Introduction to Trading Setups
In the world of trading, finding the right setups is crucial for success. It
requires a balance of understanding and implementing the strategies taught.
The good news is that you have the opportunity to get in sync with the
market through careful analysis. By looking at higher time frame charts,
such as the weekly charts, you can predict where the market is going. This
gives you the advantage of time and opportunity to make informed decisions.
Market manipulation and market making play a significant role in price
direction. It's important to note that market makers are not the same as
dealers. Market makers control the price and determine how high or low it
will go. They operate behind the scenes, utilizing algorithms and following
instructions to efficiently manipulate the market. This manipulation has
become even more efficient with the rise of electronic trading.
When it comes to trading setups, liquidity is a key factor to consider.
Liquidity refers to the availability of buyers and sellers in the market.
Understanding where liquidity is focused during different periods of the
trading day can help reduce risk. Whether you're a day trader, scalper,
session trader, or looking for longer-term trades, liquidity plays a role in
your strategy.
By analyzing liquidity and market profiling, you can narrow down the
amount of risk and make more informed trading decisions. It's important to
note that while these concepts can help reduce risk, it doesn't guarantee
winning trades all the time. However, by understanding and applying these
concepts, you'll have the ability to fine-tune your risk model and potentially
increase your chances of success.
Understanding PM Session Ranges
In trading, understanding PM session ranges is crucial. PM session ranges
refer to the price range and liquidity during the pre-market trading session,
which occurs before the regular trading hours. Here are the key points to
remember:
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PM session ranges are important for day traders, scalpers, and shortterm traders.
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If you're bullish and trading near the opening bell, which occurs at
9:30 AM, you should pay attention to the PM session low. If the market
drops below this level, it suggests sell-side liquidity.
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By analyzing the PM session ranges, you can fine-tune your risk model
and reduce the amount of risk associated with your trades.
Let's look at an example to understand this concept better:
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Scenario: You're bullish and expect the market to go higher.
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During the pre-market session, the market drops below the PM session
low.
This indicates sell-side liquidity and suggests a potential shift in
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market sentiment.
*** Incorporate PM session range analysis into your trading routine to better
understand market sentiment and manage risk effectively.
Analyzing London Session Ranges
The importance of considering the previous PM session range and how to
interpret London session ranges in trading. By understanding these concepts,
you will be able to identify potential setups and make informed trading
decisions. Let's get started!
Importance of considering previous PM session range:
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The PM session range refers to the highest high and lowest low
between 1:30 PM and 4:00 PM. It provides valuable information about
the market's behavior during regular trading hours.
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By analyzing the PM session range, you can identify key levels and
price points that may influence future price movements.
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This information is not limited to any specific asset class, making it
applicable to various trading scenarios.
Interpretation of London session ranges:
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The London session range refers to the range between 2:00 AM and
5:00 AM New York local time.
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Similar to the PM session range, analyzing the London session range
can provide insights into potential setups and market behavior.
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It is important to annotate these levels on your charts to have a clear
reference point.
Examples and annotations to illustrate points:
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•
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You can manually annotate the PM and London session ranges on your
charts or use a charting platform that allows you to set your charts to
New York local time.
By visually identifying these ranges, you can easily spot price
movements that occur within or close to these ranges.
This information can help you determine whether to take a bullish or
bearish stance and make more accurate trading decisions.
Now that you understand the importance of considering previous PM session
range and interpreting London session ranges, you are equipped with
valuable knowledge to enhance your trading strategies. Remember to always
analyze the charts and look for setups within these ranges to improve your
trading outcomes.
Understanding key price levels and using different chart
timeframes can enhance trading strategies.
For example, let's consider the New York lunch and how an algorithm
controls price during this time. The algorithm sets the tone and pace for the
market from 1:30 to 3:00. By identifying key price levels and observing the
market structure, traders can take advantage of price movements.
*** Start using different chart timeframes, including shorter ones like the
15-second chart, to identify market inefficiencies and make informed trading
decisions.
Avoiding Social Media Opinions
In the world of trading, it's important to rely on your own analysis rather
than getting caught up in social media opinions. Social media can be filled
with noise and conflicting information, making it difficult to make informed
decisions. Here are some key points to remember when it comes to avoiding
social media opinions and relying on your own analysis:
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Remove uncertainty by knowing where to look in the charts and when
to utilize electronic trading hours.
Understand the importance of regular trading hours and when to refer
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to them.
Learn how to identify different types of setups and when and where
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they form.
Incorporate market profiling techniques to gain a deeper
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understanding of the market.
Remember, finding your own setups and understanding when and where
they form is a constant in any asset class. Avoid getting caught up in the
opinions of others on social media and focus on developing your own analysis
skills.
Studying and Analyzing Charts
Guess what? They can't hide this information from you. You don't need a
subscription or any extra steps to access it. All you have to do is look at the
time intervals and identify the pool of liquidity above and below. This
understanding will give you a better grasp of the market and more
opportunities within reach.
However, it's important to remember that you can't become an expert
overnight. It takes weeks and months of backtesting, studying, and
journaling to develop the necessary skills. By documenting your observations
and encouraging yourself with positive commentary, you can train your
subconscious to feel more comfortable with real-time price action.
In trading, psychology plays a significant role. It's easy to doubt yourself or
get discouraged, especially if you surround yourself with negative influences.
That's why it's crucial to cheerlead yourself and stay positive. Simply
watching videos or following someone else's advice is not enough. You have
to put in the work and follow the steps outlined in the videos.
One important tool to use is a time-based chart. Don't listen to people who
say it's unnecessary. Time is a crucial factor in algorithmic trading, and
using a time-based chart is the only way to truly understand it. By
identifying specific windows of time and referencing liquidity, you can gain
valuable insights into the market.
To illustrate this concept, let's look at the lunch hour. Back in the day, the
lunch hour between noon and 1 pm in New York was often a consolidation
period. It was a time when the market would reverse whatever happened in
the morning. However, on trending days, the market would continue its
momentum. By recognizing these patterns, traders could make informed
decisions.
*** Studying and analyzing charts is a crucial part of developing trading
strategies. It requires patience, discipline, and a deep understanding of
market dynamics.
Example: Let's say you're analyzing a time-based chart and notice a pool of
liquidity below a certain time interval. This indicates potential buying
opportunities. By studying historical data and observing similar patterns, you
can increase your chances of making profitable trades.
Actionable Step: Spend time analyzing different time intervals on a timebased chart. Look for pools of liquidity and try to identify patterns. Document
your findings in a trading journal and analyze the results over time.
Gradual Improvement and Self-Criticism
In the world of trading, it's important to avoid comparing yourself to
experienced traders. Their success may make you feel good about yourself,
but it's not a productive mindset. Instead, focus on learning and gradually
improving your skills.
One key aspect of trading is being realistic about where the market is going
and making decisions based on that understanding. Over time, as you start
seeing positive results, you can leave a runner on a trade, allowing it to
potentially go higher.
It's common to wrestle with the desire to be right in trading. However, it
becomes even more challenging when you're doing it in front of an audience.
When you invite others to manage your trades, it introduces uncertainty,
fear, pride, and pain that wouldn't be there if you were focused solely on your
own decisions.
To truly succeed in trading, it's essential to have the right mindset. It's not
about showboating or proving yourself to others. Ultimately, what matters is
your own financial success, not how many people believe in your abilities.
While there are various tools and strategies available to traders, it's
important to understand their limitations. For example, the Book Map tool
may be useful for new traders, but it can become a crutch. Tonight's lesson
will show you how to make the primary function of that tool redundant,
proving that relying too heavily on tools can hinder your growth as a trader.
Notes:
PM SESSION RANGES:
1:30pm to 4:00pm NEW YORK LOCAL TIME.
Always referred to previous day.
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Search for the highest high and lowest low between 1:30pm and 4pm
o If you have a bullish bias and we are trading near that range.
o
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If you're seeking PM Session Ranges (Previous Day), it's
advisable to focus on the RTH (Regular Trading Hours), which
excludes the overnight session.
The orange line is the opening bell in the screenshot example.
o If market goes below the PM Session SSL, you can expect a move
up.
§
Smart money will accumulate in Judas Swing
PAY ATTENTION TO THE HIGHS/LOWS BETWEEN 1:30pm AND
4pm
o We can anticipate a run lower/higher – Judas Swing to take
o
sellers/buyers in the marketplace.
If we open (9.30am) out of the PM Session, look at the LONDON SESSION
RAID (2-5am) in ETH.
London Session Raid:
2:00am to 5:00am New York Local time
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•
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Notice how when the market opens at 9:30am, we find ourselves near
the London Session Buyside. This situation can be interpreted as a pre9:30 Judas Swing.
The range is the highest highest and lowest lowest between 2am and
5am.
Once price sweeps, in this example, the high, we can conclude that it's
a fake swing and not a genuine move. However, it's important to wait
for confirmation before taking any action. Don't rush into making a
decision just yet. This situation presents a favorable opportunity for a
FVG entry, and your target should be the London Session SSL.
Opening Range Gaps:
Regular trading hours. (RTH)
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Mark out where we stop and start trading.
Separation is the opening range gap
o NOT TO BE CONFUSED WITH THE OPENING RANGE - that is the
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first 30 minutes after 9:30am – 10am
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Does not mean that price will want to run up into the gap and fill it
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immediately
Do not care what price does within the ETH if you are trading the
opening range gap
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Referring to screenshot example
o We have moved a lot since previous session
o
We are in a very deep discount
It is reasonable to expect a move into the opening range gap.
New York Lunch Raid
NOON to 1:30pm New York Local Time
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1:30pm is the start of the NY Macro sets the tone for the 2:00pm –
3:00pm - Silver Bullet
AM SESSION RANGES:
9:30am TO NOON NY (ETH)
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If we observe an elongated market where the NY AM Session of the
current trading day is characterized by consolidation, and even the
lunch hour shows consolidation or a directional movement, we can
refer to the trading activity of the previous session, particularly the
electronic trading. In this bearish example, we would be specifically
looking for the low between 9:30 AM and noon as a potential target.
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In this example, we are referring to the AM Session SSL because we
already trading BELOW the Lunch/Noon Low.
Can’t use afternoon session high and low because starting current day
we are already below it.
o We look at the AM Session SSL from previous day.
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DO NOT CARE ABOUT OVERNIGHT HIGH’S AND LOWS.
o
They will either be respected or blown out.