Can This Be The Best Trading Strategy?

0:00 if you're a Trader I would venture to Guess that you really like catching big moves we all do so in this lesson I'm going to teach you how to identify this spot and this spot on your charts because if you could identify this spot and that spot correctly guess what you get to catch the big move that happens in the middle let's get into it let's say some really great news has just come out for your favorite stock cryptocurrency project or maybe the currency pair that you're trading great what it happens then that creates demand in the market the price goes up but then what happens shortly after that a lot of times the market will Peak out and then it drops back and then it goes into this price consolidation phase this kind of sideways Market this creates a lot of

0:45 confusion for Traders they don't know if it's going to go up they don't know if it's going to go down it's just moving sideways and a lot of times it leaves people trapped on the long and the short side so the key is understanding what's going on here how does this happen if there's good news and so much demand has just come into the market why all of a sudden is it stopping the reason the market is stopping is because all this demand has to be filled by somebody who's going to sell to all that demand it's the market maker and because the market maker has sold to this huge spike in demand it has caused the market maker to get net short this is a big problem because if there is truly significant Dem man that's going to carry this

1:31 market for a while to the Longs side the market maker is going to lose a ton of money so how the market makers is going to fix this is with the strategy of manipulation they've already got Traders confused because they're suppressing price they're not letting it organically move up with the demand so that's already got these traders that have previously bought thinking well maybe there's not as much juice in this market as I thought so all the market maker really needs to do to fix their problem of being that short is dump a little more Supply into the market and get it to move away from this area this right here is going to freak out the traders that are net long still and then it's

2:16 also going to cause new traders to start to sell the market dumping even more Supply into this situation now what does that do for the market maker in this area right here it creates a ton of buying opportunity what's the other side of a sell order it's a buy order so right here the market maker can rebalance their portfolio plus they can load up on new buy inventory because guess what they know that this demand will kick back in very easily and how's that going to happen all they have to do is they need to let the market come back up right about here and then when we get over this equal ibrium point right here natural demand from the other Traders

3:05 the retail Traders the public in general will kick back in at this point and boom we're off to the next move so the key for you right here is understanding that the market maker is the one that controls the floodgates of Supply into the market yes the market will move up with Organic demand but not without the market Maker's permission so if you want to catch the big moves that happen in these big trending environments you best understand where the market maker sits and how their position this is the formula for catching big moves step number one first you want to identify a contraction box which I'm going to teach you exactly how to do that in just a moment you want to assume in this

3:52 situation that that box is pre-loaded with strong demand how do you do that well again we could look at has there been any positive news that has recently come into this Market where we've seen the market already start creeping up you can look at the higher time frames are the higher time frames already pointed in the upward direction is there strong momentum on those time frames the point is when you identify this initial contraction and you map that out you're going to expect that this is going to be a point from which the market maker will use to rebalance their portfolio that moves us to step number two when you see this happen you see the market dip below this equilibrium point you

4:38 want to accumulate your inventory with the market maker meaning you want to buy under this level the reason that that's so great is because if you're wrong let's say the demand doesn't kick back into the market you're closer to your exit point and if the demand does kick back in which it's highly likely do then you're going to catch the majority of this move and be much much better positioned for risk which then leads us to step number three which is to sell your inventory with the market maker the market maker is buying below because they know this is a discount in price and then as the demand kicks back in guess what you got a bunch of retail Traders flooding into the market and

5:25 they want to buy who's going to sell to them you are along with the Market maker so you're going to accumulate inventory with the market maker and you're going to sell your inventory with the market maker and then when you see the market go back into this contraction Zone you get to do it again this exact situation played out today in the EUR USD currency pair so just a little bit ago we had non-farm payrolls come out if you look at our daily chart right here we've been long on ATS trend for several days so we've been expecting that demand is going to come into this Market so if we go over here to our 30 minute chart we want to identify that contraction phase just like I explained on the board well we see that we had one right here confirmed so when we left that

6:11 contraction phase we can see that the market maker was net short to a certain degree so they manipulated the market down here just a little bit and then boosted it back up through fair market value and then you can see we kept going kept going and then boom there's non-farm payroll as it released and that led to a huge move now look where we're at at this very moment we are in a fresh contraction so the question right now is what is going to be the future outcome of this box that we're looking at on the 30 minute is this demand going to hold on The Daily and if we expand out of this box and then dip below this equilibrium point what is the best thing to do is it to buy I'm going to leave

6:56 that to you now here comes the big moment this is by far the biggest question that has been asked on YouTube in particular for my channel which is how do I identify the contraction phase how do I draw that box that you're always drawing on all these illustrations so I'm going to give you the formula right now and it's actually very simple I always Define a contraction by simultaneous lower highs and higher lows meaning kind of going into a wedge in fact a lot of Traders will say oh that's the wedge pattern you're right there's usually a lot of contraction activity inside wedge patterns but the key to doing it correctly is to marry it to the three

7:42 Market phases which I talk about on all my other videos so first you want to make sure that you've had a trend phase already happen you want to make sure that we've seen that traveling activity because what happens after the trend phase is we go into the contraction phase which is the First Market phase so when we see the trend phase what we want to do is expect the contraction and then we want to look for this exact price action which is here's the trend phase goes up it pulls back you want to look for a leg of price action that moves up that does not pass that high and then you want to look for another one that does not pass that low and then right here at that moment it is confirmed when you see that happen you can now draw a

8:28 box around that price action that is your contraction phase it does not need to be harder than that you just need to make sure that they are distributed after the trend phase has already happened and that's where the practice is going to come in so I want to quickly go through a couple of charts and show you on the chart how to draw your boxes so I'm looking at Tesla stock right here on the 30 minute chart obviously it's been moving up quite a bit so we're going to assume that that momentum or that demand will will continue so we want to Mark out our contraction areas that are standing out to us so I see one right here at the top so I'm going to go ahead and grab a box right here and I'm going to drop a box right over this price action right there so there's a contraction area there and then we want

9:14 to keep that Center Point which is about right there we want to map that out because if Tesla is going to continue to the upside then we're eventually going to work our way back up through this value level so also the market has arily moved down from that level so remember we're looking for dispersement between contractions so we know that there has been a minor Trend phase to the downside right here so if I look in this area where has the market compressed where has it met that contraction formula I can see one right here so right there in that area that's a good place to put a contraction box so we're going to look at that level right there and we're going to put our fair market value line

10:00 coming out of that contraction that's going to be our other reference level so in this situation again if we expect the demand to be moving up you would want to buy under this fair market value in expectation that we're overall going to travel back up to the highest level of framework in this trend and then get a nice big move up through this level so if you're buying down here you would want to protect your profit when you get up through this level so now let's take a quick look at pound USD I've mapped out the last contraction phase on the weekly chart so that's going to show us our general flow of money you can see right now we have a few weeks that are going up the question is are we going to get up through fair market value if the market turns and the candles turn yellow good chance we're going to have more momentum away from this level so we'll

10:47 have to wait and see what happens but right now we are blue headed back up towards value so if we look at our 30 minute chart over here here's the last few contraction phases we had one that came up right here it expanded upward came down test that a level went back up we formed another one here we have good dispersement between those contractions so right now the question is is this manipulation right here for the market maker rebalancing their portfolio is this a good entry if so then the market really won't want to come back below this level we would be expecting that it's going to hold above fair market value and revisit this High However the fact that we did have such an aggressive collapse back below value leads me to feel like this may be a reversal and the momentum is going to kick back in to the

11:34 downside over here on the weekly but we'll have to wait and see what happens so that's what I got for you today hopefully you learned something that you didn't already know before and you could use these Concepts to do better in your trading so I want to remind you at my website trade ats.com I have a full 8h hour course called the master pattern Academy it's something that I recorded with our Inner Circle members and it's really detailed it explains everything everything about the methodologies that I teach and the best thing is it's completely free you can just go over to trade ats.com go to our free stuff section and enroll in the master pattern Academy you'll be glad you did I made it free it's for you go take advantage of it so that all being said thanks again for watching this video and we'll see

12:19 you on the next one [Music] [Applause] [Music]