Understanding Market Structure For Trading

how's it going everyone this video is going to be over basic market structure. Now, understanding trend and basic market structure is very important before we get into advanced market structure. Let's hop into the PDF and get started.

before we get started it's important to understand what swing highs and swing lows are and understanding liquidity if you don't understand what is please click the top right or look in the description for a link to that video and

Now, before we get started, it's important to understand what swing highs and swing lows are, and understanding liquidity. If you don't understand what that is, please click the top right or look in the description for a link to that video and watch that prior to this.

for example here we have a low we create a high then relative to this low here we have a higher low relative to this High here we have a higher high relative to this low we have a higher low higher

Now, here we are in the PDF. If price is going to move higher or trend upwards, we're going to have to make higher highs and higher lows. That is how price moves higher. For example, here we have a low. We create a high. Then, relative to this low, here we have a higher low. Relative to this high, here we have a higher high. Relative to this low, we have a higher low. Higher low, higher high, higher low, higher high, and that is how price trends higher.

low lower high lower low lower high lower low now when we get a change in Trend that is when we go from a bearish trend to a bullish Trend or we get our shift and structure and that is when we

Now, if we're going to trend lower, the same thing has to occur, but just opposite. We have a high and a low. Relative to this high, we create a lower high. A lower low, lower high, lower low, lower high, lower low.

higher low and then it confirms the uptrend of the starting and we get a higher high higher low and now we move into a bullish Trend so you can see here we have that market structure shift and similarly going from a bullish Trend to

Now, when we get a change in trend, that is when we go from a bearish trend to a bullish trend, or we get our shift in structure. That is when we create a lower low, lower high, lower low, lower high. So at this point we're still trending down. We create a lower low, we can't displace lower. Now we get displacement, creating a higher high. Now we get our low-risk buy, or our higher low, and then it confirms the uptrend or the start of it, and we get a higher high, higher low, and now we move into a bullish trend. So you can see here we have that market structure shift.

then displace and close below this lower low creating another lower low and then a lower high we are shifting to beish Trend so that is where our Market structure shift or Market structure break would be now the important thing

Similarly, going from a bullish trend to a bearish trend, we have that higher high, higher low, higher high. Now we're making a lower low. This is where I'm thinking, okay, are we going to shift trend? When we put in a lower high and then displace and close below this lower low, creating another lower low, and then a lower high, we are shifting to bearish trend. So that is where our market structure shift, or market structure break, would be.

make a higher high and then we displace down making a lower low now you might be thinking okay we're shifting Trend to bearish and yes that is a possibility but we have to understand what the higher time frame is doing a lot of

Now, the important thing to understand here is you have to understand the higher timeframe trend when you're looking at the lower timeframes. For example, here on the lower timeframe we have this higher high, higher low, higher high, higher low. We make a higher high and then we displace down, making a lower low. Now, you might be thinking, okay, we're shifting trend to bearish, and yes, that is a possibility, but we have to understand what the higher timeframe is doing. A lot of times what happens is people will try to catch this first short here, and then price does this, making a new higher high, and most people get stopped out right here. So why is that? Well, you have to understand the higher timeframes. A lot of times this aggressive move lower here is just a retracement on a higher timeframe to move higher. That's why it's important to go with the higher timeframe trend. It's a lot easier to frame an idea right here to continue with the trend than it is to catch every top or every bottom.

frames a lot of times this aggressive move lower here is just a retracement on a higher time frame to move higher so that's why it's important to go with the higher time frame Trend it's a lot easier to frame an idea right here to

Let's hop into the charts and practice finding some highs and lows. Let's take a look at a bullish trend here and the structure that forms with it. You can see we've been trending up. We get more displacement out of this range, creating a higher high relative to this high. So you can see you have a higher high even if we have not formed a swing high yet. But let's see what happens. Here we form that swing high, so here is a higher high. If we're going to continue the trend, what do we want to see? We'd want to see a higher low relative to this low here. Let's see what happens. Okay, there we form a higher low. Now, if we're going to continue the trend up, I want to see closure over this high, or making a higher high. There we go, we're making a higher high. Let's see if a swing forms. Now we have a higher high, so now, if we're going to continue this trend up, what do we want to see? A higher low relative to this one. Now we have a swing low. If that's going to be our higher low, we'd want to see a higher high. Now we make a higher high. Let's see if we get a swing. We do. So now, if we're going to continue this trend up, I'd want to see a higher low. Now let's see if we form a swing here. We do. So now I want to see a higher high, and now we do. You can see this is just basic trend: higher highs and higher lows form an uptrend.

been trending up we get more displacement out of this range creating a higher high relative to this high so you can see you have a higher high even if we have not formed a swing High yet but let's see what

Let's hop into an example of a bearish trend. You can see here we're getting aggressive displacement lower, so let's see what happens. Here we form a low. Now we want to see if we form a lower high, so we do form a lower high there. Now we're forming a lower low. Form a swing. Let's see if we form a lower high relative to this one. Looks like we may. If we form this swing, we do. Now we have a lower low, and we actually have a lower high here, that's in a discount of this range. But now we want to see a lower high relative to this one. Made a lower low. There we get a lower high. Now a lower low, see where it goes. Now we'd want to see a lower high. There we go, and then creating a lower low. So you can see, as we're trending down, we're making lower highs and lower lows. We do. You can see make highs and lows in here, and those get swept out before we go, but you can see relative to this high here, it is still a lower high.

happens okay there we form a higher low now if we're going to continue the trend up I want to see closure over this high or making a higher high so there we go we're making a higher high let's see if a swing

Now, not all examples are going to be this clean, so let's hop into some price action and just practice. Let's take a look at this price action here and show how, using structure, you can see when trends change. You can see here we are trending up on this higher timeframe. Keeping that in mind, we make a high, low, lower high, lower low. Short term here we are becoming bearish, and we'll go ahead and move that to there, because that's actually our lower low. Now, if we're going to form a lower high, we have a fair value gap here. Let's see what happens. We do. So if this trend is going to continue lower, here we're expecting a lower low. Now we don't get a lower low. We actually end up getting a higher low. What do we notice? We make a higher high as well, but is there any displacement here? No, it's really just kind of consolidation. We don't know where price is wanting to go, so letting it play out, what happens? Now we get some displacement, a close over this previous high, another little higher low, but mostly focused on the close here, making a higher high. So now, if we're going to continue and shift trend, I want to see a higher low and then a higher high, and ideally go reach for here. We make a higher high, just going to drag this up, higher high. Right now we've broken this high as well. We form a swing high. Now, if we're going to form a swing low, we could form one right here. Ideally I like to see discount. This is when I like to use discount and premium, but we do form a higher low right there and make a higher high. So now you can see we've taken this high here and made a higher high relative to that, and we're kind of just retracing here. Let's see what happens. You can see no real direction here, we're just sweeping highs and lows. Now we make a higher high, making a higher high. Now we're making possibly a lower high if we don't sweep, but we do sweep the higher high. We don't really have any swing low in here that we broke, so this is still bullish to me, because we never broke this low down here. Let's see what happens. Now we break this low. You can see we don't really have a swing low in here, so once we break this low, I'm thinking, okay, we can possibly shift to bearish. Now, if we're going to form a bearish trend, I want to see lower lows and lower highs. So I'd want to see a lower high put in to continue lower. Here we do have a high, if we form a swing. Now we have a lower high. So if we're going to form a bearish trend here and actually shift from bullish to bearish, I want to see a close below or break of this low. There we go. Now we make a lower low.

going to be our higher low we'd want to see a higher high now we make a higher high let's see if we get a swing we do so now if we're going to continue this trend up I'd want to see a higher

low now let's see if we form a swing here we do so now I want to see a higher high and now we do so you can see this is just basic Trend higher highs and higher lows form an uptrend let's hop

into an example of a bearish trend you can see here we're getting aggressive displacement lower so let's see what happens so here we form a low now we want to see if we form a lower high so we do form a lower high there

now we're forming a lower low form a swing let's see if we form a lower high relative to this one looks like we may if we form this swing we do now we have a lower low and we actually have a lower high

here that's in a discount of this range but now we want to see a lower high relative to this one made a lower low there we get a lower high now a lower low see where it goes now we'd want to see a lower

high there we go and then creating a lower low so you can see as we're trending down we're making lower highs and lower lows we do you can see make highs and lows in here and those get swept out before we go but you can see

relative to this High here it is still a lower high now not all examples are going to be this clean so let's hop into some price action and just practice but let's take a look at this price action

here and show how using structure you can see when Trends change you can see here we are trending up on this higher time frame so keeping that in mind we make a high low lower high lower low so

short term here we are becoming bearish you can see and we'll go ahead and move that to there cuz that's actually our lower low now now if we're going to form a lower high we have a fair value Gap here let's see what

happens we do so if this trend is going to continue lower here we're expecting a lower low now we don't get a lower low we actually end up getting a higher low now what do we notice we make a higher high

as well but is there any displacement here no it's really just kind of consolidation we don't know where price is wanting to go so letting it play out what happens now we get some displacement a close over this previous

high right another little higher low but mostly focused on the close here making a higher high so now if we're going to continue and shift Trend I want to see a higher low and then a higher high and

ideally go reach for here we make a higher high just going to drag this up higher high right now we've broken this high as well we form a swing high now if we're going to form a swing low we could form

one right here ideally I like to see discount right this is when I like to use discount and premium but we do form a higher low right there make a higher high so now you can see we've taken this High

here made a higher high relative to that and we're kind of just retracing here so let's see what happens so you can see no real Direction here we're just sweeping highs and lows now we make a higher high making a higher

high now we're making possibly a lower high if we don't sweep we do sweep higher high we don't really have any slow in here that we broke so this is still bullish to me right because we never broke this low down here let's see what

happens now we break this low so you can see we don't really have a swing low in here so once we break this low now I'm thinking okay we can possibly shift to bearish now if we're going to form a

bearish trend I want to see lower lows and lower highs so I'd want to see a lower high put in to continue lower so here we do have a high if we form a swing so now we have a lower high so if

we're going to form a bearish trend here and actually shift from bullish to too bearish I want to see a close below or break of this low so there we go now we make a lower low and there is our lower low now if

we're going to continue bearish we want to see what a lower high but we do have a lower high here I'm not as interested in this because of premium and discount right I'd like to see a premium array that one does form the high though

and makes a lower low and we continue lower so you can see it sometimes does get a little bit messy but just focusing on swing highs and swing lows and the displacement around them or the lack of displacement around

them can give you Clues to where price is heading and where it is Shifting so just deleting this here if we go back to where is our shift in structure or where is our actual change in Trend now I'm

not really interested in this right here right we do form a higher high but we don't have a swing we break so looking at this low here this is where we shift Trend right because this is the low that

made the new high before price came and broke it right so then if we rewind so right here this is where I'm thinking we can shift Trend however we are also in a discount over here so if we're going to continue the trend higher

in this is just a sweep we're not going to form a lower high here we'll make a higher high so I want to see do we form a lower high here and then look to get in later right so right here this is the

deciding point do we reject from here continue lower shift the trend or is this just a sweep to continue higher and continue this uptrend now once we displace and close below this low that is when I'm looking short right to Old

lows you can see but you can see this is the shift in structure now let's take a look at this example on oil so you can see we're making higher highs higher lows higher highs higher lows higher highs so if we're going to form a higher

low here I'd want to see the trend continue higher if we're going to break a low then I'd want to see if we put in a lower high and continue lower so let's see what happens so here we displaced and close

below this low so do we shift structure well if we do I'd want to see a lower high be put in and here we put in a lower high so if we're going to go lower I'd want to see closure below this

low now we just continue higher and end up taking this first high so now why did that happen well here we are on the F minute chart let's go ahead and zoom out to the hourly chart now this is

what I talked about at the end of the PDF where a lower time frame reversal or this lower time frame shift inst structure is actually just a retracement to a higher time frame PD array in this case an hourly fair value Gap to

continue higher so marking out that hourly fair value Gap going back to the 5-minute chart you can see when we shift structure right here this retracement is going to fail because it's going against the higher time frame and so that's why

it's a lot easier to go with the higher time frame and look to trade this out towards this high now if you want to learn more about this the best way to learn is to hop into your own charts and

practice that's the only way you'll truly understand it now this is the foundation in the next video I will talk about Advanced Market structure so I hope to see you guys there have a good one