Stop Overcomplicating Trading (Here's the Fix) — Transcript

Full transcript

1. 0:11How's it going everyone and welcome back
2. 0:12to another video. In this video, we are
3. 0:14going to talk about keeping it simple.
4. 0:17So, let's talk about how to keep it
5. 0:18simple within the fractal model. So, the
6. 0:21first thing we're going to start with is
7. 0:22a daily chart because if we are trading
8. 0:25intraday, we are inside that daily
9. 0:26candle and want to have a daily bias.
10. 0:30So, what are we looking for first? We're
11. 0:32going to focus on a candle two closure.
12. 0:34So, a candle two closure is when a
13. 0:36candle sweeps out its previous and
14. 0:37closes back above that level or below
15. 0:40that level and I have a dedicated video
16. 0:42on that. But, with a candle two closure
17. 0:44on the daily chart, I'm going to go down
18. 0:46to the hourly chart and make sure I have
19. 0:48an hourly change in the state of
20. 0:49delivery and that'll be my confirmation
21. 0:52that this wick has formed. So, with both
22. 0:54of those met, I'm going to look to trade
23. 0:56candle three. Now, is it also possible
24. 0:59to trade candle four? Yes, but the name
25. 1:01of this video is keeping it simple. We
26. 1:04are only going to focus on trading
27. 1:05candle three on all time frames. So, now
28. 1:09that we have a daily bias or the days we
29. 1:11are going to be trading, we're going to
30. 1:13go down to a lower time frame. And this
31. 1:15is where you have the decision to use
32. 1:17the 4-hour or the hourly chart. With the
33. 1:204-hour chart, you're going to be looking
34. 1:21for a candle two closure. You do not
35. 1:24need a point of interest here. Now, with
36. 1:27an hourly chart, you do need a point of
37. 1:29interest and you do need a candle two
38. 1:31closure. Now, following that candle two
39. 1:33closure, we're going to go down to the
40. 1:34lower time frame. So, if you're on the
41. 1:364-hour, you'd go to the 15. On the
42. 1:38hourly, you'd go to the 5-minute. And
43. 1:41we're going to be doing the same thing,
44. 1:42trading candle three. So, you see how
45. 1:44we're trading candle three or the
46. 1:46continuation candle on multiple
47. 1:48different time frames in the same
48. 1:49direction, that is when expansion can
49. 1:52occur. So, following a candle two
50. 1:54closure on the hourly or 4-hour, we will
51. 1:56look at that aligned time frame and make
52. 1:58sure we have a change in the state of
53. 2:00delivery. With that change in the state
54. 2:01of delivery, we are then able to look
55. 2:03for entries in candle three on that
56. 2:05lower timeframe. How are we going to do
57. 2:07that? We're going to let the wick form
58. 2:09and then trade the body. So, what are we
59. 2:11looking for? A continuation. Here you
60. 2:13can see, this is where we reach into a
61. 2:15point of interest or into that fair
62. 2:16value gap, form a continuation. That's
63. 2:19where we can get on side with this
64. 2:20trade. If you notice, we're using a
65. 2:22higher timeframe candle three, lower
66. 2:25timeframe candle three, and then a
67. 2:26protected swing in that direction.
68. 2:29And as we let this continue on, this is
69. 2:31where you get expansion trades as we can
70. 2:33look for the daily candle to expand.
71. 2:36So, let's get into TradingView and go
72. 2:37over a few examples of this.
73. 2:39So, here we are in our first example. We
74. 2:41are on the Swiss franc futures chart,
75. 2:44and what do we have? The daily chart on
76. 2:46the side via my indicator and the hourly
77. 2:48chart here.
78. 2:50Now, do we have a candle two closure on
79. 2:52the daily? Well, price swept out its
80. 2:55previous candle here and then closed
81. 2:57back above it. So, we do have a candle
82. 2:59two closure on the daily. Now, we have
83. 3:01to confirm, do we have a change in the
84. 3:03state of delivery?
85. 3:05I find the low, find the series of
86. 3:07candles that made that low, did we close
87. 3:09over it? Yes, we did. Now, you might be
88. 3:11asking, these are equal lows, do I
89. 3:13really want to trade away from that? If
90. 3:15you're trading price in this area here,
91. 3:17I wouldn't really want to trade that
92. 3:19because price is pretty close and could
93. 3:21just sweep it out before going.
94. 3:23But, because price displays so far away
95. 3:25and price is closing up here, there's a
96. 3:27lot of separation between the opening
97. 3:29price and this low.
98. 3:31So, it doesn't really bother me trading
99. 3:33away from those equal lows down there
100. 3:35because price is so far away from them.
101. 3:38Now, if we go ahead and go to the 4-hour
102. 3:40chart because all of our criteria is met
103. 3:42on the daily and hourly,
104. 3:44what are we looking for? Another swing
105. 3:46point cuz our goal is to trade candle
106. 3:48three on multiple timeframes.
107. 3:51So, letting another candle form, Do we
108. 3:53have a point of interest? Yes. So, we
109. 3:55don't need a point of interest on the
110. 3:574-hour, but it is helpful. We have a
111. 3:59candle two closure. So, what are we
112. 4:01going to look for?
113. 4:03We're going to go down to the 15-minute
114. 4:04time frame and see if we have a change
115. 4:06in the state of delivery inside there.
116. 4:08So, go ahead. Go down to the 15-minute
117. 4:10time frame. We'll zoom in here. And let
118. 4:13this play out and see if we have a
119. 4:14change in the state of delivery.
120. 4:17So, here we don't have a change in the
121. 4:18state of delivery yet. We just formed
122. 4:20that. Now, why didn't that form until at
123. 4:22least start a candle three? Well, we
124. 4:23find the series of down closed candles.
125. 4:25Price hadn't closed over it yet. But now
126. 4:28that it has, we can anticipate that this
127. 4:30low should hold, the candle two low on
128. 4:32the 4-hour, and we'd want to see this
129. 4:34expand higher. Now, what do we want to
130. 4:37see? We want to see a continuation
131. 4:39entry.
132. 4:40So, what are we looking for? Price to
133. 4:42reach into a fair value gap, which we do
134. 4:45here. Now, on these futures charts,
135. 4:47they're a little bit choppy, but that's
136. 4:48fine. And then we want to see a close
137. 4:50through this level here to form a
138. 4:53continuation.
139. 4:55Let's see if the next candle can do
140. 4:56that.
141. 4:58It can. So, now I could take an entry
142. 5:00here, put my stop on that new protected
143. 5:02low. And what is that? I'm anticipating
144. 5:05the wick of candle three to hold.
145. 5:07We can go ahead and look for a two R
146. 5:09minimum, and then see what happens here.
147. 5:12And what are we doing? Just so you can
148. 5:13see it visually. We have the daily
149. 5:15candle three that we are looking to
150. 5:17trade with the 4-hour candle three, and
151. 5:20then a protected swing. We are aligning
152. 5:22all of these time frames in one
153. 5:24direction, looking for expansion.
154. 5:28And you can see that would be a stop
155. 5:29out. Now, that is a very valid stop out,
156. 5:32right? Everything is mechanical and
157. 5:34valid. And I'm doing this to show you
158. 5:36price can meet all of your expectations
159. 5:38and still stop you out. Now, let's see
160. 5:40if we still get a continuation higher,
161. 5:42right? Do we get a sweep out? We do get
162. 5:45a sweep. Right? Do we get a new
163. 5:46continuation? Let's see.
164. 5:52Nope, we don't get a new continuation in
165. 5:54this candle. Does that mean I throw away
166. 5:56my idea? No, because if I come back out
167. 5:59here to the hourly and the daily, I'm
168. 6:01still looking for that continuation
169. 6:03higher. So, we could look to trade this
170. 6:05hourly, but what do we notice? There's
171. 6:06no candle two closure there.
172. 6:08Do we have the 4-hour?
173. 6:10Oh, let's see if this forms a candle two
174. 6:12closure. So, we'll go back to the
175. 6:1315-minute time frame
176. 6:16and let this candle close.
177. 6:19All right, this candle closes and it's
178. 6:20actually a really great formation. We
179. 6:22have a candle two closure. We have that
180. 6:25change in the state of delivery. And
181. 6:26what do we notice? We have a point of
182. 6:28interest and a new continuation forming
183. 6:32right prior to the open of the new
184. 6:33higher time frame candle.
185. 6:35We could take an entry on the open of
186. 6:36that new higher time frame candle, our
187. 6:38stop on the low, and then look for our
188. 6:40two our minimum.
189. 6:41So, you can see this has a lot better
190. 6:43structure and it's in London, right?
191. 6:46This doesn't have great structure, but
192. 6:47it is still valid. I wanted to show you
193. 6:49you can take losses. Let's see how this
194. 6:51works out.
195. 6:53And there we hit our TP. And let's see
196. 6:55if this can continue. We're going to go
197. 6:56watch it on the 4-hour chart.
198. 6:59And you can see that expands into the
199. 7:01previous high. So, going back to the
200. 7:0315-minute time frame, what do we notice?
201. 7:06The 4-hour did create the low of the
202. 7:08day. We could have gotten stopped out
203. 7:09once. We get this continuation higher or
204. 7:12this trend. So, going back to our daily
205. 7:14time frame,
206. 7:15what do we notice here on the daily time
207. 7:17frame? We have a candle two closure.
208. 7:19We're trading candle three towards this
209. 7:21high. We're trading the candle three on
210. 7:24the 4-hour. Right? So, we're aligning
211. 7:26multiple candles for expansion. And
212. 7:29you'll keep hearing me repeat this, but
213. 7:30I'm just trading candle three on
214. 7:32multiple time frames. A continuation on
215. 7:35one time frame matched with another
216. 7:37continuation and then a protected swing.
217. 7:40It doesn't mean you're not going to
218. 7:40lose. As I showed you, we could have
219. 7:42taken a loss right there. But, this is
220. 7:44what I look for for expansions to occur.
221. 7:47Here we are with our next example, and
222. 7:49what do we notice? We've had continuous
223. 7:51days of moves higher. We have 3 days of
224. 7:53expansion, a consolidation, another 3
225. 7:56days higher, and then we have this
226. 7:58candle to closure where we can get a new
227. 8:00phase of price. So, I'd be looking for
228. 8:03either a retracement or a reversal here.
229. 8:05So, I could go down to the hourly time
230. 8:08frame, make sure we have a change in the
231. 8:10state of delivery. And here you can see
232. 8:12my model will print because we have that
233. 8:14hourly change in the state of delivery.
234. 8:16We find the high, we find the series of
235. 8:18candles that made that high, and price
236. 8:20has closed through it. So, we could be
237. 8:22looking for price to trade lower here
238. 8:24into this gap and into these targets.
239. 8:27So, once again, we're going to go to the
240. 8:284-hour time frame here. So, here on the
241. 8:304-hour time frame, we're just going to
242. 8:32be waiting for a swing to form.
243. 8:34And what do we have? We have a candle to
244. 8:36closure right there, taking out this
245. 8:39high very shallowly. Now, with this
246. 8:414-hour candle to closure, you might say
247. 8:43it's a candle to closure to the upside
248. 8:45and the downside. Yes, it is, but this
249. 8:48is where our higher time frame bias
250. 8:50comes into play. We are only looking
251. 8:52bearish in this bearish candle three,
252. 8:55not bullish. So, we would ignore the
253. 8:57bullish side here.
254. 8:58So, going down to the 15-minute time
255. 9:00frame, here on the 15-minute time frame,
256. 9:02we're going to be looking for a
257. 9:03continuation.
258. 9:05So, what do we notice here? Price
259. 9:06reaches into a fair value gap. We can't
260. 9:08close below this level.
261. 9:10All right, so we can't form a
262. 9:11continuation.
263. 9:12We make a new high.
264. 9:14Can we get price closing through this
265. 9:16level, which would form a new
266. 9:17continuation? Well, let's see.
267. 9:21And here we do get that closure. We get
268. 9:23a closure through that level, but once
269. 9:25again, another closure through after
270. 9:27sweeping out this high here. So, here we
271. 9:30have two new continuations, one right
272. 9:32here forming a protected swing, as well
273. 9:34as this one forming a protected swing.
274. 9:36So, we could go ahead and look short
275. 9:37here with our stop on this high, the
276. 9:39protected swing. And then, can we get to
277. 9:42our Let's see.
278. 9:45And there we go ahead and get to our And
279. 9:47that is what happens when we align
280. 9:49multiple candles or candle threes in one
281. 9:52direction, and then we find a protected
282. 9:54swing. So, what are we actually doing?
283. 9:56We're on a continuation on the daily
284. 9:58time frame. So, we have this daily
285. 10:00reversal up here trading this
286. 10:02continuation. And then, we have the
287. 10:044-hour reversal trading this
288. 10:06continuation. We're trading two
289. 10:08continuations and then a protected swing
290. 10:10for our structure.
291. 10:12Let's get into another example.
292. 10:14Let's do one more example completely
293. 10:16top-down. What do we have? We have price
294. 10:18reaching up into a point of interest
295. 10:20here on the daily chart, which isn't
296. 10:22required but preferred. And you can see
297. 10:24how we're respecting the middle part of
298. 10:25that. What do we have? We have a candle
299. 10:28two closure on the daily. And so, what
300. 10:30are we going to look for? We're going to
301. 10:32look for an hourly change in the state
302. 10:33of delivery. And if we do have that, we
303. 10:35can look to trade this daily candle
304. 10:37three.
305. 10:38So, down here on the hourly time frame,
306. 10:40we have that change in the state of
307. 10:42delivery because we find the high, the
308. 10:43series of candles that made that high,
309. 10:45and we have closed through it. So, we
310. 10:47can be looking for price to trade lower
311. 10:49in this area. And we want to see this
312. 10:51high be respected. Why is that? Well,
313. 10:54it's also a valid continuation.
314. 10:56So, we want to see this area be
315. 10:58respected. So, basically we need a high
316. 11:00in this gap. Let's see if price forms a
317. 11:02high or some sort of reaction that we
318. 11:04can trade away from.
319. 11:08Now, we did respect this high. We didn't
320. 11:10take it out. It's not super ideal. So,
321. 11:13I'd want to wait for some more
322. 11:14confirmation that price isn't just going
323. 11:16to go ahead and take out this high. This
324. 11:19is very similar to that first example.
325. 11:21If we are further away from these equal
326. 11:22highs, I'm okay with trading it, but I
327. 11:25would not be looking to trade it right
328. 11:26here because it could just as easily go
329. 11:29sweep it out before reversing.
330. 11:32So, here we can see we do get a pretty
331. 11:34aggressive move lower.
332. 11:36You know, we have that intra-candle
333. 11:38change in the state of delivery
334. 11:39confirming the wick, but I still want to
335. 11:41look for a continuation to trust it.
336. 11:44What do we have right in here?
337. 11:46We have this little fair value gap, a
338. 11:47retest right here. So, this could be
339. 11:49looking for a continuation here. It's a
340. 11:52lot easier to trust this area here cuz
341. 11:54the equal highs are further away than it
342. 11:56is to trust it up here.
343. 11:58So, with an hourly candle to closure,
344. 12:01what are we going to look for? A
345. 12:025-minute change in the state of
346. 12:03delivery.
347. 12:04So, cleaning up the chart a little, we
348. 12:06do have that 5-minute change in the
349. 12:08state of delivery as marked out by my
350. 12:10indicator. So, you can see the sweep,
351. 12:12you can see the closure. We're looking
352. 12:14for price to trade lower here.
353. 12:16And you can see we've already formed one
354. 12:18continuation, so that is possible to
355. 12:20look for an entry.
356. 12:22Now, it is quite shallow. So, a lot of
357. 12:24times if I'm going to be taking an entry
358. 12:25like this, I give myself a little bit
359. 12:27more room on my stop loss to see if it
360. 12:29wants to sweep it out. Maybe put it in
361. 12:31there, and then look for 2R. Let's see
362. 12:34what happens.
363. 12:36It would have gotten swept out. This
364. 12:37would be another entry if you wanted to
365. 12:40wait for the continuation inside candle
366. 12:41three. Let's see what happens.
367. 12:46And there you can see we go ahead and
368. 12:47hit 2R. So, just to review, what are we
369. 12:50doing? We're trading that daily candle
370. 12:52to closure. So, if we go back out to the
371. 12:54hourly here, we have that daily candle
372. 12:56to closure trading candle three.
373. 12:59We want to let the wick of candle three
374. 13:00form or trade a continuation within this
375. 13:03range. So, we let the wick form, we're
376. 13:05looking to trade this continuation swing
377. 13:07point, and then we're going to trade
378. 13:08candle three here on the 5-minute. So,
379. 13:11going down to the 5-minute, we have this
380. 13:13continuation in here. Now, I give it a
381. 13:15little bit of a wider stop loss because
382. 13:17when we get a very shallow reach in and
383. 13:19we're also sweeping out some liquidity,
384. 13:21many times it will come back and sweep
385. 13:22before it goes. But, the main point of
386. 13:25this example in this whole video is if
387. 13:27you want to keep it simple, look to
388. 13:29trade candle three on multiple different
389. 13:30time frames, and then use protected
390. 13:32swings for your entry.