welcome to this forex trading tutorial actually this lesson I'm
showing you on Forex but that's actually applies equally to stocks in commodities
futures e minis whatever anything you can chart so this one is about trend and
some of the distinctions that people don't understand about trend for example
one of them is that people are often taught I'm just going to bring in this
here this little drawing tool they'll say okay try and just defined as higher
highs and higher lows that is incorrect that is not right trend is not defined
by higher highs and higher lows or conversely of course by lower highs
lower lows that is not a trend why is that not a trend very simple dictionary
important trend is defined in the dictionary as the extended general
direction so therefore it means a long term move so whatever you decide to use
for measuring trend whatever tool you decide to use it has to measure the long
term move otherwise it's not measuring trend now here is point number two that
has a downside the fact that trend is always a long-term move that then
therefore makes it always a lagging indicator because before you can
determine whether you have a trend or not you need a lot of data and once you
have a lot of data and it plots it and it's confirmed will guess what yeah you
got a trend but now it's always a lagging indication and so trading trend
alone is a very very dangerous thing to do in fact a lot of professional trend
traders and I think the people actually make money doing it often have a worse
than 50/50 win-loss ratio not to make money because they make up for it with
an excellent reward to risk ratio because they're really good to keep them
in lots of small and letting their winners run and that's great I respect
them but that snot just doesn't suit my style that doesn't work my brain cells
haven't like that so I've got to have for me to be comfortable trading I have
to have a better than 5050 win last race so therefore trend yes it is one of the
things I look at but acknowledging a toys a lagging indicator I have to use
other things too so I use leading indicators with that and by the way if
you're interested in that I do have a webinar that I present periodically on
my cycle indicator and that is a at times leading indicator nothing lead to
the market all the time so there are no crystal balls in the market but we're
not predicting the future really but mathematically there are times when you
can determine a short-term move in the market before it shows up on price
action if you like that just send me an email be really calm and I will be happy
to email you if the next time we're doing the cycle indicator easily don't
want or twice a week depending on when you watch this video obviously ok so
anyway so that's number one in number two now number three with trend is a
little tricky we're going to pick up on the first misconception we're in this
isn't just just about long-term direction now I mean we're going to talk
about short-term direction so we have here lower low right that's a lower low
from there to there and so a lot of people would say okay well even if it's
not a long-term trend at least it's a a downward indication because you have a
lower low and therefore that is a bearish pattern again wrong wrong wrong
sometimes I feel like the technical analysis Heretic okay well that is that
is a bullish pattern actually right there that is a short-term bullish
pattern and the reason is because with training the devil's often in the
details one of the things I see with a lot of beginning traders is of they
learn the basics and that's great I mean you got to start with that don't learn
the basic meta patterns and so forth that's cool you're not going to make any
money with that but you start there where you make money is learning the
details the devil in the details and for some of you you've already probably
picked up on this so what we're looking at here for
example is when we bring up my horizontal line and there's your low
rating and so yes we make a lower low here don't we but this bar here and some
of you will recognize this candlestick pattern that are there am I gonna get
all fancy with you I'm just going to tell you what it actually means
mathematically and also from a market profile perspective which is based on
auction theory which I agree with 100% by the way we've the markets operate as
an auction and so this candlestick here means that yes the market during this
period of time and this is a daily chart so during this day the market did make a
lower low but it opened and closed up here so the overall sentiment that day
after all was said and done during that day the market participants said you
know what we tried these prices down here we couldn't get enough sellers not
enough selling interest and so for this day we've actually decided that no the
market is being valued the sentiment of the masses treating the market we are
valuing the market higher than this low all right we're about equal to it
actually because the the closes there it opened it there and it closed there but
here is the point so a couple pips above or below doesn't make that much
difference here is the real part of the bar that makes the difference is this
long wick or long shadow if you prefer that terminology that is called a
rejection of value in market profile terms again meaning that this whole
price range from there to there the Euro already drew was rejected by the market
rejection of value so what the heck let's draw one more rectangular square
so do we tried to get down there we did down there but by the end of the day the
market decided nope we can't get enough sellers in there for that is actually a
bullish pattern now just short term bullish not long term bullish by the way
it's a short term bullish pattern even though it's a lower low so again once I
explain this some of you a bit more advanced like lef course but definitely
for those who are beginners understand higher highest lower lows is not enough
to look at we have to understand the bars and what's going in within each bar
the bar pattern and so forth and so this actually ends up being a beloved pattern
as you can see obviously it does move up a bit so this is why I like to use
candlestick patterns well candlestick bars and to see these
candlestick patterns so again you'll see the same thing over here by the way
let's do one more real quick one just because again it's very um let's see you
know you actually guys can't see that let me bring over my chart a little bit
okay so there you go now you can see it so here we see it happening again okay
there's this low so basically support resistance in one of my previous videos
I explained out they are not lines even though we often draw them as lines
they're really zones and so these five bars here one two three four five bars
all touched this lower support level and therefore I call that the flypaper
phenomena where the bar is never broke below the level so even though they made
lower lows this support level here still held it's still considered that it held
because we couldn't break below it convincingly there's going to be a bit
of noise or randomness in a auction place so it's just a market like this
that has so many millions and millions of people trading it same thing happens
over here so we test it again test that scene we're really testing the same
support level and now again we have 1 2 3 4 5 6 bars that all touch that level
and then again let me actually take that off just to make this extra last point
here we have this long wick that comes down
here and so even though technically yep we do close just a little bit below the
low of this bar doesn't really matter that's within the margin of error so to
say or now that's not even right we're just randomness of the market chaos how
the market and the market again rejected the price levels below here and so then
from there it goes up I believe you can see that on the screen so same dynamic
this is why it's so important to understand these just very basic even
it's that very basic candlestick pattern can help you a lot and always watch for
that and understand that that is what's really meaningful not a higher high or a
higher low so if you like this video please understand that sure it's free
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you