The Ultimate Candlestick Patterns Trading Course (For Beginners)

hey hey what's up my friends so welcome to the ultimate Candlestick patterns trading course right so who is this course for this course is for you if you're a Forex Trader you're a stock Trader or even a cryptocurrency Trader because the examples the strategies the techniques the principles so it can be applied to these markets and also it doesn't matter whether you're a day trader a four hour time frame Trader a daily time frame Trader because again all this can be applied to the different time frames as well so this is a very comprehensive trading course I will put the timestamps uh somewhere on the screen so you can see which are the different sections and which are the timestamps right for each section also put it in the description right so you can refer to it easily and then hop around the trading course right if you wish to but my suggestion is that if you're new to trading I recommend you watch it from start to finish because the concepts right are built upon right one section on top of the other and by the end of this course my outcome that I hope for you is number one to be able to better time your entries and exits using Candlestick patterns number two to help you identify when the train is about to reverse so you don't get caught on the wrong side of the move and also be able to predict Market turning points and finally to equip you with a trading strategy so you can be able to profit in pool and bear markets sounds good then smash the thumbs up button and let's get started when it comes to Candlestick patterns right you will likely see one of two colors number one is what we call a green candle a bullish candle and the thing about Candlestick patterns is that every single Candlestick pattern has four data points the opening price the closing price the high of the day and this is the low of the day so let's say for example you see this Candlestick on a daily time frame what does it mean very simple this means right that over here at this point is the opening price of the day this is the price where the market opened it and this over here is the closing price of the day this tells you that let's say the market closes at 5 pm at 5 PM this over here at this point is the closing price of the day now what about this this is the high this is the high of the day meaning during the day right what is the highest price point that the market went so it's actually signified by this line over here we call it the high of the day some people call it the upper week the upper Shadow that's fine as well and then over here clearly this will be the low of the day the lowest price point that the market went during the day so on the other hand if you see a red candle again it has four data points but where it is different is that the opening price now is above the closing price whereas you look earlier for a green candle a bullish candle the opening price is below the closing price okay so again here same thing this is the high of the day if you are looking this on the daily time frame this is the opening price of the day for a bearish candle this is the closing price for the day for a bearish candle and then this is the low of the day now what if you don't see this on a daily timer what if you look at this chart or Candlestick pattern on the one hour time frame how do you interpret this again same thing if you see this on a one hour time frame so let's say for example let's refer to the bare candle let's say the market opened here at 12 p.m okay then this means you're at this closing price if you look at this on a one hour candle this candle will be formed right at 1 pm okay this means that at 1 pm this candle will kind of like be uh be form and printed on your chart okay and then the next candle will sort of let's say open somewhere here and then this thing Scandal will start to move up and down and when the hour is up then the candle kind of like be finalized right so if you are looking at this on an hourly time frame or the 15 minutes time frame this is what it means right so again just a quick recap if you look at this let's say one last time on the let's say the 15 minutes time frame let's say the market open here at 12 15 PM okay what this means is that at the closing price at 12 30 PM the candle will close it will be fixed and printed on the chart and then the next candle will be open right and start you know moving up and down so let's do a quick recap before we dive into the more advanced stuff first thing a Candlestick pattern has four data points the Open high low and close a bull candle this is where the clothes is above the opening price and for a bear candle this is where the clothes is below the opening price now that you've learned the basics of a Candlestick pattern in the next section I want to teach you nine powerful Candlestick patterns that every Trader must know the first Candlestick pattern that you are going to learn right now is what we call a hammer okay so what is the meaning of a hammer so just a quick one right this is the opening price of a hammer so if you look at this again on the daily time frame this is the opening price of the day this over here is the lowest price point that the market has went during the day this is the highest price point the market has actually reached right during the day and finally the market closed at this price point during the day so what does a hammer mean what does it signify so let me explain so again if you look at this on a daily time frame this tells you that when the market opened the sellers quickly took control and pushed the price lower down this extreme lows of the day so during this point of Maximum pessimism right the the sellers they were in control driving the price down you know really low and then the buyers they will push to a corner right react at the wall right at their back so suddenly they found the strength maybe they took you know some steroids they they don't gain control of their their strength and muscles and they push the price up higher okay and eventually closing near the highs of the day so you can see that during the early part of the day the sellers were in control driving the price down lower but eventually right the buyers stepped in and pushed the price up higher finally closing near the highest of the day so this tells you that the buyers they are temporarily in control right so this is what this Candlestick pattern means so it's a bullish uh reversal pattern so for those of you who watch Avengers endgame right you know that you know towards the end Captain America is left alone right facing Thanos Army okay and at the point in time is the point of Maximum pessimism you think now man that guys you know his his date right how is he going to find the Army and then and then what happens you know his friend I think Sam you know the Birdman came in the portal opened uh Black Panther showed up forever all right and then when the war ensues and the good guy win right so you can see the story is similar the point of Maximum pessimism right and then the reversal where the good guys overcome Thanos Army so this Candlestick pattern kind of like just reminds me of that story so if you look at the chart right it will typically look something like this this over here again is the hammer you can see that over here this reversal the price open at this price point then it went down to the extreme lows over here bias to to control okay and then finally closing near the highs of the date and the market did you know had a slight brief rarely above here and of course we don't just trade Hammer Candlestick pattern in isolation we take into account other factors like you know support Market structure Etc I'll cover all those stuff later on but for now I just want you to get familiarized right with this particular Candlestick pattern now on the other hand right shooting star this is kind of like kind of like the inverse of a hammer Candlestick pattern so I'll just go a little bit quickly for shooting star this is the opening price this is the close of the day this is the lowest price point of the day and then it's the highest price point of the day so this one you can see that the story behind a shooting star is just the opposite this is where during the early part of the day right when the market opened the buyers took control and pushed the price up higher near the highs of the day and then the sellers right say uh that's as far as you're going to go my friend and then they push the price down lower driving it down near this lows of the day so I do apologize for my wavy lines I didn't really want that to happen but you just somehow just go Zoom like that okay so yeah anyway this tells you that the the sellers right are temporarily in control because at the start of the day the buyers tried to push the price up high but it got overwhelmed by the strong selling pressure who then drive the price down lower closing near the lowest of the day so this kind of reminds me right where you didn't study for an exam and you go for an exam and and what happened is that you go back the report card man you got an A A despite not starting for the exam and then it's only you kind of realize oh it's actually A4 absent then your whole world come crashing down again right so yeah same same over here for this shooting star pattern so if you look at the chart typically it looks something like this on the chart you can see over here the price open at this price point initially the buyers were in control pushing the price near the highs of the day and then the sellers took control and pushed the price down lower closing near the lows of the day over here next we have what we call the bullish engulfing pattern and by the way if I have not talked about this thing over here this is what we actually call a body so from this over here to this right basically the colored portion of the candle is what we call the body okay so for from here to here we call this the body and then we have things like you know uh Shadow Tails let's keep things consistent right let's call this the uh Shadow right so basically from here to here is what we call the upper Shadow right you know Ninja Turtles right Shredder in the shadows yeah or turtles in the shadows yeah so this over here right is what we call the lower Shadow right so we have body and the shadow body is the the one that is colored right Shadow is the kind of like just the the Candlestick you know the shadow that line is sticking up so now what about the bullish engulfing pattern what does this Candlestick pattern means so earlier you've learned the hammer and the shooting star pattern those are individual uh reversal Candlestick pattern One reverse one candle formation but for this one over here you see there's two candle formation if this one is the first candle this is the second candle so for the first candle you can see the opening price is here and the sellers to control and drive the price down lower closing near the lows of the day that's what happened on the first day second day what happens that the market opened at this price point and the buyers pushed the price up higher closing near the highs of the day so there's this sudden turn of events right where the sellers on the first day they thought they've won the battle but only to see the next day the buyers step in and push the price of higher closing near the highs of the day so this is what we call a bullish engulfing pattern why is this what does the word engulf mean so engulf means basically to cover to wrap around so you can see that the engulfing pattern the body of this second candle has engulfed the body of this first candle so this is the body of the first candle from here to here okay and then the body of the second candle from here all the way up to here has engulfed the body of the first candle so this is what we call a bullish engulfing pattern wrap around bullish engulfing pattern and another thing to add is that if you so buy right right so if you read most textbook and courses right by right the definition of a bullish engulfing pattern is that the opening price of the second candle right it has to have a gap right from the low of the first candle so buy right let me just show you what I mean so most textbooks where you'll see is that this is the low of the first candle right so by right the opening price next day has to be somewhere about here okay and then the market eventually you know push up higher and then let's say close near the highs of the day over here so you can see that the opening price is actually here and this is the lows of the first day so you can see from here to the opening price there's what we call a gap Gap okay okay so this is [Music] definition of a bullish engulfing pattern but you can see that the example that I give you there is no Gap I simply just left the open right at the same at the same price as the previous day closing price why did I do that and the reason is simple is because if you trade the Forex Market you trade the crypto markets is traded almost 24 hours a day you won't see gaps on your chart rarely right so this is why I remove the get portion right to kind of like make this more uh relatable for people who trade the crypto markets or the Forex markets right but if you trade the stock markets don't be surprised right where you see a bullish engulfing pattern the opening price isn't here but it could actually be slightly below the previous day low over here it can actually open over here right and then finally push up higher and then closing near the highs of the day so this is actually a pretty common in the stock markets but for the Forex and the crypto not quite as much so just something to to share with you and if you look at the chart the bullish engulfing pattern right looks something like this first candle is a down day market closed near the lows of the day and the second day the candle right close higher for the day closing near the highs of the day and it has actually engulfed right the body of the first candle look at this first candle and then this is the second candle right yes angle of the body of the first candle so this is what we call a bullish engulfing pattern it means that the buyers they are temporarily in control and in this case he did you know went up a little bit higher so the inverse is true right so this is what we call a bearish engulfing pattern so the first candle is green okay and then you can see that the buyers they are in control closing near the highs of the day and then the next candle at this opening price the seller Drive the price down lower closing near the lows of the day this is what we call a bearish engulfing pattern and it looks something like this on the chart okay so you can see the price over here buyers to control and drive in into this area of resistance and then what happened next is that we have a bearish engulfing pattern over here where this body of this candle has anger of the body of the first candle closing near the lows of the day and then what we have is like a decline down lower so once again right we don't trade bearish engulfing pattern in isolation we have to take into account the context of the market so don't really don't explain to you the strategy the entries the exits examples and much more and by the way if you're enjoying this training so far smash the Thumbs Up Button if not hit subscribe so moving on the next Candlestick pattern is what we call a doe G okay so this again is the high of the day this is the low of the day and then this is over here is the opening price of the day so now quiz time as I've said earlier right every Candlestick pattern has four data points the Open high low and close but in this case I've only showed you shown you the Open high and look where is the close take five seconds to think about this one two three four five okay the answer is this this over here is the close of the day so a doji simply means that the opening price and the closing price they are the same price point so yeah we still have four data points just at the opening and the closing price is at the same price so let's say they close it the opening price is at two dollars the closing price is also at two dollars so this way there is no body on this uh particular Candlestick pattern so what does a doji mean so again very simple all right this is the opening price it tells you that uh early part of the day the buyers to control push the price up higher near the highs of this day and then the seller suddenly reverse the market down lower taking control to these lows of the day so this is the lows this is the highest and then eventually the buyers found the string once again to push the price up higher and finally they close pretty much where they open for the day so you can look at this it's like it's like indecision right both the buyers and sellers nobody is in control so it's like you know the girl's like man you know which guy should I go with this guy is Rich this one is handsome this one really loves me I'm undecided who do I go with you know so yeah there's a doji undecided right so adoji is a neutral pattern both buyers and sellers nobody you know has won the battle yet so if you look at the chart you can see that doji this was a pretty neutral pattern this is what we call a doji Candlestick pattern now moving on right there are many variations of adoji so here are a few to share with you this is what we call a dragonfly doji Okay so let's find out where are the four data points this over here is the opening price and this is the low of the day so now let me ask you where is the closing price and the high of today as you know every Candlestick has four data points so where's the high of today and where is the closing price of the day let me give you five seconds one two three four five okay answer is this this is also the high of the day as well as the close of the day so if you look at this dragonfly doji the opening price the closing price and the high of the day is all at the same price level okay so this is what we call a dragonfly doji so why is this called a dragonfly doji I have no idea I can only speculate because people think that this looks like a dragonfly okay maybe maybe not who cares so anyway so what is the meaning behind a dragonfly doji so take another five seconds and think right what is the meaning behind this dragonfly doji does this look similar to a Candlestick pattern that you have learned earlier five seconds one two three four five okay so if you say that it looks similar to a hammer Candlestick pattern that you've seen earlier then you're absolutely right so a dragonfly doji has a similar meaning to a hammer it's a bullish reversal pattern although not quite as strong as a hammer but also it still has a bullish meaning behind it this is where the opening price over here during the early part of the day the sellers took control and push the price down lower near these lows of the day and then the sellers you know they were back to a corner I mean the sellers were in control and the buyers got pushed until they say Ah that's enough run let me come in right coming coming out for those of you who watched Dragon Ball right so yeah this is where the buyers push con push the market up higher closing near the highs of the day right so they close at the highs of the day which is also the opening price of the day right so this tells you that they uh a reversal in Market sentiment sellers were initially in control over here and then the buyers reverse up higher close back towards the high towards the opening price of the day so this is what we mean by a dragonfly doji it's a bullish signal so if you look at the chart right this is how a dragonfly doji looks like okay so dragonfly doji opening prices here sellers when control pushing down towards the low of the day over here before the buyers finally step in and reverse back up closing back where the market has opened earlier so this is what we mean by a dragonfly 2G okay the inverse of the dragonfly doji is what we call the gravestone doji so quick one right what Candlestick pattern do you think the gravestone doji looks like so if you learn earlier and you've said a shooting star pattern then you are absolutely right it looks similar to a shooting star pattern the difference is that for a gravestone doji there is no body whereas the shooting star pattern you have this body over here so gravestone doji similar to a shooting star it has a bearish signal signal to it where initially during the open of the day the buyers were in control push the price up higher and then suddenly the sellers took control and drive the price down lower closing near the lows of the day which is also the opening price of the day which is also the closing price of the day so this is what we mean by a gravestone doji signaling to you that the sellers they are temporarily in control so it looks something like this over here you can spot the gravestone doji over here's the opening price is the low of the day as well as the closing price of the day and this is the high of the day so initially buyers to control push the price up higher closing near the highs of the day and in the sellers Drive the market down lower closing back towards the opening price of the day and signaling to you right there is a rejection right of this higher prices over here okay the next Candlestick pattern that we have is what we call the Morning Star pattern and I want to point out is that this particular Candlestick pattern has three candles involved this is the first candle this is the second candle and then this is the third candle so this is a tree Kendall reversal Candlestick pattern right there are three candles involved so what does the Morning Star pattern mean so let's analyze this right bar by bar so on the first bar the first candle over here you can see the market open over here and the sellers took control and pushed the price down lower closing near the lows of the day so at this point you can see that the sellers man they are winning the battle right boo yeah who's your daddy so the sellers are clearly in control driving down the market lower for the day then what happened next is that the next day the market open at this price point so at this point I think the sellers will think that oh man this today is going to be another Bloodshed day right we're gonna crush the market today as well but what happened instead is that the market tried to Rally up higher right over here then this is the highest of the day and then only to reverse down lower re-testing the lows of this day or rather testing the lows of the day and then finally pushing up higher and closing right where it pretty much opened for the day which is over here so at this point you can see that the sellers they try to drive the price down further but it's meant by uh but there's a lack of selling pressure right or there could be possibly be strong buying pressure stepping in where the opening price and the closing price is the same for the day so this Candlestick pattern the second day one if you have seen the earlier uh training you know that this is what we call a doji pattern it's a neutral pattern where both the buyers and sellers right they are pretty much in equilibrium okay so nobody's winning the war as of yet and what happened on the third day is very interestingly on the third day the market opened at this price point they open over here okay and then the buyers suddenly found the string and stepped in and pushed the price up higher Kamehameha all right and they close near the highs of the day so if you look at this from this three candle perspective the story goes something like this right on the first day the sellers are in control they drive the price down lower on the first day the second day over here the sellers tried to drive the price down low but couldn't push it any lower instead what they end up is a doji it's a neutral day where both the buyers and sellers are in control and on the third day the buyer suddenly stepped in and pushed the price up higher closing near the highs of the day reversing right the uh the down move right from two days ago so this is a bullish reversal Candlestick pattern right the morning start telling you that the buyers right they are temporarily in control so if you look at the chart it looks something like this so you can see over here right for this particular Example The price came towards this area of support right so price came into this area of support we had to bounce up higher and re-test support so over here look at the second retest this is where I want you to focus on we had strong selling pressure right from this highs all the way down into this area of Support over here and then we have this particular Morning Star pattern which is shown over here so let me explain to you the psychology of the market okay so the Market Drive the price down lower on this particular candle you can see that the sellers they are clearly in control they might have thought they might have thought right they have won the battle man we have you know broke below support the market is going to collapse it's going to go down lower right who is your daddy right then on the next day we have this doji looking pattern so when the market forms a doji looking pattern it can be one of two scenarios number one there's a lack of selling pressure lack of I can just call it SP right selling pressure or number two it could be strong uh buying pressure okay so we have no idea which is which if there's a lack of selling pressure then you can see like the candle the range is is just not going down any lower because nobody's wanting to sell at the same time it could also be strong buying pressure because there could be very strong selling pressure trying to push the price down lower but why it ends up as a doji is because there's also an equally strong buying pressure coming in right to hold up the price so strong selling pressure meets strong buying pressure you end up as a doji as well so it could be one of these two scenarios you do not know which is which unless we you know we look at volume and then we can tell but as of now I have no I have no volume on this shot so we can't tell as of now and then what happened is that on the third candle we have this strong bullish uh reversal candle I think we can even call this as a bullish engulfing pattern if you want because he has anger of the body of this uh this candle over here right see we have strong bullish candle closing near the highs of the day so this at this point it tells you that the bias they are temporarily in control because if you look at a story for this morning star sellers push the price down lower okay couldn't push it any lower form as a doji the third date buyers to control and push the price of higher closing near the highs of the day the move is pretty strong that even close above right the highs right of this first candle over here so at this point this morning star shows you a bullish reversal pattern and that they bias they are temporarily in control next on the list is what we have we call the evening star pattern so one thing to point out is that the evening star is similar to the engulfing pattern in the sense that if you read you know textbooks or courses right they will tell you that you know the morning and evening star there should be a gap but the reason why I didn't put the Gap over here is again because if you trade the Forex Market the crypto markets you would rarely see gap on the charts so if you look at the textbook examples it would probably look something like this so the first candle would be something like this okay then this second candle could be over here like this and then the third candle it comes down lower like this okay so this is something that you might see in a textbook or the courses so you can see over here from here to here right is the get okay this is the gap that we have over here that you might see elsewhere all right but for me I didn't put the cape over here because again you trade the Forex or the crypto markets this is something that you will unlikely see on those markets so that I kind of like remove this to make it relevant for crypto and Forex Traders and another thing to add also is that for the evening star the Morning Star pattern it doesn't this one doesn't necessarily have to be a doji pattern because it can also be a pattern like what we call just a small body candle something like this it could be something like like this right a relatively small body candle like this and then it reverse down lower over here close like this right this again could be also an evening star pattern so there are slight variations to it and I'm not going to cover all the variations because later on as you'll find out that you know you don't really need to memorize every single Candlestick button out there because I'm going to share with you a cheat sheet right that within five seconds or less or you know whether the buyers or sellers are in control so I'll talk about that later on but for now let's talk about the evening star in more detail so again the evening star is just the inverse of the morning start the first candle you can see that the buyers they're in control there's the opening price they drive the price up higher and close near the highs of the day okay so clearly at this point right the buyers they're in control and the next day they thought that they know man let's drive the price up further all right let's push it up to the moon to the moon and then what happened is that on the second day the market form a doji pattern so this means that the market is pretty much a neutral for the day both buyers and sellers right they're kind of like in equilibrium right this is the opening price of the doji price try to go up higher failed to do so then come down lower from the low of the day couldn't close near the lows of the day before it got rejected and then closed back at the same price where it opened so both buyers and sellers they are in equilibrium what happened on the third day Third Day the market opened at this price point and then the sellers took control and drive the price down lower and finally closing near the lows of the day so this tells you that this particular Candlestick pattern the evening star is kind of like a turn of event right initially the buyers were in control you're bullish bullish all the way up to the top then you find some uh pause in the market right that is dictated by the doji and then suddenly there's a sudden reversal where the market come down lower closing near the lows of the day so this means there's a uh the market is you know or rather the sellers they are temporarily in control and the market could possibly hit down lower so looking at this chart you can see over here the market came towards this area of resistance I'll talk more about later about support and resistance what it means and how to draw it and stuff like that later on but for now I just want you to pay attention to the evening star pattern notice how the price drive up into this area of resistance right that is marking rate over here so for those of you who are not familiar resistance is an area where selling pressure could come in to push the price down lower no guarantee you will reverse from resistance so this is where you can use tools like Candlestick patterns right to help you time your entry again don't worry I will talk about all the details the trading strategies entries and exists later on and where it got interesting is that over here we have this evening star pattern look at the first candle how bullish it is the bias to control and push the price of higher closing near the highs of the day breaking out of resistance people think that oh man this is the breakout it's real time to get long bye bye bye then what happened is that on the second day this candle over here notice we have this doji looking candle over here so this is not exactly a doji because you can see that there's a pretty small body over here so that's why I call it a doji looking pattern the body is pretty small but you can see that there's still a small body and the message behind this is that you know both the buyers and sellers they're pretty much in equilibrium because the opening price and the closing price is near the same level okay this is the second candle over here and then what happened next is on the third candle the sellers took control okay and they drive the price down lower closing right near the lows of the day so this lows of the day right has uh take out the lows of the previous day and pretty much a drive you know more than halfway through of the body of the first candle over here right so closing somewhere around this this this portion right on the first day so we can see you can see that the sellers they're not temporarily in control and also one more thing about the evening star to add is that according to most textbook definitions the close of this third candle just has to exit the halfway point of the first candle to be classified as a Evening Star pattern so for example if let's say the this third candle let's say you only close somewhere over here right this won't be considered anything star pattern because it only closed uh around the 25 Mark of the first candle so he has to exit the 50 Mark of the first candle so let's say the first candle the 50 Mark let's say it's somewhere about here okay it's about here okay so this means that the third candle has to close right beyond the 50 Mark so it's close below this line so in this case it close over here which is below this line so this is where the evening star pattern is kind of like uh concluded right we call this An Evening Star pattern so again this has a bearish annotation to it in this case the market did as a slight dip down lower so let's do a quick recap right to the things that you've just learned right a lot of Candlestick patterns right number one we talk about the hammer and the shooting star pattern so these are single individual reversal Candlestick pattern the hammer looks like this it tells you that the buyers they are temporarily in control and the shooting star looks something like this and it tells you that they sell us they are temporarily in control and another thing to add is that usually for hammer and shooting star the length of the Shadow right is usually at least two times the length of the body okay so there's another another thing to kind of take note off right so repeat once again the hammer is shooting star usually the length of the Shadow it's at least two times the length of the body yeah next one we have the bullish and bearish engulfing pattern so bullish engulfing pattern is a two bar reversal pattern this over here is the first one is a bearish candle and then the next candle we have a strong close above the first candle okay so this is what we call bullish engulfing pattern where the second candle over here has engulf right cover the body of the first candle so this is a bullish pattern so the bearish engulfing pattern is just the opposite it looks something like this where the first candle we have a bullish candle okay and then the next candle right could be something like this where it engulf the body of the first candle and close lower for the day okay this is what we call the bearish engulfing pattern then moving on we also talk about the doji the gravestone doji and the dragonfly doji doji is simple like just like this like across gravestone noji it's this one over here and dragonfly doji is like this okay so basically this has a bearish annotation to it and this is a bullish annotation to it why is that it's because over here you can see rejection of higher prices at one point in time the market opened at this price point trade up to this highs only to get rejected and come down lower and close at close where it opened for days so you can see that this over here this entire portion is rejection of higher prices and then this dragonfly doji is just the inverse this entire portion here is rejection of lower prices where the market closed at the same price where it opened previously yeah and moving on we talk about the morning star and the evening star this is a three candle a reversal Candlestick pattern the Morning Star is something like this right so Morningstar I mean if you think about this how do I know whether morning or evening is bullish or very interesting about the morning the start of a bright new day this you know things are filled with hope and you know a great day ahead so we think about bullishness yeah so Morningstar is something like this okay so this is usually a down candle now with the next candle where it closed more than 50 of the halfway halfway mark of the first candle so the half first candle the halfway marks let's say somewhere about here this means that the third candle has to close Above This halfway mark to be classified as a Morning Star and if things start is just the inverse all right so this one over here so first is a green candle then we have like a doji or maybe even just a small body candle and mark it on the third candle closer I'd be low the halfway mark of the first candle so this is what we call it evening star so this has a bullish annotation to it and this has a bearish annotation to it at this point you've learned a number of Candlestick patterns and here's the truth is that there are many more other Candlestick patterns out there I think possibly you know 50 or 100s more out there and the reason why you don't need to learn every single one is because I'm about to share with you a cheat sheet such that you can understand any Candlestick pattern in less than five seconds sounds good then let's get to it now the first part of this Candlestick cheat sheet is this right number one you wanna ask yourself where did the price close relative to the range so what do I mean by this as you know that every candle they have arranged the range between the highs and the low so let's say this particular candle let's say it uh this is the body okay then you know that this is the highs and then this is the lows at the same time this is also the opening price and then this is the closing price so you want to ask yourself where did the price close relative to the range and of course there are many ways this can happen it can also happen like this okay in this case you can see over here with this upper shadow and this is the highs this is the open this is the close and this openness say this is the low so in this case where did the price close relative to the high in this case it closed right I would say near or pretty far away from the high so this tells you that there is a not very bullish not as bullish as this first candle over here so you can see how where the price closed relative to the range okay so in this case the range is from this highs to this lows right can give you an insight to who's in control whether the buyers are in control or the sellers are in control so let me dive this a little bit deeper so if you look at this chart over here you can see that this is over here the first candle there are the range of this entire candle is from this highs to this lows so now ask yourself where did this price close relative to the range so you can see the market has closed at this price point over here this is pretty near the high so this is why we say that this is a very bullish candle because the price is closed near the highs of the day assuming it's a daily time frame now what about this the market is closed over here so where did it close relative to the range it close you know relatively near towards the highest but of course not as high as this first candle over here so overall we can say that yeah this is still somewhat a bullish candle because the price is close right uh almost approaching near the highs of the day not very close to it but you know uh much nearer to the highest than the lows now what about this candle over here why is this a least bullish candle because yes even though the market is closed higher for the day that's the opening price this is the closing price even though it has closed higher for the day but it's actually very far away from this uh this highs of the of this uh the high of the day so you can see that this portion over here is what we call a rejection a rejection of higher prices so yeah even though it closed higher for the day there's some sense of a bullishness but it's not very bullish consider this the least bullish among the three so knowing where the candle closed right relative to the range right can give you an insight to know whether the buyers are in control or the sellers are in control so let's do a few more before we move on so same for this one over here the market opened at this price point and then close near these lows over here why is this a bearish candle right because you can see that yes even though it closed lower for the day it didn't manage to close at the extreme lows it's just closer somewhat near to the lows of the day so we can consider this a bearish candle why is this very bearish is because the market opened over here and it closed right near the lows of the day right almost near the low so this is a very bearish candle and then this is the least bearish is because again you can see it open over here it closes over here yes it is a down day the market is closed lower for the day but if you look at the close right compared to where it was right previously during the day at one point right it was actually trading near these lows over here and then the buyers did step in and push the price up higher and eventually causing the market to actually close uh somewhat below the opening price for the day so yep it is still bearish but it's at least bearish among uh the other candles that we have just discussed and again right this one over here while it's all this a neutral candle a neutral candle over here it's because again the market is pretty much just close right the within the middle of the range okay you can see right this one this is the highs this is the lowest close flat in the middle of the range so this is a neutral candle telling you that both the buyers and sellers they are pretty much in equilibrium same for this one over here this one fun fact that's what we call a long legged doji in other words the difference between this first doji pattern and this one over here is that the volatility of this candle over here is greater than the volatility of this doji looking pattern so this tells you there's more volatility in this particular market right that's why you can see that the swings are much wider but the meaning behind behind it is still pretty much the same the buyers and sellers they are pretty much in equilibrium and finally what's this little negative sign over here this is what we call a fall price doji this is where the opening price the highs the lows and the close of the day is pretty much at the same price point and this is usually due to uh markets which are very illiquid right there's not much price movement you get this type of neutral or rather full price doji looking candle over here okay so that's the first part right knowing where the market closed relative to the range and this is important because it tells you who's in control and by the way if you are enjoying this training so far don't forget to smash the thumbs up button to bring a smile to my face okay now the second part of this cheat sheet is is this right what's the size of the candle compared to the earlier one so the first part of the cheat sheet right just a quick recap is to where did the price close relative to the range is to find out who's in control are the buyers are in control or the sellers in control right because as you know if the price closed near the highs of the range clearly the buyers are in control and if the price closes near the lows of the range the sellers are in control if it closes near the middle of the range pretty much in this decision undecided now what about this what's the size of the candle compared to the earlier ones this question right helps you to this third question tells you right the conviction right behind the move so let me explain what this means so if you look at this chart over here you can see that over here we have a pullback right Market goes up pulls back goes up makes a pulls back pull back and then over here we have this what we call a bullish engulfing pattern where the body of this candle has engulfed the body of this previous candle but if you look at the size of this bullish engulfing pattern there isn't really it doesn't really give you much conviction behind the move right because if you compare the size of this candle to the size of the earlier candles like this one over here this one over here this one over here maybe this one over here it's pretty much similar size or maybe even slightly smaller yeah so where we want to pay attention or to find out whether there's any conviction behind the move is to pay attention to the size of the Candlestick pattern compared to the earlier one so if you see an example like this right now you see a difference right Market makes a move up higher it makes a pullback slight move up higher it makes a pullback and now we have this bullish engulfing pattern once again but look at the difference between this bullish engulfing pattern and the earlier one if you look at this bullish engulfing pattern this one over here and compared to the earlier candles like this like this like this like this like this like this you can see that it's much bigger than the earlier candle so this tells you that there is conviction behind the move in the market is likely to head up higher so this is uh what I mean by you know comparing the size of the candle relative to the earlier ones so just a quick recap with the cheat sheet number one the first question to ask yourself is where did the price close relative to the range of the candle this gives you an idea to who's in control whether the buyer sellers or equilibrium and then finally what's the size of the candle right relative to the earlier ones this tells you whether there's any conviction behind the move or not okay so this kind of like sums up right the entire training on Candlestick patterns but what we are going to do next is to actually dive into the trading strategy because as you've learned earlier right we don't just trade Candlestick patterns in isolation we don't just see oh Raina look there's a hammer bye no we don't do just that right because we still need to look at the market structure the area of value support resistance you know when to enter when to exit and much more so all the juicy stuff coming up right now okay the first part of this trading strategy is to learn the market structure right so once you learn Market structure you pretty much know what to do right should you be a buyer should you be a seller or should you just stay out of the market so when it comes to Market structure there are three Market structure every Trader should know number one that's what we call the uptrend number two is a downtrend and number three is a range market so let me dive into this into more details so uptrend what is an uptrend so a market is said to be in an uptrend when it consists of a series of higher highs and higher lows like for example Market hits up higher makes a pullback heads up higher makes a pullback higher makes a pullback hits up higher so you can see over here we have a series of higher highs let's call it HH higher high HH and then with this higher low higher low okay why is this called a higher lowest because right the low over here is higher than this previous low over here and why is this called the higher lows because this low over here is higher than this previous slope same thing why is this called a higher high because this high is higher than this High over here does it make sense so let's have a look at an example to see this in action so if you look at this chart over here this is what we call an uptrend right from left to right Market is heading up higher and uptrend if you look at the highs and lows we have a series of higher high a higher high a higher high higher high higher high and higher high what about the lows if you look at the lows right this would be the the the first higher low right because it's higher than this low higher low this is another higher low another higher low a higher low a higher low and a higher low so you can see that when the market is in and uptrend it will consistently form a series of higher highs and higher lows now some of you might be thinking but right now this is not as easy as it seems because there are times where I see the market is in an uptrend like this then it goes down lower and it continues up higher so now Rainer let me ask you Rainer is this now in a downtrend because we now have a lower high and lower low so that's a good question right because in Market structure in an uptrend you don't always get a series of higher highs and higher lows because there are times where the market can make a pullback and within the pullback right the the market gets messy it forms a lower high and lower low like what you're seeing over here or sometimes you could even do like like this over your Market goes up higher then it chops up into a range you thought it's going to be a reversal and then pump it breaks out higher so how do we know whether an uptrend trend is intact or not so this is where I'm going to share with you pay attention right something really important is what I call is this right basically an uptrend is invalidated only after the price breaks below the swing low that precedes the breakout what do I mean by this okay so let me give you an example so if you look at an uptrend okay price goes up comes down goes up comes down goes up comes down goes up so when we talk about the swing low the swing low that precedes the breakout we are actually referring basically to a major swing point on the chart now when I talk about major swing point it can be hard to decide like for me I know this is a major swing point this is a major swing point this is a major swing point but to new Traders they can't tell so how do we know that's a major swing point is that you want to look at where did the market broke out previously so you can see over here previously this was the breakout point right over here is the highs and the market broke up over here so this is the the breakout point now where is the swing low that precedes the breakout the word precedes means before where is the swing low that happened before the breakout so you can see that the swing load that happened before the breakout is this swing low over here so in other words right this uptrend will be intact unless the market has break and then close below this swing low until that has happened right we would say that the uptrend is still valid and we are expecting higher prices to come okay we would say the uptrend is only invalidated if it breaks below the swing low that precedes the breakout okay so let me give you an example so if you look at this chart over here let me ask you quiz time okay I'll just make your life a little bit easier this over here right is the High okay and when the market breaks out of this High over here right you're gonna ask yourself where is the swing low that precedes the breakout and then you have this swing low over here okay now when you look at this chart right you can see that now on the market has actually break and closed below this swing low right yes breaking close below it so my question to you is this is this uptrend still intact or it has to be invalidated five seconds right think about this one two three four five okay so the answer is this is that the uptrend is actually still intact because it did not break below the swing low that precedes the breakout okay this uptrend is still intact so you can see what happened next is that this Market it did a deep down lower and then continue deep down lower and then continue up higher because this is the swing low that you want to pay attention to if if only if the market breaks and close below it then we can say that hey you know this uptrend is no longer in Tech and the market could possibly go into a range or reverse down lower so remember right uptrend is invalidated only after the price breaks below the swing low that precedes the breakout okay so one more example look at this chart over here at this point the market has break below this low over here it's breaking close below it let me ask you is the uptrend still in Tech or has it been invalidated otherwise known as otherwise or can we say that the uptrend is destroyed yeah so what's your answer five seconds one two three four five okay the answer is this right so if you first and foremost find out where is the swing low that precedes the breakout this is the breakout Point all right this is the highest that we are referring to so at this point the market has break out of this highs so where's the swing low that happened before the price breaks below this highs this is the swing low over here so at this point you can see that the market did break below this uh swing low so at this point this is what what I'll say right that the market the trend is no longer intact and it could possibly you know go into a range or even reverse down lower now one important thing to add is that in an uptrend we only want to look for buying opportunities so for example if you see a chart let's say we go back to the earlier chart like uh I think this one over here in this case right when you see that the market is in an uptrend we only want to look for buying opportunities why only buying opportunities I mean you can look for selling opportunities if you want to buy if you're a new Trader just getting started I recommend only to look for long setups basically to look for buying opportunities because that is the path of least resistance because when you look at markets which are in an uptrend it is more often than not right that the market is likely to continue heading up higher so by trading along the path of least resistance by trading in the direction of the trend you number one are putting the odds in your favor and number two you are getting the most bang for your buck because if you look at by trading in the direction of the trade look how much higher the market can move in your favor so by trading the direction of the of the trend the move can explode up this much higher this much higher whereas if you are like a counter Trend Trader looking for selling opportunities in an uptrend you can see that the the move the down move is much smaller much smaller and much smaller so this is why as much as possible you trade in the direction of the trend so if you spot the market is in an uptrend look for buying opportunities and avoid selling in that market scenario a market is said to be in a downtrend where it forms a series of lower highs and lower lows something like this Market head is down lower pulls back then breaks down lower pulls back breaks down lower pulls back break down lower so if you look at the highs right We compare this high with this height this is a lower high because this current high is below this high and of course this is a lower high as well and this is a lower low because this low is below this low and likewise this is also a lower low so you'll see a series of lower lows and lower highs in the downtrend and just like an uprender when you see a market is in the downtrend you want to look for selling opportunities because that's the path of least resistance by looking for selling opportunities in the downtrend you can see that the move right the magnitude of the move is much larger you can see this is the magnitude of the move that you can expect the magnitude of the move the magnitude of the move compared to let's say you are looking to buy in a downtrend the move is usually much smaller you can see over here this move is usually much smaller okay so let's have a look at an example so over here this is a market the pound against the dollar and if you just identify the highs and lows this is a lower let's take this is the first side and this would be the lower high a lower high a lower high a lower high a lower high and then this is say let's say we take this as the first load and this will be the lower low lower low lower low lower low lower low and a simple trick is that if you look from left to right right if the market is trending it usually will point to One Direction in this case it's just pointing down lower and once again right when the market is in the downtrend we want to look for selling opportunities now some of you might be thinking about rain I know Market downtrend is not as obvious right sometimes I see the market Spike up higher I thought it's an uptrend I buy only to get stopped out why well that's because remember we we have an idea to how a downtrend looks like but the market somehow just doesn't you know play out to our expectations there are times where you can just do this Market hits down lower and then it suddenly makes a strong pullback right we thought this is the start of a new uptrend we buy only to see the market collapse down lower so how do we not get caught right by this fake move right and again we're going to use this principle which I just shared with you right just that this time round is for a downtrend a downtrend is invalidated only after the price breaks above the swing high that precedes the breakout or breakdown if you want to call it so so let's say for example Market is in a downtrend and then it breaks down lower and then now it hits up higher over here okay now where is the swing high that precedes the breakout so the breakout point is actually over here okay just here this is the breakout point okay because it broke below this low this is the breakout point so where is the swing high that precedes the breakout the swing height that precedes the breakout is actually this level over here so until the price can break above this swing high I would say that the downtrend is still intact until the market can break Above That Swing high and if the market does break above the swings I I would then tell myself hey this Market could possibly go into a range or even start or be the start of a new uptrend okay so let's have a look at a quick example so quiz time look at this chart let me ask you is this the start of a new uptrend or is the trend likely to continue down lower so remember the rule is this right for downtrend is that uh a downtrend is only invalidated it's only invalidated until the price can break above the swing high that precedes the breakup okay so what do you think the answer is so one two three four five okay so here's how I'll do it so where is the price or where did the price break out so the breakout point is actually here this is where the market broke out and where is the swing high that precedes the breakout the swing high is this one over here so just to dive in a little bit more details you can see that this is actually also a swing high so how do we decide between this swing high and this swing high so I like to be more conservative I like to take the swing high that is actually higher the one that is further away from the breakout point so it's this one so I'll reference this swing High over here so until the market can break above this swing height I would say that you know the market is still in the downtrend until right the market managed to let's say go up higher break above this swing High then I'll say at this point it could be the start of a new uptrend or the market could enter a range so in this case you can see that the market that did continue down lower because it did not break this swing High there's a high that we've identified earlier which is the key swing point in this downtrend yes now what about range markets a market is said to be in a Range when it's contained between the highs and the low so let me give you an example so let's say the price goes up higher then pulls back lower heads up higher pulls perspect lower heads up higher and pulls back lower so at this point you notice that this Market is not in an uptrend because it's you know it doesn't form a series of higher highs and higher lows neither is it in the downtrend because you don't see a series of lower lows and lower highs instead what you have is actually a range Market the market is contained between this highs over here and this lows over here okay so this is what we call support and resistance this low of the range is usually what we call an area of support and this highs over here is what we call an area of resistance so this is what we call a range market and of course in reality the range Market isn't as precise as this because in reality the market could break down below support and then goes back up into the range again so let me give you an example of how a range Market looks like so you can see over here this is an example of a range Market notice how the highs and lows are not exactly precise notice how this this uh this price point over here the market took out this low so right people thought it's going to be a breakdown before the market reverse up higher once again but if you look at this from a macro perspective you can either identify that this Market is pretty much a range Market how do we know that because look at the highs right there there is the price re-testing the highest multiple times but you know failed to break out of it right this would be the highest to highlight otherwise known as an area of resistance and then this is an area of support right price tried breaking below support as well right tested once over here twice three times four times and then here fifth time right try to you know hit down lower but just couldn't break down lower so you can see that the price is kind of like stuck between these highs and this lows and it's what we call a range market and of course Market doesn't stay in the range all the time because eventually the market has to break out and how do we know when the market has broke out of a range when the range is invalidated it's just it's when the price breaks out of it when the price breaks and close out of the range this is where we know that the range Market condition is invalidated so let me give you an example so if you look at this chart over here notice how this Market is in a Range contained between these highs and this lows over here this area of support and on this particular candle we have a brick and close right below it right so you can see that at this point we can see that the market now has actually broke out below the range the market is like now moving into a downtrend and at this point this range Market condition is invalidated now you might be thinking so right now you know how do we trade a range Market do we just simply buy support or sell resistance so for example this is a area of support right this is resistance do we just buy support and sell resistance so for me when I trade range market conditions I don't just blindly buy support or sell resistance I usually would want to trade from a level where I think the market is unlikely to break so what do I mean by that so for example let's say in this example if I thing right I suspect that this Market the market is likely to break below Support over here what I want to do is to sell at resistance sell at the highest of resistance so this way if support does break down we can see that my risk to reward my profit potential on the trade is pretty great and likewise if I feel that the market is likely to break out the higher so for example let's say let's in this case the market is in this range okay let's say if I feel like slightly to break out the high over here I don't want to be shorting at resistance I don't be selling a resistance instead what I want to do is to buy at support right buy this support in anticipation that if the market does break out higher I have a pretty good uh attractive profit potential on this particular trade so now how do I know which side of the market or rather which side of the range is the market likely to break out so I don't get caught on the wrong side of the move good question I'll share with you more details later on how I actually go about identifying such a scenario or how I go about identifying which side of the range to play on but for now I want to do a quick recap first number one uptrend it's simply a series of higher highs and higher lows we talked about that earlier and uptrend invalidation occurs right when the price breaks below the swing low that precedes the breakout if you don't understand what this statement means rewind back this trading video for a few minutes and you can see what we talk about when the uptrend invalidation occurs then downtrend is just the opposite a series of lower lows and lower highs and downtrend in validation occurs when the price breaks below the previous swing high that precedes the breakout and then finally we talk about the range where the price is actually contained between the highs and the lows contained between support and resistance and finally range in validation occurs when the price breaks out of the range okay and by the way right just because a market is in an uptrend right doesn't mean we immediately hit the buy button and likewise just because the market let's say it's in a downtrend it doesn't doesn't mean we immediately hit the sell button because for all you know right the market is trending and it could be like you know overbought really stretched to the limits and about to make a pullback so if you buy when the market is kind of like overbought stretch to the to the limits that's where the market is you know about to make a reversal and you'll get stopped out so this is why we need to look at this second part of the strategy area of value this helps you answer the question right where to buy or sell so where on the chart do you buy or sell so area of value will help you with it this is where you will also use the concept of support and resistance so earlier we spoke about it right support if you recall it is an area on your chart where buying pressure could right the keyword here is good not definitely but good step in to push the price higher and resistance is an area on the chart where selling pressure could step in to push the price lower so there's no guarantee the price will reverse at support there's no guarantee the price will reverse that resistance it's only could maybe mine so next question how do you actually draw support and resistance on your chart well here's how we do it so first and foremost this example is a market which is in an uptrend so if you know a market is in an uptrend that you only want to identify area of support on the chart and the way I do it is to identify areas levels on the chart where the market bounce off higher so you can see over here this is one example Market making a pullback over here bounce of fire made a pullback over here bounce off higher so what I'll do is I will draw area of Support over here this one over here and there's another one over here now how do I kind of like fine tune my level so the way I like to do it is that I like my area of support right to get as many touches as possible so you can see that this black line over here that I've drawn right I can actually shift this black light up higher and take into account this lows over here so that's what I'll do right now so I'll adjust my area of support and push it up slightly higher so this way I got multiple touches I got this one touch over here and two touch over here so same for this over here right this one over here I'll push this up slightly okay so when I do this I now got three touches I got one touch two and three over here and what about this one over here this I think there's another area of Support over here I'll draw this one here you can see that if I were to draw here right I I would either have to consider touching this line or push it down lower to touch this line over here so again what I'll usually do is that is either you're going to leave it at this line or you'll leave it at this line because there's no way to get both of them being touched so usually what I'll do is I'll take into account the more recent one and push it to somewhere here okay and another tip to share with you is that support and resistance they are an area on your chart but I like to draw it as lines on the chart is my habit so what if you want to do you can also do is you can draw it as an area just use the rectangle tool on trading view over here you can see rectangle click on it and you can just highlight it as an area on your chart so again you can change the color if you want to this is gray okay you just draw this as an area on your chart and then over here you can draw it as an area on your chart as well so this kind of like reminds you it's an area and not a line on your chart so I'll remove this for now since I prefer lines my own personally and another thing to also share with you is that when you draw support and resistance I typically not have not more than two areas of my shot because if you have too many you're gonna feel overwhelmed you might be thinking right right now you know what about this one over here right this is another level you can draw what about this one over here another another level that you can draw and that's true those are levels that you can possibly draw but here's the thing this will just clutter your chart with a lot of unnecessary information and I usually just want to keep only the two most recent one why is that so let me explain so let's say for example why don't I have this particular level over here to leave it as a pot well think about this if the market comes down all the way to this level at this area of Support over here the market reverse down lower do I still want to be buying at this price point around you know 114 50. and the answer is no even though it's an area of support why and the answer is this is because by then the market is no longer in an uptrend let me repeat right by then if the market reaches this area of support it's no longer in an uptrend you can visualize the price action at that point the market is likely to be in the downtrend and if the market is in a downtrend I want to sell that resistance not buy and support so this is why I usually just have not more than two areas of support on my chart so I'm just going to remove all the additional one just remove remove and remove so my support and resistance will look something like this on the chart and also one more thing to add is that this level over here will be significant why is that why is this level significant so recall okay recall about our uptrend invalidation the uptrend will be invalidated right when the price breaks below the swing low that precedes the breakout yeah so this over here is the swing low that precedes this breakout over here so this highs is the breakout point over here and this is the swing low that precedes the breakout so at this point if the market comes down lower and breaks and lets it close below support this Market to me is no longer in an uptrend it possibly could go into range or even a downtrend altogether so this is what I call the uh you know the last line of defense if you want you know the last line of defense where you know support must hold if not right the entire Market structure will shift from from an uptrend right to something else like a range or a downtrend now another example right look at this chart over here so let's do a quiz right pause this video if you have to right and visualize ask yourself how will you draw resistance right in this downtrend where will you draw your area of resistance in this downtrend so I will you know do my version of it you can pause this video and see no identify which levels you want to draw and then we can compare and see whether your answers is similar to mine and really I want to say that there's really no right or wrong this is just my own preference my way of identifying resistance if you have your own method that works for you that's great but if you're new you have no idea where to start then you can try using my method first right and then from there you can fine tune to what you know Works what works for you so for me again right how I would do it is again I like to pay attention to the two most recent highs the two more recent levels where the market actually you know decline from so this is one life identified over here and then possibly another one over here so notice how the market over here it uh consolidates right then hit down lower then over here we just decides and then hit down lower so this will be the two area of resistance that I will draw on the chart so I think I will leave this as it is right and again why I don't have so many resistance area why I don't have it here why I don't have it here again it's very simple if you imagine this right imagine from where the price is right now let's say the market rarely up higher to this highs do you still want to be selling at this price point over here do you want to be selling here probably not because this Market is slightly no longer in the downtrend probably in in the uptrend and in an uptrend as you've learned right you want to be looking to buy ad support so again this is why I just typically have just the two most uh recent resistance on my chart and that's pretty much it so in this case let's say if the market comes up to this area of resistance this is where I can look for selling opportunities right to short this Market but of course I don't just blindly you know sell when the market come to this price level that's another thing I still look out for which I'll share with you really shortly but for now this is how I would draw resistance resistance in an outgrade and finally right how do you actually draw support and resistance in a Range market so again the concept is similar you want to identify the levels the areas on the chat right where the market has a huge swing right or huge uh decline already from it so if you look at this chart this is a key area because the market has a strong collapse from it this is another one right not a strong collapse now what about the lows right so this will be a key one that's the market did rarely up higher from it this is another one strong rally this is another one strong rally so once you identify these key points where the market just keeps getting rejected higher and we're keep getting rejected lower this is an area on the chart where you want to pay attention so in this case right recommend you know using a rectangle tool so you can better identify your support and resistance and of course if you want to use lines like me it's your choice as well so this will be my area of resistance and for area of support will be somewhere about here okay you can see I try to get as many touches as possible so you can see for this area of support right we have this uh one touch two three four five six seven this one over here one touch two touch okay so actually this one here I might even shift this up a little bit higher to take into consideration this lows as well by the way if you are enjoying these trainings of our smash the Thumbs Up Button if not hit subscribe so I can bribe you further with better content so next one right entry trigger so for this segment right this is where you look to answer the question when exactly do you buy yourself because as you have learned right just because the market is at an area of value like support doesn't mean that you immediately want to hit the buy button because you're still looking for an entry trigger to tell you you know now it's the time to enter the trade so entry trigger is very simple right all the Candlestick patterns that you have learned earlier although you know the reversal Candlestick patterns like the hammer the shooting star all those can be used as an entry trigger so it could be things like your Hammer your shooting star your bullish engulfing pattern your bearish engulfing engulfing pattern Etc all these are very useful uh patterns right that can serve as an entry trigger to get you into a trade so for example let's say Market is uh in an uptrend okay you come back towards this area of Support over here and then over here you can look for an entry trigger like in this case a hammer which is a bullish reversal Candlestick pattern to signal to you that hey now is the time you know to to get long so you can enter on the next candle open right so this is how an entry trigger work so I'm not going to spend too much time at repeat what's a hammer shooting star Etc because you've learned all of that earlier already so for now I want to move on to the next section all right so when it comes to exit there are two questions right we are trying to answer over here first one is this exit when you're wrong so where do you exit your trade if you're wrong otherwise known as a stop loss so when it comes to stop loss right I have a very simple principle your stop loss must be at a location right where if the price reaches it it will invalidate your entire trading setup your entire trading idea let me explain so let's say for example you're looking to buy at support okay price comes up we buy a support price up it goes up higher over here where exactly do you set your stop loss so a mistake that many Traders make right pay attention is that they simply set their stop loss somewhere here or maybe somewhere here number one and number two and those are horrible places to set your stop loss why is that that's because the market could easily just swing back down lower and then reverse up higher from there so you can see if it does like what I'm showing over you here a false break whether you set your stop loss at level one or level two you're gonna get stopped out so now how should you set a proper stop loss then so this is what I recommend when you set your stop loss set it away from an area of value or set it away from yeah an area of value away from price structure so for example again go back to our support example so let's say this is support price bouncer comes back down bounce up higher and this time let's say you buy over here let's call it e or your entry your stop-losser you want to set it at a place somewhere about here because at this point right let's say s over here is your stop loss if the price are able to reach a stop loss over here at s let me ask you do you think that support right at this point in time is broken and I think for most of you looking at this drawing you say yeah support is broken and yeah since your basis of basis of entering the trade is to buy a support now support is broken clearly you should get out of the trade exit the trade because this is where the market has proven you wrong so whenever you set your stop loss you want to set it at a level right where the market will invalidate your trading setup let me share with you just one more example right because it's so important so let's say you're looking to trade the blue flag pattern for those of you who are not familiar a bull flag pattern is where the market let's say breaks out it forms like this out it's what we call a bull flag pattern and then let's say you break above the highs you buy so this is what we call a bull flag pattern now at what price point right where if the market reaches that level your blue flag pattern no longer looks like a blue flag pattern I'll give you three scenario 0.1 0.2 or 0.3 what do you think I know this is a little bit of a trick question and answer I'm actually looking for is actually more towards point three because if you look at point one and two right this low over here right is where buying pressure could come in this is where potential previous resistance resistance could become support So if you set your stop loss at one or two the market can actually hit down lower bounds into support and then go up higher and if you set your stop loss at level one or level two you probably get gotten stopped out of the trade but if you set it at three this is where you're giving your trip more room to brief right you're setting your stop loss away from this price structure away from this area of value and that kind of you know put the odds in your favor because you're not going to get stopped out prematurely or too easily yeah so this is what we mean by exit when you're wrong right you know setting a proper stop loss now what if what about exit when you're right where do you take profit so they have different ways to do it you can you know you know use like you know capture a swing write a trend and stuff like that but for now we keep things simple we talk about capturing a swing so let's say again the market let's say it's in a Range okay goes up comes down goes up comes down let's say you buy at support right and where on this chart right my sellers come in where my sellers come in and push the price lower and as you know this is an area of resistance this is where sellers might come in so this means you want to set your target profit right just before this area of resistance so maybe somewhere about here it's a good level to set your take profit level because if the price goes up right coming to resistance you take profit great right because what could happen is that the price comes into resistance and then quickly reverse down lower so if you set your take profit level let's say over here over here you're making the market work hard for you making the market you know break out of resistance resistance to reach your Target and if you were to make the market work hard for you you will usually you know pay the price yeah so as much as possible Right the market is the big boy right follow the clues right that's being left behind by the market right don't try to you know push your luck right but rather respect the market respect the price structure if you know that this is an area where sellers might come in and then be conservative right set your take profit level just before that area of resistance and this will kind of like increase your odds of actually you know exiting your trade with the profit so these are two very simple guidelines right that you want to take into account right when setting your stop loss and Target profit so now I've shared with you the entire formula right if you realize it's what I call the May formula a quick recap this stands for number one market structure area of value entry trigger and exits later on which is about right now I'm going to share with you examples right trading examples right to see how this particular formula allows you to profit in Boo and bear markets right let's get to it congratulations right I know I've covered a lot but if you've made it this far trust me you have now built a very solid foundation right to go out there to trade the markets right with clear precise rules to know when to enter when to exit and how to manage your trades from start to finish and if you ask me you're probably ahead right of 90 of Traders out there because you have a clear plan right of what type of market conditions to trade when to enter when to exit Etc but before we move on right into the trading strategy examples I want to walk you through what we have just talked about so you don't forget right so number one we spoke about the market structure to know whether the market is in an uptrend A downtrend or range we talk about if the market is in an uptrend we don't want to look for buying opportunities if the market is in a downtrend we want to look for selling opportunities and if the market is in a range right I usually like to play on one side of the range right and it's usually the side of the range where I think the market is unlikely to break out off right and I'll share with you later how to choose the right side of the range to trade from later on next one is an area of value you've learned things like support and resistance how to draw support how to draw resistance in different market conditions you've learned entry triggers right things like Candlestick patterns the hammer the shooting star we covered a lot of that right earlier in today's trading and finally we talk about exits right where to protect your downside where to cut your loss if you're wrong and where to take profits if the market does move in your favor now the next section is going to be important because this is where we take the concepts the techniques the strategies everything right and apply to the charts so you can see how everything come together so let's go okay this first example is the chart of a Swiss franc against Japanese Yen the daily time frame so first thing is the trend let me ask you what is the trend is it up or down you can see the market is in an uptrend good next one where is the area of value okay you can pause this video and you know visually identify the area of value but for me here's where I'll draw it over here is one and possibly another one over here okay these are the two area of value on my chart right so why is did I plot this two level because this is previous resistance price breakout retest as support previous resistance price breakout retest support So now price could possibly come back to this area of value or this one over here now why don't I draw area of value let's say uh over here or maybe over here well because at this level and this level I don't want to be buying at that price point because if the market do reach that level the market is probably already in the downtrend I don't want to buy in a downtrend how do you want to look for selling opportunities in a downtrend so no point drawing those two levels because if the price do get to it the trend would have really reversed and I'm no longer you know looking for buying opportunities so now that we have spot right there's a two area of value the two block blue box over here next thing we are looking for a valid entry trigger to go long as you know you've learned things like your Hammer your bullish engulfing pattern so let's see what happens next so in this case the market came into our area of value but do we have an entry trigger to go long let's find out yep we have it right in the market for my hammer and this tells us that hey you know the buyers are now temporarily in control so if you understand the story behind this you can see that the market overall is in an uptrend the market make a pullback towards this area of value in area value is where buying pressures could step in and push the price higher and you got Clues right that buyers are stepping in because the market opened over here try to break down lower couldn't but reverse it eventually and close near the highs of the day so this tells you that buyers are stepping in so what you can do is to go along right on the next candle open so let's say next candle open over here right this will be our how entry price at the opening price so let's just say we change this to Green to signify our entry what about stop loss so for stop loss I like to if you remember I would like to set it a distance away from price structure a point where it will invalidate our trading setup so you can see that this is an area of support so if the price breaks below this area of support we want to be out of the trade so where at which exact price point right do we know we want to get off the trade so one way to kind of like quantify that answer is to actually use the ATR indicator right so I'll just show you every two range click on this okay I'll just uh delete this one I'll use this one right the settings I use is a 20 period I mean the 20 period and SMA you click ok so what you'll do is to find out what is the ATR value okay so you can see that right now the ATR value is 1.221 what this tells you is that over the last 20 trading days right the market moves an average of 1.2 to 1 uh dollars per day okay and the way to kind of like know where exactly to set your stop losses to find out the low of this candle at minus 1.221 so the low of this candle right is actually let me just bring my cursor here is 137.15 okay so 137.15 so I'll just take one three seven 0.15 this is the low over here and I minus off with 180r which is 1.221 and what does it give me I'm just going to pull out my trusty calculator and I get that 0.221 I'm just going to round up to make things easier one three five point nine three okay so this will be my stop loss level so what I'm going to do is do bring out this line over here I'll just change this to rate to signify stop loss and it's at 135.93 okay and there you have it this is my stop loss level and if you recall what about Target where do we want to exit if the market moves in our favor so usually I like to set my target just before the recent swing High just before resistance and from what I'm seeing on the chart right this is an area where sellers might come in to push the price lower so just put this let's just change this to Blue and to signify our Target profit so now for those of you who want to you know be a little bit more uh or rather want to know what is your risk to reward on the trade you can actually use this tool just click on this long position since you're looking at a long trade click on this and green is your entry price I just press the tool only over here shift this one over here to your stop loss level which is the raid one and this top one over here which is the blue one which is your Target and it'll tell you what is your potential risk to reward on this particular trade so I'm just going to adjust it slightly to be a bit more accurate okay so you can see that your potential risk to reward on this trade is 1.13 as shown over here this means that you're risking a dollar to potentially make one dollar and 13 cents and since uh this is a Cherry Picked shot all right you can see that the market yeah eventually did reach our Target over here and you have exited with a profit now let's have a look at another example shall we so again the May formula I'll just do a quick recap here in case you know some of you have short-term memory like me m a e e right me one ask you what is the market structure that you're seeing on this chart over here this is the New Zealand Canadian the four hour time frame what is the market structure the market is in a downtrend right great right Market is in a downtrend so you know that the market is in a downtrend where will you look right to trade from where is the area of value that you want to pay attention to in this case area of value is at resistance fantastic all right so let's cover this first two so in the market is in the downtrend area of value I'll probably highlight this one over here okay that's probably the key one they'll pay attention to and let me just change this to Black right so we don't get confused later on with our entries and exit okay and again for those of you who prefer to have it drawn as a rectangle you can you probably look something like this right as an interior on your chart right that's perfectly fine so all that's left to do or rather the next thing to do is to wait for the market to come towards your area of value or in this case resistance so you can see the market head up into resistance okay breaks into resistance at this point and this candle over here we have a valid entry trigger this is what we actually call a bearish engulfing pattern this the story behind it is similar to a shooting star pattern right where the the bias will initially in control and then they quickly right got uh disrupted and the market got pushed down lower by the seller closing below resistance also actually you can see it's actually actually a false break as well the market actually took out this highs and quickly reverse back in to below resistance this looks like number one but anyway yeah so this is a valid entry trigger to go long telling you that the sellers are in control so what you can do is again to enter on the next candle open so again uh the next candle open at this price point let's put this as screen right to 6 near to signify that is our entry point okay I know this is quite a few black lines over here we'll remove some of them so you can see better okay now what about our stop loss so in this case again you can pull out the ATR indicator the average true range indicator I'll just do this one more time so what we are trying to do over here is to set our stop loss a distance away from the resistance because we don't want to get stopped up prematurely so what you'll do is again find out what is the high over here and add on right by this number of uh ATR value in this case is about 45 Pips so let's do a quick calculation the high of this candle currently it shows that it's about uh let's see seven eight eight five okay so seven eight eight five you plus 45 Pips right that gives you seven nine three oh so your stop loss will be placed at 0.7930 so I'll change this to rate okay and 0.7930 got it okay so that is your stop loss level all right this over here is your stop loss so basically how you interpret that stop loss level is that from this high you add on one ATR okay get on one ATR is equals to this level that you're seeing on the chart over here next thing right where is your target so if you look at Target right there are two levels that showing up over here one is this recent swing low and this one is more of an extreme further away right that swing low so in this case usually I like to have a first a conservative Target over here so in this case you can actually have your trade right all exit at this swing low that's a perfectly you know valid uh thought process okay but at the same time right let me just remove the indicator at the same time right some of you might be thinking but right now if you look at this market right if you look back this Market is actually in the downtrend right now and the price tends to break below this low break below this low break below this low because you look at this the price over here it breaks below this low and then it makes a pullback so won't we like you know be giving up some potential profits because we can still look to capture this additional bit of the move right as the market breaks down lower lower right so that's a fair thought right so actually what you can do in this case is actually to have two Targets one is a more conservative Target and one is a further Target so let me share with you how to do this so in this case your first Target can be over here okay this is your first Target let me just change this to Blue let's call this target one right tp1 okay and you can have a second further Target right as you know the market is in a downtrend it could break below the lows and go a little bit further so in this case this is the extreme low over here for all you know this Market could possibly you know break below this extreme low right and then make a pullback so you want to kind of like take your profits right somewhere about here right where you can get the most bang of for your buck how do you do this right so how can you do this objectively so what you can do is you can use a tool right called a Fibonacci extension right and look to uh exit right at a just before the 127 extension so just get up show you what it means look at Trend based flip extension click on this you draw it from the swing High to the swing low and back up high again this is the swing High down to this extreme low and then up higher again okay so once you do that you can see that over here you can see over here other over here I'll just manipulate this chart a little bit okay you can see over here I want you to pay attention to this level over here this is what we call the 127 extension and over here is an objective way where you can look to set your second target so I'll just draw a second blue line over here just before the 127 extension maybe somewhere about here okay so let's see what happens next right so in this case right uh I'll just remove the feedback extension since it looks a bit messy but at least you know you know how this second blue line come about we actually use the Fibonacci extension to kind of like project right where the price could go right so we can just take advantage of that extra little Pips right as the market breaks down lower so what I mean by this is that example this is a swing low Market break this Swing Low by quite a little bit before it makes a pullback so the question is where exactly right do you take profits right as the market breaks down lower so this Fibonacci extension gives you that a little bit of objectivity to it okay so I'm just going to remove this extension first and see what happens so in this case the market you can see that it pretty much went lower over here and hit our first Target relatively quickly so at this point Market continued down lower over here almost reaching our Target here and didn't quite and now he's making a pullback and as you can see this is how the market is right now so at this point in time right so what you can do is actually you know your stops is really in place your first Target is really taken and your stop loss is already at a logical level it's still over here so what you can do is again leave your stop loss as it is right and let the market either you know hit your this second target or hit your stop loss right because there's really no point you know trying to shift your stop loss right to break even because again there's a good chance you could get your stop loss hit at break even so what many Traders like to do in this case is that they set their stop loss to let's say Break Even they bring their stop loss down to their entry point but to me that's not really very logical because there is no like kind of like barrier right because this is an area of resistance if the market comes up higher and it hits down lower you can see that in this case like you will get stopped up on your trade right on the second half of the position and the market eventually hits your Target and you're not in it because you know you got you're given to your fear so usually what I do is that you know my stop loss is already at a logical level I'll leave it as it is my target is uh at this point over here I know I almost got filled on the trade but I didn't quite so I'm just going to leave my plan and see this either it's going to hit my stop loss or hit my target I already taken partial profits on this first Target over here so even if the second position hit my stop loss hey guess what this overall trade will not really be a loser it probably could be more of a break even trade or a very very tiny loss so at least that's my top process to how I would you know go about handling this trade alrighty so in this example right I want to share with you an example about the range market so if you look at this one at this point in time this chart Market might seem to be in a range and earlier if you recall at a earlier part of this training I mentioned that when the market is in a Range I still tend to have a directional bias sometimes I want to be buying only a support or sometimes only to sell at resistance so now the question is how do I decide when the market is arranged do we buy and support or sell that resistance that's what we're going to cover right now so if you look at this Market at this point in time right what I want you to do is actually to go up to a higher time frame and see what the market is doing so if this is the eight hour time frame I'm going up to the Daily time frame and as you can see over here the daily time frame this Market is actually in a long-term uptrend this means right on the lower time frame if the market is in a Range as much as possible I want to be a buyer I want to buy ad support because I know that the market is in a long-term uptrend and because you're buying at support and the market is in a long-term uptrend the chance of the market breaking out of resistance is higher okay so let's get back to the charts right so this is the eight hour time frame chart that I was sharing earlier so again the same thing applies right so Market is in a Range we look to identify the area of support that we want to trade from that's the area of value so I'm just going to draw this horizontal line somewhere about here change this to Blue to signify uh support shall we next thing is to wait for the price to come into support so let's see so in this case the market has come into support great next candle over here right here is break below support at this point in time many Traders will think oh man right now support is going to break down right let's shot this Market okay then what we see next happens is that the market then show signs of reversal and this is what we call a actually a false break it's a valid false break as the price took up below this lows and then quickly reverse and close back above support at the same time right traders who are familiar with candlestick patterns they might call this a bullish engulfing pattern that's fair enough as well because as you can see here the candle has actually engulfed right the prior candle so this is the prior candle this green candle has actually covered the body of this prior candle over here the red one so this is what we call a bullish engulfing pattern so of course needless to say what you can do is actually go along on the next candle open so let's see what happens next candle you can see that this is the opening price let's set this as our entry right so let's change this to Green this is our entry stop loss I'm not going to do the one ATR calculation because you should be familiar by number your stop loss I would say somewhere about here okay let's change this to red there you have it okay this black line I'm just gonna remove it since you know this is an area of support I remove it so what about Target so to so you know that the higher time frame the market is in an uptrend so how can you you know take advantage of it so again you can use similar principles that you've learned earlier for example if you want to exit your trip before opposing pressure steps in so I'll say this is a good level to reference to right because this is where sellers could come in right so over here let's put this as our Target just before this area of resistance over here okay so just before this area of resistance we look to take some profits off the table and as you've seen right earlier you've learned the technique where we use a Fibonacci extension right to kind of like project where the uh the move might end okay so of course you can use Fibonacci projection for your second target but another technique I want to share with you is what we call trailing your stop loss this is very useful because as you've seen right on the daily time frame this Market is in an uptrend so imagine this imagine that the market breaks out of this highs it breaks out of this highs and then continues up higher you can imagine that there's a lot of profit potential towards the upside so how can we capture this trend so what you can do is to use a trailing stop loss so there are many ways to Trail your stop loss okay let's go back to the eight hour time frame again there are many ways to Trail your stop loss but one approach you know you can use this moving average but for now let's see what happens in the in this on this time frame so you can see that market starts to you know show signs of uh headache about to hit higher right so this one you can see Market quickly hit our first Target over here okay at this point in time right your first Target is met right and let's say you have you know uh you sell half your position right at this first Target so you have the remaining half of your position still on so how can you manage the trade on the remaining half of your position so let's say for example right let's just for simplicities let's say buy 10 000 units of dollar against the Chinese Yuan you sell over here 5 000 units right so at 5 000 units at this highs over here so you take profits so what's left over here now is you have the remaining 5 000 units on this currency pair dollar against the Chinese yen how can you manage this trade on the remaining 5000 units that you're long so what you can do is to Trail your stop loss you can do something like the 50 period moving average so for example just go to moving average okay so this one comes up uh typically if you're on a trail to stop loss I recommend I won't really I mean I wouldn't say recommend but if you know right medium term Trend or you can use a 50 period moving average and click okay okay so what you can see over here on this chart is this blue line over here this is the 50 period moving average that I've inserted on the chart so the way to Trail a stop loss is that you will hold the remaining position that you have until the market breaks and close right breaks and close below this 50 period moving average below this blue line and of course if the market continues up higher that 50 period moving average will continue up higher along with it so let's see what happens so in this case where you can see the market breaks out higher I'm just going to play this a little faster or I can see that as the market goes up higher as the market goes up higher your trailing stop loss your 50 period moving average is going up higher as well so in other words you're kind of like locking in your profits as the market progressively moves in your favor and you will exit the trade only when the market breaks and close below the 50 period moving average so in this case see the market continues up higher okay almost right breaking and closing below the 50 period moving average but it didn't so we've continued to hold right the remaining 5000 units that we have on dollar against the Chinese yen until the price breaks and close below it so it's still grinding up higher as you can see okay and then over here finally it has now finally break and closed below the 50 period moving average and this is where we exit the final portion of the second half of our portion right of our trade okay so you can see that this if you write this trend of how you can see that this profit potential on this trade uh it's going to be pretty attractive this was your initial risk at the start I can see this was your initial risk and it looked how much higher the market pretty much exploded to this point over here so obviously in terms of risk to reward I think possibly risking a dollar you know to make maybe four or five dollars also okay so that's a pretty much it for this example and let's move on to the next one now let me share with you an advanced strategy right using this Concepts that you've learned earlier so this Advanced strategy will help you identify a low risk trading opportunities but at the same time I offer you a more favorable risk to reward on your trade so this means you can possibly you know risk a dollar to make four dollars or more so here's how it works right so first thing first again what is the trend in this uh Market condition so you can see this Market is in a downtrend downtrend we look for selling opportunities so where is the area of value on the chart so in this case the area of value is what I'm seeing over here I will draw it somewhere about here this is the area of value that I'm looking at so if you recall right earlier the basic strategy is where you look for a price rejection or a reversal Candlestick pattern at this area of value but to take things a step further this Advanced strategy you can actually go down to a lower time frame right to fine tune your entry by doing that right your stop loss right is smaller it's Tighter and this means that you get a more favorable risk to reward on the trade so in this case let's go down to the eight hour time frame so the eight hour time frame this is the area of value that I've highlighted earlier the same one what we're looking for now is again the same thing price rejection at this high so we're looking for the price to come up higher and give us a bearish price rejection could be something like a shooting star pattern and then from here we will enter our trade so imagine this right if you're entering on an eight hour time frame you're going to be much earlier compared to someone on The Daily time frame and when you're trading on eight hour time frame your stop loss is going to be tighter smaller because the range movements of this Market on this time frame is smaller compared to the range movement on a daily timeframe I mean it's it's logical right you know the price movement on the five minutes time frame is much smaller compared to a weekly time frame so same thing the eight hour time frame the price movement is going to be smaller compared to the Daily time frame so let's see what happens next so in this case Market tried to Rally up higher okay and over here we have a bearish price which actually looking something like a shooting star bet that's what we can do is to go shot on the next candle open right so let's say we call this one over here let's say our entry prices over here I'll just change this to Green to signify uh the entry price okay I'm not gonna do it here I'll just remove this box so it's quite irritating so I'm not going to do the ATR calculation for stop loss because you already know how to do it right so I'll just you know in in Singapore linguically agaga we just estimate right so I'll estimate the stop loss the 180 stop loss to be about here okay so and by the way right when you set your 180r stop loss right the ATR value will be on based on eight hour time frame you can reference the daily time frame if you want right but I usually use the eight hour time frame so I get a nice tight stop loss and as for Target you can see that over here we have a few levels right where buyers might step in and to push the price higher so the first one I'll say this is one possible area worth paying attention to I'll put this to Blue okay and since right you've this is the first uh this is a target right and since right you've seen that on the daily time frame this Market is in a downtrend that's actually a good possibility ability that this Market could also retest this low over here so for Target I would also have another Target right just before this area or swing low okay so if you go back to the eight hour time frame it looks something like that so at this point now we have multiple targets right this green is our entry this rate is our stop loss and this blue here we call it tp1 our first Target and this one is our second target okay so in this case that you can see that instead of you know using the daily timeframe to fine tune your it to enter your trade You're Now using a lower time frame to enter your trades earlier and thereby you know improving your overall risk to reward on the trade so in this case right again admit this is a cherry pick chart and you can see the price right would have you know hit your first Target over here and and let's say once the price has hit your first Target there are times where it just simply you know starts to move against you and then hit your stop loss and if it does happen right don't worry because this will probably just be a break-even trade because imagine if you buy I mean you shot let's say uh one lot right of this this Market you will exit 0.5 Lord 0.5 Lord at this first Target profit in the bank and your remaining 0.5 lot let's say the market reaches your stop loss over here right so 0.5 Lord this one over here is a loss this one here is a target so overall this trade will probably be a small profit or a break even yeah so that's kind of like a uh how multiple targets work so we can see that in this case the market did uh eventually hit down lower and you know hit our second target as well so overall I mean as I've said it's a cherry big chart this trade would have you know worked pretty beautifully in your favor but bear in mind right there are times where you know the market could also you know reverse against you hit your stop loss and that's the reality of trading okay so moving on right if you are enjoying this training so far smash the Thumbs Up Button if not hit subscribe so moving on right let's do a super quick recap about the main formula so again May stands for Market structure a is area of value e is for your entry trigger and the other is for your exits exits where your right and exits where you're wrong so if you look at this chart over here this is the chart of gold the daily time frame what is the market structure Market structure is in an uptrend so we are looking for buying opportunities where is the area of value so from what I'm seeing over here I would say this is a possible area of value so this area of value I'll say is a little bit tricky in a sense that I see one over here and I possibly would see let me just change this to Black first okay and I possibly see a slightly lower another one over here so you can see that this area of value is pretty wide right you have no idea whether it's going to re-test this level or this level and if you draw this like an area it's going to be a pretty wide area how do you kind of like you know set your stop loss when the area is so wide how do you know when to enter so what I like to do in this case is to let the market give me clues right to where it's about to show signs of reversal so what I like to do is to let the market usually come down first make a first test and bounce and then come down again make the second test giving me like a false break and then bounce up higher so at this point in time I roughly know that okay buyers are coming in around this area I will reference this level right to kind of like set a proper stop loss okay so let's see what happens next so I'll just uh uh let the market continue right heading down lower at this point we have like a hammer okay so at this point I wouldn't want to buy over here because again the market could at this point go up right and come down and continue the downtrend that could happen so I would want to see the market make another step lower and fail to go down lower right and that at that point in time that's where I would want to time my entry to go long okay so but what we have over here is that the market has come into our area of value let's see what happens Market heads up higher now consolidating a little bit and then hitting up higher nice now it got rejected a second time so again pay attention to this one over here in the market head up higher swing down lower taking out this lows and then on this most recent candle notice the price rejection the market tried to break down lower couldn't and close almost near the heights of the days over here so at this point when I see this right I want to go along because the market is tell me that he tried to push the price down lower two times and failed so that to me is a signal that okay buyers are possibly coming in from this area of value and could push the price up higher so what I'll do is again I'll look to enter on the next candle open so let's see the next candle open over here I would like to go long okay I'll just put this in green signaling my entry price I'll remove the two black lines since you know this is the area of value I will set my stop loss like one ATR from this most recent extreme low which is this one here which will probably probably might stop losses somewhere here okay just change this to red okay as for Target I will set it just before this most recent extreme High over here okay pretty decent risk to reward so set it over over here okay somewhere about here I said change this to Blue okay some of you might be thinking about right now why not you know this this level over here I would say this one here is fine uh it's it's okay to be honest right because although your risk to reward is slightly less than one probably one to zero point eight I think that's a decent level to actually set it as well so let's have another let's set a set of first Target just before this extreme swing it's not extreme but this most recent swing High okay and the second one further away over here so one and then the second one over here okay let's see what happens next so in this case the market pretty much uh reach our first Target relatively quickly but this is not a big winner because you're probably like risking a dollar over here right as you can see this is your risk this is your risk okay and this is your reward right to the first Target so I think you're probably risking like maybe a dollar to make 70 cents 60 cents or so right but because you have a second target overall this trade could still be a profitable Trader if it reaches your second target so first Target is mad let's see what happens next so in this case the market now showing signs of reversal going back to your entry putting you in the rate right now so again remember many Traders you're panicking let me cut my loss let's move on right no remember your stop loss is already at a place right where it's logical it's away from the noise of the market it's away from support right now support is not even broken support it's now still intact you don't want to be cutting your laws right into supports right so your stop loss is there for a reason adhere to your stop loss let the market do what it needs to do and in this case you can see over here Market starts to again go up and up and down right messing with your emotions and feelings and then finally you got stopped up on this trade over here so this trade overall I would say it will be a loser because your first your first Target probably is not enough right your first Target here is probably not enough to cover the loss on the second half of your position and it's perfectly fine why where I'm going over here is to kind of like let you know that you know when you trade as a Trader you will have winners you will have losers along the way I want to be honest about this up front the main formula is not the Holy Grail okay so manage your expectations hopefully by sharing losers with you right you would actually go out there to trade markets hopefully on the demo or a really small account and to manage expectations to know that there will be losers plenty of losers right that will come your way so congratulations to making it to the end of today's training and if you've enjoyed it so far then here's what you'll love right you will live right this guide over here called the monster guide to Candlestick patterns where we talk about additional tips tricks and strategies not covered in today's training so if you want to grab a copy just go down to this website trading with rainer.com or I'll put the link somewhere below this video for you to click on and then go to this website and click on this orange button over here I'll send you a copy a PDF copy of this guide for free so with that said right I wish you good luck good trading I will talk to you soon

Channel: Rayner Teo

Views: 451,856

Keywords: learn to trade, rayner teo, tradingwithrayner, twr, candlestick patterns, candlestick trading

Id: _I1omSmy44Q

Length: 100min 59sec (6059 seconds)

Published: Tue Feb 14 2023