hello traders it's samurai trader here welcome to my training session in
today's session you're going to be learning one of the best-keeps secrets in
trading during trend lines using fractals
I love trading very very much in a rules-based manner that is I'm a very
mechanical trader in my approach and the students that are watching my videos in
the past and as you know I've got literally now well over 100 videos on
YouTube now I'm a very very mechanical trader in the way I approach the market
I'm probably about 95% mechanical where's the discretion well you've got
red flag news announcements and really the eye is the best indicator of are we
in a trend etc so I'm going to be showing you how I draw trend lines in a
very mechanical approach I'm going to do this over a number of training videos
because there's a lot to cover here as always I need to mention the risks
there's always a risk in trading don't trade using the rent money and always
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traders and new potential traders one of the greatest challenges that we have
this traders is what we called information overload I just want to mention this
because one of the greatest challenges I have in training traders is that over
70% of the traders I deal with are already experienced and many of them
have found it very very tough we need to peel back the layers of Y onion if you
like we need to go back to the start and you'll hear me
preach continually become a master with one setup or one strategy and the reason
I mentioned this is a lot of my students will be watching this don't stop what
you're already doing if it's working master T2 about T25 T10 and maybe T89
before you move on but using trendlines is something that you can all be
incorporating to if you like verify a trade however as we go to live charts in
a moment we're going to be looking at some live setups just remember that with
a lot of the strategies that I teach you would have already been in the market
because sometimes when the trend line connects that is when we get a can door
closes over the trendline we may have already been in on one of our other
signals I just wanted to mention that now for the new traders and even if
the trade is that have found things tough up to now I love this statement
this quote by norman vincent peale people become quite remarkable when they
start thinking that they can do things when they believe in themselves that the
first secret of success anyone can learn how to draw trend lines trend line
trading is a standalone strategy and you can literally make a fortune from
trading trend lines now one thing with trend lines is that the low of a time
frame you're trading the quicker you need to be enduring trend lines and so
the 8090 yes or maybe the 144 yes during market hours the market is moving that
quickly it's hard to just even get a normal trade on let alone draw a
trendline wait for a close over the trend line etc so just remember that for
those of you thinking gee whiz the market moves that quickly you might have
to increase your time frame one of the advantages when you're drawing trend
lines if you're using a time-based chance you know of course when the
candles going to close so makes it lot easier but if you're trading using
the tick chart or a range chart that can present some additional challenges you
might have to increase the timeframe so I want to talk to you about making your
trend lines mechanical enjoying them that is to make them very rules based
and we can do that using fractals now Bill Williams is very famous for
fractals his fractals are really around his whole course around his program his
written books are new trading dimensions trading cows very very much based upon
the power of fractals however for why I draw my trend lines
and take my entries is a little different to why Bill does it but it's
still well worth reading about his concept now a standard fractal is where
you have and hopefully you can see this on your screen two candles or bars to
the left and to the right and one in the middle see formation of five and so the
top one you can do good software and you'll see my software we've got a dot
appears above that and you can have we can see down here you can have a dot
appears down here up here and you've got different types of fractals but the
overall philosophy is that you've got to lower candles on either side or to
higher on either side to form a fractal now you're going to see in a moment how
it can make our trading very mechanical now when it comes to drawing trend lines
what we want to be doing is of course touching these factors now you can see
here you've got actually in this little diagram I've got three candles up to the
left to the right same here and you can see here I've joined a trend line from
this lower point to this higher point there's a trend line and likewise going
short we can see it going down here so drawing trend lines is fairly easy it's
going to have to be a little easier when you see it on the chart in a moment but
we're trend lines are very absolutely invaluable
you may have heard of the famous wolf way of bill wolf has been trading wolf
waves for many many years there's a lot of material on the internet about the
wolf wave it can take a while to get your head around it now once again
students I just want to mention that this is another whole concept for those
students of my course you just want to be very careful that you don't confuse
yourself here okay I just want to mention that if you already a trend line
trader fantastic but just be careful of incorporating too many concepts remember
become a master own one set up before you move on but what I wanted to show
you here these are fractal points here one three five four and two are all
fractal points and so therefore in drawing wolf waves when you read his
material he doesn't refer them to fractal points but that's exactly what
they are now of course we use trend lines for drawing up triangles and
wedges for ascending descending and so trend lines have an incredible that
there can really form a variable part of your trading so what let's now go and
have a look at the charts themselves now what we're going to have a look at here
traders is this is now today's feet by the way in Australia here at see Friday
the 18th so it's some very early Friday morning over in the USA and what we're
looking at here is the NQ now this is applicable remember on any market so I'm
going to be explaining how I've drawn these trend lines but it doesn't matter
with your trading Forex with your trading stocks it really doesn't matter
whether you're using time based charts range Renko that's all applicable so
let's have a look at the first trend line that was drawn today can you see
these little and actually let me just get this I just want to get a large
pointer for you okay
so trade us you can see these black dots what they signify is a fractal point now
you can see here I've got a low here in the back black taht appears and what am
ideally looking for let me remove this one for you is I'm looking to draw my
trend line from fractal point to fractal point and beyond so you can see from
there to there continues right up now for me to get then a break I'm looking
for a candle to close in the direction if you like of the new trend or under
this break here so technically speaking on this NQ chart this is a 55 tick chart
so if you're based in LA or even New York or very early in the morning in
Europe this is a great market to trade when you get home now just remember
though when you're trading futures contracts after hours your broker may
require a full margin I think my broker at the moment a full margin on an NQ
contracts about three and a half thousand dollars during the day of
course I think it's five or six hundred dollars so the margin requirements doing
go up however let's have a look at this here so you had an entry here so you can
see here I've drawn a trend line from this fractal to this fractal we've had a
break you can see here that little white candle is actually a red candle what
you're waiting for a close under it so you had a nice profitable trade here
okay down down it went now what I've now got here is a trend line break to go
with the trend here now trend line breaks with the trend or always going to
be the highest probability so you can see here the yellow line here is a 34
EMA for black is a 21 and the little blue line here is an A-T-M a so I've got
a and I should point them all up is a 289 3421 and 8 so obviously they're all
going up so this is with the trend so you can see here I've had a
practical point form there and here draw a trendline and you're in on the close
of this candle and a way it goes so we can see that we're trading with the
trend so you can see point here fractal point fractal point fractal point now at
times you'll have and we see really strong trends you'll get a number of
false breakouts now let's have a look at what may have happened with this and let
me just get a trendline here now traditionally what a lot of traders will
do is follow the candles down like I've done here and you've actually could say
okay I've got an entry here becomes more discretionary when you're using the
fractal points these black dots which is nothing more than candles to atleast to
higher on both sides it just makes it more mechanical now we may choose not to
do that is when you're trading with the trend another point I want to make out
is that when you've got a strong drag down trend it like you can see here your
second breaks and please remember this when you are counter-trend trading and
you've had a really strong trend down or up quite often the second break is the
the best to take an actual content out it's also the most accurate so if you
want to play it really safe you can you might have drawn a trendline down here
as many traditional would have done you would have got in there or there and of
course we've gone up and we've bounced all four moving averages
now remember your moving averages will act as magnets or support and resistance
now what we've got here is a nice little double bottom formation and for my
students look at this here lovely divergence here double bottom we've got
a T7 we've got great divergence here and of course you've had a break and away
you go and up we go now your next tier line break would have been with the
trend here you had another one potentially here but you didn't have a
fractal now when you are trading with the trend
and you have at least four to six candles you can skim or draw a line on
the top of those candles but please be aware that the further your entry is
away from your moving averages the greater the chance of a pullback and
also look at this large candle this can be one of the challenges that we
actually have when we're trading a time-based chance if the candles can be
really big so just remember the further away from the moving averages you are
more likely you are to have a pullback now we've gone up here you've had an
entry that actually pulled back now where should you stop be and I haven't
mentioned it yes so good an entry here your stop should go below your pivot and
remember your target should be a minimum of one to one a minimum of one to one we
do a trend trades and two to one with your counter trend trades in other words
if we looked at this trade here and my stop was under here I want a minimum of
a two to one return because remember when you're trading with the trend
that's your it's a higher probability trade now another little trick and
please write this down as well be very cautious in taking any more than three
trades in a trend the market moves in waves one two three it then rolls over
in actual fact if I move this here you can see actually shorted the market let
me just pull this down for you I actually shorted the market and I like
going to betrayed the reason I did that on this sorry trader I'm just going to
quickly get this here move this down and you can see here I shorter the market
ten contracts right here for fourteen six now on the NQ is at $700 gross down
here my target was the 89 EMA and you can see actually at punch straight
through quite often we bounce in you can see here a bounce store for 200 just
down here so if we go here the next trend line
break that we actually had and let me show you this here there too there was
here my stock would have been up here this is trading with the trend
remembering if your students you'll know we talked about the support and
resistance and if we look here we can see the 200s going sideways we've got
some nice divergence happening right here right now and let me show you
another way we could have drawn this trendline in okay you can see that
fractal break there now my problem with this one is it's we get in very very
late see I've drawn fractal points there and there but it's very very late look
how much how far we've moved now we're due for a pullback now for my students
that would have been a T-89 so for the counter trend traders that trade the
with me there RT 89s let's have a look you can see that there was a beautiful T
89 so you would have already been in that well and truly so on let's go to
that I'll put this video on hold traders wrap this one up that will go to video
to where I want to show some other action trading trend line breaks