Notes on Candle Range Theory (CRT)

Introduction to CRT

• Focus on understanding Candle Range Theory (CRT)
• Aimed at dedicated learners; no shortcuts or "Holy Grail" strategies
• CRT helped develop the 9 AM CR model

Understanding CRT

• CRT stands for Candle Range Theory
• Generally, presented as a three-candle model, but not limited to three candles
• Basic Structure:
  • First candle establishes range (high and low)
  • Second candle manipulates below (wicks, turtle soup)
  • Third candle distributes higher to the range high
• Can involve multiple candles hitting range high/low

Types of CRT Models

1. Three Candle Model

   • Commonly understood model
   • Consists of accumulation, manipulation, and distribution phases

2. CRT Plus Inside Bar

   • Higher probability setups
   • Involves more than three candles forming within the range
   • Better suited for beginners and those seeking confirmation

Key Concepts in CRT

• Mechanics of CRT:
  • Mechanical signatures in market algorithms
  • Every candle has predetermined highs and lows
• Combining Concepts:
  • CRT can be combined effectively with other trading concepts
  • Using power of three and turtle soup enhances trade probability

Entry Strategies

• Midpoint of the Range:
  • Target midpoint (equilibrium) of the range for potential reversals or continuations
  • If focusing on midpoint, win rate can improve
• Candle Types:
  • First candle is accumulation, second is manipulation, third is distribution
  • Higher probability trades occur when these dynamics are understood
• Order Blocks:
  • Thick down-close candles tapping key levels are high-probability order blocks
  • Entries should align with the change in state of delivery (CSD)

Trading Phases: Power of Three

• The power of three involves:
  1. Accumulation
  2. Manipulation
  3. Distribution
• Each phase has a specific function in price delivery
• This can apply to every timeframe, emphasizing fractal nature of price action

Key Timing and Ranges

• Fractal Time:
  • Higher timeframes affect lower timeframes (e.g., daily chart influences hourly)
  • Specific times of day are better for spotting highs and lows
• Magic Times for Trading:
  • For Forex: 1 AM, 5 AM, 9 AM, 1 PM, 5 PM, 9 PM
  • For Futures: 2 AM, 6 AM, 10 AM, 2 PM, 6 PM, 10 PM

Psychological Aspects of Trading

• Filter Approach:
  • Only execute on high-probability setups; avoid low probability trades
  • Focus on risk-to-reward ratios; set standards for acceptable trades
• Understanding market psychology can distinguish beginners from professionals

Conclusion

• CRT is a comprehensive trading strategy involving detailed understanding of market dynamics
• Key to success: patience, backtesting, studying, and understanding the concepts thoroughly
• Future content will elaborate further on CRT and its applications in trading strategies.