How To Start Trading Stocks As A Complete Beginner - Ep.3

Summary

In this crucial episode, the host emphasizes the importance of understanding market trends for successful trading. They introduce a fundamental technique to identify uptrends, downtrends, and consolidation by focusing on validated highs and lows. Common mistakes made by traders, even professionals, are highlighted, and a step-by-step guide is provided to avoid them. The video also features a forex broker promotion, Hankotrade, offering a deposit match for new traders. The host promises more advanced content in future episodes, encouraging viewers to engage with the series.

Takeaways

• 🎉 The video celebrates reaching 5,000 likes and releases episode 3 as a crucial part of the series.
• 📈 It emphasizes the importance of understanding market structure as the foundation for successful trading.
• 🍎 The video uses a play on words and visuals to highlight the 'core' concept of market analysis.
• 🚀 The video promises to give viewers a significant advantage over other traders by teaching them market trends.
• 🤔 It points out a common mistake traders make by misinterpreting market trends based on past data.
• 📊 The script introduces a 'secret formula' for identifying the type of market one is in, suggesting it's a step-by-step guide.
• 💰 Hankotrade is introduced as a forex broker with a promotion for new deposits, highlighting its benefits for currency trading.
• 📉 The video explains the concept of 'highs' and 'lows' in trading and how they indicate market trends.
• 🙅‍♂️ It warns against a common error where traders assume a trend reversal too early based on a single low point.
• 🔑 The script stresses the importance of a 'valid low' being confirmed by a subsequent high before considering a trend change.
• 🔄 It illustrates how to correctly identify trend reversals by breaking through validated high or low points.

Q & A

What is the significance of episode 3 in the series according to the video script?

Episode 3 is considered the most important video in the series as it covers the core of how the markets are structured, which is fundamental to understanding everything taught in future episodes.

Why is identifying the market trend crucial for traders according to the script?

Identifying the market trend is crucial because it prevents traders from merely guessing the market direction, which can lead to losses in the long run if done without proper understanding.

What is the common mistake traders make when trying to identify market trends?

A common mistake is assuming the market is reversing when it makes a new low without breaking the previous higher low, leading to incorrect trading decisions.

What does the script suggest about the importance of watching the video for trading success?

The script suggests that watching the video is essential for gaining a competitive edge in trading, as it provides foundational knowledge that many traders overlook or are unaware of.

What is the role of Hankotrade as mentioned in the script?

Hankotrade is a forex broker sponsor of the video, offering a platform for trading currencies and a promotion where they match the first deposit of new sign-ups.

How does the script define an uptrend in the market?

An uptrend is defined by the market making higher highs and higher lows, indicating an overall upward movement in price.

What is the script's explanation for a valid low in the context of trading?

A valid low is when the market price breaks a previous high, making it an official low and part of an uptrend. It is not considered valid until this condition is met.

What mistake do traders often make when they see a new low in the market, according to the script?

Traders often mistakenly believe the market is reversing to a downtrend when it makes a new low, without realizing that the low is not valid until it breaks the previous higher low.

How does the script differentiate between a valid and invalid low in trading?

A low is considered valid when the price breaks a prior high, making it an official low. If the price does not cross the high mark, it is not an official low and the trend remains unchanged.

What is the key takeaway for traders from the script regarding market trend identification?

The key takeaway is that traders should master the structure technique of identifying valid highs and lows to correctly interpret market trends and avoid common mistakes that can lead to trading losses.

What does the script suggest will happen if the video receives a lot of positive feedback?

If the video gets a lot of love, the creator promises to release an episode 4, continuing the series with increasingly advanced trading concepts.

Outlines

00:00

🎉 Episode 3 Release and Market Structure Basics

The script opens with the host expressing excitement over the success of their previous episode, which reached 5,000 likes, and acknowledges the audience's eagerness for the release of episode 3. The host emphasizes the importance of this video, which covers the fundamental understanding of market structure, a concept often overlooked by traders. The video promises to provide a step-by-step guide to identify market trends, which is crucial for successful trading. The host also humorously introduces a sponsor, Hankotrade, a forex broker offering promotions for new traders. The summary of this paragraph highlights the video's significance and sets the stage for the educational content to follow.

05:02

📈 Understanding Market Trends and Common Trading Mistakes

This paragraph delves into the concept of market trends, explaining the basic principle of identifying highs and lows to determine if the market is in an uptrend or downtrend. The host points out a common mistake made by traders, who often misinterpret market movements, leading to incorrect trading decisions. The script clarifies the importance of validating lows and highs to confirm the market's direction, using examples to illustrate the point. The host warns against the pitfalls of premature conclusions and emphasizes the need for a clear understanding of market trends to avoid losses. The summary explains the core idea of validating market trends and the potential consequences of ignoring this principle.

Keywords

💡Likes

In the context of social media and online content, 'likes' refer to the number of times viewers have clicked a 'like' button on a video or post, indicating their approval or enjoyment. In the video script, the creator expresses surprise and gratitude that episode 2 received 5,000 likes, which is a significant milestone that motivates them to release episode 3.

💡Markets

Markets, in the context of trading, are platforms where buyers and sellers come together to exchange goods, services, or financial instruments. The video emphasizes the importance of understanding market structure, which is the foundation of the content being taught in the series.

💡Fluctuating

Fluctuating refers to the constant change or movement up and down in value or level. In the script, the speaker describes the market as always fluctuating, highlighting the dynamic nature of trading where prices do not remain static.

💡Highs and Lows

Highs and lows are terms used in trading to describe the peak and trough values of a market or asset over a certain period. The video script uses these terms to explain how traders can identify the direction of the market trend by observing whether the highs and lows are increasing or decreasing.

💡Trend

A trend in trading is the general direction in which prices are moving. The script discusses uptrends, downtrends, and consolidation as types of market trends, which are critical for traders to identify to make informed decisions.

💡Consolidation

Consolidation in trading refers to a period where the price of an asset moves within a certain range without a clear upward or downward trend. The script mentions consolidation as one of the states a market can be in, which traders need to recognize.

💡Reversal

Reversal is a term used to describe a change in the direction of a market trend. In the script, the creator warns against mistaking a temporary price drop for a reversal, emphasizing the importance of validating lows and highs to confirm a trend change.

💡Forex Broker

A forex broker is a financial intermediary between a trader and the foreign exchange market. The script mentions Hankotrade as a forex broker, suggesting it as a platform for trading currencies, which is a common type of market for traders.

💡Currency Trading

Currency trading, also known as forex trading, involves buying and selling currencies on the foreign exchange market. The video script promotes currency trading as a stable and predictable market, making it an attractive option for traders.

💡Break

In trading, a 'break' refers to the moment when the price of an asset moves past a certain level, often a resistance or support level. The script uses the term to illustrate the concept of validating highs and lows, which is essential for confirming the direction of a trend.

💡Validation

Validation in the context of the script refers to the process of confirming a new high or low in the market. A low is only considered valid if the price breaks a previous high, and vice versa. This concept is crucial for traders to accurately identify market trends.

Highlights

The video emphasizes the importance of understanding market structure as the core of successful trading.

Episode 2 reached 5,000 likes, prompting the release of episode 3.

The video claims to be the most crucial in the series, focusing on market structure fundamentals.

Most traders skip or are unaware of the foundational step discussed in the video.

The video aims to put viewers ahead of the competition by teaching market fluctuation identification.

The speaker uses humor to illustrate points, such as referring to looking at a chart as 'easy peasy'.

The video introduces a 'secret formula' for identifying market trends.

Hankotrade is introduced as a sponsor, offering a promotion for new deposits.

The video explains the concept of highs and lows in market trading and their significance.

Traders often mistakenly believe a reversal occurs when the market makes a new low without breaking the higher low.

A low is only considered valid when the price breaks the prior high.

The video clarifies the difference between an official low and an unofficial low in market trends.

A bearish example is provided to illustrate the validation of highs and lows in a downtrend.

The video stresses the importance of not mistaking an unvalidated high for a trend reversal.

The speaker promises that understanding this technique will become second nature and significantly improve trading skills.

The video series is well-received, and the speaker hints at releasing more advanced content in future episodes.

Transcripts

This is. Holy sht, you guys did it.

You got episode 2, to 5,000 likes. Now I know, I know, it reached 5,000 likes

a couple weeks ago and you guys have been absolutely spamming me with comments to release

episode 3. Well, here it is.

Now, if there was ever a crucial video to watch. This is the one.

This is probably going to be the most important video out of the whole series because its

going to be going over the absolute core of how the markets are structured.

See what I did there? I said core, and I zoomed into an apple.

Ughhh moving on. Now by watching this one video its going to

drastically put you ahead of the competition. Because most traders skip this step entirely

or don t even know about it. Hell, Ive seen some quote on quote professional

traders even go against this rule. So I can not the stress this enough. You did a good

job by click this video. This is going to be the absolute foundation

of everything thing im going to teach you in future episodes.

Let s not waste any time, lets get straight into it.

Now as you guys already know, or I m assuming you know.

The market is made up of highs and lows. Kinda like a roller coaster.

The market is always fluctuating. Our job as a trader is identifying how the

market is currently fluctuating. Is it currently going up, down, or consolidating.

Now you may be thinking. TradingLab, are you an absolute idiot? Can

you not see? You can just look at the chart and tell if the market is moving up or down!

First off, I m gonna have to ask you to calm down and second that was pretty hateful.

This is actually the part where most traders make the mistake.

Looking back at a chart, its very easy to say, oh yeah price is uptrending here, then

started to consolidate, and then started downtrending. Easy, peasy.

Yes, a monkey with a computer can look back at a chart and tell you what it did. No offense

to monkeys. But if you ve ever traded live, you ve probably

realized it s a lot harder to tell if you are in an uptrend, downtrend, or consolidating

while live trading. and if you don t know what direction the market

is trending, well you re really just guessing at that point and you re bound to lose in

the long run. But what if I told you that I have a secret

formula and a step by step guide to easily identify what type of market you re in?

That would be cool right? Well, here it is.

But first, lets talk about today s sponsor. Hankotradeeeeee

If you don t know, Hankotrade is a forex broker. So if you ve want to trade currencies the

dollar, the euro, or the yen. This is how you would do it.

Trading currencies is seriously one of the best ways to trade. A lot of traders think

its one of the best because the markets are a lot more stable and easier to predict. Which

is always a good thing when you re a trader. So if you don t want to trade these currencies,

hankotrade is the way to do it. Like, just look at this review page. Like

cmon, people like em. They are also running a special promotion

where if its your first depositing and you sign up with the link description. They will

match whatever you first deposit. So if you deposit say $183, kind of weird

amount to deoposit it but hey, you do you. If you deposit that, they will match that

and give you an extra $183 to trade with. They re awesome.

Thanks for sponsoring this video hankotrade. Lets get back to the video.

So, one of the first things you learn as a trader is highs and lows.

If the market is making higher highs like this. And lower highs, like this. The market

is trending up. If the market is making lower lows and lower

highs, like this. The market is trending downwards. Pretty simple right?

But when using this technique for trading, often times traders will make an absolutely

crucial mistake and that mistake is this. So say if the chart does something like this.

It makes an upwards movement. Now if we go by what we just learned, we ll see that the

chart is making higher highs and higher lows. So we can call this an uptrend, which it is.

So far so good. But then, something interesting happens

The chart will start moving downwards, making this low.

Like this. Now this exact point is where I see the masses

make the mistake. Not even joking, ive seen professional traders make this mistake.

A lot of traders when they see price make this low right here, they think the chart

is now in a reversal, because it made this low, and think its going to start heading

downwards. So often times, they will enter a short right

at this breaking point. This is a CRUCIAL mistake.

What if I told you this chart is still fundamentally bullish?

Ya see, sure price made this low right here. But this is NOT a valid low. Why?

Because price never broker the Higher low. Which is right here.

In order for price to turn bearish, price needs to break this point. Which it never

does. The chart is bullish until that break happens.

So here is usually where the shorters will enter their trade and end up run into trouble

and the chart will head upwards after this. Making them lose their trade.

Now you might be a little confused so lets really clear this up.

So lets go back to the beginning. A low is only validated, if price makes a

high. Okay, so in the example, we have this.

This low is only an official low, wants price crosses this point, which is the high.

So we can now call this an official low. Because, price broke the high.

If price just does this, and doesn t cross that high mark. It is NOT an official low.

So here we cross, we now have a valid higher low, and are now start to make higher highs.

So we now know this chart is an uptrend. And we can take bullish only trades.

It will only be considered a downtrend if price breaks this point.

It can do anything after this point, it can go up, down, sideways. ANYTHING after this

point, as long as it doesn t break this low, its an uptrend.

So continuing with our example. If price does something like this.

You may get confused. And think this is a low.

If you remember from the core idea of what I said earlier, we only consider it a low

if it breaks the prior high. So in order for this to be an official low,

it has to break this point. So say if it does break this point, our new

low point to break is moved from here, to here.

This is our new low. So now for price to be considered a downtrend.

It now has to break this point. And the process continues.

Let s do a bearish example. Price is making lower high and lower lows.

We only consider this point a high, if price breaks this low. Which it did.

So the price action is in a downtrend and the ONLY way for it to be considered a reversal

and to be considered an uptrend is if price breaks this point.

So if price does this. A lot of new traders will think this is a

break and the chart is now uptrending. But this high is NOT validated because we

didn t break this low. And we have not crossed the actual valid high

point yet, which is right here. Until we do, we are still in a downtrend.

So you should only be taking bearish trades. Once price breaks this point. We are now officially

in a uptrend. And you can start taking bullish trades only.

It might seem a little confusing at first, but if you re having trouble just rewind the

video a couple times to really get the idea down.

I promise once you understand this structure technique, it really becomes second nature

seeing it on charts. Its an extremely important part of trading

and if you master this, your really passing a lot of traders by knowing just knowing this

simple thing. You guys seem to be really liking this series,

so if this video gets a lot of love, ill release an episode 4.

And as you guys know, we are gonna get more and more advanced as the series moves forward.

Thanks for watching and ill see you guys next time.