Lecture Notes on Candle Range Theory (CRT)

Introduction

• Focus on deeper understanding of charts and trading.
• Aim to enhance market trading skills.
• Encourage to set aside preconceived notions and take notes.

What is CRT?

• CRT: Candle Range Theory.
• Each candle represents a range.
• A candle can either:
  • Be broken out of (next candle closes below).
  • Wick below and close above (Turtle soup), indicating a potential rally.
  • No third option exists.

Identifying Candle Ranges

• Define the range to trade (Monthly, Weekly, Daily, etc.).
• Example of ranges:
  • Monthly Candle: Open, Low, High, Close (Bullish).
  • Weekly Candle: Open, Low, High, Close (Bullish).
  • Daily Candle: Open, Low, High, Close (Bullish).
  • 4-Hour Candle: Open, Low, High, Close.
  • 1-Hour Candle: Open, Low, High, Close.
• Importance of identifying the correct range to trade.

Fractal Nature of Price

• Prices are fractal: behavior on higher time frames reflects on lower time frames.
• Monthly candles are simply slower versions of 1-hour candles.
• Practice on lower time frames to build experience.
• There is no fixed time frame alignment; each time frame has its own pace.

Steps to Trading

1. Define Your Range: Decide which range you want to trade (Daily, Weekly, Monthly).
2. Understanding Relationships: Each range (candle) relates to the previous one (Turtle soup).
3. Opportunities: Each candle offers a new opportunity if a mistake is made.
4. Open and Key Levels: Look for open key levels and turtle soup for trading opportunities.
5. Market Patterns: Market moves from range to trend to range, always seek the patterns.

Understanding Turtle Soup

• Turtle Soup refers to the market's tendency to reverse after a false breakout.
• Can expect price to trade into the 50% of the range after a turtle soup event.
• Each candle has a significance (candle one = accumulation, candle two = manipulation, candle three = distribution).

Trading Strategy

• Sell above the open of candle three if bearish; buy below if bullish.
• Look for entries at specific candles based on previous price action.
• Importance of journaling trades and understanding losses to improve.
• Emphasize the relationship between entries and the market's behavior.

Summary of CRT Concepts

• Each candle is a range.
• Turtle soup indicates potential reversals; target 50% of the range afterward.
• Recognizing the importance of timing in trading; timings affect price action.
• Focus on learning from losses and refining trading strategies.

Homework Assignment

• Reverse engineer all trades from the year 2023.
• Understand how CRT principles applied to each trade.
• Review the pinned messages on Telegram for additional insights and highlights.