What's good, baby? I know you love seeing my beautiful face every damn morning. What's good, baby? Welcome to boot camp day...
shit. Day six? I believe. Welcome to Boot Camp Day 6, okay? Today, we're back on it with the trading, okay?
We are going to be talking about break of structure, okay? I figured, you know, we're going to get the baby, the beginners, right out. Hold on.
There's a fly. We're going to get the baby. We're going to get the beginner shit out of here first so we can start getting into this because right after this one, right after this trading video, the next trading video is going to be talking about liquidity so we can actually get into some shit. All right.
So first we need to. understand break of structure because we've talked about candlesticks. So we know the little drawings on the chart and now we know trends, right?
Now we need to understand why and when the market's trending and you know, when it actually switches direction. action, when it breaks structure, when it gets a market structure shift, okay? So the simplest way that I can describe a break of structure is a shift in the trend, okay?
So we know, right, trends move in higher highs and higher lows, okay? We also know, or actually I haven't even talked about this, okay? So trends move in higher highs and higher lows, okay, right?
And And then lower lows and lower highs on the contrary, right? In a downtrend. Okay, what makes up a high in the first place?
This is something that I didn't talk about in the trends because I was going to save it for the Break of Structure video. Okay, so what makes a high? A move up, then a move down, right? High.
What makes a low? A move down, then a move up. Low. Okay, so... When we apply this to the charts, okay, it is literally as simple as that.
A high, okay, is a move up, then a move down. A low is a move down, then a move up. Okay, so what does that mean?
It only takes two candles. Essentially, it's a candlestick pattern. So if there is one green candle up and then a red candle down, that's a high. If there is one red candle down and then one green candle up, that's a low it's not it doesn't have to make a perfect little fucking shape okay it doesn't have to look perfect it doesn't have to look pretty because i feel like a lot of people a lot of beginner traders especially think highs and lows have to be like you know like look exactly the same right so let's let's jump into the charts and start outlining what a high and low even looks like before we even get into break of structure because we have to understand what highs and lows look like in order to understand what a break in structure is, right?
Because if that means the trend is changing, if we're saying a trend is higher highs and higher lows and the trend changes, we have to know what those highs and lows even look like, right? So this is a perfect example of an odd looking high that people probably wouldn't even call a high. People would probably call this the high. No, okay?
You can't just lump them together. That's not how this shit works, okay? So first of all, right, we do have a move up, then a move down.
What does it consist of? Literally a blue candle, then a black candle. My chart is blue and black.
It just looks cool that way, okay? That's why I have it, okay? So this is a high. Right, this right here is the high, off the wicks of the blue candle right there, perfect. That's a high.
Okay, and on the contrary, right, we have a move down, then a move up. So what is this? A low.
Cool. Cool, cool, right? This, again, is still a high. It just doesn't look as pretty as this, right?
Why? Because we have a blue candle, meaning a move up, and then a move down. Okay, it's two candles.
And you're probably going to say, well, TJR. are. Where is the high? Is it off the wick of this candle or is it off the wick of this candle?
Well, since a high takes two candles to form, you're going to take the highest wick of whichever of those two candles it is. Okay. So boom, we got a high right here. Okay.
And same thing, same thing down here, right? If this blue candles wick was lower than the black candle, that would be the low. Make sense? Cool?
Good? We got it? Hopefully I don't have to cover that. Hopefully I don't have to cover that again, okay? We can go over another example.
What is this? This is a high. Why?
Because there is a blue candle, then a black candle. Literally, it only takes two candles to make a high. Perfect. Boom. We find the top wick between the two candles.
Done deal, okay? This is a low. Why?
Because there's a move down, then a move up. This is a low. Why? Because there's a move down, then there's a move up.
Cool? Cool. Same thing right here. This is a low. Why?
Because there was a move down, then a move up. Right? If we scale into the four hour and look at this, this is the low, right?
It makes sense that this would be the low and not And not the start of the black candle, or not the wick of the black candle, because if we zoom in and look at it, what the fuck is that, right? This ain't no low. The low's all the way down here, okay? So, boom. We know what lows and highs are now.
Perfect. Clap it up. We got, we got like the super beginner shit done. Okay. Perfect.
All right. We know what lows are high, what lows and highs are. And if we know what what trends are and if we know what lows and highs are, then we can know when a trend breaks and when market structure shifts.
Okay. Why? Because if an uptrend moves in higher highs and higher lows, but then, uh-oh, it doesn't anymore. It ends up breaking.
What is likely going to happen? Okay. It's going to start making lower lows and lower highs. And that is what we call a break of structure, okay?
Meaning we break the trend that the current market, that market is currently in, okay? We break that trend and then flip, flip market direction. flip market structure in the other direction okay and break of structure is very very simple but for some reason i get lots of questions on it and in this video i will try and simplify this shit so literally a child can understand it okay i'm going to try and make this super simple okay a break in structure you to the upside, okay?
And we'll show examples of this on the chart and through drawing, okay? A break of structure to the upside. So that means there is a downtrend currently, right? A break of to the upside is when we have a closure, a candle closure, not a wick, a candle closure above a high.
Remember, what's a high? A move up, then a move down. So that means in order for it to break structure to the upside, we have to see a single candle close fully, meaning closing above this high, meaning the candle body has to be above the wick of the high.
Make sense? Let's find an example on the chart because I'm not sure this makes sense yet because this is how I described the last video and we still had questions. But that's okay. Questions are good. I'm going to try and help you guys understand this.
okay so right here we get a move up then a move down then a move up okay perfect we made a low right here and as you can see right here we had like a miniature uptrend okay we come down get a move down then a move up we get another low cool I no longer care about this previous low. I'm only caring about the most recent one, okay? And we'll get into that a little bit later into this video, okay?
I only care about the most recent high or low that has been made. As you can see here, we previously... Had broke structure to the upside, right? Uptrend.
Okay. Then we have this low. And what happens, right? We have a move down, then a move up.
But then, right, we weren't in a downtrend previously. But what happens with this candle? The body of the candle closed below the low. So what happened? What did it cause it to do?
It started a downtrend. Right? Boom.
Lower high, lower low, probably going up to form a lower high or retracement on the weekly timeframe to come up within here. Okay. So are we starting to understand what a break of structure is?
Now let's try and find a break of structure to the upside. This is just lovely, right? What happens?
We were previously trending up. This gives us two perfect examples of this. Previously trending to the upside, right?
We see a low. What happened to the low? The body of the candle. closed below it what happened to the trend it shifted right we have a high right here we have a low right here where's the next high right here where's the next low right here lower low lower low lower high What's this right here?
I move down, then I move up. That's a low. What's this right here?
Move up, then I move down. That's a high. What's this? A lower high, a lower low.
Wow, would you look at that? It's a trend. It's a downtrend because market structure broke.
Okay, so now that we're in a downtrend, what happens over here? We have a high right here and you're going to say, oh yeah, it broke. Whoa, whoa, whoa, slow down. We also had a high right here. Why?
Why? Why? Why is this? a high guys why is it a high because we have a move up and then they move down we get a closure above it okay close the candle closed above the wick and then what happens Bing bong. Moves to the upside.
Yeah, we did get a retracement down, but hey, look. Higher low. Higher high.
Higher low. Higher high. Higher low.
Higher high. Higher low. Continues.
Okay? That is breaking structure to the upside. Now, what's breaking structure to the downside? Well, it's when we have an uptrend, and then, schmink, a low gets taken out. Right?
Same exact thing, just in the opposite direction, right? Low gets taken out, okay? Boom, we start the downtrend, okay? Pretty simple stuff, right? Let me show you guys what a break of structure is not.
And I think this is where a lot of people slip up. Right here is a perfect prime time example of this. Right here, we get a move up, then a move down.
So what does this make? A high, correct. Right here, we get a move up, and then a move down. This wick goes higher than this wick, right? So technically, this high is higher than this high.
However, we do not give no fucks. We do not give a crap. We do not care about...
wicks going above highs or going below lows. That does not mean anything to us. We need a candle closed because as you can see right here, oh, oh no, it's a higher high. What's going to happen? oh no, it falls?
What? This isn't what TJR taught us. Well, here we are teaching you this shit.
Okay? So we get this wick going higher than this wick, but we don't care because it doesn't close above it. It is not a break of structure unless the candle closes above it. Write that down.
It is not a break of structure unless the candle closes above a high or below a low. Right? For example, if let's say this black wick, let's say this wick went lower than this low, that would not have been a break of structure. That would not have been a break of structure and this whole thing wasn't a break of structure until this most recent low got closed below. That's all a break of structure is.
Whatever the most recent... Okay, ready? So we'll simplify this even more, right?
It's literally a step-by-step execution of understanding where a break of structure is. Number one, identify the trend. Identify the trend.
We'll even write this down. This will be good. Damn.
Can be profitable but can't type. That's how it goes. Is that even the way?
How to spell structure? I don't even know and I don't care. How to spell break of structure. Number one, identify the trend.
Okay, where is it going? Number two, okay. Up trend or down trend. Okay. Number two, if an uptrend, okay.
We are watching the lows, right? Because if we're moving up higher and higher, when are we going to get a break of structure? When the low gets taken out, when the low gets close below, we don't care about the highs, right?
We care about the lows. Okay. number three if in downtrend we are watching highs right for opposite reason right we're moving down so the only way for this thing to turn into an uptrend right is for it to go higher, right? If it keeps going lower, we're staying in the trend. Got it?
Got it. Okay. Number four.
Okay. Once you identify the trend, right? We figure it out.
The can't, okay. In order for it to be a break, again, I misspelled it. In order for it to be a break of structure to the upside.
it has to close above, or actually, we'll make this be a break structure to the downside, because we talked about we're watching lows for the first one. I don't want to confuse you guys. Wow, I can't even type. So in order for it to be a break of structure to the downsize, to the downside, which means it is turning from an uptrend into a downtrend.
Damn, I wonder if I can make this smaller. There we go. It has to close below the most recent low. Does that make sense?
Give me a nod. Yes? Yes.
Okay. Number five. Oops.
Number five. It's the exact same, but just opposite. Let's see if I can spell it right. Structure. Did it for me.
I love technology. Oops, I was just copying. Upside.
Into. And uptrend. Oops, bad grammar on A instead of AN.
In order for it to be a break of structure to the upside, which means from a downtrend into an uptrend. I'll even add that into there because that can get confusing, I know. Cool? So in order for it to be a break of structure to the downside, which means an uptrend into a downtrend, it has to close below the most recent low. Understand that we are consistently watching the most recent lows and the most recent highs getting formed, okay, we are not listening or caring about past lows, okay?
So, in this example, this gives us a perfect example, okay? Right? We make this low right here. This low, yes, it's lower than this one. But why do I not care about it anymore?
Because this one is the most recent low that was made. Yes, price ended up closing below both of them, so we wouldn't have had an issue. But I know damn well that some of you guys, if it only closed below this one and not below this one, you guys would have been having a heart attack, shivering your fucking timbers, deciding whether or not to take a short. Okay?
So we take the most recent low or high made. Okay, same thing with this. Same thing with this over there, right?
We have a high right here. Oh, we make another high right here. Why is this? TJR, why are we using the wick of this?
This because up- and a down candle. How do we mark our highs? The highest point of those two candles. All right? The wick.
Right there. We got it? We closed above that. Yes, we closed above both of these yet again.
However, We don't care about this high anymore. Okay, there will be times when price will consolidate, right, not within a trend, right? It'll just be consolidating and you'll see a lot of that, right? You'll see, oh, move up, right?
Right here, move up, then a move down. Now this is a high, move down, then a move up. This is below move up then i move down this is a high move down then i move up this is a low right this is just pure consolidation there is no trend within however many days this was this would have been a terrible trading week for gold right there was no trend within this there was no break of structure market had no clue where it wanted to go oops okay does that make sense I feel like that is the easiest way that I could have put break of structure at all.
Okay? We have it laid out. It is a step-by-step formula.
Number one, identify the trend. What's the trend? Look at it.
Lower lows and lower highs. Perfect. We're in a downtrend. Okay, so we are in a downtrend.
What are we watching? We are watching highs. Where is our most recent high?
Right here. So in order for this to turn into an uptrend again, we have to wait for the daily time frame to close above here. We just got to sit back, relax, and wait.
This wick is not a high. This wick is not a high. This candle forming is not a high. If the next candle that forms is down though, then yeah, we'll move the high to there.
But that hasn't happened. So where's the most recent high? Right there.
Cool. And when does it turn into an uptrend? When we get a candle closure above there. Okay.
We'll show one more example of a break of structure. I'm gonna throw this on the weekly. Oh, this is money. Okay.
Right here. Right? We're trending up. Alright.
Or, actually, no. We'll go into like a 15 minute time frame. This'll be good.
And again, remember guys, remember, remember, remember, I don't want you to watch this break of structure video and instantly be like, when there's a break of structure, it means it's going to go up forever. Or when there's a break of structure, the downside, it's going to go down forever because that is not true at all. Not, not true. Okay. Not true whatsoever.
Because remember in our trends video, if you have to rewatch that today, I highly suggest you do so. Remember in our trends. video. The weekly holds more power than the daily.
The monthly holds more power than the weekly. If we see a break of structure to the downside on the daily, like we saw right here on gold, or sorry, on GU, right? Why is this a break of structure to the downside? Move down, move up.
This is the low. We close below that. Market starts trending down.
If we see a break of structure to the downside on the daily, but the weekly, we're still bullish. It's just a retracement. Was this a break of structure?
Little homework, little tip and trick for you guys. This was the most recent low that we had. Is this a break of structure?
No! Why is it not a break of structure? You're probably saying, low, This looks like a liquidity sweep. And oftentimes, market will do this a lot to fake people out who think that a wick below a previous low is actually a break of structure. Because what's market probably going to do?
It's probably going to come up a little bit. Okay. Yeah, maybe the next weekly candle will close below here. Maybe.
If it wants to. But we have to wait for that. We can't just say... good enough, sell, right? Because we don't want it to be good enough.
We want to know. And because even when we know for certain, we don't actually know. So why would we, why would we take a trade off of something that's already low probability of being a break of structure and already being in a market that's already very difficult to have a high probability to trade in, right?
We're literally just reducing our chances of being a higher probability trader by taking back. I had setups like this. Right? We need to wait for the low to get closed below. Same shit with this.
Same shit with this. This is an exact example of this right here. Same thing with this. Right? What's this?
Move down, then a move up. This is a low at one point in time. At one point in time, this black candle right here, this was full, a full black candle to the downside.
It looked like this. I know, I know damn well that 90% of retailers were just short. It's going down forever. And then what happens?
Market never fucking breaks structure and we push higher. Same thing here, right? We get a move down, then a move up.
No break. Move down, then a move up. No break.
And market continues to push higher and higher and higher and higher and higher because the trend never was broken. Trend never broke. And what were these? These were just liquidity sweeps. And we will learn about that next time.
Okay. Hopefully that covered break of structure for you guys. It has to be a close.
Let's go back to that. That little thing that we had. Let's do this on the daily.
And let's drag this all the way up here. Identify the trend. Is it going up?
Is it going down? Is it going in higher highs and higher lows? Is it going in lower highs or lower lows? Boom.
I literally made a checklist for y'all. Figure it out? Okay, perfect. It's in an uptrend.
If it's in an uptrend, we are watching the lows. Perfect. Hawkeye those things. Watch every single new low that gets made, okay? That's actually something that I want.
Because we only care about the recent ones that get made. Those are the only ones we care about. Okay, those are the only ones we care about.
Those are the only ones that need closure above. Because who gives a fuck, right? If markets moving like this, or... Right, I mean, we showed it in that GJ chart. But if markets moving higher highs, higher lows...
And then one of the loads gets wicked below, but it keeps going higher. We don't care about that, right? Because market structure never was broken.
We only care if it gets closed below, right? Also, right? Sorry. For the most recent.
low point. Okay, we're going like this, right? Who cares about this low if this new low was already made? If it's supposed to move in higher highs and higher lows and the most recent low gets broken, gets closed below, then that means the structure... is shift.
Who cares about this one? It means we made a new low. We made a lower low compared to this one. Who gives a fuck about this? This was the trend.
This was the most recent low. No one cares about this low. No one cares about this high. We care about the most recent ones that were made.
Same thing for the downtrend. Okay, please, please drill that into your head. And I suggest you guys write this down. Okay, so we know that we're in an uptrend.
And if we're in an uptrend, we're watching the lows. We're watching the most recent ones that get made and we forget about the old ones. Okay, after the most recent ones get made.
and then once it's a break of structure to the downside in an uptrend, it has to close, the candle has to close below that most recent low, and that's it. That's break of structure. we got it okay so what i want you guys to do for homework is find 10 examples of breaks of structure this should be very very easy because it's pretty easy to spot especially with this checklist find 10 examples of an actual break of structure within the market and then find 10 examples of what someone a noob who hasn't watched this course who hasn't watched this video yet who hasn't watched my how to spot a break of structure uh, in the market video, find 10 examples of what someone might consider a break of structure, but actually isn't a wick below a low or like a wick above a high, right?
Something that might fake somebody out that someone might believe is a break of structure, but isn't. So you guys can get good at spotting actual breaks of structures and then fakes. Okay.
Do those two things. You need to have 20 examples by the end of this, okay, until you're done with your homework. You need 10 examples of breaks of structure and 10 examples of fake outs or fake breaks of structure.
Okay, not real. All right, that's your homework. Make sure you get it done before tomorrow's video. I'll see you boys tomorrow.