Thread by @TradesbyHaze

⚠️I’ve had many people Dm me and ask for 1on1s to learn how to trade so i figured I’d create a thread on it instead to help everyone out, I will be breaking down how one can achieve the skill of trading in a multistep process. Its a very simple concept once understood correctly⚠️

1st. The first thing i believe a trader should learn would be identifying Market Environments. The Market shifts between these
3 Environments: Uptrending, Consolidating & Downtrending.
Below i will be going into detail and breaking them down so you can get an understanding

Uptrends: When a market is Uptrending it consists of HH’s- Higher Highs and HL’s- Higher Lows.

If you notice, when the Market is Uptrending or Downtrending it tends to move in a pattern called a 3 Leg Extension 🦵

In order for it to be a confirmed 3 leg extension, the trend highs must go higher then the previous high for it to be higher and the trend lows can not go lower then the previous low, the lows must be going higher then the previous lows basically like a staircase

Consolidation: When a market goes into consolidation, it usually occurs after an uptrend or downtrend, the market is taking a break from trending higher or lower before continuing or reversing the the previous trend.

When consolidating trend isnt making New Highs or New Lows, its just staying inside a certain zone going back & forth as if you were in a room throwing a ball against the roof, its going to bounce back down to the floor & bounce right back up not going any higher or lower

Downtrend: As you can see after it was consolidating it finally picked a side and made a new Lower Low and then proceeded to create a new Lower High thus confirming the downtrend, as the trend continued it went on making new Lower Lows and new Lower Highs

It then created a Low at the same level as the previous Lower Low, but since the High it created was Lower then the previous High, then it was still considered Downtrending, as confirmed right after when it pushed Lower past the previous Low

Generally a Downtrend consists of 3 leg extensions 🦵 towards the downside where it’s creating LL’s- Lower Lows & LH’s- Lower Highs

When you tie it all together, youre able to get the overall story of the market + the current major trend of the market to know wether market is Bullish (Uptrending), Bearish (Downtrending), or at a Neutral (Consolidation). Later you will learn how to further use it for trading

⚠️Will be posting a continuation to the thread later tonight once I’m home⚠️

2. I believe the Second Most Important part to trading is being able to read Major Support & Resistance Levels. These are areas where market has changed directions or stalled repeatedly. Support is considered to be the Floor and Resistance considered to be the Roof

When price reaches these Major Support & Resistance Levels it will do one of 3 things. Break through structure, Reject and reverse, or consolidate before picking to break through or reject

Price reached resistance at 1. Then rejected before pulling back up to break resistance at 2. Price then traded higher before selling off to retest support at 3. When price breaks above resistance, that level now becomes support and vice versa

as seen here, the resistance at 1. became the new support at 2. once price was able to break past resistance

here price found support at 1, but once price was able to break under that level, it then became resistance as seen at 2 where it rejected and formed a 3 leg extension downwards, that move then consolidated for a bit at support #3 where it was then finally able to break through,

once broken through #3 support, it then became resistance as seen on #4, price then broke through and then that level became support once again at #5 & #6. These major levels can be used as Entry Points or as Exit Points depending on what price does

When prices rejects off of these levels it does 1 of these 3 Touches.
TOUCH: Price comes and actually touches the exact level
GAP: Price comes real close to the level but doesn’t exactly touch
OVERLAP: Price goes a bit over the actual level but isnt able to sustain and goes back

When drawing these levels out they can be found on any time frame, the higher the time frame its drawn on, the more respected this level will be, the smaller the time frame the level was drawn on, the easier it will be to break through it.

If price Bounces off of Support it would mean a Bullish move, if price Breaks Support it would be a Bearish move, if price Rejects Resistance it is seen as Bearish, and if price Breaks Resistance it is seen Bullish

When drawing these Major Levels, you want to pick levels where it is both a Support & Resistance Level thus confirming it as a level. The more touches a level has, the more respected the level is, when drawing these levels always analyze from left to right & look at midpoints

In this example, price met resistance at #1 & #2 until it finally broke out making a new higher high, price rejected at the higher high #3 now making a new level, it then came back to the support at #4 which was previously #1 and #2 resistance

Price bounced off of support and broke through #3's resistance creating a new all time high at #5 where it then rejected creating a new resistance level, price can be expected to eventually pull back down to support #6 which was #3's resistance

Always keep in mind that support and resistance levels are more of zones then actual numbers hence why some overlap and why some gap from the level and arent able to touch

Support bounces are Buy Entry points and Resistance Bounces are Sell Entry points, also when setting these levels they can be set from the candle close or from the highest or lowest the wick reached. Another important thing are Whole Numbers as there’s are usually psychological

When using these Major Levels and Entry Points and Exit Points, your Entries would be at strictly rejections or bounces off of support or resistance, when entering in this example at 1. you enter once you have confirmation of a rejection,

your stops then go higher then the highest is was able to go to give it room for fake outs, our targets for this bearish move is the support level which was the previous resistance. if you notice the red box is your risk and the green box is your potential risk,

youre setting yourself up for a great risk to reward ration of potentially 1:3. No one in trading will hit 100% of the time so the next biggest thing would be risk management

3. The Third Most Important thing to me would be Proper Risk Management. Proper risk management will consist of Proper Entry & Proper Exit points, Proper sizing, Stop Losses & Take Profits

Based off of Major S/R levels we can draw out our Entry Points, Exit Points, Risk & Reward. Tying all of this together will allow for proper risk management to be able to grow in the long term as no one trades 100% win rate.

Now based off our levels, price rejected resistance at #1 & our next level for the rejection to find some support would be Price target #2, our risk would go above the highs from price action at #1

Our second potential risk is here at #3 & #4, price bounced off of support #3 where we couldve bought in with our stops under the lows of the support bounce, our price target would be the resistance which was our previous support target from the last trade

Our third potential trade would be from #5 & #6, price broke over resistance and retested that level as now support, once it started to bounce off of support you couldve entered with your stop loss being under the lows of the bounce and your target being the resistance from #1

Our forth potential trade would be #7 to #8. Price rejected at the resistance where you couldve entered with your stops going over the highs from that move and your price targets being the same support it just retested in the previous trade.

if you notice for all these trades your risk ( red box ) will always be smaller then your reward ( green box ). In the long run taking bigger gains then what you lose will over all have you being profitable

When first starting to trade, not building any improper habits is the most important, I’ve lost thousands of dollars to learn all these lessons that i am passing down to you guys, the main purpose is to make sure you don’t lose such a big amount in the learning process

That’s why proper sizing is the most important. Once you go off of your rules it is no longer trading, it then becomes gambling. You need to keep in mind this is a marathon not a sprint so compounding your gains and losing in small amounts is the key to success

As your account begins to grow from compounding gains, you can then increase in size (example: $10 loss is a 10% loss from a $100 account, once compounded to a bigger size, that $10 is no longer a 10% risk, so you can either stay at same $10or increase on size to where it’s 10% R

⚠️Will continue the thread tomorrow, please retweet the original post to spread this out to as many struggling retail investors as possible!!⚠️

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⚠️Continuation of yesterday’s thread⚠️

When deciding to increase in size, you need to understand the emotions won’t be the same as previously due to having more draw down risk , finding consistency & confidence in your strategy should be your 1st goal before increasing sizing, which leads us to our next lesson

4. Psychology: As traders we tend to go through a lot of mental obstacles, from learning, to being doubted by family&friends, to trading emotions, were all different, so all of these emotions will differ for each, but below will be a list of obstacles we must all overcome

The first emotion that most traders tend to go through is GREED. When greed kicks in we tend to do stupid things, we begin to over size trying to get rich quick, we begin to bag hold on winners and give back the profits, we tend to win a few trades in a day & overtrade instead &

give the profits right back. As Greedy traders we lack discipline of a strategy. Some solutions to this would be having Take profits area and setting a Sell Limits to automatically do it for you, the next solution would be to discipline yourself not to get greedy which can be a

difficult but not impossible challenge. Learning when to call it a day & when to exit the trades will play a big role in your long term growth. Keep this quote in mind "The pigs get fat & the hogs get slaughtered"

The next emotion I believe most traders go through is FEAR/ANXIETY. As traders we will never be able to hit 100% win rate so losing will always be a part of trading, all losses are lessons though, reflect on them & note down the mistakes that you made, point out the issues & make

them known so you know in what areas of your trading you need to be working on. When one starts losing one starts to have fear of losing their hard earned money, you could fear wether the trade will really play out as you analyzed, you could fear wether you really will make it to

financial freedom. Ways to overcome this fear will be finding a good amount youre fine with losing per trade, as we talked about in risk management, this is a marathon so losing in small amounts one is fine with to be able to keep trading will cut out the fear of losing all your

money, If you fear wether you analyzed correctly or not, then hit the books in what you feel like you lack in & reinforce that section, one needs to have confidence in their analysis as hesitating can make you miss out on an entry & can make you miss out on an exit.

Time & Confidence is very crucial in the trading world, also it is better to act on a false signal then to miss out on a real one. If you fear on wether you will make it out in the trading world, just remember nothing worth having comes easy, to reach financial freedom & be part

of the 1% you must be willing to do what the 99% dont do, you must be relentless in wanting to achieve your goal, you must become a new & better version of yourself that doesnt give into anything, you must become a champion at what you do & strive to be better then you were

yesterday. This can take however long it takes but if you have the proper reasons as to why you want this then nothing will stop you from achieving your goals, better to go through the struggles for financial freedom then to be a slave to the system living off of a salary

One way to fight trading anxiety is to concentrate on following the trading plan, not on making a set amount of money. That way, following the plan becomes more automatic, and you spend less time worrying about what can go wrong.

The next important emotions most traders go through is DEPRESSION, depression can happen from many things like you family or friends not supporting you in your journey, from losing streaks, from still making mistakes even after all the work youve put in, from being indoors 24/7

as were always on the computer. Find things you like to do to keep your mental health in check, take time off the charts to hit reset as you wont be trading optimal how you should, other solutions for depression could be hitting the gym or even meditating, the point is to find

whatever puts you in a better mood & de-stresses you & if in this journey you family or friends wont see in trading what you see, they will tell you its impossible or that if it were easy everyone would do it, or theyll even tell you youre gambling & throwing money away.

Dont listen to none of them, if youve seen real results & really see something in trading then stick true to your vision, someone has to take the risk to create generational wealth & it starts with you

5. CANDLESTICKS: This next piece is what I think plays another HUGE ROLE in Trading. Candlesticks are the story of the market, it tells you what price did & how strong the move was. Candlesticks also give reversal warnings & they give signs of continuations once learned to read

I won’t be going into full depth on Candlesticks as theres a good amount of patterns and in depth psychology behind the patterns that are vital for you to comprehend so you can use it to your advantage, i will explain the basics and leave a few links for those to further learn

Candlebody: The candlebody of a candlestick shows you where price Opened & Closed for the time frame of the candle
Wicks: Shows you how High or Low price went during the time period of the candle
⚠️You always want to wait for candle closes for confirmations⚠️

Engulfing Candle Stick 🕯: Occurs when the candle body closes completely above or below the previous candle. It indicates a shift in directions & the more previous candles it engulfs the stronger the shift in trend is. This engulfing must engulf at minimum the body of previous 🕯

Opening of candles are usually dominated by the amateurs & professional traders dominate the closing of the candle. If you notice usually the last few seconds before a candle closes a swarm of orders will go through to push it that extra bit higher or extra bit lower for closing

Shaven Head & Bottom 🕯: A shaven head opened at low & closed at high, this bullish candle frequently predicts a higher open on next candle. Shaven bottom opened at high & closed at low, this candle predicts a lower open on next candle. These 🕯 have little to no wicks on close

Candlesticks have a Rule of Two: where you don’t judge one candlestick in isolation. If you see key candlesticks, wait for the next one to confirm your theory

Hammer 🔨 🕯: Marks a reversal off a bottom or off an important support level. It shows buyers seized control. A bullish candlestick right after that engulfs its wicks confirms it. Think about it as the trend bottoming out

This candle always appears after a prolonged downtrend. Strong selling, often beginning at open of candle, as time goes on price recovers & closes near the candle open or even higher sometimes.

Hangman 🕯(Bearish): This candle stick occurs after an extended uptrend. It occurs because traders seeing a sell off in shares, rush in to snap up the stock at bargain prices. To their dismay, they find out they could’ve gotten it cheaper. Looks identical to the hammer, but it

Happens at the top off an uptrend, always best to wait for the next candle close to confirm as this pattern can be seen as bullish due to the rejection to the downside

Doji 🕯(Neutral): shaped like a cross or has a small real body, indicates a stalemate between supply & demand where everyone is in agreement. This indicates a potential reversal if it happens at the top of an uptrend or bottom of a downtrend

There’s plenty of other important 🕯 patterns in which i can’t explain into full detail here. Here’s a book to get started on it, or if you’d like multiple books my discord has all the links drive.google.com/file/d/1tmi5UD…

6. Volume: ⚠️Volume is EXTREMELY IMPORTANT⚠️ it is like water pressure in a hose. Greater the water Pressure(Volume), the greater the Flow(Trend). Volume should increase in direction of the trend to improve likelihood that current trend should continue. If volume declines as

Trend progresses, less reason to believe trend will continue. Volume can also be useful for confirming tops & bottoms, Volume also helps you confirm how strong candlesticks & patterns are. Volume increased at the rejection of support w a hammer candle and bottomed out, if you

Notice the volume on the hammer was bigger then the volume for the previous bearish engulfing candle

7. TYING IT ALL TOGETHER: Once you’ve built your foundation & have gotten a more in-depth knowledge of all these simple concepts, the goal is to tie it all together into a strategy & follow it through religiously. Self Discipline will be your friend for this step of the process

Now let’s tie it all together.
Step 1: find a stock
Step 2: chart out all major support & resistance levels
Step 3: figure out the overall major trend & figure out what trend is doing by analyzing candles & volume & levels

Step 4: figure out how you want to enter & how much risk it will be, how much sizing would it be for you, figure out where you would take profits to have an ideal target
Step 5: wait for price to reach your level & wait for confirmation to enter, try to have 3 confirmations

Step 6: watch trade & once in profits move stop losses to break even to now be in a risk free trade, if up a good amount trail the stops to protect profits
Step 7: try to only take 1-3 trades a day that set up with high probability to be profitable

Step 8: note everything down in a trading journal, note what made you enter, how you felt through out, why you exited, your profits, your losses, & grade yourself on the trade

⚠️Well this is the end of the thread, if you made it this far & we’re able to learn please Follow, Like & Retweet to be able to spread it to as many struggling retail investors as possible🙏🏽⚠️
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