It doesn’t matter if you’re new to trading or have been trading for awhile. We all have a starting point.
That starting point for most traders is learning how to trade market structure.
In the beginning of my trading career I learned that I needed to be a structure based trader in order to be profitable. So, I began learning as much about it as I could.
I started with support and resistance levels, supply and demand levels, trend lines, countertrend lines, chart patterns such as wedges and flags, and as you can see my list can go on and on.
The moment I came up for a breath of fresh air, I realized I had too many structures that cluttered my price charts and I was making too many decisions that did not always lead to money in my pocket.
It was taking me longer to learn how to trade all of these strcutures and time was not on my side as a mother of two, one of whom was a newborn.
So, I wiped my charts clean to focus on what made the most sense to me and I could keep the same rule trading regardless of how price was moving.
Now, I’m going to share with you the structures I use personally use that I didn’t take me long to learn and makes me money weekly.
Let’s get started.
What Is Market Structure?
Simply put, market structure is what you draw on the chart.
When you plot market structure you are telling price where you would like to see it get to so you can enter and exit a trade.
Think of price as a GPS. As price moves, your market structures are the important exits, stops, and turns.
You as the trader take action once price reaches a particular destination and you must react quickly so you don’t miss a turn or get caught in traffic.
So what important structures should you be plotting? Well, there’s 3
1. Zones That Highlight Your Entries
From the beginning, you do not want to overcomplicate where you enter your trades.
Instead, use something that highlights every trade you to take.
I like to use what I call the flash light method and I do that by using zones.
I use Trading View to analyze my price charts and it allows me to use the rectangle tool.
I use this tool to draw zones on important price action candles so when price moves back into the zones I can enter my trades.
You can use zones in a variety of ways, but it will be based on how you view price movement. At what important price points you draw the zones where you want wait for price to get to so you can enter a trade?
Once your mind wraps around the fact that you can only enter the trade when price is in the zone, you will realize how quick you learn this structure and how well you make money.
2. Trend Lines That Guide Price Movement
Let’s go back to the GPD direction. Have you ever noticed when you drive on a highway or a busy street, there are lines in the middle of the street and cement or metal borders?
Have you ever asked your self why?
The sensible answer is these things are in place so you know what side of the road or in what lane you need to stay in.
Trend lines are quite the same, but I use them a bit different than most traders. Take notes here because this is something you’ve probably never heard before.
I use trend lines once trend has reversed. Contrary to how trend lines are normally used as price is moving in one direction, I use to once I see the first sign of trend reversing.
Graphic( Background picture and words “ you have to know how to read trend)
First thing first, if you want to know how to learn how to use trend lines quickly, you have to know how to read trend first.
Think about the word “trend line.” The word trend is first. So why is this line important? You gotta know price trends!!!
When I realized my zones work well in a trending market without trend lines, I began asking myself, “ when should I use my trend lines.
I began to wait until price was no longer trending and used it to plot on it on the trending market once price showed me the trend was over.
I’ll give you an example below:
(Price chart of trend line)
Pause for the cause, in order to learn structure quickly, you have to prioritize which structures you will use most and for what reason.
Once I prioritized that my zones are more important when price is trending more than the trend line itself, that meant I have less decisions to make on my price chart.
Especially because I make more money with my zones than trend lines.
So, just like in the example above, you will see multiple zones as price was moving up and 2 trend line when price moved down.
My trend line was drawn once I saw that price had made a lower low. After that, the trend line is used to let me know I need price to stay on the other side of it
Because price is potentially going the opposite direction.
Other than that, trend lines do not stay on my price chart.
The Line On The Other Side
When I realized that after price reverses it has to start trending again. Once it begins trending again, I began to notice that I can use a counter-trend line.
Counter-trend lines are important because they are lines you plot when price moves against the trend.
It’s not a line I use often because I analyze are higher timeframes, but they counter-trend lines also represent one important feature that most traders look for, break and retest of chart patterns.
The majority of trades look for patterns such as head and shoulders, teacups, wedges, flags, and so forth. Some of these patterns require two trend lines. I only need one.
Once again, I’m not looking to put too much on my price chart, I only want to use structures that allow me to make the least amount of decisions as possibles.
A countertrend lines does that. It tells me when price is getting ready to begin trending again which is why traders use the break and retest method.
What I’m Simply Saying Is
These 3 types of market structure can do you good.
Zones highlight your trades, trend lines show you when price is going in the opposite direction, countertrend line allow you to trade the continuation of price movement.
Quick and straight to the point, yeah?
I want you to use this information to practice and make money with.
Let me know, which structure stands out most to you?
Comment below and I’ll see you back here soon!