Master CHOCH In 20 Mins! ( Change Of Character )

Summary

The 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

00:00

📈 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.

05:03

🔄 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.

10:05

📉 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.

15:06

🛑 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.

Keywords

💡Change of Character

A 'Change of Character' in the market refers to a shift in control from buyers to sellers, or vice versa. It marks a reversal point where the market trend changes direction. For example, when sellers have been dominating the market and buyers start taking over, it signifies a change of character.

💡Order Flow

'Order Flow' refers to the movement of buying and selling orders in the market. It indicates the direction in which the market is moving based on the dominance of buyers or sellers. The video explains that a change in order flow can lead to a change of character, such as when sell orders become stronger and sellers start dominating the market.

💡Internal to Internal Change

'Internal to Internal Change' is a type of change of character where the price reverses within its existing range without breaking the overall structure. The video describes this as a situation where the price is in a bullish trend but reverses in the internal range, indicating a shift from buyers to sellers.

💡External to External Change

'External to External Change' involves the market taking out both extremes of the current range before reversing. This type of change of character often indicates a trap for traders as liquidity is absorbed from both sides before the market direction changes. In the video, this is illustrated by the market double sweeping both level extremes before breaking the structure.

💡Liquidity

'Liquidity' in the market refers to the ease with which assets can be bought or sold without affecting their price. It is a crucial concept in understanding market movements. The video mentions liquidity in the context of institutions taking out liquidity on both sides to trap traders before a change of character occurs.

💡Range Extremes

'Range Extremes' are the highest and lowest points within a market range where price is likely to reverse. They are significant because traders often look for reactions from these levels to determine market direction. The video explains that rejections from range extremes, such as premiums and discounts, can signal a change of character.

💡Premium and Discount Levels

'Premium and Discount Levels' are price points within a range where it is favorable to sell or buy, respectively. The video explains that institutions prefer to sell at premium levels (higher end of the range) and buy at discount levels (lower end of the range), as these levels offer better pricing opportunities.

💡Break of Structure

'Break of Structure' occurs when the price moves beyond its previous high or low, signaling a potential change in market direction. It is a key indicator of a change of character. The video describes a break of structure as a confirmation of a change, such as when the price breaks a previous swing low after reacting from a premium.

💡Institutional Orders

'Institutional Orders' refer to large buy or sell orders placed by major financial institutions. These orders significantly impact market dynamics and can lead to a change of character. The video highlights that large sell orders from institutions can shift the market from a buyer-dominated phase to a seller-dominated phase.

💡Scalping

'Scalping' is a trading strategy that involves making small, quick trades to take advantage of short-term market movements. In the video, scalping is mentioned as a way to capitalize on a change of character by finding precise entry points for short positions once the market direction has shifted.

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

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see you guys next video