Once I came to terms with the fact that price can do whatever it wants in the market range and the trend is still technically intact, is when I stopped hearing price and started actively listening to what price is telling me. It’s also the turning point were I was faked out much less.
In this ridiculous pic below, the uptrend is intact as long as the market range low isn’t violated, no matter how much price tries to fake us out.
It’s not the total answer but it may help you move in the right direction. There are be other helpful resources, but I can’t think of them at the moment.
Nice post, a lot of wisdom here that resonates with my experience.
What you refer to as Market Range, I see as cycles where there are very specific conditions that need to be met for a cycle change / trend reversal. And as long those conditions aren’t met (similar to your market range low violation) then the current trend is in tact.
Interesting how those market & technical theories that have stood the test of time tend to have a great deal of overlap between them.
Thanks. I don’t believe there isn’t anything new under the sun. Most price action based trading can be boiled down to taking advantage of some repeatable aspect of market structure.
hi @Dollar_McGavin, if we are talking about how EMA20 signifies the proper swing for the low on the 4hr then i can definitely why that market marks that as CHoCH. I had to read over your post a couple of times and look back but i can see how through ema 20 that my CHoCH was just a decline/pullback it wasnt an actual “trough” which is what we are looking for.
charted up swing high and low and ignored the internal structure and focused on external, CHoCH broke so i entered here EMA 20 also signifies where CHoCH through swing high
let me know your thoughts and possible corrections i can make.
my only issue is does this not take quite a while for it to form?
hi @EmeraldEyes, so you are saying hit rate/accuracy is > profit/gains. Whereas, i believe profit/gains > hit rate/ accuracy, I think this way because having your SL > TP is potentially a ineffective RR? And your risking more than you actually benefit from the trade which could really lead into some trouble IMO.
for instance having a 1:2 RR would mean that you would need a WR of 33% or > or at least win 1 out of 3 trades to break even However,
if you were to have a SL greater than TP such as using a 0.5 RR you would need to have a WR greater than 66.67% or win 2/3 trades to just break even.
IMO it is better to have a higher RR than lower RR because you are risking less for higher returns with a lower success rate of winning. Whereas, taking your approach means that we are risking more for less returns however, with a higher success rate
By the way the reason why my RR is like that is because instead of going for the majority of 1:2 RR i like to use certain levels where i think market will retrace/come back to which was the liquidity zone i pointed out.
just for clarification this is my opinion so please dont take harsh or anything
Yes, RR is directly correlated to win rate, also “time in trade”. A smaller TP will win more often and in less time, releasing margin for the next trade faster.
The main concern is that you’ll always have greater losing streaks when R is above 1. It’s the streaks of losing that will kill an acct.
Looking at your chart I would agree with your CHoCH level.
I can’t speak on the 20EMA part because that’s not my wheelhouse.
As far as waiting on 4 Hour structure to form or be broken, it’s not always practical unless you’re a swing trader. But knowing where you are in the higher time frame allows you to make informed trading decisions on the lower time frames.
For example, you don’t have to wait for a 4 Hour CHoCH to look for long setups. But knowing where your 4 Hour CHoCH level (strong resistance) sits gives you a place where you will want to start reducing risk for any lower time frame long positions. The reason is, as price develops in real time it isn’t known if price will react to a H4 bearish point of interest and resume selling (right image below) or if price will breach the H4 CHoCH level and continue being bullish (left image below).
Higher time frame (blue) and lower time frame (red)
Knowing your higher time frame boundaries, allows you to plan lower time frame trades within those boundaries so your trade opportunities are not necessarily limited by the time that it takes for the 4 Hour to print.
I posted this pic elsewhere but it reinforces the same point.
Yes i understand that you may win more often in less duration and that a streak of losses will lead to acct blown. However, to be considered profitable or at least breakeven it is alot harder to do so with a RR >1.
Blown account on the other hand really depends and varies down to an individuals RM and MM. depending on the person some may reduce risk down from 2-1-0.5% after having a loss in a trade and will return back to there original risk untill they make a certain amount back, to reduce risk of acct being blown
Couldnt agree anymore with this explanation very clear and concise , this has really helped me alot thank you very much for the in depth detail and support. has really opened my eyes with HTF and LTF. might print this off and stick it on my wall
i do have a question. how would you mark your CHoCH H4 on a huge down trend such as this one?
In my personal opinion, ICT and SMC concepts are watered down limited versions of old school price action and fractal cycles theory. I also find that CHoCHs are sub-optimal entries as the markets will often signal trend changes way in advance.
What @MartialChartsFX labeled as market range and CHoCHs in his version, I have labeled as ICH / ICL (intermediate cycle highs / lows) in mine. It’s a more detailed and complex but not necessarily better way of viewing the same chart / market.
Even with sub-optimal CHoCH entries, the trades would have turned out pretty well. BTW, there are CHoCH in the opposite direction to the intermediate cycle, but these are counter-trend and not to be traded, which is why they are dotted lines.
i agree SMC & ICT is watered down. To be honest i dislike ICT very much i always laugh when i watch him, quite funny how he says he programmed the algorithm and then promised to win the Robbins cup and drew the acct down to -90%
