Understanding Market Structure is the foundation for successful trading. Utilized effectively, it can help assess the markets’ direction, empowering us to make informed decisions about entering and exiting trades, as well as risk management. Jump into Market Structure Part 2 here!
TIMESTAMPS
00:01 – INTRO
00:32 – UTILITY
Part 1 covered: Where is the market trying to go?
Part 2 will cover: Is the market doing a good job in its attempt to go that way?
As traders, it is our responsibility to identify shifts in the market.
Market Structure enables you to navigate through the dynamics of an asset.
This gives us a competitive advantage.
01:22 – IMPLEMENTATION
Is the market doing a good job in its attempt to go that way?
3 steps to assess direction performance of an asset:
1. Define attempted direction.
2. Evaluate trade facilitation based on volume.
3. Determine the success of that trade facilitation according to its impact on the value area.
1. Define attempted direction:
> Market Structure
> Uptrend
> Downtrend
> Consolidation Range
🔎 02:55 Visual examples showing attempted direction.
2. Evaluate the trade facilitation based on volume:
> Volume as a primary means of determining directional performance.
> High volume can confirm the validity of a move.
> Low volume may suggest a lack of conviction.
> Monitor previous day's volume within a trend.
🔎 04:17 Visual examples showing trade facilitation based on volume.
3. Determine the success of trade facilitation according to its impact on the value area:
> Use the Value Area as a structural indicator.
> Progress in your ability to determine if the market is doing a good job.
> Were buyers successful in placing value higher?
🔎 06:18 Visual examples showing how volume can impact value area placement.
> Value can form clearly higher or clearly lower.
> Value can overlap from one side to another, indicating a lesser degree of conviction and change.
> Value can be contained within the previous day's value area (aka an Inside Day).
🔎 07:39 Visual examples showing value forming higher.
🔎 08:05 Visual examples showing overlapping value.
🔎 08:39 Visual examples showing an Inside Day.
Value area placement enables you to identify early signs of a shift in trend.
🔎 09:22 Visual examples showing early signs of a shift in trend.
🔎 10:45 Summary of attempted directions with volume and value area placement all indicating directional performance.
11:47 – TIPS & TRICKS
★ Synthesize all elements of direction and performance for a holistic market understanding.
★ Enhance your analysis by incorporating the Market Profile.
★ Allow yourself time and patience to explore these methods.
12:26 – FINAL THOUGHTS