Candlestick Patterns Trading Workshop | Deeyana Angelo | Skillshare

Candlestick Patterns Trading Workshop

Deeyana Angelo, Derivatives Trader

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10 Lessons (1h 22m)
    • 1. Lesson 1 syllabus

      1:24
    • 2. Lesson 2 candlestick patterns vs chart patterns

      9:05
    • 3. Lesson 3 engulfings

      10:15
    • 4. Lesson 4 engulfing continued

      9:46
    • 5. Lesson 5 stars and consolidations

      17:14
    • 6. Lesson 6 morning evening stars inside bar

      13:00
    • 7. Lesson 7 exit rules

      5:25
    • 8. Lesson 8 practical problems

      7:13
    • 9. Lesson 9 Double Tops & Bottoms

      6:33
    • 10. Next Steps

      2:26

About This Class

My courses are the result of the last 11 years of trading the markets both independently and professionally. I have so far traded for three different prop trading companies based in London and Chicago, the hub of prop trading.

My own method is based on a combination of professional trading strategies such as supply demand analysis, profile trading and my own proprietary concept of Q Points© (described in one of my other courses).

Technical analysis and trade locations aside, one thing that remains a constant in my trade entry techniques is validating my Zones of Interest (aka ZOIs) by waiting for the correct reversal candlestick pattern to appear.

This approach eliminates the guesswork entirely and sets you up for trading the chart and not your own bias. I always say: your trade locations exist for you to speculate what should happen at that area, but only when a strong reversal candlestick pattern appears you know that institutional traders are also thinking the same thing. And that's the big secret of trading - know your locations, know your trade direction, but only act when the factual candlestick pattern appears.

In this course I will teach you the rigid rules about the most important reversal candlestick patterns and also what makes a strong candlestick pattern - not every pattern is equal.

I have placed a couple of systematic flow diagrams to help you visualise the rules in a straightforward way.

What you will need:

  • Analytical mind

  • A good level of reading candlestick patterns

  • Charting platform - I recommend Metatrader, it's free and straightforward

  • 1-2 years of trading the markets

  • Persistence and self-motivation to apply the concepts methodically

  • Enterpreneurial spirit

  • Emotional Resilience

What you’ll learn

  • Candlesticks Trading
  • Technical analysis using candlestick patterns
  • Pullback Entry Technique
  • Learn to read Price Action more accurately
  • Timeframe Intermix Technique
  • The most suitable trade locations to look for these patterns

Are there any course requirements or prerequisites?

  • Ability to read candlesticks patterns already (engulfing, stars, etc)
  • Some kind of charting software such as Metatrader 4
  • Some experience trading the markets
  • Knowing types of orders (limit,pending, at-market, sell/buy stop, stop loss etc)

Who this course is for:

  • Traders familiar with reading candlestick patterns

Transcripts

1. Lesson 1 syllabus: All right, let's begin. I will start by briefly explaining the difference between Candace tick buttons and chart patterns. And then I'll go straight into examples off engulfing patterns but also failed in golf patterns, which are even more important sometimes in particular, something known as a dead cat bounce. I will then talk about the problem with hammers and shooting stars, and I'll show you the motto Time did they failed in the live markets. When is just one single candle without, like, other kind of consultation around it? Eso for me pin bars. We kind of tested it and they don't work. Um, I will also go over consolidations, which help us find accumulation and distribution phases, which are very important in the overall speculative picture. I will move on to the application off a pattern with very fun. Name is called three inside outside, depending on what it looks like. And, um, it also has the inside bar as a component. You may have heard that before, and then I'm going to speak about the only chart pattern that I deem acceptable, which is the double top or a double bottom 2. Lesson 2 candlestick patterns vs chart patterns: Let's start with a candlestick patterns versus chart patterns. What is the difference? I would hope that you already know the difference between these two, but just in case you don't cause you know I didn't when I first started like over a decade ago can stick patterns are based on obviously on price action and are usually comprised of about 2 to 4 candles. Maximum, right. They generally have a clear, low or a high that you can base to stop us on now chart patterns on the other side. They are very vague, very subjective, and in my opinion, then they may as well be based on ink stains because their justice useful for professional training. Um, well, actually, ink stains might be more useful because you at least would have, like some coming insight into a trader's limiting beliefs or some field fears that maybe a problem down the line. But anyways, here's Here's some examples off these candlestick patterns, so I have to bury spatters into bullets, batons, carriages for for like a general example. So, as you can see, if we focus on this 1st 1 there is a clear high, so you would be basing a stop loss on this high if you're looking to sell, um, and same thing here. So you have a high, very well defined high. So, you know, a few ticks above that would be stop loss up here. Same thing with the bullish sides. See, Have morning starting three inside up. So this is your low. You stop. This would go below that area. And in this three inside up candle battering, you would have your stop loss below the low off this first candle because that was the lowest point. Now, I can also tell you the ah clear entry price in each of these examples and my own Andrew techniques, the market stalkers, method techniques. They're all entries into Pullbacks that happened very early on based on these patterns, but then it wants thes petits have finished printing. I also want some kind of pull back to happen into the pattern itself before I I go in. If you can successfully identify the early reversal, you can then gain a lot more confidence in your setups and confidence. That's that's kind of what you would call like a holy grail of trading. It's the big secret off good traders. It goes hand in hand with experience, solid methodology and consistency in various parameters. So you can have very, you know, if you constantly very stuff like size of stop, last use or if you don't know what percentage of trading capital you're using. If you costly, varying the number of trades per day or even per week. If you're varying time of day that you trade that all these to various and consistency. So there's a lot more to trading than just kind of, like all spot a candlestick pattern and go in eso the chemist IQ patterns in which ones were using how you use them. They are a small part off that consistency, and they are very straightforward. So those a candlestick patrons now country to them. We have these chart patterns. So here's a triangle pattern that is, uh, you know, widely taught is kind of like a great trading strategy, and we have to wait for trying goes up here. And yet, you know, if I actually analyze this properly when you should be, I like see about five or six trains that you could have done whilst you're waiting for this mythical triangles who appear eso here's like a supply area, and then you basically have a pivotal pop into it. You do have some kind of, ah, a reaction from it. And then there's clearly a, you know, a three outside down pattern, and then that's it. And then before that, even way before that, like he was a morning star, that he was like a consultation area. Here's another morning star that you know it's XTO many things he can use before the Triangle Cubs, and yet they insist on saying how triangles are like, really good things to trade. They're not, you know, So, um, the problem shop patterns in general like over, he said. They're incredibly vague on where your entry should be and, for the most part, there, even vaguely which direction you're supposed to take a psycho. If it breaks this side, you're supposed to go along and breaks this side. He's supposed to go short, so, um, that's a big problem. If you're using a pattern. Whether charges cattle steak and it cannot tell you exactly when you should be going in and what your direction is, that is, it's it's it's effectively breaking the first couple of rules of trading. Know your direction and know your anti price. Neither of those are available on your chart patterns, my friends. And then you have stuff called harmonic patterns. No, that's another can of worms all in itself. I mean, why? Why would you want to do this to yourself? See, I you know, I could do math, but I really dislike doing mathematical calculations when I'm trading. So I do everything in my power not to do them. And I have a concept called Q points, which involves dividing a whole moves from A to B into four quarterly points. But even for that, I hacked my own FIP tools to just show me the top quarter bottom courters that I don't have to calculate anything. And, like I have a YouTube video on that which was done like years ago. Now, Andi, I do the same thing. For my risk, we would ratio calculation for my targets. I mean, as a trade, when you actually doing it seriously. There's so many other things that you need to consider and remember all at one point, and then you have to use your rational side of your brain to make a trading decision that goes with your trading plan. So this is the last thing you want to be doing. Um, and again, why? Just because it looks super complicated. Therefore it must work. It's not how trading works, so just don't don't do that. I mean, as much as my method is complex, it's actually pretty straightforward. And it's all based on price action, statistical data and swing extremes. So you don't need an advanced degree mass. And you know, some kind of advanced geometrical drawing skills on you certainly know don't need to spend the best days of your life calculating some ratios between you know, all of this and then spotting bats, butterflies, dry angles in a few mythical creatures thrown in for good measure. So keep it simple. I'm not saying the trading is simple because it's not. It's probably one of the most difficult disciplines in the world, but you know, by only is, if you don't want to take my word for it, go out, do your own research, try to trade these for a while and then come back to me. Ah, and that's how it always works. you know, we have some people who have started on the method about 23 years ago decided that it's way too much material for them, and then off they went, uh, somewhere else. But then they come back a few months later saying, Oh, actually, you know I'm back because you're a lot more straightforward than the other guys, and I mean, trust me, I've been there, you know, when I first started, I messed around with a lot of strategies and just hot air. And one of the big reasons why I decided to do these courses is because there's no good information out there. Still, to this day, most of courses will throw everything together. You know, price action, batters, chart patterns, they just want to cover themselves. And the big reason for this, of course, is because the guys who are mainly selling these courses are there, not traders. There's very few of us who are actually professional traders who have gone on to teach others, and that's because teaching others is a skill. You know. Not everyone is a good teacher. Just because you can trade doesn't mean that you can teach others, um and these sales people who are attempting to throw all these strategies into the same basket Muslim have never actually had even one profitable month, let alone like an upward curve for an extended amount of time. So naturally, because they themselves are not quite sure whether this would work or not. They try and keep it as Vegas possible on the entries and stop close placement. But then they tried to make everything look super complicated to make it look like they actually know what they're talking about. Now I run a small prop trading company with about 12 remote traders and three developers. We have some software engineers with us. Um, and I also posed my weekly strategies every Monday on YouTube. So if you wish you can subscribe to that channel, you can comment. You can ask me questions there as well, and then you can see how often I get things right both in direction and on price levels for entries. But that's because I know what works and what doesn't and I like to cut through the nonsense. But I also like to test my strategies in my entries. Algorithmic Lee 3. Lesson 3 engulfings: in this section, I'll be talking about engulfing patterns. Of course, any price action pattern can be bullish, which is a potential signal to buy a K to go long. Or they can, of course, be bearish. You know this already, which is signal for cell. Take a short trade in Gulf Thing is the strongest reversal signal a price action trader can have for the their entry. It is not the only one you can have, but it is certainly the best case scenario now. It is important to say that I do tend to combine all of these and golfing patterns with other types of statistically viable analysis. So for me, it means the supply and demand and also market profile in some cases. So that type of finding trade locations who always should always precede any kind of price action. So you have a good reason as to why you're looking at a price action pattern. It a particular trading location on your chart. Just having a price action pattern is not enough. I myself, I combined my supply and demand zones combined that with Q points, which is my own proprietary concept on and frequently spoken about as the missing link to supply and demand. And then I would zoom into smaller timeframes, especially if I'm doing futures trading. So I would look at a time of day, very particular time of day, according to my method. And I will also look at things like exhaustion or the debt daily averages, sometimes even weekly averages. I look at distribution curse from previous day's trading. I do have the first part of my supply and demand course on you, to me as well, the teachers, the basics off cue points and supply and demand. But if you decide that you have a more rounded education, you can always go to the main website where I have these professional development courses and they really teach you like the ins and outs or methods a few serious about trading. That's Ah, there's definitely the path that you should be taking rather than kind of just partially new knowledge with, you know, a little bit of profile. Littoral supplied that little bit of in golf in patterns. So, you know, if you really want to whole new trader skills, it has to be taken in a lot more structured way then, you know, just taking one. You know me. Course. All right. Back to the engulf ing's. The biggest mistake I see people make with engulfing patterns, especially, is that they don't really differentiate between the varying strengths off the price action patterns they can see. So not all engulf things are equal. You can have a strong golfing pattern in a week engulfing pattern with very clearly defined rules. So let's start with bullish engulfing pattern. So engulfing it a two candle pattern. And the reason why it's called Engulfing is because the second candle body completely engulfs the first candle body, you see. So I'm sure you know this already if you've traded even a little bit. So here are some examples of that strong bush and golfing. You can have various types, so all of these are strong, bullish engulfing. There is one, uh, rule that is true for all of these, even though they all look a little difference. But they can all have this one single thing that happens inside this pattern that makes them a strong pattern. And it's all to do with where the second candle closes to the second candles. Close is higher than the first candles high in all off these all of these patterns and that same condition. Okay, now let's have an example of a week bullish engulfing. So here you can see this sizable cell wick, so it attempted to make engulfing. I mean, technically qualifies as a bullish and golf. However, the second candles close is not higher than the first candles height, so that makes it a week bush and golfing. On top of that, you also have this large selling WIC, which is also telling you that it's not time to buy yet. So all of this is telling your factual piece of information that this is a week engulfing. If the price of the second candle unequivocally closes above the high off the previous scandal, then that's a clear signal that the buyers every gained control. And that's why it's so important to look at the cattle formation itself, right? Not just kind of like Renco Child, so it's all the same as you can see in this second example, you have the same thing. You have seemingly a bullish and golfing where the second candle body and God's the first kind of body but the clothes doesn't go above the first candles high. Therefore, still within that same range, he didn't go anywhere, you know. So it's actually really quite logical when you think about it. And while I'm on the subject of opposing Wicks like we have all these weeks that Selway Excel Wake Celic, Um, there is another version off a week bullish engulfing. And that's when you technically do have this second candles. Close price that goes about the first candles high, but it's accompanied but a huge selling week, So this is a bullish engulfing that's week as well. So next time you see a bullish engulfing, grainy, carving, coughing, you need to ask yourself the following question. Is the second Candace close higher in the first Candles High. As a trader, you need Teoh training mind toe work on a binary decision making process, which means it's either yes or no. There's no maybe, and then when you're making a decision of whether to take a pattern or not here the two questions. So this was the 1st 1 The 2nd 1 is is the selling week off the second candle, similar in size to the second candle body. What? So I find that it's much easier to do this through flow diagrams. Flow diagrams help massively with the decision making process, and I use them a lot when I'm teaching traders eso here, you start there and then you. This is the first question. Is the second candle close hard in the first candle high? If it's a yes, you then follow the process to the second box. Where, you would say, is the second candle selling wick similar to a second body in size. If that's a yes, then there's no trade. You don't trade. If the answer is no, then you're free to make a trade. Eventually, you have to start to tie everything together. In this way of thinking. It's not easy to start because binary decision thinking process is a skill that has to be practiced like any other skill. It won't happen overnight, and you have to force your mind over and over to look at flow diagrams and then to take action based on the decisions that you've come Teoh through the flow diagrams. Now, if any developers are watching this, then you probably know you're if else statements, this is the same thing, except you're not telling the telling it to a machine code. You're telling it to yourself, which in a way, is is kind of like the code. Let's finish up the section with talking about a failed bullish engulfing. When you looking at this, you would think, Hey, D but this is not an engulfing at all. It's It's if anything, it's a week inside bar. And if you know anything about inside bars, similar principles apply. So if you have a selling wick that is equal to the size off the counter body, then it's weak. But this is also failed Bush and golfing. And the reason why is because the human brain is a funny little thing, especially in times of great excitement and pressure, which is frequently the case when you trading the markets and you still somewhat inexperienced. So you don't know the physiological things you need to dio in order to stop your primitive mode from kicking in. Your primitive mode doesn't know anything about the bullish engulfing its just trying to survive, and then you have the rational side of you that does know this, but everything is kind of like jumble. Then you keep jumping from from primitive mode to restaurant visible, rational mode, and eventually you can make a mistake. At one point, this particular pattern may have looked like this. So you're staring at this 30 seconds ahead of the candle close, and you're thinking, Hey, it's definitely abortion coughing, right? Let's go in. But, um, unfortunately, then the candle closes in the last 30 seconds, Sellers just smash it down and then you're looking at this. And this is why I wanted to draw your attention to the fact that this can be called a failed bullish engulfing. This is also referred to as the dead Cat bounce. So it's basically a move that it started. But ultimately the buyers have failed to step in and hold the price. And the reason why this is relevant is because this pattern can actually mean a continuation off the trend, but only if it's at a particular chart location. So your trade location has to be right for continuation off the trend, and the reason for that is because once you've reached a swing extreme, an area where the move originated from then it becomes dangerous to keep going with the trend and it becomes a case off. Only dead fish go with the flow 4. Lesson 4 engulfing continued: in this section, I'm going to go through the same thing that we did with bullish and golfing Onley with bearish engulfing examples Now a bearish engulfing there is a little bit more Teoh be said on the types of patterns because of the nature of selling in trading and investments in general, there's a phrase panic selling. You're never gonna hear a phrase panic buying. So because of that, this is also reflected in how these patterns behave. So while in a strong volition, golfing, you absolutely must have that strong close of the second candle with bearish and golfing. Yes, you do need to have that, but you may come across the following problem one where the engulfing candle is so huge and so massive that it's just not viable for trading. He would have to use a really big stop loss using very large stops, but will have a negative impact on your reward risk Expectation. Also, you need to have a minimum 2 to 1 reward risk on your trades, ideally 321 so that your trading is statistically viable over long periods of time, and it gets very tough, if not impossible, to keep your your profitability for months and years without your reward risk being high enough. And that's because if you have a low risk awards and you are aiming for very high accuracy , that's something that's extremely difficult to keep over long periods of time. What differentiates those who won't go on to become professional traders from those who are just basically an experienced people is that we are generally a lot more analytical when it comes to the types of trace that we dio the risk award the accuracy. And we're trying to find a robust system where you don't have to trade much, but it brings you high profits. So that's the whole point. It's not to trade mawr with less profit is to trade less with more profits. And the way you get that is by optimizing your entry locations. Teoh generally obtain 2 to 13 to one reward risk. Okay? And you know I'm not asking people to do a trade where you get like 10 to 1 re scored like did you have to do that? All you want is that's the testicle edge so that you can weather the draw. Giles. When they come and they will come. There is a party trading everyone, Whoever hiss traded for a long time. There will be a moment and extended a period of time in some cases as well, where you have a drawdown. Sometimes it would be an entire year off a drawdown for various reasons. It could be you yourself where it could be markets being irrational. It could be, you know, a number of things that may cause you to go into a draw down for a while. And that is why you must ensure that once you get your winning trades, they go to at least 2 to 1, preferably 321 reward risk ratio, which ensures that you still have the statistical as to recover quickly after the drawdowns . Another differential between professional traders and nonprofessionals. How you behave. And typically it is that higher risk reward ratio that gives us the buffer to be able to withstand the drawdown in the first place. So what's to do when the bearish engulfing looked like this? And it's clearly strong but untradable. It's a little unrealistic to expect a total pull back to where this move came from, and that is one of my entry techniques. I typically look for an entry all the way back to the open of the previous scandal, and that's my entry point. It's not realistic to expect that this pattern usually appears when some kind of surprising economic fundamental number comes out, or it's an interest rate decision that was not expected and therefore it was necessary to re price the products that you're looking at. So when you're saying this, it means that the move is already done and the market is re priced and we're done and dusted. That's how the market today. So therefore, I discourage my traders from getting involved in, um, something like this at all. If you're already in a swing trade when they started and you're heavily and profit, then you can take profits after the candles closed. Okay, so if you see something like this, the candle there several times the size of other candles in its vicinity, just stay out of it. On the other hand, you do have some normal looking bearish and girls like this one very nice and clean. Same rules would apply, but in the opposite way. So if the second candle closed is lower than the first candle low, then it's a strong version golfing, viable for trading entries. And here are some more examples of that close of the second candle is lower than low first candle. Now this final example has a slightly higher buying wick than ideal. However, this week is still not equal to the candle body. Therefore, it's absolutely fine. The size off the wick, Um, is what you're looking looking at when the candle closes. So when the cattle closes, if this week is the same length as the counter body or more, then it's not viable for trading. It gets dangerous, regardless of whether the clothes happened below the previous kind of long. So it's exactly the same. Rules only flipped upside down for the bearish engulfing pattern moving on to the week bearish engulfing. So here's a couple of examples. One thing that immediately stands out is that in some cases the candle bodies are quite similar size, so that's another aspect of a week. Pattern was a strong pattern, looking a difference in the candle body size. So looking at these two, this first example, if you're going to trade for whatever reason this would be your potentially viable option to go into trade more than this one. You can trade them right? You can trade these, but they generally performed better. If there's another reason why using them like maybe it's the right tumble day and then this happens. In that case, it justifies using a weaker pattern because you have another reason to go into it. But if you see something like this, the reason why wouldn't use this instead of wait to see what happens with the third candle in the fourth candle is that typically the more uniformed the candles are, the more likely it is that it's a start of a consolidating pattern. Wallonne throwing in consultations here and there. Here is an example of someone of an uneven consolidation pattern, which starts off with a shooting star. But here, the week bearish and golfing is actually a pattern finisher, and that's also the case where you may consider using the bearish engulfing because it is a part off a four count pattern, and it comprised of consolidation. So in that case, is perfectly sufficient to kick off trade, especially if is the right time of day I call these bearish in golf things finishers. So that's a finisher to a pattern. If you are using the the weaker, embarrassing golfing, it's better used to the part of the consolidating pattern than on its own. Okay, and here's kind of what followed after that pattern just to illustrate why you can use them . So here is where so this is this first candle is a part of the up trend that was happening up until now and then. There was a very violent reaction, and then there was uneven consolidation, followed by a bearish Ingle. Things that's 1234 That's a consolidating pattern. And back it goes, right. So that was a pretty decent reversal that was taken off the back off a week bearish engulfing that was a part of a consulate dating pattern. And, of course, just like you can have a failed bullish engulfing, you can have a failed bearish engulfing which at one point looks like a probable bearish and golf. And then he pulls back. Andi, you're looking at like more of a neutral candle. It has a long buying WIC, which is not really ideal. If you're looking to sell unless this is the start of a consolidating pattern. If you are looking at a continuation trade, you probably want to see something that's more on the along the lines of this rather than this, because it's probably consolidating pattern beginning. But again, you're looking at a hammer candle, and then they attempted to reverse the whole price, which failed, resulting in a week bearish engulfing. And it's very likely that this is going to turn into a continuation of a trend. If you're looking to trade with the trend, make sure that on larger timeframes, you're not hitting a swing extreme to the opposing side, because that's like an absolute no intron trading. And this is why what happened After that, the market just slowly meandered higher and higher and higher and higher. So as you can see, this is more continuation pattern that than anything else 5. Lesson 5 stars and consolidations: in this section. I'll take you through hammers and shooting stores, morning stores, evening stars. But then we'll also go through the consolidation pattern, which is by far the most important pattern in this section, starting with the hammers and shooting stars. This is what they looked like right off the bat. These are touted as the Hail Marys off reversals, but it's not all about peachy hamsters. Shooting stars are similar there, characterized by extremely long, one sided wicks and then reasonably small candle bodies. Compared to the week that's indicated, the opposing side by the buyers or sellers have stepped in, apparently quite aggressively. But I've come to realize that these are nothing but pivotal pops into supply demand zones from, ah, higher time frame. And they initially seemed Teoh reacts quite aggressively, and then they fill some existing orders in the level. But then eventually they kind of start meandering back to where they came from and continue the trend in most cases. And we have done some algorithmic testing on these, and it turns out that when hammers and shooting stars appear on their own just as a single lonely candle, they have a reasonably high failure rate, especially on lower timeframes, like one hour, 30 minutes in lower. If they have spotted on the higher time for him, like four hours daily weekly chart, then they can have a relevance. But to me, this wasn't that much of a surprise because I actually stopped trading these lonely hammers and shooting stars a number of years ago. They're quite painful trays to be in on. You'd expect to see this reversal with a quick follow through. But then what kept happening to me was that I would sit in our trade sometimes for hours on end, and then it was just like a slow grind back see where the price first came from and then it wouldn't have eventually just stopped me out. So it was frustrating and annoying. And, you know, although I'm very good at emotional control, I prefer to trade off and got things consolidations inside bars and three inside outside. So here's Ah, hammer on. If you were going to go by like, textbook examples, you're thinking who here's my trade. I'm going to go into a reversal. Um, so this one wasn't a 30 minutes charge on literally like an hour later, it just smashed through and kept going. I could show you, like close of these. I didn't even have to look very far. So here's a shooting star and then very uneven consultation. This is, you know, more arranged in a consultation because the pattern is not even. You don't have these candles that are super even and then eventually just makes attempt to move away. And then right after that, it comes smashes through the whole area. And here's another example of reverse hammer that doesn't even last one single candle, it just smashes straight through it. Um, Now, let me draw your attention to this first example. All of these patterns can complement each other. So just because you're looking at a hammer, that hammer could be apart All the consolidating pattern. But it can also be a form of a bullish golfing. In this case, I could have speculated this This might be the start off a consolidating pattern because these bodies air so even. And it was an ideal that there was attempted embarrassed engulfing right after that because I was looking too long. So you don't really want that the price needs Teoh create that engulfing finish up with your trade direction idea. So this one clearly creates a bearish engulfing which economies is still creating supplies . It's not really flipped back into the other direction. It's still in the same area. Nothing has been broken. This high here still stands, so overall, this is, like all just very, very weak. So rather than just trading these hammers and stars on their own, they're better when they're apart off a consolidating pattern like you can see in here. Now, this is an entirely different story. You have a bearish a consolidation. After a very long uptrend, this third candle made an attempt at a continuation. But because the selling wake is larger than the candle body, it means that this is a failed attempt and going higher. But that's still not enough for you to go. Hey, I'm just gonna short this now. This pattern will only be valid when it has four candles at the very minimum. And if it has a bearish finisher, So you need that engulfing finisher off some sorts. In this case, it is a bearish engulfing finisher. Quite a nice looking one. So now you're staring at a high probability off a reversal. And with that, let's move on to consolidating patterns. Because there's nothing much else to say about hammers and shooting stars. You shouldn't use them on their own. Consolidating patterns are extremely important when they happen during regular trading hours. If you're trading lower timeframes, this usually means sort of London, New York. See me exchanges. If you're trading from the daily chart exclusively, then you have no no needs to have a look at these regular trading hours because you're looking at a daily candle and you're presumably less concerned with intraday moves if you're trading from the daily candles exclusively but anything lower than the daily and you really must take into account when the consolidation is happening. For example, if you look into your dollar and then you see a consolidation during Asian trading hours, that doesn't mean the same thing, cause the volume is right to be low compared to what it is when London and New York trading it Consolidation pageant that happens during regular trading hours is a very valuable piece of information because it means that the price has stopped advancing in the same direction . For whatever reason, you don't even need to know the reason. Once a spot of conservation on any of these time frames, it still means the same thing that the market has stopped advancing. Okay, Ideally, the consolidation pattern needs to be comprised of minimum four candles and about maximum six. Anything over six is means the lack of interests rather than a consolidating area. And ideally, the consolidation needs toe have very uniform. Uniform body is very equal size. Candle body is kind of like this. The more on uniformed the bodies are, the less likely it is that the consolation work, although not impossible. So that's the difference between week consolidation and a strong consolidation. In a week consolidation, you're gonna have things happening like non uniformed candle bodies attempted a small trend and then maybe a reversal. It's still usable, still very tradable, but it's better if it's uniform. So this is an example off a reversal reversal, consolidation after an uptrend. Now we actually have an indicator called blah tick S. D, and it is mainly done. Teoh spot supply demand zones in my own cue points, but it also shows you when the consolidation starts, it kind of starts to print a little box as soon as 22 candles, a kind of a similar body size. And then it determines a range and then measures whether the next couple of candle state within that range. And if if they dio, then it deems that it's a potentially new reforms applying different area. I've included a link for you in the resource of section. Just a case you want to get that tool for magistrate er again entirely up to you. I would also prefer that you know how to do supply and demand trading because it is. It is designed for supply and demand traders. It's a professional trading toe. Ah, highly optimized piece of software that doesn't crash or slow down your computer. So, you know, all of that is done because we have some investment banking software engineers working for us. I mean, the head of the company is is a former Barclays Capital software architect. So you know, we know what we're doing with our software. So if you expecting to kind of pay like 10 bucks and get all of that, it's not gonna happen. Okay? Now, when? When we talk about consolidating passions. There's usually like a start of candle on. That's when opposing direction candle appears. Once you see that is, they have to wait. So it's not like see the candle go. Sometimes it is, but not in the case of consolidating Patron. If you training an inside bar, it's slightly different because you still need to see the inside bar that crosses 50% of the other candle and to actually close confidently there. But without that, you're simply looking at the starter and the direction the speed bump. So until this consolidating pattern appears, you cannot really speculate that it's a reversal. Yet. It's a very specific set of rules that you're looking at you looking at uniform candles. You're looking at a bearish, engulfing finisher. In this case, it sort of creates like a little bass right, And this is also very important for supply demand trading to recognize when these bases are forming Um, which again relates very closely to the accumulation, markup, distribution and liquidation which of the four phases of the market moves regardless of whether you're in an uptrend or downtrend Now, ideally, the whole consolidating pattern needs to have an engulfing finish it like in that example, but also like in this example, right? We've seen this before, and this is what signals you that it's time to go in. So you're clear direction after the finisher appears. This particular example would mean that it's a very strong, consolidating Barris passion. But beware. Sometimes you can have a week consolidation, which doesn't have a finished your something like this. And yet the market actually does eventually reverse. I mean, if you just if I go back, if you just looking at this, you don't know whether you're buying or selling here, you know, because it's just so uniform. But it was like a little Rex angle, a little box. And if you were just to look at that isolated from any kind of market, moves will be like it can be, Ah, bottom. It could be a top, I wouldn't know. But then, if you see that it happened at the bottom of a trend and you see that it did kick off a reversal. Eventually it tells you that you can use these weaker consolidations, but only if you're using another reason as to why there should be a consideration for my market stalkers method. We use this thing called the day trading time zones, which are very a specific times of day. When you're expecting to see these reversals for very good reason. There's an underlying reason why these intraday but persons happen another way to use these consolidations. If they are weak, you would maybe want to combine them with exhaustion, often average daily range value. And then you can maybe determined that. Okay, well, now that we've exhausted date range on, we're coming to the end of the session. Perhaps this will bring about the reversal cause whoever was sure it at some point they have take profits. So you can kind of bank on certain behaviors of the market participants who are trading for the institutions and moving the markets to kind of piggyback onto whatever they're doing. And consolidations are very, very good way to do so now. I spoke about hammers and shooting stars earlier and how I don't like to trade them if they're on their own. But if they are part of a consultation, then they are completely valid for reversal trades when the market has stopped moving. But then you also have some strong bars and sellers that you noticed in the form of these hammers and shooting stars. And there's a continued idea off selling or buying in the eyes or minds off. The institutional traders now notice that as I'm going through the course, I'm starting to almost overlap what constitutes a strong in a week pattern and now implying into consolidations, too. So all of these patterns into twine, they give you the same piece of information that the other side is starting to win. But it's in a slightly differently organized passion. If that makes sense, you need to combine them into a single knowledge bank. Eventually, that is going to be used simultaneously. It's very difficult to remember so many things at once. You'll find that many of us who do this job professionally have photographic memory, which enables us to have extremely quick recall when necessary. If you're not naturally gifted with eidetic memory, it's probably going to be an uphill struggle learning how to trade. Uh, because, you know, don't forget trading involves a huge knowledge off complex financial products, both fundamentally and technically, so you have to have enough idea of how the economy works. But then you have to learn all this new stuff to see how that would relate to technical moves as well, which can be quite confusing. Sometimes you can have a fundamental release that seemingly goes the wrong way. But then, if you know what you're looking for in the technical picture, you know that all that's happening is that the market is kind of trying to find those orders because the institutional traders needs to have large liquidity pools to save on execution costs. If you're trading thousands of lots in size, you cannot just execute your trade wherever you know. That's only a retail trader thing. You actually have to know where the liquidity pulls lie. And although some people go well, you know, when you're training for an institution, then you have their order book. Yeah, but you only have that one institutions order book. You know, if your training for Barclays Capital Lloyd, they're not gonna let you in like two peering into their order book, it's just ridiculous. So you still have to know how to be heard to find those areas of deep liquidity on the chart, and that's where you want to trade with. That's where you want to be looking at these patterns. Now, on top of all of that, if you want to become a traitor, you have to have an analytical, methodical mind with enough scope for thinking out of the box. So if you're too methodical into analytical and stupid mathematical, then you're not flexible enough. And although I have seen mathematicians do reasonably well in trading, generally, they feel highly uncomfortable with the idea that the pattern could look different even though it's still, you know, still, maybe a strong pattern. But it has something a different look about it, and they struggle with that a lot. So those of us who have maybe been musicians to a very high level like I myself, I was a session musician since I was like 15 and I've been playing a musical instruments since I was four years old, so I was a bit of a nutter. It's like to begin with um, and then, you know, if you were a semi pro or pro athlete, that's also very transferrable. Skill engineers. They do very well in strangers to and for some strange reason, there's this mainstream thinking that you can be like 18 and working as a cashier, a Tesco's to becoming, ah, super rich trader tomorrow after you have looked at, you know, one of these courses over the weekend and don't get me wrong being a cashier, Tesco's is a perfectly respectable job. But if that's your always killing life currently and you've never done any science, music or sports to a professional, a semi professional level, meaning that you understand how much practice and methodical work it takes to develop those kind of high performance skills, then you're potentially looking at the next decade, maybe longer off learning every single day, acquiring new skills and then only eventually understanding just how systematic you have to be in your approach to become consistently profitable. It's not easy. I felt that this needed to be said, since we're over halfway into this course now, 6. Lesson 6 morning evening stars inside bar: in the next section, I'm going to be talking about morning and evening stars. They are exclusively a reversal pattern, just like any other pattern. The higher the time frame there on the more accurate they will be. And they made up of three candles and characterized by a kind of Doje looking neutral candle in the middle. They are not as prevailing does consolidation and in gulf things. But when you do see them, especially combined with a particular time of day, when these intraday reversals usually happen, then they are extremely useful. So let's have some evening star examples. First, the evening star is a cell signal. It's a bearish pattern, so as such logically they would be usually found in the end or than uptrend. Although there been more rare in for experience than the patterns that we talked about so far, they're pretty accurate, especially in equity indices such as decks and S and P 500 where they tend to appear slightly more frequently. And on the other side, Morningstar's and they do look like mirror image of evening stores. Right now, this dodgy candle doesn't necessarily have to be a dodgy. You can have like a small candle where you can have a neutral candle that doesn't really go anywhere. For example, this is a real Doje over here, but this is just a small candle. This is more like a hammer that more than anything, this is a neutral small candle. We've done some algorithmic testing on these, and all of these ended up having equal probabilities regardless off whether this one is a true does you're not. And also, very interestingly, whether the third candle was really strong or not like in this case. So they all had the same pro bodies. It's a very interesting. It's a somewhat somewhat unusual to see that you would expect the strength of the candle to have some kind of, ah, you know, impact on whether it causes the reversal Not, but I don't know whether it's to do with the fact that maybe it's a three candle pattern rather than to candle pattern. One of my theories and you know, it was kind of drilling down through the time frames to to see the reason why that might be My suspicion is that the reason why that's happening is because there's an even lower timeframe that could be created consultation before it creates the third candle. So in that respect, since you already have that base, the consultation, it doesn't matter what happens after that, because by default the market is stopped moving as far as the morning and evening stars go , that's pretty much all you need to know. The way I like to enter them will, very depending on how large the second candle is. Sometimes I will be entering it on a pullback. Another very simple way to enter is just assumes the third candle prince. If it's not too big, then you could just enter it and forget about it. So those a couple of ideas of how you will execute your trade stop loss will always go below wherever the low is for wherever the highest if you're selling. So in this first example, your stop has to go quite a few pips below here, and it's also a lot more comfortable if you just have that stopped lost slightly wider, and you don't have to like, tremble if the price starts to come down towards this consolidating area, if you will, and that's pretty much it. So let's move on in this section, I'm going to take you through the use off. Three inside outside passions. This pattern is quite similar to a well known bullish stock pattern called piercing line and its bearish counterparts called the Dark Cloud Cover. There's also a huge similarity with the inside bar pattern because that's a second bar actually forms a piece of the pattern. But the difference between these patterns occurring in stocks versus in forex and CFD days is that the stock market closes overnight, which means that frequently price may get upon the open on the next day and forces doesn't have a closing time. It's what technically not you have. The electronic exchange opens and closes, but it really runs 24 hours, five days a week. And whenever you know trade, you can take the trade off any time you wish, Which is not the case with stocks like once the market closes, you cannot do anything with the trade even of the market moves overnight. But the idea behind trading them will remain the same. The three inside outside patron is also reversal passion, much like most of the others in this course, any time you identify a trade location away where a reversal should happen, followed by one of the strong reversal patterns that we're talking about in here is where the highest reward to risk opportunities weight naturally. Okay, I was never really comfortable with some of the kind of beginner strategies that teach you to go in on the trades when the movie is already well on the way when I got a job is a futures trader in the middle of like, the most turbulent times that we've ever seen in the history off the markets actually had to modify a lot of my swing trading concepts because of time constraints. And this is where these price action passions became invaluable. Now this pattern three inside out outside pattern. It is frequently found on intraday timeframes like very frequently, But you can also spot them a large time from stew. It comes in four different variations, and I will show you all of these one by one in a minute. The variations depend on whether the second candle is within the first candle length or outside of it. Here, you have a second candle that's open completely outside off this first candle and then went up and then carried on. Or in this example, which is something that you will see more frequently in for X and C of D markets, where the markets don't close overnight. Now the reason why this is called a three outside up in this case is because the second candle makes a new low, therefore exiting the range of the first capital. But in a more traditional sense, it was named this way because the stocks would gap outside of off the candle on the day completely. Now, in an ideal world, this third candle usually brings a very nice strong follow through. In this new direction, that kind of closes well above the first candle hype. However, Waas that was a condition for determining the strength of an engulfing pattern. That's not how you determine the strength in this case. The third candle strength does have a role to play, but it's to do with your exit rules rather than the validity off the strength of the patron . Que suspenseful music don't don't don't. So what's the deal then? Now some of you are wondering how in the worlds would you trade this if you wait for the price to move, like all the way up here, then you need to use a massive stop loss, which we've talked about this before would diminish your expectation of reward risk quite significantly, and that's never good. Now the whole point or price action is to diminish the stop loss size and not to increase it. So here is where this pattern difference from the rest of them that I've described so far is the only price pattern. Well, you will views a second candle before the entire pattern is done, so you will be entering your trade upon the finish off the second candle. And that's where the connection is with the inside bar, because that's exactly what the inside ball trading is. And I will explain in a minute what you will be using the third candle for as well. But let's talk about the entry first. What are the rules for validity of the strength off the inside bar, which will eventually turn into a three outside up for three inside up or the bearish versions off the same pattern? Well, rule number one is that any time you see a candle that is doing something like this is that it absolutely must close above the 50% mark off the entire length of the first candle. Okay, so you know, I have my my hacked film tool, which I've used so many times in so many videos. And actually, that's one of the main things that people ask me. What is that? What is that tool? It's nothing is just the hacked regular Fibonacci trading tool is just I erase all the levels and put my own levels on it. It's really not not that difficult, but it's for some reason, very interesting to people. So I joined not to do any calculations myself. So instead of going price high priced, low, divided by two I don't do that. I just get tipped all put points five level in their 01 and 10.5, and then you just drag it from top to bottom. And hey, presto, there's Europe 50% measuring tool so, you know, bit lazy that way. But again, you're thinking about so many other things. You don't wanna be doing any any super complex calculations at this point. So once you see that the second candle has closed above the 50% off the first candle length . That's your rule, that this is a valid pattern or reversal. Your stop loss will be placed slightly lower from the candle low in this case. So that's your entry rule now for any pattern, regardless of which better using and regardless which method you're using, it it. It still stays the same in order to statistically make a viable trading system to have a statistically viable performance over long periods of time. My general exit rule is to aim for a minimum to tow one reward risk on all trades. Ideally, you want to make that number 321 and why it's because you can have a low accuracy and still remain profitable. Okay, so here's something that's quite interesting for for most people, just quickly. I'm not gonna dwell too much on this. If you're trades, Ah, 100 trades per month and you start with, let's say, $1000. You know, anyone can can just about get $1000 to trade, and if only 27 of them win so you have 100 trains per month. 27 of them win 73 of them lose, but you maintain a 3 to 1 risk reward of all trades that win, so that where there's no ambiguity, you keep all of them until they reached 3 to 1 or 21 depends, but 31 is something very interesting happens. So 321 you have stupid low accuracy you like basically almost a Muppet. But those traces do you do get they go to 3 to 1. You will still be making about 8% on the month, OK, 80% of the month, which, if you compound this, if you're using set risk portrayed 1% then actually compounds two. But 252% per year is crazy, so you can basically a complete idiot. Almost it only have 27% of your trades reached target, and you're still profitable. If you're accuracy does go down below 25%. It's where it becomes a little bit tricky because that is when you get to zero and you will not make any money, because you will slowly start to bleed your account, especially if you're accuracy keeps going down. It's possible to have an even higher risk reward, So if you aim for five or six times risk reward. You can even have an accuracy that's as lowest 20% and still make money. But it becomes mentally very draining and difficult to trade that way. Ideally, accuracies of about 35 37%. That's pretty good, because that makes you make a lot of money. You feel like you're not a complete idiot. I mean, you will be wrong a lot and trading. That's just the nature off the job. And if you're not comfortable with that, then perhaps this job is not for you. But you know there is, ah, break off point where even if you have a high risk reward, you will still start to lose money, and that's if your accuracy goes below 25%. 7. Lesson 7 exit rules: in this section, I'm going to go over exit rules. What can you use for exit rules? And it is related to the three inside outside pattern. But to be honest, you can pretty much used the's for any any pattern that you may be using. And I always say, for exit, you can pretty much use anything, for example, just but the fact that the price reaches your 321 risk reward, you need not look for other reasons. You can just close the trade. That's it. Statistically, that's all you need. But it's always good to have a few options. I myself, I frequently used time of day to kill my trades off so it doesn't matter where they are. Brexiters use time of day, and that's it. Some of my black dick traders have a set trade duration. We have one guy who trades by going into trade and doesn't matter where, what time he went into it. He will always hold it for 16 hours and then just kill it, and we even wrote him a script for that. There's also a technique that I called tapered to take profit, and I teach it in my professional development courses in level three. It's more meant for the future strangers. And when your futures trader you are frequently not allowed to trade through some major events, and usually there's about two or three of them on the day, so you would enter a trade and that, like 9:30 a.m. Would come and there's release. You have to close the trade because that's the risk rules on the company. And if you don't follow the risk rules, they revoke your access for like a week, so you have to follow them. And because of that time restraint, you have to have another way off taking profits. So I teach. This thing called tape would take profit where you would start, Let's say, with a 3 to 1 risk, we would. But then, as the time goes by like, let's say every 15 minutes, the longer that you trade has not reached the intended target, you then started Taper. So you started 321 15 minutes goes by. The trade hasn't reached it, so you lower your profit target of 2.5 times with forward. Another 15 minutes goes by. The prophet has reached. You go down to two and so on and so on until the time and price converge and you take a trade off or there's another release and you have to kill your trade anyways. But it's a very good technique for intraday trading. So how does this relate to three inside outside rules? Well, it's because the exit conditions are also based on time or price, whichever comes first, depending on the strength of the third candle. In the most ideal situation, you will get the third candle. Follow through like you see here, and it would just hit your 21 or 3 to 1 ratio depends on the size of a stop loss, so that's your first exit rule. If the third candle closes anywhere above 2 to 1 reward risk ratio, you will close your trade as well. But the markets are frequently less ideal than that, so you have to be prepared for when the things don't going away. So your first exit rule will be the third candle closes above 2 to 1 reward risk ratio. But if it doesn't the new needs, you know another exit rule, which is methodical. Everything is about being as consistent as possible. So if you had that third candle that is not even reaching a 1 to 1, let alone 2 to 13 to one, you can then allow an extra five candles to reach the price target or to be taken off when the fifth candles finish wherever it is, it doesn't matter whether it's 2 to 1121 doesn't matter. So to add to the exit rules, you have the first option where the third candle closes above the 2 to 1 reward risk ratio . Or, if that doesn't happen, you that allow additional five candles. And here's that same idea in a handy flow diagram for slightly easier use, you would start here. Here's your first rule for the entry. So is the second candle close more than 50% of the first candle length? If yes, you then have the green light to trade. If now there's no trade and you walk away, go do something else. Walk the dog. Spent time with the kids, cook something, exercise anything. There's no no trading, Okay, but if the candle is 50% more than the first kind of length you enter a trade and then you have exit rules. So here it is. Third candle. Has it reached over to the one reward risk? If yes, you close the trade. If no, you wait for five candles mawr and on the fifth candle close you close the trade wherever it is, regardless off whether it has risk reward enough. Because in this case, rather than working off what God, It's in some profit. Let's close it mindsets. You're working for a mindset. Listen, I entered. I saw the opportunity. I gave a time. I gave it 54 candles to work out. It didn't happen. It's not gonna happen. Time to close. See the difference in the mindset and the decision making process. One is an emotional decision. 2nd 1 is a methodical decision, baseless and fax and consistency. 8. Lesson 8 practical problems: in this section. I'm going to talk to you about some of the practical problems you can have with entries and with using all these chemist IQ patterns. And the idea is that once you know where you looking at, you will be able to combine the expectations of what you need to see on the charge in order for you to enter the trade. But even so, there are some things that can happen that are unexpected because it is the markets. So here is an example of that. So let's say you see the market moving. So you were looking at the second candle, which hasn't closed yet, and at one point it looks like a bearish in golfing. And then you're thinking, let's say 30 seconds left and you're like excellence give you bearish, engulfing their the market can oppose back up and finishes as an inside bar. This is where your thought process and your action needs to start happening very quickly, so you quickly have to measure the second candle close in relation to the first candle length to see whether it goes over 50%. So the speed off accessing different available information to you needs to be practiced, you're not gonna get there overnight. And this is where software like for ex tester can actually come in handy because it can allow you to practice these thought processes in different speeds. He's kind of like doing music. If you ever played a musical instrument and you are trying Teoh Master a particularly difficult, very fast phrase. You don't start by just playing that phrase at Like the temple that is supposed to be. You start playing it very slowly. Same thing with the markets. Trading markets live is scary. It's difficult. You have to make split second decisions. You have some fear that blocks develop until the brain as well. So that's that's an issue to take all that away. Practicing on a back tester that can play back the candles at different speeds so that you can spot these patterns would be a very good thing to Dio. And then eventually, as you get faster and faster, what I used to do actually used to train myself to, to see these patterns quite quickly. And once I was able to see them very quickly on a back tester when I came to trade them in real time. The real time market seemed like still slow, and that's a good thing because it gave me plenty of time to make a decision. And I highly suggest that you try and do something similar if you're serious about trading . So the idea is that you are so accustomed, Teoh analyzing and making action in a very fast way, so that when you come to the real markets, you're totally chill and Zen. That's my little secret high. I developed my little skills. You do literally have a few seconds to determine the course of action once this next candle is done printing, because these are thought thought patterns that you have to have. First of all, was it a version? Golfing? No. Is it inside? Bar? It is. Is the second candle closing over 50% mark with the first candle? Yes, Where did I put my stop loss? What size of position am I supposed to be using? If you're serious about your risk management, or if you're working for a prop trading company, there's other things you didn't think about. So, for example, you have to remember how many trait that I do today? How many do I have left? How much did I lose today? Do I have a profit buffer left over? Do I have another position? Like a pending order that I've for gotten about? Am I allowed to have another active position and my going over my max position size like there's so many things that they kind of throw it you And it's a lot of stuff to remember once. But let's say that you thought all about all of this and you kicked off the trade from this second candle. But now you get this. So you're staring at 1/3 candle, then went back up. The three outside down didn't happen. So what can happen now? What is your expectation now? Despair. Pull your hair out. No, you basically go. But what can this be? Assuming that I'm still correct on my trade direction and there will be a reversal here because I'm in a trade location that I've determined or time of day that I've determined when the reverse of ST happened, you can maybe start to speculate that this is now start of a consolidating pattern. Okay, so then you're still in a trade. And you're thinking, should I close the trade? Because I didn't see what I needed to. Well, no, because now you have other options. This could be a consolidation, which means that even though you already in a trade on the basis of the inside bar the second candle in the pattern and I have to wait for the fourth candle too close to see whether there's gonna be a reversal and this is where you have to start expecting what kind of patterns you will find. So rather than you know, rather than despairing over the fact that something didn't happen, that you were planning to happen No bearish engulfing no three outside down. Well, what about consultation? Is that gonna happen? So then you sit and wait, and then you finally see something on the chart whilst you in a trade that doesn't match your expectation. And that's what people mean when they go visualize what you want to see on the chart. It's not like you sitting down just going. I want to see a bullish and bearish engulfing. It's not how it works. It's basically an expectation of what can happen in relation to us. a number of options. So this course is giving you a number of options of what could happen, and all of these patterns relate to one another, so it's very useful. And then, once you see that, you can then use one of your exit rules because I was still keep the same rule of about 56 candles maximum whichever trade you're doing. So basically, if you're trading from the daily candles, you'll have about six days until you cut your trade off. Even trading from a four hour chart you're then looking at about, I don't know about 16 to 20 hours graduation. If you trading from 15 minutes chart, then you'll be cutting your trade off after 1.5 hours and so one and so forth. There are highly adviser to set your maximum trade durations in this way. And yes, there are other ways to determine maximum graduations. But I found that this is the most optimal methods to force people to take profits. A number of traders are mentored. Have this issue. You don't want to take profits. Some people have this obsession off. Well, I'll just see where it ends up. But you absolutely must have a solid exit strategy. It's one of the things that causes people to fail because they don't know where their exit is. It's like being a buying hold investor that never takes profits, which is okay because you're still taking dividends. But it is not OK if you're an active trader, Absolutely not. You have to know where to take your profits. 9. Lesson 9 Double Tops & Bottoms: in the final section off this course, I'm going to talk about the only chart pattern that I can see the use for in practical trading and good execution practices. And that's double tops or double bottoms. And who doesn't like double bottoms now? In a way, these are more useful in hindsight, especially when you're already using candlestick patterns and supply and demand areas to determine your direction and entry timing and all that good stuff. But it just in case you missed the first move either, you know, because it may have happened outside of your normal day trading time zone, where you may have been asleep sometimes. But then you see, the price kind of moved back to that same area within the next trading session and then creates another Candlestick reversal pattern. Well, then it's a great opportunity to say, Hey, this could be a double top or double bottom. Okay, so in this first example, you can see that the first candlestick pattern was a three inside up. So you had this inside bar that would have given you the opportunity to go in already and then if you followed the exit rules of five candles, maximum trade duration. You would have already had one profitable trade under your belt. And then the price meanders back down, goes all the way back where he came from, and creates a very strong bullish engulfing. Okay, so you can also then use this pattern to execute more than one trade full level, thereby learning how to outperform the underlying products. See, the difference between traders when you get to a certain level in professional trading is mainly in the style that they trade. So you have swing traders holding multi day positions. So by default they will only track the underlying price movements. They identified the area off a probable reversal. Usual very large time frame. Anything from like four hours daily weekly monthly. Um, and in the enter and wait, that's it for them. It really doesn't matter how many times the market may have meandered up and down, up and down as long as that. At some point over the next few hours, few days, a few weeks the market moves in their direction towards their target. They're not interested in the intraday movements, which is reflected in the size of the stop losses. So the bigger your stop loss, the more you will be able to handle the intraday websites. But then, if you're an intraday trader, your stuff Ours is a comparatively cut, quite small, which means you have to be a lot more accurate in your timing in everything like it's so much more difficult. Typically, as a swing trader, you may be using a stop fosters. That's about 40 pips in size. If you're trading over a couple of days and then anything up to 120 if you trading from weekly and monthly positions, you're probably aiming to hold that trade for a number of months. And maybe after a couple of years, in which case those kind of stop losses will go into 500 papers 1000 pips, you know, whatever the level requires. I started out as a swing trader is definitely helped me to see the whole picture from a very large time free perspective. And in that record, I probably have quite a bit of edge over someone who has never looked past one hour short and then on the other side you have the day traders who tried to outperform the underlying product so there's the pinnacle of trading skills. You really need to be consistent in everything, right? So you need to be consistent in a number of trades per day. Time you rent, you train size of your stop loss percentage of trading capital portrayed the time they will take a profit situational retreat like literally every little change in parameter conspicuous results and mess everything up. So let's say you haven't learned how to be disciplined yet, but you want to have a hand at intraday trading. So one day you trained three trades, and then the next day you go a little crazy and you trade seven. Okay, so that's it. Inconsistency. You cannot be a day trader unless you sort that out. And that's the part that takes years to master. It's not which strategy there used to until trade. It's how consistent can you become over a number of years? Um, going forward. But the day traders are actually the ones who will get the most. You sort of watching these double tops and double bottoms because if I analyze the second example, you'll see again strong bearish scandal, which allows you to him to one trade As you can see, this first move is a very good move. And if I had, like my fifth tool here, you will see that it does reach a 3 to 1 risk reward and then subsequently returns to the area Exactly where he came from. Creates another sort of pattern that we now know, which is a consolidation pattern with a bearish and golf and finisher, and then moves away again, so that would give you another trade for the day. Some of our algorithmic research indicates that the double tops and double bottoms happen very frequently on a one hour charts, but they can be often found on other timeframes, too. Usually, when you get this kind of a price action going on lower timeframes, it means that there is a larger timeframe, supply and demand area that is causing the price to be reactive. It also gives us a reason as to why you would get like, a fairly similar price for a low or a height, because these are almost to the tick. And that's because the price is actually referencing a much higher time frame zone where there are lots of institutional size orders and I think that's pretty much where the nonsense about holds support resistance came from. Do you have this like widespread inaccuracy that the extreme highs and extreme lows is where you should be placing your entries? And then people get absolutely murdered on the markets, and yet they don't know what the problem is because everyone's talking about support resistance, and then sometimes this kind of thing happens. So if you want to learn why and you're not familiar with, like, supply demand yet, you can check out the first part of my supply and demand professional development, of course, which isn't you. To me, it's, um it's kind of the bulk of what supply demand trading is all about. 10. Next Steps: I hope you found this course useful and valuable in your journey to becoming a skilled price action trader. However, price action Trading actually has three concepts, and this course I talked about the 1st 1 pure candlesticks, sometimes also referred to as naked trading, which means trading with no indicators. Onley relying on cans thick patrons themselves. But this is just the tip of the iceberg. The second implication is called supply and demand trading, and the 3rd 1 is called Market Profile. Supply and Demand looks at Candlestick formations as well, but in a different way. It also measures a number off odds enhancers and filters in a systematic manner. Market profile, then goes one step further and looks at how much time price spent at a particular area is what some other useful calculations, such as distribution cars from the previous day's business. And it's still press action based. If you wish to know more, you can start by checking out my unity course on supply and demand trading, which is easily done by searching the phrase supply and demand on you Timmy website. That particular course is comprised of the 1st 6 lectures that are actually part of a much larger professional development. Siri's on the main website. That course has three levels and a whole 39 lessons teaching all of these various concepts . So supply demand my own concept of Q points, which is kind of the missing link to supply and demand. And I also teach you how to use accumulation and distribution faces in your trading and, of course, how to apply market profile to your intraday setups. I also teach you how to apply average daily rangers, and every session ranges for maximum accuracy. It shows you how to scale your stop losses to the instruments on liquidity to maximise. The chances are of getting a moderately high reward risk even on injuring traits. If you decide to take that step towards your professional development, please get in touch with me for any discounts that we may be running at the time. I hope to see you there. Until then, thank you for watching