Trading Course Day 7: How to Mark Up Charts

Summary

This video teaches a practical chart-marking workflow for trading: use the 1-hour and 4-hour frames to identify market structure (higher highs/lows or lower highs/lows), then scale down to 5- and 15-minute charts for precise entries during high-volume sessions like London. It explains reading buyer/seller zones, spotting trend changes when support or resistance breaks, and using volume to avoid false liquidity grabs. The presenter covers trade management—stop placement, targets (1:3 to 1:4), partial profits, and optional trailing—and emphasizes patience, session behavior, and aligning lower-timeframe setups with higher-timeframe structure.

Takeaways

• 😀 Identify the trend on the higher time frames (1 hour, 4 hour, or daily) before making trading decisions on smaller time frames.
• 😀 Always start with determining the current price level, identifying the nearest highs and lows, and marking key support and resistance levels.
• 😀 A higher high indicates an uptrend, while a lower low indicates a downtrend — this helps in identifying the market direction.
• 😀 When the price breaks support or resistance levels, it signals a potential shift in market control between buyers and sellers.
• 😀 Focus on major market sessions like London, as they provide the highest momentum and trading opportunities.
• 😀 The market will often make a correction after an indication, so don’t panic if price doesn’t reach the exact target immediately.
• 😀 Traders should always scale down to the 5-minute or 15-minute time frames for more precise entries and exits.
• 😀 You can use higher time frames to define the structure and lower time frames to pinpoint entry and exit points.
• 😀 Wait for clear trend changes and structures to form before taking positions, especially when price action is in between highs and lows.
• 😀 It’s important to monitor volume and price reactions during key sessions, as this helps in avoiding false signals and liquidity grabs.
• 😀 Trading is not about being perfect but understanding key support/resistance levels, managing risk, and adjusting based on market conditions.

Q & A

What is the first step in analyzing a trade based on the script?

The first step is to identify the market structure on the 1-hour or 4-hour time frame, determining whether the market is in an uptrend or downtrend. This provides the context for where to look for potential trades.

How do you determine whether a market is in an uptrend or downtrend?

In an uptrend, the market forms higher highs and higher lows, while in a downtrend, the market forms lower highs and lower lows. Identifying these patterns on the chart will help you understand the market direction.

Why is the London session particularly important for trading?

The London session is critical because it often sees increased volatility and volume, making it a prime time for price action to move strongly in either direction. This offers opportunities for both trend-following and breakout strategies.

What role do support and resistance levels play in the trading strategy?

Support and resistance levels are crucial for identifying areas where price may reverse or consolidate. They help set potential entry and exit points, as well as identify areas of breakout or breakdown.

How should you trade during a correction or pullback?

During a correction, wait for the market to show signs of resuming its trend. You can use lower time frames like the 5-minute or 15-minute chart to pinpoint entry points after the correction completes.

What is the recommended risk-to-reward ratio for trades in this strategy?

A 1:3 or 1:4 risk-to-reward ratio is ideal, meaning that for every dollar you're willing to risk, you aim to make three to four dollars in profit. This ensures that even with losses, you can still be profitable in the long run.

When should you set a stop-loss in this strategy?

Set your stop-loss based on recent swing highs or lows. If you're entering a trade in an uptrend, place the stop-loss below the last swing low; if in a downtrend, place it above the last swing high.

How do you know when to enter a trade after a breakout?

Wait for confirmation that the breakout is valid. This confirmation could come in the form of volume increase, a clear trend direction, or a retest of the breakout level. Enter when the market shows momentum in the breakout direction.

What is the importance of volume in trade confirmation?

Volume helps validate price moves. A breakout or trend move accompanied by increased volume is more likely to continue, while low volume can signal a false move or potential reversal.

How should you handle high volatility news events in this strategy?

Avoid trading during high volatility news events unless you're comfortable with the risk. News can create erratic price movements that may not align with your strategy's rules, potentially leading to large losses.