Have you ever felt like the market is a puzzle designed to confuse others? Well, you’re not alone. Here’s the inside scoop that could have saved you hours of watching get-rich-quick trading videos.
1. Three Market Movements
The market is not as unpredictable as it seems. It does one of three things:
- Breakouts and trends: The price moves in one direction with momentum.
- Breakout and then reversal: A false breakout where the price turns quickly.
- Ranges: Move between specified high and low points.
Here's a pro tip: If the price is swinging in the middle of a known range, back off. The risk is high, the odds of success are low.
2. Daily price quadrant
Each trading day provides you with four key pieces of data:
- High of the day
- Low of the day
- Opening price
- Closing price
Take note of these numbers daily. They are not just numbers; they are clues. They will show you whether the market is in an uptrend or playing ping pong within yesterday's range.
3. The fractal nature of markets
Think of the market as a set of Russian dolls. What you see on a large scale (like the daily chart) is reflected on smaller scales (like the 5-minute chart). If you suddenly see a downtrend after what appeared to be an uptrend on the 5-minute chart, check the 15-minute chart. You may find that you were riding a small wave of a much larger wave going in the opposite direction.
Conclusion:
Cut through the noise. Forget about complex indicators for a moment. Watch how candles dance, and understand the market structure day by day, week by week.
The market is a beast designed to confuse traders, but it reveals the truth every day to those who are willing to look. Learn to read price action. Master market structure. Combine this with solid risk management, and suddenly, any strategy you apply becomes dramatically more effective.
