The Key to Being Right 90% of the Time in Trading

0:00 Let me explain this to you guys. This is very powerful. What's a market pause and what's a market turn? Do you know that there's a huge difference between a pause and a turn? And you have to be able to know the difference. How can you ever be successful if you don't know what a pause or a brief interrupt in the flow of a move is versus is this a turn of direction entirely? because there's similarities between the pause and the turn and you've got to be able to know. So, knowing the difference between pauses and turns, that is paramount. If you know how to determine what a pause is, then you automatically know what is likely to happen next after the pause.

0:47 And now it's about let's take advantage of what's going to happen next eight, nine times out of every 10. Step number one guys, understanding the three different types of market moves. Now before we get into the specific legs of a market, I have to define for you what is a move. There are three specific types of moves. These are the three types of bull market moves. The period of the bar doesn't really matter. So if you're a fiveminut chart trader, this is a five-minute bar. If you're a twominut chart trader, this is a two-minute bar bar. If you're a daily chart trader, this is a one full day bar. Time doesn't

1:34 matter. Everything that I talk about is universal across all time periods. Okay. The first type of bull market move is a violent powerful sudden unmistakable surge to the upside in the form of one bar. Type number two is two powerful bars. Not as elongated as type one, but very powerful. Individual bars are powerful, but when you take them together, they're just as powerful as type one. Now, type three is similar to type two in that it's not just one bar, but it's multiple bars. Now, it's not a

2:20 specific number. Type three is not a specific number. Type two is. Type two is specifically two bars. If it's five strong bars, it's type three. If it's eight strong bars, it's type three. Do you understand? Anything beyond two is type three. But type one is one bar. Type two is two bars. They're strict in terms of the number. And type three is any solid move where the vast majority of your bars are the same color and they're solid. It's not that you can't get a pause bar or a neutral bar in between. You just don't want a lot of

3:06 them. So, what makes a bull move a bull move is that it's fluid. What you see across all three of these types, guys, is a solidity in the color of the bar. Type one is a very solid green bar. Type two is two solid green bars. Type three is a barrage of solid green bars. Those green bars might be shorter, but they're still solid. There's nothing shaky about them. There's nothing unmistakable about them. There's nothing kind of wishy-washy about them. They're solid, powerful bars. The majority of the bars that make up type three. Of course, this is the reverse. This is your the three types of bare moves. So, when I say look for a

3:53 market move, you're looking for a market or a stock or a financial item that is producing either one of these three moves. a single powerful bar to the downside, a twobar power move to the downside, or a multiple bar move to the downside. The market can only produce a move in one of these three ways to the upside. And the a market can only produce a move in one of three ways to the downside. This is building block number one. It's very important that we understand this. There's only three moves the market can make. Now, step two, there are three types of market pauses. Just like there are three

4:39 moves, there are three types of pauses. And here's how they work. Remember guys, the move up can be any one of these three. One bar move up, two bar move up, or multiple bar move up. The the first type of pause is usually a pullback, a retracement, a giving back of a portion of the move up. All right, that's pause number one. Pause number two. Pause type number two is not a give back of price. It is a marking of time pause. You see, pause number one gave

5:27 back price. That is a priceoriented pause. You're sacrificing gain to the upside to give the stock a chance to rest. The rest for the stock or the financial item is occurring because the stock is backtracking in pause. Number two, your stock or financial item is not giving back price. It's marking time. Type three is just a brief pause. It is not as elongated in time as type one or type two. It's literally like a hiccup of a pause. Almost as if

6:13 your runner temporarily bumped into someone by mistake. that bumping into someone caused them to hiccup, hesitate, break their stride a little bit. Boom. But they're off in the same stride relatively quickly. The bump into someone that was walking slow in front of them interrupted the flow. interrupted the flow a little bit but didn't stop the movement the subsequent movement to the upside. And so these are your three different types of pauses. Now the the market move down. Now remember that market move down can be

6:58 any of the three types of down moves. It can be one bar down, it can be two bars down or it can be a barrage of bars down. Remember move is one of the three types. All right? Doesn't matter which one. So after a move down a pause, pause one is a give back of price. Remember? So we retrace a portion of that downward move, a brief move to the upside. And pause number two does not give back price, but it marks time. And pause number three is very brief. A hiccup. Boom. Broke my stride a little bit, but not for long.

7:45 Boom. Got my rest. Now I'm off and running to the races again. Boom. Had to jump over a little small wall. So had to back up. And now I'm off to the races again to the downside. These are your three types of pauses. Step three, knowing the importance of the numbers three and five. One of the most frequently asked questions I get on the technical side is do I have a belief or faith or use in my trading Fibonacci concepts? All right. Now, and the answer is yes and no. I believe in the efficacy of Fibonacci. I believe that it is a force in the universe that is very real. And remember

8:30 when I told you that the markets are a microcosmic version of the universe of life and so whatever is true for life or the universe has to be true for the market because it's a mirror image albeit a smaller mirror image of the more cosmic universe or life. That is my philosophy. As above so below, as below so above. And so if Fibonacci, if we can find some measure of truth in Fibonacci in the universe and in the various sciences that that are designed to basically study life in the universe, then of course it has to be true in the market. So yes, Fibonacci has been proven statistically and scientifically to be true in the universe, in life, in the world. We see Fibonacci increments

9:16 and cycles in sea shells and plants and planetary alignments and stars and da da da da da da da. I believe that there are many traders who take Fibonacci too far. They take it to the extreme. And just like anything else in life, you can take something so far that it starts to lose its importance. Now, what I'm about to explain to you is rooted in the concept of Fibonacci. There is something magical about the numbers three and five in the markets. What you're going to find and what I'm going to reveal to you is that markets will have a high tendency to turn around three or five cycles or

10:04 somewhere in between. this number three and this number five and in the middle which I obviously would say with four all right 3 4 5 that zone is a very important market zone in fact I can say that that market zone 3 to 5 is responsible for my whole trading profitability that everything I do is usually in between or at or in between those three numbers those two numbers three and five. I'm doing something after three. I'm doing something after five. I'm doing something in between them. And I know that my timing is going to be better if I'm doing something around 3, four or five. 3 to 5 in that

10:53 zone. All right? And so what I'm about to explain to you is the basis of it is Fibonacci because obviously we know that the number three and the number five are Fibonacci numbers. The number one and the number two are Fibonacci numbers as well. But one and two become important with different concepts. The concept that I'm explaining to you today has its importance rooted in the numbers three and five. So, just wanted to give you a little background behind these two numbers here. Let's get on with it, guys. Markets tend to turn or have a tendency to turn after it's done something three times in a row. And it

11:38 if it continues, it has an even more powerful tendency to change after it's done something five times in a row. So, three is the first stop. Five is the second stop. Let me show you what I'm talking about. Remember I told you that there are three ways a market can pause. So check this out. Here's market move number one. Here's pause number one. This is one move. Interrupted by a pause. Boom. Here's move number two. Interrupted by another pause. Remember these two pauses. And boom. Here's move three. that is like more likely now to have some type of

12:25 change. Why? Three legs have been achieved. And this is what we're talking about today. How to read the market's legs. The market's beautiful legs. All right. And if you traders can count from to three, you're going to be okay. And for you advanced types, if you can get all the way to counting to five, you're even going to be better. All right. So many people ask me, Oliver, do you think that it's possible for everyone, anyone to really learn how to trade? And says, well, can you count to three? You said, well, yeah, of course. Well, then I think yes, but can you count to five? Well, yes, of course I can. Then you're

13:11 going to really be okay. All right, because three would capture about guys 70%. 70% of your turns, your changes in trend, your changes in the nature of the stock and the nature of the move and the nature of the momentum and the nature of whatever the stock is doing. 70% change after three legs. Let's look at three legs on the downside. All right, I'm going to do it with the red. Right. So, you got move that move one, pause one, move two, pause two. Remember the three types of pauses. Boom. Move three. So, do you see the

13:59 three legs? Do you see the three legs? Beautiful. Three legs. The market's not a two-leg animal. It's a three-legg animal sometimes. Sometimes it produces a four-legg animal. Sometimes it produces a five leg animal, but most of the animals that the market produces have three legs, four legs, or five legs. Three legs up to five legs. Typically, 70% of the time, your turn's going to going to happen in some way or your change some way happens after the third leg. So, just knowing how to read legs and pauses and being able to count to three to five can have you playing this concept like a freaking pro. Do you understand?

14:47 You can have one type of pause. Boom. Pause. Boom. Pause. Boom. So, you got leg one, leg two, leg three. And the pauses are identical, but you can have you can have the pullback pause, boom, the sideways pause, boom, or you can have this, this, boom. And so each one of these are three leg moves. One, two, 3. One, two. Do you see it? Don't get tricked by that brief one. Three. And these are all three leg paws. Now, it's

15:33 not necessary for me to demonstrate for you a four pars or a five pause. It's just another pause after three and a continuation. It's just that I want you to understand that 70% of your changes come after the number three. So, only 30% come after the number four or five. So understand that most things can't get past three legs. They can, but most things can't get past three legs. That's the most important thing I think you should understand here. Look at the relatively fluid move to the downside and look at I

16:21 know it's not perfect in real life. It's not going to be perfect, guys, but this is the relative pause. Now, your pauses in real life, they're not always like a drawing, right? Not going to be like, "Oh, Oliver, that didn't happen at a right angle. That's not a pause. That that happened a little slanted to the downside there. That doesn't count, Oliver. You can't We can't be that specific freaking strict, right? This this p your pauses sometimes are going to be pauses like that with a slight upward bend. Sometimes the pause is going to be a little like that slight t and sometimes going to be perfectly flat. We got this drop basically and

17:08 this pause of sorts here. All right. Now leg one fluid unmistakable move number two pause three mean pause two right so we got leg one and two pause one and two leg three and pause number three now remember when I told you 70% change in some form or another after how many legs? Let's see, boys and

17:53 girls. One, two, three. Is it possible for a fourth leg? Of course. Are the odds that we are at or near the bottom? Are the odds higher than not? Yes. Isn't 70%. Higher than not doesn't make another leg down impossible. All I'm explaining to you based on this concept is that we've got a 70% chance that this is the bottom. Being able to count to three to five and being able to read the legs and being

18:39 able to determine whether something's a pause versus a turn is so paramount to proper market play. You've got to get this under your belt and you've got to get it has to become almost second nature for you. You should be able to look at a chart and ultimately you should be able to look at something and say, "Okay, it's on its third leg. I've got distance far away. My two moving averages are wide apart and I've got time." That's another concept we will cover. So, I've got three legs down. I've got wide space from where the 20 is and the 200 is, and I've been going down over time, wow, all of these things are lining up to say we're likely the bottom. Anyone who tells you traders that it is possible to

19:24 be certain without any shadow of a doubt, do you understand? Anything anyone who tells you that is either being intellectually dishonest or they're an idiot. It's there and there's nothing in between that. You can't know something 100%. This is not a game of certainty. This is a game of probabilities. And this is one of the things that makes this art, if you will, for lack of a better term, this art we call trading so difficult for people because the vast majority of people are out here in the markets searching for

20:10 certainty and it doesn't exist. They're searching for the Holy Grail and it doesn't exist. They're certain. They're searching for They're searching for something that can give them absolute assurance. And they fail to understand that this is not a game of absolute assurances. That it doesn't matter how long you study, how long you read, how long you practice trading, you can't ever be certain. And many people have a problem with this. Yet they deal they understand in regular life that nothing is certain.

20:57 But somehow when it comes to the market, they can understand it. Like for instance, we don't ever really truly have certainty if it's going to rain 2 days from now. We might get a weather report that says it's going to rain, but we can't be certain. But we can come up with probabilities. All right. I'm in the midst of a freaking rainstorm right now that is projected to last for the next 6 days. So yeah, two days from now it's high probability it's going to be raining. That is not certain, but it's pretty freaking high. We live ev our everyday

21:42 lives with uncertainty. We live the life of prob playing probabilities. All right? It's everywhere in our lives. But somehow this level of understanding, this intuitive intelligence is lost when it comes to trading as if it's possible to know. You can't. And so we can't ever know if three legs down is the end. But we can know that it is highly likely. We can't know for sure if

22:30 there's another leg after two, but it's probable if certain things are in place. And so I always I always want to remind you of this because I don't want you to take what I teach you and think that it is going to lead to absolute certainty. No. This is why you're going to have to become an expert at managing the scenarios that don't work out according to plan so that those that work out according to plan can reward over and beyond you protecting yourself for the few that don't. As long as we can keep

23:18 the few that don't work according to plan contained, we can let those that do work flourish in a far more marvelous, spectacular way than the ones that don't. Before I close, I want to show you I want to show you another time frame. We looked at the daily chart of Bitcoin. We're going to look at the weekly chart of Bitcoin. And we're going to take the ultimate high price of 69. That's where Bitcoin topped out in November of 2021. Just a

24:05 few few months ago. All right. Now let's take the bigger time frame and count the legs. One, two, three. I don't know if you see it. four. So, we got one, two, three, four on the weekly. Now, it might you might feel like, Oliver, I didn't see this pause and I didn't see this one.

24:54 Here's something interesting. I like when I'm looking especially at macro phases, I like to see five bars create a pause, right? When I'm looking at a bigger time frame like this. So, count the bars. Look, let me open this up a little bit so you can see it a little clearly. Count the bars. One. What What bars are part of the pause? One. I know it started here, but this is part of the pause. This starts at 1 2 3 4 5. Pause. All right. Here. This this this

25:39 starts the pause. 1 2 3 4. It's way more than five. Remember I said they're not always perfectly sideways. All right. And one. Well, let's do I'm sorry. 1 2 3 4 Boom 5 1 2 3 4 Let's see. But I believe there's good odds that we've got it. Not that this means this is going to turn around and go immediately to all-time new highs or anything like that. I'm just saying that we're closer to the bottom than we are to the top of this thing.

26:26 We're closer to the bottom than we are to the top of this lifech changing thing right here. Remember in one of my prior talks I told you my bands were going to get it. Did I tell you? Did I tell you my bands Oliver? Did I tell you it was going to get it? Did I tell you? Do you see what's happening now? Remember that. Remember my friend L. All right. These bands are catching catching catching again. Let's see. All right, guys. There you have it.