Sang Real Notes

4) Support Becomes Resistance and vice versa.


When trading FZ, it means you want your S to become R, or R to become S.
What we need to be keen with here is the price action when S/R is being broken, that’s where we are going to look for OB.

5) Breaker (Failed OB)

Breaker is also another technique for anticipating a valid FZ.
High probability Breaker is often identified using clean breakout.

But if there is not a clean break out, always check for price action at the point of breakout to find an OB

Identifying liquidity.

The markets need liquidity to move, personally i think of it like fuel for a car.

Without the fuel it wont run but if you only have fuel then you'll get nowhere.

What i mean by this is you shouldn't be entering trades just because there's liquidity above or below market you
need to keep in mind other factors.

That being said liquidity is everywhere but the most common type is equal highs and equal lows.

The theory behind this is when retail see a double top they will look to sell when price reaches that level again as its seen as a
strong level.



If loads of traders are seeing this then they will all place limits with their SL just above the highs.
This is then what creates liquidity and price will seek out their SL to liquidate it in order to fuel its move


Here we can see price goes and hunts out the stop loss and fuels its move to the upside.

If we were in a trade we could see this as a good place to target to take partials.

So when we see Support/Resistance breaking we talk about how the Market is taking liquidity instead of just saying Support/Resistance turning to Resistance/Support
but when an OB FAILS aka BREAKS its now just a breaker block and not a liquidity grab. GOTCHA.

"The theory behind this is when retail see a double top they will look to sell when price reaches that level again as its seen as a
strong level."

retail traders barely account of any liquidity in the Market, even if we were to pretend that all Retail Traders trade at the same time on the same Pair we would barely move the market, so why would the Market care at all.

Always liked to follow your posts, because you traded very simple and are obviously a good trader, guess you are now following the trend that every dumbo trades now "smart money concept".

good luck in your journey

BE - Break even
BEFL - Bearflag
BO - Breakout
BSZ - Breakout and Stop Loss Zone
BUFL - Bullflag
CP - Compression
CPLQ - CP followed by Liquidity
DBD - Drop base drop, descending pole flag pole
DBR - Drop base rally
DBT - Double top
D1 - Daily
DD - Drawdown
DM - Diamond
DMA - Direct Market Access
DP - Decision Point
FL - Flag Limit
FL - As Suffix - Flag / Consolidation
FO - Fakeout
FOF - Free Order Flow
FTA - First trouble area
FTB - First time back. Followed by 2TB, 3TB etc.
FTR - Failure to return. Also Hook, Finger
HH - Higher High
HL - Higher Low
HNS - Head and shoulders
HTF - Higher timeframe
HW - Homework
iQM / IQM - Ignored Quasimodo
IT - Institutional Trader (or banks and other financial organisations)
LFL - Lower FL
LH - Lower High
LL - Lower Low
LS - Left Shoulder
LSK - Left Shoulder Kink
LTF - Lower timeframe
M1 - 1 minute
M2 and so on
MN - Monthly
MPL - Maximum Pain Limit (the last set of orders, or the maximum where price can travel)
ORFL - Orderflow
PA - Price action
PAZ - PA Zone
PCP - Pre-Compression
PIE - Price Is Everything thread
PO - Pending Order
RBD - Rally base drop
RT - Retrace/Retracement
SL - Stoploss
SR - Support/resistance
TG - Target
TP - Take profit
TPP - Take partial profit
TT - Touch trade
UFL - Upper FL
W1 - Weekly
3

OMG## u explain all ur analysis very clear..thanks for the knowlegde and hope to see more for us to be a better trader like u..Thank u so much Pat..

Glad to see your post Brother ,

You post always inspired me and many human being here , and from your contribution here many many Trader here just not learning only about trading but also learning to deal with their emotions as well , from your post learning to become a disciplined trader and also a good conscious human being ,



God bless you and your family brother ,



Love and respect always for you from my heart

Stay blessed

I N D U C E M E N T

Inducement is when the institutions move price in such a fashion, that traders place orders, stop losses and take profits in areas that provides liquidity for institutions to move price where they intend for it to go.

This image is just one of many examples where people are being induced by the institutions to get into the markets.

1- price has broken recent lows, triggering sell stops, or sell limits when price comes back up and likely hitting their stop losses when price breaks the high of the range.

2- price breaks the high of the range, making traders think price is now bullish, triggering buy stops or buy limits when price comes back down eventually hitting their stop losses.

Circular economy is how people in the past centuries survived and thrived and had beautiful homes.
Did we become too lazy or ignorant?


It’s the inevitable result of capitalism.
A wasteful, throwaway culture that requires consumers to endlessly consume.

We became capitalistic.
There's little private profit in re-use and recycle, except for fixed goods.
Even there, the capitalist paradigm is to destroy and build something new (though not necessarily better).

Thank you Pat for the tutorial,I am learning real things here, please keep up

I never saw you speak about lot size to trade with how much balance, leverage to use.

I'll try my best to answer questions you have, but cannot advise you on how ot manage those trade as there are differences for each person.


I traded several broker account.

I don't treat a single brokerage account as my portfolio.
I track my trading in Excel, that is where the portfolio numbers are, each of my trading accounts are only a small portion of the total portfolio.
Here's the trick...when I am doing my position sizing, I do it on the entire portfolio amount, NOT the amount in the brokerage account. This keeps my position sizing very fluid and consistent.

You then have to deal with making sure your accounts have enough cash to cover the margin on your trading.
That's why leverage is so damn important.

BTW, if you are new to trading you will want to trade with as little leverage as possible.
But when you get serious about your returns, and you have the skill to deal with leverage, than you will want use as much leverage as you can without causing margin call risk.


cont/-

And how many trades per each pair or what makes you add additional trades on a setup

The basic feature of fixed ratio-style MM is rapid (higher risk) growth at the beginning, and slower (lower risk) growth as your account builds up.

Maybe you can think of your trading account(s) like a human life, there is a childhood phase where you grow up very quickly, an adult phase where you grow more slowly but still pick up new tricks along the way, and a retirement phase where you collect your pension

If you trade 2% of your equity for the entire lifespan of your account, you are cutting off your childhood.
You need to consider not only the lot size (leverage amount) but also the "delta" (or target balance in my spreadsheet).
The delta will determine how quickly the MM kicks in and starts to reduce your risk.
If you make the delta too small, your "childhood" will be too short and the account will not grow as much or as quickly as it could otherwise.

If you make it too large, you will be exposed to higher risk for longer amounts of time, perhaps unnecessarily (depending on your goals).
Then you turn into the 45 year old beach bum who still thinks he's 21.

I suggest you play with different values and see how they translate to the lifetime of a trading account, either using your spreadsheet, or just writing them out on paper.

You need to know in general how much you are willing to risk, and what you consider to be a mature trading account -- it will be different for everyone.

Cont/-

I know how much to risk on a trade is determined by SL that is flexible level that invalidates your trade as wrong.


If I have understood this correctly, that sounds is very similar to what I have traded with.

I have two ranges, percentage range and account balance range instead of one fixed risk ratio per trade.

Let's say that percentage range is from 5% to 1% and balance range is from 10k to 100k.
Note that the previous numbers are totally fictional and not based on any tests or real data.

So to calculate risk, I reduce the risk linearly from begin balance to end balance, before the begin balance (10k) the risk is 5%, after the end balance (100k) risk is 1%.

Between the 10k to 100k the risk is 5%-(account balance-10k)/(100k-10k)*(5%-1%).

This may sounds very similar and sticks to the "childhood - adulthood - retirement" idea.
The main difference is if you plot fixed ratio positions, it is not linear with defined start and end points, but a smooth curve.

I think this methods like make so much more sense than the whole "risk 2% per trade" advice...

Have a great weekend!

Some other additional info that you need to take into consideration.

In depth analysis of position sizing notes.

Markets change from sideways periods to trending periods and from low volatility to high volatility and all permutations of these scenarios.

Usually the idea of increased risk during early stages of a small account and scaling out as time goes on and the account grows. Unfortunately without paying attention to the the market conditions mentioned above, one can expose oneself to some serious volatility in account balance.

Trade with varying risk based on market conditions given the systems being traded.

Trading is based on a constantly evolving sample and if one is unable to understand the conditions leading to drawdowns on a particular system, a position sizing model based on a fixed lot size for different account balance targets will not help minimize drawdowns.

I think the application of this kind of model and also applying a varying risk based on market condition can be even more beneficial to growing an account.