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Luckshury

@Luckshuryy

Jan 20

trapped traders: a clear understanding

a thread 🧵

what are trapped traders?

when new positions enter and are placed in an offside position, they will naturally want to close, squeezing the market in the opposite direction.

this natural outburst of breakout traders being caught offside can be a great reason to look for a reversal.

example ↓

identifying trapped traders:

requires an understanding of open interest and delta, as open interest will categorically tell you if the majority of positions entering are new ones.

open interest increasing = new positions
open interest decreasing = positions closing

positive delta = longs
negative delta = shorts

breakout traders only appear when there's an increase in open interest; otherwise, most positions you see will be closing.

1) identify the candle in which new positions have largely entered
2) identify a level in which those new positions would be offside
3) trade in the direction of the new positions unwinding

example ↓

Read 6 tweets

Luckshury

@Luckshuryy

Jan 10

forming a daily bias:

(stats included)

a thread 🧵

candle formations:

engulfing candles - I look for a candle to wick below the previous candle and close at least beyond the 50% mark the previous candle (bullish engulfing).

I find this to be as effective as waiting for the entire previous candle to be engulfed.

the following day will be biased towards the direction of the previous day engulfing candle.

shooting star - my favourite daily formation, these often result in better entries to much larger moves, failure to extend above/below previous day and end up mean reverting.

example ↓

one time-framing:

the most basic thing I always check for - an aggressively trending move.

daily timeframe, for a bullish example - is the daily candle printing 3 or more consecutive daily highs in a row whilst not wicking below previous day.

yes = I will only follow that direction for the remainder of the day should i take any trades.

no = move to next step

Its a simple and effective way to not get caught offside against an aggressively trending market.

example ↓

Read 7 tweets

Luckshury

@Luckshuryy

Jan 3

liquidity: a complete guide

a thread 🧵

what is resting liquidity?

resting liquidity comes in 2 forms:

- buy stops
- sell stops

these resting liquidity zones when hit can cause:

- positions to exit (stops)
- breakout traders (new positions)
- liquidation runs

internal vs external:

external - major highs/lows (key pivot areas)

internal - highs/lows or a series of them within two major external pivots.

I find internals are more likely to see a clean swing failure pattern from, external are more prone to failed auctions.

Read 8 tweets

Luckshury

@Luckshuryy

Oct 8, 2024

Price Action

- Market Structure
- Executing Structure change
- Bullish/Bearish Candles
- Entry confirmations

a thread 🧵

1. Market Structure

There is no definitive way to look at structure, it is something that is really dependent upon individual strategy/system.

I don't take so-called "HTF" trades. I approach the market daily, finding it most useful to track market structure by anchoring it to each individual day.

Doing this removes a lot of higher time frame noise, since i am 98% of the time in and out of a trade within the same day, I want to solely focus on that trend.

note - using range chart or non time-based charts can allow for a much cleaner view of that structure.

example ↓

2. Structure change

executing through structure change requires 3 things:

- clean pivot for price to move and revert from
- acceptance - either below a HL or above a LH
- internal level to execute the reversal from

in reference to "a clean pivot", this means the pivot should not be a poor high/low, if it is, then that just increases the likelihood that the pivot can be revisited. I would also prefer to see spikes in volume & liquidations that these pivots.

acceptance - has price seen multiple closes above/below either the HL or LH, as mentioned previously, you can use time-based candles for this but I find it cleaner through range charts, none the less you want to see acceptance to be able to warrant looking for that structure shift trade.

internal level - after confirming a structural shift, the entry can be based on: internal fibs, a volume profile pull, or an anchored vwap from the new pivot. find an entry point at an internal level with your invalidation firmly above the new pivot that price is shifting away from.

example ↓

Read 6 tweets

Luckshury

@Luckshuryy

Oct 1, 2024

Using Previous Day Values for Bias:

a thread 🧵

Previous day sweeps:

monitor above & below previous day for excess in:

- volume
- liquidations
- trapped traders in general

recognising a sweep above/below the previous day can help you get on the right side of a newly forming engulfing candle.

Price vs. previous day:

where is current price in relation to previous day, is it above or below previous days highs/lows.

If it is above previous day for example, then monitor the strength of that trend above previous day's high.

When monitoring the trend check for:

- strength in relative volume (for continuation)

- aggressive OI increase, as if price reverses away from these positions could fuel for a large reversal back into pd values.

Read 7 tweets

Luckshury

@Luckshuryy

Sep 19, 2024

Candlestick Reversals

[patterns & confirmations]

a thread 🧵

Swing failures:

simple premise:
wick above or below a level with a close back in the opposing direction.

one of the more simple patterns although extremely effective if you know where to look for it.

It's extremely important not to trade these randomly but only at proven selective levels, especially at pivots/levels where others may stop out or pile in for a breakout trade.

some things I look for:

- internal liquidity [internal from major pivots - least expecting stops hit]
- distance between pivots - time to build up positions before stopping out
- sfp of specific sessions [of London high/low]

nonetheless, an sfp traps excess before allowing it to fuel a reversal.

note - invalidations for a swing failure pattern trade are commonly strictly above/below the sfp candle.

example ↓

Engulfed candles:

I most commonly use this for trading against trapped traders.

The engulfed candle likely includes traders opening new positions in that direction, instantly placing them in an offside position.

For further confirmation I check the OI + delta to dial in further whether there is offside traders within the engulfed candle.

Same as any other execution method is to look for this solely at pre planned locations:

- naked pocs
- s/r levels
- intra session pocs

Do not just blindly trade this reversal, there has to be some pre planned substance behind the level.

example ↓

Read 6 tweets

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