A Simple 3-Step Trading Model (Full Breakdown)

How's it going everyone and welcome back to another video. This week we are joined by AMtrades who is going to be talking about daily bias and 7 hour daily profile confirmation.

Once he is done with that I will join in to talk about fractal model entries that align with that daily bias and with that daily profile.

I hope you guys enjoy so let's get into the video. Getting right into this

the first part of any trade is framing the idea off

the higher time frame so that you're not caught chasing price intraday

small reactions back and forth we want to keep our logic

rooted in the higher time frame and supported

by this framework that we're going to be following and this is not something

that has to be over complicated at all we're only going to be

using highs and lows off the daily chart something called

relevant swings which are extremes of of the current range in price so that when price reacts there, we know without a doubt that reaction holds a weight for what should happen next.

And that's going to be our bias backing every single trade idea that we have.

The first part of understanding relevant swings, and honestly the most important, is knowing what a failure swing is.

That is the entire premise of what we're doing here, and you'll see why. What we're looking at in this chart would be a daily time frame, and this is just a general example.

This could form in multiple different ways. But the idea that we're seeing here is that price is trading lower.

It forms an initial low and then trades away from that point inside of this daily candle.

That could be a potential reversal because we've run on a low, manipulated, closed back up into the range.

But then we see the following day here make a deep run back down into that initial point, that low.

And then without taking it out, it makes that deep run and then starts to trade back away from it.

This deep run, whether it was one day after or multiple days after into this initial point of reversal without taking it out is a failure swing.

What we see this as is an unestablished point of reversal.

So when the market reverses, true reversals are going to turn and then we will not see deeper tracements back on that initial area.

We will reverse, then expand shallow retracements along that way.

deep runs back into that initial area creating that

failure swing is an area that we will not trade

away from that is the one rule with failure swings if

we form failure swing lows like in this example and we start to trade

higher we will not trade that move away because we view

this as an unestablished point of reversal it would be the same with highs if we see failure swing highs and prices trading down off of it we are not going to trade the downside we are filtering that out completely.

So that's a rule around failure swings, but this also plays into how we're identifying relevant swings on the daily chart.

This low, the initial one that was formed, the deep run which follows creating that failure swing is how we identify which low is a relevant low.

This is where we note out that initial low before that deep run was made back into it as the extreme.

That is your relevant low inside of this daily chart.

And the only way we're going to trade this higher is if the following

day or days returns back down into

that relevant low engages it to manipulate and

then expands back into the range we know

a manipulation at this low without any doubt holds

weight in the market because it is the current extreme of

this range in price unlike if price were to come back down only take out this failure swing low again fail to take out the extreme

and then trade higher that is an unestablished reversal it

didn't trade into the extreme of price where the reaction

has weight this is that scenario where price would

come back down into the relevant low where we had an unestablished

reversal but at the point where it manipulates it closes

back up into the range because that occurred at a relevant low this reaction matters it's going to lead us to assume this is the true reversal and we can trade the continuation

to the upside this is the final layer of understanding relevant

swings and just being able to identify them because now you

know where to look for failure swings on the daily time frame and

we're not going to trade away from them so for example here we have a deep

run into this initial high which is the extreme of that

current range off the low we have a deep run into

this initial low and the next piece here is knowing separation between one potential relevant swing to the next

this example here is showing valid separation where

we've engaged this extreme low that relevant swing

and then traded higher off of it the reason why

this is valid is because the low of this manipulation did

not create another failure swing to a daily

low to the left of it that is making it valid separation and something that we can trade to the upside versus let's take this similar

piece of price action and imagine that we have these same

lows to the left but with less separation between them in