Break Of Market Structure Trades

in #steempress • 6 years ago (edited)

In this article I am going to:

  • Explain market structure
  • Provide examples of market structure
  • Elaborate how I use it to have an edge

What is Market Structure?

Market structure is the relative range of buyers/sellers where the price of a traded commodity/crypto/stock/security has been ranging for some time. They are usually highlighted by macro support and resistances which end up representing the large orderblocks. Essentially, on every time frame there are orderblocks, which are areas where liquidity is present. Usually, on supports there is an influx of buy liquidity and at resistances there is a presence of sell volume.

LONG SUPPORTS +SHORT RESISTANCES= WINNING

The higher the time frame indicates the higher the strength of the liquidity pools. So, on the weekly chart, supports and resistances are more powerful and will almost always cause a price move. Yet, order blocks or S/R levels on the 1h time frame are relatively insignificant to the greater price action. This is why all the "OGs", experienced traders and investors preach zooming out and looking at the big picture.

It is simply easier to trade these high time frame levels than it is intraday trading. This is not to say that daytrading and scalping is not profitable(because it is), rather that understanding larger macro moves using orderblocks can help you take your swing trade and intraday trading game to another level. This means that by understanding where the market is trending on the the macro time frame can help you to trade more profitably on smaller time frames.

Examples

Here's the 1W BTCUSD orderblocks. They directly coincide with support and resistance. One could argue that ~ $9k is the bearish weekly OB, yet I see it as near ~$12k.

btc 1W OB.png

Here's the 1D BTCUSD orderblocks. There is confluence with support/resistance levels as well as the VPVR longest/highest volume profile.

Screen Shot 2018-07-13 at 2.36.13 PM.png

Using these OBs


Well, they pretty much work as support/resistance levels. So, the simple concept is just long at support and short at resistance. Not too hard, right? Well for humans, many of us tend to buy high(long resistance) and sell low(short support) and this obviously leads to losses. This is because of emotional barriers involved with trading.

Using weekly OBs as longer term long entries (bullish weekly OB support for a long). This allows for my head to be clear where the longer term trend is. When I am trading short term time frames I always keep the longer trend in mind and having a position in the longer time frame with less capital provides a great hedge if I lose in daytrading or if I am not trading that day.

All in all, the different levels of weekly/daily OBs allow me to actively utilize the trend and capitalize on price movements on lower time frames due to an understanding of the macro market movements.

THIS IS NOT FINANCIAL ADVICE

 

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Cheers,


Andrew

Check these articles out if you like money


Posted from my blog with SteemPress : http://bullsvsbears.vornix.blog/2018/07/13/break-of-market-structure-trades/
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6 years ago in #steempress by
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     6 years ago  

    Hey man, thanks for sharing. I see that number of people use these OB’s are increasing. My question is how exactly you draw those lines? I kinda understood the first one but second is kinda confusing for me. Thanks again.

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     6 years ago  

    using support/resistance levels, finding clusters of candle closes/opens and looking at price action off those levels

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