Day 1 - Trading plan

Step 1

Method: choose the trading method of Price Action:

  • Follow the trend
  • Going against the trend
  • Trading within the range
  • Trading breakout/pattern

Risk management: determine total capital

Emotions: Prepare a transaction log

Step 2

Method: choose the tool to use:

  • Average line
  • Volume
  • Trend line

Risk management: the maximum acceptable amount of risk per trade (eg 2%)

Emotions: Thinking about what to do when a trade loses.

Step 3

  • Method: Select time frame: D1 is the most optimal, H4 or H1 can be selected
  • Risk management: No
  • Emotions: start to notice emotions when entering & exiting orders

Step 4
  • Method: Choose a market to trade: crypto, stock, commodity
  • Risk Management: Determine what to do with profit: withdraw or keep in account
  • Emotions: avoid emotional entry
Step 5
  • Method: identify entry and stop loss & take profit
  • Risk management: calculate the order volume
  • Emotions: forget the trade after entering
Day 2 - Understand the market structure

Market structure

Market structure is what helps us to identify a trend accurately and objectively. Without using an indicator, the market structure will immediately answer the question: "should buy or sell" in just a few seconds looking at the chart.

The market structure is the set of low peaks of the price waves forming a meaningful trend.

An uptrend is defined when the price forms a higher high than the previous high and a higher low than the previous low.

A downtrend is defined when the price forms a lower high and a lower low than the previous low.

Just missing one of the two above conditions, we consider the market has no trend and cannot trade.

A trading strategy for a trending market is different from a sideways or trending market. When looking at the chart, the first thing you need to do is identify immediately that the market is trending? If yes, what?

If the chart you are looking at does not clearly show the market structure, minimize it to see more bars.

For example, analyze the following chart market structure:

Since the first points, A and B are completed, we determine that this chart has an uptrend, because B is a high higher than the previous high, and A is a higher low than the previous low. The price zone between the AB pairs is the entry area for traders who follow a pullback strategy (enter orders when the price returns). In a healthy trend, the price will create waves to return to the AB area, the moment the price surpasses the peak B, we confirm that the uptrend is continuing.

From point A1, the price surpasses peak B to create peak B1, so from this point, A1B1 will determine the continuing trend of the market. The price continuously moves sideways in this area. If it goes over B1, we confirm the continuation trend, if it goes down to A1, we confirm the termination trend.

Remember that an uptrend end does not mean reversal. The reversal occurs only when the market forms a pair of lower highs and lower lows, confirming that a downtrend exists.

There will be cases where a downtrend has formed, but the previous uptrend has not ended. Then still not allowed under the SELL strategy.