Master These Simple Reversal Entries To Become A Top 5% Trader (3 Must-Know Entries For All Traders)

what's up traders steven here your honest trading coach and if you are not a or plan to be a price action trader then this video is not going to be for you and you can go ahead and click away now i know that i probably lost a lot of people doing that but i don't want this to be a waste of your time in any way shape or form this video is going to be solely based on price action no indicators involved whatsoever and the strategy system philosophy of trading that i'm going to share with you in this video was actually created based on a dare i got a few years ago let me explain that in a story so whenever i first started practicing price action trading i actually had a partner in crime if you will it was a guy that i met at the university of georgia his name was josh he wore glasses he was a straight a student he was in school for computer science this was a very intelligent guy so me and him partnered up and we both started trading price action patterns and reversal patterns price action in general at about the same time about a month goes by and i get a phone call from josh josh calls me and goes hey man i just want to let you know that over the past 30 days i've been trading price action and i've lost 25 out of 35 trades this [ __ ] does not work and i taking that as a challenge because i'm extremely competitive i took that like a challenge i took that like a dare that he was saying there's no way i could create something based around price action that would actually create an edge and a profit over time in the markets so setting out on this adventure over the next few weeks i spent hundreds of hours testing thousands of trades and eventually came up with the strategy system and philosophy of trading that i'm going to share with you in this video now josh went on to pursue a career in computer science doing very well now but still trades on the side for extra income with his investment portfolios this strategy is a strategy that he still uses to this day this is a strategy i still use to this day and it's one of my most accurate ways of trading and what i want to do with this video is share with you three things the purpose of these three things is to keep you from having to spend hundreds of hours testing thousands of trades save you time and energy so you can start off by testing and trading based on ways that already work that i've personally already tested and i'm going to do this by showing you three things in this video the first part of the video i'm going to show you exact rules the objective rules that i use for these price action patterns so you're never confused about how to trade price action and reversal patterns again these three patterns that i'm going to show you are the patterns that i personally use in order to trade every single time i place trades based around price action the second thing i'm going to do is go ahead and go through two live trades i took last week using the exact same strategies and systems the exact same price action patterns i'm going to show you in the first part of the video and lastly what i'm going to do is break down the entire rules-based system and strategy to you that way you have it in your arsenal so you can take it test it figure out if you want to use it for yourself and your own personal trading plan so if that sounds good to you i need you to do a couple of different things for me first off please go ahead and smash that like button because i'm going to come at you with some extreme value today and i need that in order to show more price action traders this video we got to get the word out on what actually works and what doesn't second go ahead and hit that subscribe button if you're not already subscribed so you're alerted about the content we come out with each and every week and third go ahead and follow us over on instagram at the trading channel to get notified about early release content so i will see you directly after the intro and disclaimer to share with you the three main reversal patterns that i personally use in my trading each and every time i trade based on price [Music] action welcome back traders let's go ahead and get started and first off what is the main problem with trying to trade reversal price action patterns well remember me talking about my buddy josh one of his problems was that he was trading all these patterns but had no rules at all for how to trade them so you've probably heard let's say for a head and shoulders pattern that you're supposed to trade after the break of a neckline right you're supposed to trade we have our shoulder our head our shoulder and then when that neckline is broke place the trade you may have also heard to place a trade on the shoulder you may have also heard that this isn't a head and shoulders pattern because it doesn't look perfect or is for some reason the point is not what is and isn't a head and shoulders pattern the point is to have consistency and having consistency means that you have a set of rules you see my buddy josh had no set of rules and because of that he was trading numerous patterns and losing tons of traits because he wasn't trading in a consistent way so what we're going to do now is take a look at some consistent rules you can apply to head and shoulders pattern head and shoulder pattern head and shoulders patterns are the first ones we're going to take a look at in this portion of the video and what this is going to do is keep you from having to go is this a head and shoulders pattern is this a head and shoulders pattern shoulder head shoulder break is this an inverted head and shoulders right here you won't have to question that any longer as long as you have a set of rules that tell you whether this is or is not a head and shoulders pattern and tells you how you're going to be trading that so right now let's jump into the objective rules that i personally use and that really are the only reason i was able to create profits out of price action trading with reversals let's go ahead and talk about those rules right now so for our first example let's take a look here on the euro pound 15 minute chart and what we're looking at here is we have what looks to be a possible head and shoulders we have our first shoulder here we have our neckline creation right here and we have the head right here at this point is when i can start mapping out my rules for if is this a head and shoulders pattern or is this not a head and shoulders pattern my rules for this i'm going to go really slowly here and this is the time you might want to bring out a pad in a pen so you can keep up with this information as the video continues so my rules once we have this in place we have our push-up our first shoulder our head and we've pushed back down i wait to see a push back up as soon as i see a green candle pushing back up what i do is map out a zone this zone is from the body of our first shoulder to the body of our head the highest body of these candles these candles came up to right here where you see my horizontal line the highest bodies on our previous shoulder is right here what this is right here for me is a termination point so i'll put a box in this area right here this means that i can have candles push up and i need these candles pushing up to at least enter my termination point entering that termination point could be with a wick of a candle could be with the body of the candle that's irrelevant so if i have a candle that pushes up like this let's say the next candle is green or red and it touches my termination point that counts now i have a valid head and shoulders pattern until or if this comes up another candle comes up and touches my head then i no longer have a valid pattern so the termination zone for my head and shoulders pattern is in my red zone right here let's see what happens as we push up into this zone what i want to see is candles touching the zone as we are right now but not going and touching the top of the zone so the termination point again is right here and what i want to see in this termination point this is how i spot head and shoulders patterns and the way that i spot my entry is just a red candle you see i already have my pattern created here this in fact is a head and shoulders pattern but i want to see confirmation that this head and shoulders pattern will push the market down and that confirmation for me is a red candle so let's see what happens does this next candle stay in my termination zone yes it does it doesn't hit the top of my zone right so therefore i can keep looking for possible entries and there what happens so now what i have is a head and shoulders pattern where remember these are the these are the set in stone rules that you never have to be confused about what a head and shoulders pattern is supposed to look like again you'll now know what you're looking for every time you're looking for a head and shoulders pattern we have our first shoulder our head back down creating our neckline and what i want to see is a market that pushes up into my termination zone between the bodies of the highest candles of the first shoulder and the bodies of the highest candles of the head of the head and shoulders pattern that's my termination zone once the market gets into that zone i'm looking for a red candle for a possible entry there's that entry i will then have a stop loss that's just above the head of my head and shoulders pattern this is breaking into the how how am i going to trade this pattern it's just like this i want a risk reward of at least a one-to-one risk reward let's hit play and see what happens the market then continues to play around in our termination zone before eventually pushing down and hitting our profit target so this is the exact objective way that i look at head and shoulders patterns i will go over this one more time with an inverted head and shoulders if you need more help on this you can go back and re-watch this portion of the video we're going to go over it one more time when we take a look at the live trade in just a second but essentially looking for a termination zone between the highest bodies of the first shoulder and the highest highs of the head of the head and shoulders that termination zone is where i want to see market the market get to and when it gets to that zone my entry reason is looking for a red candle for confirmation that we could see this market push down from that head and shoulders pattern so that's the first pattern i wanted to take a look at next up let's take a look at the next pattern i'll see you in just a second okay so the next pattern we're taking a look at is the inverted head and shoulders meaning the opposite of what we just looked at so i want you to look on the screen and see if you can flip it yourself do you see what i'm looking at as in the inverted head and shoulders pattern here and try to define the rules as you go as well what we want to see is this first shoulder and then we want to see a break of that shoulder because that gives us our head the head has to be lower than the first shoulder on an inverted head head and shoulders pattern so we see that first shoulder we see the neckline the head of that pattern at this point try to map out the zone what song would you would we use in a head inverted head and shoulders pattern in order to classify this as an actual head and shoulders well i just thought of this that's actually a shampoo brand that's so weird i feel like i'm just saying shampoo brands sponsored by head i'm just playing okay so we have an area now that looks like this is our termination point on an inverted head and shoulders what we're looking at is the area between the lowest bodies of the first shoulder and the lowest bodies of the head of this head and shoulders pattern so with that being the case this would be our termination zone now this is our termination zone what do we need to see happen well we need this market to at least get down to that termination zone but we do not want this market to even touch the bottom of our termination zone right here the bottom of our red box can't even be touched not even by a wick if i have a candle that looks like this comes down and touches that i invalidate that as a head and shoulders that looks more like we're possibly going to see train continuation or a double bottom but it classifies as a totally different pattern as for a head and shoulders pattern i need to see a termination in this zone and what i mean by termination is i need the market to hit this zone without going below it in any way shape or form with a wick or a body and then give me a green candle to show me confirmation that this head and shoulders pattern could take this market higher could take us into a reversal considering the previous trend of the market so let's hit the play button see what the market does in this case we're getting closer not in our termination zone yet at this point right here we are in our termination zone if i raise up my black line here you can see that if we're on exactly these bodies here and we bring up the box we actually do get into our termination zone and the market prints a green candle right afterwards what does this mean well for the way we enter on inverted head and shoulder patterns we would do something like this here at the trading channel whenever i say we is what i mean we would do something like this we would have a stop loss below the head of the pattern we would have a target at at least a one to one risk reward you can place base targets on structure that would give a 2.25 let's do that this time let's base our targets on the previous level of support that could turn to resistance just to show you the power of trading in this way let's hit play and see what happens here on this head and shoulders pattern we mess around down towards our left shoulder for a second while consolidating them push up get closer to targets and eventually if i speed this process up a bit we eventually we actually hit targets right here so we eventually hit our targets right in that area so that's the inverted head and shoulders if you need to watch that again feel free to back the video up this is supposed to be a guide for beginners intermediates and advanced traders so that you have objective rules in order to define these price action reversal patterns so feel free to back up the video and watch that one more time until it makes sense following this we're going to take a look at one other pattern and then i'm going to show you a couple of live trades i took using all of these patterns and then i'm going to show you a full strategy a full breakdown of when i use these patterns so you can add it into your own trading so let's go ahead and take a look at the next pattern right now all right so the next pattern we're taking a look at is the double bottom and as simple as this is going to be and as simple as a double bottom and double top pattern r this is one of the most accurate ways i've found a trade this alongside with the head and shoulders and inverted head and shoulders are what i use on 90 of my price action trades and i don't just use them by themselves that's why you got to stick it out for the rest of the video take a look at the live trades and the explanation behind them because i'm going to show you the exact system and strategy that has provided that heavy accuracy over a long period of time but let's take a look at double bottoms and let's take a look at the rules the objective rules that i have for these types of trades so right now what you can see is a market that is down trending right we're in this downtrend we're pushing lower and we have one bottom and a push up this push-up by the way i need to see two green candles on the push-up i have to see that if that doesn't happen and i just have one green candle and then another push down such as right here i don't even start to look for a double bottom in this case i need at least two green candles pushing back up for a double bottom again you may need notes in order to remember this if you're someone that's newer now for a termination zone with my double bottoms what i look for is a candle that at least touches the body of our double bottom but does not close below the low of the first bottom so in this case we have the bodies of the candles right here and the low being this red candle if a candle pushes down and closes below that low i see this as trend continuation and the likelihood is that this market the heavy likelihood the high likelihood as this market continues lower but if i get a candle whose body comes into this zone and the wick goes below it that's just showing me buying pressure so i'm okay in the case of double bottoms with the wick going below the previous low not with the body going below the previous load that's when i invalidate it and look for train continuation i'm also okay if just the wick of a candle comes into this zone and the body doesn't touch it so that's going to be the termination zone and a wick can close below it in this case so we have this termination zone for our double bottoms once we get into that termination zone right there we got close to closing below right but we didn't close below the low so i'm still expecting possible double bottoms here but for confirmation very similar to what we just looked at with the head and shoulders and inverted head and shoulders for a double bottom for confirmation i'm looking for a green candle to tell me that this double bottom could push the market higher in this reversal so let's see what we get here there's a wick below it but what do we have we had a wick push below showing me buying pressure because the body didn't close below and now we have a green candle with this being the case this is my entry for double bottom patterns and the way i'm going to show you how to trade them in this video this would be my entry let me delete that extra tool make this smaller don't know why they are always so big i guess because i'm really zoomed in and my stop-loss would go below the low of this double bottom my target and this specific case would probably be up at the previous level of structure so let's put it right up there and see what happens if we hit play we got a three to one on this possible trade that did not stop us out if i zoom in a little bit further right here we had a wick come about as low as the previous wick but not close enough to our stop-loss to have to worry about market is pushing in our favor and eventually the market hitting that target now this won't always happen obviously you'll still lose trades even trading this way and if you take every one of these trades you will absolutely lose as a trader in general the point of this and the point i'm going to make after we take a look at the live trades is to trade this type of price action rules based objective strategy like the head and shoulders inverted head and shoulders and the double bottom pattern that i just showed you trade these in very specific areas that give an edge over the market with this consistent set of rules that i'm going to show you in just a second first before i show you that consistent set of rules now you have head and shoulders inverted head and shoulders and the double bottom pattern we're going to take a look at double tops and that's just going to be the inverse of what you just looked at that's another way that i trade these price action patterns in very specific zones of structure and we're going to take a look at all of that in just a second put it all together combine it into a system a rules-based strategy that you can actually take test trade if you find it to give an edge over the market and go ahead and add to that trading plan if that's something you decide to do let's take a look at double tops though right now okay so now we're taking a look at double tops and what do you see on the screen now what we have is a market that's pushing up creating one top pushing down to a possible neckline the beauty of this specific trade is that we're pushing right up into a previous level of structure support that's likely to become resistance so what do we have with this double top well we have the highest bodies of that first stop right here we have the highest highs of that first stop right here meaning that we have a termination zone right here what this means is that we can have candles push up and the wick of the candle hit this zone we can have the body of the candle closed in this zone we can have a wick push above it the only thing we cannot have is a body of a candle closing above this top wick and the reason is because that signifies trend continuation and we don't want to be going short if the market's likely to continue in this trend we are trying to trade double tops here so let's see what happens and if we actually get a trade if i push the market forward here you can see that we're now entering into our termination zone with this being the case can i take a trade hopefully you answered no to that because what could happen here is we could see a cluster of green candles that continued pushing up into an uptrend just because we're hitting our terminations on enough classified this as a double top doesn't mean i have confirmation that the market's likely to fall i have to wait on that confirmation the way i do that is just by waiting on a red candle so we continue and what do we have now is this that confirmation well yes it is this is telling me that this market has actually created a double top and shown selling pressure from that first stop so what i would do grab my entry tool place it like so on the close of that candle or the open of the next candle there the same exact thing put a stop loss just above the previous high over here the high of my double top and put a target somewhere near the previous level of structure let's hit play and see what happens the market pushes down and immediately or very quickly at least hits that target on the double top so that's the double top you now have the rules-based way i look at these patterns what we're going to do now is i'm going to show you the live trades i took last week using these same exact rules with a combination of structure that i'm going to teach you right after showing you those live trades so you'll have this full system this full strategy in your arsenal let's go ahead and take a look at those live trades though right now all right so we just got to entry here on the euro pound i'm gonna go ahead and place my position tool and get this trade moving i want to have a stop loss above our previous highs over here and my target is going to be pretty far i'm going to start off with a 1.4 though right here and we'll see how this starts to look and how this trade starts to play out in just a second i'm going to place the actual trade it's going to be a new order we're looking to sell i know where my stopping target is so i can tell myself what i'm going to be risking on this trade with a stop of around 10 pips let's do 11 for safe keeping and a target of around 14. and that let's make it 15 is going to be our trade setup we have to do our risk now which i'm gonna put two percent on this specific trade because i have a lot of confidence in it so let's see how the trade plays out let's go ahead and click the button and there we are guys good to go on this trade i'll keep you guys informed as it plays out what's up traders we're looking at the aussie candidate right now i'm looking at this double bottom move we have right here i'm gonna go ahead and open a trade live with you guys and we'll take a look at how it plays out and the full analysis behind this trade momentarily so i'll click the buy button as soon as i get my risk correct there's gonna be a two percent risk on this trade and there we go we are in the trade i will let you guys know as soon as i either get stopped out or hit targets on this trade and i'll talk to you a little bit about the analysis that went into it see you in a second all right traders back here on the euro pound 15 minute chart yet again for about a third time in this video but what we're looking at here is that euro pound trade you saw me take live and what i want you to do is walk yourself through this trade right now as you look at the chart let's talk about this head and shoulders pattern right what are you looking for in this head and shoulders pattern well we know that we have our first shoulder we need a break of that high to have a head so we have a push down to what will be our neckline we have a push and a break of this shoulder to give us our head we then have a push down and a test of the neckline which is necessary as well we need at least a test of this neckline after the test of that neckline and a green candle showing us that we are in fact pushing back up from the neckline right here's that green candle now what are you looking for well if you were paying attention earlier in the video and you remember back from that portion of the video our termination zone for a head and shoulders pattern looks like this we have the highest bodies of the left shoulder and the highest bodies of the head and in that area is where the market can terminate and terminate is defined as get to without going above whatsoever and give me a red candle for confirmation that we could see this market drop and have a reversal we've been in an uptrend i want confirmation that we could possibly fall after this head and shoulders pattern so let's push the market forward and see what we get as we push a little bit higher here we finally enter into our termination zone right here so now we've entered into the terminations on between this left shoulder and the head of the pattern we don't want the market to touch our top part of this uh this termination zone so what we want to see is a red candle before the market touches the top part of our termination zone so let's hit play and see what happens and there's our red candle that was actually the entry you just saw me take our stop was exactly where it was and my target on this specific trade i ended up moving the target from a one point four to one risk reward down to a two to one risk reward because it had a little more structure that was supporting it there and if i hit play you'll see that this trade in fact eventually sometimes it takes a while when you're trading guys eventually though we did in fact push down to hit the targets geez that was the slowest i've ever said that but as you can see we had a lot of consolidation this is one of those trades it was hard to stay in but eventually the market did push down and hit my overall target a two to one risk reward and a previous level of structure now before we talked about this specific trade i told you i'm gonna teach you a whole system and that trading these patterns by themselves in the middle of nowhere is not going to create a consistently profitable trading career that's why it was important for you to stay this far into the video was not only to learn these patterns an objective way to find them so you can trade with consistency but to understand that i'm not trading these patterns every time they happen just because i see a head and shoulders pattern these patterns work best at higher time frame levels of major structure so let me explain explain explain let me explain that lisp got me really bad let me explain what that looks like out on a higher time frame if i'm trading and my trading time frame like for instance what we just did is on the 15-minute chart then i'm going to zoom out to the four hour chart in order to see if i have structure so as this market was pushing up what i was actually doing is looking left placing my horizontal line at the previous level of major resistance for this market and asking myself if it was tested multiple times we have one two three tests of this level so i knew if the market got to this level i would definitely be looking for a price action pattern that could possibly push the market down now if you haven't studied a little bit about structure and you don't know anything about what i'm talking about right now in terms of structure levels i can't get into it right now in this video because this video will be hours long right but i do have a video i recorded last week on this exact subject and i was doing these in sequence on purpose so that you can go to that video which will be linked in the top right hand corner of this screen go to that video check that video out to understand how i find these specific zones in order to trade the entries i just shared with you inside of so this specific case and what's important for you to note now is don't trade these patterns absolutely by themselves all the time what you want to be doing is finding areas of value in the market as in previous levels of major structure and using these types of pattern in those areas now don't go out and use this either this is something you need to test make sure that you can find a way to make it provide an edge over the market and then you need to decide whether or not you want to add this to your trading plan based on your testing results this isn't something you just need to go out and start doing right now because the testing process is something that is extremely important in trading but that was the euro pound trade now let's take a look at the other trade the double bottom trade we had let's look at that right now okay so here we are on the aussie canada we're actually on the four hour chart now because i'm going to show you the entire top-down analysis that i do before placing trades using these patterns right now what we're looking at is a market that's pushing down right as we're pushing down i'm looking for areas the market's likely to reverse in and if i zoom this chart out you'll probably be able to see why i was so interested in the area in green that you see on the chart this area had acted as resistance resistance resistance support support multiple times in the past and i assumed that if the market got down to this area again we would more than likely see a bounce out of this area now my objective easy way to capture that move up that is very likely is by trading based on the price action patterns i've taught you in this video for me in this particular case it was the double bottom pattern so let's see what happens here on the four hour chart as i push the market forward there we go we get into our zone so the moment we get into our zone i'm dropping down to a 15 minute chart after dropping down to this chart what am i looking for well i'm going to be looking for that double bottom situation so let's push the market forward and see what happens and actually this was on a one-hour chart sorry about that guys this specific trade was based on a one-hour chart so right now what i want you to notice is that we have come into our green area right we had our area of structure based on our four hour chart and the markets pushed down created a bottom have one green candle two green candles up to our neckline then we have another push down we we have our termination point remember our double bottom termination points between the bodies here and the lows there we don't want to see a candle close below that but then what we get is a nice green candle off of those lows showing me this valid double bottom with confirmation being that green candle with that being the case i went ahead and took this trade with a stop loss right below the lows of that double bottom i'll hit play i had my possible targets at a 3.5 on this one because out on the four hour chart this was the next major level of structure support was right in this area here with these support levels out on a higher time frame so that's where i place my targets if i hit play you'll see how this trade actually worked out once we got into these levels i actually saw some selling pressure and decided to exit the trade for a 3.5 to 1 risk reward on this specific trade here on the aussie canada the market did go higher but you can never catch absolutely everything out of any trades so here main takeaways make sure you have objective rules like we just discussed for reversal and price action patterns make sure that you're not trading these patterns in the middle of nowhere make sure you have set in stone rules for levels of structure that are important areas of value the market is likely to reverse in before you even decide to possibly place a trade based on any pattern especially price action patterns like this and once you have all of those things combined into a strategy it's time to test it see if you want to make it a part of your trading plan if you made it always through the video i want to thank you and if you're ready for some more advanced training i'd like to invite you to join us in the eap training program and let you know that you're not alone i work with thousands of traders every single day that struggle i was one of them i struggled like crazy in the beginning of my trading career over a year passed while i was just consistently losing money and had no idea what i was doing but over the process of a year or two in the beginning of my trading career i learned how to actually create consistency in my trading and how to become a professional trader throughout the process of testing thousands and thousands of trades throughout the process of learning the importance of discipline the importance of risk management and learning how to have the proper expectations and in doing so i left a trail of breadcrumbs i created a map that i now use to teach other traders how to do the same exact thing and that map is inside of the eap training program i can't put that entire map on youtube because the course is hours and hours long it no one would watch the entire video right but if you get involved in a program where you have a mentor someone you can ask questions to becomes a lot easier so inside the eap training program i'll put some testimonials up on the screen of traders who have already been through the program and found it valuable but inside of that program what you're going to receive is a full training course that teaches you the strategies i'm using on a day-to-day basis that will teach you the importance of discipline and risk management and how to implement them into your trading you'll also be receiving three to five email analysis per week the trade you see on the aussie canada that's on the screen right now i'll put a screenshot up i sent this trade out in email analysis in order for other traders to either be able to capitalize on it if it's something in their trading plan or learn from it in terms of learning how i'm seeing the market and using the strategies that are inside of the eap training program and on top of all of that you'll be receiving what i call priority email and be able to ask me any questions you have about the strategies in the course forex in general or the course in general and finally as the topping on the cake the program comes with a 60-day money-back guarantee so if you have went through the course and applied what you've learned in order to try to create a consistently profitable trading plan before ever trading live which is so important and you find that it did not help you in the way you thought it would just ask for your money back and we will gladly send your money back within 60 days so if that's something you are interested in feel free to click the link in the description that says eap training program if not that is totally fine too but keep it locked here on youtube by clicking the subscribe button so you're always notified about the valuable free content we come out with here follow us over on instagram for early release content click that like button if you enjoyed the video to help out with the youtube algorithm comment below with anything you'd like to see next and we'll put that into one of our next videos i look forward to seeing you next time hope you have a great trading week and i will talk to you very soon

Channel: The Trading Channel

Views: 489,843

Keywords: forex, forex day trading, forex trading, make money online, forex trader, how to trade forex, how to make money, day trading, day trading for beginners, trading strategy, Forex trading strategy, learn to trade, how to day trade, how to swing trade, candlestick patterns, how to enter a trade, how to swing trade forex, forex swing trading, structure trading, support and resistance, best forex strategy, price action trading, price ation strategy, best forex entries, indicators

Id: _uXz5S0Udxo

Length: 33min 12sec (1992 seconds)

Published: Fri Aug 28 2020