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UNIT 4
EXECUTION
UNDERSTANDING TIMEFRAMES
READING EACH TIMEFRAME
Cycle through each timeframe from the HTF (Monthly -> 4H) to the LTF (1H - 15/5M) and try to understand what price is currently doing. The HTF will tell you where price will likely go in the far future, and the LTF will tell you what may need to happen in the short term before price is able to reach those HTF goals
They key activity here is to identify what cycle of the market both the HTF and LTF is currently in. We need to identify whether or not price has the liquidity it needs, in order to continue in its previous trajectory
TIMEFRAME CLARITY
Not every time frame will be clear in terms of direction. Occasionally there will be certain time frames which have ranges which overlap or are hard to read. This is very normal and because there is not much we can do about previous price action being unclear, all we can do is look for the timeframes that make the most sense to us
TIMEFRAMES OF INTEREST
When we are able to choose the 3 or 4 timeframes which are clear and complement each other in terms of levels, we can decide to use these timeframes for our trade idea
An example of timeframe alignment would be the following:
Daily - Bullish Breakout above
4H - Bullish Breakout above
30M - Bearish fakeout
These timeframes all align for buys but are at different cycles individually
MARKING KEY LEVELS
WHAT LEVELS TO USE
The longer you look at the charts, the more levels you will start to find. If you end up spending too long looking for levels, the levels you come up with are probably too specific and too tunnel visioned
Try to mark out 3 or 4 major levels on your HTF and on your LFT, maybe mark out 1 or 2 minor levels
MAJOR LEVELS
A major level is a level that is usually quite obvious. It is made up of supports and resistances that have been retested many times in past price action history. These levels typically are also respected by both HTF and LTF market structure
MINOR LEVELS
A major level is a level that is usually quite obvious. It is made up of supports and resistances that have been retested many times in past price action history. These levels typically are also respected by both HTF and LTF market structure
UNCLEAR LEVELS
When a level looks difficult to read and you find yourself wondering if it actually is a level that goes across, it is probably an unclear level. If you find yourself trying desparately to find the exact points that match the level and it takes you quite a while to find, try using alternate levels intead which are clearer and obvious
PLANNING FOR OPPORTUNITIES
TRADING PLAN
Once you have your levels, you can start creating a plan for price. In this case, lets assume that price has been pushing upwards in the past, and has started ranging
EXAMPLE TRADING PLAN
1. Wait for Liquidity grab
2. Wait for a breakout closure confirmation
3. If the breakout candle has a decent top wick, take the breakout, if not, wait for further confirmation
RANGE 2 BREAKOUT
After price establishes a range 2, price is now more confirmed to continue pushing upwards. This is following a liquidity grab, and range 2 breakout closure confirmation
Range 1
Range 2
BREAKOUT CONTINUATION
After Liquidity is grabbed, we want to look for the breakout closure to confirm our direction. However, this breakout candle has very little top wick, which means that we may need further confirmations
BREAKOUT
The first part of the plan is to see if price wants to grab liqiudity. Now that we see Liqiudity has been grabbed, we can follow our plan to step 2: waiting for a breakout continuation
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PATIENCE AND EXECUTION
ANYTHING CAN HAPPEN
As traders we must understand that we have no control over what the market and price wants to do and we cannot say for certain that price will be driving up or down
However, what we can do is analyze price action to get a better understanding of where price might go
Range 1
POSSIBILITY (A)
A potential scenario of price could be that it continues to push up. What we would expect in this case is for price to continue making higher highs and higher lows on its way up
POSSIBILITY (B)
However, price is equally likely to fakeout and come back into the range even if price has enough liquidity
By looking at the HTF, we can often stop ourselves from getting into positions that reverse on us
This is why it is crucial to be patient and adapt to price action. At any given moment, price can do whatever it wants. Never try to force action into our plan as this will reduce your winrate
TRAFFIC AND ADVANTAGE LEVELS
Historical Price Data
Current Price Data
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candle expectation
1. HISTORIC LIQUIDITY
There is no need to guess where price wants to grab its liquidity. The good thing about price is that it repeats its patterns. If we are able to identify which area price is currently in and identify where it grabbed liquidity during that period of time, we can better predict where price might grab liquidity this time
2. HISTORICAL BREAKOUT
After price grabs liquidity, it breaks out of the range. This gives us a better indication of price's direction, especially because price has grabbed liquidity previously
3. HISTORICAL RANGE FILL
Following the breakout we can see that price has filled the next range up. Because of this, we can use this level as our trade target
4. CURRENT STRUGGLE
With price action currently, we can see that it has been struggling to push up even though the direction and momentum is bullish. One of the main reasons price is not pushing is due to the lack of liquidity - so where can we find the liquidity required?
5. CURRENT LIQUIDITY
Because we are expecting price to grab liquidity at a similar price point as where price previously grabbed liquidity, we can use this point to our advantage in two ways:
1. Since we are expecing liquidity, we could take positions to get to this point
2. After grabbing liquidity, we have a better idea of where price may go and can look for positions following the liquidity grab
6. IMPERFECT PRICE
Price is never perfect, and because of this, we can't expect price to always tap into our level exactly. It is up to us if we decide to take positions after the liquidity grab - perfect or imperfect
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