Pure "PRICE ACTION Mastery" Course🔥 | 3+ Hours of Price action Content 🤯

foreign of a new course completely free of course exclusively on the concept and application of price action trading the course is designed in an orderly manner from the very basic to the advanced level as we move up the ladder I have accumulated a good chunk of the information from some of the best trading books trading blocks paid courses of some of the famous professional Traders and a few relevant online sites also I have taken a lot of effort to explain each Concept in a way that even newbie Traders can understand without much difficulty so I hardly welcome every asparing Trader to take a ride with me throughout this course so let's get started foreign [Music] of it the stock market is all about buying and selling demand and Supply sometimes we buy a stock and sometimes we sell one but just by buying and selling based on our instincts will not do any good for our trading account chances are we end up in losses and a worse case scenario we blow up our trading account that is why almost all the Traders try to find an edge in the market to remain profitable depending on the type of Trader you are you can choose between technical analysis fundamental analysis quantitative analysis and finally price action analysis the technical analysis primarily involves using different categories of indicators to predict the future price movements fundamental analysis on the other hand relies on the fundamentals of the stock or the company primarily focusing on the financials earnings Etc to make a trade decision similarly quantitative analysis utilizes the use of statistical tools to analyze the market data but if we talk about technical analysis in particular which is followed by majority of Traders the interesting thing that can be identified is that the indicators used for the analysis are derived from some of the fundamental inputs of the market namely the price and the volume think about it for a while which is better a fruit from our own home song or one with a heavy pesticide usage the former may not be very good looking and won't stay fresh for many days but it's healthy while the latter may look appealing to the eyes and stays fresh longer but it's not even remotely good for our health likewise too many indicators for our trading is not very good for our trading account this is because the indicators are a result of so many intermediate processing of the basic price and volume so that the pure behavior of price and volume are lost and at the end of the day you make your own conclusion without listening to what the market has to say I'm not in any way concluding that technical analysis is not good or that the indicators are instead what we have to understand is that we have with us a Gold Mine by by the name of price which if studied properly can help us identify what the market is doing this study of price and Its Behavior is known as price action so unlike indicators fundamentals or algorithm price action tells you what the market is doing and not what you think the market should do the price action focuses mainly on the recent and current prices it is also dependent on the overall Market trend and finally on the price structure of the market we will talk about each one of them in our upcoming episodes now price action is not the Holy Grail or the mantra for ultimate success in stock markets because trading is mostly about your psychology and implementation and not about a single special strategy the goal for most Traders is to maximize the trading profits through a style that is compatible with their personalities without that compatibility I believe that it's virtually impossible to trade profitably for a long term but if you devote a good amount of time to learning price action trading will trade with cleaner charts without hell lot of indicators will also be able to pinpoint your trade entries and exits with better precision foreign this video will focus on how the market price moves or how the prices are made to move in a particular Way by some big players you might have heard people saying things like history repeats itself price memory and stuff like that what they really mean is how the market price moves in a specific pattern time and time again now the question is why does the price of a stock go up or down there can be different answers to this particular question like it could be the news or government passing some Bill a new monetary policy by the RBI some legal issues ETC but at the center of it all the one thing that makes the market movements are the earnings of a company even if a piece of very bad news related to a particular stock has come out but it has no direct impact on the earnings of the company then there might be a temporary noise in the stock for a short period but eventually the stock will recover but on the other hand stocks like Vodafone idea yes Bank Etc are victims of the news that directly affects the earnings of the stock and thus resulting in their crash in the stock market there are mainly two players in general number one are the retailers and number two are the institutions 90 or more of all the trading in the markets is done by institutions which means that the market is simply a collection of Institutions the institutions includes mutual fund houses Banks brokerage houses insurance companies Pension funds hedge funds Etc these companies account for most of the trade volume and they mostly trade on the fundamentals of the stock but now they are eventually shifting to the algorithmic side of trading what I mean to say is that the trading done by these institutions controls the direction of the market on daily and weekly charts and a lot of the big intraday moves or swings are also controlled by the big institutions it is not very surprising to know that almost all these institutions are profitable over time so the institutions are generally considered to be the smart money meaning they are smart enough to make a living by trading and they trade a very large volume every day no trade can take place without one institution willing to take one side of the trade and the other willing to take the other side the small volume trades made by the retailers can only take place if an institution is willing to take the same trade let me explain this if you want to buy at a certain price the market will not get to that price unless one or more institutions also want to buy at that price similarly you cannot sell at any price unless one or more institutions are willing to sell there because the market will only go to a price where the institutions are willing to buy and others are willing to sell I hope the point is clear most individual Traders or retailers have no ability to move the market the market will only test a particular price if one or more institution believes that it is financially sound to sell at that price on the other hand there are other institutions which believes that it is profitable to buy there so to be very precise at every tick in the stock market institutions are buying and other institutions are selling and all of them have proven systems that will make money by placing those trades so the main point to be noted or the main point that I want to convey is this you should always be trading in the direction of majority of the institution or like the professional say follow the footprints of these institutions because they control where the market is heading or simply they move the market now let us look at a new scenario you have found out a new trading strategy that makes money and it works perfectly but at some point it stops working after a while many of us might have gone through this situation the reason for this is simple the markets are changing it is never fixed but it is always in transition from one stage or one phase to the other this simply means that if you are using a trend trading strategy today and you continue to do that then at some point you will lose money in range markets and similarly if you are using a range trading strategy and continue using it for a while at some point you will end up losing the money in the trending markets the thing to understand is that the profitability of trading system moves in Cycles there are periods during which the trend following systems are highly successful and profitable then the market shifts from the trending to range price action that is when all the trend trading systems becomes unprofitable and the inexperienced Traders start making losses this is the reason why you see a lot of newbie Traders boasting up their p l during the trending markets while all of a sudden they disappear when the range Market arrives to sum it all up Market moves in three phases or three stages number one is the uptrend or the advancing stage number two is the downtrend or the declining stage and number three is consolidation stage so the consolidation stage can be further subdivided into accumulation phase and distribution phase so let us look at how the market transition from one phase to the other let us start with the accumulation phase the accumulation phase is when the big institutions start buying a particular stock this institution deals in huge bulks of money therefore their order sizes are expected to be huge so think what happens if they buy such huge quantities in a single order the prices would react suddenly and the prices would just shoot up they will be able to purchase the stock at a specific price only if there is enough liquidity in the stock else the orders will be matched at higher prices which will in turn reduce the profitability of the institution but they will not allow this to happen so instead of placing a bug order the institution places small orders secretly and this is called as position building in short we can conclude that during the accumulation phase the institutions are building up the position slowly and silently and during the accumulation phase the market tends to be in a range or this range bound and the trend Traders would face losses if they don't adapt suddenly so how will you identify the accumulation phase generally the accumulation phase occurs after the price has fallen down or simply it happens after a downtrend the accumulation phase can also be viewed as an area of low volatility or an area where there is a lack of interest between the Bulls and the Bears moving on to uptrend or the advancing phase this stage occurs usually after the price breaks out of the accumulation phase here's what happens in the uptrend or the advancing phase after building up the positions the institutions take the market higher so there is a bullish sentiment in the market all along the institutions will not book profits anytime soon so the uptrend can last anywhere from months to even years it is during this phase that the trend Traders make a note of profit we will discuss on how to identify an uptrend and how to approach your trades during an uptrend in our upcoming videos but now let's move on to the third phase which is the distribution phase the distribution usually occurs after the prices have rised to a good extent and the distribution phase looks similar to an accumulation phase where the market remains in a Range here's what happens in the distribution phase the institutions begins to distribute or cell or Square of their positions after they have made a good chunk of profit on their initial Investments similar to the accumulation phase the institutions sells the shares secretly and slowly so that the market doesn't fall immediately creating a panic situation so they will sell at a range of Target prices and that is why the distribution phase is also range bound and the trend Traders don't stand a chance if they don't adapt suddenly in the distribution phase the volatility tends to be high due to the Panic of an imminent crash or fall in the prices the last and the Final Phase is the downtrend or the declining phase the decline phase happens when the price breaks down of the distribution phase during this phase the selling pressure is high and the Market Outlook is bearish most Traders try to cut their losses and those who don't well they remain as long-term investors in the hope that the price will come back up the volatility tends to be very high due to panic and fear in the market so this is a good time for Trend traders who can short the market and get hold of good profits this is how the faces look like in a chart and it is interesting to note that these stages continue to appear time and time again as cycles and if you could spot them early then you have an edge over the market and eventually you can use a suitable strategy that works in the situation we will talk about different Trend trading and range trading strategies in detail in the upcoming videos and we will also understand how to design your trading strategy according to changing market conditions foreign [Music] we come across innumerable apps like Tick Tock Instagram Etc where the creators introduce a new idea every day and some becomes so hyped and popular that others begin to perform the act it becomes a trend or the ACT is said to be trending even YouTube has a trending section that features the most popular videos at a specific time this trend stays for a short duration that is for a few days to a few weeks so this is a short-term Trend similarly the stock markets also have trends that may range from short-term Trends to medium term Trends to even long-term trends depending on the duration which the trend persists in the market so in the stock market scenario a trend is the overall direction of the market during a specified period of time in the stock market there are mainly three types of Trends number one the uptrend number two downtrend and number three sideways Trend there are different methods to identify the general trend of the market but the most popular ones are by using the trend lines for visualizing the price rings and the other method includes the use of indicators like moving averages average directional index Etc but we will limit our discussion to only the first method the simple reason being this is a price action course and we want to trade with cleaner charts and minimum confusion before moving on further let me talk about a situation where there are three stock market participants an investor a swing Trader and an intraday Trader if I ask them what is the present Market Trend do you think all of them will have the same answer not necessarily investor could say it's a bullish Market while the intraday Trader would say it's bearish trend even the swing Trader can say there is no Trend at all or the market is sideways what is the reason for different opinions why do different people have different views on the market Trend given the same charts and same conditions at the same instance the simple and straightforward answer is the time period that each trade are used for their analysis the investor might conduct his analysis on the monthly or yearly time frames while the swing Trader might be using the weekly or daily time frames and for an intraday Trader the time frame might be 15 minutes or 5 minutes therefore as the time frame changes the analysis changes so does the perspective on the market trends so this is my first conclusion that Trends are relative in nature that is Trends are dependent on time frames and it change with time frames there is so common saying in the market that trend is your friend I will try to bring clarity as to why this statement is relevant for our trade success in the last episode we have talked about the four different faces or stages of the stock market price movement now let us analyze in detail how the price moves for that let's take an example of a rubber ball for instance and let's bounce the ball once the board would not just take off and go to space right it will come back to the ground and bounce back up similarly in the stock market also the price does not move indefinitely up or down there will be Direction changes once in a while this nature of price oscillation is called as price swings a typical price ring will consist of an Impulse move and a corrective move the impulse move is the strong move with stronger price action candle while the character moves in a trend are generally weak or dull moves opposite to the direction of impulse mode moving on let's understand this by taking up each of the trend types and learning how to draw the trend line for analysis by definition uptrends are marked by Rising data points such as higher swing highs and higher swing lows so here the price moves up in such a way that the swings also move up making a recognizable pattern during an uptrend the impulse move is a strong up move with a series of strong bullish candles which forms a higher price than the previously formed High the impulse move is followed by a corrective move in the opposite direction of the prevailing bullish Trend the corrective move usually includes a lesser number of weaker candlesticks that forms a lower price but this lower price is still higher than the previous lower price formed the corrective moves are generally due to profit booking by some Traders as a rule of thumb a trend can be confirmed as an uptrend only when the price has made at least two swings on the upside after finding out put all the higher lows all we have to do is to draw a line connecting all the swing lows or the higher nodes that we have plotted this line connecting a series of higher lows creating a support level for future price movement is called as a trend line it is from the vicinity of this trend line that future price movements would reverse or break out and therefore it is a very important trading zone or an area of value the trend line is an area from which we can trade the impulse swing moves or simply we can place a buy order when the price reaches the trend line after identifying all the higher highs we can draw a line connecting the series of higher highs or swing highs that we have plotted and this line is called as the trend channel line which will act as an area of resistance for the prices and we can trade the corrective moves from the trend channel line or simply we can place a cell order when the price reaches the trend channel line coming to downtrends by definition these are marked by Falling data points such as lower swing lows and lower swing highs in a downtrend the price moves down in such a way that the swings also movable making a recognizable pattern so during a downtrend the impulse move is strong in the downward Direction with a series of strong bearish candlesticks which forms a lower price than the previously formed low the impulse move is followed by corrective moves in the direction opposite to the prevailing bearish Trend the character move usually includes a lesser number of weaker or dull candlesticks that forms a higher price but this higher price is still lower and the previous formed high so the corrective move is generally due to profit booking by some traders who took a short trade earlier in the trend so a trend can be confirmed as a downtrend only when the price has made at least two strings on the downside that is two impulse move and two correcting moves should be there now after plotting all those lower high points we can draw a trend line connecting all the swing highs or the lower highs that we have plotted the trend line so font acts as an area of resistance from which we can treat the impulse mode to the downside or simply we can place a sell order when the price reaches the trend line as in the previous case if we plot the lower lows and then draw a line connecting all these lower lows we will get a trend channel line which will act as a support for the future prices and it is from this trend channel line that we can place buy orders to trade the correct you move so by now you might have the realization that the character moves are weak moves opposite to the existing Trend while the impulse move happens in the direction of the trend and is generally a series of stronger candles this is the reason why we should trade the impulse move during trending market so that the probability of profit is high this is the reason why trend is your trend as we move on it is very important to understand when a trend will end and when the consultation will start this can be identified by the use of Swing transition during an uptrend whenever the price breaks the higher low for the first time then it is an indication that there is a transition in the uptrend similarly when a price breaks the lower highs in a downtrend it indicates in the transition from downtrend to a sideways Trend or even an uptrend the final type of trend is not actually a trend but it is a situation where there is no clear Trend in the market where the market stays inside the range we have talked about ranging stages of the market as accumulation phase and distribution phase so the price movement between two price levels is called as sideway strains there are three types of sideways Trends number one is the range contraction number two is the range expansion and the last one is the Triangular range let's talk about range contraction first during range contraction the levels shrink and the price action becomes almost neutral or flat this shows the lack of any interest between buyers and sellers the volatility in the market also drops so range contraction happens when there is a shortening of the price bars or simply the Candlestick sizes reduces the high and low range or levels get narrower or closer to each other and this is a strong indication that a trend reversal is coming so that is if there was a prior downtrend now the trend might change to an uptrend but it is just an indication it is not for sure during a range expansion as the name suggests the 11th will expand and the price action starts becoming visible so range expansion is associated with lengthening of the price bar or the size of the candlesticks becomes larger and the high and low range or the levels gets wider so range expansion usually indicates a continuation in the price pattern that is if there was a prior uptrend it is an indication that the uptrend might continue in the future but it is not for sure now the final type of sideways trend is the Triangular range where the price shrinks or expand not between two fixed horizontal levels but rather an expanding or converging level this is a topic which needs broader discussion so we will talk about triangle patterns and how to trade them further forward in this course even though the trend lines do a good job of showing overall Market Direction one issue with trend line is that they often need to be redrawn for example during an uptrend the price may fall below the trend line but this does not necessarily mean that the trend is over or there is a breakdown the price may move below the trend line and then continue Rising so in such an event we have to adapt ourselves and the trend line needs to be redrawn to reflect the new price action drawing the trend lines is easy but there can be errors in drawing the trend line so that is why just using trend lines exclusively to determine the trend is not really advised because most professional Traders also tend to look at other indicators like moving averages or average directional index to confirm the market trends because the more the confirmations the better the analysis so it's finally time for the most important part of the video that is identifying the strength of a trend so generally Trends can be categorized into two types depending on the strength that is there can be a strong Trend or there can be a dull or weak trend the main parameters to keep in mind while categorizing the trends based on their strength includes a few parameters number one is at least two or more swings has to be there or there should be two or more points of contact in the trend line then only a trend is considered to be valid number two is the slope so the slope of a trend indicates how much the price should move each day so steeper the slope the better the trend the slope is simply the angle between the critical price level during a consultation and the trend line so if it was an accumulation phase and the price breaks out to an uptrend if we take the angle between the trend layer and the top price level of the accumulation phase then we can easily find out the slope of the trend so if the trend is too flat strength is considered to be weak or dull the third parameter is the time of the trend it is actually about the time required to form a trend because the trend took months to form then it is considered to be more stronger than a trend which took just weeks or days to form so more the time a trend takes to form the more stronger it is we can also categorize the trend based on the duration like it could be a short-term Trend an intermediate Trend or a long term trend the longer the trend Remains the stronger it is so these are a few parameters to identify the strength or the weightage of a particular trend [Music] in this video you will learn how to read Candlestick patterns like a professional Trader this is even if you have no experience with candlesticks patterns beforehand and here's the good thing I will explain a simple method to read the Candlestick patterns without memorizing a single pattern that's right you don't need to buy heart any of these patterns so let's get started candlesticks are a way to show the market prices of a security on your chart it's not the only way to represent it we have other ways of protein them like bar chart lion chart Etc but the candlesticks are one of the more popular approaches the Candlestick usually consists of two parts a real body and shadows or wicks also when you're dealing with candlesticks you must be aware that there is a four price point for every candle on the chart these price points are the opening price the high price the low price and the closing price for the same period or simply we call them as ohlc the real body of the Candlestick shows the open and close prices while the Shadows on the top and the bottom of the body shows the high and low prices for that particular period the Shadows looks like Wicks and hence they are called as candlesticks the upper Wick signifies the high of the period and the lower weight signifies the low of the period the high is the highest price point of the candle at a particular time and the lowest the lower price point of the candle at a particular time depending upon the time frame you are trading on candlesticks generally have two popular colors green and red sometimes it might be white and black depending on the settings that you use but most commonly it's green and red and a very important feature is that for green and red bars or candles they're opening and closing prices are at different locations the color of the body of the candlesticks determines if the Candlestick is showing a bullish or bearish Price movement that is if the opening price is less than the closing price then the body of the Candlestick is green or white similarly if the opening price is more than the closing price then the body of the Candlestick is red or black the longer the real body the more bullish or bearish the candle is there are so many Candlestick patterns out there ranging from engulfing candlesticks shooting stars hammers spinning tops dojies Etc to name up very few so if you were to learn all these patterns it would seem very hard and confusing but don't worry because we have got an easy way to understand what each Candlestick means and identify the strength or priority of each of them to learn this Method All you have to understand is just two little things number one is the Open high low close or the ohlc of the candles and number two is to figure out who is more dominant in the market whether it is the Bulls or the beers or simply the buyers or the settlers at a particular time period let's start our discussion on the first category of candlesticks these candlesticks are called as marbosus let's look at the first type since the candle is a green one it is a candle it has a big rail body but has no Wicks or Shadows on either the upper or the lower end so we know that the longer the real body the more bullish the candle is the ohc of the candle is as follows since it is a bullish candle the buyers are under control so the closing price is greater or higher than the opening price since there are no weeks on either side the high and low prices coincides with the close and open prices respectively as a rule of thumb the wick of a candle indicates price rejection or opposition by the opposite party in case of a bullish marabosu the open and low prices coincides and similarly the high and close price coincides which means that there is no selling pressure from the base that brings us to the conclusion that bullish marabusos are the strongest bullish candles we can find on a chart but we have to be verified flexible with patterns that is we have to first quantify and verify because in the market the patterns generally don't occur exclusively the same way as it is mentioned in those textbooks so let's look at this green Candlestick pattern where the price has closed higher for the period it has opened lower and closed higher which means it is a bullish Candlestick and there is a small lower Wick and a small upper whip but the high and low prices are so close to the open and close prices which means there is a very weak selling pressure from the Bears so in real market conditions we can actually consider these candles as bullish marabosos because even though there was a slight selling pressure it is still a strong bullish candle now moving on to bearish marobosu which is similar to the bullish marubosus but this pattern is a strongest bearish batter for a bearish candle the open prices are higher than the closing prices this is because the sellers are willing to select all the available prices a bearish marabosu also indicates that there is so much selling pressure in the that the participants actually sold at every price point during the day so much so that the stock closed near the low point of the day in case of a bearish marabosu the high price and the open price coincides while the low and closing prices coincides the candle has a big rail body with no Wicks on either end indicating a strong selling and a complete lack of buying or or position from the booze as mentioned earlier we can be a little bit flexible when trading in real markets now let's look at the second category of candlesticks the pin bars the first category of pin bars are the Hammers and hanging man talking about hammers a pin bar is said to be a hammer when it appears at the bottom of a downtown Trend the hammer consists of a small real body at the upper end of the trading range with a long lower Shadow the longer the lower Shadow the more bullish the pattern is generally the prior trend for a hammer should be a downtrend as mentioned we should visualize the hammer pattern in the following manner the market is in a downtrend so bears are in absolute control over the markets when a hammer forms the price goes even lower and it forms a new low price the price action of hammer formation indicates that the Bulls attempted to break the prices from falling further down which simply means that the Bears tried to bring the market lower but they did not succeed in their attempt to do so because the Bulls generated a lot of buying pressure so much so that the price closed near the open of the candle this action by the bulls has a potential to change the sentiment in the stock so we can say that Hammer is a reversal pattern and a hammer pattern could indicate a bullish reversal in the market now moving on to the hanging man a pin bar is said to be a hanging man when it appears at the top of a trend similar to the Hammer pattern the hanging man is also a reversal pattern except the fact that it is a bearish reversal pattern a hanging man signals the market High here's how you should visualize the hanging man pattern the market is in an uptrend hence the Bulls are in absolute control over the market a hanging man at the top of the trend indicates that the Bears have managed to make an entry this is emphasized by the long lower shadow of the hanging man which signifies that bears have tried to break the stronghold of the Bulls because the Bulls tried to push the prices higher but the Bears managed to bring in so much selling pressure that the price closed closer to the open price creating a small real mode and there is a high probability that the market Trend would reverse and the hanging man pattern is a good indication that bearish sentiment is about to Prevail in the market and it is a good time to short the stocks now the second category of pin bars goes by the name of shooting stars or inverted hammers depending on where it is formed on the chart talking about an inverted Hammer generally occurs at the end of a downtrend this is the weakest bullish candle that you can find in the market we can see that the range of the candle or the real body is very small also the open and closing prices are close to each other the long Wick suggests that the Bulls try to take the price higher but there was a big selling pressure by the Bears so it indicates that the weak buyers are in control of the market and there can be a shift in the sentiment so we can say that even though a green candle was formed the sellers are actually in control of the market the inverted Hammer is generally accepted as a price reversal Candlestick pattern just like the hammer where the trend shifts from a downtrend to an uptrend but if you were to ask me which signal would you trade the hammer or the inverted Hammer I would definitely go for the hammer pattern because the hammer pattern gives a much stronger indication of a trend reversal than an inverted Hammer pattern this is also due to the difference in selling pressures in both these cases now moving on a pin bar is said to be a shooting star when it occurs at the end of an uptrend indicating a price reversal similar to an inverted hammer it also has a real body with the open and close prices close to one another it also has a large wick on the upside indicating that the Bulls tried to bring the price up but they were overpowered by the Bears who push the price below the open price so the shooting star is a strong bearish pattern it is stronger than the hanging man pattern that is formed in the uptrend this is because the sellers were more in control when the shooting star was formed rather than during a hanging man pattern now let's move to the third category of candlesticks we can clearly see that the candle server small real body a small real body indicates the open and close prices are quite close as we have discussed so far the upper and the lower Shadows are almost equal in length since the open and close prices are close to one another the color of the candle doesn't really matter now talking about the upper Shadow the presence of the upper Shadow tells us that the Bulls did make an attempt to take the market higher however they were not successful in their attempt if Bulls were truly successful then the real body would have been a long green candle as seen before in case of marabosus hence this can be treated as an attempt by pools to take the market higher but they were not successful at it similarly the presence of lower Shadow tells us that the Bears did attempt to take the market lower however they were not successful in their effort if they were really successful then the real body would have been a long red candle as in case of a bearish marabosu hence the Bears attempt to take the market lower can also be treated as an attempt which was not successful so here neither the Bulls nor the Bears could establish an influence or a superiority in the market which is evident from the small Trail body what this means is that there is an indecision between bulls and bears they are not able to clearly influence the market Direction so this type of candlesticks is called as spinning tops which are actually indecision candlesticks now let us consider two situations where spinning tops can be formed and let us discuss what the outcomes are now what if the spinning tops were to occur in an downtrend so during a downtrend the Bears are in absolute control as they are able to take the prices lower or spinning top in the downtrend indicates that the Bears could become consolidating their position before resuming the trend it can also be seen as an attempt by the Bulls to arrest any further price for but are they really successful because if the Bulls were to be really successful it would have resulted in a strong bullish candle rather than a spinning top so clearly there are two foreseeable situations or outcomes with equal probability in this case number one either there will be another round of selling and the market will continue with its slow number two the markets could reverse its directions and the prices would increase as a Trader you need to be prepared for both the situations that is for either a reversal or a continuation an obvious situation persist in the uptrend also now lastly let's talk about the dojis so dojis are similar to spinning tops except that it does not have a real body this means the open and closing prices are equal so doji is an important Candlestick pattern as it provides very crucial info informations regarding the market sentiment by a textbook definition doji suggests that the open price should be equal to the close price which indicates that the real body does not exist the upper and the lower Wicks can be of any length and the color of the candle does not really matter because the prices are very close to each other the dojis have similar implications as spinning tops as we have discussed just now so whatever we have learned from spinning tops a place to doji's as well so doji also conveys indecision in the market meaning that the bulls and bears are confused whether to take a trade both dojis and spinning tops ask the trader to remain cautious in the market there are a lot of other candlesticks but those mentioned so far is enough to understand the idea of similar candlesticks that forms in the chart now let us arrange the candlesticks from strongest to the weakest so first of all we'll consider the bullish candles and arrange them in the order of their strength moving on let us arrange the bearish candlesticks in the order of their strength from strongest to weakest a gentle reminder at the end of the video would be not to trade these candlesticks in isolation because more the confirmations the better the key thing that I am trying to bring across is that you understand what each individual Candlestick pattern mean and afterwards you can use these tools and techniques that you have learned and make it a part of your trading plan when you consider different elements of price action which we are going to learn in the upcoming episodes of this training thank you in today's episode our discussion will focus on one of the Hot Topics in this price action course the simple reason being this topic is what helps a price action Trader identify the critical price levels and decide with the entry targets and stop losses the support and resistance are one of the key factors that distinguish between your success and failure in trading starting off the support and resistance are specific price points on a chart which is expected to attract maximum amount of either buying or selling the support price is a price at which one expect more number of buyers than sellers likewise the resistance is a price at which one expect more sellers than bios so as the name suggests the resistance is something that stops the price from pricing further this is a textbook definition that you can find in any standard trading book let's dig deeper into this topic let us understand why some price points behave in this particular manner we have talked about the fact that stock market runs on demand and Supply this very concept is what causes some price levels to behave as a barrier or some as a booster for the prices take an example of a stock trading at 125 rupees let us say that an institution thinks that the stock will do good in the upcoming quarters but the fair price is 100 rupees and not 125 rupees in order to achieve the fair price they take the market down to 100 rupees where they slowly and steadily build their positions the price seems to respect the price level of 100 rupees this level where the demand for the stock is met and from there the prices will start to rise is called as the support level the support level can also be seen as a price level which holds the prices from falling further down it is also an area where the big buyers will buy the stock due to a large number of buy orders at the support level and the lack of sellers to match all the orders the price starts rising from the support level a price level is said to be a support level when it is below the current market price now moving on with the same example the price rallied from 100 rupees to 200 rupees in a matter of months this is when the institution thinks of squaring of their position or selling the stock to make a profit they do this by placing a large number of small sell orders so that the supply meets the demand or in other words they ensure that there are enough buy orders at the same price at which they want to sell so that the profits are not reduced this particular price level will look like it is stopping the prices from moving further up so this level is known as the resistance level the number of sell orders in this price level is higher than the number of buy orders or the supply is higher than the demand due to which the prices start to fall from this level a price level is said to be a resistance level when it is above the current market price as a Trader working in any time frame it is important to figure out the critical levels where there was some price action by identifying the important price levels you can make more successful trades using the price action technique let us learn how to draw supports and resistance in our Char by a simple four-step process in short these four steps are loading the data points and zooming out identifying the obvious price action zones aligning the zones and fitting a horizontal line now we can take a look at each of them step one is to load the data points and zoom out after selecting your preferred time period for the trades you want to zoom out your charts this is because we want to see the bigger picture once you can see the big picture it is much more obvious to your eyes which key levels should you be paying attention to so if your objective is to identify the short term support and resistance for intraday trading then you must load at least three to six months of data points and if you want to identify the long-term support and resistance for swing or positional trades load at least 12 to 18 months of data points so when you load more number of data points the chart looks more compressed moving on to the second step we have to identify the obvious price action Source a price action Zone can be described as sticky points on this chart this is because the 11th sticks out or is easily visible to your Naked Eyes so if the level sticks out the level matters or it is a level of importance but if you are doubting your eyes and asking if it is a level or not then it's better to ignore it because it is not an important level just to give you better Clarity you can identify a critical level when the price has displayed at least one of the following behaviors that is number one the price hesitates to move up further after a brief and number two the price hesitates to move down further after a brief down move and finally number three when sharp reversals occurs at a particular price point these are some of the ways you can figure out the price action zones now moving on to step number three aligning the price action Source now when you look at a 12 to 18 month chart it is very common to spot many price action zones by the method that we have just discussed but we don't have to track down all these price levels the trick is to identify at least three price action zones at the same price level but a critical point to note while identifying these price action zones is to make sure that these price zones are well spaced in time meaning there should be a good time difference between the two level spotter the more the distance between the two price action zones the more powerful the support resistance identification or we can say the support or resistance is a major price level now after identifying and aligning your price action zones we move on to the step number four that is a horizontal line connecting the price action source that we have identified with the horizontal line after Drawing the Line you have to adjust your level to get the maximum number of touches the more touches the better because the more number of touches the stronger the price level will act as a major support or resistance so how do you tell that you have drawn a support or you have drawn a resistance as we have discussed if the market price stays above the level that we have drawn it acts as a support similarly if the market price is below the level that we have draw then it will act as a resistance here's an important mistake that most Traders make while plotting the support resistance levels the approximation risk generally when identifying the support resistance you run into approximation risk the thing to understand is that the market will not respect just a single price level but rather a group of corresponding price levels or an area of prices so hence we have to give a room for error which means that the price level should be depicted in a range and not just as a single price point which simply means that rather than drawing a single line to plot the support resistance we should represent it as a zone or an area where there is a price action happen so this is a very important idea to remember when you are placing the targets and stop losses while trading the support resistance levels especially if you are keeping stop losses with respect to a single support or resistance line we might end up eating your stop losses often let us talk briefly about how reliable the support resistance are the support and resistance lines are only indicative of possible price reverses that is by no means we can be certain that a reversal is going to happen which implies that the support and resistance alone are not the Holy Grail to success in price action trading rather a few optimization techniques will help us identify high quality traits remember the fact that when you see quantity the quantity will always be compromised but this compromise is worth taking the idea is to identify quality trading signals as opposed to identifying plenty of worthless traits and ending up bursting your pockets this leads to an important idea so what if we have a checklist or a framework for every trade that we consider the checklist would act as a guiding principle before we initiate the trade the trade should comply with the conditions specified in the checklist if it does we take the trade else we drop it and look for another trade opportunity that complies with the checklist not only that we should not make a habit of just trading with a single confirmation that is if the price reaches a support or resistance we should not jump into the conclusion that the price would reverse the direction and we should enter the trade does not work like that instead what we should do is that we should look for confirmations in the previous episode we have talked about price action candles which are very important it is generally a very good idea to use some of these price action candles along with the supports and resistance to actually make a trading system that is a Confluence trading system which is much more efficient than using a single indication or a single confirmation so make your own system and create a checklist because the checklist has another Advantage it helps you to be disciplined because discipline as they say makes up 80 percentage of the Trader's success so in my opinion the checklist forces you to be disciplined it will also help you to avoid taking an Abrupt and Reckless trading decision so we will continue this discussion on support resistance in the upcoming episodes because it is an extensive topic requiring a deeper understanding thank you in the previous episode we have discussed the basic stuff regarding supports and resistances in this video we will go a step further seeking the depths of support and resistance levels we will talk about how to identify if a level will break or not how to approach our trades using supports and resistances that is if we should trade a breakout or should we trade a reversal and finally we will learn to find trades that other Traders fail to notice let's get started right away without wasting any time the first and foremost question is how to identify when a support or resistance will break to get started when you see a series of higher lows into a resistance you want to avoid selling at the resistance the reason is very simple let me give you an example let's say you have a huge hammer in your hands and it's really powerful and right in front of you there is a brick wall now you take the hammer and smash against the wall many times over and over again now let me ask you will the brick wall hold or is it likely to break well Common Sense tell you that the brick wall is likely to break and this is exactly the same concept when a resistance level is tested multiple times within a short period of time the chances are the resistance will break now I'm not 100 percentage sure that it is going to break because no one can be 100 percentage sure in trading but the odds of resistance breaking are high and likewise when you see a series of lower highs into the support the chances are the support level is going to break this is because the prices hit the support level multiple times in a short duration of time we will expand this idea further in this video when we will talk about breakout rates moving on to the most important question how to find the best support and resistance areas to trade we can approach this question with two trade ideas the breakouts or the reversals we will understand when one should take a breakout trade and when to take a reversal trade now let's start with the idea of trading reversals the most important question associated with this type of reversal trade is how do you know that a purchase particular level is likely to hold only if the support or resistance level holds can you enter a reversal trade otherwise you will end up in the wrong side of the trade and you will incur losses in order to trade reversals I want to share with you a few tips to bear in mind the first and foremost thing is that you want to see a power move or a momentum move or a strong move into the market structure now what this means is that if you have drawn a area of support or resistance you want to see a strong move into the level by strong move I mean big or large bodied candles which in turn means that for an area of resistance we want to see a strong bullish candle coming into the area of resistance and in case of a support level you want to see a strong bearish candle coming into the support now this is what I mean by a power mode or a momentum move I know this sounds counterintuitive as to why one should Trader reversal when there is a strong momentum move so you can ask me why do you want to sell when there is such a strong bullish momentum into the resistance and also why do you want to buy when there is such a strong bearish momentum into the support level right now don't worry because as we move on we will find clarity as to why I am talking about this now the second tip that I have to give you is that you want to see a strong price rejection at the area of value that is the area of support or resistance you want to see a strong price rejection the price rejection can be in form of a pin bar the pin bar may be a shooting star or a hammer Etc the idea is to see a long Wick where the price gets rejected from the particular level that we are considering let's say this in case of resistance a big bullish candle comes into the resistance and suddenly it gets rejected and the stronger the rejection the better and that is exactly what you you want to see let's take our discussion a little deeper and understand it closely initially I have told that you need to see a strong momentum or power move into the area of support or resistance let me explain why we want to see large bodied candles into an area of support or resistance now let's say when you look at the resistance and when you have a strong move coming to the resistance level at this point ask yourself what exactly a resistance is so in the previous video we told that resistance is a price level which stops the price from moving up or simply it is a level where the supply is high now also think about the fact that where exactly will you face an opposing pressure or simply where do you think will the buyers come in so that they could buy at good prices so if you think about a good price that the buyers would come in and if you look at the chart the chances are that that buyers would always love to buy at an area of support so it is obvious from the market structure that the buyers would wait for the price to retest or reverse to the particular support level so that they can buy or they can go long further the price rejection at the resistance indicates that the buyers are not willing to buy at higher prices and this is exactly the best place to initiate a short trade the other reason being the only place where you have to be afraid of the buyers coming back into the market is the support level the advantage of taking a short tray that the resistance is that you can leverage the difference between the support and resistance level so as to obtain a higher reward to risk ratio however on the downside if you don't get a strong move or a momentum move into the particular level instead what you get is a choppy move with a lot of swings like this then it is not a good idea here to short on the resistance we can ask the same question here also where will the opposing pressure come in that is where will the buyers come in so as to get a good buying price well this time around the bias could potentially be at these swing lows what this means to a Trader who is looking to short at the resistance is that as the price approaches to these swing low levels we will be facing opposing pressure that could turn the tide against you and you would not get a good reward to risk trade that is exactly why you don't want to go short when there is a type of stair stepping price action or a swing price action into your levels the reason being all these swing low levels are opposing pressures where the buyers could potentially come in and push the price against your trade now another reason why you want to see large candles or larger momentum candles into a particular level is a very simple idea often when there is a strong price move for example there is a strong bullish move into a resistance level most Traders just look to buy the breakouts I'm pretty sure that you have done it yourselves right so when there is a strong moment up you might be thinking let's buy the breakout the market is rallying and it will continue to Rally so the simple decision at that point of time is to buy now this is where the twist in the plot comes where will you put your stop loss now because you are taking a breakout trade it is pretty obvious that you will put your stop loss under the resistance or maybe in the middle of the range or somewhere in that close vicinity what is the importance of this now what this means is that if the breakout fails it is going to hit all these clusters of stop loss owners that is placed under the resistance and what exactly are these clusters of stop loss orders that are waiting under the resistance level they are simply orders to exit the market or Square Off the positions which were kept by those breakout traders who went long on this talk this in turn means that these are actually sell stop loss orders which will induce further selling pressure in the market no more stronger the bullish move is into the market structure more breakout Traders will enter the trade and there is more buy and more buying in turn means more selling stop loss order behind the resistance and if there happens to be a price reversal or if the price reverses towards the downside it will hit all the sales stop loss orders of these breakout Traders another key thing to remember is that the longer the price is away from the particular level the better the trade is and why is it so the thing is the longer the price is away from a particular level the more it would attract the attention from higher time frame Traders for example if a price has not retested to rupees 150 level on a daily time frame for let's say three months or six months or even one year then you can be sure that this particular level can be seen on the weekly time frame or even the monthly time frame and because of this reason it will attract more Traders from the higher time frame to pay attention to these particular Nevers and that is why you get a strong price rejection or a reversal at a level which has not been tested for a long period of time alright now let's learn to identify breakout rates most newbie Traders trade more breakouts than reverses when they see a strong move they think that the market is going out to the space and they jump into buying the breakouts in The Next Movement there is a price rejection and there is a strong reversal in the opposite direction and all these Traders get caught on the wrong side of the trade which in turn resides in hitting their stop losses which forces the price to go even lower now when do you trade breakouts at supports and resistance this concept is actually pretty much the opposite of what we have just learned earlier in case of reversals so you know that price is likely to reverse at a support or a resistance when you have a strong power move or a strong momentum move into a market structure with a price rejection when you are looking at it from a breakout standpoint you don't want to see a strong momentum move into the market in this case what you want to look for is a price action that we have discussed right at the beginning of this video we have to look for higher lows into a resistance which somewhat look like an ascending triangle or we should look for lower highs into the support which somewhat looks like a descending triangle or even a third type where there is a price build up which is supported by a moving average now let me cover each one of them starting off higher lows into a resistance looks something like this and you can see the price looks somewhat like an ascending triangle pattern this is significant because it's telling me that the buyers are willing to buy at higher prices and the sellers are not interested or they are weaker the ascending triangle pattern tells me that the sellers in terms of their strength are getting weaker or they are getting feeble the thing is that the first time the sellers managed to push down the price by a good margin and in the consecutive times it got weaker and weaker and this is a sign of bullish strength that the market could possibly break out higher at this instance you don't want to be shorting at the resistance because number one you don't have a momentum move into the resistance structure and number two if you were to go short into the resistance there are swing levels which have been formed where the buyers could potentially come in and result is that you will hit your stop loss now similarly let's look at lower highs into the supports which are the same thing and it tells me that the sellers are in control and they are willing to sell even at lower prices and top of it from a price action standpoint it is telling you that the buyers are also getting weaker because this is a condition where the buyers barely pushed the price higher and the subsequent times it only moves smaller and smaller they were not able to push it any higher similar to the previous case you should not be going long in this case as the sellers are the dominant force and there is a higher probability that the market will break down and in case if you go long there are swing levels which were formed during the ascending triangle formation where there's a possibility that the buyers can come in which will in turn result in hitting your stop loss now you see the price action is quite interesting right where one side is getting stronger and stronger while the other side is getting weaker and weaker now let's discuss the third type where a build up is supported by a moving average in this case the price could just come to a key support or resistance level and it just console dates there now if you bring up the moving average like a 20 period or 60 period moving average you will notice that the moving average supports the price and vice versa pretty nicely it's like the market is really respecting the moving average and it is getting ready to break out so if you find a build up or a slight console rotation when the price reaches the support or resistance it is always an indication that the price is about to break down or break out now let's hop on to the final question how to find support resistance trading opportunity that most Traders fail to notice now it's very simple if you are a Trader who enters at a daily time frame then you have to go to a higher time frame like a weekly time frame and then you have to look for build up or a tight consolidation this is because when a higher time frame is forming a tight consolidation there are chances that you will be able to find support resistance trading opportunities on a lower time frame like a daily time frame in this case now taking another example if your trading time frame is a one hour time frame you should spot a tight consolidation on a higher time frame which in this case could be a daily time frame and if you are able to find a tight consultation in your daily time frame then it is likely that you will find a support and resistance trading opportunity in the lower time frame which is a one hour time frame this is a pretty good technique that you can use to find support and resistance trading opportunities in the market you can also use it for even shorter time frames like 15 minutes or even 10 minutes time frames the only thing to keep in mind is to appropriately select a higher time frame and find a tight consolidation in the higher time frame so that you can find the support and resistance trading opportunity in the lower time frame now that is it for this video I hope you have a good clarity about supports and resistance and how to approach your trades with supports and resistance after watching this video and the previous video foreign this price action course will not be complete if I don't talk about the market volumes throughout this course our Focus was strictly on prices for the success of price action in Market volume place a very pivotal be it the identification of Trends or patterns be it finding out the breakouts and false breakouts be it the entry or exit from the trade vol-in is a necessity as you may know golden is a leading indicator which means that it precedes the prices or simply before something happens in the price the volume will show the changes beforehand so our duty as a Trader is to find the relationship between the price and worry so as to get an edge over the market or even to predict the market moves beforehand so let's open right away without wasting any time basically volumes indicate how many shares are both and sold over a given period of time so the more active the share and the higher would be its own for example new design I2 by 100 shares of Tata Motors at rupees 485 at the same time I decided to sell 100 shares of Tata Motors at 485 or it can be different people who want to sell a smaller quantity at the same price that is 485 which are accumulated together to give you 100 shares that is let's say one of them has 50 shares the other one has 30 shares and the third person has 20 shares to sell at the same price of rupees 485 which will be matched with the buyer so basically there is a price and quantity match which results in a trade this means that you and I have together created a volume of 100 shares or you and the other three senders which we have talked about created a volume of 100 shares because if you notice overall 100 shares were transferred from the seller to the buyer now many people tend to assume the volume and count it as 200 because 100 were bought and 100 were sold this is not the right way to look at booleans because only 100 shares transport hands from one person to the other with that being said the volume information on its solve is quite useless for example we know from the NSE website that only and song Reliance India to this particular day is 16 lakhs 700 shares so tell me how useful is this information when read in isolation if you think about it it has no merit when used individually and hence it would actually mean nothing for our analysis however when you associate today's rolling information with the preceding Trend in the price and the preceding Trend in the audience then the volume information becomes more meaningful now I will show you a table that consists of four price to volume relations or different conditions and the related outcome that is expected under such conditions now before going ahead don't fall into the conclusion that if you understand the relations provided here you can trade it right away it doesn't work like that in order to use this ID and market conditions you should have a fair idea about the market structure and the participants the market of which you need to understand how the big players or institutions work and number two you need to have a good understanding of the candlesticks and their relevance at different price areas if you know these two things spot on then this will just be a walk in the park for those who don't have an idea I recommend you to watch these two videos beforehand that we have already discussed earlier in our course before we understand the price volume trim table in detail think about this scenario when we are talking about an increase in the volume what does this actually mean to a Trader what is the reference point or what is the metric to say if the rolling is high or the volume is low should it be an increase over the previous day warrant or the previous week's aggregate polling what is the reference point as a practice Traders usually compare today's volume over the average of either last 3 days or last 5 days or last 10 days or even last 20 days volume depending on the type of Trader they are and what exactly is their time frame for analysis generally the rule of thumb is that higher the time frame and higher the number of hole in bars or data taken to calculate the volume the more reliable the analysis is for the sake of this video let me consider the volins from or swing Traders perspective that is a one day time frame and 10 days of schooling data for the average volume measurement after the average volume measurement is done we can use it for the comparison of today's volume well today's swollen is said to be the average volume if it is equal to the last 10 days average voted now with today's hoonin is said to be higher volume or is said to be an increasing volume then it is is greater than the last 10 days average point and finally if today's volume is said to be a low volume or a decreasing volume then it is less than the last 10 days average for it in order to get the last 10 days average all you need to draw is a moving average line on the boarding bars and the job is done this feature is available on most charging platforms for free so you don't have to calculate it by yourself at the time as you can see in this chart the volume bars are represented as red and green bars and is placed at the bottom of the price chart the blue line that is overlaid on the Woolen bars indicate 10 and day average weight as you notice all the rolling bars that are over enable the 10 day average volume can be considered as increased storage although Destinies want this increased volume necessarily and why is it important well increasing volume means higher trading activity than usual which means more shares are being exchanged hand now who do you think will be responsible for this can retain Traders by themselves contribute to such high volumes single-handed Common Sense tells you that it is not possible and it's obvious that there is some institutional activity or large participation by some big players has taken place on the same note what does a lower than average swollen into a Trader it means that big institutions or big players are not interested in the particular stock at that period of time and the major warrant is contributed by the written participants and speculators so the symbol logic in stock market is to follow the institutions if you want to be success we have discussed this in the market structure episode okay then let's look at the thought process behind the wall and ground table when institutional investors buy or sell they do not transact in small chunks of small quantities for example think about an amazing Our Life Insurance Corporation of India which is one of the biggest Dia or domestic Institutional Investor now if they were to buy the shares of TCS would you think they would buy 500 shares or thousand shares obviously not they would probably buy 5 lakh or even 60 lakh or even more shares so what happens if they were to buy 5 lakh shares from the open market all in one go yes it would definitely start reflecting in the volleys and besides besides this because they are buying large chunk of shares the share price also tends to go up now this is where I have to remind you that institutional money is referred to as smart money it is perceive that smart money always make wiser moves in the market than post retail Traders so being smart otherwise they will not just buy all at once rather they will accumulate the shares in small quantities over a period of days or weeks or even months so as to get the decide price that they want to buy now most Traders have a misconception that when the volume is high the price will also move up or down with larger candles depending on the color and size of the bowling balls but this is a wrong way to understand the price point relation the thing is that volume is the number of shares that has shredded hands which can also mean that the motors can also be at a single price point for example let's say there are 10 000 biodas and 10 000 cellulose all at rupees 400 of a stock and let us say that the average volume of the stock is 8 000 for the last 10 days even though the 10 000 shares were exchange resulting higher than average volume for the particular day the price will not move up the single reason being all the orders are placed at the same price that is rupees 400 on the other hand the price where to move up with the increase in Boolean then there should have been more buy orders at higher prices that is buyers should be willing to buy at even higher prices in a similar case if the price were to go now then the sellers should be willing to send at even lower prices and it is at these instances we can leverage an increase in the bowling for our trade decisions and not otherwise the case is the same when the woman is smoked the low volume does not necessarily mean the price would not do anything this just got the number of shares exchanged hands are a lower number but there is still a possibility of biome of sending interest where the borders can be placed at higher or lower prices by the buyers or sellers respectively then there is a definite chance that the prices can do something but on the downside the big players are not interested in this particular stop and it leads us to the conclusion that the price move was supported by retail Traders which is actually evident from the lower volumes and hence foreign the smart money is the wisest idea that you can have as a Trader well then we shall discuss each of the four cases in detail with both price and volume are increasing this only means one thing but a big player is showing interest in the stock now going by that Ascension the smart money always makes smart choices and the expectation of the market tells bullish the institution build their position slowly and graduate but sometimes there won't be enough liquidity at a price where they want to buy or simply there are not many sellers who want to sell at the price that the institution wants to buy what this does is that it will in turn push the price higher keep in mind the fact that the quantity that these big players take for delivery is huge and therefore every rupee is worth lags for them and due to this reason the institution starts to sell some quantity which will in turn bring the prices down to where they want to buy because of this the Panic senders would send off the stock at the Foreigner price that the institution want and this phase of position buildup will look similar to an accumulation or consolidation in the chart once the institution finishes placing all the orders that is when the market actually starts to move higher and this is the time when they retail Traders actually start to notice that the market is starting to go higher and even they will start to join the party by buying the stock which will push the price even higher so this is the reason why one should look poor buying opportunities in the stock because the expectation turns bullish when both the price and more than increases now whenever you decide to buy ensure that the Golden's are substantial this means that you should be buying along the smart Market also also you have to look for bullish Candlestick patterns like hammers or engulfing candles to confirm growth rate entry we'll find more details regarding this online Candlestick video now all is well if you are an intraday Trader but if you are a swing Trader or an investor you will have to keep an eye on a third parameter which is either the delivery volume or the delivery percentage now delivery Boolean is the volume of the stock delivered to actual buyer out of the talked and traded board or in simple terms the shares which were taken as delivering will be auditing a day and year ago we need to go to both these parameters because the delivery volume would also include the BTSD trade that is by today sell tomorrow trades which will only give the correct picture so we also have to keep an eye on the delivery percentage but now since the BTSD trades are stopped we can consider any one of them we will get the delivery volume details on the NSE website I will put a link to it in the description box now the importance of delivery rolling is that it gives you the real picture of the interest of big players or video institutions if the big institutions start by they will take the shares for delivery if you can see a rice in the delivery bone-in or delivery percentage for a few days you will understand that there is a real buying intent in the market also understand that even if the overall traded volume is very high does not necessarily guarantee that the delivery rolling will also be high or simply it does not straight away mean that there is an interest from the investors can be seen as a heavily traded day and nothing else moving on to the second case what do you think will happen when the price increases but the moon in decreases think about the situation in the following terms number one why is the price increasing simple answer because the market participants are well you say right are there any institutional buyers associated with this rise in price the simple answer is it is not necessary that there should be institutional buyers associated with the price rise now the critical question how would you know that there is no meaning for purchase by the institutional investors or the big players Now using the basic rule if they were by then the volumes would have increased and not decreased in this case price increased but the Odin has decreased now what does price increase associated with the decreasing wall indicate it means that the price is increasing because of small retail participation and not really the influential buying by the big players hence what this price sold in relation is telling you is to stay cautious in the market because it will be a potential bull trap that is if you have taken a long trade there are every chances that the market can reverse and will the opposite direction to serving in your loss so when it comes to decreasing vol 1 but with increase in prices we should be cautious and not to take any long-term trades because the market is run by the retailers and there is no investor participation or enlisted interest in the stock going forward the third type is a decrease in price along with an increase in the voting this particular relation between price and volume sets a bearish expectation in the market we will discuss y first question to ask yourself one does a price decrease indicate a price decrease indicates that the market participants are selling the stock but on the positive knob an increase in the volume indicates the presence of smart money or even big institutions now clubbing both events together that is decrease in the price and increase in the bowling it simply implies that the smart money is selling the stocks they do this gradually so that the market participants won't Panic think about it what would have happened they place not sell or less all at once it would definitely be shown on both Woolen and price that is the prices will drop and the mobile homes would increase this will further induce panic in the retailers who will further start selling and because of this extensive selling the prices would even drop further and the institutions will not be able to sell the desired price that they want and this will directly affect their profits really badly being smart they will sell their shares in small quantities slowly and gradually and generate the ample liquidity to sell at the desired price that they want now going by the assumption that smart money always makes smart choices the expectation in the market is bearish and we should look for selling opportunities in the stock now whenever you decide to sell Ensure that the booleans are booked this also means that you should be selling with the smart buyer and also use bearish Candlestick pattern for your trade entry and confirmation if you are a swing Trader or an investor it is a good practice to look at the delivery roll-in or delivery percentage which in this case would be decreasing since the investors are selling their shares now an increase in the ruling does not necessarily mean an increase in delivery dollars moving forward to the final case where both the volume and price decreases ask the questions envelope why is the price decreasing simply because the market participants are sending this number two are there institutional sellers associated with this price decrease share about it now the most critical question how do you know that there was no meaning for cell owners by the institutional investors straightforward answer if they were settling then the volume would have increased but in this case the whole end decreased and what does a price decrease and a decreasing goal and indicate it means that the retail participation is the reason for the decrease in prices and not really the influential selling so this is the case where you have to be cautious if you are planning to sell the stock as it could lead to or possible be a tab that means a clear out shortened a stock there is every possibility that the stock can reverse and go against your trade now that is it for this video guys thank you now that we have finished with the fundamentals of price action from the market structure to the volumes we are all set to learn the different price action strategies that we can employ in the market under various market conditions the first one in the list is obviously breakouts you may ask why breakouts it is just that breakout trading can be exciting the price quickly moves in your favor and makes it seems like you're riding a wave and at the same time making a hell lot of money for you however that being said breakout trading is also quite painful for example you notice the price breaking above the resistance now the candles formed are big and bullish and you instantly get the fear of missing out so you decide to go long and as soon as you enter the trade hoping to get a strong move up the price does a 180 degree reversal and before you know it you bought the heist and now your stop loss is hit and if you have not placed a stop loss order you will see your account bleeding I hope this has happened to at least some of view this brings us to a very critical question how do I filter for high probability breakout rates and know which are the ones to avoid we have talked about the basic idea governing a breakout and a reversal in the sixth episode of this price action course I want you guys to watch that video first because this video will be a continuation of where we left off in episode 6 and so in order to understand the concept completely watch that episode and then attend this video well then a breakout occurs when the price moves Beyond a certain level not just any level but a level of importance or an area of value the area of value can be anything from a resistance a support to a trend line or a moving average the very idea of breakout trading is entering the trades when the price momentum is in your favor however no system in the stock market is perfect keeping this in mind let us first discuss the positives and shortcomings of a breakout trade I will explain in its pros and cons first of all let us talk about the pros of a breakout trades breakout trades comes with a limited risk which means that in many instances breakout rates present themselves during the consolidating market faces so the initial stop losses that we place for our trades may be relatively small according to the compression or the price range used for the market entry so in addition a confirmation of a trades failure may come very rapidly which offers an opportunity for a quick exit which simply means that if the trade does not go in our favor the price will reverse immediately and hit our stop loss we don't have to meet a whole day for the trade tool complete and also there is to reward associated with breakout rates is much better so that you can control your stop loss accordingly the second Advantage is that the momentum is in your favor if a breakout trade is successful large gains are possible so getting in on strong Trend early and be a profitable situation and the third Advantage is trait management which means that the market entry and exit are predefined with the stop losses and profit targets being identified before the trade so that our only job is to place the stop losses and targets and wait for either one of them to get hit now talking about the disadvantages number one is force breakouts so false breakouts are a considerable part of the breakout approach of trading no matter how sound your methodology used in identifying the breakout is or how would your system is in quantifying the market in many instances a signal may appear to be solid but it will end up lacking the intended participation or the increased participation from the market participants which is the most essential thing for a breakout trade to succeed the second disadvantage is associated with opportunity cost the optimum breakout setups don't occur frequently so searching for setup apps can often leave a Trader on the sidelines instead of pursuing other opportunities in the market or simply the number of breakout trades are less or it is hard to come by before venturing into different breakout trading techniques it is always better to understand how not to trade breakouts in the first place let us talk about instances when you should avoid trading breakouts first of all under no instance you want to be trading breakout against a trend now trading against the trend is quite illogical for me as a Trader and you don't want to do this in the first place you have all heard the famous saying a trend is your friend until it bends so let's see why trading with the trend puts you in a much more favorable position than going against it when you are moving with the trend or in the direction of the trend the moves that you get are pretty strong and it can last for longer period compared to someone who wants to trade against the trend for example let's look at the bull traders who are going long in a bearish market look at these up moves or Corrections that are resulted from Trading against the trend so these are up moves which are very sharp and very limited you can see that the strength of the burs is very weak compared to the beers from the size of the candles found so if you are looking to trade against the trend then you can see that there is not really much of a strength in the move but the move is pretty weak which in turn means that the gains from these traits are pretty much limited because you are trading against the trend likewise if you want to trade breakouts I would strongly discourage or in fact I will strongly advise you not to trade against the trend and let's say you are looking to trade the breakout higher I would say the chances are this breakout isn't going to go very far because after all you are trading against the trend what is likely to happen in this situation is that even if you get a breakout it would not trade any higher before it will collapse slower which will give you a false breakout at that point so you have to beware of trading against the trend whether you are trading breakouts pullback or whatever entry technique you are using trading against the trend is not usually the ideal situation for you as a Trader moving on you don't want to be trading a breakout when the price is far from the market structure we have talked about the market structure in the second episode of this price action course the important thing that I have to tell you is whatever Market you are looking be it bullish or bearish or whatever time frame beat swing time frame or intraday time frame the principles we are discussing are essentially the same and it applies to all of them equally whether it is a four hour time frame a daily time frame a weekly time frame or hourly diaphragm they're all the same nevertheless what we are looking at right now is an uptrend at this point in time you see that the price has traded at a point which is so high and some of those formal Traders will look at this chart and decide to get long before the price trades any higher without them so they they enter long at a high price over there now what the problem with going long at this high price based on the example think about this where are you going to put your stop loss or in other words where is the logic and place for you to put a stop loss the possible answer is for previous resistance level with a possibility of it becoming a support if the price drops down the level is the one that you need to lean against to place your stop loss and of course you don't want to be placing the stop loss exactly at the level as well because the price could just come into the level and bounce higher after hitting your stop loss instantly so the chances are you need to put your stop loss somewhere below the resistance because in this case the price has to move at least an equal distance as that of your stop loss so as to achieve at least a one is to one risk to reward as you can see having a large stop loss give you a poor risk reward so I would discourage you to trade breakouts when it is far away from the market structure because of the fact that you need to have a very large stop loss and it gives you a very poor risk to reward as a result of it now that we have understood what not to do we are ready to learn the different techniques of breakout Trading there are two things to bear in mind when you have to identify a high probability breakout rate they are you want to trade with the trend or trade in the direction of the trend and secondly you want to trade near a market structure or an area of value now let me explain each of them in detail let's start with the trend trading breakout strategy SO trading with the trend is something which you should be familiar by now because earlier I discourage you from Trading against the trend and it only makes sense to be trading with the trend now here's the deal for an intraday Trader or a swing Trader let us say in a strong Trend the price tends to stay above the 20 period moving average so if you are waiting for a pullback to the moving average or even a trend line then most often or not you will be disappointed as the market will continue making new highs without you able to initiate a long trade the thing is that there is a time for trading pullbacks but it's definitely not when the market is in a strong Trend we will discuss the pullback trading systems in the upcoming episodes right now in this scenario you want to trade breakouts instead of pullbacks this type of breakout trading strategy is called as the trend trading record strategy here you can either trade the break of the Swing high or swing low depending on the type of the trend the market is in let's see how this works with an example let's say the market is in a strong uptrend and the market respects the 20 period moving average the idea of this trade is to buy the breakouts above the swing high you can see that the price has Consolidated and broke higher the price looks like forming a flag pattern then you could possibly trade higher from it in this case the trend is in your favor so the ideal thing is to trade the breakout in the direction of the trend here you will increase the odds of the trades working out in your favor the exact entry for this trade would be the candle above the breakout candle High the next thing that you have to do exit when you're wrong this refers to your stop loss in other words you want to ask yourself at which point on the chart will I get out of the trade if the market moves against me as a guideline your stop loss should be at a level where if reached will invalidate your trading setup which simply means that keep your stop loss at a level which you think will invalidate the breakout trade that you have taken so in this case set your stop loss one ATR below the swing below if you don't know about what ETR indicator is watch this video on ETF indicator or else you can simply place this stop loss below the trend line or even below the 20 moving average for that sake now the second exit is when you're right on the flip side what if the market moves in your favor how would you exceed your trade it is simply about setting the targets my suggestion is to write the trend for all its work which means there is a good chance of the price heading even higher for an intraday Trader place your target as the next potential High Point or the swing High which is actually difficult to identify or it can even be the nearest resistance level but for a swing Trader I would ask you to write the trend and exit the trade only if the price closes below the 20 moving average or when the market breaks out of the structure by the structure I mean uptrend in this particular case that is when the market stop forming the higher highs or higher lows is the time to exit the trade so you can place a similar entry and exits for a downtrend with proper modification locations moving on to the second strategy which is trading near the market structure or an area of value earlier we have discussed that and the price is very far away from the structure it doesn't really make much of a sense because your stop loss is so large and you will get a very poor risk to reward but what is your trading the breakout when it is near the structure in this example you can see an area of resistance resistance in a market as you may know is an area where there will be potential sellers coming in or where the supply is higher than the demand now the price tested the area of resistance and the price break and closed about this is a breakout of resistance which is slightly different from the breakout of a swing high as we have discussed earlier because resistance is a much more respectable area in the chart so the probability of the trade success in this case is higher now if you are looking to get long right now where is the logical place to put your stop loss the possible answer would be below the previous resistance turn support you can put the stop loss somewhere below the previous resistance so this is a much tighter stop loss with a much tighter stop loss it gives you a better risk to reward because the price does not have to move a lot in your favor to start giving you the gains and why do you think you have a much tighter stop loss it is because you are trading much closer to the market structure so compared to the earlier example where the structure was too far away it does not really make any sense to make a trading in that scenario now identifying when to trade is as important as knowing how to trade the breakout trade near a market structure can be classified into three types number one is breakouts with build up number two is higher lows into the resistance level and finally number three is the lower highs into the support level let's start with the first one that is breakouts with build up now build up is basically a congestion or consultation or a tight range near an area of value you can think of a build up along these lines a lot of Traders will look at the prices consolidating at the resistance these Traders go short at the resistance or somewhere in the middle of the range and they will place their stop loss above the resistance that's what they will do because at the resistance it makes sense to go short but think about this a little deeper if the price is consolidating at the resistance what does it really tell you you know that resistance is an area where there are potential sellers who will come in and push the prices lower but in this example the price is consolidating at the area of resistance so where are the sellers why aren't they pushing the prices slower and why is that the reason why the sellers are not pushing down could be one of these two things either there are no sellers out there who are interested in selling or there are equally strong buyers at the resistance no matter what the scenario whether it is number one there are no sellers or number two there are equally strong buyers it does not look good for Traders who are looking to short either way and on top of that the clusters of stop losses above the resistance level would create an incentive for the smart money or the big players to actually break out higher so that they can Leverage The stop losses to take the market above the resistance so my point is that when you see a consolidation at a resistance basically a build up just in front of the area of resistance this is a sign of bullish strike in this scenario I'll be looking to go along and my trade entry is when the price trades above the breakout candle height and I will put my stop losses below the resistance level that is below the law of the build up or consultation or you can even keep it around two times the ATR value below the resistance now talking about the targets my target would be the next nearest structure in this case the next nearest resistance level now look through your charts look through in the price approaching the support area and ask yourself what happens if there is a consolidation at the support area and what would you comment down below so build up is a core concept whenever we trade breakouts however there are variations of it for example when you see higher lows into resistance it is a sign of a strength or weakness now think about it when you see higher lows into resistance what does it tell you it tells you that there is not enough selling pressure or the sellers are weak it also tells you that there is strong buying pressure which supports the higher prices and the final thing to keep in consideration is that there are buy stop loss orders which are clustered above the resistance which are kept by those sellers who went short at the resistance level and clearly this is a sign of bullish strength now you might be familiar with this chart pattern called the ascending triangle pattern so if you spot such a pattern in the market condition it means that the market could break out higher right it's the exact same scenario here you shouldn't be looking to go along in this case the entry should be above the breakout height and your stop loss should be slightly below the last higher low to the resistance level and finally your target for the trade should be the next nearest resistance or it should be equal to the length between the first higher low level and the resistance level projection above the resistance level now let us look at a situation of a breakdown this is the inverse of what you have learned earlier so whenever you see lower eyes into the support it tells you three things number one there is no buying pressure or the buyers are we number two there is strong selling pressure pushing the price even lower and number three there are 10 stop loss orders clustered below the support level which are kept by the buyers who went long and the support now clearly this is a sign of weakness in terms of buying and you might be familiar with this chart pattern called the descending triangle so if you spot such a pattern in the market it means that the market could break down lower in this case we should initiate a short trade below the breakdown candle low after the candidate closes below the support level just for confirmation the stop loss can be kept above the last lower high into the support or it can be 2 times the average true range value above the support level and finally talking about the Targets in this case Target should be the next support level or it should be equal to the length between the first lower high level and the support level projected below the support level moving on let us look at a highly profitable breakout trade scenario now here's the thing the market is always changing it moves from a range to a trend from a trend to a range Etc the longer the market stays in a Range the harder it breaks this is true but why is it true because the longer the market is in a Range the more orders are placed in the market let me explain the bullish Traders will put buy orders above their assistance hoping to cash the breakouts similarly the mere Traders will look to short the market at the resistance and they will have their stop loss which is also a buy stop loss order and they place it above the resistance and as the time passes you will get an overwhelming amount of buy stop loss orders above the resistance level and by some chance if the market manages to break out of the resistance it will trigger all of these clusters of buy stop loss orders which will fuel further buying pressure and in turn it will take the market higher so if you want to identify explosive breakout trades with high profitability you have to pay close attention when the market is in a range for a long period of time because the longer it is in a Range the harder it breaks and the more profitable you become thank you foreign in great detail a breakout trading is one of the oldest trading Styles in the book you watched the price consolidate within a range and then when the price breaks out of that range you bounce on to the trade and enjoy the benefits of a strong war and often when the price has been stuck in a Range it will move out of that consolidation range with some good momentum giving the Traders a good profit potential but and it's a big but the breakout pattern has an evil twin which is actually a curse to all the breakout Traders and it's none other than the fake out if you have ever traded breakouts you'll recognize this situation just when you think you have caught the big move the market turns against you and shakes out of your trade so how can we tell the difference between a breakout and a fake out now there are a number of tools that Traders can use but the first thing I have to let you know is that there is no way you can avoid fast breakouts completely there are certain times no matter how good the setup you have you're still going to get caught in a horse breakout but you can minimize the chances of getting caught in a force breakout we have got some price action methods and some tips that you can make use to minimize your chances of getting a false breakout with that being said the first tip I have for you is to stop chasing the power moves or stop going after the power moves into an area of value what are power moves I have talked about power moves in the episode 6 of this price action course when we talked about reverses but let me talk about it briefly so as to brush up your memory if you see a bigger strong momentum move with large scanners this is work a power movies now if the price moves up from a level with little or no pullback and then it goes up higher breaking an area or a level of value like a support or resistance then my advice is not to chase the breakout of this type because more often or not the market tends to reverse under these conditions and why am I so sure and why is it so let me give you a very simple explanation of why this actually occurs when you chase a market where the price is making a strong move or a power move there is no floor or support to these higher prices now if you look at the chart most of the time the price exhibits a specific type of price action where the prices goes up and then retraces or pulls back in this type of price action there are levels like swing lows to support these higher prices what this means is that for example take the case of a resistance if the mark and where to reverse from the resistance it would find a floor or a support where potential buying pressure could push the price higher these types of moves are more sustainable because they are a series of higher string levels along the way to support these is higher prices now what happens when the market has given a power move into a level in this case let's talk about our resistance level it means that there are no intermediate swing levels to support these higher prices or there is no obvious levels for the buyers to come in to oppose the sellers if they send at their assistance now the only possible area for buying is the previous support level and so there will be a lot of sellers waiting at the resistance to sell and also there will be a lot of buyers who looks to buy the breakout who place their stop losses below the resistance now there is a cluster of cell orders below the resistance by both the sellers and the buyers and by some chance if the price manages to reverse all of these stop losses would be triggered which will induce further sending in the market and the market will reverse even lower and there is a good chance if the reversal comes it can be very Swift towards the downside to the nearest support level or the floor area where the buyers could then potentially come in but this is going to be a huge distance and for any mayor who hasn't placed the stop loss can end up bleeding his account so as a matter of fact you want to stay away or stay on the sidelines if you are a breakout Trader under such conditions where there is a power move in the market to an area of value now we will look at some price action tricks that you can easily apply on the market to stay cautious of the fake outs however the problem with each of them is that you are left waiting for the candles to form their patterns and sometimes this might be a reason for missing out all some of the trades so it's up to your decision making as a Trader in the real market conditions for them to make any sense now there are clues in the candlesticks and volume data which can give information whether the breakout is a genuine breakout and these are worth considering and can be used in conjunction with other tools like indicators a breakout occurs because the price has been contained below a resistance level or a support level for potentially some period of time have the resistance or support level becomes a level which many Traders use to set their entry points or stop loss levels so when the price breaks through the support or resistance level the Traders waiting for the breakout would jump in and those who did not want the price to break out will exit their positions to avoid larger losses this is very much clear now this flurry of activity will cause the volumes in the market to rise which shows a lot of Traders were interested in the breakout level now the higher than average volume helps to confirm that it was a breakout but if there is a very little volume on the breakout then the level may not have been very significant to a lot of Traders or not enough Traders felt convinced to place a trade near the particular level and most of these low volume breakouts are likely to fail in case if you are talking about an upside breakout if it fails the price will fall back below the resistance level and in case of a downside breakout of a support often called as a breakdown if it fails the price will rally back above the support level in some instances even after a high volume breakout the price will often retrace or pull back to the breakout point before moving in the breakout direction again this is because the short-term Traders will often buy the initial breakout but they will attempt to sell quite quickly for profit this selling by the short-term Traders will temporarily Drive the prices back to the breakout point now if the breakout is legitimate then the price should move back in the breakout Direction after the retest or pullback and if it does not it is a sale breakout and the prices would reverse analyzing volumes where one way of identifying if it is a breakout or a fake out but as I have mentioned earlier does not work every time and there are occasions when this idea will fail so let us consider a few more ideas to keep in mind so as to distinguish between a fake out or a breakout the first thing is that you have to wait to see if the Candlestick closes through the line of support or resistance which means that the real body of the breakout Canon should close above the resistance level or the real body of the breakout candle should cross below the support level which in turn means that just a week poking through the level is not enough to confirm a breakout so it's a good rule to follow but on its own it's not particularly reliable now the second thing is that you have to wait for a close beyond the support or resistance level and then you have to wait for the price to retrace back to the level or pull back by a little bit and then move in the direction of the breakout and this candle should close beyond the closing price of the breakout candle this is a resistance turned support or a support turn resistance method which is a reliable way to trade breakouts but on the downside there is a lot of patience required because there is a lot more waiting around and sometimes the prices won't even retest or pull back to the level and chances are you might miss the trade now the third point is to look for big candlesticks which will indicate that there is momentum behind the breakout and you have to check for large breakout volumes Which is higher than the previous volume but on the downside a very large candle means that your potentially missed a hefty part of the move so it can rightly affect your risk reward as well as the placement of your stop losses and the final point to keep in consideration is that we have to look for a price build up at the market structure which may be a tight consolidation near the area of value or higher lows into the resistance similar to an ascending triangle or lower highs into the support similar to an ascending triangle which are credible enough patterns that can give you high probability breakout rates you can learn a lot more about them in the previous video now we will look at a faster way to get a breakout confirmation using an indicator which will give us an immediate yes or no confirmation as to whether we can rely on this breakout or not so we have to add the RSI indicator or the relating strength index indicator in our chart so when we are looking for a breakout we are expecting the breakout to come with a degree of momentum and we will use the RSI indicator to find that momentum so basically RSI is a momentum indicator and it measures the speed of a move so if the speed is increasing the momentum will be building or increasing in this particular scenario I am talking about RSI convergences RSI convergence occurs when the RSI Direction mirrors the price trend for example if the price of a security Trends upwards then the RSI will also Trend upwards this is what I mean by RSI convergence so if the price is moving up through an area of value we want the RSA indicator to be showing higher highs which signals building momentum or increasing momentum the idea is that if the market momentum is increasing the RSI should also be increasing the same is true if the prices are headed down and breaking through the value of support which will indicate a momentum towards the opposite direction or the downward Direction in the r side so this confirmation for both bullish and bearish signals are generally more useful when the RSI period is 14 days or more and anything below the 14 period may be typically considered less reliable for confirming the convergence and of course no indicator is inferible but using RSI to confirm breakouts will give you a significant Edge in the market it adds weight to the evidence of a possible breakout and not a fair code so I recommend that you add it in your charts and see what it can do for you now coming to the most important part or the important point of this video you have to back test these techniques that I have discussed with you so as to understand how reliable each system is and then choose a system of your liking and convenience because practice makes you perfect and back testing can save your account foreign [Music] all about trading pullbacks a pullback to an area of value is one of the best techniques when trading in the market Direction and it is also one of the safer techniques because of the confirmation that it gives we will discuss the pros and cons of Trading Group packs and we will talk about the likely places on the chart where the market will pull back and how to approach your trades so if you are ready let's begin what actually is pullback trading and why does it work in the market now a pullback is when the price temporarily moves against the underlying Trend in the market for example in an uptrend a pullback would be a move lower or we can say it is a corrective move on the other hand in a downtrend a pullback would be a move higher so in essence what you are trying for pullback trading is to buy the dips in the markets or the retracements to a critical level or the corrections in an existing trend for example the price breaks out of the resistance level with strong candle and then it retraces or pulls back or tests the resistance level and then move up higher another example would be if the market is trending higher you are always looking to buy the dip or to buy the retracement or to buy the pullback so as to buy at the least possible price and in case of a trending Market the reason why pullback Trading works is because when the market is trending it does not go up in a single straight line instead in an uptrend you can expect to see a series of higher highs and higher lows so as a pullback Trader what you are trying to do is to time your entry on the pullback or the retracement or the correction so you are basically entering the trade as the market trades at lower prices during an uptrend as a pullback Trader you are trying to take a trade in the direction of trend but you look to enter when the market is sort of going against the trend on the retracement or the correct you move but you are still trading in the direction of the trend and the reason for pullbacks in the prices is simple it is due to the short term profit booking by some Traders which causes the prices to dip lower now let us move on to understanding the pros and cons of pullback trading we will start off with the positives with pullback trading your main basically buying low and selling high for example if you are trading pullbacks in an uptrend you are basically buying at lower prices and the intention is to sell higher and if you're selling pullback in a downtrend you're basically selling at higher prices so that you can buy back at lower prices and the second thing about this is that it is actually easier when it comes to your trading psychology when you're trading the pullbacks the reason being you are basically trading from an area of value because buying low and selling high is something that we are all accustomed to even when we start learning about the markets think about it in terms of a small business basically what we want to do is to buy at lower prices and then sell at higher prices now we will talk about the shortcomings of trading pullbacks now the downside of pullbacks is that you might miss the move more often or not let me explain for example we know that an uptrend consists of a high higher highs and higher lows let's say the price is pulling back or retracing back right now assuming that you are hoping the prices to retest back to the lows onto the trend line or the moving average but what happens in the market is that the price does not pull back deep in us and then it broke out higher without you being able to take an entry so it ended up causing you to miss the move this is the biggest disadvantage when it comes to trading pullback which is that sometimes you actually miss the move while waiting for the price to come to your desired level the second disadvantage or maybe I won't call it a disadvantage is that pullbacks are not suitable for impatient Traders now if you are an impatient Trader or you have no patience to wait for a pullback then this strategy might not be your piece of cake now that we have understood about the advantages and disadvantages of a pullback trade let us learn how to approach a pullback trade so there are a few things to look for on trading a pullback the first point is to identify the market Trend now the first and foremost thing that you have to figure out while you trade pullbacks is to find the existing Market Trend you must have a trend in the market because most often you will encounter a pullback opportunity when there is a trend in the market and more importantly make sure to trade in the direction of the trend and not go against the direction of the trend now I am not saying that there won't be any pullback opportunities if the market is not trending or if the market is in a range but instead the probability of getting a pullback setup is higher when there is a trending price action and most often or not during a range or Consolidated price action the market tends to give explosive breakouts where the chances for pullbacks are lower due to increased interest and participation by the market participants now the second point is to identify an area of value here's the thing just because the market is in an uptrend doesn't mean you want to blindly enter a trade instead you want to be trading from an area of value an area of value could be any of these including a swing low or a swing High a support or a resistance level a trend line or a moving average Etc these are all potential areas on your chart where buying or selling pressure could step in now the third point to consider is to look for an entry Trigger or an injury area assuming that the market is trending higher and it has made a pullback towards an area of value but this does not mean that we can blindly hit the buy Button as a pullback Trader you want to look for specific entry triggers to let you know that the buyers are stepping in or to make sure that buyers are in control and they are about to take the prices higher the entry trigger could be as simple as reversal Candlestick by patterns which may be bullish hammers or bullish engulfing patterns Etc so that's an entry trigger for us to time our pullback to get on board the trade and to join the existing Trend in the market now the fourth point is setting up your stop loss since you are trading pullback the most important question is where do we set our stop loss logically speaking if you are trading pullbacks on a uptrending market then your stop loss should be below the loss of the pullback so in case if the market is on an uptrend and you have kept your stop loss below the swing low this means that if the market corrects or retraces and breaks below the lows of the pullbacks it tells you that this pullback has failed and you want to get out of this trade so in order to be safe and not hit your stop loss before the pullback finishes you will have to identify the laws of the pullback and give some buffer below the loss for this purpose you can either use the ATR indicator or or you can even set it based on your risk taking ability let's take a look at the ATR method briefly let us say the law of the pullback is 100 rupees and let us say you pull out the ADR indicator and the average true range of the market is rupees 5. you can simply take rupees 100 which is the low of the pullback and subtracts rupees 5 which is the value of the ATR at that specific period now your stop loss turns out to be rupees 95 which will set a small buffer below the low of the pullback now a similar approach can be taken in case if the market is on a downtrend and the final point is setting up your targets now where do you take profits let's say you are trading in the direction of an uptrend what you can do is to reference the extreme swing High to take the profits when you are trading pullbacks during an uptrend you are buying the dip when the market has retraced against the trend if you look prior to of the retracement you should be able to identify a swing high on the chart and this swing High could be a reference point for you to take the profits now if you are looking to buy a pullback and you win long and the market is moving favorably in your direction you can look to take the profits just before the swing high or before the nearest resistance if you are an intraday Trader and you can ask me why not after the swing high or why not at the swing eye or why not at the resistance level the simple reason being swing highs and lows supports and resistances are not specific levels on the chart instead they are areas or zones on your chart this means that the price could come close to the swing high but may not be able to reach the exact price point and then start to reverse from there so if you don't want to watch your open profits come close to your Target only to do a sudden reversal and then hit your stop loss what you want to do is to set your your profit Target just before the recent swing high or the nearest resistance level for this example now that we have learned how to approach our pullback trades let us move on to the different ways of trading pullbacks successfully and how to employ the entry and exits in the right manner starting off with breakout pullbacks breakout pullbacks are very common and probably most of you have encountered them breakout pullbacks commonly happen at the market turning points that is when the price breaks out of a consolidation pattern or a range now some of the most popular consultation patterns includes the head and shoulders the wedges triangles rectangles Etc so the question that naturally comes up is how to trade the pullbacks although there are many ways how you can approach the pullback trading I will talk about two main concepts of pullback trading during a breakout now these principles can be applied to all other pullback scenarios that we will discuss along let us take the case of an aggressive Trader now the aggressive Trader waits for the price to come back to the pullback area which may be a support or at resistance level a trend line a moving average Etc and he enters the trade right away and the price pulled backs to the level let us say the point 1 marks this approach in the scenario for breakout and pullback now there are a few more points that you need to consider when choosing such an approach using an aggressive trade entry you may be able to enter at the best possible prices as this point can often Mark the extreme point of the correction wave and the pullback phase so the potential reward to risk ratio is highest following such an approach because the stop loss can be placed very tightly but the major drawback is that you enter a trade against the price Direction without any confirmation so the price could easily go against your trade so such an approach can therefore have a lower wind rate or a lower probability of success but the higher reward to risk ratio May offset it though but I wouldn't go by this method me being a conservative Trader Waits under the price continues the trend structure and breaks over the pullback with this approach the trainer goes with momentum and confirms that the trade is in the desired Direction unlike the aggressive Traders case where there was no confirmation of the trade Direction now the conservative approach or the conservative entry happens later and therefore the potential robot to risk ratio is smaller if you ask me there is no right or wrong when it comes to trading and a door comes down to your personal preferences as a Trader now talking about the stop losses you have to place the stop loss below the pullback low in case of a breakout on the upside and make sure to add the suitable buffer based on your risk potential or you can even use the ATR indicator to do the same it is always better to stay cautious as to not move your stop loss to break even because this is a very dangerous and unprofitable thing to do and the reason for this is that poor bags happen so often in the market after a long uptrend the market stays in a range between defined levels now many Traders use the levels to time their breakout entries in this case we are anticipating a breakout on the downside and most Traders would use the support level to time their breakout entry but where they go wrong is that they move their stop loss to break even too soon and when the breakout pullback happens they will get kicked out of their trade just to see the price return in their anticipated Direction but without them finally the targets can be the next potential resistance level or place a suitable Target based on the type of consolidation pattern the market was in right now be it a wedge be it a triangle pattern will be the rectangular pattern use a suitable Target based on the consultation pattern found in the market now the second way of trading pullbacks is using horizontal steps now the stepping Behavior can be observed during many trending phases in the market during the ongoing trending phases the price will often present those stepping patterns this pullback approach is a great addition to the previously discussed breakout pullback the breakout pullback happens very close to the market earning points but if the trader misses the initial entry opportunity the horizontal steps can allow the trader to find alternative entry scenarios it also helps the trader to enter a trade even if the pullback does not form a swing low aching the trend line or a moving average in case of an uptrending Market the entry in this case would be during the retracement from a swing high level to the previous swing high levels and using confirmation candlesticks like bullish engulfing or Hammer patterns for for the trade entry and if you talk about the stop loss for the trade it would be suitable to place the stop loss below the step pattern or the swing low with a suitable buffer depending on your risk appetite further a Trader could simply choose to use the stepping pattern as a trial stop loss behind the trend in a much safer way in this case the trader Waits until the price has completed a particular step and then prior the stop loss behind the last pullback area and because of this the stop loss is protected and it is not very vulnerable a Target in this case would be each of the Swing high levels as the price moves in your favor now the third idea should have been trend line we know that trend lines are famous pullback tool but the drawback with trend lines is that it takes longer to get validated as a thumb rule we all know that a trend line requires at least three contact points to get validated you can always connect two random points but only when you get the Third Contact point you are really looking at a trend line trend lines can work nicely in addition to other pullback methods but as a standalone method the trader will miss many opportunities as the trendline validation takes a long time so instead of using a trend line we can use the moving averages for pullback trading and without any doubt moving averages are amongst the most popular tools in technical analysis and they are used in many ways including Trend identification and you can also use them for pullback trading as well you could use a 20 period or 50 period or even 100 period moving averages it does not really matter and it comes down to whether you are a short-term Trader or a long-term Trader now short-term Traders generally use shorter moving averages to get the trade signals quicker and of course shorter moving averages are more vulnerable to lot of noise and run wrong signals and longer term moving averages on the other hand moves slower and so they are less vulnerable to noise but you may not get much trading opportunities as in case of the short term moving averages so it is up to you to weigh the pros and cons of your own trading style for the purpose of this example I will use a 50 period exponential moving average and the price is in an uptrend now here we can see that the prices are correcting and reaching the moving average and it is actually respecting it the entry in this case would be above a rejection Candlestick from the moving average like a bullish pin bar or a hammer and bullying engulfing candles it shows that the buyers are willing to buy at higher valuations you can place a stop loss below the moving average live adding some buffer space because it is very common for the price to overshoot the moving average and show very deep pullbacks and that is why you you need to give your stop loss more breathing raw if you choose such a pullback strategy and if you enter the trade with proper confirmation and not being aggressive to enter the movement the candle pulls back to the Moon average then you can actually save yourself from the overshoot program finally a riding Trend till the end is the best possible Target in case of an intraday Trader look to place the nearest resistance as the Target and for a swing Trader exit the trade either when the price breaks out of the moving average line or exit the trade when the market structure changes from trending to range or consolidation so as you have seen there are many different ways on how to approach the pullbacks you can even use it with Fibonacci levels also you can even combine the various tools to come up with even stronger signals with that being said it is always a good idea to back test what you have learned to get a sense of how the strategy works in real Market condition and see if it works for you [Music] reversal trading can be one of the most profitable trading strategies you can use you can trade reversals in trending markets ranging markets and even against the trend we have discussed the concept regarding reversals in the sixth episode of this price action course do check out that video to know the basic stuff regarding how reversers work in this video however we will talk about the reversal trading strategies with respect to price action reversals refers to large price changes where the trend changes its direction altogether but the thing is that when it starts to occur a reversal isn't distinguishable from a pullback and the main difference between them is that a reversal keeps going and form a new trend while the pullback ends and then the price starts moving back in the trending direction or simply the price will continue with its previous Trend reversals often occur in the intraday Trading and happen rather quickly but they also occur over days weeks and years therefore reversals occur on different time frames which are relevant to different Traders so an intraday reversal on a five minute chart doesn't matter much to a long-term investor who's watching for a reversal on The Daily or weekly chart yet the five minute reversal is very important for an intraday Trader so as a reversing Trader you are in essence a counter Trend Trader who is trading against the trend or the current market momentum for example let's say the market is in an uptrend making a series of higher highs and higher lows as a reversal Trader you will look to sell in that uptrend or for example if the market is in a downtrend then as a reversing Trader you are looking to trade against the trend and the momentum reversal trading especially the trend reversal trading can be a profitable way to trade the markets however like any other trading strategy there is a correct way and a wrong way to trade reverses before we talk about the correct way to do reversal trading let me first explain how you should not trade the market reverses or simply or talk about the mistakes that most Traders make while trading reversals the first and the most important point to consider is to not catch a forwarding knife for those of you who do not know what is catching a falling knife it means trying to enter a long position in a market that is crashing down so let's say the market is dropping every day you don't want to blindly enter a trade because you are a reversal Trader looking to buy low and sell High there is absolutely no sense in trying to catch a crashing Market similar to a falling knife and why is it so because if you are buying into the lows of the market there is no logical place for you to set your stop loss there is no support or Market structure you can refer to and there are no signs that the downtrend could be ending anytime soon and most importantly trainers need time to reverse their direction as we have discussed in the market trends as well as Market structure videos so avoid catching a falling knife the second mistake that Traders make is entering the first pullback anticipating that it will be a reversal now this is a common mistake that Traders make that is attempting to trade the first pullback itself this means that you go along when you see the market rallies after a huge decline but often this type of a rally is only a retracement of the existing Trend and why do some Traders always do this this is simply because of the fear of missing out or formal and you don't want to miss out on the next move thus you ended a trade as soon as the market shows any sign of reversal unknowingly this sign is usually a retracement or a pullback of the existing Trend and the market will continue the trend causing you to lose your money now that we have understood about what not to do during a reversing trade let us look at how to approach reversal trades in the market the first and foremost point is to have a reference point on your chart now what exactly is a reference point a reference point can be a trend a consolidation or an area of value like a support resistance a trend line a moving average Etc where there is a chance for some sort of a price action now after you have figured out a reference point the second point is to wait for the market to reach that particular reference point no matter where the price is trading right now for a price action Trader to make any sort of conclusion with the prices it has to be in an area where there is a potential interest from the side of the market participants or simply the price should be at an idea of value now the third point to consider is regarding the trade entry now that the price has reached an area of value you have to look for a reversal Candlestick patterns we can use reversal Candlestick patterns like engulfing candles or pin bars to time your trade entry so you will enter a trade only after the market shows signs of reversal however you risk entering at a much higher price which may lower your risk to reward ratio but it gives you a higher win rate now the fourth point is setting up a proper stop loss when it comes to stop loss you want to place it at a level that invalidates your trading setup this means if your stop loss is hit then the pattern is broken there is no reason to stay in the trade any longer so it is generally a good idea to keep the stop loss with reference to the area of value and the highest or lows of the reversal candlesticks by giving the ample buffer space to save yourself from pullbacks the buffer space can be decided using the ATR indicator or with respect to your risk appetite and the final point to consider is to set a conservative profit Target now your exits depend on your goals so what do you wanna accomplish either you can capture a swing or write a trend so if you want to capture a swing then you can exit the trades before the opposing pressure comes in for example if you are long in a market then you want to exit your trade before the next resistance level or the swing High where the sellers can come in and on the other hand if you want to ride a trend then you can Trail your stop loss as the market moves in your favor for example you can trade your stop loss using a 20 moving average now that we have understood how to approach a reversal trade I'm going to share with you three techniques which can help you identify reversal traits in the market and as a reversal Trader you want to be smart about when you want to enter your trades so here we go the first strategy is the break of the market structure we have talked about the different stages of Market in the market structure video and we also know how to identify a particular Trend type from the market strengths video now think about this in a trending Market let's say an uptrend you know the price makes a higher high and higher lows and what do I mean by a break of the market structure the break of Market structure is the clue that the market is telling you that it is about to get weaker or simply it is about to reverse its direction so in case of an uptrend you have a breakup structure when the price fails to make a new higher low or a higher height so this is the first clue or the first evidence that the market is about to reverse lower but there is no 100 percentage guarantee that the reversal will happen but its enabled tense given to you by the market that there is a break-off structure and there is a good chance that the price could potentially reverse lower again looking at the concept that I just shared with you for an uptrend to reverse we are looking for a break of the trend Market structure that is what we are looking for is a lower high or lower low which invalidates the uptrend setup at this point you have actually got a lower high and when the price breaks below the area of support formed by the previous higher low you will have a lower low this tells you that this trend could be weakening and the trend could eventually reverse now the trend will not reverse all of a sudden because markets need enough sellers to bring the prices down and so most often the market go to face of consultation where the price will stay inside a range for some time and then it will show a trend reversal when there is an ample selling pressure available this time when the price breaks out of the consolidation or the distribution stage and more lower is actually the best short trade entry for a reversal in case of a tighter stop loss you can keep the stop loss above the breakout candle high and to be much safer and to our deep pullbacks you can even place the stop loss above the consolidation range the Target in this case will be the nearest support level now let us consider this in case of a downtrendic market again we will apply the break of Market structure concept we can see that during and now Trend there is a series of lower highs and lower lows the break of downtrend structure comes when the price stops forming the lower highs and lower lows or simply when you have a higher high because the price below the prior resistance formed by a lower high or is it from the higher low this again should give you a strong clue that this downtrend could possibly come to an end and the market could potentially reverse its direction in this case also the reversal may not come quickly instead there can be a consolidation or an accumulation stage where the buyers can come in in ample quantities so as to take the market higher here also the trade entry would be when the price breaks above the accumulation stage and moves higher you can keep a safer stop loss below the consultation range and the target can be set as the next nearest resistance level or simply you can write the trend until there is again a break-in structure now there is no such thing as guarantee in trading or in price action or in whatsoever so if anyone promises you guarantees then it's better to stay far away from this is why I like to use words like probably likely possibly so keep that in mind there is no guarantee for anything and especially when it comes to trading now the second strategy is the higher time frame reversal structure so in a market it's very important to pay attention to where you are in terms of the big picture or simply you should stay attention to what the higher time frame is doing this is where the higher time frame reversive structure comes in handy in this example the price apparently breaks above the sunghai and then it collapses lower below the support level at this point a lot of unaware Traders would have bought beat breakout on the upside early to get caught on the wrong side and why is that this is a chart in the four hour time frame now let's see the same chart on a higher time frame for example a one day period on the higher time frame chart it is evident that most of the Traders are buying the brain take out into a previous support level as shown that could eventually act as a resistance and thus it makes a very low probability breakout trade this means that the Traders are buying into a huge selling pressure and what do you think will eventually happen it's pretty much no wonder why the market reversed from the resistance level this is what I mean by a higher time frame reversal structure so what exactly are we looking at in case of this strategy we have to look for a higher time frame area of value like a supporter resistance where the prices can eventually reverse and you can then take a trade entry on a lower time frame with the help of a reversal Candlestick for confirmation in this case there was a force breakout and you can leverage the highs of this Force breakout to place your stop loss now the third strategy we will be discussing is using moving averages you can make use of moving averages for reversal trading in this particular technique unique we will use the longer term moving averages like the 100 moving average or 200 moving average with a positional trading perspective we know from the basics that if the price is above the 200 moving average for example we should try to stay long and if the price is below the 200 moving average try to stay short on the market now the reason for this is quite simple if you think about this the 200 period moving average summarizes the price of the last 200 candles based on your time frame so if the price is right now above the 200 moving average it is telling you that the price has been trending higher and similarly if the price is below the 200 moving average it is telling you that the price has been trending lower this is a simple way to tell you what's the long term trend on the particular chart that you are trading why is it a long term trend on the particular chart of your trading it is because you could be using a 10 wanted moving average on a five minute time frame that is not really a long term Trend because it's a five minute time frame right likewise it can be a 200 moving average on a daily time frame then that's a pretty long time frame so it is actually the long term trend of the chart that you are trading and depending on what time frame you are looking at so let's use 200 moving average and one day time frame for this particular example over here the price is above the 200 move average so from the basic rule you want to look for long opportunities in this market we can float an area of support and every time the price comes into the area of support it forms a price rejection that is validating your trading setup but the key point to note here is that the price is actually forming a consolidation and it has tested the support level multiple times and you know what that means on this simple concept that we have discussed about supports and resistances in in episode 6 and it is exactly what happened the price broke down the support level and even more below the 200 moving average with great momentum there wasn't any price rejection of any soap from both these areas of values now we can have a short bias since the price is trading below the 200 moving average and now we can look for opportunity steep go short on the market now this is how you can actually use the 200 move average to give you a bias to know whether you should go long or stay short and after you have identified your bias then just reference to a market structure like a support or a resistance or even the moving average itself to kind of identify the area of value that you want to trade from and sometimes the price will test the 200 moving average which is actually an area of resistance and if it turns out to be a fast breakout of the highs you can use the help of reverse and Candlestick pattern to take a reversal trade lower anyway the 200 moving average is useful to help you find out the trend reversals and to identify the trade on the right side of the trend now these are some of the techniques which you can adopt and back test in the market conditions to check if they work for you and if it does the entry and exits can be decided based on your risk appetite and patience foreign [Music] is one of the most common candlesticks you will find on your charts the inside bar is a simple yet powerful Candlestick pattern it can help you better time your trade entries with lower risk and the best part once you learn to identify this pattern then you will very quickly see it everywhere you will see it in many different markets and in all your different time frames however just because the inside bar forms often and can be easily identified does not mean you should be using it or trading it so in this video go through exactly what the inside bar is and how we can use it successfully in our trading what exactly is an inside bar pattern the inside bar pattern is a Candlestick pattern where the price forms completely within the previous Candlestick so for an insert bar to be considered valid both the high and the low of the Candlestick needs to be completely inside the the previous Candence range most often or not Traders have this confusion around the weeks or Shadows of the candlesticks to clear this up from the start the inside bar takes into account the candlesticks Shadows or the Wicks also this means that the high and the low including the Wicks of the inside bar candle must be within the high and the low of the previous Candlestick to simplify this even further inside bar must have a high that is lower than the previous candle's high and it should have a low that is higher than the previous candle slow including the Wicks however not all inside bars are created equal there are different types of inside bar patterns formed in the market let us take a look at a few of these the first type is an inside bar with a small range so this is a standard inside bar where the range of the candle is small and it is covered by the prior candle or the previous candle now this tells you that there is an indecision or low volatility in the market we will talk about this further in this video the second type is the inside bar with a large range now you can have an inside bar with a large range so this is still an inside bar as the range of the candle is covered by the prior candle or the previous candle but in this case you will notice that the range of the inside bar is too large now depending upon the close of the inside bar this could either represent an indecision in the market or a reversal in the market now let's see an example each for the long range candles of these types as you can see in the first category there is a large inside bar with bullish close which shows signs of bullish strength moving on to the second type it is a large inside bar with a small rail body which shows signs of indecision so depending upon the range and the real body the inside bar can either represent any decision or a reversal in the market now the third type of inside bar is multiple inside bars so in this case you have multiple inside bars together this is a powerful pattern because it tells you that there is a low volatility in the market to briefly talk about volatility low volatility is associated with weak participation from the market participants or it can signify weak price movements while a high volatility is associated with elevated interest from the market participants and we know the market volatility is always changing that is it moves from a period of low volatility to a period of high volatility and vice versa so when you see multiple inside bars together it is a strong sign that the market is about to make a big move soon now the fourth type is the hikake pattern which is a variation of the inside bar this is actually a must know pattern for all the Traders because this pattern helps you identify a false breakout from the inside bar pattern imagine this situation you identified an inside bar and you are hoping that the market will go higher or simply you have a bullish Outlook so you go long when the price breaks above the highs of the inside bar but the next thing you know the market does a 180 degree reversal and collapses lower and you are now in D plus now this is what we call a hikake pattern which is a false breakout pattern now there are two variants of the hikake pattern the first type is a bear Chicago pattern which actually entices the Bulls or the buyers into buying and then wrap them and make them hit their stop loss the second one is the bullet shikake pattern which actually entices the Bears or the sellers into shorting the market only to trap them and reverses the price against their position now the hiccake pattern can be traded the same way you trade an inside bar which we will discuss as we move along this video but this is a much more powerful strategy since the breakout Traders get caught on the wrong side of the move and their stop loss would push the market in your favor if you take the right side of the trade now let us talk about the nature of an inside bar or the Outlook of an inside bar in the market the inside bar is actually an indecision Candlestick pattern the inside bar is formed because the price was not able to break either the high nor the low of the previous session or the previous Scandal now this shows us that or this tells us that neither the Bulls nor the Bears were in control during the session this is a very important information when used correctly however it is important you not where the inside bar is formed and in what type of market so if an inside bar is formed in a strong trend for example a trend higher then it could be signaling a quick pause before the price continues on with the trend and if the inside bar is formed at a swing point or even at a major support or resistance area then it could be signaling that the steam has run out of the current move and the reversal is about to play out or simply the market is about to reverse because this is an indecision Candlestick it is very important to pay attention to where and how this pattern forms moving on let us look at the best time frames to trade the inside bar candle as I have mentioned earlier you will be able to find this pattern on all your time frames from the one minute chart right through the monthly chart however just because you can find an inside bar on all your time frames does not make them all created equal because inside bars formed on a higher time frame will hold more weight compared to inside bars formed on a smaller time frame the reason for this is simple because of the time that goes into forming this pattern so if price action is showing in decision and and it cannot break the previous Candlestick high or low on the one minute time frame that shows us that for one minute the price was stuck however if we see that the price could not break higher or lower on The Daily time frame and it Formed an inside bar then it shows that for a whole day neither the Bulls nor the Bears could gain control of the market this leaves us with the conclusion that the higher time frame inside bar candle holds a much higher weightage than a inside bar on a shorter time frame well then let's talk about the trading strategies now there are many ways you can use the inside bar in your trading you can use it to find new trades and you can also use it to manage your trades the three simplest and most common strategies to trade the inside bar are the inside bar breakout the insert bar reversal and the inside bar and trading strategy let us start with trading the inside bar as a breakout the first key to trading the Shade Bar as a breakout strategy is identifying a strong Trend either higher or lower in this example the price is in a strong Trend lower and because there is a strong Trend the inside bar represents a pause in the price action where some profit booking is being taken and the price is taking a breather so when you are looking to enter with the inside bar breakout you are looking to enter when the signal confirms itself this happens when the price breaks the inside bar high or the low in the direction of the trend in this particular example we are looking to take a short entry when the signal confirms itself and breaks lower with the trend or simply we are looking to end when the price breaks below the previous Scandal low but to be saying I'm not a great admirer or a fan of the inside bar breakout strategy in particular and it's simply because of the sheer number of fast breakouts that this particular strategy can generate also it is not a very small not move to trade an inside bar on a choppy range or consolidation because of its low probability trade and why is it so because a range or consultation happens when the market is taking a breather or when the Bulls or beers are in some form of indecision so it does not make any sense to use an indecision Candlestick to take a trade on a market where indecision exists so personally I would be well off using the other two strategies than the breakout so moving on to trading the inside bar as a reversal the key to inside bar reversal strategy is where the inside bar Falls to use the inside bar as a reversal you need to see it Formed at a swing high or a swing low depending on the market Trend and even at Key price action levels or areas of values and these levels are often the major support or resistance level for example the price approaches a support level and we know that a support level is one where there can be higher chances for demand for the stock or where the buyers will be willing to enter a position and if an inside bar was formed at or near the support then it could be an indication that the price is looking to make a reversal back higher and we could get long when the price breaks back above the inside bar high but that being said I prefer to wait for the price to make a reversal move first and then from an inside bar as shown in this case now what is the benefit of this by doing this I get to know two very significant things number one that the buyers are in control at this period as they manage to make the first wave of reversal from the support level number two is that there is a volatility contraction due to the formation of an inside bar and is the buying pressure could continue further then it will manage to break out the reversal candles high and move higher this is exactly when you can enter a long position that is when the price breaks out of the inside bar this particular approach will let you enter the trade as the price moves in your favor but on the downside there is a possibility of a false breakout due to a bearish shikake pattern as we have learned earlier we can avoid this trap by taking on a more conservative approach you can wait for the breakout candle to close and enter the very next candle if the breakout candle managed to close above the reversal candle height now again in this scenario you risk missing a bit more or sometimes it can lower your reward to risk potential so clearly there is no right or wrong answer to it so you have to find the trade entry which suits you best when it comes to the stop loss you don't want to set it beyond the lows of the inside bar as the general rule states and why is this because we have already learned that there is a variation of the inside bar which is the hikake pattern this means if you set a stop loss just below the laws of the inside bar you could get stopped out prematurely on a bullish shikake pattern so a better way to set your stop loss is using the ATR indicator that is you can place stop loss 180r below the low of the inside bar in case of long and retrace this will ensure that your trade has more breathing room so if you want to know more about the ATR indicator you can watch the video here now I will talk about setting the targets at the end of this video after we have discussed the next strategy the third strategy is catching the trend previously you have learned how inside bar allows you to catch reversals in the market now you will learn how to use it to identify run trading opportunities now here's the main idea behind it let us reference with the use of a 20 moving average in a strong uptrending Market the price is above the 20 moving average so pull back in such amount Market will be shallow so when the price stars or stops after a pullback in form of an inside bar let us say you want to enter as soon as the price resumes the direction of the trend now here's how you can approach the trade when you are going long on the market now as we have mentioned the price is in a strong Trend that is the price is above the 20 moving average we have to wait for a pullback to occur and if the pullback has occurred we have to wait for an inside bar to phone and if the inside bar is also formed then you can go along when the price breaks above the highs of the previous candle of the inside bar or you can wait for the confirmation that is wait for the breakout candle to close above the inside bars previous candles high so as to avoid being trapped by the hikake pattern for this trend trading strategy you can consider setting your stop loss one ATR away from the 20 moving average since the market finds support at the 20 moving average now let us talk about setting targets for inside bar trades now your exits or targets depends on your goals so you can either catch a swing or you can ride a trend so if you intend to catch a swing then you can exit your trades before the opposing pressure comes in for example if you are taken a reversal trade from the support and you are long on the market then you want to exit your trade before the next resistance or the swing high now if you want to ride the trend then you can Trail the stop loss as the market moves in your favor for example if you have taken the trend trading approach you can trade use stop loss using the 20 moving average and when the price breaks below the 20 moving average that is when you should exit the market now when trading the inside bar pattern by entering above or below the breakout of the pattern using any of these strategies I would recommend you to go with these small ranged inside bar breakouts now there are a few reasons as to why this is important the first benefit is that you can place a very tighter stop loss you can reference the low thinset bar to set your stop loss as we have discussed and the smaller the inside bar the smaller the stop losses and with a smaller stop loss you can put a larger position size and still keep your risk constant the second benefit is that the price will move quickly in your favor the market moves from a period of low volatility to a period of high volatility and vice versa so if you trade a small ranged inside bar it means the volatility is low and there is a very good chance that it could expand or break out in your saver this means you could get a good reward to risk potential on your trade in a short period of time I hope this makes sense to you as a closing note even if you find the inside bar on all your different time frames the higher the time frame the more weight the pattern holds because this is an indecision pattern it is absolutely crucial as to where and how it is formed so you need to look at and follow the price action that is formed around the inside bar to successfully start using them in real market conditions and as always don't forget to learn about the pattern in detail and back test it so that you are comfortable while using it in the market foreign episode we have talked about the different candlesticks and what each of them had to say with regards to the market participation and one of the main candlesticks of our discussion was the pin bar candlesticks the pin bar is one of the most popular reversal Candlestick patterns you can use a pin bar on all your different time frames and it can be traded across many different markets making it a very flexible trading Candlestick pattern most importantly the pin bar Candlestick is a reversal pattern and it can often help you find when a new sink either higher or lower is about to occur let's hope and do a more detailed study both the pin bars so what is a pin bar Candlestick pattern if you remember a pin bar is a Candlestick that has a very large Shadow or a Candlestick Wick with a small real body the shadow of the pin bar is at least two times the size of the real body the tail or the shadow of the pin bar shows the area of the price that was rejected and the implication of it is that a price will continue to move opposite to the direction the tail points now this pattern can be bullish or bearish depending upon where it occurs and how it is formed within the price action the example here shows a bearish pin bar the pin bar is formed with the price trying to break higher in this particular Market the Bulls are in control but as soon as the bearish pin bar was formed it shows that the Bears have endured the market and are looking to take the price lower with a reversal and this is exactly why the large Candlestick Wick is created which shows that the higher prices were rejected and the Bears are trying to regain control after the initial break higher similarly a bullish pin bar shows rejection of lower prices the large lower Wick shows the Bears were in control earlier but eventually it was overcome by the Bulls and now the Bulls are dominant and the market could reverse higher now the most important point is that the key to high quality pin bars is where they form in the market as we discuss more about pin bars in this video we will understand why the best pin bars are found at the key market levels or within the obvious Trends let us try to understand the two pin bar types in Greater detail let us start off with the bullish pin bar some of the highest quality pin bars are when there is an obvious trend in the market in this particular example the price is moving in a clear Trend higher we can see from the price action that the price is making regular higher highs and higher lows with this uptrend for a bullish pin bar to make sense to a price action Trader we want to see it Formed at one of these swing lows with the trend now the reason as to why the pin bar should be found at the swing lows is that pin bar is actually a reversal signal and we are looking to enter the bullish pin bar and make a profit it as the price reverses higher with the trend or simply we want to enter when the buying demand starts to kick in and in addition to that we want to trade with the trend in this particular example the price forms a bullish pin bar at this swing low within the trend higher and the rejection is quite strong which will actually strengthen the bullish perspective even more so in this case we can enter a trade straight after the pin bar has finished forming or we could use additional confirmations a confirmation type of Entry is where we are looking for the price to break higher and above the pin bar height and when we see the price breaking above the pin bar High we can enter long now let us take a look at the bearish pin bar setup to clear things even more as mentioned the pin bar can be both bullish or bearish depending upon where and how it forms with respect to the price action the difference between the bullish and the bearish pin bar is the that the bullish pin bar has a wick or a shadow rejecting lower prices while the bearish pin bar has a wick rejecting the higher prices which is a sign that the Bears are more dominant over the Bulls now the other great time that you will find high probability trades with this Candlestick in addition to a trending market is when the price is rejecting a level in the market that is of importance or an area of value these can often be the key support or resistance level or dynamic levels like the moving averages in this example the price moves higher into a key resistance level we can see that the price rejects from this resistance level and forms a bearish pin bar this tells us that the resistance level has held and the price may now be looking to sell off lower and then we can either enter the trade the very next candle or we can wait for the confirmation that is we can wait for the price to break below the laws of the pin bar Candlestick moving on let us find out which are the best markets to trade the pin bar now the best markets to trade pinball strategy are markets where the price has a solid amount of volatility for the markets with a high volatility the more the price movement and volatility the more opportunities you will have to trade the pin bar and also the bigger potential for large winning trades but markets such as individual stocks that can often have large gaps like Gap UPS or Gap Downs are not ideal for pinball trading instead the markets which are fast and free-flowing with the smooth price action is actually good for pin bar trading so markets like Forex crypto Etc are the best candidates for this particular strategy in trading mistakes are bound to happen sometimes it may be due to lack of knowledge and other times it may be due to how we conceive an idea that is if we understand a perfect regular idea in a different context that will lead us to confusion so I will talk about some of the mistakes that you should avoid while using the pin bar trading strategy the first and foremost mistake is to expect Market reversals because of a pin bar a trend either uptrend or downtrend will not reverse just because there is a bin bar on the chart it takes more than a single Candlestick to reverse a trend sometimes even a major news release has difficulty in reversing a trend so what more of a pin bar we have talked about the market structure or the different stages of the market and why and how they are found so you can watch the second episode to get more insights on this topic so if you spot a pin bar against the trend it does not necessarily mean a trend reversal is about to play out the odds are that Trend will continue the second mistake is giving too much attention or interest to pin bars now we have learned that pin bar represents price rejection but here's the important thing price rejection can come in different forms and patterns and not just in the form of pin bars so if you focus only on pin bars and reversals associated with pin bars then you will miss out a lot of other trading opportunities in the market now the most important mistake of all considering all pin bars to be equal the point is if you see a strong momentum on the upside followed by a small bearish pin bar it is likely to be a pause in the price action as the Bulls are in control of the market and on the same note if you see a weak momentum on the upside followed by a huge bearish pin bar it is likely to be a reversal since the preceding price action tells you that the Bulls are getting weak so it's clear we should not read all pin bars the same because they are actually not and remember the bigger the pin bar relative to the previous candles the stronger the price Rejection it is always a good idea to compare the pin bar with the previous candlesticks to understand the price action logic now let us hop onto the pin bar trading techniques starting with trading the pin bars with the trend one of the simplest and most effective ways to start stacking the oats in your favor is to trade in lying with the obvious trend in the market when trading with a clear Market Trend you are trading with the current flow and not trying to push against it so the trick when using pin bar and Trend trading is to look to enter from areas of value and important swing points which are swing highs or swing lows in this example the price is in a clear Trend higher and so we will start looking for a bullish pin bar to get long and when the price makes a swing low due to a short-term profit booking into an area of value naked trend line or a moving average or even a swing level and then forms a bullish pin bar traversing Candlestick rejecting the lower prices we could look to end up long trades we could either go along as soon as the Eden Bar has formed or we can wait for a confirmation to enter and the price breaks above the pin bar height in case of stop loss you can place the stop loss 180r below the swing lows or the trend line or the moving average as Amber buffer or you can even place the stop loss below the lows of the pin bar Candlestick in case you want a tighter stop loss now the target can be set as the next swing high or the nearest resistance level or you can ultimately write the trend and exit when the price breaks out of the uptrend structure now there are a few advantages by trading with the trend number one is that you don't require a precise entry to make a good profit secondly you have better odds for the trade to work out as you are trading with the market flow and finally you have a greater profit potential as the impulse move is stronger than the corrective move moving on to the second strategy trading pin bars from an area of value take this sample where the price moves higher into a key resistance level we know as a thumb rule that resistance is an area of value where sellers will be looking to short the market or there will be a larger supply for the stock than the demand so when we see a price rejection from the market level and it forms a bearish pin bar Candlestick this is a clue that the resistance level has held or the sellers are active and this is an indication that the price may now be looking to sell off even lower the important point to note here is that pin bars are reversal candlesticks which can help us make a trade entry but can guarantee us a reversal now since there is a strong price rejection from the resistance level we can either take a short entry on the very next Scandal or we can wait for a confirmation the confirmation in this case is when the price breaks below the loss of the bearish pin bar candle and the stop loss for this trade would be able the highs of the bearish pin bar candle with a suitable buffer using the ATR indicator and finally the target can be set as the nearest swing low level or the nearest support level now some of the benefits of trading at a support or resistance level are that you are trading from an area of value secondly it tells you when you are wrong that is if the reversal fails your stop loss will be hit and you will be out of your trade and finally it improves your winning rate as well as improve your reward to risk because of the area of value and also based on the degree of rejection from the level now the third strategy is using a combination of moving averages and support resistance levels so in strong trending markets the price is unlikely to pull back towards the trend line or a moving average or simply the pullbacks are shallow thus you can look the trade from a 200th moving average Now by a general rule of defining the market Trend if the 200 moving average is pointing higher and the price is above it then the market is on an uptrend now on an uptrend find key support and resistance levels using a higher time frame or you can even use a more responsive 20 moving average then we have to wait for the price to come to an area of value which could be a support resistance level or a dynamic support resistance level like the 20 moving average and if the price comes to the area of value and when you see a bullish pin bar or a price rejection from this area of value then you can go along you can take along entry on the very next candle or you can wait for the break of the highs of the pin bar so as to end with a confirmation Nation if you are long you can place the stop loss below the law of the pin bar or 180r below the pin bar low now if the price goes in your favor then you can take the profits at the nearest swing high level or the nearest resistance level or you can even use the 20 moving average as a trailing stop loss and exit when the price breaks below it now a closing note pin bars will show up in any Market condition on all the time frames so be sure to understand the prerequisites and practice identify and trading them on a demo account before trading them with real money because practice makes you perfect foreign foreign ERS have always benefited from massive gems in asset prices especially during volatile market conditions so it is our responsibility as a Trader to understand these massive gems in asset prices or simply the gaps formed in the market and then learn about them analyze them and finding ways to trade them in the market so what exactly is a gap the difference between two consecutive candles closing price and opening price is called as a gap or simply a gap is an area of discontinuity in the chart where the price of the asset either Falls or rises from the close of the previous day a gap occurs when the prices skip between two trading periods that is skipping over certain prices and so it creates a void on the price chart or simply these are areas on the chart where no trading activity has taken place now you will have a question in your mind why do gaps occur in the market in the first place now there are a few few reasons as to why gaps occur in the market let us look at the reasons one by one first of all gaps occurs due to an imbalance between the demand and Supply the Gap up for example is because of the aggressiveness of buyers which means that there are more biodas in the market or simply the demand is greater than the supply which will boost the prices to go up or in other words the price will Gap up similarly a gap down is because of the aggressiveness of sellers which simply means that there are more sell orders or simply the supply is more than the demand which cause the price to gap down lower so in short gaps occurs at levels where there is a supply and demand imbalance the second reason due to which gaps occur are due to the overnight Sentiments of the market participants or due to any big news gaps usually occur when there is a fresh news or a big announcement that will lead to change in the market fundamentals usually when the markets are closed so when such a new spreads there is a flood of buyers or sellers waiting to buy or sell depending upon the nature of the news and finally sometimes the smart money or the big institutions tried to skip the important support and resistance level that is for example if they are bullish on a particular stock they will Gap up the price above the supply Zone where they could have faced a potential selling pressure another important point to note about gaps is that gaps can act as supports or resistances so in case of a gap up the Gap can actually act as a support Zone and during a gap down the Gap can act as a resistance saw we will use this particular idea further up in this video now another idea which is worth mentioning is the idea of Gap filling now Gap fill refers to the price retracement back to the previous day closing price now you can ask the question that do all the gaps get filled the simple answer to this question is a no that is not all gaps get fitted however ninety percentage of gaps eventually get filled the problem that you will have if you are making trades thinking that a gap will get filled every single time is that even if it does get filled it can take a very long time while most gaps get real quickly some gaps will not be filled for months or even years so if you are looking to make trades aiming for The Gap to get filled then you need to keep in mind that no not all the gaps will fill and some of them will take a very long time now all the gaps are not the same there are different types of gaps and actually the gaps are divided based on the context in which they appear so I'll talk about three of them number one is the Breakaway Gap or the breakout gaps the Breakaway Gap means breaking the important support or resistance level or a significant trend line in the form of a gap the Breakaway Gap actually appears after the completion of an important pattern like a price in a consolidation range or a continuation or a reversal pattern so the main logic behind Breakaway Gap is that the smart money knows exactly where the support and resistance areas are let us say for example if the smart money is bullish and higher prices are anticipated the smart money will certainly want or Alec but the problem is how to avoid the old resistance which could trigger some selling pressure so what they will do is that they will Gap up through the old area of apply as quickly as possible as a way of avoiding the resistance now after the Breakaway Gap has occurred we have a clear sign of strength now the smart money does not want to have to buy the stock at higher prices just they have already bought their mean Holdings at lower levels during the consolidation and they also know that a breakout above the old resistance area will create a new wave of buying in the market and how can they be sure about this number one many traders who have shorted the market will now be forced to cover their positions by buying back the stocks and then there will be a second group of traders who will be looking to buy the breakouts and finally there will also be traders in the market who may feel they are missing out on a big opportunity and they will be encouraged to start buying most often or not the Breakaway Gap will not be a trap up move or a force breakout because High volumes will be supporting them more often now coming to the second type of Gap it is a runaway Gap or a measuring Gap in this case the price small have been underway for some while and somewhere in the middle of the move the prices will Gap up and this type of Gap up is called as a runaway Gap so in case of an uptrend it is a sign of the continuation of a trend and also in case of a downtrend it is also a signal that the trend will continue moving on to the third type which is an exhaustion Gap these are generally weak Gap UPS or Gap Downs so it can be a weak Gap up to the resistance or a weak gap down to a support this price action is actually designed to trap you on a potentially weak market and into a poor trade and thereby hitting your stop losses and most often or not it will form a force breakout or a force breakdown in the market well then let us figure out how to trade the gaps successfully there are several ways to leverage gaps in the market to your advantage in this episode however we will talk about the idea of breakouts and reversals with respect to Market gaps these strategies are based on two types of gaps with the open price depending upon the highs and lows of the previous trading section or the previous sessions range so it can be an outside Gap or a full Gap now this happens when the market open outside the previous day range that is the candle opened outside the previous day high or the low or Gap up or gap down respectively and the second type of Gap is an inside Gap or a partial Gap in this case the market open inside the previous day range that is in case of a gap up the candle opened above the previous day close but not above the previous day hype so there are three main factors we have to monitor to determine where the Gap is real or a trapped Gap so these three factors are the Boolean opening price and the pullback to a particular level let's talk about the volume briefly it is important to watch the volume carefully when determining if a gap is valid or not so for example if a stock gaps up and the volume is also high and also the price remains above the opening price after the morning pullback it is an excellent sign that this stock can further go on the website in addition to volume you can also make use of an indicator called The Wave app or the volumated average price which bloats the average price adjusted for volume on the chart and it is fairly very easy to make use of also the B web assigns more weight to the price points with high volume to talk about bbap briefly vivap is typically used with intraday charts as a way to determine the general direction of the intraday prices it is similar to a moving average in that when the price is above the view app prices are rising and when the price is below the viewer the prices are falling but for the sake of this video we will go with the conventional approach of following the volume bars for confirmations now talking about the time frames the strategies that I am about to discuss are based on a smaller time frame that is the intraday time frames particularly on the 5 minute chart and considering the price data from two consecutive days where the Gap has occurred so to begin with I have to plot the previous days high and lows and also bring up the volume indication on the chart then you have to see if it is a gap up or a gap down and you have to figure out if the Gap was a partial Gap or a full Gap now after finding out these prerequisites you are ready to take either the breakout approach or the reversal approach and the most important thing of all do not trade the first ever after the market open in case of a gap opening because we need to understand the price range of the price action happening during such a volatile opening so as to implement our strategy with some amount of confidence as I have mentioned earlier there are two types of gaps partial gaps and full gaps and these can be further categorized to partial Gap ups and GAP downs and full Gap ups and GAP Downs so for these four category of gaps we can actually Implement a long trade and a short trade which will leave us with 8 different strategies to use with but at this point I will pinpoint only four strategies which has a a higher win rate than the other four strategies and let me make this very clear that sometimes the trades won't work out as we have planned and it is better if we opt to not trade under such situations starting off with trading the full gaps let us talk about a full Gap up that is open price of the Gap up candle is higher than the previous day high we have to note here that the previous day high is an important price level which can act as a support level for the prices it can trigger a buying pressure in the direction of the Gap up so in this particular situation we have to wait for the prices to form a range during the first hour of the market open and then if we manage to find a pullback the previous day high which is the demand Zone here then we will look for a continuation trade on the upside Direction when the price actually breaks above the opening Range High or the high that was formed during the first hour of Market open we also have to see if the volumes are favorable or high enough which will have help to strengthen our trade confirmation we can enter a long trade above the high of the range and we can keep the stop loss below the previous day high level with a suitable buffer and in case if the Open Range High is very large we can actually enter a trade above the range keeping at least 1.5 is to 1 risk to reward and placing the stop loss below the highs of the range or below the breakout of the range candle lows now you may have a doubt in your mind what if the Gap up is too large that is if the price opened far above the previous day high which means it is far away from any area of support and in such a case the probability of the price rate racing back to the support level or the previously high level is very low so as a price action Trader we can't initiate any reasonable trades as there is no critical price levels where we can find a trade entry and of course if there is any Market support and resistance level nearly 1 hour range after the market open open then we can take a breakout or a reversal approach based on price action other than that it is better as a price action Trader to stay away from such a huge shift from the price level as the win rate of the trade can be low I'm not saying that it is not possible to trade such huge gap UPS of course it is possible with technical indicators like vivap which we will talk about in the technical analysis course but on the scope of a price action Trader it is better to stay away from such setups moving on let us talk about a similar case but it is about a full gap down that is the price open below the previous day's low in this case the previous day low will act as a resistance level where there could be potential sellers coming in and push the price lower so in our approach we will wait for the first hour so that the volatility will cool down and then if we see a pullback of the prices back to the previous day low which is a potential resistance level now you have to mark the low price of the range so formed during the first hour and if the price manages to break below this range low with a high amount of volume then we can enter a continuation trade in the direction of the gap down we can take a short entry below the breakout of the range low and we can place the stop loss above the previous day low or in case if the range is too large we can enter a short trade with a predefined reward to risk of at least 1.5 is to 1 keeping the stop loss just above the breakdown of the range candle low similar to the previous case that we have discussed in case of a full Gap up in case of a full gap down where the open price is far from the previous day low which is a potential resistance level the probability of a pullback or re-test back to the resistance level is very low and it does not make any sense as a price action Trader to be trading without a critical price level to rely upon so better avoid trading when the price does not respect any support or resistance levels now these are the two full Gap trade strategies that I prefer using in contrast to their counterparts which are the full Gap up short trade and a full gap down long trade now the idea to trade the other two techniques is based on the strength of the pullback which means if the pullback is very strong and breaks through the level with high volumes then we can think about implementing these two strategies we can research more about the other two strategies if you are curious enough moving on let us talk about the two partial Gap trading strategies one of the most important points that we have discussed earlier was that a gap can act as a support or resistance level when price does move in and close the gap or fill the Gap it will often bounce away and act as an area of Supply or demand so there are two potential levels to consider out here the first one is the previous day closing price which can oppose the prices so is the opening handle of the particular day under consideration so both these levels are potential levels for Price reversal so instead of considering both these levels as separate entities we will look at them as a zone or area of price action now starting off with a partial Gap up that is open price is above the previous day close but still below the previous day high level now when a market gaps up the Gap can act as a support level for any pullback the pullback tests the Gap with lighter volume which tells us that the price does not have enough legs to get passed through the gap or break down below the Gap Instead The Gap becomes a support and there is a potential price reversal possible towards the upside and any bullish signal that is triggered is our buy entry so it can be a bullish pin bar or a bullish engulfing pattern Etc we can also look for a rise in the volumes and the prices starts to rise we ended long at this bullish signal that is we can wait to enter above the reversal Candlestick high or for an even more conservative approach we can enter when the price breaks above the day's high level formed so far but this particular approach of Entry doesn't make sense if the Range High is very close to the previous day high then there can be potential selling pressure and your trade can go against you so make sure to maintain a good reward percentage and keep an eye on the important levels where the opposing pressure could potentially come in we can place the stop loss just below the Gap Zone and we can fix a reward to risk of at least 1.5 is to 1 or you can even keep the target as the previous day high level so the benefit of using this strategy is that gaps fill 90 percentage of time so this is a popular trading strategy the second strategy is when there is a partial gap down that is open price is below the previous day close but it is still above the previous day low when a market gaps down then the Gap acts as a resistance level for any pullback if the pullback tests the Gap with a smaller volume it tells us that the price does not have enough strength to break through the gap or break out above the Gap Instead The Gap becomes a resistance level and there is a potential price reversal possible towards the downside and any bearish signal such as a bearish engulfing candle or a bearish pin bar gets triggered it is our opportunity to short the market we will also have to check if there is high enough volume associated with this particular move you can enter a short read below the bearish confirmation Candlestick and place the stop loss just above the gap for safety or it is much better if you keep a predefined reward to risk beforehand as a part of risk management now these were the two partial trading strategies the two others are the partial Gap up with a short entry and the partial gap down with the long entry in these strategies also volume and pullbacks back to the Gap regions is the key that is if there is a strong enough pullback assisted with strong volume break through the Gap Zone then we can think about utilizing these techniques you can check them out yourself if you want you can also notice that all the strategies that we have discussed we were actually taking a trade in the direction of the Gap and not against it and finally it is up to you as a Trader to back test these strategies on the chart and find out if you can actually Implement successfully in your trades now that is it for today guys I hope you have learned something new if you have please do like the video and subscribe to the channel and don't forget to press the Bell icon so that you don't miss out on the upcoming videos you can also follow us on our official Instagram page I will see you guys on another video till then see

Channel: Fortune Talks

Views: 1,462,825

Keywords: fortune talks, fortune talks hindi, price action trading, price action trading strategies, price action trading course, price action, price action course, price action strategy, price action full course, price action trading strategy, best price action trading strategy, price action forex, price action course free, price action for beginners, price action course in hindi, price action trading full course, price action trading course for beginners, price action patterns

Id: OmZZarBK_M8

Length: 207min 38sec (12458 seconds)

Published: Wed May 10 2023