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Marketstructure

41-Day Sentiment mastery missionGM WARRIORS I'm on a mission to master the SuperTrend indicator by testing all 42 combinations of its key settings: Factor, ATR (Average True Range), and Time Periods. Each day, I’ll backtest 50 trades on a new combination to refine a 15-minute day trading system, focusing on trend precision and market sentiment. The combinations include: 21 Factors (2.0 to 4.0 in 0.1 increments). 2 Timeframes (15M and 30M). Goal: Identify the optimal SuperTrend configuration, master early trend reversals, and sharpen market insights within a month. Results will be shared daily via a public sheet and incorporated into my ongoing SuperTrend study. If you’d like updates, let me know, and I’ll tag you in this journey! 📊 Progress Sheet: docs.google.com 📘 SuperTrend Study: docs.google.com
Education
by NickSeversG
What Is ICT Turtle Soup, and How Can You Use It in Trading?What Is ICT Turtle Soup, and How Can You Use It in Trading? The ICT Turtle Soup pattern is a strategic trading approach designed to exploit false breakouts in financial markets. By understanding and leveraging liquidity grabs, traders can identify potential reversals and enter trades with relative precision. This article delves into the components of the ICT Turtle Soup pattern, how to identify and use it, and its potential advantages and limitations, providing traders with valuable insights to potentially enhance their trading strategies. The ICT Turtle Soup Pattern Explained ICT Turtle Soup is a trading pattern developed by the Inner Circle Trader (ICT) that focuses on exploiting false breakouts in the market. This ICT price action strategy aims to identify and take advantage of situations where the price briefly moves beyond a key support or resistance level, only to reverse direction shortly after. This movement is often seen in ranging markets where prices oscillate between established highs and lows. The concept behind ICT Turtle Soup trading is rooted in the idea of liquidity hunts and market imbalances. When the price breaks out, it often triggers stop-loss orders set by other traders, creating a temporary imbalance. The ICT Turtle Soup strategy seeks to capitalise on this by entering trades in the opposite direction once the breakout fails and the price returns to its previous range​. The pattern is named humorously after the original Turtle Traders' strategy, which focuses on genuine breakouts. In contrast, ICT Turtle Soup takes advantage of these failed attempts, thus "making soup out of turtles" by transforming unproductive breakout attempts into potentially effective trades​. Typically, traders look for specific signs of a false breakout, such as a price briefly moving above a recent high or below a recent low but failing to sustain the move. This strategy is particularly effective when used in conjunction with other ICT concepts, such as higher timeframe analysis and understanding of market structure​. Components of the ICT Turtle Soup Pattern To effectively utilise the ICT Turtle Soup setup, it’s essential to understand its core components: order flow and market structure, liquidity, and internal versus external liquidity. Order Flow and Market Structure Order flow and market structure are critical in analysing the ICT Turtle Soup pattern. This involves observing price movements and traders' behaviour in different timeframes. Traders can analyse higher and lower timeframe price movements in FXOpen’s free TickTrader platform. Higher Timeframe Structure This refers to the broader trend governing the lower timeframe trend. For traders using the 15m-1h charts to trade, this might mean structure visible on 4-hour, daily, or weekly charts. Higher timeframe structures help traders identify the major support and resistance levels. These levels are essential as they mark the boundaries within which the market generally oscillates. Traders use these to determine the prevailing market direction and potential areas where false breakouts (stop hunts) are likely to occur​. Lower Timeframe Structure Lower timeframe structures are examined on hourly or minute charts. These provide a more detailed view of price action within the higher timeframe’s range and account for the bullish and bearish legs that dictate a broader higher timeframe trend. Liquidity and Stop Hunts In general trading terms, liquidity represents how easy it is to enter or exit a market. However, in the context of the ICT Turtle Soup pattern, areas of liquidity can be identified beyond key swing points. Stop Hunts Stop hunts, also known as a liquidity sweep, occur when the price temporarily moves above a resistance level or below a support level to trigger stop-loss orders. This movement creates a liquidity spike as traders' stops are hit, providing a favourable condition for the price to reverse direction. ICT Turtle Soup traders seek to exploit these moments by entering trades opposite to the initial breakout direction once the liquidity is absorbed. Internal and External Liquidity Understanding internal and external liquidity is vital for applying the ICT Turtle Soup pattern effectively. Internal Liquidity This refers to the liquidity available within the range of the higher timeframe structure. It involves identifying smaller support and resistance levels within the larger range. For example, in a bullish leg, there will be a series of higher highs and higher lows; beneath these higher lows is where internal liquidity rests. This internal liquidity will be targeted to form a bearish leg as part of a higher timeframe bullish trend. External Liquidity This involves liquidity that exists outside the key highs and lows of the higher timeframe trend. To use the example of the bullish leg in a higher timeframe bullish trend, the low it originated from and the high it creates as the bearish retracement begins count as areas of external liquidity. Order Blocks and Imbalances While not directly involved in the ICT Turtle Soup setup, understanding order blocks and imbalances can provide insight into where the price might head and the general market context. Order blocks are areas where significant buying or selling activity has previously occurred, often due to institutional orders. These blocks represent zones of support and resistance where the price is likely to react. Bullish Order Blocks These are typically found at the base of a significant upward move and indicate zones where buying interest is strong. When the price revisits these areas, it often finds support, making them potential entry points for long trades​. Bearish Order Blocks Conversely, these are located at the top of significant downward moves and signal strong selling interest. These zones often act as resistance when revisited, making them strategic points for short trades​. Imbalances Imbalances, or fair value gaps (FVGs), are price regions where the market has moved too quickly, creating a significant disparity between the number of long and short trades. These gaps often occur due to high volatility and indicate areas where the market might revisit to "fill" the gap, thereby achieving fair value. In other words, when a price rapidly moves in one direction, it leaves behind an area with little to no trading activity. The market often returns to these imbalanced zones to facilitate proper price discovery and liquidity. How to Use the ICT Turtle Soup Strategy Here's a detailed breakdown of how traders use the ICT Turtle Soup pattern. Establishing a Bias Traders begin by analysing the higher timeframe trend, such as the daily or weekly charts, to establish a market bias. This analysis helps determine whether the market is predominantly bullish or bearish. Identifying this trend is crucial as it guides where to look for potential Turtle Soup setups. For instance, the example above shows AUDUSD initially moving down after a bullish movement off-screen. It eventually breaks above the lower high, indicating that the higher timeframe trend may now be bullish. Similarly, the shorter-term downtrend beginning from mid-May also saw a new high, meaning a trader may want to look for long positions. Identifying Internal Liquidity Once the higher timeframe trend is established, traders look for a move counter to that higher timeframe trend. In the example shown, this would be a downtrend counter to the bullish structure break. They mark levels of internal liquidity; in a bullish leg, these would be below swing lows and vice versa. These areas are likely to attract stop-loss orders. Looking for Liquidity Taps The next step involves waiting for these internal liquidity areas to be tapped. This typically happens when the price briefly breaks through a support or resistance level, triggering stop-loss orders before quickly reversing direction. Ideally, the price should tap into the same area or order block where the internal liquidity formed and then exhibit a quick reversal, often leaving just a small wick. This movement indicates a liquidity grab, where large players have taken out stops to facilitate their own orders. Lower Timeframe Confirmation After identifying a liquidity grab beyond this internal liquidity level, traders look for an entry. On a lower timeframe, they look for a similar pattern: internal liquidity being run and a subsequent break of structure in the direction of the higher timeframe trend. This involves price retracing back inside the range to fill an imbalance and meet an order block, which provides a precise entry point. Executing the Trade Once these conditions are met, traders typically enter the market. Specifically, they’ll often leave a limit order at an order block to trade in the direction of the higher timeframe trend. They place a stop loss just beyond the liquidity grab, either above the recent high for a short trade or below the recent low for a long trade. Profit targets are often set at key liquidity levels, such as previous highs or lows, where the market is likely to encounter significant activity​. Potential Advantages and Limitations The ICT Turtle Soup pattern is a trading strategy with several potential benefits and drawbacks. Advantages - Precision: Allows for precise entry points by identifying false breakouts and liquidity grabs​. - Adaptability: Effective across different timeframes and market conditions, including ranging and trending markets. - Risk Management: Built-in risk management by placing stop losses just beyond the liquidity grab points. Limitations - Complexity: Requires a deep understanding of market structure, liquidity, and order flow, making it challenging for less experienced traders​. - Market Conditions: Less effective in highly volatile or illiquid markets where false signals are more common. - Time-Consuming: Demands continuous monitoring of multiple timeframes to identify valid setups, which can be time-intensive. The Bottom Line The ICT Turtle Soup pattern offers traders a powerful tool to identify and exploit false breakouts in the market. By understanding its components and applying the strategy effectively, traders can potentially enhance their trading performance. To put this strategy into practice, consider opening an FXOpen account, a reliable broker that provides the necessary tools and resources for trading. FAQs What Is ICT Turtle Soup in Trading? ICT Turtle Soup is a trading pattern that exploits false breakouts. It identifies potential reversals when the price briefly moves beyond a key support or resistance level, triggering stop-loss orders before reversing direction. This strategy aims to take advantage of these liquidity grabs by entering trades opposite to the initial breakout direction​. How to Identify ICT Turtle Soup Conditions? To identify the ICT Turtle Soup pattern, traders analyse higher timeframe trends to establish market bias. They then look for counter-trend moves and mark internal liquidity areas. The pattern is identified when the price taps these liquidity zones and reverses quickly, often leaving a small wick. This signals a liquidity grab and potential trade setup in the direction of the higher timeframe trend​. How to Use the ICT Turtle Soup Pattern? Using the ICT Turtle Soup pattern involves several steps. First, traders establish a market bias based on higher timeframe analysis. Then, they look for liquidity grabs at marked internal liquidity areas, indicating false breakouts. The next step is to confirm the setup on a lower timeframe by observing a similar liquidity grab and structure break. Lastly, they enter trades in the direction of the higher timeframe trend, placing stop losses just beyond the liquidity grab and targeting key liquidity levels for profit-taking​. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
1
These Market Structures Are Crucial for EveryoneIn this article, we will simplify complex market structures by breaking them down into easy-to-understand patterns. Recognizing market structure can enhance your trading strategy, increase your pattern recognition skills in various market conditions. Let’s dive into some essential chart patterns that every trader should know. Double Bottom / Double Top A double bottom is a bullish reversal pattern that occurs when the price tests a support level twice without breaking lower, indicating strong buying interest. This pattern often suggests that the downtrend is losing momentum and a potential uptrend may follow. Conversely, a double top signals a bearish reversal, formed when the price tests a resistance level twice without breaking through. This pattern indicates selling pressure and suggests that the uptrend may be coming to an end. Bull Flag / Bear Flag A bull flag is a continuation pattern that appears after a strong upward movement. It typically involves a slight consolidation period before the trend resumes, providing a potential entry point for traders looking to capitalize on the ongoing bullish momentum. On the other hand, a bear flag forms during a downtrend, signaling a brief consolidation before the price continues its downward movement. Recognizing these flags can help traders identify potential breakout opportunities. Bull Pennant / Bear Pennant A bull pennant is a continuation pattern that forms after a sharp price increase, followed by a period of consolidation where the price moves within converging trendlines. This pattern often indicates that the upward trend is likely to continue after the breakout. Conversely, a bear pennant forms after a sharp decline, with the price consolidating within converging lines. This pattern suggests that the downtrend may resume after the breakout. Ascending Wedge / Descending Wedge An ascending wedge is a bearish reversal pattern that often forms during a weakening uptrend. It indicates that buying pressure is slowing down, and a reversal may be imminent. Traders should be cautious as this pattern suggests a potential downtrend ahead. In contrast, a descending wedge appears during a downtrend and indicates that selling pressure is weakening. This pattern may signal a bullish reversal, suggesting a possible upward breakout in the near future. Triple Top / Triple Bottom A triple top is a bearish reversal pattern that forms after the price tests a resistance level three times without breaking through, indicating strong selling pressure. This pattern can help traders anticipate a potential downtrend. Conversely, a triple bottom is a bullish reversal pattern where the price tests support three times before breaking higher. This pattern highlights strong buying interest and can signal a significant upward move. Cup and Handle / Inverted Cup and Handle The cup and handle pattern is a bullish continuation pattern resembling a rounded bottom, followed by a small consolidation phase (the handle) before a breakout. This pattern often indicates strong bullish sentiment and can provide a solid entry point. The inverted cup and handle is the bearish counterpart, signaling potential downward movement after a rounded top formation, suggesting that a reversal may occur. Head and Shoulders / Inverted Head and Shoulders The head and shoulders pattern is a classic bearish reversal signal characterized by a peak (head) flanked by two smaller peaks (shoulders). This formation indicates a potential downtrend ahead, helping traders to identify possible selling opportunities. The inverted head and shoulders pattern serves as a bullish reversal indicator, suggesting that an uptrend may follow after the price forms a trough (head) between two smaller troughs (shoulders). Expanding Wedge An expanding wedge is formed when price volatility increases, characterized by higher highs and lower lows. This pattern often indicates market uncertainty and can precede a breakout in either direction . Traders should monitor this pattern closely, as it can signal potential trading opportunities once a breakout occurs. Falling Channel / Rising Channel / Flat Channel A falling channel is defined by a consistent downtrend, with price movement contained within two parallel lines. This pattern often suggests continued bearish sentiment. Conversely, a rising channel indicates an uptrend, with price moving between two upward-sloping parallel lines, signaling bullish momentum. A flat channel represents sideways movement, indicating consolidation with no clear trend direction, often leading to a breakout once the price escapes the channel. P.S. It's essential to remember that market makers, whales, smart investors, and Wall Street are well aware of these structures. Sometimes, these patterns may not work as expected because these entities can manipulate the market to pull money from unsuspecting traders. Therefore, always exercise caution, and continuously practice and hone your trading skills. What are your thoughts on these patterns? Have you encountered any of them in your trading? I’d love to hear your experiences and insights in the comments below! If you found this breakdown helpful, please give it a like and follow for more technical insights. Stay tuned for more content, and feel free to suggest any specific patterns you’d like me to analyze next!
Education
by ArShevelev
5
MARKET STRUCT USING ICT CONCEPTThe Inner Circle Trader (ICT) concept in trading, developed by Michael J. Huddleston, offers a comprehensive approach to understanding and navigating market structure. ICT emphasizes the importance of market structure, which refers to the organization and arrangement of various market components, such as support and resistance levels, trends, and price patterns. This approach involves identifying key levels where institutional investors might be placing orders, understanding liquidity pools, and recognizing the behavior of smart money. By focusing on these elements, traders can better predict market movements, identify high-probability trade setups, and manage risks effectively. The ICT methodology combines technical analysis with a deep understanding of market dynamics to provide traders with a robust framework for making informed trading decisions.
Education
by FrankFx14
Median Lines and Finding the Right Path When it comes to learning about markets and trading, finding the right path and committing to it is the hardest part. The right path has little to do with any technical analysis method. It has to do with structuring our mental framework so that we fundamentally change how we experience markets, trading, and loss. In the video, I show some Median Line and Action/Reaction work but this work is useless by itself. No tool is good or bad, they are just tools we use to comprehend markets. The problem arises when the tools start using us and we think there is some kind of magic to them. The essence of our strategy should be to structure our methods and mindset towards functionality. The journey we should commit to is one marked by fostering accountability and responsibility in all our actions. The swing trade Idea I show, takes method and structures it into function. Shane
NYSE:BXEducation
by ShaneBlankenship
2
Dynamics of Bull Market CyclesBull markets are the epitome of investor optimism and economic growth, characterized by rising asset prices and increasing investor confidence. However, within every bull market, there lies a cyclical pattern composed of distinct phases: Discovery, Momentum, and Blow-off. Understanding these phases is crucial for investors to navigate the market efficiently and capitalize on opportunities while mitigating risks. 🟣 Discovery Phase: 👉 Accumulation: During the accumulation phase, institutional investors and smart money recognize undervalued assets and begin quietly accumulating positions. This often occurs when the broader market sentiment is still pessimistic or uncertain, presenting attractive buying opportunities. 👉 Trend Emergence: As accumulation continues, subtle shifts in market dynamics become apparent. Prices begin to exhibit higher highs and higher lows, indicating the emergence of an uptrend. Technical indicators such as moving averages may start to show bullish crossovers, further confirming the trend. 🟣 Momentum Phase: 👉 Shake-out: The shake-out phase is characterized by short-term price declines or corrections that test investor resolve. Weak-handed investors, who bought near the end of the accumulation phase or are driven by fear, panic sell their positions. This phase often creates volatility and uncertainty but also offers opportunities for long-term investors to accumulate quality assets at discounted prices. 👉 Momentum Building: Following the shake-out, momentum begins to build as the broader market recognizes the strength of the uptrend. More investors start participating in the rally, driving prices higher. Positive news catalysts and strong earnings reports further fuel the momentum, attracting even more investors. 👉 First Sentiment: As the bull market gains momentum, investor sentiment shifts from cautious optimism to moderate confidence. Market participants start to believe in the sustainability of the uptrend, leading to increased buying activity. However, skepticism may still linger, especially among contrarian investors who remain wary of potential overvaluation. 🟣 Blow-off Phase: 👉 Renewed Optimism: In the blow-off phase, optimism reignites as investors regain confidence in the market's upward trajectory. Corrections or pullbacks are viewed as buying opportunities rather than signals of impending reversal. Institutional investors and retail traders alike re-enter the market, driving prices to new highs. 👉 FOMO (Fear of Missing Out): Fear of Missing Out becomes prevalent as investors fear being left behind in the rally. Social media, financial news outlets, and word-of-mouth recommendations amplify the sense of urgency to buy, further fueling price appreciation. This FOMO-driven buying frenzy can lead to exaggerated price moves and irrational exuberance. 👉 Euphoria: Euphoria marks the peak of the bull market cycle. Investors become irrationally exuberant, believing that the current uptrend will continue indefinitely. Risk management takes a backseat as greed overrides caution. Valuation metrics may reach extreme levels, signaling frothiness in the market. Understanding the cyclical nature of bull market cycles is essential for investors to navigate the market successfully. By recognizing the distinct phases of Discovery, Momentum, and Blow-off, investors can make informed decisions, capitalize on opportunities, and protect their portfolios from potential downturns. While bull markets are synonymous with optimism and prosperity, prudent risk management and a keen awareness of market dynamics are critical for long-term investment success.
Education
by Vestinda
2
The Wash and Rinse To See True Support/ResistanceTrue support and resistance is found in the meat of the move, not at the extreme highs and lows. To find it, Simply draw a zone or box and look for the place that price touches the most, and then pay attention to what happens afterward. In this lesson, I set up a trade plan and show how a Wash and Rinse structure at the pivot of a swing uses the most touches to find true support in a market. I then show how to identify it. The Wash and Rinse has a process that we can follow in real-time. 1. Multi-Pivot Line (MPL) 2. Zoom through the MPL 3. Come back and retest the MPL 4. Zoom back through the MPL the other way What happens in this process, is that buyers are holding some level. Price then busts that level triggering stops and at the same time encouraging shorts to enter. Then price rips back up essentially cleaning the book of orders and showing where the true support is (at least for the time being). Once you can recognize this structure, you can begin making your own observations and use these levels to read a market or begin to build a setup around it. The most important part is to learn to design a plan with objective rules around what you observe. Shane
NASDAQ:RCKTEducation
by ShaneBlankenship
2
Defining Target for Risk Reward: Maybe you shouldn't?The trade plan is broken up into parts. We have an objective and consistent entry, stop, and exit plan. Here I will be talking about the exit plan and setting targets that will give you a particular risk/reward ratio. There are no absolutes when it comes to what risk/reward you should be aiming for, a lot has to do with how you handle risk and loss and your overall understanding of markets. Defining the stop (risk) is relatively easy compared to defining the target (reward). Mostly you need a clean set of statistics on an objective method. This will give you an average distance that the swing will run in relation to your method. The reward part of the equation is a function of how far your stop is to your entry. There is no one-size-fits-all when it comes to trading. For many, it may be best not to set a target, but instead use something simple and objective like a moving average to exit the trade. This way, you get what the market gives you while incorporating consistency and objectivity into your exit plan. Keep it simple, objective, and consistent, and learn as you go. In the video, I make something up on the spot that may give you some ideas. I use a 20ema as a profit stop only after price has made a new high. It's simple, principle-based, and it's objective. No matter what your method, knowing where you are in the swing cycle will help in defining entry, stop, and target, and this will directly influence the risk/reward ratio. Shane
AMEX:IWMEducation
by ShaneBlankenship
2
What Is an Expanding Swing?Markets move in contraction/expansion. Small swings can be thought of as a form of contraction and the bigger swing is a form of expansion. An Expanded Swing is simply a reaction leg that is bigger than the previous reaction leg or legs. Its minor swings growing up to be major swings. This represents a change in behavior that often causes confusion among the shorts and the longs. The shorts are fearful cause the market is now backing up on them and the longs are fearful cause they see a market now turning up and getting away from them. This confusion creates an opportunity for those that are sitting back with a plan. To see this price action on a chart, it helps to have some simple and objective definitions for mapping the market and i show this in the video. First, we use market structure to read the market, and then we use a trading structure (trade plan) to structure the actual trade where we manage risk. Shane
NYSE:OIIEducation
by ShaneBlankenship
The importance of trading with the trend + Suppy/Demand zonesA trend can be defined with price action or indicators. Understanding that all indicators lag and price behaviour is key I prefer price action to tell me if we are up trending, down trending or trading in a range. Before understanding the basics of market structure it is important to know that its more likely for a trend to keep going on than for the trend to reverse. That is why professional traders look for areas to jump on the trend not areas to go against it. Also, keep in mind what time frame are you using to define the trend, for example, if your trades don't last more than an hour would you jump on the weekly chart trend ? what happens in 1 hour won't affect the weekly chart. So if you are trading the 5 or 15 min chart you can trade with the trend of the 1 or 2 hour chart. How to define the trend ? • An up trend is when price is making higher highs and higher lows • A down trend is when price is making lower highs and lower lows. • If there is no way to define the trend then you can say it is in a trading range with no clear direction. When has the trend changed ? To explain a trend change we will consider the chart below. First we can notice a clear up trend making higher highs and higher lows (1,2,3) then we create a new lower low (4) where we break below previous higher low (2) then price fails to create a new higher high and instead creates a lower high (5), finally when price breaches the previous lower low at (6) we can consider a change of structure. opposite situation happens in a down trend market. ABCD CORRECTION PATTERN There is a very common pattern that pretends to be a change of structure but really it is just a correction pattern to continue the uptrend. Look at the example below. An up trend creates a higher high (A) and a higher low (B). Then creates a lower high (C) and finally a lower low (D) before continuing its up trend. What did not happen that the trend didn't change ? If the high after (C) had been also a lower high and then it breaks below (D) and (D) acts further as resistance then the trend had changed. What is more important here is to understand that trading a continuation of the trend has a higher probability of working, on the example shown the correction ended right at a 4hr demand zone that was valid because the trend was still skewed to the upside.
CME_MINI:NQ1!Education
by FTWTraders
2
Market Structure Identification ✅Hello traders! I want to share with you some educational content. ✅ MARKET STRUCTURE . Today we will talk about market structure in the financial markets, market structure is basically the understading where the institutional traders/investors are positioned are they short or long on certain financial asset, it is very important to be positioned your trading opportunities with the trend as the saying says trend is your friend follow the trend when you are taking trades that are alligned with the strucutre you have a better probability of them closing in profit. ✅ Types of Market Structure Bearish Market Structure - institutions are positioned LONG, look only to enter long/buy trades, we are spotingt the bullish market strucutre if price is making higher highs (hh) and higher lows (hl) Bullish Market Structure - institutions are positioned SHORT, look only to enter short/sell trades, we are spoting the bearish market strucutre when price is making lower highs (lh) and lower lows (ll) Range Market Structure - the volumes on short/long trades are equall instiutions dont have a clear direction we are spoting this strucutre if we see price making equal highs and equal lows and is accumulating . I hope I was clear enough so you can understand this very important trading concept, remember its not in the number its in the quality of the trades and to have a better quality try to allign every trading idea with the actual structure
OANDA:XAUUSDEducation
by Snick3rSD
A guide to Profitable Scalping (why waste a price action)In the world of trading, many participants find themselves constantly waiting for the perfect confirmation for swing positions or entries, often missing out on the rapid movements that characterize financial markets. This is where the art of scalping comes into play, a strategy vastly different from swing trading, yet equally, if not more, compelling for those who master it because it offers way more opportunities to make money. In this blog post, I'll guide you through the essentials of becoming an effective scalper, focusing on market structure theory, the significance of Break of Structure (BOS), and the nuances that set scalping apart from swing trading. Understanding Market Structure Theory To excel in scalping, one must first be well-versed in market structure theory. This theory is the backbone of understanding how markets move and why they behave in certain patterns. It involves analyzing price highs and lows, trends, and ranges to predict future price movements. For a comprehensive understanding of market structure theory, this resource offers an in-depth explanation, it's not complete, but the best one freely available so I suggest you understand the content properly. www.youtube.com The Role of Break of Structure (BOS) A critical concept in scalping is the Break of Structure (BOS). When we observe a confirmed BOS to the upside or downside, it indicates a significant shift in market sentiment. The order block that caused this break becomes a focal point of interest. This is because, in the realm of scalping, these points often act as magnets for price, offering high-probability entry points. Capitalizing on Order Blocks Once a BOS is identified, scalpers must pay close attention to the order block that instigated this shift. When the price returns to this order block, a reaction is typically expected. This reaction is the bread and butter of scalping. Unlike swing traders who seek to capture larger market moves over extended periods, scalpers thrive in these quick, precise moments. Scalping vs. Swing Trading: A Different Focus The primary difference between scalping and swing trading lies in their respective focuses and timeframes. Swing trading involves holding positions for several days to weeks, aiming to profit from substantial price moves. Traders in this domain often focus on potential targets for a trade, analyzing broader market trends and economic factors. Conversely, scalping is a short-term strategy where trades last from a few minutes to hours. The focus here is not on the potential extent of a price move but, on the risk, -to-reward ratio. Scalpers typically aim for a 1 to 3 risk-reward ratio, meaning they risk one unit to gain three. This approach requires quick decision-making so it's much more involved than swing trading. Before we go on to see some examples following are the key things to remember to be effective in scalping To be an effective scalper, you need to: 1. Develop a proper Understanding of Market Structure 2. Identify High-Probability Order Blocks 3. Master Risk Management: Given the high-speed nature of scalping, managing risk is paramount. This involves setting strict stop-loss orders and having a clear risk-to-reward ratio for each trade. 4. Stay Disciplined and Agile: Scalping requires discipline to follow your trading plan and agility to adapt quickly to changing market conditions. Examples: Scalable OBs with results. This happened today: on SPX and NAS100 NAS100: SPX: How to pick an order block to trade for scalping: Entry for Scalping should be between 0.25 to 0.5 level inside the Order Block, you can use FIB tool to get these levels, this is highlighted in the Images above. 1. Do not go above 4h TF for this strategy. 2. Make sure Order block is caused a BOS 3. Notice the time frame of BOS, Pick the Order block in relation to the BOS timeframe. 4. Makes sure Prior to BOS the Order block resulted in FVG 5. Make sure the Order Block is not too big as it will result in greater risk, which I do not prefer. 6. If price does not hit your entry do not chase price, move on to next one. I want to emphasize here again , the goal of scalping is to capture the small move , not the whole move , so your focus should be one getting 2X or max 3X of your trade once , you do you get out and move on to next one , the good thing about this strategy is you can always find multiple assets where BOS is happening on anywhere from 1h to 4H TF. Finally, nothing in the world of trading is 100% so it's possible this may not work sometimes, which you should be okay with as long as it works more than 50% of the time. I n my experience it works more than 80% of the time. Conclusion Scalping is a dynamic and potentially lucrative trading strategy that requires a unique skill set, distinct from swing trading. By understanding market structure theory, focusing on order blocks following a BOS, and maintaining a disciplined approach to risk management, traders can exploit the rapid movements of the market for steady income. Remember, the key to successful scalping lies in quick, informed decisions and an unwavering commitment to your strategy. Like and Leave comment to this post to seek further clarifications if needed. Happy trading!
Education
by zakoraio