1. Market structure

Market structure is the first and foremost thing that traders must know, to understand whether to sell, buy or stand out on any chart.

Market structure is simply the stages of the market, telling you what to do with each stage.

The market structure can be divided into four categories:
  • Accumulation phase
  • Growth stage
  • Distribution stage
  • Decline period
Accumulation phase: Similar to a price range moving sideways after a prolonged bear market:

At this time, the buyer will think that the market is too low, can not reduce any more, and jump in to buy, creating an increase in the market. However, sellers still exist who believe that the price will fall further and jump into selling, causing the market to have a balanced buying and selling force, leading to a period of sideways movement.

Growth phase:

is an uptrend with a sequence of higher highs-lows.

Distribution stage:

After the uptrend weakened, the price leveled off and started moving sideways. Similar to the accumulation phase, at this time, there are also buyers jumping in to buy, making the price stay at a high level, and the Seller jumps in to sell, preventing the price from rising further.

Decline stage:

Start Seller becomes stronger and creates a downtrend with lower highs and lower lows.

2. Value area

Areas of high value on the chart, where the high pressure to buy/sell makes the price more likely to reverse.

Possible values are:

The horizontal resistance supports:

Or it could be the moving average:

The ghost line 50 or ma 21 can be used as the area of value in trending markets. Entering an order when the price touches or is near the value area will increase the probability of winning the trade more.

3. An entry trigger signal

The entry trigger signal tells you exactly when it is time to place the order. This is like a green light allowing you to enter orders.

Here are two techniques to use:
  • Break the structure
  • Break fake
Structure Breakout: A previous top or bottom breakout, triggering a new trend or wave allows you to enter with low risk.

Step by step on the command:

  • Wait for the uptrend to approach a strong resistance zone on a higher timeframe (trading on H4 can see the higher frame as D1, similar to H4-H1)
  • Price made a lower high
  • Sell as soon as the previous bottom is broken
False Breakout: A breakout from a zone of resistance or support but immediately reverses in the opposite direction.

Step by step on the command:
  1. Wait for the big strong bullish candle to break the resistance zone, the bigger the bullish candle, the better
  2. Then wait for a big bearish candlestick to appear, which reverses the price and closes below the resistance
  3. Sell at the next candlestick opening price
Do the opposite of the purchase.

For example:

Remember that the bullish candlestick has to overcome resistance, but it is not enough to hit resistance.

6 Price Action Filters - 4: Stop Loss

At this point, our trade setup is comprised of the market structure, range of values ​​, and an entry trigger signal. But the problem is that even when we enter orders with such full filters, we can still lose money. It is therefore imperative to use stop losses.

The stop loss must be placed close enough to exit the position as soon as the market reverses, but it must also be far enough away to avoid normal volatility without having to reverse the market.

Rule: Stop loss 1 ATR from nearest support/resistance point.

How to do with the buy command:
  1. Identify the nearest support (previous bottom)
  2. Determine the current ATR value by adding the ATR indicator to the chart
  3. Stop loss is located 1ATR from the nearest support.

Do the opposite of a sell order. Placing a stop-loss like this avoids a shark hunt, which is also just enough to exit the position when the price reverses.

Option 2: place stop loss below ema 50:

6 Price Action Filters - 5: The market structure on large timeframes

The market structure on a large timeframe will tell you whether to keep your winning orders longer or take profits when the price has gone a bullish/bearish wave.

1, Trade against the trend of the big frame:

For example, you have a sell order on the H4 frame and are profitable, but on D1, the trend is up. You will: a) continue to hold a sell order hoping the price falls further, or b) exit a sell order at the nearest swing low on D1 in case the price reverses.

The choice is up to me, but for me, I choose option b for safety.

2, Trade trending with large frame:

Brothers have a buy order on H4 and profitable, and on D1 also tends to increase. You will: a) keep the order and trailing stop to get the biggest profit, b) exit the position at the nearest swing High

Obviously, a is the logical choice why we are trading on the trend with large frames.