How to journal the Daily Candle using ICT Concepts

Summary

In the video, Oliver discusses the daily candle and the business of power 3, emphasizing the importance of understanding the process and fundamentals behind it. He suggests that by journaling the daily candle's open, high, low, and close, one can build skills and reference experiences. Oliver explains that each unit interacts and influences the others, and by studying their relationships and dependencies, one can navigate the daily candle effectively. He also highlights the role of the environment in shaping the process and the necessity of adapting to it. The video encourages viewers to iterate and learn from each daily candle, ultimately improving their understanding and becoming more proficient over time.

Takeaways

• 📈 Understanding the daily candle and its business involves recognizing the interaction and mutual influence of its components: open, high, low, and close.
• 📊 Journaling the process of the daily candle helps build skills and reference experiences, leading to a better understanding of its fundamentals.
• 🌟 Each new daily candle presents an opportunity to study the input, observe the output, and learn from the feedback, enhancing awareness and skill level.
• 🔄 The process of the daily candle is sequential, with each step (open, high, low, close) depending on the previous one and contributing to the overall structure.
• 📈 The environment plays a crucial role in shaping the daily candle, whether it's bearish, choppy, or range expanding, affecting the process and outcome.
• 🔍 Identifying and understanding the filters within the process are essential for determining the appropriate actions (do x or y) in navigating the daily candle.
• 📝 Journaling should focus on the relationships and dependencies among the components of the daily candle to understand how they contribute to its formation.
• 🚀 Repeating the journaling process over time leads to a deeper understanding and improved ability to navigate the daily candle, as it becomes second nature.
• 🎯 Focusing on the fundamentals rather than complexity allows for more significant results, as a few key components can lead to 80% of the outcomes.
• 🌐 The business of the daily candle is a system where each part has a specific role, and understanding this system helps in implementing strategies effectively.

Q & A

What is the main focus of the video?

The main focus of the video is to discuss the daily candle and the business behind power 3, explaining how to understand the process and start journaling it correctly to build skills and reference experiences.

What are the four units that make up the daily candle mentioned in the script?

The four units that make up the daily candle are the open, high, low, and close.

How do the units within the daily candle interact and influence each other?

The units within the daily candle interact and influence each other in a specific sequence, where each unit depends on the previous one, such as the low depending on the open, and the range expansion depending on the low.

What is the significance of understanding the sequence and structure of the daily candle?

Understanding the sequence and structure of the daily candle is crucial for navigating the market effectively, as it allows traders to recognize patterns and make informed decisions based on the relationships between the different units of the candle.

How does the environment affect the process of the daily candle?

The environment plays a significant role in shaping the process of the daily candle. A bearish environment will lead to a bearish process, a choppy environment will result in choppy price action, and an expanding range environment will lead to an expansive and aggressive process.

What is the purpose of journaling in the context of the daily candle?

Journaling helps traders to dissect and understand the relationships and dependencies between the different parts of the daily candle, which in turn builds their skills and reference experiences, allowing them to better navigate future daily candles.

What does the speaker suggest as the best approach to learning and implementing the fundamentals of the daily candle?

The speaker suggests that instead of focusing on complexity, traders should focus on understanding the fundamentals, the process behind the daily candle, and the few key components that make up the system. By doing this repeatedly, they can improve their skills and become more adept at navigating the daily candle.

How does the speaker describe the process of improving one's understanding and skills over time?

The speaker describes this process as iterative, where traders should continually study the output of the daily candle, learn from it, and bring that new awareness back into the original understanding. Over time, this iterative process will lead to significant improvement and a deeper understanding of the market.

What is an example of a specific narrative that can be derived from the daily candle?

An example of a specific narrative is the 'hunt on previous days low and then reverse with a New York session reversal,' which indicates a price movement that starts by testing a support level from a previous day and then reverses due to market manipulation or other factors during the New York session.

How does the speaker suggest traders avoid getting lost within the daily candle?

The speaker suggests that traders should understand the sequential order of the daily candle, the relationships between its components, and the environment's influence on the process. By focusing on these elements and journaling them consistently, traders can gain clarity and avoid feeling lost.

What is the role of intermarket analysis in understanding the daily candle?

Intermarket analysis can provide additional insights and context to the price movements within the daily candle. It can help traders identify key levels, such as support and resistance, and understand how external factors, like news events or actions from central banks, can influence the market.

Outlines

00:00

📈 Understanding the Daily Candle and Power 3

This paragraph introduces the concept of the daily candle and the business of power 3. Oliver explains the importance of understanding the process behind the daily candle and how to use journaling as a tool to gain insights. The daily candle is described as a collection of units (open, high, low, close) that interact and influence each other. The goal is to build skills and reference experiences by studying these interactions and the feedback received, leading to a deeper understanding and ability to navigate the daily candle effectively.

05:03

🌐 Interconnected Units and Their Influence

In this paragraph, the focus is on the relationships among the units within the daily candle. It is emphasized that each unit (open, high, low, close) has a specific role and is influenced by the others in a sequential order. The paragraph explains how the low cannot be determined without knowing the open, and how the range expansion depends on the low. The importance of understanding this sequence and the structure behind the daily candle is highlighted, as it is crucial for predicting and analyzing market movements.

10:07

📊 Dissecting the Daily Candle's Components

This paragraph delves deeper into the components that make up the daily candle and their interactions. It discusses the need to understand the process, structure, and relationships between the units (open, low, range expansion, etc.). The paragraph stresses the importance of journaling these interactions to gain a better understanding of how each unit contributes to the final candle formation. By doing this repeatedly, one can develop a strong foundation in the fundamentals of the daily candle, which is essential for successful analysis and navigation.

15:09

📈 Analyzing Price Action and Narrative

In this section, the focus is on analyzing price action and the narrative behind the daily candle. It discusses how different factors such as news, market sentiment, and institutional order flow can influence the price action and shape the narrative of the day. The paragraph explains the importance of understanding these narratives and how they fit into the overall structure of the daily candle. By identifying key levels and understanding the narrative, one can better predict and adapt to market movements.

20:10

🔄 Iterative Learning and Improvement

This paragraph emphasizes the iterative process of learning and improving one's understanding of the daily candle. It highlights the importance of studying the output (the closed daily candle) to learn about the processes and structures that led to its formation. The paragraph encourages the viewer to repeat this process over time, which will lead to a deeper understanding and the ability to adapt to different market conditions. By continuously learning and refining one's approach, one can achieve significant growth and become more adept at navigating the complexities of the daily candle.

25:14

👋 Conclusion and Future Discussions

In the final paragraph, Oliver concludes the discussion by reiterating the importance of journaling and iterating to understand the daily candle and its components. He suggests that future discussions will delve into identifying filters and other key elements that can further enhance one's ability to navigate the market. The paragraph ends with a promise to continue the exploration in the next video, leaving the viewer with a sense of anticipation for further learning opportunities.

Keywords

💡Daily Candle

A daily candle refers to a representation of the price movements of a particular asset over the course of a single trading day. It is a fundamental concept in technical analysis, used to understand market sentiment and trends. In the video, the daily candle is the central focus, with the speaker discussing how to analyze and understand the interactions and influences between its components, such as the open, high, low, and close prices.

💡Business of Power 3

The term 'Business of Power 3' seems to refer to a specific method or approach to understanding and analyzing the daily candle in the context of trading. It involves a step-by-step process of examining the interrelationships between the open, high, low, and close prices, and how these elements interact to form the overall structure of the daily candle.

💡Journaling

In the context of the video, journaling refers to the practice of documenting and reflecting on the daily candle's formation and the interactions between its components. This process helps traders build skills, gain new insights, and develop a deeper understanding of market behavior over time.

💡Input and Output

Input and output are terms borrowed from computing and data processing, but in this video, they refer to the starting and ending points of the daily candle formation process. The input is the new daily candle that is expected to print every day, while the output is the final形态 of the daily candle after all interactions and influences have taken place.

💡Open, High, Low, and Close

These four terms refer to the four primary data points that define a daily candle: the opening price, the highest price reached during the day, the lowest price reached during the day, and the closing price. These values are crucial in technical analysis as they provide a snapshot of the day's trading activity and market sentiment.

💡Range Expansion

Range expansion is a concept in trading that refers to the process of the trading range (the difference between the high and low prices) widening over the course of the day. This often indicates increased market volatility and can be a result of various factors such as news events, economic data releases, or changes in market sentiment.

💡Offset Distribution

Offset distribution is not a standard term in trading but seems to refer to the distribution of trades or price movements around a certain point or range within the daily candle. This could be related to how the market reacts to specific price levels or technical indicators.

💡Feedback and Awareness

Feedback and awareness, in the context of this video, refer to the insights and understanding a trader gains from analyzing the daily candle and its components. By studying the feedback (the output or result of the daily candle), traders can become more aware of market patterns and improve their decision-making process.

💡Sequence and Structure

Sequence and structure are critical concepts in understanding the formation of the daily candle. They refer to the specific order and arrangement of the components (open, high, low, close) and how they interact to form a coherent pattern. Recognizing the sequence helps traders predict and navigate market movements more effectively.

💡Fundamentals

In trading and finance, fundamentals refer to the basic principles or core concepts that underpin the analysis and understanding of market behavior. In the video, the fundamentals are the key components and processes involved in the formation of the daily candle, which traders need to understand to successfully navigate the markets.

💡Adaptation and Environment

Adaptation and environment in this context refer to how traders adjust their strategies based on the prevailing market conditions or the 'environment.' The environment could be bullish, bearish, choppy, or range expanding, and understanding these conditions helps traders make informed decisions about their trades.

Highlights

The importance of understanding the daily candle and the business behind power 3 in trading.

The process of journaling the daily candle to build skills and reference experiences.

The concept of input, process, and output in relation to the daily candle.

The four main units of the daily candle: open, high, low, and close.

How the units of the daily candle interact, influence, and depend on each other.

The sequential process of the daily candle formation and its significance.

The role of environment in shaping the process and outcome of the daily candle.

The importance of understanding the fundamentals to navigate the daily candle successfully.

The concept of range expansion and its dependence on the low of the day.

How the relationships among the units of the daily candle influence the entire data candle.

The process of dissecting the daily candle to understand its components and their interactions.

The significance of understanding the narrative behind the daily candle.

The concept of using a few key fundamentals rather than focusing on complexity for better results.

The role of journaling in improving awareness and refining trading strategies over time.

The iterative process of learning from the output and applying it to future trades.

The idea of simplifying complex trading concepts into manageable fundamentals for effective trading.

Transcripts

Hey, it's Oliver. In today's video,

we're going to talk about the daily candle and the business

of power 3 How you can understand this entire process the business

behind it and then start journaling that

process correctly so that we can understand the

main fundamentals of the daily candle and

the whole process behind power 3 and then when we understand

those components and the fundamentals by journaling

it every day because there's a new opportunity every day where we journal

it we're building the skills we're building our reference experiences so we understand

the daily candle and from where we understand the

daily candle we can start implementing the fundamentals to

navigate the daily candle so if you want to get good at the daily

candle or The business behind a

candle as well. This is how you should approach it understanding the process

after each input Looking at the output and then studying

the feedback so that you have new awareness and with that new awareness

you bring it back to the original understanding so

this is how you level up basically on a daily basis so

let's start with here so there's always going to be an

input into this whole process and the

input here is just a new daily candle you can expect

a new daily candle to print I was born in

1999 so ever since 1999 there has always been a

daily candle that's printing so understand that there's always going to be

a new daily candle, a new daily candle and that whole daily

candle is a collection of units that interact with each

other. interact and mutually influence each other. So if you look at this whole

daily candle right, what is the collection of units?

Well there's the open, there's the high, there's the low and there's the close.

And we're going to see these units every time there's a new daily candle

close. So first of all we need to understand that.

Second of all we need to understand how these units

within the whole that prints every day with these

units. It's how do these units interact with each other and

mutually influence each other and also depend on each other.

So that's the first part. Once we have this we know there's going to

be a new open. Every new day that open goes through a process.

So what is the process?

Well we're linking it back towards the open high low close.

How do they interact?

How do they mutually influence? How do they influence each other for that daily

candle? So you're studying the collection of units now,

the open, the low, the range expansion,

the offset distribution and then the close.

So that's the entire process behind power of three and the

power of three we're studying is the daily candle. So

we need to inter, we need to study how these parts,

these units, of the daily candle,

how did they interact, how did they mutually influence each other and what's the

structure because there's a sequence behind it as well.

You can't go from this messing around,

mixing around, right? There's a specific sequence.

It's behind it as well. You got step one,

step two, step three, step four and you need to understand how

each of these steps, how did they interact and

mutually influence each other or you can't have the low.

Without the open,

because the load depends on the open,

such as accumulating open flow for the daily

range, so that's based on the open.

Or you can at the low, if you don't know what the opening price

is, you can at the low,

you can at the Judas, because the open determines where that Judas is going

to high probability seek towards,

so we can see that this sequential sure.

In order from open to low, um,

the low pretty much depends on the open as well,

similar to how the range expansion depends on the low here as well.

You can't have the daily range.

If it hasn't set the low of the day yet,

as you can see our range expansion, which is typically in New York,

it can't happen without the low which is normally set in London.

So you can see the relationships among these units as well,

how they influence the entire data candle.

Notice how every step of the process I outlined here,

each influence the generation,

the manifestation. Or the daily candle.

So understand, okay, what does the open, what does it do?

And then how does that influence the low? Understand the low,

what does it do? How can it perform?

All the details behind it. The fundamental is.

The low. And then the details.

Get like three or four. And then see how the low

influences range expansion.

You can't have range expansion without the low. Understand

the sequential order and then understanding the processes behind it as well,

step by step, you prevent being lost within the daily camp.

Sometimes you might jump into a new session and then you might not be

sure, uh, if. Going up or going down

as my bias or it all depends on,

um, first of all,

tracking where you are at within the day by starting at the open and

then looking at, okay, where does the day? What does that want to go

to? What's the narrative behind the day?

Does it want to trade higher because the environment says so?

Are we on bullish institutional order flow on the daily or the 4-hour because

the environment is going higher? The weekly candle,

are we going higher as well? So this is going to be large range,

right? This entire process shows us how to not be lost within

the daily candle. Let

me walk through the process one more time.

So you have the input.

This is going to happen every day. Then you have the process behind it

that forms this with the environment that helps influence the process.

If the environment is bearish, the process is going to happen for bearish

way. If the environment is choppy,

the process is going to happen for choppy type price action.

If the environment is range expanding. This entire process is going to be

expansive, fast,

aggressive. So that plays a role as well,

but also the parts of the process.

So the business is AMD, right?

Each process have a relationship with each other,

how is it structurally formed or step by step.

If you know these fundamentals of

the daily range system, it's really hard to get lost because it can

either be doing x or y.

It's that simple. Because these have filters

as well that tell you to do x or you do y.

But if you don't understand the process first,

then you won't be able to do it. What do you identify the filters?

The filters is the gems. It tells you to do x or do you

do y? Okay, so we'll leave that for another discussion.

So when you're journaling the daily range here That's

when you want to do it during the output.

So you wait for the input It runs through its process.

It creates like a let's say bullish Power

three candle then Offset distribution that's in

between process output because that's the result you're getting But

let's say it's the closed. So now you have daily candle closed bullish You

want to study that you want to study the process how did they

how did the structure how did the relationships how did these units interact

with each other to produce that candle that

was bound to happen okay so what are the processes structures

relationships that made that happen then

you'll understand that there's only a few um

components that help with this process so

what we do then is just

journal that journal the parts of the

relationships and dependencies how each of these interacted to give

that specific close that happened.

What were the parts? What were their relationships?

How did they depend on one each other to contribute to

that daily candle being printed? Thank you.

So you're studying that, um,

you're dissecting the results. What happened here,

here, here, and then you're gonna, after a while,

after, well first of all, after the first time you do it,

you have a new awareness where you'll learn something new about the day.

Then if you repeat this process over and over and over,

let's say you do a hundred candles, then you're just gonna have a

lot of references of what are the main fundamentals of this process.

Do I need to keep it complicated? Do I need to learn that?

Do I need to know this? It's just a few that make this operate.

And also if you do it a hundred times and you're aware of the

environment, then now you know how to adapt certain narratives on that.

So, this

is how you understand all the components of the daily candle necessary

for success. You don't have to focus and

fixate. Like, you don't have to know

81 pd rays to navigate

this. You can pretty much just do it with

a fidelity gap, but understanding

the business behind the data candle allows

you to see where do I fit this fidelity gap within the system because

this is just a part this is the whole this is the

the car is the whole f

e g is just a little part within that so it could be like

the wheels or the the mirror or the seat but you

can't run the car on the seat alone it's a collection of units

so all you need to have is pretty much

one pd array to focus on or two it could be order block and

further gap I like this combination and then seeing

where does that fit within the business power of three basically

you're journaling the fundamentals and then a it's just a reference point that sticks

out to you and this is important part you understand in daily candle

where that fits in and then when you do this over and over again

you understand all there's only a few options is X or do Y

based on these processes to get this result because after you

do it over and over and over again the output is just going to

get better with time because you're breaking it down and you're having new awareness

and then you bring in new awareness into the next output so over over

candles you're just going to get better over and over and over again so

that once you do start implementing the fundamentals to navigate the input

it just becomes a part of you it becomes second nature and

you only need like one piece to follow that entire

process of this so you don't have to make it more complicated

than it needs to be focus on the fundamentals such as

daily candle and what are the process behind it what's

what are the parts components behind that that make it the data candle focus

on that because that's going to give you 80% of the results of

the daily candle instead of focusing on the complexity which only gives you like

a minor a minor increase in

understanding of this. Like short 81 PD rays might help you navigate

the daily candle a lot more but you can do it with one PD

ray which is the Feralig app. But you use that to operate this entire

system. That's all you need.

81 PD rays alone is not going to help you navigate this entire

system because you don't know where those PD rays fit in the specific narrative

of the process. So let's

get into a few examples here of journaling.

So this is what you want to be doing every day.

So first of all, today, Who is this candle here,

which is a large range there. We could see it's bullish or we could

say the environment affecting this type of PD,

uh, this price delivery was bullish on the daily chart and

also large range. So within the week,

it could have been news that was was studied later,

which made it large range day trades

aligned with the large ranges. They're the best because if you didn't have

any awareness and you would. Finding for that a gas within here.

Your results would not be as good as finding for that a gaps one

sided on here. So that's narrative.

It tells you where to fit the that's about a gaps.

so the narrative for this day was stump

hunt on previous days low and then reversed

with new york session reversal to offshoot offset

distribute these longs and an area of liquidity which

is the previous days high here okay and then we can also see a

bit of the previous days here so we had Tuesday's high raid pretty

false low it took a little bit but it's still a false low with

space and time here and then we can see after that

false low inducements breaking out higher

so trapping longs we'll dive into that as well

and the fact is behind it so we're setting up all this

liquidity to stop hunt into this key level then

reverse into the day so that's that's the narrative okay we can see there's

a bit of chop a bit of a choppy

week this week with this type of fire section as well so

once you understand the narrative or that you want to understand what are the

parts and the components of everything within that day that may

you want to do is break it down with time and

price. essentially if you want to make it more

complicated in your journaling you can include intermark analysis at key

points like here or here is that the SMT is it not the SMT

but if you just want to learn about price delivery i mean narrative

from intermark analysis can give you like 20 exp levels but if you

just want to start out understanding price delivery just focus on time and

price and then level up to include intermark analysis so

what are the time components within this day we have the

kill zones we have the news and we have the opens that's pretty much

it so let's study the time first we had at New York session

this had central bank manipulation from the Fed

and on unemployment claims so what this tends to do for

a daily candle is it tends to wait on

to New York to have its volatility and that's what we see we see

New York happens and then volatility happens.

range expansion why because it's waiting late in the day to do so

but sometimes price doesn't like to hold and wait

for New York when it's choppy and it especially

in these this week instead of chopping like that it can do inducements

to generate liquidity instead of the consolidation so

that's what we see here so we understand that okay price is going to

wait for New York but here inducing liquidity

for New York okay why because New York is going to have its manipulation

why to form the low of the day open low high

close okay so it's either a New York session

continuation or a New York session reversal it's pretty much the two

options now I'm describing the factors behind that that make the daily

candle what it is so

we have the inducement here one two

three what is this doing it's forcing breakout traders here where

they're going to put their stop laws intraday lows where

is this close proximity to okay Asia lows is Asian lows clean as well

yes so you can see there's just a major liquidity pool being

generated here for this okay

why did London have some moves upside well

we can see that Asia was just contracting sideways so it's building float so

it's seeking the float above it first that was the first narrative

of the day induced liquidity then the second narrative of the day

was manipulation so we can see the accumulation start

of the manipulation but also still accumulating liquidity here then

the manipulation then the range expansion okay

so we can see our time that was just the influence of time now

let's look at the influence of price if we're going to see some sort

of inducement here it's going to be seeking a specific objective

and that's simply previous new york's ferretica

up here so the inducement has a specific narrative

as well its narrative is oh okay induce but i have a termness on

me based on time so what what does

price do it's either seeking liquidity or an imbalance

so we can see the price for that first narrative

of the day was inducing liquidity in terms of price narrative it just is

imbalance and the second portion of the day i

said okay imbalanced on liquidity okay

imbalanced liquidity now we have liquidity here what's

the second narrative of the day range expansion where can it range expansion

to opposing liquidity so we have clean highs here then we open float

and then we seek higher time frame jewels on liquidity so this is the

favela gap we talked about on monday which is here

so now that you have price you have price and then

we did time earlier you want to see okay how did these

two components what are their relationships how

do they depend on each other you can see price depends on

time so often this move

to the imbalance would not have happened without

a kill zone okay or this inducement

wouldn't happen without late-day news okay

this consolidation to build float above and below wouldn't have happened

without dead time here 15 to all the way to Asia

okay this move wouldn't have happened if there was no consolidation because

consolidations start all frameworks okay see how

we're piecing together each relationship within the

whole and we're understanding how

this day printed and that's just how you want to journal things every day

going from now on so if you just want to get really

good at studying or just operating within the daily

candle like how you not be lost you need to understand each of these

components transitioning together how did they depend

on each other and the sequential order of the business

of power three the step by step movements and

the environments and this will tell you how to

prevent getting lost then when you understand the fundamentals

over and over and over again okay you can start

implementing it and then when you implement it just follow the process again

you'll learn about yourself so every time you get the output you

say what are three things I can learn from that output what are three

bad things I can remove and then focus on removing this

focus on reinforcing the good and bringing that new stage of awareness for

the new data candle and then we can see over a progression of time

let's say you're like 10 x exp over

time you'll be 100 exp and then you're just going to be

a complete different person here because you've iterated and

you're becoming a brand new version of yourself over and over and over again.

So not only do you want to journal, yes you want to journal,

but you also want to iterate because this is how you translate.

So instead of just journaling blindly and not really

understanding what I'm exactly trying to navigate,

what am I actually trying to operate within.

And that should be it for today.

I'll catch you in the next one.