Master CHOCH In 20 Mins! ( Change Of Character )
Summary
TLDRThe video script explores the concept of 'change of character' in market trading, where the control shifts between buyers and sellers, leading to potential reversals. It delves into three types of changes: internal to internal, external to external, and external to internal, using examples to illustrate each. The speaker emphasizes the importance of observing market trends, understanding price reactions at range extremes, and waiting for confirmation of a character change before making trading decisions. The script concludes with advice to focus on mastering one type of change of character for effective trading.
Takeaways
- 📈 Change of character in trading refers to a shift in market control from sellers to buyers or vice versa, indicating a potential reversal in the market trend.
- 🔄 The concept involves three types of changes: internal to internal, external to external, and external to internal, each representing different market dynamics and reversal patterns.
- 📊 Internal to internal change is identified when the price, after being in a bullish or bearish trend, reverses at the range extreme instead of continuing the trend, signaling a shift in control.
- 📉 External to external change occurs when the market price breaks through both the discount and premium range extremes, indicating a strong change in momentum and potential trend reversal.
- 🔄 External to internal change is characterized by the price breaking above or below the range after being in a bearish or bullish trend, suggesting an intention to move in the opposite direction.
- 📝 Traders are advised to wait for confirmation of a change of character, such as a break of structure or a return to the initial range, before making trading decisions.
- 🤔 The importance of looking to the left of the chart to understand past patterns and identify which type of change of character occurs more frequently in the current market conditions is emphasized.
- 🚫 A caution against anticipating a change of character too early, such as after an initial break of structure, is highlighted, as markets have evolved and require more confirmation.
- 🛑 The significance of waiting for the full absorption of liquidity at key levels before confirming a change of character and looking for trading opportunities is underlined.
- 🔢 Fibonacci levels are used to identify range extremes, which are critical in determining potential entry points after a confirmed change of character.
- 💡 The script suggests focusing on mastering one type of change of character motion due to the complexity of monitoring all three and the limitations of human traders compared to robots.
Q & A
What is the definition of 'change of character' in the context of market trading?
-In market trading, 'change of character' refers to a shift in the order flow where the control of the market transitions from buyers to sellers or vice versa. It signifies a reversal point in the market dynamics.
How does a change of character manifest in the market?
-A change of character is evident when there is a shift in market control. For instance, if sellers have been dominating and then buyers start to take over, or if buyers have been in control and sellers enter the market, causing a bearish trend.
What are the three types of changes of character discussed in the script?
-The script discusses three types of changes of character: internal to internal change, external to external change, and external to internal change.
What is an internal to internal change of character?
-An internal to internal change of character occurs when the price is in a bullish trend but instead of continuing to break structure, it reverses at the range extreme, indicating a shift from buyers to sellers or vice versa.
Can you explain the concept of 'range extremes' in the context of internal to internal change?
-In the context of internal to internal change, 'range extremes' refer to the discount and premium levels within a trading range. The price reacts from these levels, and a change of character is indicated when the price rejects from the premium and breaks the structure, leading to a reversal.
What is the significance of a price rejecting from the premium in an internal to internal change?
-A price rejecting from the premium in an internal to internal change signifies that the buying power is not strong enough to continue the upward movement. This rejection often leads to a reversal where sellers start to dominate the market.
What is an external to external change of character in trading?
-An external to external change of character happens when the market price breaks the structure on both the discount and premium sides of the range, absorbing the liquidity and then changing direction, indicating a significant shift in market control.
Why is it advised to wait for full confirmation of a change of character in the market?
-Waiting for full confirmation of a change of character is crucial because markets can be unpredictable. Early anticipation can lead to false signals. It's safer to wait until the price breaks the initial range or the range that previously had the sweep, confirming the change in market control.
What is the difference between an external to internal change of character and an external to external change of character?
-An external to internal change of character occurs when the price breaks the external range and then comes back into the internal range, indicating an intention to go up. In contrast, an external to external change of character involves the price breaking both the discount and premium levels of the range before changing direction, showing a more aggressive shift in market control.
Why is focusing on one type of change of character recommended for traders?
-Focusing on one type of change of character is recommended because it simplifies the trading strategy and reduces the cognitive load on the trader. It allows for a more targeted approach and can lead to better decision-making, especially in dynamic market conditions.
Outlines
📈 Understanding Change of Character in Market Trends
This paragraph introduces the concept of 'change of character' in market trading, which is a pivotal shift in market control from buyers to sellers or vice versa, indicating a potential reversal in trend. It uses an example to illustrate how sellers dominated the market initially, only to be replaced by buyers, creating a 'tug of war' dynamic. The speaker outlines three types of changes of character: internal to internal, external to external, and external to internal, and briefly explains the first type, which involves a bullish trend reversal within a range.
🔄 Analyzing Internal to External and External to Internal Shifts
The second paragraph delves deeper into the types of changes of character, focusing on the internal to external and external to internal shifts. It explains how a price on a bullish trend can reverse by reacting from its range extremes and then breaking the structure, indicating a bearish reversal. The speaker advises against early anticipation of a change of character and emphasizes the importance of waiting for full confirmation of the shift, using the example of a double sweep of both level extremes to illustrate a change in direction.
📉 Recognizing Advanced Trading Techniques for Change of Character
In this paragraph, advanced trading techniques for anticipating and identifying a change of character are discussed. The speaker provides an example of a bullish trend slowing down and how an experienced trader might predict an upcoming change. The importance of waiting for confirmation of the reversal through level breaks and observing the market's reaction to range extremes is highlighted. The paragraph also touches on the use of scalping methods and higher time frames for identifying external to external changes of character.
🛑 Adapting to Market Changes and Confirming Character Shifts
The final paragraph emphasizes the importance of adapting to market changes and not relying solely on past strategies that may no longer be effective. It discusses the process of confirming a change of character by waiting for a price to break a certain level and then return to its initial range. The speaker suggests using Fibonacci levels to identify potential entry points for trades after a confirmed change of character. The paragraph concludes with advice to focus on mastering one type of change of character motion due to the complexity of monitoring all types simultaneously.
Mindmap
Keywords
💡Change of Character
💡Order Flow
💡Internal to Internal Change
💡External to External Change
💡Liquidity
💡Range Extremes
💡Premium and Discount Levels
💡Break of Structure
💡Institutional Orders
💡Scalping
Highlights
Change of character in trading is a shift in market control from buyers to sellers or vice versa, indicating a potential reversal.
The concept of change of character is explained through an example, illustrating a shift from seller to buyer dominance in the market.
Three types of changes of character are introduced: internal to internal, external to external, and external to internal.
Internal to internal change is described using a bullish trend example, where the price reverses at the range extreme.
The importance of waiting for full confirmation of a change of character before making trading decisions is emphasized.
External to external change is explained as a double sweep of both level extremes, leading to a market direction change.
Market trends and the significance of reacting from range extremes are discussed, highlighting the importance of buy and sell decisions.
The video explains why anticipating a change of character too early can be misleading and advises patience for confirmation.
A detailed analysis of an external to internal change of character is provided, including how to identify and trade it.
The video demonstrates how to use Fibonacci levels to identify potential reversal points in the market.
The importance of market context and adapting to market changes over time is discussed for effective trading strategies.
A step-by-step guide on how to identify and trade an internal to internal change of character is provided.
The video stresses the need to look to the left of the chart to understand past market behavior for better trading decisions.
The concept of 'never anticipate a change of character too early' is reinforced with examples of market traps.
A practical example of a change of character in a bearish trend is analyzed, showing how to spot and trade it.
The video concludes with advice to focus on mastering one type of change of character for more consistent trading success.
The presenter suggests joining a free telegram group for further trading insights, analysis, and motivation.
Transcripts
so what is change of character change of
character is the order flow shift in the
market it's when the sellers take
control of the majority of the positions
in the market after previous dominance
of the buyers and vice versa it could be
a shift of buyers taking control of the
market when previously the sellers were
in control so it's basically a point
where a reversal occurs in simple terms
let's get into it
so here's an example of change of
character so as you can see here sellers
been dominating the market for the
majority of the time and then you can
see a shift this was your change of
character When Buyers enter the market
here since buyers were dominating the
market you can see a shift where sellers
entered the market sellers into the
market
the order flow continued bearish until
what buyers entered the market again and
basically
change of character is just a shift
it's a shift where sellers would
dominate a market and then buyers would
dominate a market then once once buyers
are done dominating the market and
sellers come in so huge sell orders from
the institutions come in and then
sellers will start dominating the market
it's basically a tug of war
so in this lecture I'm going to cover
three types of changes of character
first we're going to cover internal to
internal change then we're going to
cover external to external change and
then we're going to cover external to
internal change
so internal to internal is when price is
on a bullish Trend right so price on the
bullish or bearish vice versa but in
this example we're using bullish so as
it's on a
a bullish Trend obviously this example
would be a bearish reversal so what
we're doing is
price still used the range extreme to go
bullish but instead of breaking
structure here instead of continuing and
breaking structure Here It reversed in
the internal or the range extreme so it
reacted from the discount and came back
the premium and reacted again these are
the range extremes this would be your
What premium and this would be your
discount based on what range based on
this range and price rejected from here
which means it wants to continue up but
then instead of breaking structure and
continuing it's
it's movement and Brake and structure to
then later come back and continue the
bullish Trend and reject it from here
and came what and came back and broke
the previous swing which is our
rejection from
our discount level and the range
and the range that will form the entire
thing so this would be your internal to
internal so then price broke came back
into the range and continued lower and
this is your change of character here's
a perfect example
price was on its way up came up forced
the range this would be a range but then
price came up here you would think okay
this is perfect price is reacting from
our uh discount level that means price
is going to continue higher but instead
of taking this liquidity and breaking
structure it rejected from our premium
the fact that it rejected from your
premium and then came down and broke
this structure and this structure
this means this is a change of character
so when price does come back into range
eventually you know you're looking for a
short why are you looking for a short
because this is a change of character
price went from buyers being dominating
for a certain amount of time to now
sellers entering the market and sell
orders are coming in stronger and
stronger
so let's look for a change of character
okay so what do we have here we have a
rejection from
our extreme which would be a rejection
from our discount and we have a
rejection from our premium
why why are these are extremes because
if you pull out your fib
this would be your extremes right this
would be your
uh discount and this would be your
premium so you have a rejection from
both of them so what are you waiting for
you are waiting for a price to prove
itself now it's a break out of this
range and then if it comes back into the
range you are looking for a short so
that's when you go in your scalping bag
and figure out an entry
to go shorter why because you know the
market is going to change character
okay completed so the market now change
characters now let's look for another
one
okay what do we have here
nothing yet
okay we have a rejection from here
let's see where this goes
okay nothing yet
okay
price looks like he wants to react from
here
okay reject it from here
and now it looks like it's rejecting
from the other Market extreme which
would be uh what our discount why again
we
this will be our range extreme this
would be our range extreme right
so now if price breaks to what side
bullish why bullish because we were in a
bearish trend we're in a bear Trends so
what kind of reverse we want we want a
bullish reversal
why because this would be a change of
character after sellers dominating the
market for a certain amount of time
buyers come in buy orders come in
so let's see
nothing yet okay now we have a break now
if price comes back instead of range
what would you be looking for
yup a long
and price never came back
you could actually say
that if you Market this entire area this
entire order block
as your range extreme
price did come back and went bullish so
let's look at other types of changes of
character so what is the why behind the
internal to internal shift so as you can
see here
prices on a bullish trend
and what do you have probably been
reacting from its extremes the entire
time as it's going up why because buys
come in buys come in why do buys come in
here because it's obviously the best
thing to do is to get into Buys in the
lowest part of your range your range
your range is your market price you have
your discount which makes sense to
buying discount for institutions and
at a premium it would be best to sell
because it's cheaper to sell here and
it's better to buy Here name of the game
Buy Low sell high right so
as the market reacts from your uh
discount which that means buys come in
but instead of breaking structure it
rejects from your premium what does that
mean that means institutions came in and
it makes sense for them right now to
sell at a premium so it rejects again it
comes back here so what happens here we
know that there's buy orders in here why
because like we said there's buy orders
and discounted areas so if if the if
price doesn't break structure it doesn't
have enough buying power here to break
this structure right here and take this
liquidity and continue higher what does
this mean that means the cell orders
here are coming in strong and they're
starting to overpower the buyers in the
market so it's confirmed when
it breaks when it breaks that means the
buyer is completely dominated the cells
the the sellers in the market so when
price comes back into this range we
already know what happened in this range
what happened in this range sellers
dominated right sellers dominated
this range so when price does come back
here this is when we look for a sell to
continue price lower because we had all
the clues that showed us that sellers
are about to dominate the market
so here is a double sweep which would be
your external to external
character change right so here you have
your yeah the market was going bullish
and what happened instead of reacting
from your discount right here price
broke structure right so as price broke
structure price continued above you
would expect a reaction from here but no
price did not react from here this is
why I Say Never Never anticipate a
change of character this early like
let's say oh price broke structure here
so you're like okay this is a breakup
structure that means price is going to
come out from external to internal
this this might have worked in 2019 2020
but the markets changed changed
tremendously too so my advice is to wait
right always wait for the full-on
character confirmation
so instead of reacting from the premium
and reacting from the discount price
took this liquidity into this liquidity
and there's no reason to get into why
because
you know why it's the Trap Traders and
absorb liquidity so price double swept
both level extremes and took them out
completely for then
to change direction and break the
structure and the initial range well
both of these ranges got broken price
comes back once price comes back into
the initial range or the the range that
previously had the sweep preferably the
initial range you can start looking for
a short rate
and here is an example so price was on a
bullish trend
started to slow down let's slow down if
you're an advanced Trader you could have
predicted that there might be a change
coming so this would obviously take some
time this might you might see this the
previous day and you can already
anticipate that there might be a change
of character the day before right
so as you can see price did want to
react from the range extremes but didn't
gave you a slight reaction after stop
hunting then came down took this level
so what would you wait for you would
wait for obviously the the level extreme
but you can see the level Extreme's
already been tapped here so you know
it's more than likely to take the other
end of the external so absorb this
liquidity absorb this liquidity and then
start the reversal when is the reversal
confirmed once this level is broken
obviously this level first and then this
level and then once price breaks this
level and comes back into the range you
can start looking for a short somewhere
here you use your scalper method or you
can use your a little bit of a macro
time frame with a higher stop loss
obviously you can use a a hidden block
or you could use a gap usually occurs as
price skips through the initial range
and you look for it short because you
know the trend is now confirmed right
when is the trend confirmed once the
break happens so now you're waiting for
a pullback and you can even use your FIB
to try and get to a pullback above so
here you would use a pullback above your
premium range and now your premium your
uh discount range somewhere close to
fair price a lot of times it doesn't get
to the fair price so that's something
you need to watch out for
so another thing you want to keep in
mind when looking for an external to
external change of character it doesn't
only have to be let's say price is only
bullish Trend and then it takes out and
then it takes out uh the bearish side
first then comes up to take the bullish
side and then breaks comes down it
doesn't have to be only this way
obviously right it can also be taking
the uh the preferable side first right
so let's say price it's an a bullish
trend
and it Formed inducement broke structure
to the up first took the liquidity then
broke down structure densic liquidity
here and then came back to the range and
then found rejection here to go lower
right so it could be both ways it
doesn't have to be taking one side
specifically first obviously I prefer
this side first but it doesn't really
happen that often in the market looking
for this type of reversal you'll mostly
find it on higher time frames right so
you will find this type of reversal
where the opposite side gets plucked out
first it would be more for a four hour
to a daily type of scenario and you
don't see that often but it has a way
better probability than the generic one
which would be take out the Trap first
and then take out the initial side which
would show that there was a lot of power
in that hunt that forced the breakup
structure this one happens previously
but it's not as high of a percentage as
this one that's why I didn't include it
in the
in a diagram right so here we have the
generic change of character that
everyone teaches right
so it's you have a bearish trend and
then you have a shift shift of structure
or whatever people call it and
um price price breaks above and comes
back into internal so this would be your
it external to internal right
but and here's an example right so you
have your you have your range it was in
a bearish order flow previously and then
you have your range right here then
price takes out the external here to
come back internal this shows that price
has intentions of going up
and it will use the internal liquidity
which would be your OB right here in the
range extremes to push price forward
right and in my opinion this used to
work perfectly back in the day right but
right now if you if you want to if you
want to take advantage of this in a high
accuracy right I would say wait for that
that external liquidity has been taken
right here you would want to wait for
that to at least get wicked wicked
through or broken right for them price
to come back into the range then when
price comes back into the range you
could pull out your Fib from right here
right here and get the range extreme
here it would be your discount and then
you can get in the trade somewhere here
right or once price come up and shows uh
intention that it wants to go higher
again that's when you look forward so
you don't so you don't really look for
you don't really confirm this change of
character until this gets broken and
once this gets broken now you're waiting
for price to come back and range and
then you look for your entry based on
your range or you're looking for a scalp
to go lower to then take it higher
whichever way you want right
so here we have a bearish trend and a
price was in a bearish momentum
but here the high has been broken it
means this liquidity has been taken so
what does this mean that means price is
insinuating that it wants to go higher
right and what a lot of people teach
when it comes to uh character change is
once price break structure they wait for
a pullback to a internal level and once
price start reacting from that internal
level they say
they say
um that uh the character is changing
right and this is more of a 2019 2020
2021 type of approach because the
markets have changed right and in my
opinion best thing to do is as you can
see price broke this level and price
comes back so once price finds this
once price finds this uh
uh internal liquidity which could be
this OB or it could be the extreme OB
right here but this ob's been used so in
my opinion it'll be more than likely
here and the fact that this is
correlating with the 50 range
right here right
somewhere in the 50 range this will
probably work in your favorites so once
price reacts from this level and we're
not gonna guess what this so once price
reacts from this level We're not gonna
just get an A buy or say okay
uh the character has changed we're gonna
wait for this level to be broken in
price to prove itself this would be
something somewhat of your last point of
resistance or your last point of support
right so once price breaks this level
right here
absorbs this liquidity and then comes
back into the range now you can say okay
a character has changed and now you can
start looking for entry based on your
range or wait for a stop hunt right you
can wait for a stop point or you can
wait for uh a set of the setup in your
range and try and ride the momentum as
if it's a continuation
so now prices back in the range we're
waiting for that Peak to be broken
okay so now that Peak has been broken
so now what are we waiting for we're
waiting for price to come back to its
initial range and we look for a setup
right
price came back into the range
stop hunting so now you can say okay
once price starts to pick up momentum
now you can say okay the character has
changed
okay now we have a micro breakup
structure
and the character has changed into a
bullish order flow virus came in the
market
same discontinues
so as you can see you witnessed your
change
so the conclusion here is as a Trader
you should focus preferably on one
change of character motion right why
because you're just a human you're not a
robot and to focus on all three might be
overwhelming so preferably you should
Master one right my favorite and the one
that I use most frequently is the
internal to internal that's the one that
I find most success in these market
conditions right and I always look to
the left I always look to the left and
see which one is occurring more often
right and Implement that because the
market has changed we know about
seasonal Tendencies and everything so it
depends on their mind of volume and
volume that's injected into the market
so you always want to see which one
which one is occurring more and use that
all right guys make sure you like share
and subscribe follow me on Instagram
make sure you join the free telegram
group we always go over trades and uh
weekly analysis and motivational uh
quotes and everything so yeah
see you guys next video
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