This is. Holy sht, you guys did it.
You got episode 2, to 5,000 likes. Now I know, I know, it reached 5,000 likes
a couple weeks ago and you guys have been absolutely spamming me with comments to release
episode 3. Well, here it is.
Now, if there was ever a crucial video to watch. This is the one.
This is probably going to be the most important video out of the whole series because its
going to be going over the absolute core of how the markets are structured.
See what I did there? I said core, and I zoomed into an apple.
Ughhh moving on. Now by watching this one video its going to
drastically put you ahead of the competition. Because most traders skip this step entirely
or don t even know about it. Hell, Ive seen some quote on quote professional
traders even go against this rule. So I can not the stress this enough. You did a good
job by click this video. This is going to be the absolute foundation
of everything thing im going to teach you in future episodes.
Let s not waste any time, lets get straight into it.
Now as you guys already know, or I m assuming you know.
The market is made up of highs and lows. Kinda like a roller coaster.
The market is always fluctuating. Our job as a trader is identifying how the
market is currently fluctuating. Is it currently going up, down, or consolidating.
Now you may be thinking. TradingLab, are you an absolute idiot? Can
you not see? You can just look at the chart and tell if the market is moving up or down!
First off, I m gonna have to ask you to calm down and second that was pretty hateful.
This is actually the part where most traders make the mistake.
Looking back at a chart, its very easy to say, oh yeah price is uptrending here, then
started to consolidate, and then started downtrending. Easy, peasy.
Yes, a monkey with a computer can look back at a chart and tell you what it did. No offense
to monkeys. But if you ve ever traded live, you ve probably
realized it s a lot harder to tell if you are in an uptrend, downtrend, or consolidating
while live trading. and if you don t know what direction the market
is trending, well you re really just guessing at that point and you re bound to lose in
the long run. But what if I told you that I have a secret
formula and a step by step guide to easily identify what type of market you re in?
That would be cool right? Well, here it is.
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Thanks for sponsoring this video hankotrade. Lets get back to the video.
So, one of the first things you learn as a trader is highs and lows.
If the market is making higher highs like this. And lower highs, like this. The market
is trending up. If the market is making lower lows and lower
highs, like this. The market is trending downwards. Pretty simple right?
But when using this technique for trading, often times traders will make an absolutely
crucial mistake and that mistake is this. So say if the chart does something like this.
It makes an upwards movement. Now if we go by what we just learned, we ll see that the
chart is making higher highs and higher lows. So we can call this an uptrend, which it is.
So far so good. But then, something interesting happens
The chart will start moving downwards, making this low.
Like this. Now this exact point is where I see the masses
make the mistake. Not even joking, ive seen professional traders make this mistake.
A lot of traders when they see price make this low right here, they think the chart
is now in a reversal, because it made this low, and think its going to start heading
downwards. So often times, they will enter a short right
at this breaking point. This is a CRUCIAL mistake.
What if I told you this chart is still fundamentally bullish?
Ya see, sure price made this low right here. But this is NOT a valid low. Why?
Because price never broker the Higher low. Which is right here.
In order for price to turn bearish, price needs to break this point. Which it never
does. The chart is bullish until that break happens.
So here is usually where the shorters will enter their trade and end up run into trouble
and the chart will head upwards after this. Making them lose their trade.
Now you might be a little confused so lets really clear this up.
So lets go back to the beginning. A low is only validated, if price makes a
high. Okay, so in the example, we have this.
This low is only an official low, wants price crosses this point, which is the high.
So we can now call this an official low. Because, price broke the high.
If price just does this, and doesn t cross that high mark. It is NOT an official low.
So here we cross, we now have a valid higher low, and are now start to make higher highs.
So we now know this chart is an uptrend. And we can take bullish only trades.
It will only be considered a downtrend if price breaks this point.
It can do anything after this point, it can go up, down, sideways. ANYTHING after this
point, as long as it doesn t break this low, its an uptrend.
So continuing with our example. If price does something like this.
You may get confused. And think this is a low.
If you remember from the core idea of what I said earlier, we only consider it a low
if it breaks the prior high. So in order for this to be an official low,
it has to break this point. So say if it does break this point, our new
low point to break is moved from here, to here.
This is our new low. So now for price to be considered a downtrend.
It now has to break this point. And the process continues.
Let s do a bearish example. Price is making lower high and lower lows.
We only consider this point a high, if price breaks this low. Which it did.
So the price action is in a downtrend and the ONLY way for it to be considered a reversal
and to be considered an uptrend is if price breaks this point.
So if price does this. A lot of new traders will think this is a
break and the chart is now uptrending. But this high is NOT validated because we
didn t break this low. And we have not crossed the actual valid high
point yet, which is right here. Until we do, we are still in a downtrend.
So you should only be taking bearish trades. Once price breaks this point. We are now officially
in a uptrend. And you can start taking bullish trades only.
It might seem a little confusing at first, but if you re having trouble just rewind the
video a couple times to really get the idea down.
I promise once you understand this structure technique, it really becomes second nature
seeing it on charts. Its an extremely important part of trading
and if you master this, your really passing a lot of traders by knowing just knowing this
simple thing. You guys seem to be really liking this series,
so if this video gets a lot of love, ill release an episode 4.
And as you guys know, we are gonna get more and more advanced as the series moves forward.
Thanks for watching and ill see you guys next time.