The Only Trading Strategy You'll Ever Need — Transcript

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1. 0:00I have a 3 step formula that I  ve backtested 1000 s of times
2. 0:03And every single month that I tested  it, it was profitable in the long term.
3. 0:07No indicators, no patterns,  just pure price action baby.
4. 0:18And by the end of this video,  you too will know this strategy.
5. 0:21And will be able to take calculated trades just  like this one and make insane amounts of money.
6. 0:28To jump right into it, the first  step involves market structure.
7. 0:31Now, this is arguably one of  the most important steps.
8. 0:34Because if you even slightly just slightly fk  this part up. It will ruin the whole strategy.
9. 0:38*meme* One of the very first things you
10. 0:43learn as a trader is uptrends and downtrends. Its almost the sippy cup of trading.
11. 0:48A chart that makes higher highs  and higher lows is an uptrend.
12. 0:51A chart that makes lower lows  and lower highs is a downtrend.
13. 0:54Simple enough. Everybody know this. Now you may be thinking.
14. 0:57Why are we even going over this?  I already know all of this.
15. 0:59Well, what if I told you, you re probably  doing all of this completely wrong?
16. 1:03Let me explain. So going back to our example.
17. 1:05The chart does this, making  higher highs and higher lows.
18. 1:08And as we already stated, its an uptrend. Okay.. But then something interesting happens.
19. 1:13The chart starts heading downwards. Which in the process, price makes
20. 1:16this low, and breaks right through it. And this exact point, is where I see the
21. 1:20majority of traders make the mistake. Since price broke this low,
22. 1:23a lot of traders think we are now in a  reversal and price is in a downtrend.
23. 1:27So they start looking for short trades because  they now think price is going to head lower.
24. 1:32But what if I told you this chart is  actually still fundamentally bullish.
25. 1:38*crowd gasp* You see, sure price made this low.
26. 1:40But this low is actually not a low  at all, or at least a valid one.
27. 1:44Why? Because price never broke
28. 1:46the valid low which is right here. *switch up*
29. 1:47You see, the only way you can get a valid  low is by breaking the previous high.
30. 1:48If price did something like this, where  price didn t break the previous high.
31. 1:48This would not be a valid low. I want to make this clear
32. 1:49In order for a low to be validated.  It needs to break the previous high.
33. 1:53If you do not understand this part of the  strategy. The strategy will not work.,
34. 2:02So say if price does breaks this high, we  now know this is the valid low. Okay good.
35. 2:08So now price is in an uptrend. Which means,  we should only look for bullish trades.
36. 2:12The only time we should start looking for  short trades is if price breaks this low.
37. 2:16It can do anything right here. It can go up, down, sideways.
38. 2:19Literally anything as long as it doesn  t break this low. We are in an uptrend.
39. 2:23So if price did this. What are we in?
40. 2:23Well a lot of people would say downtrend,  because we broke this low right here.
41. 2:23But like I said before, a low is only  validated if it breaks the previous high.
42. 2:23Which this low did not break the  previous high. So its not validated.
43. 2:23So we are still looking at our  previous low. Which price hasn t broke,
44. 2:23so we are still in an uptrend. Now say if instead of doing this,
45. 2:25price did end up breaking upwards. Since price did break our previous high.
46. 2:28Our new low will be transferred  from this point, to this one.
47. 2:32I know it can be slightly confusing But the main thing you have to remember
48. 2:32is the only way a low is validated  is if it breaks the previous high.
49. 2:32If you remember that one simple rule,  you will easily be able to identify
50. 2:32if we are bullish trend or a bearish one. So that s the first step. Identifying if we
51. 2:34are in an uptrend or a downtrend. So whats next?
52. 2:37That would be step 2 in the formula. Step 2 is identifying supply
53. 2:41and demand in the markets. Demand zones take place in uptrends.
54. 2:44Supply zones take place in downtrends. A good style of thinking is you want to buy from
55. 2:49demand zones and sell from supply zones. The reason why you want to
56. 2:51buy from demand zones is this. Here if we look closely. The market is going up.
57. 2:54Since we saw a large push from  the beginning of this move.
58. 2:56It simply shows us that a lot people  wanted to buy from this point onwards.
59. 3:01So we can assume, if price  comes back down to this area.
60. 3:04Traders will have the same style of thinking  and want to buy in this same area again.
61. 3:11A supply zone is the exact opposite.
62. 3:14Since we saw a large downwards  move from this point on.
63. 3:17It shows us that a lot people  want to sell at this area.
64. 3:20So if price ever retests this zone we can assume  price will again move downwards from this point.
65. 3:26This supply and demand theory  is the core of our strategy
66. 3:28But We still have one more  step in our 3 step formula
67. 3:32But lets put all that we learned so far  to the test on a real life chart example.
68. 4:30So looking at a real chart. We see price moved upwards
69. 4:33Came down, and then broke this previous high. Which means we have higher highs and higher lows.
70. 4:38Meaning we are in a . uptrend. Since we are in an uptrend.
71. 4:41We only look for long trades. WE DO NOT look for any sell positions
72. 4:45As shorting in a uptrend is just silly. *meme*
73. 4:48Since this low broke the previous high,  this is our valid low and price will only
74. 4:53be in a downtrend if it breaks this point. So now that we know we are in an uptrend,
75. 4:57we want to look for demand zone opportunities. We can find our demand zones by finding an area
76. 5:02of consolidation or a point where price moved  sideways before having a sharp move upwards.
77. 5:07As you can see from this chart  we had some consolidation right
78. 5:10here. The price shot straight upwards. How I like to mark my demand zones is marking
79. 5:15the candle right before the impulse move. So grab your rectangle tool on the side.
80. 5:19Find the area of consolidation  before the big move.
81. 5:22Then mark from the low to the high of  the previous candle before the big move.
82. 5:27This is our area of demand. Again, we are not even considering areas
83. 5:31of supply because we are in an uptrend. So we don t need to worry about that.
84. 5:37We wait for price to re-enter into this  zone and this is where we would enter.
85. 5:41Set your stop loss right below the demand zone  and set your take profit at the recent highs.
86. 5:46Boom we got an easy trade. So that s an example of one winning trade.
87. 5:51But I want to show you just how  accurate this strategy really is.
88. 5:54So lets break it down with a real chart example. Here we get an uptrend, because price is making
89. 5:59higher highs and higher lows. As we can this low is what
90. 6:03broke the previous high. So, this is where price need to
91. 6:05break in order to be in a downtrend. Which is exactly what happens.
92. 6:10So now we are in a downtrend and we only  look for areas of supply or short trades.
93. 6:15So we mark our areas of supply. Price comes back up this area of supply. We
94. 6:20enter. Set our stop loss above the area of supply.  And set our take profit at the recent lows.
95. 6:25Boom easy winning trade But wait! we re not done
96. 6:29Price created another area of supply up  here and we re still in a downtrend.
97. 6:33So we wait for price to come up to this supply Enter
98. 6:36Set our stop loss above the area  of supply and target recent lows.
99. 6:40Another winning trade. But again, we re still not done.
100. 6:43Price created another area of supply. Wait for price to come up to it.
101. 6:47Set stop loss above the area of supply. Set take profit at recent lows.
102. 6:51And again we got another winning trade But wait theres more
103. 6:54We got ANOTHER area of supply Wait for price to come up here again
104. 6:58Set you stop loss and take profit. And we got another winning trade.
105. 7:02That s the power of this strategy. Its extremely accurate for one.
106. 7:05And two, you are only trading  in the direction of the trend
107. 7:08Which raises the probability of  you winning a trade by a lot.
108. 7:11So now that you know just how  powerful this strategy really is.
109. 7:15Lets go to the third and final step on  how to improve this strategy even more.
110. 7:19Our last step involves risk to reward. Sometimes while using this strategy,
111. 7:23you ll get a trade that checks all of the boxes. But when you setup your stop loss and
112. 7:27take profit. Its has a low
113. 7:28risk to reward like in this example. We only want to take trades if the
114. 7:32risk to reward is above 2.5:1 Mean for every $250 we re
115. 7:37getting back we re only risking $100. So even if the chart follows both step 1 and 2.
116. 7:43But the risk to reward is under 2.5. We do not take this trade.
117. 7:47This one rule increases the profit  rate of the strategy by a ton.
118. 7:52So for our final example we have price  making higher highs and higher lows.
119. 7:56Meaning we are in an uptrend so  we only mark our areas of demand.
120. 7:59Price consolidated right here before  shooting upwars. So we mark this area.
121. 8:04We wait for to come to this area again. Enter.
122. 8:08Set our stop loss below the demand zone. Set our take profit at the recent high.
123. 8:13Last step is to check our risk to  reward and make sure its over 2.5.
124. 8:17Which in this example its 3.  So we re good to go there.
125. 8:20If its anything under 2.5,  we do not take the trade.
126. 8:23Wait for price to play out and we  get a beautiful winning trade.
127. 8:27Then we just repeat the process Forever ..