Lecture Notes: Understanding Candle Range Theory (CRT)

Introduction to CRT

• CRT stands for Candle Range Theory.
• CRT aims for deeper market understanding, enhancing trading opportunities.
• Purpose: Shift from preconceived notions and focus on grasping CRT principles.

Key Concepts of CRT

Definition of a Candle

• Every candle represents a range.
• A candle can:
  • Be broken out of by the next candle.
  • Wick below and close above (termed Turtle Soup).
• These outcomes set the stage for market movements.

Identifying Ranges

• Types of Ranges: Monthly, Weekly, Daily, 4-Hour, 1-Hour.
  • Each candle has its own open, low, high, and close.
• Step One: Define the range you want to trade (monthly, weekly, etc.).
• Study how these time frames relate through fractality.

Trading Framework

Steps Forward

1. Define your trading range.
   • Example: Daily and Weekly Ranges.
2. Understanding the Power of Three:
   • Identify the three significant candles (accumulation, manipulation, distribution).
   • Follow the flow of price action through these candles.
3. Review All Time Frames:
   • Monthly, Weekly, Daily, and lower time frames can mirror each other.

Candle Relationships

• All candles are connected:
  • Monthly candle's behavior can be reflected in hourly movements.
• Learn from lower time frames for practice.

Trading Strategy Development

Market Behavior Insights

• Market moves: Ranges lead to trends and vice versa.
• Entry Strategy:
  • Enter trades based on candle formations (e.g., close above/below previous candles).
  • Avoid buying at highs and selling at lows.

The Turtle Soup Concept

• A candle's Turtle Soup behavior indicates potential market reversals or continuations.
• Trade targets: Often aim for 50% retracement of the range.

Practical Application

Journal Your Trades

• Document your trades to analyze what works and what doesn’t.
• Learn from losses – each loss holds a lesson.

Key Takeaways

• Candle One: Accumulation.
• Candle Two: Manipulation.
• Candle Three: Distribution.
• Always consider who might be losing in the market.

Final Homework Assignment

• Reverse engineer your trades, focusing on understanding CRT.
• Watch the 2023 trade highlights for practical examples of CRT in action.

Conclusion

• Mastery of CRT involves continuous practice and understanding of candle relationships and their implications in trading.
• Motivation: Successful traders remain dedicated, constantly reviewing and refining their strategies.
• Watch the lecture multiple times to reinforce learning.