Review of SZ Reversal

Review of SZ reversal

So last week we had the pleasure of how TraderSZ (twitter @TraderSZ) views the market on the HTF and what he waits for before stalking a setup.

Like many of Saeed’s trades, he waits for what we are familiar with in regards to a confirmation of market breakdown. Market structure and breaking market structure have already been covered in previous posts on this site, so if you are unfamiliar with this concept please revist the previous posts to further understand.

What was brought to attention was the accummulation of strong liquidity over several days in the form of daily highs and lows (H/L) and a simple excercise was devised to plot these levels to mark out the areas of liquidity that had been manufactured by institutions.

As most of you may already understand that daily H/L are strong levels in nature because of the vast amount of buy and sell stops resting there. Profitable traders place their stop losses at these levels trailing the market as they are seen as a safe haven, albeit the market maker sees them as liquidity and they will get raided… eventually.

See below, EURUSD and how the accummulation of lows is underway

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And how after a few days they are flushed and long positions are killed quicker than a

8 vs 1 team deathmatch!

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So you can see, how clever price manipulation can generate plenty of liquidity for the market maker to devour in a short space of time. So the next question, how do we get on board and do the banks leave clues as to when these moves are going to happen?

As TraderSZ demonstarted last week, absolutely YES!

The task is simple

Plot daily highs or lows that have not yet been swept for roughly seven days. Mark out above or below the market HTF RA or SA (Resistance areas or Support areas) mainly in the form of OB (Order Blocks) or BR (Breakers)

Allow PA (Price Action) to nagivaye towards one of these HTF RA and mark close to this area any previous long term highs or lows that have still to be taken.

See illustration below

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Now PA may flush through the HTF RA and carry on to seek higher prices, which if it does just sit back and mark out the next area and move on.

If price clears the previous high and then rejects at the HTF RA, be prepared to start watching for the market to present a sneek peek of what is unfolding.2015-12-12 22_31_38-

The area within the blue box is where the high probability setup will be taken so lets have a closer look

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The key to strart hunting for a short position, is to wait for the market to make an obvious attempt at breaking the market lower by sweeping some of the short term lows set in place earlier. Breaking these lows means that market structure has broken and from here on in, a confirmation is all that is left to get on board and ride the PA downwards.

Notice how the lows from Thursday and the sell stops have been left in tact?

As price breaks lower and then retraces huntng to reload more short positions, mark out any dominant OB or BR levels where you anticipate price to react.

Doing so will present a short term low and as price reloads further short positions without breaking this low, the markets can no longer hide their intentions and any further retracement should be seen as a fake move higher and selling at either a secondary OB or an ICT OTE would be your entry.

Entries should be made withing the ICT London or New York Kill zones.

SL would usually cover the short term high (above the FIB) or for a safer option the initial high that broke down from the HTF RA.

See this example from TraderSZ webinar. Study these images well.

(Printed out on my wall)

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And zoomed out a little to show previous high and H1 -OB


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I for one will be using this excersise to confluence with my trading concepts. As my setups look to see breakdown and confirmation from HTF RA also, there can only be a better success record from marking these levels before I stalk a trade.

The key to this is simple if you understand market structure. Watch to see if the market leaves any close key lows intact before retraceing to reload shorts. If so, any further moves higher without clearing the immediate lows is the signal to get on board.

As traderSZ always says and I the same, try this on a demo account. Look left on your charts to see for your self. Screenshot a minimum of 30 times you see the setup (recommended 100 times) until your brain can recognise them unfolding subconsciously.

Do the work, spend the hours back testing. It’s the only way you will succeed.


Market Structure – What is it and how do we read it?

Market Structure – What is it and how do we read it?

You may see many times in the posts that I share with the community, a reference to Market Structure (MS) and if it has broken or not.

Why is it so important and what exactly does it mean? Does it really matter in our trading and is market structure only useful on a particular time frame?

Depending on your trading strategy, you may rely on indicators such as oscilators and MACD, you may prefer to approach the markets focused on price alone or a combination of both. Either way, having a strong understanding of market structure can greatly help improve your understanding of the market.


So what is Market Structure?

The markets never operate soley in a single direction. Banks must satisfy orders, offer dealings within a range of price and then move to further areas of price where more orders are to be filled. This is known to many as accummulation. As the banks take the other side of a trade the orders mount and price in return moves to accomodate the supply and demand of the exchange in currency.

Market structure, is the range at which the banks are accumulating their orders. Long and short term ranges (ranges within ranges) set the levels of market structure and can be determined by observing the intermittent highs and lows.

See examples below


GBPUSD from the HTF moving down to LTF

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What some people think is that market structure should be nicely contained within a rectangular range of price and the highs and lows should be almost equal as to make the accummulation look uniform. The way price moves isn’t always uniform and most of the time, key highs and lows are used to determine the maket structure range.

When price moves to take key levels, the previous swing high or low is normally viewed as the short term market structure. Injecting liquidity after a move in price is a good place to observe for a shift in direction.

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As you can see, price has broken the previous lows and the bank has traded below. The previous swing high prior to the sell off is now seen as the range of short term market structure and trading above this level would see any further price action to be bullish.

Until price breaks above the previous swing high, market structure is still seen as bearish on the lower time frame.

See another example

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Price takes a previous swing high and absorbs the buy stops to inject liquidity. The previous swing low prior to the raid on stops is now seen as market structure and any trading below this price is seen as bearish.

It is obvious the dealers are protecting this level and on the second test, price is strongly rejected downwards.


How do we use Market Structure to predict forward price movements?

If price breaks below a key level and market structure breaks and holds, it is normally a good idea to see where the dealers are heading next. In the case of the previous example, it is a good idea to highlight any previous lows (sell stops – liquidity) and expect price to seek these levels.

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The dealers won’t always seek ever key swing low, but may only head for the short term levels and continue the move in the opposite direction. Look at the chart below and it is evident the dealer had intentions of seeking all the lower liquidity.

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It is not always the case that longer term liquidity is absobed by breaking market structure but higher time fram goals can sometimes offer a bigger picture.

So overall it is possible to get a sense of direction when looking for lower and higher time frame market structure levels. If price breaks levels across multiple time frames and they confluence one another, this can be a good strategy in chosing a direction for your trdaing.

Please refer to my previous trade concepts to understand how to apply market structure in your trading.


– dragonfly

Trade Concept No.2 – Head & Shoulders Trend Line breakdown

Trade Concept No.2 – Head & Shoulders Trend Line breakdown

First of all I want to introduce the concept of the Trend Line (TL). Most of you may already understand what a TL is and some may already know how to use them. The misconception in my experience is that the trader may have a strong TL marked on their chart, but fail to know what to look for once price no longer respects the support or resistance (SR), commonly reffered to as a ‘breakout’.

A breakout does not only refer to diagonal TL analysis, it can also be ascociated with horizontal SR levels where price finds a cusion at levels or importance or significance.

Lets have a look at some examples of diagonal trend lines.

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Also some examples of horrizontal trend lines

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In this concept we are only going to focus on a diagnonal TL that is navigating price towards a HTF key area. As price makes its way to an area where we expect a reversal, the setup should form a Head & Shoulders (H&S) pattern at the peak of the reversal.

The H&S pattern in itself can be a powerful concept to master, so instead of trying to explain it here, click the link below to learn how to recognise and understand the H&S pattern.

Head & Shoulders pattern – Investopedia

Once you understand the H&S pattern, study the image below and see how price is set to behave once it reaches a HTF key area.

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The description in the image says it all. Recognising a H&S pattern if price is trading along a diagonal TL is essential for an entry. The H&S pattern highlights a weakness to continue higher and the breakout of the TL also instigates a break in market structure. See how there is a theme to my setups?

For me, market structure is key, the PA beforehand tells a story and reveals the possibility of where the banks are heading next.

Lets look at some exmaples

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The results of this trade carried over into the next day but paid in the end.

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So you see the diagonal TL can be useful to identify a setup but must be used in conjunction with confirmations before it can be adopted into your trading plan.

Please feel free to leave a comment or questions below.

– dragonfly

Trade Concept No.1 – Turtle Soup (TS) breakdown

Trade Concept No.1 – Turtle Soup (TS) breakdown

So I’ll come right out and say, this setup is my bread and butter. Its so very simple to get in, but can be a struggle knowing when to get out. Managing this trade is by far the hardest aspect. Fear and greed play with your mind like a cat plays with a ball of wool. Keep your profit targets modest and don’t get greedy. As the saying goes, ‘You will never be poor taking many small profits’

The long and short of this setup relies heavily on HTF (Higher time frame) key areas, be it an OB or BR on the Daily/H4 TF. Anything below to me is considered LTF (Lower time frame) and can not be included in this setup.

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As I suggested, HTF price areas should be highlighted in advance and if possible set an alert shortly before these areas. This will help you focus elsewhere, let the platform trigger the alert in good time.

We all anticipate price to reverse at key areas, but simply guessing is a game for gamblers. We need something solid, something which demonstrates the bankers intentions. This is where we observe the market structure.

When price is trading with a range, be it on any time frame, this is considered to be accumulation. Ranges are not confined to specific time frames because they occur across them all.


See below some examples of accummulation on GBPUSD M30 (highlighted in blue boxes)

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And on the same pair but H4

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The point I am trying to make is that when price is accumulated, the dealers are doing thier business within a specific range, and this is where we consider the current market structure to be contained.

If price deviates from these ranges with a strong certainty, we consider this to be breaking market structure.

See examples below

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Now this setup does not entertain a break in MS on the HTF, but is more focused towards monitoring the LTF PA (Price Action) during specific times of the day, specifically the ICT Kill zones. If you do not have knowledge of ICT Kill zones, I strongly urge you to watch the videos at

Time of day is very important. Liquidity rises and falls and with low volumes of liquidity come strong manipulation. Entering trades at the wrong time can see the markets turn against you quickly with the lack of orders to withstand the force of the bankers dealings.

I recommend you always consider time of day in your trading plan, I consider taking positions outside times of high liquidity to be risky and difficult to manage.

Now we have that covered, lets go back to the first image2015-11-01 09_41_32-New notification

The markets are trading quite nicely towards a HTF key area and we expect the possibility that price will reverse here. Set an alert at the key area and wait for it to be triggered. Once we get there (if we get there) price may stall as it absorbs orders (accumulation).

The setup consists of the following. A short term high is made and price can either continue to accumulate or it cab be rejected and move lower. If this happens, a new alert should be placed at the short term high and the chart should be ignored until this high is triggered.

If the high is swept, this is what we call a Turtle Soup (TS) and buy stops have been absorbed by the market. The previous swing low created by the drive up to take the highs can now be considered to be the base of our market structure.

Price may come back to this level and continue to hold as support, but our price alert is now set at this new low and we wait for support to break below and thus breaking short term market structure.

See here on EURUSD

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And in more detail on the M1 TF, as MS breaks lower, price then trades back up to previous support which has now become our target area to sell. The trade is opened here and SL (Stop loss) is placed to cover the highs. If the setup is good, the market should trade lower and seek liquidity from LTF support levels (previous lows, Asia highs/lows etc)

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As we can see from the PA that follows, the equal lows were targetted and could have been a valid level to take profits.

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More examples


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Closer look

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Zoomed in to the M5 TF

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The difficulty with this setup is that it is purely a probabilities game. Obviously this concept does not always work but as it stands I am making steady profits and still learning to control my exits.

Don’t be greedy and only use the LTF key levels to exit the trade. If you focus on HTF you will most likely lose or be scared out once the retracement starts heading back towards your entry. Don’t give back what you earn, scale out of positions if you feel the trade could run further in your favour but always take something.

– dragonfly

Trade Concept No.3 – Broken Tooth

Broken Tooth

So why start at No.3? Sure concepts No.1 and No.2 should come first and gracefully procedd to the grand finale of my Dragonfly trade ideas?

Well the reason for the illogical order is simple. When I used to take exams, I always read the exam paper from start to finish before lifting my pen, reading each question and pausing for a few moments to conjure some form of sensible answer. The higher scoring questions were usually near the end of the exam and therefore I would place most of my concentration (and short attention span) attempting the higher scoring questions.

But this isn’t an exam and trade setups are not scored on points, or so you may think. This setup, I believe carries with it the greatest risk to reward and is the easiest to execute and manage risk. Although easy to execute does not mean easy to master, nor does it mean easy to find in the first place.

Like all my trades, patience is paramount. Stalking these setups are not for those who crave frequency over quality. This trade may only happen once a week if not less, but when it presents itself, the fruits it provides are very sweet indeed.

Take a look at this basic illustration.

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We have a swing high formed close to or within a HTF key area [1] (Order block/Breaker/Mitigation block) and a strong distribution of orders that sends the price downward.

The institutions are targetting the previous highs [1] to inject liquidity in their favour. Before the last push upwards, accumulation creates a Breaker block [2] and then a raid on buy stops is executed [3].

As the liquidity is absorbed by the institutions, the raid is over and now the real move can begin.

The Breaker now has a new role, to distribute accumulated orders that drove price to claim those previous highs [1] but this is where the Dragonfly ‘Broken Tooth’ will give the trader an edge.

When market structure breaks [4], you see price make new lows from a previous area of liquidity, usually a previous low. This is the bank showing us their hand in the game, but what you really need to watch out for is the sign that the breaker is protecting the level previously used to run stops.

If price retests a breaker and rejects after a MS shift, the ‘Broken Tooth’ concept urges the trader to watch for a further break of MS followed by a reload of short positions at the original breaker [2]. If this happens, a short position should be opened and a stop loss be placed just above the breaker + the dealer spread.

See the example below on AUDNZD

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The small accumulation the M5 TF shows evidence that the breaker is holding price within a range and the ‘Broken Tooth’ shift in market structure is the ticket we need to be confident the market is winding up to go lower.

The reload on short positions after ‘Broken Tooth’ is where the trade is executed.

Also see, that once price breaks the lows of the ‘Broken Tooth’, a second reload on short positions is made and then price moves rapidly in our favour.

Take profits should be taken at LTF key levels (Asia lows, previous Swing low) or where you see is sensible.

Because of the tight stop losses permitted by this setup, it is possible to net trades with multiple R with little need to hold for very long.

Please feel free to leave your comments.


– dragonfly

Forex Psychology – Fear


This fiend has a fearsome sight, and a sharp voice, bellowing, growling all the time, trying to intimidate us into indecision in everything that we do.

Fear has the opposite role of greed in our trading decisions. Instead of inspiring us to trade like a machine gun, opening and closing positions with the speed of lightning, fear convinces us that nothing that we do will be profitable in the long term, regardless of the power of our analysis, and the amount of study and consideration gone into perfecting our method. In this case, a fearful trader will be unable to wait for the realization of a profitable position, and he will be unwilling to act on the basis of rational expectations. In addition, the fearful trader will be unable to realize losses that result from mistaken assumptions, and the red ink in his account will keep spreading everywhere as a result. The result is usually ruin: as fear leads to more and more irrational decisions, and few trades are profitable, a few long-held losing trades will eventually wipe out the account.

It is necessary to distinguish between conservatism and fearfulness. Being conservative in our trading decisions is surely a healthy and sensible practice. A conservative trader is skeptical about everything he hears, but is still willing and able to act when his study confirms a profitable risk/reward prospect for a particular scenario. The fearful trader, on the other hand, is incredulous of not only the opinions of others, but everything that his analysis tells him too. He doesn’t know what to do, where to look, which trade to take and which to avoid, because all are the same to him. As he doesn’t trust his own logic, he has no tools with which he can understand or evaluate market developments. The end result is something akin to panicky gambling, with deleterious results being the inevitable outcome.

To avoid the disastrous effects of fear, we must train ourselves to understand that there’s nothing random about a successful trading career. We must be convinced that we are in control of our choices; we must have a clear plan to which we adhere with iron will, impervious to the illogical emotional extremes of the crowd. All that is only possible by a logical, calm approach to trading, which can only be gained by patient study. Another good way of avoiding fearful trading decisions is ensuring that we do not over leverage our account, and risking only so much that when the account is wiped out, we can laugh at the outcome, and go on and seek our fortunes in another aspect of life.

– dragonfly

Forex Psychology – Euphoria


The queen of forex demons, Euphoria, is a creature that promises unlimited wealth, and delivers unlimited misery and destitution. Euphoria works hard to ensure that wherever we look, we see nothing but wonderful prospects for limitless profits. It is as if the trader has somehow been blessed with the Midas Touch, with success being the natural consequence of his routine behavior.

Under normal circumstances, euphoria has little relevance for most traders, because most are aware that success in forex trading is not child’s play. While magnificent profits in a short time are sometimes possible, such gains are usually the result of a period of study and practice during which the false promises of euphoria are proven repeatedly to be meaningless. In the case of the beginner, who doesn’t possess this background of hard work and study, euphoria may result from a string of profitable trades, as the trader comes gradually to believe that his understanding of the markets is impeccable, his analysis, flawless.

The key here is the knowledge that the first condition for performing a flawless analysis is beginning with the assumption that no analysis is flawless. Consequently, the successful analyst or trader is always skeptical about the value of his explanations, although he doesn’t hesitate to act on them because he bases his work on logic alone. The profit potential of the next trade taken is independent of how profitable the previous one was. Consequently, there’s no sense in getting excited about a string of profits: the next trade may or may not be profitable, depending on how diligent our study of the market was.

Thus, the best way of avoiding euphoria is by understanding that a string of wins or losses does not impact the outcome of the next trade that we will make. The success or failure of the next trade is only dependant on how capable we are of excluding emotions from our study of the markets, and in that knowledge lies the alpha and omega of a successful trading strategy.


– dragonfly

Forex Psychology – Greed



The greed emotion is the number one enemy of forex traders. This demon has a long and spiky tongue which constantly whispers to our ears that the opportunities in the market are going away unless we act quickly to profit from them. Its feet are on fire: it screams “faster, faster” to the trader, stressing him, causing him to lose focus. It has an empty belly, is emaciated, weak and hungry, because none of his exhortations for speed and greed lead to the slightest profit in the end.

It is perhaps natural that the vast majority of forex traders are money-oriented, profit seeking individuals who attach great importance to financial success. It is also true that without a strong drive for making money, no trader will be able to withstand the pressures of trading the forex market. In moderate amounts the drive to achieve monetary gain, and focus on financial success are healthy and necessary. But these healthy impulses become unhealthy when they direct our trading decisions: the greed emotion needs a place, and must not interfere in trading practices which must be formulated by logic alone.

How to avoid the wrong choices forced on us by greed? The first step for conquering greed is ensuring a disciplined approach to trading which minimizes the role of impulse in our trading decisions. By formulating and mastering a trading strategy in the beginning, and remaining loyal to this throughout the course of a trade, we can ensure that greed has nothing to do but bow down in silence as we study the markets and make our decisions based on reason and analysis alone.

Success can be achieved by a refined trading method, and its disciplined application. Emotions thrive where uncertainty and fear are rampant. To avoid such a situation, we’ll ensure that our responses to market developments are calculated and based on the principles established by our diligent study of them. Since our motivation alone, or desire for profits will not ensure that we actually acquire those profits, there’s nothing to be gained from listening to the teachings of the greed demon.

Training yourself to supress the urges of making money over following through with a trading strategy can be difficult, but over time your focus will shift from financial gain to your strategical success.

– dragonfly

The journey begins..

Understand one thing.

If you want to learn how to trade on the Foreign Exchange market (forex) then be prepared for the psychological rollercoaster that will leave you battered and bruised, broke but not broken and like the masochist who desires pain, you will thirst for more until you can ultimately call yourself a trader.

Trading forex is not for everyone. You need an iron will to leave your emotions behind and think of the market as a robotic string of algorithms, complex programs that have been manufactured year upon year to prey upon the weak and vulnerable while crushing your confidence and filling your mind with fear.

As if the forex market itself was designed by Stephen King, the trials that make up a traders career will be nothing short of the suffering and horror experienced by Wendy Torrance in ‘The Shining’

Only the most courageous and strong-minded veterans will survive in the forex markets, and the ones who do will surely have the scars to prove it.

During my trials, I feel it best to document the stages which I experience. To share with others may bring comfort to those who are on the same path. Learning from one another can be inspring and bond forming, so please join me on my quest to become a true, forex trader.

– dragonfly