In Design Your Own Trading Methods: Part 1, we developed an understanding of the different phases of a swing cycle and how it moves in contraction/expansion so we can develop tactics for various parts of the cycle. In this next step, I go over some of the principles of price flow and define the components, and process of a swing so we have an objective frame of reference. With just this step of mapping, you never have to ask anybody what they think about a particular market, you just look for yourself and see what is true.
This is the first part of a series on how to design your own trading methods. These methods can be from what you have observed in price flow, or they can be methods you have learned and want to adapt to your needs the way you see. It’s beneficial for us to participate in the authorship of the trading methods we use, and to make them ours.
Whatever we design will have to adhere to the principles of price flow. For example, everything moves in contraction/expansion and all market structure is a derivative of gaps and swings. From this observation, we can start to build on solid foundations and come up with numerous methods.
In this video, I want us to get a solid understanding of how price moves in a swing cycle. A swing moves in process and each part of the process has its own components and characteristics. If we understand this, we can design methods and tactics for various parts of that cycle.
I show two trades in this video, one by me in the USD/CAD 20 minute and one by a student in the E-mini S&P 2 minute. Both look a bit different but have the same understanding that comes from learning about the process of market structure and the essence of each structure. Sustained trading is not about pattern recognition, its a personal understanding of the whole read and structure that develops from practice. In the video, I show how you can see the structure no matter what time frame it shows up in or its shape. You can see this same structure and understanding in a post I did a year ago, “Trading The Valley In The CAD”.