Price Action Principles - Trading a Range
Module 1
Market Structure & Fibonacci
@Mindset_BTC
Disclaimer
Please note that any trades shown in the following content are for educational purposes only;
Any risk taken in following trades or setups that are shown for educational purposes is entirely borne by you, with no assignment of
responsibility placed on me, MindsetBTC;
I am not a financial adviser, and as such, will not provide advice that could be construed as specific in nature. Rather, this advice is
intended to be general in nature as an education and entertainment resource;
I do not recommend the purchase of any trading pair, investment, ticker, or any other financial instrument that could appreciated or
depreciate, and as such, will not be held liable for users investments, good or bad;
Do not blindly follow trading calls by anyone. Instead, do your own research;
Past performance is not a guarantee of future results;
and;
This content is strictly provided for educational & entertainement purposes (in case I didn't mention this already)
Acknowledgement
I would like to acknowledge the people who have had a massive influence on me as a trader, some of whom I would call mentor, others who have inspired me
to take action against no one else other than myself in improving and learning everyday
The 2017/18 Market - you gave me the hunger to learn how to trade after getting my arse kicked by you!
Crypto Cred - your videos and educational content are what set me off down the rabbit hole of learning how to trade
Trader Mayne - after finding your Discord, and observing through your public streams and charts etc that we had a similar learning
experience with trading, I dusted off my 2017/18 trading wounds and got back into the saddle
Rektproof - a PA legend who truly inspired me to take action through his public content and approach to trading. Truly.
Emporer BTC - No thanks are enough. He gave me a 'voice' to share my passion of trading and eduction with you all, and am forever
grateful for this
Inner Circle Trader - the man is truly a legend who I learned many concepts from, many of which are shared in this educational series.
Many hundreds, if not thousands of hours spent digesting his material has helped me put this course together for you
Quick Intro - A Bit About Myself
I'm not a trading guru or god. I'm just a guy who has a self perceived incredible hunger to learn all that I can about trading and
succeed in this field
I feel that the reward and opportunity that the space creates and offers is truly amazing in return for the (small ask!) of thousands of
hours of charting and learning
All I did was simply look to find answers for each of the hundreds of problems that I faced each and every day after being introduced
to the trading world. If I couldn't find the answer immediately, I made sure that I did (even if it cost me time or money to understand)
The reason that I'm sharing this course with you is quite selfish in nature for two reasons;
a) I like to help people and get a kick out of it (which is probably a good thing)
b) Presenting a course like this helps to firmly solidify my own learnings over the years on paper. I retain much more of my own
knowledge when I utilise it in guiding others like this (so not really too bad either)
I'm still learning too...everday. I'll never stop. The day that you think you know it all is the day that complacency comes and kicks your
arse, and you lose whatever edge it is that you think you had.
The Goal of This Course
It's to explore, in depth, each individual relevant puzzle piece, that are in my opinion, critical in gaining a framework of understanding
with regard to Price Action trading, particularly, trading a range
As a recap, we'll be exploring the below in the form of modules:
Market Structure & Fibonacci (this module)
Orderblocks & Breakers
Value Area Trading & Volume Profile Tools
Ranges & Liquidity Targets
Trade Management
Putting it All Together
With that being said, let's get into the course
Agenda:
What is Price Action?
Market Structure
Swing Highs & Swing Lows
Market Structure Breaks
Bullish / Upward Trends
Bearish / Downward Trends
Bullish Reversals
B̀earish Reversals
Fibonacci Tool
Set up
Background
Execution
Potential Take Profits
Self Learning
Conclusion
What is Price Action?
What is Price Action - Technical Perspective
Firstly, let's kick off with asking ourselves what Price Action (PA) is from a TECHNICAL PERSPECTIVE
My personal interpretation of PA from a TECHNICAL perspective is as follows:
PA, being fractal in nature, is the way that the market unfolds and is established as and after areas of supply and demand are
experienced. These tested areas of supply and demand then become formed and actual support and resistance;
These support and resistance levels can then be drilled down further into swing highs and swing lows (which I personally define as
market structure)
These swing highs and lows in turn, are the building blocks that create and form the micro levels of market structure on the low time
frames, which then go on to replicate on higher time frames thus forming the macro (as price is fractal in nature).
In my opinion, if you can train yourself to recognise market structure on a low time frame, then you will already have a grasp of these
concepts on the higher timeframes
I believe that these principles work on and in any timeframe & market as a note also.
See below marked up chart as an example of the above
What is Price Action - Emotional Perspective
What is Price Action (PA) is from an EMOTIONAL PERSPECTIVE?
My opinion is that it is simply the print out, on a chart, of
every human emotion that is experienced in the market
Think: Disbelief, Hope, Optimism, Belief, Thrill, Euphoria,
Complacency, Anxiety, Denial, Panic, Anger, Depression, &
Disbelief
The chart on the right will replicate (to a certain extent)
from the 1min chart to the monthly chart and anywhere in
between
This is why I feel that PA principles work in any market humans are involved.... and we, are predictable in nature
Based on the above, in my opinion - our job as traders is:
(2)
1) To recognize how the dynamics of human emotion play out in the market
from a technical & fractal perspective in order to use this to our own
advantage;
2) In doing so, we MUST be able to manage and control our own emotions;
3) We control our emotions through a practised & solid technical
understanding of market dynamics
4) We CONTINUALLY strive to learn & develop our technical understanding of
market dynamics to improve only upon ourselves as traders
(1)
Traders
Feedback
Loop
(4)
(3)
The Raw Reality of Trading
If you haven't realised by now, here's a bit of a reality check for you:
Someone has to lose in order for you to gain
For every liquidation or loss, someone wins
There are no two ways about it, trading is a zero sum game
Think about that - you're up against some of the smartest minds out there, bots, algo's, and whatever else that can place a
trade
If you haven't put in the effort and hours, you are at a severe disadvantage already, and the odds are firmly against you
You HAVE to put in the hours in order to be statistically more likely to be successful in this game
So that's why you're here right? Well, let's get into it.
Market Structure
Market Structure (Theory)
Market structure can basically be defined as the
series of swing highs and swing lows and all the
price action in between that can be found in the
following scenarios: upward trend, downward trend,
or in a ranging environment
Bear in mind that market structure is fractal and
can be found replicating itself across all timeframes
(1H chart, 15M chart, 1M chart).
There can be multiple scenarios of market structure
occuring across all of these timeframes which you
need to be aware of.
Eg - the 1H chart could be in a downtrend, but the
15M chart is showing signs of a bullish uptrend
Swing Highs & Lows
Swing High
Defined as when price
makes a clear high, but is
flanked by two
consecutive lower high
candles
Swing Low
Defined as when price
makes a clear low, but is
flanked by two
consecutive higher low
candles
Market Structure Breaks (MSB's)
A Market Structure Break (MSB) in my opinion, is where a previous swing high or swing low (applies to all timeframes) is run past /
violated / trade above, through, or below to cause a change or shift in trend or market sentiment
MSB's are one of the key components that make up the basis of this course
Bullish Market Structure Break
For a bullish MSB at a reversal point, price would run up through a previous swing high, where we would expect retracement back to
support prior to price rallying off
For a bullish MSB as a trend continuation, we expect price to keep beating previous swing highs in the newly formed or ongoing trend
Bearish Market Structure Break
For a bearish MSB, price would retrace through a previous swing low, where we would expect retracement up to resistance prior to
price selling off
For a bearish MSB as a trend continuation, we expect price to keep beating previous swing lows in the newly formed or ongoing trend
Market Structure (Example)
Uptrend, Downtrend, and Ranging examples in
Market Structure as shown in the example to
the right
The green parallel channels represent up
trends, where price experienced successive
Market Structure Breaks to the upside (MSB's)
The red parallel channels represent down
trends, where price experienced successive
Market Structure Breaks to the downside
(MSB's)
The blue rectangle represents a range in
between an overall HTF up trend and down
trend
You can see how key Market Structure Breaks
are in the formation of trends
Bullish (Upward Trend)
Upward Trend
Where each peak and trough is successively higher than the previous
occurences;
Essentially, when higher swing lows and higher swing highs are successively
occurring, the trend is considered intact; that is until this structure or
continued formation is broken (see bearish reversal later in the document)
Bullish (Upward Trend)
As shown in the chart on the right, you can
see how swing high market structure is
continually beaten to form an uptrend
Each successive swing high is broken, and
price continues upwards in a very strong
fashion
Bearish (Downward Trend)
Downward Trend
Where each peak and trough is successively lower than the previous
occurences;
Essentially, lower swing lows and lower swing highs that are successively
occuring, where the trend is considered intact until this structure or
continued formation is broken (see bullish reversal later in the document)
Bearish (Downward Trend)
As shown in the chart on the right, you can
see how swing low market structure is
continually beaten to form a down trend
Each successive swing low is broken, and
price continues downward in a very strong
fashion
Bullish Trend Reversal
Bullish Reversal
Where a downtrend has occurred, but after a rally in price,
recent market structure is retested, whereby we
experience:
1) A successful test of support;
and;
2) The most recent swing high market structure from said
impulse move must also be broken, with price continuing
in the new trend direction to confirm that the trend has
in fact changed / reversed.
Bullish Trend
Reversal
Example
BTC
Bearish Trend Reversal
Bearish Reversal
Where a uptrend has occured, where recent market
structure is then retested, which we then experience:
1) A failed test of resistance;
and;
2) The most recent swing low market structure must also
be broken, with price continuing in the new trend direction
to confirm that the trend has in fact changed / reversed.
Bearish
Trend
Reversal
Example
ETH
Fibonacci Tool
Fibonacci Tool
As this course is all about building the component understandings of how to trade a range, it's only logical that we explore how to set
up a specific type of Fibonacci to then utilise on the market structure that we've just covered (as we wouldn't have covered the base
foundation layer of what exactly we are anchoring the Fib Tool to otherwise).
The way that I personally trade sees me utilise the Fibonacci Tool to justify my trade entries, and these are:
Range Based Set Ups (we cover these in a later module)
&
Entry Fibs, covered here (note that these are based on ICT's fib system - see acknowledgements at the start of this module)
Let's take a look at the Entry Fibs though as I call them
2
Entry Fib Setup
1) First Select the 3rd item down on the left hand side
menu
Then select "Fib Retracement"
2) Open up the settings of the Fib Retracement Tool
(second image to the right), then enter the Fib levels
in, and make sure that the box is checked for them too
Note that I personally prefer to have no
background, I don't select the reverse or price
options, and that I have levels selected, with labels
on the right, but in the middle
1
Entry Fib Background
Let's delve into the background of the fibs
Here we show the full suite of fibs in
coloured boxes
These can be broken down per the below:
Anchor levels being the '1' and the '0'
(light orange, and teal respectively)
The trade entry levels of 0.618, 0.702, &
0.786 (yellow)
And the target levels of 0.28, 0,-0.27,
-0.618 & -1 (green, blue, purple, pink)
One thing to note with these Fib levels are that
they are percentages of a move, ie if pulling a fib
from a swing low to a high (100% to 0%), and
price retraces to the 0.702 level.
This in essence means that price has retraced by
70.2% from where you had pulled your fib set up
to and from
Bullish Fib Set Up
Bearish Fib Set Up
Entry Fibs - Anchor Levels
The Anchor fib levels form the backbone of every
set up that you establish using this particular fib
tool
In terms of how we utilise the Anchor Levels, we
do the following:
At a swing low if bullish, or a swing high if
bearish, this is where we anchor the '1' level
At a swing high if bullish, or swing low if
bearish, we place the '0' level
In doing so, the rest of your levels will fall in
suit as they are auto placed by the tool
Bullish Fib Set Up
Bearish Fib Set Up
Entry Fibs - Anchor Levels - Bullish Example
Entry Fibs - Anchor Levels - Bearish Example
Entry Fibs - Entry Levels
The Entry Level Fibs are where you...enter your
trade
In terms of how we utilise the entry level fibs:
After pulling the Anchor Levels and
determining a fib setup, we then expect price
to retrace to these levels where we *could*
then enter
I say could, because this isn't a foolproof
method; we do need to see other forms of
confluence before entry
My advice is to set an alert before these levels
are hit, and to check that your trading plan still
makes sense with regard to how the market
looks compared to when you initially thought
that your trading idea could play out
Bullish Fib Set Up
Bearish Fib Set Up
Entry Fibs - Entry Levels - Bullish Example
Entry Fibs - Entry Levels - Bearish Example
Entry Fibs - Target Levels
The Target Levels are where I personally take profits at over the course of a trade, but to be
clear, this is determined by my trading plan that can be unique or uniform depending on how the
market is looking to me. These levels won't always be hit, you need to manage your trades!
We have:
0.28 level
This level is selected as this can be the inverse of the 0.618 level of a counter move, where
we could encounter trouble and a trade head South so to speak (see counter targets
example below)
0 Level
This can be an objective in itself wholly, or partially, and is aiming for an anchored swing
high / low
-0.27
-0.27 is the same ratio as 0 to 0.28, and as such, works as a logical profit taking area
-0.618
-0.618 is the same ratio as 0 to 0.618, and as such, works as a logical profit taking area
-1
The -1 level, is a measured move as ICT calls it, where if price reaches this level, is a 200%
extension from the 0 to 1 level (Anchor Levels) ie 2 x the distance from 1 to 0
Bullish Fib Set Up
Bearish Fib Set Up
Entry Fibs - Entry Levels - Bullish Example
Note: These targets won't always
work, you need to manage your
trade accordingly!
Entry Fibs - Entry Levels - Bearish Example
Note: These targets won't always
work, you need to manage your
trade accordingly!
Entry Fibs - Entry Levels Counter Trade Targets, 1 of 2
There is a certain relationship that has a clear impact from a counter trade target when using the Entry Fib system that you should be
aware of:
This relationship revolves around the 0.28 level vs the 0.618 level in terms of moves in opposite directions when using the tool
In the below slide, you will see three numbered charts:
Chart 1 shows a trader who is looking to enter a short, they pull their fibs from the swing high to the swing low, and look for the
Entry Level of the fibs, where they enter a trade
Chart 2 shows a trader who is looking to get long, they pull their fibs from the swing low to the new swing high, and they are
looking for the Entry Levels
Chart 3 shows how these two traders levels interact. Chart 1's 0.28 level falls in just about the same spot as Chart 2's Entry Level
fibs (0.618, 0.702, 0.786)
If there is enough buying pressure at these Entry Levels in favour of the trader in Chart 2, then the trader in Chart 1 may be
in a bit of trouble if they haven't taken profits and managed their trade accordingly
This is the logic behind the profit taking at the 0.28 level.
Entry Fibs - Entry Levels Counter Trade Targets, 2 of 2
1
2
3
Potential Take Profits
Potential Take Profit Levels
Ok, so now we've covered a bit of ground here, from the logical understanding of market structure, to then using the Fib tool on said market structure, to now
using the Fib Tool as an indicative area to take profits at. I wanted to keep this as sequentially logical as possible for you all, and hope you appreciate this:
When trading this method, a suggest take profit regime is per the below (note that it's up to you to work out what is best for you in terms of comfortability
and what your level of experience is)
TP 1 at 0.28 level, 10% of position size
TP 2 at 0 level, 25% of position size
NOTE: After TP 2 is hit, I will usually bring my SL to BE. I'm firmly of the belief in protecting my capital at all costs, and not interested in full moves
without locking profits in. This is the way I play it, I rightfully respect anyone elses approach, but this works for me.
TP 3 at -0.27 level, 20% of position size
TP 4 at -0.618 level, 20% of position size
TP 5 at -1 level, 25% of position size
Theoretical TP 6 could be to let you final TP run with a trailing SL for the full effect of a move
Note how with the above, there aren't any hopes and dreams. It's a structured, logical approach. Some may not agree with this, but in my opinion, especially
for those of you looking to learn how to trade, this could help in locking more profits in than you lose in terms of hoping that full trades play out
Potential Take Profit Levels - Bullish Set Up
Potential Take Profit Levels - Bearish Set Up
Self Learning
So that's a wrap on Lesson 1. Now that we've completed this module, please go ahead and practice identifying where and how:
Trends form, up and down
Market Structure Breaks form and the reaction of the market after these after a reversal, and during a trend continuation
(spend a bit of time really hammering it home for yourself with regard to how the market reacts after MSB's)
Reversals; bullish and bearish form
Ranges occur; where price trade sideways, rather than immediately up or down
Fibonacci Tool, set up, and execution
Potential Take Profit Areas
In the next module, we'll be exploring how Order Blocks (OB's) come into the mix. Once we've built a level of understanding around
OB's, we'll then use the fib tool again to adopt a trading entry method that complements this understanding.
Conclusion
This concludes our initial foray into the component parts that for me, make up each and every part of trading a range. This is a bit of information to digest,
hence the reason why the course is delivered weekly; so that you can build upon the theory, and then execute from a practical perspective.
You can of course use these individual techniques in your own trading of course, and I truly hope that you've found some value in what I've shared here.
End goal of this course (recap)
It's to explore, in depth, each individual relevant structure that are in my opinion critical in gaining a framework of understanding with regard to Price Action
trading, particularly, trading a range
In order to do so, we'll be exploring the below in the form of modules:
Market Structure (this module)
Orderblocks & Breakers
Value Area Trading & Volume Profile Tools
Ranges & Liquidity Targets
Trade Management
Putting it All Together
Thanks for sticking around. Stay hungry, and say hi to the old chook for me.
- Mindset
Contact
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