Hello again friends...
Well...That didn't take much time at all. You see? Understanding market structure is no great "mystery" nor is it some dark secret that only the initiated know. It is simple logic, and much better, there is a calmness about it that will finally fill your worried mind when you start to watch price movement with this reality in your consciousness. You will now understand (no matter what time frame you watch) that each and every little tick of price up and down has a reason and you understand that reason is simply order flow matching with liquidity. And this order flow is constant, unyielding, and ALWAYS doing the most efficient thing. Up for aggressive buying - using up passive selling, and Down for aggressive selling - using up passive buying. THAT's IT!!
So here is a practicality of this structure and I will try to illustrate it with a personal story from my previous life as a police officer.
As a new "rookie" officer, I was required to spend about 6 months with various different more experienced officers after I had graduated the police academy. This is called "Field Training" . You are riding with a more experienced officer to show you HOW to do the most basic patrol functions...especially in the middle of the night when most new officers are assigned.
One of these "FTO's" (Field Training Officer) who also became a trusted friend gave me some advise for patrol that has followed me in just about every walk my life has taken me. It happened when it was about 3:00 am and I was sleep deprived and bored to tears driving around our patrol area street by street. I was enthusiastic and wanted "action" and the thought of just driving around all night every night was disappointing (to say the least). My FTO told me to look at every house in its "natural" state...over and over every night. Observe the conditions in the neighborhood. Take note of who comes home late, who goes out late, who turns the lights off early, and who leaves them all all night. In short - learn what "normal" looks like.
And the only way to learn what that looks like is to drive around and look at it over and over. He actually knew the area so well that once while I was driving around he was in the front seat with his eyes closed...I thought he was snoozing. We hadn't spoken for at least an hour. At one place I rolled through a stop sign as it was late and there was no traffic. Out of the darkness my FTO spoke without even opening his eyes. "You missed that stop sign at cedar and 5th", he said. I apologized and then we spoke a bit. But here is the point of this story.
The more you see something in its "normal" state the more accustomed you will be to it and it will "feel" right. The more familiar you are with something the more you KNOW when something is NOT right. My FTO knew exactly what street he was on...and were the traffic control was...and how I was driving all while he was half asleep with his eyes closed. He knew that neighborhood so well, that if the lights were off on a particular house he knew the occupant was "away on vacation". Or if a garage door was left open that something was amiss. And he kept his "beat" clean and knew everyone...EVERYONE who was walking around at night and what they were doing. Boring?? He was a patrol genius!!
So it is with US in our trading endeavors. We must be so familiar with what the market "normally" looks like and operates that when something is not quite right we can literally "feel" it. We will be able to "see" when there is something amiss with the order flow and then realize that when these subtle little changes occur the price is going to be affected as well. And THAT is when we enter or exit or do what ever we are planing on doing. It comes from many hours (and yes, years) of just watching the order flow and how price reacts to it. Once we have a good grasp of "normal" and the more we see what that is...the more we will just "KNOW" when something is NOT normal and our accuracy will skyrocket.
Now is every rookie officer required to have that same level of familiarity with patrol work to be cleared to work on his own? Of course not. And neither are you required to absolutely be intimate with the order flow to understand it and take appropriate action. But I think it is something to strive for AND can only result in a "clean" work product. Pulling money out of the market seemingly at will. You don't get there by studying lines and math, and fundamental economics. Or by drawing pretty pictures on your chart, and declaring to the world that "probable statistics" will eventually recover all your losses. You just sit...calmly, and observe the market, in real time. Be as observant as possible. Watch what happens when price approaches your areas of interest. Take note of 'normal' price advance and watch it stall. Don't enter, exit or take any action...just watch!!
Can you do that?
Well...That didn't take much time at all. You see? Understanding market structure is no great "mystery" nor is it some dark secret that only the initiated know. It is simple logic, and much better, there is a calmness about it that will finally fill your worried mind when you start to watch price movement with this reality in your consciousness. You will now understand (no matter what time frame you watch) that each and every little tick of price up and down has a reason and you understand that reason is simply order flow matching with liquidity. And this order flow is constant, unyielding, and ALWAYS doing the most efficient thing. Up for aggressive buying - using up passive selling, and Down for aggressive selling - using up passive buying. THAT's IT!!
So here is a practicality of this structure and I will try to illustrate it with a personal story from my previous life as a police officer.
As a new "rookie" officer, I was required to spend about 6 months with various different more experienced officers after I had graduated the police academy. This is called "Field Training" . You are riding with a more experienced officer to show you HOW to do the most basic patrol functions...especially in the middle of the night when most new officers are assigned.
One of these "FTO's" (Field Training Officer) who also became a trusted friend gave me some advise for patrol that has followed me in just about every walk my life has taken me. It happened when it was about 3:00 am and I was sleep deprived and bored to tears driving around our patrol area street by street. I was enthusiastic and wanted "action" and the thought of just driving around all night every night was disappointing (to say the least). My FTO told me to look at every house in its "natural" state...over and over every night. Observe the conditions in the neighborhood. Take note of who comes home late, who goes out late, who turns the lights off early, and who leaves them all all night. In short - learn what "normal" looks like.
And the only way to learn what that looks like is to drive around and look at it over and over. He actually knew the area so well that once while I was driving around he was in the front seat with his eyes closed...I thought he was snoozing. We hadn't spoken for at least an hour. At one place I rolled through a stop sign as it was late and there was no traffic. Out of the darkness my FTO spoke without even opening his eyes. "You missed that stop sign at cedar and 5th", he said. I apologized and then we spoke a bit. But here is the point of this story.
The more you see something in its "normal" state the more accustomed you will be to it and it will "feel" right. The more familiar you are with something the more you KNOW when something is NOT right. My FTO knew exactly what street he was on...and were the traffic control was...and how I was driving all while he was half asleep with his eyes closed. He knew that neighborhood so well, that if the lights were off on a particular house he knew the occupant was "away on vacation". Or if a garage door was left open that something was amiss. And he kept his "beat" clean and knew everyone...EVERYONE who was walking around at night and what they were doing. Boring?? He was a patrol genius!!
So it is with US in our trading endeavors. We must be so familiar with what the market "normally" looks like and operates that when something is not quite right we can literally "feel" it. We will be able to "see" when there is something amiss with the order flow and then realize that when these subtle little changes occur the price is going to be affected as well. And THAT is when we enter or exit or do what ever we are planing on doing. It comes from many hours (and yes, years) of just watching the order flow and how price reacts to it. Once we have a good grasp of "normal" and the more we see what that is...the more we will just "KNOW" when something is NOT normal and our accuracy will skyrocket.
Now is every rookie officer required to have that same level of familiarity with patrol work to be cleared to work on his own? Of course not. And neither are you required to absolutely be intimate with the order flow to understand it and take appropriate action. But I think it is something to strive for AND can only result in a "clean" work product. Pulling money out of the market seemingly at will. You don't get there by studying lines and math, and fundamental economics. Or by drawing pretty pictures on your chart, and declaring to the world that "probable statistics" will eventually recover all your losses. You just sit...calmly, and observe the market, in real time. Be as observant as possible. Watch what happens when price approaches your areas of interest. Take note of 'normal' price advance and watch it stall. Don't enter, exit or take any action...just watch!!
Can you do that?
Do more of that which succeeds and less of that which does not - Dennis Gar
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