In the last post, “Mapping Markets With Gaps” I showed you how to structure a market with Gaps and finished the video by marking out a few markets live. In this video Im going to follow up those charts and see what we can learn from what happened when price interacted with those levels. These are the kinds of things we do in the Language of Markets Live sessions in order to take what we are learning into practice and application. In the video, I also go over the three types of trade options related to gaps. You can see a video on the Three Types of Trades in the “Principles of Trading” section of the home page. Gaps show us an area of supply/demand imbalance that we can take trade advantage of in many ways once we understand them.
3 Types of Trades
The Principles of Price Flow
Price moves in swing cycles that contract and expand as they go through their process. By understanding this process, we understand the principles of price flow and can then make trade decisions anywhere along the way.
The Process of a Median Line
Median Lines teach us about price flow and price flow teaches us about median lines. You don’t have one without the other. So we deconstruct a Median Line in order to understand its process. We then use the process of a median line to look at the 3 basic types of trade options. The more we understand the process, the more effective our trade decisions. These are some of the underlying principles upon which all trade setups and techniques are founded. When we understand them we are free to create and it really doesn’t matter which technique or method we use.