Momentum Trading Techniques — Step-by-Step Guide & Transcript

[00:00] I am proud to announce the greatest series to ever be on youtube. So here we are, making episode 4. I know I know Im taking huge amounts of time

[00:13] to upload these episodes. But don t they say good things take time or something like that. Yeah lets go with that. Now if you guys watched episode 3, that was

[00:26] a big one. We went over actual market structure and if you don t know that, well you re kind of fkd But I do have to say, this one may just take your trading. In this episode we are going to go over momentum.

[00:43] Which arguably could be more important than market structure. Momentum has a huge role in trading. If you don t have momentum, you don t have a good I m going to teach you how to find momentum, how to trade around it, and I m going to go

[00:59] over 4 hacks that I use in my every day trading to pin point this momentum. And if you pair this with the tricks I told you in previous episodes, you re going to start seeing some serious results. I m done talking, lets get on with the value.

[01:11] Well im not done talking because I have to talk to teach you the tricks but I m done with the intro You get what im trying to say. Alright so why do we need momentum in the

[01:23] for momentum is because momentum literally makes your life so much easier. For one, when a chart is moving up and down a lot, it s a lot easier to predict.

[01:35] When a chart is moving sideways or is consolidating it s a lot harder to predict what is going to happen next. So as a trader you want to see a lot of movement Especially if you re trading in real time and not just looking at a chart from the past.

[01:51] The last one is kind of advanced, but my god has it done wonders for me. trick tho. The first trick is absolutely FIRE. It s the exact MATCH we are looking for. It s absolutely WICKed. It s candlesticks. Those were candlestick

[02:03] puns. But not wax candles, the candles on your chart. A lot of people overlook this. But candlesticks tell the story of a chart. I like to think of the chart as a book and each candlestick is a little page of what

[02:18] Whenever you look at a candle you can see what the buyers or sellers are currently thinking. Now as im sure most of you know. There are candlestick patterns. Sure, they can be useful,

[02:35] but what im about to teach you will make it so you wont have to memorize any of those When looking at these candles we are looking for a few characteristics. The first one is

[02:47] the wick. The wick itself can tell us a lot. So if we have a candle that looks like this. This is saying that sellers got the price all the way down to here, but the buyers fought them off, and got the price back up to here.

[03:01] Which is a pretty bullish sign as you can almost think of it as the buyers won the war. If the candle looks like this. This means the buyers got the price all the way up to here, but the sellers came in and fought them off, and got the price back down. Which is

[03:15] a pretty bearish sign. Just this simple wick idea can give a pretty good indication where the chart is going to head next. And what the buyers and sellers are currently thinking. The bigger the wick, the stronger the sentiment.

[03:28] So for example. If we see a candle like this with a long lower wick, we can assume that chart will head upwards after this. As its showing the buyers fought off the sellers and are now in control. Which it does head upwards after this.

[03:42] If we see a large candle like this with a big upwards wick. We can assume the chart is about to fall as its showing the sellers are winning the battle. Which is exactly what it ends up doing This can be used on any time frame but just

[03:55] know they will be stronger and more consistent on higher timeframes. Now I also think this is worth mentioning. You should not enter purely based on a candlestick. For example, seeing a large lower wick and entering a long right after it forms. No.

[04:10] a checklist. The more checks you have, the more likely the trade will go in your favor. So this candlestick can be used as a good indication of what the chart is likely to

[04:23] do next, but you shouldn t enter purely based off of it. You should use it paired with everything that im about to teach you and use it as an extra check on that checklist. Now it s time to go to the 2nd trick and this when we start getting into the really cool

[04:38] IMENSILY. But

[05:08] first Alright this next trick I use for every single made my strategy work better. It involves using this.

[05:26] Now this is the key metrics table from my private indicator and it gives a ton of useful I created this table because I know just how important metrics like momentum and volatility

[05:42] are and I wanted a fast way to present those values so I could use it to my advantage when trading live. So what we are looking for are a couple metrics.

[05:58] The first metric is volatility. Like I said in the begging of the video, the more the price moves, the easier it is to predict. The less it moves, the harder it is to predict. Volatility is the rate at which the price

[06:10] increase or decreases. In a perfect world when we are entering trades, we want the volatility metric set to high. As this tells us the price is moving a lot which is exactly what we want. The next metric we want to look at is the

[06:24] as that s what this whole video is about. If you are entering long trades you want this to be green and say bullish . If you are entering short trades, you want this to be red and

[06:37] say bearish . You can also use this to tell when a trend here and the chart is going up and the momentum is set to bullish, were in the clear and know

[06:49] we can stay in the trade. But once it gets up to this point the price hits a pretty strong resistance and the momentum on the trend table turns to bearish, this could be a good sign to exit the current trade as the momentum is starting to change. So

[07:16] we exit Which good thing we did, because the chart heads downwards and after this. Hopefully you can start to see when all of these tips are put together how powerful they can be. You can also use this strength metric to see

[07:30] the strength of the current momentum. The higher the number the stronger the move is. Overall this trend table is EXTREMELY helpful. I can not recommend it enough, it completely

[07:43] changes the way you look at the market. If you re interested in checking out the indicator Okay, so we know the first 2 tricks I use for momentum. The 3rd trick is the cherry

[07:56] Volume is very very important in trading. Like Ive said time and time again, we want a lot of movement on the charts and the only way you can have a lot of movement is by having

[08:10] of confusing on whats happening because it looks like just a lot of random rectangles use volume in order to see the momentum of the chart.

[08:25] When you re in a long trade, you want the bullish volume to be increasing. As that will make the chart head upwards. So what you want to see is something like this. Where the bars are getting larger and larger and are all green.

[08:39] This shows there is bullish momentum and its getting strong and stronger. You don t want to see something like this, as this means the chart is probably consolidating and not moving a lot and there is no momentum. As a little extra hint, the trend table from

[08:53] my private indicator also has a volume metric. It will basically identify all of this for you and tell you if the volume is currently bullish, bearish, or if there is no trend is very very VERY important when deciding to enter a trade or not.

[09:09] If you don t have volume, you don t have a good trade. So if you pair the market structure technique from episode 3, with the candle stick characteristics, the trend table, and the volume trick. You will definitely start seeing your trades become

[09:22] you can go to tradinglab.ai to get access to the private indicator. I promise ill release episode 5 .eventually probably in like 9 months. Just kidding ill

[09:35] release it soon. Maybe.