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Understanding Storyline in Trading
Jul 31, 2024
Lecture Notes: Introduction to Storyline
Overview
This is the third episode focused on storyline
Main topics:
Identifying the start and potential end of a storyline
Importance of understanding probabilities in trading
Key Concepts
Definition of Storyline
Movement from one point to another (or potential other)
Emphasis on the uncertainty of price movements
No trader can predict price with 100% certainty
Importance of Time Frames
Always deal with two time frames:
Intraday Traders:
Use daily and H4 time frames for entries
Swing Traders:
Use weekly and monthly time frames
Understanding the higher time frames helps intraday traders make better decisions
Time Frames to Focus On
Only three time frames needed to analyze storyline:
Daily
Weekly
Monthly
For swing traders, focus on monthly and weekly storylines
Daily can be ignored if the monthly is understood
Support and Resistance
Always consider one time frame below when dealing with support and resistance
Example:
Monthly storyline requires analyzing weekly levels for entry points
Identifying Storyline
Basic Steps
Identify the time frame being dealt with
Check if the time frame has rejected the zone
Determine if there is a breakout one time frame below
Example Breakdown
Weekly bearish storyline:
Identify if there has been a weekly rejection
Look for daily breakouts to confirm the story
Entry Points
For a weekly bearish storyline, look for entries on the daily time frame
Example conditions for entries:
Price reaches weekly resistance and rejects
Daily breakout occurs
Summary of a Weekly Bearish Storyline
Steps to confirm:
Weekly reject weekly
Daily breakout
Significant zones on the daily for entries
Final Thoughts
Understanding storylines takes time and practice
Aim to recognize patterns and develop a strategy based on storyline confirmations
Importance of flexibility in trading approaches
Study Tips
Review previous videos and notes
Practice identifying storylines in real-time charts
Document your learnings and observations regularly
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Full transcript