CRYPTOCRED

TRADING
COURSE

STUDY GUIDE
 Shout-outs

My success in trading has very simple roots: I learnt from people much better and
more experienced than myself, and refined their teachings to make them work for
me.

You’re less likely to find success if you try to simply emulate one single trader.

The best traders I know and have the privilege of working with have all selectively
picked up different concepts from a variety of systems and ultimately made their
own.

Take what works and appeals to you, and refine it. Ditch what doesn’t.

Be open-minded; it’s incredibly unlikely that one person/system has all the
answers in the world.

Shout-out to my mentors, in no particular order:

• @Trader_Dante
• @Trader1SZ
• @WMD4X
• @I_Am_ICT
• @Simon_Kloot

A special shout-out to @HsakaTrades for helping me find pretty much all of the
chart examples included in this study guide. Your help has been invaluable.

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 Table of Contents

Shout-outs…1

Introduction…3

Considerations for Effective Study…4-5

Lesson 1: Introduction to Candlestick Charts…6-8

Lesson 2: Risk Management Basics…9-13

Lesson 3: Order Flow…14-17

Lesson 4: Trendlines…18-30

Lesson 5: Horizontal S/R…31-35

Lesson 6: Fibonacci Levels…36-40

Lesson 7: Relative Strength Index…41-44

Putting it All Together…45-46

Conclusion…47

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 Introduction

If you’re reading this, there’s a good chance that you’ve worked through most (if
not all) of my free YouTube video course.

DO NOT GO THROUGH THIS DOCUMENT IF YOU HAVEN’T WATCHED

ALL THE VIDEOS HERE

So, what’s the purpose of this study guide?

I aim to achieve two objectives:

1. Offer substantive updates and additions to the tools and concepts taught in
the course
2. Outline how to most effectively study the course material, and how to put it
all together having done so

I call the YouTube playlist and the content provided herein a ‘course’ with great
reluctance. It’s not like other courses, and I don’t mean that in the cringe marketing
sense.

I am not teaching you a system. I am not strictly teaching you how I personally
look for and execute trades.1

The purpose of this course is to arm you with the basic technical tools, so you can
build a trading system based on what resonates with and works for you.

I’m simply providing the building blocks for you to use (or dismiss) at your
discretion on your journey to building your own, personal trading system.

LINK TO IMGUR ALBUM FOR FULL SIZE HD IMAGES OF ALL THE

CHARTS/DIAGRAMS: HERE

1 With some exceptions, of course.

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 Considerations for Effective Study

As outlined in the introduction, part of the reason for creating this study guide is to
assist you in studying the course material and putting all your knowledge together
having done so.

Even if you’ve already worked through the course, I would recommend you
rewatch/reread it with these considerations in mind. It may shift your perspective.

The aim is simply to equip you with the basic tools and for you, the trader, to
choose which ones to use.

A common misconception is that any single trade or system must incorporate every
single tool taught in the course. In other words, any chart must have horizontal
levels, Cloud, Fib, RSI, and so on.

That’s incorrect. In fact, I’d be concerned if a trader tried to cram all the tools into
every single trade.

For example, from the technical tools, I almost exclusively use Horizontal S/R and
Fib retracement levels. Other ‘students’ have done very well by neatly
incorporating the indicators into their systems.

It’s really down to you.

Look for the tools that make sense and resonate with you. I generally say “less is
more.”

I also strongly suggest you start without indicators. They’re used as a crutch all too
often.

There are some videos that I believe are ‘mandatory’ and worth incorporating into
any trading system (or at least worth being cognisant of) regardless of preferences.

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The following fall into that category:

1. Candlestick Charts
2. Risk Management
3. Order Flow

The lesson on candlestick charts is important because candlesticks are the basic
foundation for the vast majority of technical structures, systems, and so on. Just
one of those things you must be familiar with.

Risk management is (as much as I beat this dead horse) arguably the most
important topic. There’s no point learning all these tools, creating a system, and so
on if you just nuke your account in the first few trades. Trading is probabilistic and
ought to be treated as such; you’re not going to win every time. You’ll get nowhere
without at least basic risk management, certainly when you’re just starting out.

Order flow is vitally important regardless of what trading system you employ.
Violent moves in the market will often occur as a result of traders being trapped.
All the complex-sounding terms like ‘stop hunt’, ‘liquidity pool’, and so on are
explained in this video and study guide section. It adds a very important dimension
to your entries, exits, stop placement; the whole lot. Very likely to radically shift
your perspective.

So to summarise:

● The purpose is to give you the tools to build your own system
● You don’t have to (and arguably should avoid) trying to use everything
● Be selective, but be cautious of using ‘indicator crutches’ when starting out
● Some lessons are strongly recommended/’mandatory’

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 Lesson 1: Introduction to Candlestick Charts

Almost all trading tools/systems nowadays use candlestick charts, so it’s important
to understand how to read a candlestick chart.

It’s really tempting to stare at low time frame charts. It’s equally tempting to scan
everything from the M5 to the Daily hoping that the stars align.

In this lesson, I suggest that beginners stick to two time frames when starting out
(Daily and H1) in order not to be overwhelmed.

This is worth some elaboration.

Picking Time Frames & High Time Frame Bias

Market flow/direction is premised on higher time frames (Daily/Weekly/Monthly).

At the same time, it’s difficult to take shorter-term/intraday trades based on these
time frames, because candle closes take a while to materialise. Additionally, the
zones/levels on these high time frames tend to be quite big and thus it’s harder to
get frequent risk-defined entries trading only the higher time frames.

To mitigate this, traders will often mark out key structures on high time frames, but
ultimately use intraday time frames i) to refine those big high time frame structures
ii) as an entry trigger e.g. waiting for H1 candle closes above/below a structure
before taking a trade.

Moreover, it’s commonly touted yet quite unrealistic to expect every single time
frame to line up to setup a trade.

This is because markets don’t move in straight lines. For example, if the market is
bearish/trending down, it (usually) won’t simply fall in a straight line.

What we can expect instead is a trend downwards (lower highs and lower lows)
but with some intraday retracements.

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You have to go up a little to go down more/go down a little to go up more.

This is why having higher time frame context is so important.

If you’re bearish higher time frame, an intraday move up is (broadly) an

opportunity to sell.

If you’re bullish higher time frame, an intraday move down is (broadly) an

opportunity to buy.

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There are lots of ways to establish higher time frame bias (MA crossover, HH/LL
in price, Swing High/Swing Low structures, stop runs, candlestick formations, and
so on).2

That said, as common as the phrase “trade with the trend” is, it’s actually often
difficult to ascertain what “the trend” is!

I recommend reading this superb article by EvreuxFX.

Let’s summarise:

● Higher time frames (Monthly/Weekly/Daily) dictate macro market

flow/direction
● Higher time frame structures encapsulate wide price ranges and it may be
difficult, therefore, to get precise/risk-defined trade parameters
● Lower time frames can be used to refine higher time frame structures to
facilitate more precise/risk-defined trade parameters
● Markets don’t (usually) move in straight lines → price often has to go up to
go down more/go down to go up more
● High time frame bias is important in establishing whether an intraday move
is a new impulse leg, or merely the retracement of a bigger leg (as per the
diagram)
○ I.e. if HTF bearish, rallies are for selling/if HTF bullish, dips are for
buying
● Beginners would be well-served to pick 1-2 higher time frames (e.g. Weekly
and Daily) and 1-2 intraday time frames (e.g. M15/H1/H4) for study

2
The topic of HTF bias is beyond the scope of this study guide, but something I will cover in future
webinars.

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 Lesson 2: Risk Management Basics

I’m going to elaborate on a couple of the concepts in the video, and then talk about
a few things that I didn’t cover but I get asked a lot about.

Position Size and R

This topic is still a source of confusion.

I wrote a follow-up Medium article on calculating position size and how leverage
plays into it.

You can (and should) read it here.

The rest of this section won’t make a lot of sense unless you’ve read the article and
watched the video.

Your R multiple is simply (Potential Profit/Potential Loss).

For example if my target is 80 points away from entry and my stop loss is 40
points away from entry (80/40) = 2R.

What does that actually mean? It means that if my trade goes to target (assuming
those parameters aren’t changed and I don’t take partial profits et cetera) I will
make 2X my Risk Amount (hence 2R).3

★ Key point: if your Risk Amount and R multiple are equal, you make the
same amount of money regardless of the size of the move. 4

3
Risk amount is the predetermined amount you are willing to lose if your stop loss gets triggered. This is
all explained ad nauseam in the article and the video.
4
Excluding fees, funding, and any other such commissions

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Take the following example:

● Group A has an account of $10,000. They risk 4% on a trade. Their stop loss
is 20 points away and target is 60 points away. The trade goes to target with
no management.
○ Risk Amount = 10,000 x 0.04 = 400
○ R Multiple = Potential Profit/Potential Loss = 60/20 = 3R
○ Profit = $400 (Risk Amount) x 3R (R Multiple) = $1200
● Group B has an account of $10,000. They risk 4% on a trade. Their stop loss
is 50 points away and target is 150 points away. The trade goes to target
with no management.
○ Risk Amount = 10,000 x 0.04 = 400
○ R Multiple = Potential Profit/Potential Loss = 150/50 = 3R
○ Profit = $400 (Risk Amount) x 3R (R Multiple) = $1200

Group A turns the same profit as Group B despite catching only a 60 point move
while Group B caught a much ‘bigger’ 150 point move.

How does that make any sense?

1. Position Size = Risk Amount/Distance to Stop Loss

2. Group A had a smaller distance to Stop Loss
3. Therefore, Group A had a larger position size than Group B
a. Group A Risks $400 with a 20 point stop = 400/20 = $20/point
i. $20/point X 60 points (target) = $1200
b. Group B risks $400 with a 50 point stop = 400/50 = $8/point
i. $8/point X 150 points (target) = $1200

This isn’t an implied endorsement of tight stop setups.

I am more bringing to your attention that Risk Amount and R Multiple are much
more useful metrics to track than how big the move you/some trading guru caught.

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Hedging

Hedging is a trendy topic on crypto Twitter.

What most people mean by hedging is offsetting one’s core directional position by
taking a fraction of that position in the opposite direction upfront and/or at key
levels.5 Using BitMEX as an example, if I am bullish Bitcoin on a swing trade
basis, I can long futures and short (a fraction of my long size) perpetual swaps to
hedge my long exposure.

This is typically used by longer-term and/or swing traders to manage their risk as
price makes its way towards their target(s) and/or to protect themselves in case
they’re on the wrong side of the swing.

For example, assume I long Bitcoin at $6000 with a target of $11,700. There’s no
guarantee that price makes it through the intermediate resistance levels e.g. $8000.
Thus, assume price reaches the $8000 level, I can ‘hedge’ (i.e. short perpetual
swaps if I’m long futures) to take off some risk if $8000 happens to be the turning
point. This allows me to keep my long position while taking some risk off.

A beginner, in my view, would be better served trying to nail down a few good
setups, honing their entry/target/stop, management, and appropriate risk as
opposed to delving into more advanced risk management strategies.

In short, hedging is sensible as a more advanced, swing/position trade risk

management strategy, but you shouldn’t spend too much time worrying about it if
you’re just starting out.

It’ll be a topic for future advanced webinars.

5
It is important to be clear that I am using the ‘crypto definition’ of hedging. It means something else in
other asset classes, and there are lots of different ways of hedging therein. The relative inexperience of
crypto speculators plus the very close correlations between crypto assets generally creates quite a
different (and narrow) definition of hedging. I am aware that it’s unorthodox, but this is what people are
referring to when you see the term being used in crypto trading circles (for the most part).

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Compounding and Averaging Down

★ Compounding is when a trader adds size to a profitable position in order to

increase profits.
★ Averaging down is when a trader adds size to a losing position in order to
gain a better average entry price.

Compounding can be a powerful tool to maximise gains when on the right side of
the market. However, if done incorrectly, it can increase risk and exacerbate losses.

There’s a simple test I apply before compounding a position. Both answers must be
‘Yes’:

● Has the market proven to me that I’m right by breaking support/breaking

resistance?
● If I weren’t already in a trade, would I take this compounding setup as a
separate trade?

If you’re experienced, know exactly what area you’re working within, have
experience scaling in (as opposed to loading up full size straight off the bat), and
have a clear technical invalidation level, then it may be reasonable to average a
loser.

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Beginners are extremely unlikely to satisfy any of these criteria, and for this reason
averaging down is best avoided completely, in my opinion.

Moreover, constantly averaging down can form some pretty poor habits in
developing traders.

It can encourage lazy/imprecise entries, discourage ascertaining a clear technical

invalidation level, and create circumstances whereby if the trade is going poorly,
more risk can be taken on and ‘justified’ in the trader’s head with reference to
“averaging down” or “working an area”.

Summary:

● Compounding is adding size to your winning trades

○ Shouldn’t be done blindly → wait for a high-quality setup to form
once the market has proven to you that you’re on the right side of the
move
● Averaging down is adding size to your losing trades
○ Can be used to get a better entry price when in the right hands and in
the appropriate context
○ Best avoided by beginners; can form some ugly/lazy trading habits

Next lesson overleaf.

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 Lesson 3: Order Flow

Understanding basic order flow can really enhance your trading, even if you don’t
follow a strict price action approach.

There’s often a lot of confusion around this topic as traders use different terms and
explanations to discuss very similar price patterns.

This all makes a lot more sense if you think about it in terms of big traders and
trapped traders, and forget about smart money/algo/market maker/Wyckoff stuff
for the moment.

★ 3 core premises:

○ Orders accumulate around attractive reference points on a price chart

→ old highs/lows, equal highs/lows, swing highs/lows, range
boundaries, and so on
○ Abundance of orders = liquidity = what market participants trading
big size seek in order to execute orders with minimal slippage
■ They’re looking for lots of selling to ‘pair’ their buying/lots of
buying to ‘pair’ their selling
○ Markets tend to react violently when traders are trapped on the wrong
side of attractive reference points

Another good supplementary reading to this lesson is my article on stop loss

placement.

In this section I’ll cover two additional topics:

1. High Probability Invalidation Levels

2. Liquidity Pool Selection

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High Probability Invalidation Levels

An invalidation level is the price point at which your entry thesis has almost
certainly been disproven and thus where you exit the trade.

A common misconception is that putting your stop above swing highs/below swing
lows is never acceptable, because doing so puts you at risk of being hunted.

While this is true under certain circumstances, it’s not a hard rule.

★ Key point: using an ‘obvious’ swing high/swing low for a stop is safer if it
formed after a stop run has already taken place

Take a look at the price action on the Dollar Index, H4 time frame.

The top level is a clean, deep swing point with a cluster of equal highs. It gets
raided, and price immediately rejects.

On the close of that candle (delineated with the red arrow) I personally don’t see an
issue with placing a stop above the high of that same candle.

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The stop run has already taken place. If price is bearish, there’s no reason for it to
trade back above that high. If it does, there’s a good chance that the move wasn’t a
stop run and that the market wants to reach higher.

Let’s look at a bullish example on the same chart.

The same logic applies. Without context, the low delineated by the red arrow
would be a good candidate for a stop run. Normally this would mean one should be
cautious in using it as a stop.

However, that low was formed following a stop run of the equal lows to the left.

So, if price is bullish, it has no reason to trade below the delineated low since the
stop run has already taken place.

★ In summary, if the high/low was formed as a result of a stop run, price has
no (good) reason to return to the high/low if you’re right and therefore the
structure can be used to define risk.

Simplest way to remember it: the stop run shouldn’t be stop run!

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Liquidity Pool Selection

When assessing whether an area above highs/below lows is a liquidity pool, it’s
worth being very selective.

Structures that attract liquidity (i.e. that traders use for setting orders):

● Equal highs/lows
● Deep swing points/swing highs and swing lows
● Range boundaries
● Popular candlestick pattern highs/lows

The more attractive and outstanding a structure is, especially if it’s visible on a
high time frame (D1+), the more significant it is.

Don’t be that trader who uses every wick on any time frame as a ‘stop run’.

High time frame context also helps in identifying high probability liquidity pools:

★ If higher time frames are bearish, then a move above old highs on an
intraday basis is more likely to be a ‘trap’ before continuation lower

★ If higher time frames are bullish, then a move below old lows on an intraday
basis is more likely to be a ‘trap’ before continuation higher.

As outlined in the notes for Lesson 1, markets don’t move in straight lines. The
most successful and violent setups will often occur following stop runs which are
in sync with the higher time frame flow – context is key.

If you have to sit there and really contemplate whether a structure is a liquidity
pool or if a stop run has taken place, the answer is usually ‘no’.

Be picky and trade what is clear.

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 Lesson 4: Trendlines

My video on trendlines was one of my early lessons and I did not cover some
important elements.

Let’s focus on three things in particular:

1. Types of Trendlines
2. Trendline Quality
3. Four Types of Trendline Trades

Types of Trendlines

1. Uptrend support trendline

2. Downtrend support trendline
3. Uptrend resistance trendline
4. Downtrend resistance line

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Trendline Quality

There’s no point in trading shitty structures.

One mistake that I kept making early on was assuming that every instrument will
have a tradable structure in play on any given time frame.

This is not the case.

Sometimes there simply won’t be a clean, straightforward structure to use for a

trade. That’s fine.

You’re better off waiting for something clear to form that practically begs to be
traded, as opposed to finding an excuse to be in a trade based on a mediocre
structure.

So what are the characteristics of a high quality trendline?

● At least 2 touches
● Touches are evenly-spaced
● Price reacts violently to the trendline/it is respected
● Trendline can be cleanly drawn/connected without having to be ‘forced’ and
without cutting through (too many) candles
● Connects reasonably recent highs/lows

There’s certainly a balancing act involved; one that comes with experience.

Namely, you must be reasonably strict when it comes to assessing the clarity and
quality of a structure while at the same time being cognisant of the fact that lines
are seldom perfect.

Let’s look at some chart examples.

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20
There’s little point in me spamming you with examples, as there are countless.

If a structure is good it will jump out at you, so go look at some price charts and
develop an eye for it.

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Four Types of Trendline Trades

This statement is far from some scientific fact, but in my opinion and experience
there are (at least) four types of trades that can be taken using a trendline.

1. Continuation
2. Momentum Reversal
3. Retest Reversal
4. False Break

Continuation

Definition: a trade taken in the same direction as a trendline

At its core, a trendline is a support/resistance structure.

So, if a trendline is providing resistance e.g. a downtrend resistance line, a

continuation trade would be selling when price returns to the trendline anticipating
continuation to the downside.

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Continuation: 3 Touches Confirm a Trendline?

You’ll commonly hear (including in my video) that 3 touches on a trendline

confirm it while 2 touches on a trendline means that it is
tentative/speculative/unconfirmed.

The logical inference from this information is that a continuation trade is safest on
the 4th touch of a trendline: 2 touches constitute a tentative one, 3rd touch
confirms it, and so the 4th touch is the first test of the confirmed trendline.

This is actually something that I disagree with.

Here’s what I think:

1. The higher probability continuation trade is taken on the 3rd touch of the
trendline i.e. the touch that ‘confirms’ it as a trendline
a. In my opinion and experience this works better as market participants
anticipate that the tentative trendline will be confirmed on the next
touch (rather than violated), hence it is often respected on the
confirmation touch

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 2. If you wait until the 4th touch to take a trade, the probability of a violent
reaction is lower because the structure has been used/been absorbing orders
for 4 consecutive tests at that stage
a. As a general ‘rule’, the more a structure gets hit from the same
direction, the weaker the anticipated reaction from that structure
b. Thus, getting in on the 3rd touch of the trendline (as opposed to
waiting for it to be confirmed and then bidding/offering it) is
oftentimes a higher probability trade (Entry technique)

Momentum Reversal

Definition: a trade taken in the opposite direction of a trendline once it is violated

(on a closing basis)

At its simplest, once a trendline fails to provide support/resistance, we anticipate

price to move away from it in the opposite direction.

If a trendline providing support fails, we expect price to trade lower. If a trendline

providing resistance fails, we expect price to trade higher.

So where does “momentum” come into all of this?

It is common for traders to expect price to retest a structure once it is broken.

Indeed, this will be one of the next setups I cover.

However, markets don’t always work so neatly.

Sometimes the break of a structure will not be followed by any type of retest of
that structure before price runs away.

This is what I mean by Momentum Reversal.

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Entry technique: bidding/offering at market once the candle cleanly closes through
the trendline.6

6 There are a lot of variables here. In terms of time frames, I’d usually wait for a close on the time frame
that you used to identify the trendline. E.g. if it’s an H1 trendline then a clear H1 close through it is the
entry technique. Also, not every momentum reversal is going to be tradeable (in terms of defining risk).
E.g. if the candle closes too far above/below the trendline, ‘chasing’ it might not be worth it R:R-wise
because stop loss would necessarily have to be far away from entry. Nuance, people.

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Retest Reversal

Definition: a trade taken in the opposite direction of a trendline once it is violated

(on a closing basis) and retested by price

This setup isn’t radically different from a Momentum Reversal. The crucial
difference is that the trade is taken if price returns to retest the other side of the
trendline after closing through it. This is different to Momentum Reversals, which
don’t require price to come back to the trendline in order to take a trade.

Simply, this is a break-and-retest setup as opposed to a break-and-run setup. It’s a

support/resistance flip trade as opposed to a momentum trade.

Retest Reversals and Momentum Reversals are not conflicting setups.

1. Traders can opt to only trade one of the two setups based on their journal
2. An aggressive entry can be taken as a Momentum Reversal Trade with the
options to:
a. Exit at target and trade the retest as a separate trade
b. Take an aggressive entry when price closes through the level and
compound the position at retest

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Type 1: BPC/Butt-kiss retest

Type 2: Rounded retest

Entry technique: bid/offer once price tests the other side of a broken trendline (be it
BPC or Rounded retest)

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Retest Reversal: What Kind of Retest?

If you want the full breakdown on different types of retests, check out my video
here.

Let’s keep it simple.

When price breaks a structure and retests it, there’s either time and space between
the break and the retest, or there isn’t.

In the first chart example, price closes through the trendline and retests it a couple
of candlesticks later. There is very little time (and space) between price breaking
the structure and testing it from the other side.

This is a BPC (Break-Pullback-Continuation) or ‘Butt-kiss’ retest. These types of

retests don’t usually give you a whole lot of time to get in on the trade, and may
sometimes require you to drop to lower time frames (H1, M15) in order to catch
them. They’re much closer to momentum trades than support/resistance flips.

In the second chart example, price closes through the trendline and continues to
run away from it without immediately providing a retest opportunity at the origin
of the breakdown. There is plenty of time (and space) between price breaking the
structure and testing it from the other side.

This is a Rounded retest. These setups take time to form as price may trade much
higher/lower before eventually returning to the structure. Rounded retest setups are
arguably ‘safer’ because they only form once the structure is definitely broken (as
proven by the time/space price spends away from it). BPC setups, on the other
hand, are arguably riskier because the breakdown could be a false break.

I don’t think one is necessarily better than the other. They’re two different types of
setups. Try both, record/observe how price behaves when structure is broken, and
see what works for you.

Beginners will likely do less damage to their account by starting with BPC setups.

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False Break

Definition: a trade taken in the same direction as a trendline following a false

break/failed reversal

The simplest way to express this setup is that it is a Continuation trade after a fake-
out.

Price action can be messy. Breakdowns/breakouts aren’t always going to be very

clean and have distinctive follow through.

What’s the logic behind a False Break setup, and how can we take advantage of
times where trendline boundaries aren’t being fully respected?

1. Price forms a valid trendline

2. Price violates/closes through trendline
a. Momentum Reversal and Retest Reversal traders bid/offer the break
3. The retest fails and price reclaims the ‘broken’ trendline → false break
4. Price retests the ‘broken’ trendline from the original direction (Entry
Technique)
5. Continuation

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The explanation as to why this structure works isn’t nearly as important as being
able to trade it.

However, it’s worth covering briefly (and has a lot of overlap with the lesson and
section on Order Flow).

The reason this False Break structure (and other false breaks) works is because it
essentially traps traders.

1. Support trendline forms

2. Support trendline breaks
3. Sellers short the break and/or the retest
4. Price moves back above the support trendline
a. All the shorts are trapped/in losing positions
5. Shorts realise they’re on the wrong side and close their losing positions
a. Closing shorts = longs at market
b. Additionally: smart traders identify that sellers are trapped and hit the
bid to squeeze them
6. Trapped shorts closing under distress + smart traders hitting the bid to
squeeze the trapped shorts = (violent) move upwards

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 Lesson 5: Horizontal S/R

Defining Risk

When I say ‘defining risk’ I mean how to identify where you’re wrong when
trading a level.

Even more simply, this section will cover stop loss placement.

The way I personally set stop losses for trading levels follows 3 steps:

1. Place stop above/below the candle that broke the level I’m trading
a. If shorting retest: stop goes above the high of the candle that broke the
level
b. If buying the retest: stop goes below the low of the candle that broke
the level
2. Clean up chart completely and mark out stop loss level (derived from point
1) as a horizontal level
a. Does my stop fall into an area of support/resistance?
i. If the stop loss is for a short trade, I don’t want to be stopping
out into resistance
ii. If the stop loss is for a long trade, I don’t want to be stopping
out into support
b. If yes, move stop up/down to the previous candle on the time frame
you’re trading
3. Calculate R:R once stop loss rules are met and see whether the trade is
actionable

This brings forth an important point: not all levels, even if they’re high quality,
have to be traded!

If you can’t define your risk for a trade in a way that meets your rules, the setup is
probably worth skipping (even if the structure itself is enticing).

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1. This is a reasonably aggressive stop placement strategy. But I like it because
I know I’m wrong quickly and it’s replicable. Out of the 3 steps, step 2 is
vitally important yet the most overlooked.
2. If there’s a liquidity pool above my stop (especially very clean highs/lows or
deep swing points) I’ll often sit out of the obvious level trade and wait for a
stop run setup instead. This is quite discretionary.

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Setting Targets

Trading level-to-level, holding swings and hedging along the way, using Fibonacci
levels, moving to break even and “letting it run”7, targeting liquidity pools, using
trailing stops, and so on are all different ways to ascertain exits for trades. There
are many more.

I’ll share with you the system I use to ascertain targets, and you can see if you like
it.

One thing I’ll suggest from the outset is try to find something that is consistent,
replicable, and can guide you from setup to setup.

The way I set targets for trades is pretty simple: my target for a trade is the FTA
(First Trouble Area) in the form of a level on the same time frame as the structure I
am trading.8

I strongly recommend you look at this Tweet.

7 Also known as ‘trading like a bell-end’.

8 Unless I have a D1/HTF directional bias, in which case FTA is ascertained on the D1 time frame.

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Not only do I explain the concept of FTA in detail with an annotated chart, but one
of my trading mentors (Tom Dante) from whom I learned this concept provides
some invaluable additional commentary.

At its core, I exit long trades at the resistance level closest to price and I exit short
trades at the support level closest to price.9

You may prefer much larger and longer-term swing and position trades. This is just
what works for me.10

The plan for trading a level resembles the following. For the purposes of this
example, assume I am looking at a H1 level that I want to buy (broken resistance
turned support).

1. Identify level that I want to buy

a. Let’s assume it is of sufficient quality + appropriate retest for me to
leave a limit order
2. Identify the stop loss price for trading that level
a. Refer to previous section
3. Identify closest H1 resistance to price → that’s my target
4. Use R:R measuring tool and input entry (the level), target (closest resistance
on the same time frame), and stop loss (refer to previous section)
5. Leave limit order to buy that level if R:R is good enough to warrant a trade

Simpler version:

1. Identify support/resistance level I want to buy/sell

2. Identify stop loss for buying/selling that level
3. Identify closest resistance to my long/closest support to my short
4. Use the R:R tool and input entry (1), stop loss (2), and target (3)
5. Determine if the setup gives you actionable R:R

9ibid.
10Though I recommend newer traders start out by trading closer to level-to-level style rather than trying to
catch perfect tops/bottoms that subsequently destroy every support/resistance level in the way.

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This is a slightly simplified version, but should give you an accurate depiction of
how my target selection process works.

I’ll reiterate the importance of reading through my Tweet on FTA. There’s a good
chance that if you have a question about it, it was answered in the Tweet replies.

It’s important to state that FTA is not a concept that belongs to one specific
system.

For example, if you trade exclusively trendline structures, you can still use the
concept of FTA to set targets, just the trouble area itself will be a trendline.

Same applies for supply/demand trading, and even indicator-based systems like
Ichimoku Cloud.

At its core, all you’re trying to do is ascertain where your position might run into
difficulty, and cut it there.

You can always 1) get back in if price doesn’t turn around where expected 2)
determine FTA on higher time frames if you have a high time frame bias.

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 Lesson 5: Fibonacci Levels

When it comes to Fibonacci levels, the biggest issue I see is that traders know how
to use the tool but don’t really think about what it is they’re ‘Fibbing’ (or
measuring).

There are two further issues with how many traders use Fibonacci levels.

1. Traders seem to select quite arbitrary (or at least difficult to replicate)

anchors for their retracement levels
2. Traders pay attention to all the retracement levels (from .236 to .786) and
don’t have a clear idea of which levels are tradable or where to anticipate a
reaction

I’ve slightly refined the way I use Fibonacci levels since the video was published.
This is not to say that I disagree with anything outlined therein. This is a setup that
works for me, and will hopefully clarify some of the concepts in the video e.g.
which swing highs/lows to choose, which retracement levels to look at for trades,
and so on.

Retracement Levels Following a Trend Shift/Shift in Market Structure

If a market breaks out to the upside, by which I mean trades through (and ideally
closes through a swing high)11, that can be interpreted as evidence of bullishness
i.e. that the market wants to trade higher.

However, given that price will often pull back after breaking out (retrace after an
impulse move) we can anticipate a pullback and bid the retracement as opposed to
chase price as it goes up.

Put simply: Fibonacci levels can help delineate where we want to buy a dip after
bullish price action/sell a rally after bearish price action, without having to chase
the move itself.

11 Refer to the Fibonacci Levels video for a refresher on what this means.

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Here’s what we’ve established so far:
1. Markets don’t usually move in straight lines
2. Shifts in market structure are evidence of direction
3. Breakouts/breakdowns often pull back before continuing in the same
direction
4. Fibonacci levels can identify levels that should hold if price will continue

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Now the two main questions:

1. Which high/low should one choose to anchor the Fibonacci levels and
when?
2. Which retracement levels are significant/should one expect to provide a
reaction?

To for the first question: I use the Fibonacci retracement tool when there is a shift
in market structure. I choose the origin of the breakout as anchor 1 and the highest
high/lowest low made as anchor 2.

To the second question: if I’m buying a dip/selling a rally following a break in

market structure, I look for a reaction between the 0.618 and 0.786 retracement
levels.12

12 This concept of Optimal Trade Entry (“OTE”), to the best of my knowledge, was created by Ken Roberts
and more recently made popular by ICT. However, ICT uses Fibonacci or retracement levels differently
and has several different methods by which he selects anchors. If you’re interested in that, he has several
videos on the matter.

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So, the logic should look something like this (bearish example):

1. Identify shift in market structure i.e. lower low

2. Wait for the impulse move down to find a bottom and start to retrace i.e.
move back up
3. Apply Fibonacci levels tool from origin of the breakdown (high) to where
the breakdown ended (low)
4. Anticipate sellers to step in between .618 - .786 for continuation

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Some important clarifications:

1. I never trade this setup purely based on the retracement levels. I need there
to be some sort of support/resistance structure at that level (as there often
will be) in order for me to make a trade. It’s a very powerful tool for finding
confluence, but the probability of success will still be a lot lower if there’s
no support/resistance structure at the retracement level.
2. I am not implying that the other Fibonacci levels are insignificant. The .618-
.786 is a ‘healthy’ retracement range that makes it easy to define risk. That
does not mean that price can’t turn around at earlier retracement levels,
especially if there’s significant support/resistance structure in the same area
(which is the main thing you should be looking for anyway).
3. If you’re unclear or hesitant as to whether a setup is a shift in market
structure, it probably isn’t. Even if it is, the best ones are usually very
obvious and worth waiting for.
4. There’s absolutely nothing wrong with using Fibonacci levels as they’re
described in the video. This is just another setup you can add to your arsenal,
or at least see if it works for you.
5. Keep higher time frames in mind: in a bearish market, selling rallies after
bearish market structure shifts is the higher probability play/in a bullish
market, buying dips after bullish market structure shifts is the higher
probability play.
6. Using candle wicks versus candle bodies doesn’t really matter as long as
you’re consistent i.e. don’t pick wick for the top and body for the bottom.

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 Lesson 6: Relative Strength Index (RSI)

Failure Swings

You’ll recall in the video that I cover RSI Failure Swings. Essentially, where a
bullish divergence ‘breaks out’ and forms a higher high/bearish divergence ‘breaks
down’ and forms a lower low.

My initial position was that failure swings ‘confirm’ a divergence e.g. a bullish
divergence itself isn’t enough to trigger a trade, and one must wait for the previous
high to be exceeded in order to take a long position.

My current belief is that failure swings aren’t entirely necessary to trade

divergences successfully.

Price action itself will often give you hints or a faster answer to the question of
whether a divergence is ‘working’ or not. So, the technique isn’t entirely
necessary; price itself can confirm the divergence.

The fact that price is diverging from an oscillator is useful information and isn’t
entirely obvious by just looking at the chart. Whether a divergence has ‘worked’,
however, is obvious by looking at the chart (you’ll get a higher high/lower low)
and thus there’s no need to look to the indicator for a failure swing.

Trendlines

Similar argument: no need to look for an oscillator breakout as price will show it to
you anyway.

There’s seldom meaningful difference between an oscillator breakout and price

breakout (in a way that can create an actionable trade) so it tells you nothing that
price doesn’t.

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Hidden Divergences

I don’t use them and I don’t think they are anywhere near as reliable at standard
divergences.

Counter-Trend Overbought/Oversold Signals

When RSI is below 30 the instrument is considered oversold.

When RSI is above 70 it is considered overbought.

A simplistic interpretation could lead one to conclude that RSI below 30 is a buy
and RSI above 70 is a sell.

The quality and reliability of an RSI overbought/oversold signal is affected by the

trend that the market is in.

In a bullish trend, discernible by higher highs and higher lows, RSI can stay
overbought for a very long period of time without providing any successful short
entries.

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In a bearish trend, discernible by lower highs and lower lows, RSI can stay
oversold for a very long period of time without providing any successful long
entries.

Here’s a little cheat sheet for using overbought/oversold signals to achieve higher
probability signals:

• Uptrend
o Oversold = good long entry signal
o Overbought = good take profit signal for longs & weak sell signal
• Downtrend
o Overbought = good short entry signal
o Oversold = good take profit for shorts & weak long signal

I’ll reiterate this now even though the entirety of the next section addresses the
matter: do not try to trade solely based on RSI, most certainly without knowing if
your entries are counter-trend or not. If there’s no support/resistance, I don’t trade.

RSI Confluence in Support/Resistance Structures

Oscillators can serve as powerful factors of confluence when price approaches a

support/resistance structure.

It’s worth remembering that when price approaches a support/resistance structure,

we simply don’t know (with full certainty) whether it will hold or get flipped.

Thus, indicators, retracement levels, and other tools can be used to assess the
probability of a level holding with extra evidence.

When price is approaching resistance, the presence of a bearish divergence

increases the probability of the resistance holding.

When price is approaching support, the presence of a bullish divergence increases

the probability of the support holding.

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Standard bullish divergence forming as price approaches support structure

Standard bearish divergence forming as price approaches resistance structure

Note: oversold at support/overbought at resistance works too. It’ll give you more
setups, but the signal is usually not as powerfully as a divergence setup.

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 Putting it All Together

So, what now?

You have a bunch of technical tools at your disposal and you’re itching to enter the
markets.

I was contemplating how to structure this section. I think a quick, easy-to-follow

list of steps is the best way to stop overanalysing and start learning.

Here’s how I recommend you go about it in 5 steps.

1. Make a list of the tools that appeal to you. For me personally, horizontal
levels always just made sense and I found them easy to spot. Trendlines
were the complete opposite. You’ll naturally be drawn to some more than
others.
2. Find a handful of instruments (2-6) and choose a few time frames (D1, H4,
and H1 being my favourite).
3. Study the past and the present.
a. Past: mark out your levels/lines across different time frames.13 Take
some trade setups and watch how they played out. If they worked,
why? If they didn’t work, why not? What links the ones that work as
opposed to the ones that don’t? Make rigorous notes.
b. Present: the same, except demo/paper trade the setups. I do not
recommend risking real capital until you have some semblance of a
strategy. The market is your best teacher: mark out your structures and
see how price behaves around them. Where do you get the most
powerful reactions? In what cases does the structure fail? What links
the ones that work as opposed to the ones that don’t? Which setups
work better than others? You only need 1-3 setups when starting out.
c. Screen time is simply irreplaceable, but you can definitely accelerate
the process if you watch charts with an actual goal in mind (and take
notes) as opposed to just staring at candlesticks form.

13 TradingView has an excellent replay feature.

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 4. Start a basic trading journal.
a. Link to a template can be found here
b. Start thinking about why you’re taking a trade; there must always be a
reason that you’ve decided to risk your (demo) capital.
c. The journal should have two sections:
i. Log of your trades as per the template
ii. Sketchbook of the setups you trade → can you articulate/draw
out what the market needs to show you in order for you to take
a trade? Is it an S/R flip? A certain trendline break? A pattern?
5. Start building a trading system.
a. This is simply a set of rules/guidelines derived from the data in your
trading journal.
b. Your system should inform your trading plan (defined below):
i. Entry Technique → what structure do you need to see to get
into a trade?
ii. Entry Trigger → what does price need to do around the entry
structure for you to take a trade?
1. E.g. H1 candle close through the trendline for a
Momentum Reversal Setup
iii. Invalidation → if the entry is triggered, where does the stop loss
go?
iv. Reward → if the entry is triggered, what is the target for the
trade?
v. Risk
1. How much of your capital (as a %) will you risk?
2. What is the minimum R:R the setup must meet in order
to take the trade?
3. How do you manage the trade as it moves from entry to
your stop loss or target?

This is a huge topic that will be the subject of future webinars.

However, this is a pretty solid foundation that’ll set you on the right track.

Trading is hard and should be taken and treated seriously.

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 Conclusion

Thanks for making it this far.

I hope it has been valuable.

This Study Guide is and will always remain free of charge.

There’s a really good chance I saved you buying a shitty course, whack webinars,
and a whole lot of paid ‘proprietary’ indicators.

If you’d like to tip me for my work, my $BTC address is below.

32Nefm8Wn5pLjJHeUvqtyBNqigVVkZxsgA

Best wishes,
Cred

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