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Mastering Break of Structure in Trading

May 26, 2025

Break of Structure in Trading

Introduction

  • Presenter: tjr, a day trader with over seven figures in profit at age 22.
  • Objective: Teach how to identify a break of structure in the market to take higher probability trades.
  • Relevance: Helpful for both new and experienced traders to understand market trends.

Understanding Break of Structure

  • Break of Structure: Identifies a trend shift in market structure and can indicate orders being filled.
  • Market Movement: Three main trends:
    • Uptrend: Higher highs and higher lows.
    • Downtrend: Lower lows and lower highs.
    • Consolidation: Sideways movement.

Identifying Break of Structure

  • Uptrend Break: Occurs when a low is closed below.
  • Downtrend Break: Occurs when a high is closed above.
  • Consolidation: Many breaks can happen; focus on breakouts above highs or below lows.
  • Key Requirement: A break of structure requires a full candle closure, not just a wick.

Practical Examples

  • Analyzing Charts: Use candlestick patterns to identify breaks.
  • Example of Uptrend Break:
    • Monitor the most recent low for closure below.
  • Example of Downtrend Break:
    • Monitor the most recent high for closure above.

Common Misconceptions

  • Wicks are Not Breaks: A wick passing a line is not a break; a full candle closure is required.
  • Continuation vs. Break: In an ongoing trend, breaking the same structure is trend continuation, not a new break.
  • Recent Lows and Highs: Focus on the most recent ones for structure assessment.

Additional Tips and Warnings

  • Break of structure should not be the sole reason to enter a trade — consider context and additional confluences.
  • Confluences are more effective when combined into a complete strategy.

Conclusion

  • Understanding market structure through break of structure can lead to more informed trading decisions.
  • Additional Resources: Free course available for in-depth learning and strategy building.
  • Encouragement to review and apply knowledge skillfully to avoid losses.

Note: Save and review these concepts regularly to reinforce understanding and application in trading scenarios. Further learning resources and videos are available for continuous improvement.