Price Action - Bootcamp Ep.1

Okay. Hello and welcome to episode one

of my technical boot camp. This is going

to be a year-long series where I'm going

to break down absolutely everything you

need to know about technical analysis

and charts so that you can master that

realm of trading. There are going to be

12 classes per season spanning over

three seasons. We are beginning with

season 1 where we'll look at

foundational layers of all of the

different concepts that I trade. We're

going to be talking through everything

and we'll go deeper level and then go to

advanced approaches throughout season 2

and three. These classes will be dropped

weekly and this will be probably the

most valuable bit of trading education

you've seen if you follow along with

each of these episodes. It's not going

to be fun. It's not going to be hyped

up. There's no retention editing. But if

you're here to solidly learn, then this

is the place for you. Now, before we

begin, a simple disclaimer. All content

inside of the boot camp is for

educational purposes only. It does not

constitute financial advice. Trading is

risky. You know this. You should trade

safe. Study deeply before you risk real

money and trading simulations to master

the approaches that you learn. With that

said, let's get into today's class,

which is as episode one, a focus on

price action. I'm going to give you an

introduction to candlestick trading and

price action trading as a whole. I'm

going to explain to you why price action

beats any other form of analysis, and

I'm going to show you the best concepts

to use and which ones you should ignore.

So, with that said, let's jump over to

the charts and get to work. All right,

so first, what do we mean when we say

price action? Well, when we say price

action, we simply refer to raw price.

Okay, we are tracking the raw price of

the market. Meaning, we are looking at

the candlesticks, how they've printed,

the ups and downs in here, and all of

the information these give us. And we

are not using any indicators. We are not

going to use any external factors. We

focus purely on what the price is

telling us. Now, a lot of people opt to

use indicators. And I'm going to tell

you why I don't like this and why I

prefer to focus on raw market price.

With an indicator like a stoastic or

pretty much any other indicator, the

information these give you, while you

may think they're telling you important

information, is only telling you things

that the market price has already

printed. So all of this is lagging. It's

not giving us any insight into the

future. It is simply giving us

information based off of the candles

that have already been printed. So one,

we are basically looking at information

that is not telling us anything new. And

two, if we are going to focus on

realtime happenings to determine where

the market's likely to go next, in my

opinion, it makes a lot more sense to

look at the raw real market price, the

movements that price itself has made

rather than trying to overlay some

random lines, some lagging information,

and trying to use that to determine our

decisions. So indicators are out of the

question. Now, we may introduce a couple

throughout this series, but these are

things like uh session indicators, which

simply mark out different times of day

to show you the important times to be

trading at. This is not an indicator in

the sense that it's giving us any

information. It just simplifies and

automates a part of the process for us,

but we'll get into that a little bit

later. So, with that said, then price

action is all about reading the story of

the market, or at least price action in

the sense that I view and trade it. The

market is endlessly telling us a story.

Each of these candles that prints, and

we'll talk about candles in a bit more

depth in a moment, candle for now or one

of these blocks. Each one of these that

prints is giving us some information as

to whether buyers or sellers are in

control at that moment in time. Whether

buyers or sellers are in control is

crucially important because this tells

us whether the market will be going up

or going down. And if we want to make

money in this market, we need to know

what is likely to take place. So that we

can profit on the up moves by buying the

market and profit on the down moves by

selling into the market.

So when we're looking at raw price

action then there are a few concepts

that we want to number one focus on

number two avoid because in my opinion

there is good and there is bad price

action analysis and I want to preface

this entire series by saying this is to

some degree subjective. I'm sharing my

opinions and what's helped me and the

people that I've taught to find success.

Okay, you can disagree with what I say.

That is fine. You can trade concepts

different to what I trade. That is also

fine. But this is my view of the market

and that's what I'm going to be teaching

you here. So, as I've said, when I'm

doing my price action analysis, when I'm

reading the candlesticks, when I'm

reading the movements, the highs, the

lows that the market has printed, I am

trying to develop a story or a narrative

from the market. I'm reading into what

each of the candles and what the larger

candles in context are telling me about

buying and selling pressure and control

from buyers or sellers because this is

ultimately what helps us to determine

which way the market's going to go. So I

am not a fan of patterns. For example,

some people trade triangle patterns

where you draw some lines on a chart and

then you wait for a break and retest and

sell or buy accordingly. I don't like

patterns like this because again they

are not tied into narrative or story or

explaining anything about what price is

doing. We want to essentially detach

from the idea of pattern trading and

instead focus on narrative creation.

Okay. So, we are really looking to build

stories from the market using the

information that it's giving us. Now,

that pretty much eliminates immediately

chart patterns. They're out the question

and other things like support and

resistance and trend lines, which to a

degree are just patterns in their own

right. Okay. So, to show you what those

are real quick and why I avoid them, a

support or resistance level is simply a

line that we draw on the chart based on

areas the markets reacted from. So for

this example, you can see we had a tap

here, tap here and then we broke and we

tapped the market at these levels and

here again the idea with this support

and resistance is if the market is above

the support and resistance, we look to

buy retests of it. If the market is

below the support or resistance level,

we look to sell retests of it. This is

an okay way to trade if this is how you

want to trade. And this is going to come

under the label of price action trading.

But for me, it's again just another

pattern. This doesn't actually tell us

anything. If you think about what you've

done here, you haven't built any story.

You've drawn a line on a chart and now

you're saying, "If it taps above, I'll

buy. If it taps below, I'll sell." Now,

why does this not work so well in

reality? Why are there so so many people

trading with this concept and completely

failing to make it work? Well, pretty

much for the same reason that most

people trade most concepts and fail to

make them work. That is because it makes

no sense. They are not making sense of

what's happening in the market by

drawing these lines. They're basically

just setting up some arbitrary level

that will buy or sell with pretty much

no reason other than well because it

tapped imaginary line. If we think about

this, this line does not actually exist

in the market. It is literally something

you've drawn on. If we delete this line,

then there is no more support or

resistance. Sure, the market showed

reaction to this level a few times, but

really it isn't there anywhere outside

of your imagination. So again, you may

like support and resistance. If you do,

keep trading it. Stop watching my

videos. and I hope you reach success.

But if you've been struggling to win

with it, that is one of the reasons why

it gives us no information to the

broader story or the context of the

market. Therefore, I don't think it is a

good price action concept to trade. So,

we will not be trading support and

resistance. We will also not be trading

chart patterns. So, that's anything from

triangle patterns, wedges,

uh head and shoulders patterns, all of

these different things that you may have

learned previously. I do not see these

as good price action trading. Okay, they

come under the label price action

because you are just using raw price but

in my opinion they are pretty much

useless. Now the final one that we will

not be using in this right is going to

be trend lines. Okay, so a trend line is

much like a support or resistance level.

It is basically an ascending trend line

would look like this. We connect the

dots of multiple lows and then the idea

is if the market stays above this level

the trend is up. And for a descending

trend line, we would connect the dots of

multiple highs. And the idea would then

be if the market stays beneath this

level, then the market is trending down.

There's a problem with this that will

become very clear when we get into the

market structure education. And that is

that not only do these not actually show

the market structure, and they don't

actually tell you what the trend is,

they can also be a very big trap.

Because if you believe that a trend line

tells you the trend direction, you're

going to take a lot of trades against

the reality of the market. The truth is

that the market price, the raw price

that we look at inside of our price

action trading can be up while a trend

line is down. And you trusting the trend

line over the real market price is going

to have you in situations where you are

selling a market that is going to

continue to ascend against you. The same

can be true for when a trend line

breaks. A core way of trading these

trend lines is if the trend line breaks

and closes, you look to sell. But as you

can see in this example, it broke, it

closed, and then it just bought again.

From the market structure view that I

use, this is completely obvious because

the market continued making highs and

lows that lead us to believe the market

should keep going up. So trend lines

again, they are pattern-based. They are

not contextual. They do not help us

build narratives and they also fool us

more than support or resistance because

they give us false signals as to

determine the direction of a trend. So

for me, I focus on narrative creation.

The lessons you learn in this boot camp

will focus on narrative creation. We

will not be using patternbased analysis,

pattern-based price action concepts like

support and resistance, chart patterns,

and trend lines. We are learning to read

the story the market tells us, not stick

patterns on a chart and hope that it

works out. So, with that said, that's an

introduction to price action in regards

to the concept. I will not be trading in

this boot camp. If you trade these,

again, continue to do so if you think

they are good. But for me, these are no

good. These are not going to help us to

build our narratives. These are not

going to help us to read the story of

the market. Therefore, they are chopped

off my list. Now, before I talk about

the concepts I do trade, I want to dig

into these candlesticks and show you

what an individual candlestick actually

shows and how we read these to determine

information from the market because this

is a very important point leading into

pretty much everything else we do. So,

let's do that now. So, the charts that

we use for our price action trading are

called candlestick charts. Japanese

candlestick charts. What they are

showing is a series of individual

candles. And each candle, so each one of

these little gray or blue sticks for

you, they might be green or red, can be

any color you want, is showing price

movement within a specified time frame.

Now, here we're looking at the 1 hour

time frame, which therefore means each

of these candles is showing price

movement within 1 hour. Okay. Now, to

talk you through the anatomy of these

candles. Even if you think you

understand candles, you should watch

this because we're going to go deep into

why the candles are doing what they're

doing and how we read them, which is the

more important part. Each of the candles

looks like this. Okay, this is what we

would call a bullish candle, the blue

one, and the gray one is a bearish

candle. Now, a candle is made up of

basically two parts. We have a candle

body, and then we have candle wicks. The

body is the large solid colored part,

and the wicks are the little sticks that

come off either end. The candle body

shows confirmed price movement within a

given time frame. So if we liken these

to the 1 hour chart, each candle would

be 1 hour of price movement. A bullish

candle will have an open price lower

than the close price. This is the price

the market was at when the hour began.

And then it will have a close price,

which for a bullish example will be

higher than the open price. And this is

where price was sitting when the hour

closed. As soon as the hour closes,

another hour will begin and we will have

an open price on the next candle

immediately. If the market then moves

down, we get a close price which is

lower. And the candle body for that hour

would actually show us bearish price

action, confirmed bearish price action

within that given time frame. Okay, so

the candle body is simply how much the

market moved within a specified period

of time. For a 15-minute chart, that's

how much the market moved in 15 minutes.

For a 4our chart, it's how much it moved

in four hours. It's nice and simple.

Now, the wick, then what does this show?

Well, wicks show us rejected price

action within a given time frame. What

this means is this is a price point the

market pushed to at some point within

that specified time period. In this

case, an hourly, so within 1 hour, but

did not close at. So, simply the wick up

here just shows us that the market at

one point had a candle body that looked

like this. The market was pushing

higher, but then before the hour closed,

it ended up coming back down. which is

why we say the price up here was

rejected cuz the market wasn't able to

close at those levels. It also means at

some point the market actually came down

here. So the lower wick indicates to us

that this market was for some period of

time actually bearish within this hour.

Okay, we opened here and we traded lower

than the open price, but we pushed all

the way up, closed up here for the end

of the hour. So these bodies and these

wicks give us a lot of information that

we can use to our advantage and they're

actually pretty much staple in helping

us build our narratives because what a

candlestick shows is basically buyer

psychology and buyer action and seller

action within a specified time period.

All right? And we get a lot of

information from these bodies and wicks.

So we're going to talk about this in

considerable depth soon in a class on

momentum. But for now we will discuss

the general basics of what a candlestick

can give us in terms of information. So,

if we focus in on the bearish candle,

then what we're going to do is consider

the market opened here at the beginning

of the hour and then it's moved all the

way down to this level and closed here

at the end of the hour. The additional

attempt to go higher and the additional

attempt to go lower can provide us some

information in a candle like this where

it's exceptionally bearish moving from

here down to here within this specified

time period. We wouldn't worry too much

about the lower wick because it's not

too big and we definitely have a notable

amount of seller control within this

time period. The way we want to think

about candlesticks is a battle between

buyers and sellers. A game of tugofwar

and we can see who's in control when the

candle closes by determining how large

and strong the candle bodies are versus

the wicks. So for an example like this,

we would be interested in basically

seeing that the wick at the top was

rejected showing buyers were pushed out.

they were rejected from this market.

They weren't able to push this market

higher. Okay. Then the close all the way

down here indicates that sellers were

clearly in control over the buyers.

There's more selling than buying taking

place. Therefore, the market has managed

to move lower because supply is

increasing, demand is decreasing. The

market then gets down to this level and

although we do have some rejected lower

prices, the candle body is so large even

closing here that we would indicate this

is definitely a bearish candle. Okay. So

from this we would generally mostly be

interested in continuing to look in the

downward direction for future trades. We

would expect this market is one that is

likely to move lower. Now of course

bigger picture context matters as you

will learn throughout this boot camp. We

don't really base trades just off one

individual candle but they can give us

significant information that we use

inside of a larger context. Okay. So to

explain how it can give us different

information, let's take a look at an

example. If we just pull this over here,

give it its own space. Let's take a look

at an example where this would give us

more of a deeper insight essentially

because this is quite a normal bearish

candle. It's just going to tell us,

okay, the market's selling. It's

probably going to continue selling. But

if we were to have a candle like this,

for example, which has opened at this

price level, it has pushed all the way

down here, but then it has closed at

this price level. We could say, well,

this is a bearish candle because the

market closed bearish. But we have to

think about what this rejected price is

telling us. If we look at this as we've

just said as a battle between buyers and

sellers, we see that sellers attempted

to take the market all the way down

here. They came in with force. However,

at some point before the hour ended,

buyers have pushed the market all the

way back up towards the open price. So

this candle actually tells us although

it's a bearish candle in reality, it

tells us something very interesting and

that is that buyers have kicked in at

mass force somewhere down here and

actually reverse pretty much all of the

price action that sellers achieved

throughout this given hour. Well, this

could actually be a reversal indication.

This could give us some insight,

although the candle closed bearish, that

maybe the next candle, or at least very

soon, could actually start leading us to

the upside. Because we've obviously seen

every time we get down here, or at least

up to this point, buyers are kicking in

in such force that they're basically

taking over every bit of movement that

sellers achieved in that time span. This

could basically indicate the turning

point of the market where we may lead

into higher prices and stop moving in a

bearish fashion. So that's just a

example as to how we can pull

information from candlesticks instead of

just looking at static patterns on these

charts. You can read into pretty much

exactly what's going down by just

reading the candles in this light. So as

I've said, we will get deeper into

candlestick anatomy and how this

momentum works on a broader scale when

we get into the momentum class. But for

now, I'm going to leave it at that. You

now understand what candlesticks are.

And hopefully this explanation has

showed you how I start to do this in

context. you understand I'm trying to

read stories from the market and this is

how we do it from an individual candle

basis. So now let's talk about the

concepts that I do like and we'll be

teaching you throughout this boot camp.

Okay. So when it comes to the price

action trading that I do, we've already

discussed that I don't like to trade

with the basic retail concepts should we

call them which are essentially like

support and resistance and trend lines

and things like that. I prefer to

operate with something I call logic

based concepts. And that's simply

because these make the most logical

sense to me and they help to build the

story in the best way. To list these, we

have market structure, we have supply

and demand. Now, this one is a really

big one. When we get into the supply and

demand class, that will change the game

as to how you see the markets. We have

market efficiency, we have momentum, and

we have liquidity. Now, each of these

concepts doesn't matter if you don't

understand them yet. And if you believe

you do, you're probably going to learn

more about them in this boot camp than

you already know. Now, each of these

concepts serves a role, serves a purpose

in helping us to determine our overall

story and narrative for the market,

which is what we use to then take good

trades. So, structure refers to the

direction the market is trading in. And

we use high and low structure. So, we

simply mark the lows and the highs in

the market to determine whether this is

going up or if it's going down. And this

is a very simplistic, but there's

there's a lot to it. does get pretty

elaborate way for us to actually analyze

the direction of the market. We're going

to get into this, I believe, in the next

class. Supply and demand refers to areas

where notable buying and selling is

entering the market. We use supply and

demand to determine where to get into

trades and to determine high probability

areas to number one target and number

two execute positions. So, a demand zone

would look like this. Of course, this is

very simplistic right now and I don't

expect you to understand it. But so far

from this market, we would identify the

high low structure and realize this

market is heading to the upside and we

would use supply and demand to actually

find the execution point which would be

the zone just here. So we'd be looking

at buying from this level to take this

market higher as it has. The next

concept is market efficiency. This is

basically the theory that markets like

to come back and fill open price ranges

generally to fill into new orders that

are still waiting to be retested. Market

efficiency refers to something you may

know as imbalances or fair value gaps is

another name that someone's made for

them, but they're traded in a different

way as fair value gaps. So market

efficiency or an inefficiency in the

market, we'll keep it at the moment. Is

simply an open price range between a

demand zone or supply zone and where

price is right now that hasn't been

filled yet. So when we saw this rally

from this area of demand that I marked,

this concept basically tells us we will

not buy the market anywhere above this

demand. We must wait for the imbalance

or inefficiency, which by the way is

this price area here to be filled before

we can execute any trades. Then when it

comes to momentum, we simply look at the

strength and size and speed of the

candles on their own and also from a

multi-candle momentum perspective to see

where momentum is strong, where it's

slowing down and get an idea as to

whether we believe that buyers are still

uh you know the right way to be going in

this market. So to show you what I mean

there, this movement up very fast, very

quick, the pullback down slower, weaker,

and then as we hit this, we start to get

these strong bullish candles again.

Okay, so by identifying speed and size

of candles, we determine whether we want

to be moving with the market. And then

liquidity refers to areas in the market

where orders will be situated. This one

is rather elaborate. So I'm going to get

into this when we get there, but those

are the concepts that I use. And each

one of them, as I've said, serves a

purpose in helping us to determine which

way the market is likely to go by

helping us build narratives and stories

around them as opposed to just building,

you know, patterns on static charts and

praying that something fits. These are

the concepts that we're going to be

digging deep into throughout this boot

camp. And through season 1, every single

one of these will be broken down for

you, and you'll understand pretty much

everything you would need to know about

these before we get into the deeper

level stuff in seasons 2 and three. This

boot camp is going to teach you these

concepts most likely better than any

paid program that you've enrolled in

when it comes to the technical elements

of trading. I'm not holding anything

back. I'm going to give you everything

you need to know about all of these

approaches. So, with that said, that is

episode one. This was more of an

introductory class teaching you about

the way that I trade from a simplified

view, teaching you about price action

and what we focus on here and how I view

the market. And next episode we'll be

getting into the core concept behind

understanding markets and that is market

structure. So with that said, that's all

for this class. I'll see you in the next

one.