TLDR;
The video argues that relying solely on price action for trading is ineffective and detrimental to long-term success. It introduces the concept of "level-to-level" trading, emphasizing the importance of structure and mechanical systems like the LCE model to make trading more predictable, less stressful, and ultimately more profitable. The key is to focus on areas where the market is forced to make a decision, utilizing supply and demand levels to guide trading strategies.
- Price action alone is random and lacks predictive power.
- Structured trading, while better, still leaves room for interpretation.
- Level-to-level trading with elite structure provides a mechanical, simple, and scalable approach.
- The LCE model helps in assessing market conditions and making informed trading decisions.
Intro [0:00]
The video introduces the idea that trading based solely on price action is not only useless but also detrimental to a trader's success. The presenter, a professional trader, asserts that the over-reliance on price action is the primary reason why many traders fail. Despite the common belief that reading candlestick patterns leads to profitability, statistics show that this approach is generally ineffective. The video aims to explain why price action trading is a losing strategy and to present a more profitable method for long-term trading success.
Why price action doesn't work [1:18]
Price action is essentially a visual representation of buying and selling activity, where green candlesticks indicate more buying volume and red candlesticks indicate more selling volume. Standard price action patterns are often ineffective because price action itself lacks predictive power. It's impossible to know who will trade an asset at any given moment, making consistent market prediction through price action unreliable. Even large financial firms acknowledge this unpredictability. Traders often mistakenly believe that studying price action more will improve their skills, but even top traders don't rely solely on it.
Trading level-to-level [7:02]
Implementing a level-to-level system is presented as a solution to the unreliability of price action. This approach involves being independent of price action and relying entirely on structure, using line charts to make profitable decisions. This makes results more predictable, simpler, and less stressful, boosting confidence in execution. Elite structure is crucial for making sound trading decisions, requiring a clear and repeatable framework that remains effective regardless of the trader's state. Instead of focusing on dips and rips, the emphasis is on areas where the market is forced to make a decision, such as supply and demand levels, which are zones of high liquidity where institutions have previously created imbalances.
The LCE model [10:15]
The LCE model is used to assess market conditions and determine whether to enter a trade. The process involves setting alerts at supply and demand levels and then closing the screen until an alert is triggered. Once the alert hits, the trader assesses the market conditions to see if they align with the setup. If the conditions are met, the trader enters the trade with predetermined stop and target levels, then closes the screen again. This minimizes stress and screen time, increasing the likelihood of profit due to the reduced opportunity for interference. The right structure maintains consistency and keeps psychology intact, making long-term profitability more sustainable.