Market Panic and Reactions in Trading

answer you're going to vote on which one do you think that the thing that causes panic in markets is people panicking or do you think that it is people um rethinking meaning that they find something better or do you think that markets panic when everyone doesn't know where to to go okay so those are the three options it's you're panicking because others are panicking you're panicking because of the um situation you're in or you're panicking cuz there's nothing to do think of it like there's no charts to trade there's no setups everything is like whatever it's confusing where everyone doesn't know there to go combo meal I'll take a number three uncertainty and losing money do you guys think people make decisions because other people are panicking like if one person panics do you think other people also panic because that person is panicking have you guys ever seen that Meme where some guy said it's snowing and then some guy said snow yeah he's like yeah snow cell cell cell and then it started going into cell from snow crowd effect the first one once the floods open then open so but it can't like what about conviction if that was true if people panicked because other people panicked then every pullback would always be bigger than what it should be so that can't technically be true and what I mean is if somebody like assume like somebody got something like Celsius right and if people sell it 10% and then the Market's open and everybody panics then it should go another 10% but that's not always the case the the candle size is not always the reason to why everybody panics there's something much more important herd mentality that's also not true as well because like what you guys are doing is you're trying to you're trying to judge retail as the reason for the market movements but don't think about retail screw these guys they're not you know we've always said that there's 20% of the daily volume 80% of the volume is institutional So 20% is retail driven but it can't it can't really be the retail herd mentality and it's not that everybody's crowded and piled into one spot because everybody was crowded in Nvidia since 400 and they continued higher and higher and higher and higher so you can't make that argument that's not true just because something is crowded does not mean that it has to crash right the idea that we gave with crowded mentalities is think of it like a uh a printer right think of it like there's a u a little store here that prints money and there's only five printers that print $1 uh you know maybe per second and these five printers anybody can have access to the first one who shows up before anybody well he's gonna make $5 a second but then when the second guy goes well he's probably going to try to maintain three and then let the other guy take two and then the third guy comes and they have to split it and then the fourth guy and the fifth guy so the more people crowd into something what ends up happening is not that there's Uh something's going to crash all it means is that there's not much money to be made right it's because everybody's occupying a printer and the printer can only print so much there's a limit the limit of the printers is very small small unless somebody can somehow magically discover more printers which is how like bubbles and uh these type of Manas in the market happen is people start to build smaller printers on the side but everybody knows that these printers are fake they're not even printing fake money but that's how crowd you know tends to kind of you know get themsel effed up in a position it's not that there's no money it just there's not enough money to be made because everybody is there but that's not necessarily a reason for a market to crash so what else what what could be causing all of this cuz if you understand it you'll know when to pull the trigger on things and I'm talking about like more broadly not you know F minute chart uh the meme snowflake drop exactly where he was like snow is falling and then some guy was like sell snow snow is falling he's like damn mm playing Battleship with Millions it's not the market maker it it's the Big B it's the big guys right it's not the dealer and it's not the retail Trader it's the institutions it's the ones that are managing money for people so it's billion dooll hedge funds versus billion dooll asset allocators the actual answer okay and I want you guys to remember there's three reasons for a selloff in any Market in any any any Market first of all you have to consider Who's involved right the people involved in certain things will make different decisions so the most common excuse and it's not really an excuse but it's something that we never hear of unless you're like heavily you know involved in the management um side of the markets and that is profits right people want to ring the register so they get paid remember if you're a guy who works for a billion dollar hedge fund or and you're a money manager you're you know an investment officer whatever you are you got to ring the register so you get paid doesn't matter your your client will never judge you based off how much something went up he will judge you based off if you are in it or not so the client doesn't give a [ __ ] whether you got him at 100 or 150 he just wants to be in whatever is going up or he wants to be short in whatever is going down but believe it or not one of the most underlooked things um in trading is literally profits people do not understand that when the market goes up and people are starting to get more than the average average under the the management firm rules they have to ring the register so what um what I'm trying to tell you is when you go into the spy and people tell you that the Spy is up you know if you take it from here to here the Spy is up 15% look at this almost 20% in half of the year and then you're looking at it and you're like well what the hell that's not normal and the normal is usually 7 to 8% so what do you think people do well they're forced to take profits on every above average move so you can always make a bet that okay if the S&P outperforms in 8% within a one-third fold meaning that it basically does it in less than four months or five months any time the the S&P outperforms by at least 10% in less than four months there's always going to be a pullback in that process are you sharing screen I am sharing screen can you not see it my screen is shared right okay so just Pat Pat Uh yeah you can click on the screen but all it means is that if you guys actually take a measurement and you realize well if the markets actually go up in the beginning and you have to think about it from time to time so what are the times you're talking about fiscal quarters and you're also talk by year to year so if you're doing this you start on a 2024 you start on the end of the third quarter and the fourth quarter which is going to basically be September June March and January right those are the quarters and you do that and you realize that anytime the S&P does more than 10% there's always some pullback and you go ahead and you measure it from here to here from the middle of the year or whatever anytime you get a little bit more than 10% uh if we assume you know the mid-march period which is right around here where people probably allocated this is March and you can see that the out performance another 10% you get a pullback you go ahead and you measure it from January in the beginning of the year you get that pullback you measure it from uh this case which is September in in this case you actually had a pullback during it so there was no actual app performance but it also works in Reverse as well anytime the market does that in the opposite direction you could also make the claim that if the market underperforms by that similar 7 to 8% then there's always going to be a buyer so if you keep this rule in your head that every quarter just measure from the quarter to end of the quarter in this case like I said everybody should know him it's January March June September those are the quarters if the S&P itself does more than 7 to 8% which is the the average right uh the annual average at least whether it's plus or minus you're always going to get a 50% retracement of it now doesn't guarantee 50% but in majority of cases you're usually going to take back at least 5% of that uh move so 5% of not this like the the gain but it means you're going to pull back at least 5% somewhere around there sometimes four sometimes it depends on how much it's up by but it doesn't matter how much the pullback is all you need to know is that there's a pullback and that's usually what causes majority of pullbacks in the markets it's not Camala Harris it's not the crap with the cuts has nothing to do with this it's people want to take profits people want to take money home these guys get absolutely nothing on this entire ra um you know rally that they basically bought in early on they only get money when they ring the register and take it home remember that one scene from The Wolf of Wall Street where he was like it's money on paper they think they're rich but they're really not because you're not really rich until you take the money out and do something with it the same thing with the markets the the guy who put money with you he doesn't care that he's up 200% on Nvidia he cares about did you ring the register because if you have to pay taxes that means you made money so it doesn't matter if if it's up and up and up everybody knows eventually things top out right everybody knows that eventually things top out and reverse and if you're a manager and you are not R ringing the register for your client you are [ __ ] everybody's going to hate you because it don't matter if you bought it here and then watched it go up all the way there and then you watched it go down halfway they don't care okay so um that's that um somebody said can you repeat it I saw you just deleted it anytime the markets if you go ahead and just do this right here I'm going to do this for you guys I want you guys to choose a year somebody choose a year for me choose any Year from 2010 all the way to 2020 and I'll show you how to do it try to vote on the year you guys want like the year you guys want 2012 or 2018 [Music] 2018 all right so this is 2018 right here what you do is you take a line you put it in the beginning of 2018 you put it in mid-march usually somewhere near the end of March the mid- March also works you put it in mid June you put it in midt okay those are the four lines you draw the these are the quarters now there's different quarters for certain firms depending on uh the way they like to allocate so some of them actually have their quarters and their fiscal quarter actually ending somewhere in the middle of these but on average this is usually what majority of people follow so what you do is you say okay well you got this pump you got 8% and literally how much one month you got a dump now of course the dump magnitude is a different story is this usually what happens no you're not supposed to take all of it back right that's not the idea but if this ever happens you're always going to get a pullback if it goes above 7 to 8% it's always going to get a pullback you take it from here you get a drop all the way almost 7% you get a pull back cuz it happened in such a rapid time I mean you're not even measuring from the Top If You measured it from the top this was actually 10% but if you measure it from the start of the the actual quarter you can see that you will more than likely get a bottom there it doesn't necessarily mean that that's the permanent bottom you could take it out the next quarter you could but at the very least what I would say is usually if you drop by a certain amount or pump by a c amount you'll usually take back 40% without the exponential rule to it meaning that you guys know that um you know if you go up 5% it's not the same as going down down 5% right so if you go up from uh you know if you go up from 100 all the way to 105 losing 5% of 105 is not the same as gaining 5% from there there's a little bit of a miscalculation but what I would usually do is just say that there's a pullback and then you trade it accordingly based off the situation but at least you'll get a drop and then you take it from the beginning of the quarter okay you get a drop here markets are topping out let's say from this candle down you got around 4% and not too much right if it was 7% it would be a good buy and then you go ahead and you say okay well from the beginning of the quarter did this go up a lot how much did we go up from the beginning of the quarter especially considering that there was no crash well the markets only went up four 5% up so there's really no need of an actual crash in this situation because well nobody really needs to ring the register and then you do the same thing for the fourth quarter and you do it for down and see the markets went down in this case almost 20% but the first 10% also caught a rebound as well so it went from like literally here to 8% bounce so it wiped out almost half of the move but that's what you're trading and that's the quarter to quarter situation so now you go ahead and you ask yourself what about the year-to date situation that also applies in the same way you go ahead and you do that 8% except in this case you're going to find that the trade trades take a little bit longer to play out but if you do it from here this's the end you get a 7% rally you get a pullback and then anytime you underperform in this situation you can see 7% is going to be down around here if the markets ever got down to this level in 2018 that would also be a major level for majority of people now again you could be wrong and it goes 8% it could be wrong it goes 9% but that's not the the point the point is that you get an idea where majority people are going to be forced to ring the register out and ring the register in and then you do that across so in this case the highs of the year were here and the lows of the year were set early on in the year so there wasn't much of a of a say a system for you to follow throughout the year but majority of the times if it ends up outperforming by a big chunk you can always bet that you're probably going to catch some sort of dump and in this case you basically got to see something now if you go ahead and uh let's say a year where things worked out really well uh do they always you know and ring the register again it just means cutting positions it doesn't mean crash so if I go ahead from 2016 this is after a very ugly year you just had a crash happened things went really bad if you take it from here to the top you can see that the first um little 6% right here you got a pull back and then you went up this is where it gets this kind of like um post to the let's say relationship to uh the year but if I go ahead and actually uh let me measure this so this is the beginning of the year what the hell where is it January was right here oh wow this is the beginning of the year I guess this this was the first actual trading day so this is the first actual trading day if this is the first actual trading day you put it 7 to 8% let's do seven and a half and then you take another one and you do another 7% or you can do a 20% to give you a little bit of a bigger idea but these would be automatically two zones that you would draw on the year right it'll be somewhere around here and somewhere around here and now the question is you can go and do quarter by quarter so if I do quarter by quarter uh it will be somewhere around mid-march which is right here and then somewhere around mid June which is right around here but you can see that when the market got to somewhere a little bit too extended I guess if you count from bottom to top it's 8% right here right that's probably could be considered that but the whole idea is that if the markets ran this much they're probably going to catch some sort of bid um on the downside and the upside if you flip it to the downside from there you also got a 10% or 9% here but again since it it was a gap down day it's kind of just you know depends on when they bought let's assume they're perfect and they're goated this is 7% down and this is 7% up so 7 to eight anytime you get to any of these zones that's usually a good time in the year to date to get some allocation for majority of investors now usually the rule that we made if you guys remember in 2021 the rule that we said is every two years there's a 20% pullback right and then every year there's usually two 5% pullbacks so what it basically means is unless last year you had a very small correction then you can expect that this year can be a bigger one but if you just had a 20% correction last year don't expect another 20% correction this year and if you follow that you'll usually have a very clear idea of where the markets are probably going to go so in a very similar sense if you go uh from this situation and you push it up 7% 7% is going to be right around here 7 to 8 this one's almost 9% the markets went up up they had a little bit of a hiccup here but you didn't get any big pullback in this situation but then you go to the March situation right here you didn't get any big push in here now did you get any major correction you got 4% so that's cool but there wasn't any major push from this situation now you did make a lot of money in this process but if you measure it from the beginning of January you're not actually up that much now if you go and you measure uh September this is let's say mid-september you can see in this situation this is where you basically took a position somewhere here did the markets drop by a lot no you had 2.4% what about up up up up almost 7% you had a from here to here top to bottom you had a 2.5 c% correction wasn't too crazy but the move was isn't too crazy either especially considering you just had a sell off and then you go ahead and do in 2017 there's the beginning of the year right here you get a 7% and you got a pullback so if you go ahead and just draw these it's not about oh it's going to crash and I have to short or anything but at the very least you have some sort of expectations right that you draw some parameter to have an idea and this is what majority of the time causes 90% of the these pullbacks absent a massive Black Swan event that nobody ever knows so in this case what I would do if you guys go ahead and actually measure this from let's say the middle of June which is the actual little bit of a situation right here if the markets ever crashed worst case scenario they would go to like 500 right that's worst case but if we measure it from top to bottom you're basically expecting around 5 to 8% which would literally give you the 8% that we're aiming for which is 522 and you kind of get an idea with that but that's that's kind of one of the main reasons to why markets pull back so uh hopefully that helps now the other two reasons are always random sometimes it's the economic cycle and people just want to find excuses to rotate and the only and remember to uh to be able to move money around somebody has to freak out because freaking out causes volatility volatility creates liquidity liquidity allows for better pricing and people don't really understand what that means until they realize that trading with billions of dollars is hard to trade with like you guys buy 10 contracts on options think of like um what's a good example how many of you traded uh Kimberly Clark Yesterday anybody trade that one if you traded that one how hard was it to actually get in and out of a trade it's pretty damn tough why was it so tough well because the damn spreads were wide okay think about that happening to every billionaire in the market on the majority of stocks they can't just Place A2 billion order they have to make sure somebody's there to actually sell it to them so it takes time but what you do is you create panic panic forces people to make decisions and people who are trying to make you know decisions in majority of cases they're willing to underpay overpay or whatever and then the more important part is it brings people and the more people in the market that are involved in actively making decisions well the more liquidity you provide the better feels you give for other people so one of the the most important things about a market crash is everybody needs to be involved there's a reason why markets crash when everybody's in them they can't crash if nobody's in them and if it was just literally the big guys in them and nobody else is like foming into something it doesn't make sense for a crash to happen cuz who the hell is going to buy it and then more importantly you could overblow a movement I mean if you go ahead and sell billions of dollars of spy and there's no liquidity you could literally cause a flash crash of 20% and then the reality is is the the fair value is somewhere here but because you dumped so much in such a short amount of time you caused a strain on the dealer the dealer is not able to provide all that liquidity as fast as he can because there's so much other obligations he has to deal with okay so um hopefully that helps uh but I thought I might as well just share that for a future reference and if you can make a PDF of it or write down some notes on it hey uh that'll be cool and if you can share it in the server as well uh that would also be appreciated um as well but as far as uh today's lesson I saw some guy was asking a question question um and the guy told him to ask me so um let me see is he even on the call that mofo is not on the call so screw yeah he's not here okay we're good and then the other guy who also had a question he said okay that that thing is going to take a while to explain we have to do the lesson all right um so let me go ahead and take a sip of water and then uh we'll start with our stuff so today is going to be drawing out a path and I want to go ahead and ask a question to everybody um and the question is what do you think um is the most important step to uh do before drawing a path what do you think you have to know before you can draw a path and by path we're referring to um you know like uh what's it called like these arrows all right these are call paths is there another site other than trading volatility yeah there's a free one it's called optionistics you don't even have to do anything um and you see it it's actually we used to use this a lot the only reason I use trading volatility now it's just um they update their chains every 10 minutes versus this one which is updated um usually in the middle of the night so there's a little bit of a delay but it's not that much especially the way that we trade but this is the website so if you go ahead and search that up this is it totally free you don't have to pay for anything just go click option chain search up the ticker and then go ahead and adjust the expiration dates that you want and the strike prices and it'll show you all of them and it's actually really really nice uh this one's really good because um you get to see the the open interest this way and I like it um I personally prefer this way but I use the other one just because it's much bigger and people are able to see the the screen here um versus the other one uh maximum pain option this one's hard I wouldn't trust it because maximum pain they they just adjust it based off how much open interest is there that means that somebody could have a deep out of the money with a [ __ ] ton of open interest which is completely worthless and then somehow they'll tell you max pain is here so this is actually a pretty bad uh thing I would not use it um I don't know about their open interest but I would not use this one I think this one hands down from all the ones that I've used this one's hands down the best one and I think they have a subscription thing maybe it's cheap I don't know how much it cost but uh you can give it a shot okay but this one is hands down the best one uh for viewing things they also have a bunch of other stuff they have volatility skew and um option price history and all that fun stuff okay so as far as the the question many of you actually uh are somewhat close right the the most important thing uh when it comes to actually drawing a path is you have to label label label label you got to label levels before you even draw a path and there's a reason why I did those two lessons before this so that you guys can kind of get caught up so we did the open interest right which is why I showed you guys draw it here draw it here draw it here and then expect it to go this this this and then a b c right there's a reason why I was drawing it like that so that you guys can understand this a little bit better and then the lesson that we did prior to this is we talk about continuous Trends right and we said that you can actually find a lot of levels in them versus a buy candle uh strength and then we also talked about liquidation with no zones and liquidation injections and all that stuff as well so the previous four lessons were literally to to prepare you to be able to um actually do this so if you paid attention to those you'll find that this is actually going to be pretty simple and there's not much complication so before we do it let's actually mention all of them as a quick recap just as a refresher so the first thing that we talked about is uh continuous Trend who knows what a continuous trend is does anybody remember not an inclined Trend there you go right so it's something that's sloped so it has to be something that's sloped so this is continuous Trend so you can put okay cool that's pretty uh that's pretty simple and there's consistent buying of that stock it's just going up in One Direction now the um other thing that we also t talked about which is a single trigger so the single trigger does what well the single trigger all it simply does a big insta parabolic handle right it just somebody puts a big chunk of money right they call them fat fingers in the financial markets just some dude he may be fat we're not certain but it just means that you know everything's just doing well and then big candle up that's an instant single trigger candle okay and then what about a liquidity injection so liity injection well this one is referring to a big body reversed by a similar body candle I spell similar wrong right so what it looks like is something like this you get a pop and remember there's no there's no need for levels it's just a big pop literally taken back right away and what did we say that they do well these create walls or barriers so something like that okay so they create walls or barriers and then we also mentioned from a while ago which is Li uh ration zones now we mentioned that liquidation zones are a little bit different than injections right and the difference is that these are price action breaks a consistent distant block zone or standard deviation channel right so in this situation what this is referring to the liquidation zones are like this that's one and there's also e okay so these are liquidations and again the difference between them is that these don't actually need to break any key level and these actually have to break a level and what do these do what these do is they don't actually create barriers or anything these in majority of cases will create a grab or formation based on the wick or chop near bottom all right so what they will do is they're going to basically um they're either going to create a grab in this case a grab is referring to the stock basically was doing this right and then it instantly you know Wicks to liquidate and then it comes back instantly that's considered to be a grab however if the stock does the same thing and instead of actually just reversing instantly it actually chops at the top and then comes down that's considered to be a uh liquidation formation right it's a liquidity formation cuz now this doesn't actually become a grab it actually becomes a block so what does that mean it means that the reaction to a block is it usually will get rejected and a reaction to a grab is usually it will Rip right through it okay um are those very clear does anybody confused with them go ahead and ask if you are all right let me actually label this may actually do a better one e e actually pretty sure everybody knows the other one okay the one on the right is called liquidity grab yes so the grabbing all it's basically saying is if it goes if it if it's kind of just chopping and then it breaks out and it liquidates like it fakes down it goes right back down you usually this is considered to be a liquidity grab because all it did is it went it broke it sucked all the liquidity that was out there meaning it basically filled right it filled all the orders that were out there and it came right back and because it did that it means that the next time if the stock it doesn't mean it's bullish it just means that if the stock ever crashes and then it goes back some other time you don't actually expect any major result resistance here it should actually just rip right through it and continue higher if it ever comes back to that zone right and that's a grab and the reason it works like that cuz again it filled all the orders a formation what ends up happening is the the stock breaks and then it chops into that zone what that means is that there's new price action developing and that there's actually more to come but the problem is is there's somebody suppressing it and when it crashes is it has a problem with it if the stock ever crashes down and it tries to come back to it it would always get rejected it would never just rip through it like the other one and it also even means that if the stock crashes for a while and then it comes back again it will find a lot of problems trying to break out of here and it usually will reject does that make sense does the chop to create the block have to be longer than the time and a bunch of 5 minute candles it should take longer than the breakout so if it took it 10 minutes to break out it should at the very least spend 10 minutes chopping so 1: one Ratio or one plus so that's pretty much it you for sure don't want a 20 minute breakout and a 5 minute chop and then reversal cuz it doesn't make sense it's like it's more of a weird price action cuz that's usually how liquidity grabs work they don't just go and instantly reject in one second okay so that's the difference between the injection and the actual liquidation the injection is referring to just money being faked out it's being moved around versus this one okay so that is um that is that and then the final part of what we already discussed were the open interest and the validation chains now we're basically just looking for a few things we need need these things so oi and chains let's go ahead and make this blue yeah blue isn't the best color to Orange so in this situation what you're looking for is you need incline slash decline oi of three plus so what this means is you need the open interest to be going up or to be going down and we'll post the image of that as well right below and then you also want blocks of four plus compress Ohi in small zone so they have to be together they can't just be separated all over the place triangle rejection oi now that's um that's similar to uh what we talked about yesterday if you guys remember where you have one open interest that's high the second one is higher but the third one is lower and we talked about how to trade that right so that's basically um what we're referring to in this situation so you're looking for something like this um e e and then finally I'm trying to draw this just so everybody knows so we can Breeze through this and everybody has to master this this has to be uh you know memorized in your head and it's not it's not anything uh it's not anything crazy for people to say oh you know I got horrible memory dogs like no not really right you know don't actually have horrible memory just you just you need give it a little bit more effort okay so there we go our weak pool the these this is basically what we discussed so far go ahead and give me a thumbs up or yes we got 30 of you let's see if we can get 10 was everything clear if not just ask me I'll explain it you're not holding anybody up so is there any way to remove this plus minus thing down there I think I'll just do this there you go okay there you go you please explain the oi and chain once so all it's saying that if there's a triple open interest where there's a small one a bigger one in the middle and a smaller one of the same size on the other side usually the reaction of the stock if it's down here it's going to go and break this Zone and it's going to go to this middle one and get rejected it's never going to go to the final one right and that's the triangle rejection but if it is increasing what will happen is it will go all the way to the final one and then it will drop to this one it will create a b leg here and then will create a c leg here and then if it's just a bunch of open interest all over the place usually it creates a wall and all it does is it goes there chop chop chop chop chop and then eventually Rejects and goes down okay so with that out of the way now that um you guys have an idea of what this is now you go ahead and you try to draw it how difficult do you guys think it will be to actually draw all this stuff on a scale 1 to 10 rate how difficult you think it will be 5 to six take a few different charts Okay so it's pretty simple I want you guys to to actually get a rhythm and as long as you get the Rhythm you'll understand um what it means and how quickly you can draw them the way I do it is I usually just have it in my head I don't actually draw it but what you have to do is you have to give yourself lines and colors so the easiest way if you're drawing anything um in any of these all you need to know is the reaction okay so it's all about reaction more than it is the zone and based off the reaction you're going to go ahead and draw a different color if you have a line in a continuous Trend meaning you found a level in there what is usually the reaction of a continuous Trend if you have a Zone there what do you think the reaction will be it's going to be retest so the reaction here is we'll make it in uh whatever color but here reaction equals retest so that's how you're going to draw it on a chart what is it going to look like oh you're drawing a chart whatever you hit a continuous Zone your reaction is going to be it goes back touches and it bounces and it continues like everything is going fine so the the reaction there is going to be a retest and let's make this uh do black background and white text there you go now what about a single trigger if a stock is in that zone what do you think the reaction is well in this case the reaction in a single trigger mejor rejection okay so usually what you would expect is if there's a big green candle in majority of cases what you expect is the stock gets to there instantly rejects so there's going to be a Zone in there and you're going to find it using the other method we already talked about and that's going to be a rejection right so you're going to get a c you're going to catch a big bid in this situation or big rejection uh where it's up or down depending on the trend okay cool what what about if it is a liquidity injection what would be the reaction in this situation well the reaction is do chops and reverses so if Whatever Gets to there in majority of cases it's a barrier so therefore it'll go to it it'll touch it one two times and then it'll reverse off of it and then well what if it's a um what if it's a liquidation Zone well in this case if it's a grab then stock breaks through so you can say stocks you can say tip point becomes a booster so it uses it to push more if that's makes sense so it's using it as a booster if it's a liquidity grab because if it comes back to there it's going to instantly push above it now what if it's a uh similar situation here it's going to be a very similar situation because both of these are grabs they're just when here they're liquidating and now they're pushing back up what if it's a formation right stock uses tip point so tip point becomes a wall and needs Gap or chop to break okay are we good so far you guys getting it so the first one if you ever have a continuous Trend you you draw a bounce and a reversal or it goes off of it if you have a single trigger where it's a big green candle you draw a big reversal off of it if you have a liquidity injection like the candles we had you draw that the stock usually goes to it chops and then reverses from that zone so usually there's a continuation it's a two it's a two-part sequence more than it is just one sequence rejection and if it is a liquidity grab usually what you will do is you will draw that it will use that zone to explode higher so it might go up there slowly slowly slowly and then once it hits it it'll break it retest it a little bit and then explode higher if it's a liquidity formation what you will do is you will draw that it goes to it it chops for a bit it goes down a little bit it goes back to it and it gets rejected again and that the way that it goes above it is either after multiple touches or after it gaps above it now what about the the reaction of this well the reaction in these situations just based off what we said right if if it goes up to the mid wall it gets rejected if it goes up this way it gets that and if it goes up like this you get a chop okay so that is that right there go ahead and screenshot it for you uh just so you guys can have it uh when you do need it okay now we actually go and let's see if we can draw it on a chart so let's do it on Nvidia uh let do where is NVIDIA there you go okay so this is NVIDIA this is the chart I'm going to try to do it as quickly as uh possible to to kind of get an idea of what's going on now people are going to say well what time frame do we use in majority of cases you're going to use the 1 hour on some occasions you're going to use the daily okay but in majority of occasions we'll do 1 hour because those are much easier to see some of the candles in smaller time frames okay here we go let's start off the top what do we got here this is a liquidity formation how do we know it's a liquidity formation because what it did is it broke outside of this channel this was the channel That was in so this was the standard deviation Channel you can see a gap down below it here was a liquidity grab so we could identify these as two different things and we're going to label them so we're going to label liquidity formations and it is is where everybody gets to get creative however you want to label them it's up to you but what you do is you label these we usually just like using red boxes to give us an idea but you can label this as a liquidity formation and you can label this as a liquidity grab so this one it's going to be a say that okay now it's because again it went above that channel it broke out of it and it chopped near the high that's a liquidity formation here is a grab so you put G here you put F or you can even label it however you like in the beginning you're going to have to use you know letters but once you get the hang of it it's really not that hard okay so you're going to put LG okay we're not talking about Logitech we're talking about LG and then LF stands for liquidity formation not let's [ __ ] go okay there you go so that's two of them that we have right there what about um and we're going to assume we don't actually see this I forgot to say that okay because we want to predict what happens so we'll assume the stock is right there so we can already say that okay if the stock breaks below here it's going to get liquidated it's going to drop very very quickly cuz this is a grab how do we know this is a grab because again this was outside of the standard deviation this was outside of the standard deviation what is the standard deviation this is the channel there's the channel we drew that's how we got these two zones now speaking of zones this is considered to be what this is a continuous Trend so in a continuous Trend you can always find levels and this is also an instab buy candle so this is a trigger so that's also a Zone too so if I wanted to go ahead and actually draw a Zone I could draw a Zone in one of these and I could also draw a Zone in here so if the stock is crashing I want to find a zone for maybe a buy somewhere around here where do you think the buy is going to be well the buy is going to be somewhere in these ranges so the stock went up up up and it chopped I could make a bed and say okay well you know we had the expansion candle everything started to chop here so I could make a bet that maybe in this continuous Trend there's a buy right at this Gap because we didn't actually close it so there's a gap right there and we're going to label that um as gray so that's my Gap range right there okay cool now we got three so we use the continuous buying to find a Zone and the the zone that we like here is the gap now in some other cases what are you going to like maybe you like the the reversal maybe you'll find a Liquidation in it right maybe you'll find a liquidation candle a liquidation injection whatever it is you'll find um you could have said this candle but because this red one was pretty big it doesn't count but you'll find a Zone in here and you might ask well where do I draw the Zone wherever you think there's a trade so since the liquidity grab is down here I want to see where can I buy when it drops below it is there a point for me to draw Zone here no not really it's kind of pointless but we'll consider that and we'll say that that's a continuous T all right that's a continuous trigger so we found that and that's the Gap then we have this big buy candle so this big buy candle there's a Zone in it now if you guys remember from a while ago in buy candles where there's major major buy or breakout candle as we like to refer to the majority of times the easiest way to to find where they basically have the biggest buy or bid is usually one of two you keep zooming into the time frame so you start with 1 hour and you ask yourself what is the most crucial candle well it's the one that violated the most levels is this candle the one that violated the most levels no because it closed right at the top so it means that this is the candle right here that we're looking at so this is our Zone how do we know it's this candle cuz this candle violated all those zones and closed higher now could you have said this candle is more crucial no because this one closed lower it closed a little bit higher than all of these but it also chopped here so we don't really care too much about that we think that the buyers are in this candle right here and we have a lesson on that from a while ago but we'll label this as purple and we'll just call it that and then we're going to go zoom into to a three minute because we think the zone is too big it's $1 a half uh well going to a smaller time frame did not help it's still the same level okay we'll go to the five minute now we got the five minute and you zoom in you try to ask yourself well what is the candle well it seems like the one that actually broke and closed higher it was this one cuz this one popped and it went back down this one dropped and it went back up so it can't be that red candle it has to be this green one that's the buy well I mean we have 70 cents it's better than nothing but that's a zone for us to maybe look at when we're trading and we'll consider that to be a major level as well okay and that's a buy point so now that we have this we're not going to do the open interest because uh it's already a month late but you could also go and do the open inter as well but this is just the simple one now you go ahead and you find the liquidity injection is there any liquidity injection we found liquidity grabs but no liquidity injection there's a liquidity injection here there's one uh here as well it's a little bit smaller this one seems to be the most obvious it's the biggest one and we said that you always want to use the candle that's basically smaller than the other one to make sure that you're getting a perfect Zone but in this case it's basically going to be around here which is pretty big and we'll label this as blue and you could also make the argument that you could maybe set the level here doesn't really matter all that matters is that you know that there's a barrier down here for that stock and it's going to bounce somewhere in between them and these are not things to trade off of if they're huge but there's something to actually base off of so if I zoom in a little bit I'm probably going to find a stronger Zone which I will I mean might as well and you can see that the actual zone is right here so this is the candle because it dropped instantly went back up so this is the actual Zone all right so we found the answer to that okay cool and this is going to be Li which is liquid injection this one is by trigger BT and again you can use whatever symbol it doesn't really matter just I'm trying to label it just so you guys have an idea okay cool now we go and we do the same thing we talked about which is what is the reaction to that so you pull up your little cheat sheet uh that I have posted somewhere here so you look at this we have an LF LF is referring to liquidity formation what's the reaction tip point becomes a wall and needs to Gap or chop or break uh to break so it's telling us that it has to chop near and then reject so we draw that if the stock ever gets to there it'll probably do this and then reject okay and that the only contingency is that if it gaps above it okay cool now we know what that is and it's going to get very close to it and if you know how to draw blocks you would know that the block order is slightly below so this would be the expectation for that path okay cool what about a liquidity grab you go ahead you pull the cheat sheet again what does the cheat sheet say it says that if it's a liquidity grab tip point becomes a booster to push more okay so what does that mean it means that this Zone if the stock breaks it it's going to go below it touch and then use it to push lower in this case so it's going to be a continuation thing okay what about CT it's a continuous Trend what is the reaction of a continuous Trend retest and continue so all it means is that you're going to go down to here bounce and then you'll continue whatever Trend you're in which in this case is going to be a minor buy to the upside so you'll have a minor buy maybe you could extend it down to here right maybe back all the way near up to this Zone and then it'll continue higher or or lower so we'll label this gray we'll label this green we'll label this red okay now what about a buy trigger well you look at the cheat what do by trigger does major reaction oh there's a big buyer here okay cool so then we go ahead and we actually draw the big buyer in this situation and it comes and a big bounce so you probably catch a big bid all the way to like 125 or whatever so you could even make the argument up to 126 but there's a big buyer here but the reaction is a little bit more bigger than this one okay cool so we got that and that's going to be your pink one that's assuming it gets there okay so you're seeing it you touched you down you went to here now you're touching now you're bouncing and then finally the bottom one this is a uh liquidity injection so it's referring to uh one of these and it says that if it's an injection then it creates a wall or barrier stock chops and reverses so it's kind of like a formation but it's temporary and it's much bigger so you could always say that if the stock ever comes down to here stock chops chops chops and then reverses okay and that's the blue and this is not using the open interest yet and then you combine all of these right you combine all of these and then you'll get something like this and you there you go what do you guys think okay now the question is is how does it do so we'll go ahead and play it and let's see if this is right and again as long as we get 30 to 40% of it right that's what matters the most we don't have to get it 100% but at least it's better than nothing so we draw it and let's see how it goes so if it liquidates below here you can see it just continued in the after hours you got another dump you got the continuation you touch the Zone here and you got a big buy so you got a little bit of a bounce you can see how big this bounce is from the the purple Zone it touched it and it bounced all the way to even higher to 129 the first one the blue one you can see how it touched it and it went only back to 129 so it went all the way back to here this one actually went all the way back to here that was a big big bounce and then if it breaks below this you have the expectation that this is going to go all the way down to there and down and you're catching now you're expecting it to chop so will it chop in reverse maybe not it just went straight to it so it chopped for a bit and okay it they did it in the after hours so you went slightly below it and then you had a big reversal and it went right back to that zone okay so you can see how it was slightly wrong for the last five minutes or the last hour oh yeah last I think 10 minutes or 15 here you had a big big dump it went right below it and then it instantly rejected right off and it moved so was this 100% no 80% sure not the worst now we never got to here so we never got to see what happens to there but now at least you have the idea of how these rejections work and if you can do this on multiple charts you're not the only thing you're not going to consider is the gap so when we do these charts that are posted here we do not consider the gaps as part of the drawing because well we we can't predict the Gap and you don't want to predict the Gap but with majority of these you can kind of draw the expectation through and kind of expect it so in this case here we expected it to chop it did it went a little bit higher and then It reversed and never got to the top of the wall and what you do is you go ahead and actually add the walls later on and it's the same reaction the only thing that the walls are going to help you with in this situation is they're going to help you with how do you think the drawing is going to be instead of just drawing an arrow the walls will give you specifics they'll tell you it's ABC it's one two 3 5 it's a market maker cycle or it's going to tell you it's a double leg sequence right it goes up chops goes up chops based off the the kind of open interest that you're looking at and uh I don't know did this thing ever get to the top here let's see if it does you can see how like these levels it's touching it it's going back staying between it it's going it's touching this Zone it's touching this so it's not just a onetime thing you can leave them on the charts for a good period of time until you know the stock basically has murdered that but you can see how it's like it's going to these walls majority of the times now you're breaking above it let's see and we got there you can see how it came very very close to it it didn't touch it the block was right on this candle it was one of this it was the range from here to here that's the candle it came very very close and then rejected but that's good enough that's also pretty good I mean if you had a short or something you would have shorted somewhere around the morning anyways or as it was breaking down or whatever but this also made another liquidity formation as well and then with that you kind of get an idea of what's going on but does this make sense any questions I'm going draw this um okay um if nobody has any other questions what I'm going to do is I'm going to ask you guys to do this as your homework assignment the homework assignment is going to be to find a stock of your liking whatever preferably do something that already played out to see if you can do it so so just do like me close your eyes choose a random date right and just click this and then do it and you do not have to add the open interest for now because well we haven't done the open interest and it's going to be hard to do it on history so I don't want you guys going through history and trying to find the open interest levels and all that just leave the the oi alone and then tomorrow we'll do the open interest on these charts but for now just try to find a liquidity formation a continuous buy a buy trigger um a liquidity injection and this and as long as you have 60 40 50% accuracy you're good you want your levels to be close you don't have to be perfect and try to give your levels a little bit of Zone to make sure that you're pretty decently accurate and if you do them just the way that we usually do them you'll usually find pretty good levels okay that should be it for now so um whoever is recording I don't know if anybody is you can go ahead and end recording but if anybody has any questions

answer you&#39;re going to vote on which one do you think that the thing that causes panic in markets is people panicking or do you think that it is people um rethinking meaning that they find something better or do you think that markets panic when everyone doesn&#39;t know where to to go okay so those are the three options it&#39;s you&#39;re panicking because others are panicking you&#39;re panicking because of the um situation you&#39;re in or you&#39;re panicking cuz there&#39;s nothing to do think of it like there&#39;s no charts to trade there&#39;s no setups everything is like whatever it&#39;s confusing where everyone doesn&#39;t know there to go combo meal I&#39;ll take a number three uncertainty and losing money do you guys think people make decisions because other people are panicking like if one person panics do you think other people also panic because that person is panicking have you guys ever seen that Meme where some guy said it&#39;s snowing and then some guy said snow yeah he&#39;s like yeah snow cell cell cell and then it started going into cell from snow crowd effect the first one once the floods open then open so but it can&#39;t like what about conviction if that was true if people panicked because other people panicked then every pullback would always be bigger than what it should be so that can&#39;t technically be true and what I mean is if somebody like assume like somebody got something like Celsius right and if people sell it 10% and then the Market&#39;s open and everybody panics then it should go another 10% but that&#39;s not always the case the the candle size is not always the reason to why everybody panics there&#39;s something much more important herd mentality that&#39;s also not true as well because like what you guys are doing is you&#39;re trying to you&#39;re trying to judge retail as the reason for the market movements but don&#39;t think about retail screw these guys they&#39;re not you know we&#39;ve always said that there&#39;s 20% of the daily volume 80% of the volume is institutional So 20% is retail driven but it can&#39;t it can&#39;t really be the retail herd mentality and it&#39;s not that everybody&#39;s crowded and piled into one spot because everybody was crowded in Nvidia since 400 and they continued higher and higher and higher and higher so you can&#39;t make that argument that&#39;s not true just because something is crowded does not mean that it has to crash right the idea that we gave with crowded mentalities is think of it like a uh a printer right think of it like there&#39;s a u a little store here that prints money and there&#39;s only five printers that print $1 uh you know maybe per second and these five printers anybody can have access to the first one who shows up before anybody well he&#39;s gonna make $5 a second but then when the second guy goes well he&#39;s probably going to try to maintain three and then let the other guy take two and then the third guy comes and they have to split it and then the fourth guy and the fifth guy so the more people crowd into something what ends up happening is not that there&#39;s Uh something&#39;s going to crash all it means is that there&#39;s not much money to be made right it&#39;s because everybody&#39;s occupying a printer and the printer can only print so much there&#39;s a limit the limit of the printers is very small small unless somebody can somehow magically discover more printers which is how like bubbles and uh these type of Manas in the market happen is people start to build smaller printers on the side but everybody knows that these printers are fake they&#39;re not even printing fake money but that&#39;s how crowd you know tends to kind of you know get themsel effed up in a position it&#39;s not that there&#39;s no money it just there&#39;s not enough money to be made because everybody is there but that&#39;s not necessarily a reason for a market to crash so what else what what could be causing all of this cuz if you understand it you&#39;ll know when to pull the trigger on things and I&#39;m talking about like more broadly not you know F minute chart uh the meme snowflake drop exactly where he was like snow is falling and then some guy was like sell snow snow is falling he&#39;s like damn mm playing Battleship with Millions it&#39;s not the market maker it it&#39;s the Big B it&#39;s the big guys right it&#39;s not the dealer and it&#39;s not the retail Trader it&#39;s the institutions it&#39;s the ones that are managing money for people so it&#39;s billion dooll hedge funds versus billion dooll asset allocators the actual answer okay and I want you guys to remember there&#39;s three reasons for a selloff in any Market in any any any Market first of all you have to consider Who&#39;s involved right the people involved in certain things will make different decisions so the most common excuse and it&#39;s not really an excuse but it&#39;s something that we never hear of unless you&#39;re like heavily you know involved in the management um side of the markets and that is profits right people want to ring the register so they get paid remember if you&#39;re a guy who works for a billion dollar hedge fund or and you&#39;re a money manager you&#39;re you know an investment officer whatever you are you got to ring the register so you get paid doesn&#39;t matter your your client will never judge you based off how much something went up he will judge you based off if you are in it or not so the client doesn&#39;t give a [ __ ] whether you got him at 100 or 150 he just wants to be in whatever is going up or he wants to be short in whatever is going down but believe it or not one of the most underlooked things um in trading is literally profits people do not understand that when the market goes up and people are starting to get more than the average average under the the management firm rules they have to ring the register so what um what I&#39;m trying to tell you is when you go into the spy and people tell you that the Spy is up you know if you take it from here to here the Spy is up 15% look at this almost 20% in half of the year and then you&#39;re looking at it and you&#39;re like well what the hell that&#39;s not normal and the normal is usually 7 to 8% so what do you think people do well they&#39;re forced to take profits on every above average move so you can always make a bet that okay if the S&amp;P outperforms in 8% within a one-third fold meaning that it basically does it in less than four months or five months any time the the S&amp;P outperforms by at least 10% in less than four months there&#39;s always going to be a pullback in that process are you sharing screen I am sharing screen can you not see it my screen is shared right okay so just Pat Pat Uh yeah you can click on the screen but all it means is that if you guys actually take a measurement and you realize well if the markets actually go up in the beginning and you have to think about it from time to time so what are the times you&#39;re talking about fiscal quarters and you&#39;re also talk by year to year so if you&#39;re doing this you start on a 2024 you start on the end of the third quarter and the fourth quarter which is going to basically be September June March and January right those are the quarters and you do that and you realize that anytime the S&amp;P does more than 10% there&#39;s always some pullback and you go ahead and you measure it from here to here from the middle of the year or whatever anytime you get a little bit more than 10% uh if we assume you know the mid-march period which is right around here where people probably allocated this is March and you can see that the out performance another 10% you get a pullback you go ahead and you measure it from January in the beginning of the year you get that pullback you measure it from uh this case which is September in in this case you actually had a pullback during it so there was no actual app performance but it also works in Reverse as well anytime the market does that in the opposite direction you could also make the claim that if the market underperforms by that similar 7 to 8% then there&#39;s always going to be a buyer so if you keep this rule in your head that every quarter just measure from the quarter to end of the quarter in this case like I said everybody should know him it&#39;s January March June September those are the quarters if the S&amp;P itself does more than 7 to 8% which is the the average right uh the annual average at least whether it&#39;s plus or minus you&#39;re always going to get a 50% retracement of it now doesn&#39;t guarantee 50% but in majority of cases you&#39;re usually going to take back at least 5% of that uh move so 5% of not this like the the gain but it means you&#39;re going to pull back at least 5% somewhere around there sometimes four sometimes it depends on how much it&#39;s up by but it doesn&#39;t matter how much the pullback is all you need to know is that there&#39;s a pullback and that&#39;s usually what causes majority of pullbacks in the markets it&#39;s not Camala Harris it&#39;s not the crap with the cuts has nothing to do with this it&#39;s people want to take profits people want to take money home these guys get absolutely nothing on this entire ra um you know rally that they basically bought in early on they only get money when they ring the register and take it home remember that one scene from The Wolf of Wall Street where he was like it&#39;s money on paper they think they&#39;re rich but they&#39;re really not because you&#39;re not really rich until you take the money out and do something with it the same thing with the markets the the guy who put money with you he doesn&#39;t care that he&#39;s up 200% on Nvidia he cares about did you ring the register because if you have to pay taxes that means you made money so it doesn&#39;t matter if if it&#39;s up and up and up everybody knows eventually things top out right everybody knows that eventually things top out and reverse and if you&#39;re a manager and you are not R ringing the register for your client you are [ __ ] everybody&#39;s going to hate you because it don&#39;t matter if you bought it here and then watched it go up all the way there and then you watched it go down halfway they don&#39;t care okay so um that&#39;s that um somebody said can you repeat it I saw you just deleted it anytime the markets if you go ahead and just do this right here I&#39;m going to do this for you guys I want you guys to choose a year somebody choose a year for me choose any Year from 2010 all the way to 2020 and I&#39;ll show you how to do it try to vote on the year you guys want like the year you guys want 2012 or 2018 [Music] 2018 all right so this is 2018 right here what you do is you take a line you put it in the beginning of 2018 you put it in mid-march usually somewhere near the end of March the mid- March also works you put it in mid June you put it in midt okay those are the four lines you draw the these are the quarters now there&#39;s different quarters for certain firms depending on uh the way they like to allocate so some of them actually have their quarters and their fiscal quarter actually ending somewhere in the middle of these but on average this is usually what majority of people follow so what you do is you say okay well you got this pump you got 8% and literally how much one month you got a dump now of course the dump magnitude is a different story is this usually what happens no you&#39;re not supposed to take all of it back right that&#39;s not the idea but if this ever happens you&#39;re always going to get a pullback if it goes above 7 to 8% it&#39;s always going to get a pullback you take it from here you get a drop all the way almost 7% you get a pull back cuz it happened in such a rapid time I mean you&#39;re not even measuring from the Top If You measured it from the top this was actually 10% but if you measure it from the start of the the actual quarter you can see that you will more than likely get a bottom there it doesn&#39;t necessarily mean that that&#39;s the permanent bottom you could take it out the next quarter you could but at the very least what I would say is usually if you drop by a certain amount or pump by a c amount you&#39;ll usually take back 40% without the exponential rule to it meaning that you guys know that um you know if you go up 5% it&#39;s not the same as going down down 5% right so if you go up from uh you know if you go up from 100 all the way to 105 losing 5% of 105 is not the same as gaining 5% from there there&#39;s a little bit of a miscalculation but what I would usually do is just say that there&#39;s a pullback and then you trade it accordingly based off the situation but at least you&#39;ll get a drop and then you take it from the beginning of the quarter okay you get a drop here markets are topping out let&#39;s say from this candle down you got around 4% and not too much right if it was 7% it would be a good buy and then you go ahead and you say okay well from the beginning of the quarter did this go up a lot how much did we go up from the beginning of the quarter especially considering that there was no crash well the markets only went up four 5% up so there&#39;s really no need of an actual crash in this situation because well nobody really needs to ring the register and then you do the same thing for the fourth quarter and you do it for down and see the markets went down in this case almost 20% but the first 10% also caught a rebound as well so it went from like literally here to 8% bounce so it wiped out almost half of the move but that&#39;s what you&#39;re trading and that&#39;s the quarter to quarter situation so now you go ahead and you ask yourself what about the year-to date situation that also applies in the same way you go ahead and you do that 8% except in this case you&#39;re going to find that the trade trades take a little bit longer to play out but if you do it from here this&#39;s the end you get a 7% rally you get a pullback and then anytime you underperform in this situation you can see 7% is going to be down around here if the markets ever got down to this level in 2018 that would also be a major level for majority of people now again you could be wrong and it goes 8% it could be wrong it goes 9% but that&#39;s not the the point the point is that you get an idea where majority people are going to be forced to ring the register out and ring the register in and then you do that across so in this case the highs of the year were here and the lows of the year were set early on in the year so there wasn&#39;t much of a of a say a system for you to follow throughout the year but majority of the times if it ends up outperforming by a big chunk you can always bet that you&#39;re probably going to catch some sort of dump and in this case you basically got to see something now if you go ahead and uh let&#39;s say a year where things worked out really well uh do they always you know and ring the register again it just means cutting positions it doesn&#39;t mean crash so if I go ahead from 2016 this is after a very ugly year you just had a crash happened things went really bad if you take it from here to the top you can see that the first um little 6% right here you got a pull back and then you went up this is where it gets this kind of like um post to the let&#39;s say relationship to uh the year but if I go ahead and actually uh let me measure this so this is the beginning of the year what the hell where is it January was right here oh wow this is the beginning of the year I guess this this was the first actual trading day so this is the first actual trading day if this is the first actual trading day you put it 7 to 8% let&#39;s do seven and a half and then you take another one and you do another 7% or you can do a 20% to give you a little bit of a bigger idea but these would be automatically two zones that you would draw on the year right it&#39;ll be somewhere around here and somewhere around here and now the question is you can go and do quarter by quarter so if I do quarter by quarter uh it will be somewhere around mid-march which is right here and then somewhere around mid June which is right around here but you can see that when the market got to somewhere a little bit too extended I guess if you count from bottom to top it&#39;s 8% right here right that&#39;s probably could be considered that but the whole idea is that if the markets ran this much they&#39;re probably going to catch some sort of bid um on the downside and the upside if you flip it to the downside from there you also got a 10% or 9% here but again since it it was a gap down day it&#39;s kind of just you know depends on when they bought let&#39;s assume they&#39;re perfect and they&#39;re goated this is 7% down and this is 7% up so 7 to eight anytime you get to any of these zones that&#39;s usually a good time in the year to date to get some allocation for majority of investors now usually the rule that we made if you guys remember in 2021 the rule that we said is every two years there&#39;s a 20% pullback right and then every year there&#39;s usually two 5% pullbacks so what it basically means is unless last year you had a very small correction then you can expect that this year can be a bigger one but if you just had a 20% correction last year don&#39;t expect another 20% correction this year and if you follow that you&#39;ll usually have a very clear idea of where the markets are probably going to go so in a very similar sense if you go uh from this situation and you push it up 7% 7% is going to be right around here 7 to 8 this one&#39;s almost 9% the markets went up up they had a little bit of a hiccup here but you didn&#39;t get any big pullback in this situation but then you go to the March situation right here you didn&#39;t get any big push in here now did you get any major correction you got 4% so that&#39;s cool but there wasn&#39;t any major push from this situation now you did make a lot of money in this process but if you measure it from the beginning of January you&#39;re not actually up that much now if you go and you measure uh September this is let&#39;s say mid-september you can see in this situation this is where you basically took a position somewhere here did the markets drop by a lot no you had 2.4% what about up up up up almost 7% you had a from here to here top to bottom you had a 2.5 c% correction wasn&#39;t too crazy but the move was isn&#39;t too crazy either especially considering you just had a sell off and then you go ahead and do in 2017 there&#39;s the beginning of the year right here you get a 7% and you got a pullback so if you go ahead and just draw these it&#39;s not about oh it&#39;s going to crash and I have to short or anything but at the very least you have some sort of expectations right that you draw some parameter to have an idea and this is what majority of the time causes 90% of the these pullbacks absent a massive Black Swan event that nobody ever knows so in this case what I would do if you guys go ahead and actually measure this from let&#39;s say the middle of June which is the actual little bit of a situation right here if the markets ever crashed worst case scenario they would go to like 500 right that&#39;s worst case but if we measure it from top to bottom you&#39;re basically expecting around 5 to 8% which would literally give you the 8% that we&#39;re aiming for which is 522 and you kind of get an idea with that but that&#39;s that&#39;s kind of one of the main reasons to why markets pull back so uh hopefully that helps now the other two reasons are always random sometimes it&#39;s the economic cycle and people just want to find excuses to rotate and the only and remember to uh to be able to move money around somebody has to freak out because freaking out causes volatility volatility creates liquidity liquidity allows for better pricing and people don&#39;t really understand what that means until they realize that trading with billions of dollars is hard to trade with like you guys buy 10 contracts on options think of like um what&#39;s a good example how many of you traded uh Kimberly Clark Yesterday anybody trade that one if you traded that one how hard was it to actually get in and out of a trade it&#39;s pretty damn tough why was it so tough well because the damn spreads were wide okay think about that happening to every billionaire in the market on the majority of stocks they can&#39;t just Place A2 billion order they have to make sure somebody&#39;s there to actually sell it to them so it takes time but what you do is you create panic panic forces people to make decisions and people who are trying to make you know decisions in majority of cases they&#39;re willing to underpay overpay or whatever and then the more important part is it brings people and the more people in the market that are involved in actively making decisions well the more liquidity you provide the better feels you give for other people so one of the the most important things about a market crash is everybody needs to be involved there&#39;s a reason why markets crash when everybody&#39;s in them they can&#39;t crash if nobody&#39;s in them and if it was just literally the big guys in them and nobody else is like foming into something it doesn&#39;t make sense for a crash to happen cuz who the hell is going to buy it and then more importantly you could overblow a movement I mean if you go ahead and sell billions of dollars of spy and there&#39;s no liquidity you could literally cause a flash crash of 20% and then the reality is is the the fair value is somewhere here but because you dumped so much in such a short amount of time you caused a strain on the dealer the dealer is not able to provide all that liquidity as fast as he can because there&#39;s so much other obligations he has to deal with okay so um hopefully that helps uh but I thought I might as well just share that for a future reference and if you can make a PDF of it or write down some notes on it hey uh that&#39;ll be cool and if you can share it in the server as well uh that would also be appreciated um as well but as far as uh today&#39;s lesson I saw some guy was asking a question question um and the guy told him to ask me so um let me see is he even on the call that mofo is not on the call so screw yeah he&#39;s not here okay we&#39;re good and then the other guy who also had a question he said okay that that thing is going to take a while to explain we have to do the lesson all right um so let me go ahead and take a sip of water and then uh we&#39;ll start with our stuff so today is going to be drawing out a path and I want to go ahead and ask a question to everybody um and the question is what do you think um is the most important step to uh do before drawing a path what do you think you have to know before you can draw a path and by path we&#39;re referring to um you know like uh what&#39;s it called like these arrows all right these are call paths is there another site other than trading volatility yeah there&#39;s a free one it&#39;s called optionistics you don&#39;t even have to do anything um and you see it it&#39;s actually we used to use this a lot the only reason I use trading volatility now it&#39;s just um they update their chains every 10 minutes versus this one which is updated um usually in the middle of the night so there&#39;s a little bit of a delay but it&#39;s not that much especially the way that we trade but this is the website so if you go ahead and search that up this is it totally free you don&#39;t have to pay for anything just go click option chain search up the ticker and then go ahead and adjust the expiration dates that you want and the strike prices and it&#39;ll show you all of them and it&#39;s actually really really nice uh this one&#39;s really good because um you get to see the the open interest this way and I like it um I personally prefer this way but I use the other one just because it&#39;s much bigger and people are able to see the the screen here um versus the other one uh maximum pain option this one&#39;s hard I wouldn&#39;t trust it because maximum pain they they just adjust it based off how much open interest is there that means that somebody could have a deep out of the money with a [ __ ] ton of open interest which is completely worthless and then somehow they&#39;ll tell you max pain is here so this is actually a pretty bad uh thing I would not use it um I don&#39;t know about their open interest but I would not use this one I think this one hands down from all the ones that I&#39;ve used this one&#39;s hands down the best one and I think they have a subscription thing maybe it&#39;s cheap I don&#39;t know how much it cost but uh you can give it a shot okay but this one is hands down the best one uh for viewing things they also have a bunch of other stuff they have volatility skew and um option price history and all that fun stuff okay so as far as the the question many of you actually uh are somewhat close right the the most important thing uh when it comes to actually drawing a path is you have to label label label label you got to label levels before you even draw a path and there&#39;s a reason why I did those two lessons before this so that you guys can kind of get caught up so we did the open interest right which is why I showed you guys draw it here draw it here draw it here and then expect it to go this this this and then a b c right there&#39;s a reason why I was drawing it like that so that you guys can understand this a little bit better and then the lesson that we did prior to this is we talk about continuous Trends right and we said that you can actually find a lot of levels in them versus a buy candle uh strength and then we also talked about liquidation with no zones and liquidation injections and all that stuff as well so the previous four lessons were literally to to prepare you to be able to um actually do this so if you paid attention to those you&#39;ll find that this is actually going to be pretty simple and there&#39;s not much complication so before we do it let&#39;s actually mention all of them as a quick recap just as a refresher so the first thing that we talked about is uh continuous Trend who knows what a continuous trend is does anybody remember not an inclined Trend there you go right so it&#39;s something that&#39;s sloped so it has to be something that&#39;s sloped so this is continuous Trend so you can put okay cool that&#39;s pretty uh that&#39;s pretty simple and there&#39;s consistent buying of that stock it&#39;s just going up in One Direction now the um other thing that we also t talked about which is a single trigger so the single trigger does what well the single trigger all it simply does a big insta parabolic handle right it just somebody puts a big chunk of money right they call them fat fingers in the financial markets just some dude he may be fat we&#39;re not certain but it just means that you know everything&#39;s just doing well and then big candle up that&#39;s an instant single trigger candle okay and then what about a liquidity injection so liity injection well this one is referring to a big body reversed by a similar body candle I spell similar wrong right so what it looks like is something like this you get a pop and remember there&#39;s no there&#39;s no need for levels it&#39;s just a big pop literally taken back right away and what did we say that they do well these create walls or barriers so something like that okay so they create walls or barriers and then we also mentioned from a while ago which is Li uh ration zones now we mentioned that liquidation zones are a little bit different than injections right and the difference is that these are price action breaks a consistent distant block zone or standard deviation channel right so in this situation what this is referring to the liquidation zones are like this that&#39;s one and there&#39;s also e okay so these are liquidations and again the difference between them is that these don&#39;t actually need to break any key level and these actually have to break a level and what do these do what these do is they don&#39;t actually create barriers or anything these in majority of cases will create a grab or formation based on the wick or chop near bottom all right so what they will do is they&#39;re going to basically um they&#39;re either going to create a grab in this case a grab is referring to the stock basically was doing this right and then it instantly you know Wicks to liquidate and then it comes back instantly that&#39;s considered to be a grab however if the stock does the same thing and instead of actually just reversing instantly it actually chops at the top and then comes down that&#39;s considered to be a uh liquidation formation right it&#39;s a liquidity formation cuz now this doesn&#39;t actually become a grab it actually becomes a block so what does that mean it means that the reaction to a block is it usually will get rejected and a reaction to a grab is usually it will Rip right through it okay um are those very clear does anybody confused with them go ahead and ask if you are all right let me actually label this may actually do a better one e e actually pretty sure everybody knows the other one okay the one on the right is called liquidity grab yes so the grabbing all it&#39;s basically saying is if it goes if it if it&#39;s kind of just chopping and then it breaks out and it liquidates like it fakes down it goes right back down you usually this is considered to be a liquidity grab because all it did is it went it broke it sucked all the liquidity that was out there meaning it basically filled right it filled all the orders that were out there and it came right back and because it did that it means that the next time if the stock it doesn&#39;t mean it&#39;s bullish it just means that if the stock ever crashes and then it goes back some other time you don&#39;t actually expect any major result resistance here it should actually just rip right through it and continue higher if it ever comes back to that zone right and that&#39;s a grab and the reason it works like that cuz again it filled all the orders a formation what ends up happening is the the stock breaks and then it chops into that zone what that means is that there&#39;s new price action developing and that there&#39;s actually more to come but the problem is is there&#39;s somebody suppressing it and when it crashes is it has a problem with it if the stock ever crashes down and it tries to come back to it it would always get rejected it would never just rip through it like the other one and it also even means that if the stock crashes for a while and then it comes back again it will find a lot of problems trying to break out of here and it usually will reject does that make sense does the chop to create the block have to be longer than the time and a bunch of 5 minute candles it should take longer than the breakout so if it took it 10 minutes to break out it should at the very least spend 10 minutes chopping so 1: one Ratio or one plus so that&#39;s pretty much it you for sure don&#39;t want a 20 minute breakout and a 5 minute chop and then reversal cuz it doesn&#39;t make sense it&#39;s like it&#39;s more of a weird price action cuz that&#39;s usually how liquidity grabs work they don&#39;t just go and instantly reject in one second okay so that&#39;s the difference between the injection and the actual liquidation the injection is referring to just money being faked out it&#39;s being moved around versus this one okay so that is um that is that and then the final part of what we already discussed were the open interest and the validation chains now we&#39;re basically just looking for a few things we need need these things so oi and chains let&#39;s go ahead and make this blue yeah blue isn&#39;t the best color to Orange so in this situation what you&#39;re looking for is you need incline slash decline oi of three plus so what this means is you need the open interest to be going up or to be going down and we&#39;ll post the image of that as well right below and then you also want blocks of four plus compress Ohi in small zone so they have to be together they can&#39;t just be separated all over the place triangle rejection oi now that&#39;s um that&#39;s similar to uh what we talked about yesterday if you guys remember where you have one open interest that&#39;s high the second one is higher but the third one is lower and we talked about how to trade that right so that&#39;s basically um what we&#39;re referring to in this situation so you&#39;re looking for something like this um e e and then finally I&#39;m trying to draw this just so everybody knows so we can Breeze through this and everybody has to master this this has to be uh you know memorized in your head and it&#39;s not it&#39;s not anything uh it&#39;s not anything crazy for people to say oh you know I got horrible memory dogs like no not really right you know don&#39;t actually have horrible memory just you just you need give it a little bit more effort okay so there we go our weak pool the these this is basically what we discussed so far go ahead and give me a thumbs up or yes we got 30 of you let&#39;s see if we can get 10 was everything clear if not just ask me I&#39;ll explain it you&#39;re not holding anybody up so is there any way to remove this plus minus thing down there I think I&#39;ll just do this there you go okay there you go you please explain the oi and chain once so all it&#39;s saying that if there&#39;s a triple open interest where there&#39;s a small one a bigger one in the middle and a smaller one of the same size on the other side usually the reaction of the stock if it&#39;s down here it&#39;s going to go and break this Zone and it&#39;s going to go to this middle one and get rejected it&#39;s never going to go to the final one right and that&#39;s the triangle rejection but if it is increasing what will happen is it will go all the way to the final one and then it will drop to this one it will create a b leg here and then will create a c leg here and then if it&#39;s just a bunch of open interest all over the place usually it creates a wall and all it does is it goes there chop chop chop chop chop and then eventually Rejects and goes down okay so with that out of the way now that um you guys have an idea of what this is now you go ahead and you try to draw it how difficult do you guys think it will be to actually draw all this stuff on a scale 1 to 10 rate how difficult you think it will be 5 to six take a few different charts Okay so it&#39;s pretty simple I want you guys to to actually get a rhythm and as long as you get the Rhythm you&#39;ll understand um what it means and how quickly you can draw them the way I do it is I usually just have it in my head I don&#39;t actually draw it but what you have to do is you have to give yourself lines and colors so the easiest way if you&#39;re drawing anything um in any of these all you need to know is the reaction okay so it&#39;s all about reaction more than it is the zone and based off the reaction you&#39;re going to go ahead and draw a different color if you have a line in a continuous Trend meaning you found a level in there what is usually the reaction of a continuous Trend if you have a Zone there what do you think the reaction will be it&#39;s going to be retest so the reaction here is we&#39;ll make it in uh whatever color but here reaction equals retest so that&#39;s how you&#39;re going to draw it on a chart what is it going to look like oh you&#39;re drawing a chart whatever you hit a continuous Zone your reaction is going to be it goes back touches and it bounces and it continues like everything is going fine so the the reaction there is going to be a retest and let&#39;s make this uh do black background and white text there you go now what about a single trigger if a stock is in that zone what do you think the reaction is well in this case the reaction in a single trigger mejor rejection okay so usually what you would expect is if there&#39;s a big green candle in majority of cases what you expect is the stock gets to there instantly rejects so there&#39;s going to be a Zone in there and you&#39;re going to find it using the other method we already talked about and that&#39;s going to be a rejection right so you&#39;re going to get a c you&#39;re going to catch a big bid in this situation or big rejection uh where it&#39;s up or down depending on the trend okay cool what what about if it is a liquidity injection what would be the reaction in this situation well the reaction is do chops and reverses so if Whatever Gets to there in majority of cases it&#39;s a barrier so therefore it&#39;ll go to it it&#39;ll touch it one two times and then it&#39;ll reverse off of it and then well what if it&#39;s a um what if it&#39;s a liquidation Zone well in this case if it&#39;s a grab then stock breaks through so you can say stocks you can say tip point becomes a booster so it uses it to push more if that&#39;s makes sense so it&#39;s using it as a booster if it&#39;s a liquidity grab because if it comes back to there it&#39;s going to instantly push above it now what if it&#39;s a uh similar situation here it&#39;s going to be a very similar situation because both of these are grabs they&#39;re just when here they&#39;re liquidating and now they&#39;re pushing back up what if it&#39;s a formation right stock uses tip point so tip point becomes a wall and needs Gap or chop to break okay are we good so far you guys getting it so the first one if you ever have a continuous Trend you you draw a bounce and a reversal or it goes off of it if you have a single trigger where it&#39;s a big green candle you draw a big reversal off of it if you have a liquidity injection like the candles we had you draw that the stock usually goes to it chops and then reverses from that zone so usually there&#39;s a continuation it&#39;s a two it&#39;s a two-part sequence more than it is just one sequence rejection and if it is a liquidity grab usually what you will do is you will draw that it will use that zone to explode higher so it might go up there slowly slowly slowly and then once it hits it it&#39;ll break it retest it a little bit and then explode higher if it&#39;s a liquidity formation what you will do is you will draw that it goes to it it chops for a bit it goes down a little bit it goes back to it and it gets rejected again and that the way that it goes above it is either after multiple touches or after it gaps above it now what about the the reaction of this well the reaction in these situations just based off what we said right if if it goes up to the mid wall it gets rejected if it goes up this way it gets that and if it goes up like this you get a chop okay so that is that right there go ahead and screenshot it for you uh just so you guys can have it uh when you do need it okay now we actually go and let&#39;s see if we can draw it on a chart so let&#39;s do it on Nvidia uh let do where is NVIDIA there you go okay so this is NVIDIA this is the chart I&#39;m going to try to do it as quickly as uh possible to to kind of get an idea of what&#39;s going on now people are going to say well what time frame do we use in majority of cases you&#39;re going to use the 1 hour on some occasions you&#39;re going to use the daily okay but in majority of occasions we&#39;ll do 1 hour because those are much easier to see some of the candles in smaller time frames okay here we go let&#39;s start off the top what do we got here this is a liquidity formation how do we know it&#39;s a liquidity formation because what it did is it broke outside of this channel this was the channel That was in so this was the standard deviation Channel you can see a gap down below it here was a liquidity grab so we could identify these as two different things and we&#39;re going to label them so we&#39;re going to label liquidity formations and it is is where everybody gets to get creative however you want to label them it&#39;s up to you but what you do is you label these we usually just like using red boxes to give us an idea but you can label this as a liquidity formation and you can label this as a liquidity grab so this one it&#39;s going to be a say that okay now it&#39;s because again it went above that channel it broke out of it and it chopped near the high that&#39;s a liquidity formation here is a grab so you put G here you put F or you can even label it however you like in the beginning you&#39;re going to have to use you know letters but once you get the hang of it it&#39;s really not that hard okay so you&#39;re going to put LG okay we&#39;re not talking about Logitech we&#39;re talking about LG and then LF stands for liquidity formation not let&#39;s [ __ ] go okay there you go so that&#39;s two of them that we have right there what about um and we&#39;re going to assume we don&#39;t actually see this I forgot to say that okay because we want to predict what happens so we&#39;ll assume the stock is right there so we can already say that okay if the stock breaks below here it&#39;s going to get liquidated it&#39;s going to drop very very quickly cuz this is a grab how do we know this is a grab because again this was outside of the standard deviation this was outside of the standard deviation what is the standard deviation this is the channel there&#39;s the channel we drew that&#39;s how we got these two zones now speaking of zones this is considered to be what this is a continuous Trend so in a continuous Trend you can always find levels and this is also an instab buy candle so this is a trigger so that&#39;s also a Zone too so if I wanted to go ahead and actually draw a Zone I could draw a Zone in one of these and I could also draw a Zone in here so if the stock is crashing I want to find a zone for maybe a buy somewhere around here where do you think the buy is going to be well the buy is going to be somewhere in these ranges so the stock went up up up and it chopped I could make a bed and say okay well you know we had the expansion candle everything started to chop here so I could make a bet that maybe in this continuous Trend there&#39;s a buy right at this Gap because we didn&#39;t actually close it so there&#39;s a gap right there and we&#39;re going to label that um as gray so that&#39;s my Gap range right there okay cool now we got three so we use the continuous buying to find a Zone and the the zone that we like here is the gap now in some other cases what are you going to like maybe you like the the reversal maybe you&#39;ll find a Liquidation in it right maybe you&#39;ll find a liquidation candle a liquidation injection whatever it is you&#39;ll find um you could have said this candle but because this red one was pretty big it doesn&#39;t count but you&#39;ll find a Zone in here and you might ask well where do I draw the Zone wherever you think there&#39;s a trade so since the liquidity grab is down here I want to see where can I buy when it drops below it is there a point for me to draw Zone here no not really it&#39;s kind of pointless but we&#39;ll consider that and we&#39;ll say that that&#39;s a continuous T all right that&#39;s a continuous trigger so we found that and that&#39;s the Gap then we have this big buy candle so this big buy candle there&#39;s a Zone in it now if you guys remember from a while ago in buy candles where there&#39;s major major buy or breakout candle as we like to refer to the majority of times the easiest way to to find where they basically have the biggest buy or bid is usually one of two you keep zooming into the time frame so you start with 1 hour and you ask yourself what is the most crucial candle well it&#39;s the one that violated the most levels is this candle the one that violated the most levels no because it closed right at the top so it means that this is the candle right here that we&#39;re looking at so this is our Zone how do we know it&#39;s this candle cuz this candle violated all those zones and closed higher now could you have said this candle is more crucial no because this one closed lower it closed a little bit higher than all of these but it also chopped here so we don&#39;t really care too much about that we think that the buyers are in this candle right here and we have a lesson on that from a while ago but we&#39;ll label this as purple and we&#39;ll just call it that and then we&#39;re going to go zoom into to a three minute because we think the zone is too big it&#39;s $1 a half uh well going to a smaller time frame did not help it&#39;s still the same level okay we&#39;ll go to the five minute now we got the five minute and you zoom in you try to ask yourself well what is the candle well it seems like the one that actually broke and closed higher it was this one cuz this one popped and it went back down this one dropped and it went back up so it can&#39;t be that red candle it has to be this green one that&#39;s the buy well I mean we have 70 cents it&#39;s better than nothing but that&#39;s a zone for us to maybe look at when we&#39;re trading and we&#39;ll consider that to be a major level as well okay and that&#39;s a buy point so now that we have this we&#39;re not going to do the open interest because uh it&#39;s already a month late but you could also go and do the open inter as well but this is just the simple one now you go ahead and you find the liquidity injection is there any liquidity injection we found liquidity grabs but no liquidity injection there&#39;s a liquidity injection here there&#39;s one uh here as well it&#39;s a little bit smaller this one seems to be the most obvious it&#39;s the biggest one and we said that you always want to use the candle that&#39;s basically smaller than the other one to make sure that you&#39;re getting a perfect Zone but in this case it&#39;s basically going to be around here which is pretty big and we&#39;ll label this as blue and you could also make the argument that you could maybe set the level here doesn&#39;t really matter all that matters is that you know that there&#39;s a barrier down here for that stock and it&#39;s going to bounce somewhere in between them and these are not things to trade off of if they&#39;re huge but there&#39;s something to actually base off of so if I zoom in a little bit I&#39;m probably going to find a stronger Zone which I will I mean might as well and you can see that the actual zone is right here so this is the candle because it dropped instantly went back up so this is the actual Zone all right so we found the answer to that okay cool and this is going to be Li which is liquid injection this one is by trigger BT and again you can use whatever symbol it doesn&#39;t really matter just I&#39;m trying to label it just so you guys have an idea okay cool now we go and we do the same thing we talked about which is what is the reaction to that so you pull up your little cheat sheet uh that I have posted somewhere here so you look at this we have an LF LF is referring to liquidity formation what&#39;s the reaction tip point becomes a wall and needs to Gap or chop or break uh to break so it&#39;s telling us that it has to chop near and then reject so we draw that if the stock ever gets to there it&#39;ll probably do this and then reject okay and that the only contingency is that if it gaps above it okay cool now we know what that is and it&#39;s going to get very close to it and if you know how to draw blocks you would know that the block order is slightly below so this would be the expectation for that path okay cool what about a liquidity grab you go ahead you pull the cheat sheet again what does the cheat sheet say it says that if it&#39;s a liquidity grab tip point becomes a booster to push more okay so what does that mean it means that this Zone if the stock breaks it it&#39;s going to go below it touch and then use it to push lower in this case so it&#39;s going to be a continuation thing okay what about CT it&#39;s a continuous Trend what is the reaction of a continuous Trend retest and continue so all it means is that you&#39;re going to go down to here bounce and then you&#39;ll continue whatever Trend you&#39;re in which in this case is going to be a minor buy to the upside so you&#39;ll have a minor buy maybe you could extend it down to here right maybe back all the way near up to this Zone and then it&#39;ll continue higher or or lower so we&#39;ll label this gray we&#39;ll label this green we&#39;ll label this red okay now what about a buy trigger well you look at the cheat what do by trigger does major reaction oh there&#39;s a big buyer here okay cool so then we go ahead and we actually draw the big buyer in this situation and it comes and a big bounce so you probably catch a big bid all the way to like 125 or whatever so you could even make the argument up to 126 but there&#39;s a big buyer here but the reaction is a little bit more bigger than this one okay cool so we got that and that&#39;s going to be your pink one that&#39;s assuming it gets there okay so you&#39;re seeing it you touched you down you went to here now you&#39;re touching now you&#39;re bouncing and then finally the bottom one this is a uh liquidity injection so it&#39;s referring to uh one of these and it says that if it&#39;s an injection then it creates a wall or barrier stock chops and reverses so it&#39;s kind of like a formation but it&#39;s temporary and it&#39;s much bigger so you could always say that if the stock ever comes down to here stock chops chops chops and then reverses okay and that&#39;s the blue and this is not using the open interest yet and then you combine all of these right you combine all of these and then you&#39;ll get something like this and you there you go what do you guys think okay now the question is is how does it do so we&#39;ll go ahead and play it and let&#39;s see if this is right and again as long as we get 30 to 40% of it right that&#39;s what matters the most we don&#39;t have to get it 100% but at least it&#39;s better than nothing so we draw it and let&#39;s see how it goes so if it liquidates below here you can see it just continued in the after hours you got another dump you got the continuation you touch the Zone here and you got a big buy so you got a little bit of a bounce you can see how big this bounce is from the the purple Zone it touched it and it bounced all the way to even higher to 129 the first one the blue one you can see how it touched it and it went only back to 129 so it went all the way back to here this one actually went all the way back to here that was a big big bounce and then if it breaks below this you have the expectation that this is going to go all the way down to there and down and you&#39;re catching now you&#39;re expecting it to chop so will it chop in reverse maybe not it just went straight to it so it chopped for a bit and okay it they did it in the after hours so you went slightly below it and then you had a big reversal and it went right back to that zone okay so you can see how it was slightly wrong for the last five minutes or the last hour oh yeah last I think 10 minutes or 15 here you had a big big dump it went right below it and then it instantly rejected right off and it moved so was this 100% no 80% sure not the worst now we never got to here so we never got to see what happens to there but now at least you have the idea of how these rejections work and if you can do this on multiple charts you&#39;re not the only thing you&#39;re not going to consider is the gap so when we do these charts that are posted here we do not consider the gaps as part of the drawing because well we we can&#39;t predict the Gap and you don&#39;t want to predict the Gap but with majority of these you can kind of draw the expectation through and kind of expect it so in this case here we expected it to chop it did it went a little bit higher and then It reversed and never got to the top of the wall and what you do is you go ahead and actually add the walls later on and it&#39;s the same reaction the only thing that the walls are going to help you with in this situation is they&#39;re going to help you with how do you think the drawing is going to be instead of just drawing an arrow the walls will give you specifics they&#39;ll tell you it&#39;s ABC it&#39;s one two 3 5 it&#39;s a market maker cycle or it&#39;s going to tell you it&#39;s a double leg sequence right it goes up chops goes up chops based off the the kind of open interest that you&#39;re looking at and uh I don&#39;t know did this thing ever get to the top here let&#39;s see if it does you can see how like these levels it&#39;s touching it it&#39;s going back staying between it it&#39;s going it&#39;s touching this Zone it&#39;s touching this so it&#39;s not just a onetime thing you can leave them on the charts for a good period of time until you know the stock basically has murdered that but you can see how it&#39;s like it&#39;s going to these walls majority of the times now you&#39;re breaking above it let&#39;s see and we got there you can see how it came very very close to it it didn&#39;t touch it the block was right on this candle it was one of this it was the range from here to here that&#39;s the candle it came very very close and then rejected but that&#39;s good enough that&#39;s also pretty good I mean if you had a short or something you would have shorted somewhere around the morning anyways or as it was breaking down or whatever but this also made another liquidity formation as well and then with that you kind of get an idea of what&#39;s going on but does this make sense any questions I&#39;m going draw this um okay um if nobody has any other questions what I&#39;m going to do is I&#39;m going to ask you guys to do this as your homework assignment the homework assignment is going to be to find a stock of your liking whatever preferably do something that already played out to see if you can do it so so just do like me close your eyes choose a random date right and just click this and then do it and you do not have to add the open interest for now because well we haven&#39;t done the open interest and it&#39;s going to be hard to do it on history so I don&#39;t want you guys going through history and trying to find the open interest levels and all that just leave the the oi alone and then tomorrow we&#39;ll do the open interest on these charts but for now just try to find a liquidity formation a continuous buy a buy trigger um a liquidity injection and this and as long as you have 60 40 50% accuracy you&#39;re good you want your levels to be close you don&#39;t have to be perfect and try to give your levels a little bit of Zone to make sure that you&#39;re pretty decently accurate and if you do them just the way that we usually do them you&#39;ll usually find pretty good levels okay that should be it for now so um whoever is recording I don&#39;t know if anybody is you can go ahead and end recording but if anybody has any questions

Transcript for:Market Panic and Reactions in Trading

Transcript for:
Market Panic and Reactions in Trading