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Summary

In this video, the focus is on understanding how to trade using price action, particularly with the concept of edges, which are the wicks of candles. The video explains how to identify key levels of support and resistance based on candle wicks and profiles. The presenter emphasizes trading only at the extremes of price action, avoiding the middle range. A detailed walkthrough of using 15-minute candle patterns to predict price movements is provided. Viewers are taught to wait for specific candle formations before entering trades, with a focus on selling at the right edge for optimal results.

Takeaways

• 😀 Candle edges are determined by the wicks, which should be at least 20% the size of the candle body for a healthy market reaction.
• 😀 Larger wicks indicate stronger potential for market reactions, but 20% is a good baseline.
• 😀 You should avoid trading in the middle of the price range; instead, wait for price to reach or react at the edges of the range.
• 😀 Identifying edges involves marking the highs and lows (wicks) of each price profile during the trading period.
• 😀 If price fails to close above or below an edge, it suggests a bearish or bullish market reaction depending on the direction.
• 😀 The market's intention can be gauged by how price behaves relative to previous profile edges, with failure to close signaling a reversal or continuation.
• 😀 Trading should be based on price reaction at the edges rather than entering trades in the middle of consolidation zones.
• 😀 Using a lower timeframe like 1-minute charts helps pinpoint more precise entries after price reacts at an edge.
• 😀 Wait for a breakout and retest within the last 7-10 minutes of a 15-minute candle for a more favorable entry.
• 😀 Always set your stops above the previous candle’s high, and target the opposite edge of the range for profit.
• 😀 The strategy emphasizes patience and market clarity by only trading after clear confirmation of price reactions at significant edges.

Q & A

What is the main concept introduced in the video regarding the Fairly Gap?

The video discusses how the Fairly Gap or inverted Feverly gap doesn't hold in trading, and it aims to teach how to understand and read price action in relation to these gaps.

What does the term 'edge' refer to in the context of this video?

In this video, an 'edge' refers specifically to the edge of a candle, which is the wick. The wick should be around 20% of the body size, and larger wicks are considered better for trading purposes.

Why are we not supposed to trade inside of certain ranges?

Trading inside the range is not recommended because it is not considered an extreme. The focus is on trading at the edges of the range, where price reactions are more likely to happen.

How do we identify an edge when analyzing price action?

Edges are identified by looking at the wicks at the top and bottom of the price range. These wicks represent the areas where price may react, and we avoid trading in the middle of these ranges.

What does it mean when price fails to close above a previous profile's edge?

If price fails to close above the previous profile's edge, it suggests that the market is likely bearish, indicating that price will continue to move downwards.

How does a failed close below an edge indicate a bearish market?

A failed close below an edge shows that price reacted but didn't sustain the movement, leading to the assumption that the market is still in a bearish trend.

Why is consolidation not a good place to trade according to the video?

Consolidation is not ideal for trading because it represents a lack of clear direction. The video emphasizes trading when price reaches an edge, which offers a better chance for price reactions.

How does the one-minute timeframe help in executing trades in this strategy?

The one-minute timeframe helps by offering a more precise entry point during consolidation or after price touches the edge. It allows traders to time their entries more accurately by monitoring smaller price movements within a larger timeframe candle.

What is the role of the last 10 to 7 minutes of a 15-minute candle in this strategy?

The last 10 to 7 minutes of a 15-minute candle are crucial as they are used to track price behavior during consolidation. The price action during this time can indicate potential breakout or breakdown points for setting trades.

What is the significance of creating a candle count for entry in this trading approach?

Creating a candle count is important because it confirms the trend's continuation. A candle count confirmation within a specific timeframe helps to identify the right entry point and assess whether the market is likely to move in the anticipated direction.