Lecture Notes on Market Trading Mechanics

Questions and Interaction

Definitions:
- Strong High: A point where liquidity is grabbed, leading to a break of structure.
- Strong Low: Opposite of strong high.
Formation Importance:
- Understanding formations is crucial; referred to as QM (quarterly market) formations.

Liquidity Definition:
- Refers to stop losses and pending orders in the market.
- Often seen as magnets that price moves towards.
Clearing Liquidity:
- Not all liquidity is equal highs or trendlines; can also be from single swing highs.
- Breaks should be confirmed with a body closing, not wicks.
Market Structure:
- Example of lower highs and lower lows; common trading expectations.
- Common approaches include order blocks, supply and demand, trend lines, etc.

Smart Money Behavior:
- They often do the opposite of retail traders to capture liquidity.
- Use liquidity pools to their advantage.
Order Blocks:
- Defined as specific price levels where significant market movement occurs.
- Critical to differentiate between order blocks, breaker blocks, and rejection blocks.

Identifying Order Blocks:
- Order blocks not defined by the entire candle; focus on specific price levels.
- Key focus on closing prices of candles rather than opening prices.
Breakers and Rejection Blocks:
- Breaker Blocks: Last down candle before market manipulation.
- Rejection Blocks: Areas of support/resistance identified through price action.

Emphasizes the importance of understanding trading logic over memorizing terminology.
Focus on fresh levels; tested levels lose relevance for trading.
Use of line charts to better visualize price action and identify significant zones.

Always prioritize closing prices of candles for defining entry/exit zones.
Practice identifying market structure shifts and liquidity pools.
Understand the behavior of smart money versus retail traders for effective strategies.