Market Structure and Price Action Trading

Introduction

• Market structure is crucial in price action trading.
• It consists of uptrends, consolidations, and downtrends.
• Primary strategy:
  • Buy during uptrends
  • Sell during downtrends
  • Avoid trading during consolidation

Phases of Market Structure

• Impulses: Trend moves
• Corrections: Pullbacks
• Market operates like an auction; buying and selling occur at acceptable prices.

Common Mistakes in Understanding Market Structure

• Incorrectly reading highs and lows.
• Focus on large wave structures rather than small movements.
• Swing Structure vs. Substructure:
  • Swing Structure: Bigger trend waves
  • Substructure: Smaller trends within the larger trend

Practical Example: Structure Mapping

• Analyzed a trend shift example using GB/AUD on 1-hour timeframe.
• Mapped swing structure: Identified impulse (upward moves) and correction (downward moves) waves.

Detailed Analysis of Structure

• Focus on big picture, not every small move.
• Substructure Trading:
  • Possible to trade smaller trends within the bigger move.
  • Look for smaller bearish opportunities within an overall bullish trend using lower time frames (e.g., 15-minute chart within an hourly trend).

Importance of Fractal Nature in Markets

• Patterns repeat across timeframes.
• Valid trends can exist on different timeframes (hourly vs. 15-minute).
• Employ strategies like break-even or trailing stops to protect against reversals.

Trade Management Tips

• Differentiate between swing and substructure.
• Take profits before the highs or lows of the swing structure.
• Avoid extending substructure trades beyond the swing structure bounds.

Conclusion

• Encouraged to backtest and gather data.
• Suggested building personal perception of the market.
• Offered a free course link for further learning about market structure, supply and demand, and other core trading concepts.

Final Advice

• Trading with the trend is secure.
• Use the knowledge to backtest and refine strategies.
• Actively engage in learning and trading, avoiding procrastination.