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Trading Made Simple: The 4-Line Method That ACTUALLY WORKS! — Transcript

by Flux Charts · 2,450 words · 389 segments · language en · Watch on YouTube

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0:00Here's the thing nobody tells you.
0:02The more you try to be clever with the
0:03market, the worse your results get.
0:06The traders who make money on the open
0:08are not the smartest ones. They're the
0:10ones with the simplest process.
0:13In this video, I'll give you the
0:14simplest process ever.
0:16One timeframe, four lines you draw
0:18before the market opens, three candles
0:21you wait for. That's it. No stacking
0:23indicators, no hopping between charts,
0:26and most days you're done before your
0:27coffee gets cold.
0:29I'll explain what to look at and why it
0:31works. And then I'll apply everything on
0:33a live chart to show you how it works
0:35step-by-step.
0:36Let's get straight to it.
0:38Before I show you the lines, you need to
0:40understand why they work.
0:43Think about where traders put their stop
0:45losses. If you're short, your stop is
0:47above a recent high. If you're long,
0:49your stop is below a recent low. And the
0:51highs and lows everybody looks at are
0:53the same ones. Yesterday's high,
0:56yesterday's low, and the last obvious
0:58swing points on the chart. Millions of
1:00stops sitting in the same few places.
1:03That pile of orders is what we mean by
1:05liquidity.
1:07Now think about a big institution that
1:09needs to buy a very large position.
1:11It can't just hit the buy button.
1:13There's not enough selling to fill it.
1:15It needs somebody to sell.
1:17And where does a lot of selling appear
1:19all at once? Right below yesterday's
1:21low, where every long trader's stop loss
1:24gets hit at the same moment. So, price
1:26gets pushed into that level, the stops
1:28fire, the institution gets filled, and
1:31price snaps back the other way. This
1:33move, price running past a level to
1:35trigger the stops and then reversing,
1:37that's a liquidity sweep.
1:39This is why price behaves like a pinball
1:42between those levels. It goes to the
1:43high to grab the stops above, comes
1:46back, goes to the low to grab the stops
1:48below, comes back.
1:50Once you see it, you can't unsee it.
1:52And once you have those levels on the
1:54chart, you stop trading in the middle
1:56where nothing happens. And you start
1:58trading where the big money actually
1:59shows up.
2:01Let's draw them. Open TradingView. Go to
2:04the 15-minute chart. That's the only
2:06time frame we're going to use for the
2:07entire day. I'm not kidding.
2:10Line one and two, the range high and the
2:12range low. These are simply the highest
2:14price and the lowest price of the
2:16previous trading day, wicks included.
2:18Look at yesterday's candles. Put a
2:20horizontal line on the very top, put a
2:22horizontal line on the very bottom.
2:24Get as close as you can. It doesn't have
2:27to be exact to the tick.
2:29Line three and four, the swing high and
2:31the swing low. The swing high is the
2:33first high above the range high that you
2:35find when you scroll back to the left.
2:37Sometimes it's 2 days back, sometimes
2:39it's 2 weeks back. It doesn't matter.
2:42You keep scrolling left until you bump
2:44into a high that's higher than
2:45yesterday's high. And you put a line on
2:47it. Same thing below. Scroll left until
2:50you find a low that's lower than
2:52yesterday's low and put a line on it.
2:55That's the whole setup. Four horizontal
2:57lines drawn once before the open and
2:59nothing else on the chart.
3:01Now the rule, and this is the most
3:03important thing in the whole video. You
3:05only trade at those four lines. The two
3:07lines above are sell lines. That's where
3:09the sellers have shown up every single
3:11time price got there, and until they
3:13leave, price is not going any higher.
3:16The two lines below are buy lines.
3:18That's where the buyers live. Anywhere
3:20in between, you do nothing. No trades in
3:23the middle.
3:24Most of your losing trades come from
3:25there, where nobody is in control and
3:27the price just chops.
3:29Here's the pattern you'll see almost
3:31every day on almost every instrument. In
3:34the first 15 minutes after the open,
3:36price bounces back and forth between the
3:38range high and the range low, testing
3:40both sides. Then, shortly after those 15
3:43minutes, one of the two sides breaks and
3:45price runs straight to the swing level
3:47beyond it. Range low breaks, price
3:49visits the swing low. Range high breaks,
3:52price visits the swing high.
3:54And this is where the strategy gets easy
3:56because you don't have to decide if
3:58today is bullish or bearish. You let the
4:00first 15-minute candle decide for you.
4:03It tells you which line price picked.
4:05All you do is wait and read it.
4:07Now the entry. The whole execution is a
4:09three candle sequence on the 15 minute
4:11chart.
4:12Candle one is the opening candle. It's
4:15usually big and aggressive and it drives
4:17into one of your lines. Say it plows
4:19down into the swing low. Every instinct
4:22tells you to buy right there. Don't.
4:25Maybe today is the day that level breaks
4:26and keeps going and you don't know that
4:28yet.
4:30Candle two is the one that matters. I
4:32call it the confirmation candle. It's
4:34the next 15 minute candle. And what you
4:37want to see is that it closes back
4:38inside the level. Price dipped below the
4:40swing low, buyer stepped in and the
4:43candle closes green above the line.
4:46That candle proves the buyer is real.
4:4930 minutes of the market pushing into
4:50that level and being bought back every
4:52time.
4:53If you don't get it, if the second
4:55candle just keeps dropping, you keep
4:57waiting. Maybe the confirmation is the
4:59third candle. Maybe the fourth.
5:01No confirmation, no trade.
5:04Candle three is the entry. The moment
5:06the next candle pushes above the high of
5:07the confirmation candle, you buy.
5:10One candle taking out the high of the
5:12previous one. That's the trigger. No
5:14indicator, no pattern names, just one
5:16candle beating the previous one.
5:19The stop loss goes below the low of the
5:21confirmation candle, which means below
5:23the level where the big buyer just
5:24showed up.
5:26And this is why we drew the lines in the
5:27first place. Your stop sits behind a
5:29buyer that's been tested for half an
5:31hour and has held every time. That's the
5:34best protection you can get.
5:36The target is the opposite side of the
5:38range. If you bought at the swing low,
5:40you're aiming at the range high. And if
5:42it keeps going, the swing high.
5:44Price moves from line to line. That's
5:46what we saw earlier. So that's where you
5:48take profit.
5:50One last thing about this and it's the
5:51part most traders get wrong. Sometimes
5:54candle three fires and price rockets
5:56straight to the target. Sometimes it
5:58sits on the level for an hour. Bouncing
6:00around on the level, testing the buyer
6:02again and again and it's uncomfortable
6:04to hold.
6:05Here's the rule. As long as the level
6:07holds, the trade is valid. Your stop is
6:10below the buyer. Until that's hit, you
6:13stay in. Patience is part of the
6:15strategy, not an optional extra.
6:17For a short, it's exactly the same,
6:19flipped. Opening candle into a sell
6:21line, confirmation candle closing back
6:24below it, entry when the next candle
6:26breaks the low of the confirmation
6:27candle, stop above, target the range
6:30low.
6:31Enough theory. Let's put it on a real
6:33chart. On this chart, I'm on the
6:3415-minute time frame.
6:37First thing I do before the open is draw
6:38the four lines. Yesterday's high line,
6:42yesterday's low line. Now I scroll left,
6:45and I keep going until the chart gives
6:46me a high above yesterday's high.
6:49Sometimes it's the day before, sometimes
6:51it's some days back.
6:53There it is. That's my swing high line.
6:56And below, same thing. Scrolling left
6:58until I find a low under yesterday's
7:00low. There, that's my swing low line.
7:03Four lines, done. And I haven't looked
7:06at a single candle of today.
7:08Market opens. Look at the first
7:1015-minute candle.
7:11Big red candle. It goes straight down
7:14through the range low and drives into
7:16the swing low. Notice it doesn't stop
7:18exactly on the line. It pokes a little
7:20below it.
7:21That's normal. These lines are areas,
7:23not laser beams.
7:25The market just told me which side it
7:26picked. Am I buying? Not yet.
7:30Second candle. It opens below the line,
7:32dips a bit more, and then look at what
7:34happens. It turns around and closes
7:36green, back above the swing low. That's
7:39my confirmation candle. The buyer is
7:41here.
7:42Third candle. It opens, pushes up, and
7:45the moment it takes out the high of the
7:46confirmation candle, I'm in. Long right
7:50there.
7:51Stop loss just below the low of the
7:52confirmation candle, under the buyer.
7:55Target the range high.
7:57Now watch what happens next, because
7:59this is the real world, not a textbook.
8:02Price doesn't rocket. It goes up a bit,
8:04comes back, taps the level again, goes
8:07up, comes back. Three, four candles of
8:09this.
8:10Look at those wicks on the low. That's
8:12the buyer being tested over and over and
8:15holding every time. My stop is still
8:17untouched, so I hold. This is the
8:20uncomfortable part, and it's also the
8:21part that separates the traders who make
8:23money with this from the ones who don't.
8:25And then it goes. One 15-minute candle,
8:28then another, and price runs right back
8:31up into the range high.
8:32Target hit. From the swing low to the
8:34range high, exactly the move we planned
8:37before the market even opened. With a
8:39stop that never came close.
8:41That's the strategy. Four lines, three
8:43candles, one time frame.
8:46Now, I've got to be honest with you
8:47about something. Drawing the lines takes
8:502 minutes. Sitting there waiting for
8:52price to reach one of them, and then
8:53waiting for the right candle to show up
8:55is the boring part.
8:57So, I asked our devs to build it, and to
8:59make it ping me the moment that candle
9:01prints.
9:02And no, we can't confirm the rumor that
9:04our developers are actually cats. We can
9:06only confirm that they climb into any
9:08cardboard within 30 seconds of it
9:09entering the building, and that they sit
9:11and stare at a completely empty corner
9:13of the wall for minutes at a time.
9:15Code somehow is excellent.
9:18First things first, open TradingView,
9:20hit the indicators tab, search price
9:22action toolkit by Flex Charts, click,
9:25done. Link [snorts] in the description,
9:27too.
9:28The toolkit does a lot of things, and
9:30for this strategy, we need exactly three
9:32of them. So, let's keep the chart clean
9:34and switch everything else off.
9:36First, the MTF highs and lows section.
9:39Enable the previous day high and low.
9:41Those are your range high and range low,
9:43plotted automatically, updated every
9:46morning.
9:47If you trade [snorts] stocks, switch on
9:48the pre-market levels, too. And here's
9:50why.
9:51If the market opens with a gap above
9:53yesterday's high or below yesterday's
9:55low, yesterday's range is no longer the
9:57box price is playing in.
9:59On those days, the pre-market high and
10:01low become your range high and range
10:03low, and you find the swings above and
10:05below those. Same logic, updated levels,
10:08and the toolkit plots them for you.
10:10Second, the liquidity section.
10:13This one plots the swing highs and the
10:15swing lows on the chart. The toolkit
10:17calls them buy side liquidity at the
10:19highs and sell side liquidity at the
10:20lows, because that's where the stops are
10:22sitting.
10:23There's a pivot length setting. A low
10:25value gives you lots of small swings. A
10:27higher value gives you fewer, more
10:29significant ones.
10:31For this strategy, you want the
10:32significant ones. So, raise it a bit
10:34above the default until the level
10:36plotted above the range high is the same
10:38one you'd have found scrolling left by
10:40hand.
10:41Third, liquidity grabs.
10:43This is the one that does the
10:44confirmation candle for you.
10:46When a candle spikes through one of
10:47those swing levels and closes back
10:49inside, the toolkit prints a bubble on
10:51that candle.
10:53Green bubble at the low, red bubble at a
10:55high.
10:56The bigger the wick compared to the
10:57body, the bigger the bubble.
10:59That's the buyer is real moment, marked
11:02on the chart the second it happens. So,
11:04you're not squinting at a candle
11:05wondering if it counts.
11:07And you can set an alert on it. The
11:09toolkit pings you when a grab prints, so
11:11you're not staring at the chart from the
11:13open.
11:14Everything else, order blocks, fair
11:16value gaps, sessions, trend lines, offer
11:19today. Four lines in a bubble. That's
11:22the chart.
11:23Same strategy as before, live, and the
11:26indicator does the grunt work.
11:28On this chart, I'm on the 15-minute time
11:30frame. And this time, we'll take the
11:32short side.
11:33The four lines are already there. I
11:35didn't draw anything. Previous day high
11:37and low from the toolkit, and above and
11:40below them, the swing levels from the
11:41liquidity section. Range high, swing
11:44high, range low, swing low.
11:46Market opens. First 15-minute candle.
11:49Big green candle. [music]
11:50Straight up to the range high and into
11:52the swing high. The market picked the
11:54top side,
11:55>> [music]
11:55>> sell line. So, I'm thinking short, but
11:58I'm not clicking.
11:59Second candle. Watch it. [music] It
12:01pushes above the swing high, spikes, and
12:03then the sellers slam it back down, and
12:05it closes red below the line. So,
12:07there's a long wick on top.
12:09And right there, on that candle, the
12:11toolkit prints a red bubble. Buy-side
12:13liquidity grabbed. That's my
12:15confirmation candle, and I didn't have
12:17to judge whether the wick was big
12:18enough. The indicator did it for me.
12:21Third candle. It opens, drops, and the
12:24moment it takes out the low of the
12:25confirmation candle, I'm short. Stop
12:28loss above the high of the confirmation
12:29candle, above the bubble, above the
12:31seller, target the range low plotted by
12:34the toolkit.
12:35This one is quicker. A pullback, one
12:37more small test of the level, the bubble
12:39candle's high never gets touched, and
12:41the price rolls over and runs down into
12:43the range low. Target hit.
12:46So, that's the price action toolkit. The
12:48previous day levels, the swing levels,
12:50and the liquidity grab bubbles are just
12:52the three pieces we needed today. It
12:54also plots order blocks, fair value
12:57gaps, and market structure all across
12:59multiple time frames. So, as your
13:01process grows, the chart grows with it.
13:04Link in the description. Go grab it.
13:07If this video saved you some morning
13:08chaos, leave a like. And in the
13:11comments, tell me which city you're
13:12trading from. Cats are keeping a map.
13:15Thanks for watching, and see you in the
13:17next one.

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