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There is a popular saying in trading that says look left structure leaves clues. Well, I am here to expose it as a true and false statement. While it is true we must look left and structure does leave clues, the confusing part and question I mostly receive is how far left should one look back? Knowing that every trader looks at the charts differently, this is a hard question to answer. If I say look back a few years the question would be how many years back? If I say look a few months back the same question will appear. Add in which timeframe to plot structure from and we have a whole new conversation. Add in what type of structure should we plot and the conversation gets heated.
So, now what? Where do we go from here? Well, let's keep it simple and look at the different types of traders:
Scalpers are in and out traders who hold traders for a few seconds and minutes. They don't fancy the one drawn out moves. Their analyzing timeframes can be that of the 4 hour, 1hour, 15 minute, and entry timeframe can be that of the 15 minute, 5 minute, and 1 minute.
Day traders are similar to scalpers in all regards except they hold trades for no more than 24 hours and they will add in the daily timeframe for analysis a time or two.
Intraday traders are the similar to day traders in the same regard except they are willing to hold trades for a couple days.
Swing traders hold trades trades for a long period of time. They invest more into the market and don't really care for the quick in and out moves.
Anyone trader can be one of these types of traders, all, or a combination of 2. Its best to stick to 1 or 2 styles of trading. Being all can be time consuming and a bit stressful.
If you categorize as a scalper or day trader and want to know more, click the title and purchase these books specified to your trading style. These books deserve to be on your shelf. If you are an intraday trader or swing trader this blog post may deserve your attention.
I, myself, have believed in looking left and I have even taught it to others. While it holds some truth it also holds a broad perspective. So, after backtesting this past year as a swing and intraday trader, I have come to realize that we must stay to the right and trade current price action and base our analysis on where price is currently, vs. where price has been.
Let me clarify, analyzing the chart looking to the left is one thing, but trading it is another. Look at the chart below:
This is the GBPJPY chart on the 4 hour timeframe. Starting from the top left, price rejected the weekly resistance. As price continues down breaking lower lows and trending downward creating lower high points, its natural to trade with the trend for those who are trend traders. Each zone was plotted before the break and increase in selling potential. This allowed for multiple entries to take place.
Watch the breakdown video here: https://youtu.be/TXPqnK7joC8
While each trader will plot their zones differently and enter differently based on their eyes and trading rules, keeping to the right and observing price action as it currently moves is as a greater benefit, than fishing out trades by always looking to the far left for permission to enter into a trade.