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Trading Market Structure

  • #1
  • First Post: Nov 4, 2011 4:32pm Nov 4, 2011 4:32pm
I am starting this thread because I don't think there is enough discussion about how market structure can help you read the markets. A lot of threads talk about trading naked or indicator free - but some people (myself included) need some visual clues to help in reading price action.

I know different people have different definitions of what market structure is, but for the sake of this thread we are going to say market structure consists of Higher Highs (HH), Higher Lows (HL), Lower Lows (LL) and Lower Highs (LH). Now these are not really indicators but rather patterns - so if you are a purist, you can utilize market structure and still trade indicator free.

Looking at a chart you can "read" how strong an up trend is by viewing a string of HH's and HL's - void of LL's & LH's. Reverse for a downtrend.

Attached Image (click to enlarge)
Click to Enlarge Name: 132044044722.jpg Size: 141 KB


The above chart shows two trades that I took today. In the next few posts I will explain how to observe the set-up and jump in for some low risk high probability trades.
  • #2
  • Nov 4, 2011 4:38pm Nov 4, 2011 4:38pm
Here is a link that provides the basis of my strategy:

http://www.enthios.com/methodology-2...ctures-mshmsl/
  • #3
  • Nov 4, 2011 5:38pm Nov 4, 2011 5:38pm
show us more the reversal pattern is very useful. how can we know that is preparing a consolidation zone??
  • #4
  • Nov 4, 2011 6:11pm Nov 4, 2011 6:11pm
Hi!

Very interesting thread! Keep it going!!!!!!


I wait for more with a great interest!
  • #5
  • Nov 4, 2011 9:34pm Nov 4, 2011 9:34pm
Quoting vladutz112
how can we know that is preparing a consolidation zone??
As nice of a guy as I am, if I had the answer to this question I would not tell you or anyone else for that matter.



I can only tell that a consolidation is occurring after getting several HH-or=LL's in a very short range. In hindsight, it will look like barbed wire and if you get caught on that you are gonna get cut.

Once I post about entries, you will be able to see how to avoid the account churning chop.
  • #6
  • Nov 4, 2011 10:55pm Nov 4, 2011 10:55pm
nice chart!

Is this template available anywhere? I would like to play with it....

thx
  • #7
  • Edited 1:15am Nov 5, 2011 12:57am | Edited 1:15am
Hi,
I wanna get this trading system. How to get it?
  • #8
  • Nov 5, 2011 2:55am Nov 5, 2011 2:55am
Quoting enochben
Here is a link that provides the basis of my strategy:

http://www.enthios.com/methodology-2...ctures-mshmsl/
Hi enochben, your basic strategy (MSH MSL) is almost similar to harami pattern setup,
may i know what makes your strategy different from harami setup.

Best regards,
Jin Shan
- 888 Horse Power - Fast Momentum Speed Run Towards VICTORY
  • #9
  • Nov 5, 2011 9:27am Nov 5, 2011 9:27am
Quoting cyberevil
nice chart!

Is this template available anywhere? I would like to play with it....

thx
I use sierra charts - there is a template available. PM me if you are a sierra user.
  • #10
  • Nov 5, 2011 9:29am Nov 5, 2011 9:29am
Quoting Du Jin Shan
Hi enochben, your basic strategy (MSH MSL) is almost similar to harami pattern setup,
may i know what makes your strategy different from harami setup.

Best regards,
Jin Shan
I am not familiar with the harami setup - I am sure it is similar to several setups - I am not claiming to have invented this setup, I just have found it useful.
  • #11
  • Nov 5, 2011 10:22am Nov 5, 2011 10:22am
Hi,
are trying to catch trend reversal?
how do you define your exits?
thanks alot
  • #12
  • Nov 5, 2011 10:31am Nov 5, 2011 10:31am
Quoting exking
Hi,
are trying to catch trend reversal?
how do you define your exits?
thanks alot
Overall I look for confluence of events at key levels (quarters, round numbers, pivots, S&R, etc.). So if price races up to a resistance level and then gives me a market structure HH-HL-LH pattern. I will be looking to short the break of the higher low.

In a nutshell - yes, I am looking to enter at reversal points, but not always, some of the entries are catching the trend in various pullback stages.
  • #13
  • Nov 5, 2011 10:57am Nov 5, 2011 10:57am
Quoting enochben
Overall I look for confluence of events at key levels (quarters, round numbers, pivots, S&R, etc.). So if price races up to a resistance level and then gives me a market structure HH-HL-LH pattern. I will be looking to short the break of the higher low.

In a nutshell - yes, I am looking to enter at reversal points, but not always, some of the entries are catching the trend in various pullback stages.
Yes, I thought so,
So on what timeframe mostly you're looking to find good setups? and what pairs?
thanks for your time
  • #14
  • Nov 5, 2011 11:01am Nov 5, 2011 11:01am
Quoting enochben
Overall I look for confluence of events at key levels (quarters, round numbers, pivots, S&R, etc.). So if price races up to a resistance level and then gives me a market structure HH-HL-LH pattern. I will be looking to short the break of the higher low.

In a nutshell - yes, I am looking to enter at reversal points, but not always, some of the entries are catching the trend in various pullback stages.


Hello enochben!

Its great to see trading approach very similar to what I am trading so long time already. But - will you explain your trading method in some more structural manner? Or what is in your first post is pretty much it? If there will be somethig more - I am waiting with interest.

Hope - you will explain more
  • #15
  • Nov 5, 2011 11:31am Nov 5, 2011 11:31am
Quoting dim4ik42
Hello enochben!

Its great to see trading approach very similar to what I am trading so long time already. But - will you explain your trading method in some more structural manner? Or what is in your first post is pretty much it? If there will be somethig more - I am waiting with interest.

Hope - you will explain more
I plan on posting more details - the one chart leaves much to be desired. I was planning to wait till Monday and take some screen shots as they happen. I don't like using charts more than a day or 2 old, but if others are ok with me digging up weeks old charts, I will be happy to oblige.
  • #16
  • Nov 5, 2011 11:39am Nov 5, 2011 11:39am
Quoting exking
Yes, I thought so,
So on what timeframe mostly you're looking to find good setups? and what pairs?
thanks for your time
The main pair I use is Eur/Usd with my secondary pair (if I want to trade asian early european session) being Aud/Jpy.

I normally don't use time based charts. I have used this with 8 bar range and 8 tick charts. Although I have used previously with 1 minute charts.

I also use heikin ashi candles to keep me calm (minimizes the noise). The moving averages on the chart are both 21 bar zero lag ema's - one set to opening price and one set to closing price. Sierra allows you to color the slope of the ma's so I have them colored green when the slope is up and red when the slope is negative. Also about 95% of the time, I will only trade in the direction of the MA's - so another point of confluence.
  • #17
  • Nov 5, 2011 12:53pm Nov 5, 2011 12:53pm
Attached Image (click to enlarge)
Click to Enlarge Name: Snapz135.png Size: 105 KB


This is a set-up from last week - price pushed through 3700 to make a higher high (HH) at 3710 - drops down to make a higher low (HL) at 3700 and then failed to make a new higher high - which is a good indication the push up is losing steam. We get confirmation as soon as a lower high prints.

Now market structure are 3 bar patterns - so there was some anticipation needed as the white candle marking the lower high will not turn white until the candle after it closes.

So watching this I will place a sell stop at 3699 with a stop at 3709, however, if price would have shot up and taken out 3708 BEFORE taking me in at 3699, I will cancel the pending order and wait for another set-up. The reason for canceling is because the reversal pattern no longer exists.

I hope this makes sense. It really is a simple concept.
  • #18
  • Nov 5, 2011 12:58pm Nov 5, 2011 12:58pm
excellent metod more more information, and do you template for mt4 please?
  • #19
  • Nov 5, 2011 2:10pm Nov 5, 2011 2:10pm
Quoting enochben
Attachment

This is a set-up from last week - price pushed through 3700 to make a higher high (HH) at 3710 - drops down to make a higher low (HL) at 3700 and then failed to make a new higher high - which is a good indication the push up is losing steam. We get confirmation as soon as a lower high prints.

Now market structure are 3 bar patterns - so there was some anticipation needed as the white candle marking the lower high will not turn white until the candle after it closes.

So watching this I will place a sell stop at 3699 with...

Thank you for posting more information!

Excellent method, simple and straightforward.

waiting for more with interest
  • #20
  • Nov 5, 2011 3:13pm Nov 5, 2011 3:13pm
Hi

Great trading system very simple, I will keep an eye on it next week looking forward to your live charts. Just one question I am using 1 minute charts will it work for them?

By the way what charts do you use? I don't understand the terminology used earlier of " 8 bar range" and "8 bar tick charts" could you explain please.

Many thanks looking forward to following your thread.

All the best Clive.
Feel the Fear and do it anyway!!!
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