Category: Strategic Trading Academy

The power of candlestick signals in the markets can be traced back to the 16th century.

Candlesticks were used back then, just as they are today,

by technical traders and analysts to read market behaviour,

which is heavily influenced by supply and demand, as well as emotions like greed and fear.

We will first take a brief dive into the history of candlesticks, and then

I’ll show you four powerful candlestick signals that still work today—signals I personally use to identify high-probability bullish or bearish entries.

History of Candlesticks: The Power of Candlestick Signals

In the 18th century, a legendary Japanese rice trader named Munehisa Homma developed the Japanese candlestick method to track price movements.

It is important to note that during this time, the rice market dominated the financial markets.

Rice was so significant that it played a major role in Japan’s economy.

Munehisa Homma’s early work on candlestick charting, which incorporated

human emotions such as greed and fear, market behaviour, and even weather conditions, dates back to the mid-17th century during the Edo period.

The Power of Candlestick Signals Invented by Homma

It is important to note that the candlestick patterns created by Munehisa Homma continue to help technical traders today by providing a visual representation of the market.

These patterns offer signals that help traders determine areas of high or low bullish and bearish activity, as well as potential reversals or continuation zones.

Historical records indicate that Homma developed these candlestick patterns based on his Sakata Rules.

Some of the candlestick patterns he introduced might sound familiar, such as the Doji, Hammer, Engulfing, and Spinning Tops, among others.

If these patterns are new to you, don’t worry—I’ll be covering a few of them that I personally use to gain an edge in the market.

The Power of Candlestick Signals: 4 Powerful Candlestick Patterns

Now, we dive into four powerful candlestick patterns that I use to achieve highly accurate price predictions in the market, allowing me to yield rewarding long-term returns.

But before we do that, let’s define what a candlestick is and what it consists of.

By understanding the anatomy and psychology of candlesticks,

it’s like visiting a foreign country and being able to communicate in its language.

Having this ability allows you to navigate that country with ease,

unlike relying on time-consuming methods to find your way around.

The same applies to technical trading—when you understand the language spoken by candlesticks,

you can navigate price movements with greater confidence and accuracy.

What is a Candlestick?

A candlestick, as I mentioned earlier, is a visual representation of price movement,

available across different timeframes (4-hour, 1-hour, 30-minute, etc.).

Candlesticks provide valuable information, including the opening price,

closing price, highest price, and lowest price over a specific period.

For those unfamiliar with candlestick structures, I will provide a video link later in this blog to illustrate how they appear.

I use candlesticks in combination with trends, key levels, and support and resistance zones.

You will see exactly how this works when I discuss pattern formations for entries.

Another key aspect to pay attention to is the colour scheme of the candlestick.

When the bulls (buyers) are in control, the candlestick typically appears white or green.

When the bears (sellers) are in control, the candlestick is usually black or red.

Personally, I use the green/red colour scheme, but the colours can be customized to your preference—it doesn’t really affect the analysis.

Benefits of Using Candlesticks Over Other Chart Types

One major advantage of using candlesticks instead of other chart types,

such as line charts or bar charts, is their compatibility with trendline strategies and support or resistance zones.

A technical trader who understands candlestick patterns can capitalize on market reversals,

such as bullish engulfing patterns forming at a support zone.

These patterns provide strong buying signals, indicating that sellers

have exhausted their momentum and that strong buying pressure is about to take over.

As you will see, my ability to read candlestick patterns gives me an edge in uncovering hidden market signals.

Take note: If you lack the ability to read candlesticks, it will be much harder to spot these signals and make informed trading decisions.

The Power of Candlestick Signals: 4 Powerful Candlestick Patterns

Now, let’s explore four candlestick patterns that I use to anticipate future price movements.

By understanding these patterns, you will be able to spot high-probability

reversal entries and continuation-based buying and selling opportunities.

Bullish Engulfing Pattern

The bullish engulfing pattern is one of my favourite candlestick patterns for capitalizing on strong bullish momentum.

There are two key ways I use this pattern for high-probability trade setups:

• Reversal Setup: I look for bullish engulfing patterns forming at support areas (law: we buy at support) within a zone or trendline.
• Since bullish engulfing patterns act as reversal signals, their presence at key support levels increases the probability of a successful trade.
• Continuation Setup: I also use bullish engulfing patterns when looking for market continuations. For example, when price breaks above resistance, a break-and-retest scenario may turn previous resistance into new support. If a bullish engulfing pattern forms at this retest area, it signals strong buying activity and a potential continuation of the uptrend.

How a Bullish Engulfing Pattern Forms

A bullish engulfing pattern consists of two candlesticks:

• The first candlestick is small and bearish (indicating weak selling pressure).
• The second candlestick is large and bullish, fully engulfing the first one (indicating strong buying momentum).

Example of a Bullish Engulfing Trade setup

In the diagram of my trading setup:

• Candlestick 1 was a bearish candle that touched the support zone and support trendline.
• Shortly after, Candlestick 2 fully engulfed Candlestick 1 with a strong bullish candle, confirming the reversal.

This setup provided a high-confidence buy signal,

showing the importance of understanding candlestick patterns and how they align with market structure.

2. Bearish Engulfing Pattern

Similarly, the bearish engulfing pattern acts as both a reversal and continuation pattern.

There are two ways I use this pattern for high-probability trade setups:

• Reversal Setup: I look for bearish engulfing patterns forming at resistance areas (law: we sell at resistance) within a zone or trendline.
• Continuation Setup: I also use bearish engulfing patterns when the price breaks below support and then retests it. In this scenario, a bearish engulfing pattern at the retest area suggests strong selling pressure and a continuation of the downtrend.

How a Bearish Engulfing Pattern Forms

A bearish engulfing pattern consists of two candlesticks:

• The first candlestick is small and bullish (indicating weak buying pressure).
• The second candlestick is large and bearish, fully engulfing the first one (indicating strong selling momentum).

Example of a Bearish Engulfing Trade setup

In the diagram:

• The market was previously trending upward until the last bullish candlestick formed at a resistance zone and trendline (high-quality signal).
• This was followed by Candlestick 2, a strong bearish candle that fully engulfed the last bullish candlestick.
• This confirmed that selling pressure was taking over, leading to a market drop—a perfect sell opportunity.

3. Morning Star Pattern

A Morning Star pattern is the third pattern I use as an indicator

for high-potential reversal and continuation bullish entries.

It consists of three candlesticks. Similarly, to the bullish engulfing pattern,

I wait patiently for the market to make its way to the support zone or trend.

After the Morning Star pattern has developed, I start buying indices, commodities, currencies, etc.

Now, let’s look into how I capitalize on a continuation scenario.

In a situation where I can identify that bullish momentum is going to break a resistance area,

I patiently wait and allow the market to prove my theory correct.

After it does (the market breaks resistance, turning the zone into new support),

I wait for a retest that can take the form of a Morning Star. Once the pattern has taken shape,

I enter with my high-probability trades.

How a Morning Star Pattern Forms

A Morning Star candlestick pattern consists of three candlesticks:

• The first candlestick is a strong bearish candlestick that closes at the support. This candlestick indicates to technical traders that the market is still heavily dominated by sellers.
• The second candlestick forms right after the first. Its body is much smaller than the first candlestick and can close either bullish or bearish. The key takeaway is that it signals that sellers are losing momentum.
• The third candlestick is a very strong bullish candlestick that is greater than the second candlestick and must cover at least half of the first candle.

Example of a Morning Star Trade Setup

In the diagram:

• The market was trading downward until it reached the support level with a strong bearish candlestick (marked 1), indicating that sellers were in control.
• The second candlestick (marked 2) formed as a small bullish candlestick known as a hammer. As seen, this candlestick is much smaller than the first, signalling that sellers are losing momentum.
• The third candlestick (marked 3) formed as a bullish candlestick larger than the second candlestick and covering more than 50% of the first candlestick. This alerts us to strong buying pressure, leading to a potential buy setup.

4. Evening Star Candlestick Pattern

Similarly, to the bearish engulfing pattern,

an Evening Star candlestick pattern can act as a reversal or continuation pattern,

which I also use for sniper entries. Sniper entries are well-timed trades with little to no market drawdown.

Another way to achieve a high trading outcome using this pattern

is when selling pressure breaks through a support area, turning it into new resistance.

When this happens, I patiently wait for the market to retest,

which can take the form of this pattern. When it does, it’s a strong signal to enter sell trades.

How an Evening Star Pattern Forms

An Evening Star candlestick pattern consists of three candlesticks:

• The first candlestick is a strong bullish candle as it approaches resistance, suggesting to a technical trader that buyers are still strong during that period.
• The second candlestick follows after the first and forms a small bearish or bullish candlestick, indicating that buyers are losing momentum.
• The third candlestick is a strong bearish candlestick that is greater than the second candlestick and must cover at least 50% of the first candlestick.

Example of an Evening Star Trade Setup

In the diagram:

• The first candlestick (marked 1) shows that buyers were in control during that period, and the market momentum was bullish.
• The second candlestick (marked 2) closed as a bearish candlestick, signalling that buyers were losing momentum.
• The third candlestick (marked 3) is a bearish candlestick with its open and close price lower than the second candlestick. Even though the candle’s body did not cover 50% of the first candlestick, its close was below 50%, confirming our Evening Star pattern. This would have been a high-probability setup, leading to a selling opportunity.

By understanding these candlestick patterns

and their formations, traders can make informed decisions and capitalize on high-probability setups in the market.

The Power of Candlestick Signals: Conclusion

As we have discussed, being able to read candlestick patterns helps you make sense of what price is telling you.

If you understand the language, you will be able to uncover its secrets. I have shared with you four powerful candlestick patterns:

Bullish Engulfing, Bearish Engulfing, Morning Star, and Evening Star.

There are many more out there, and you can dedicate time to finding patterns that work best with your strategy.

Developing this skill will allow you to read the market with ease over time. If you made it to this part,

I want to congratulate you—this shows you can start something and finish it. Trading is a personal journey, and traders who

are prepared always come out on top. It is always important to keep growing and learning rather than repeating the same mistakes.

If you want to learn more about other important traits needed to become a profitable trader,

click on this link to get our free FundsandGalore e-book. If you want to learn more about candlesticks, click on this link.

To master strategic risk approaches in trading, one must possess strong technical analysis skills.

Numerous technical trading strategies exist, but today’s piece focuses

on how to excel in trends and support and resistance zones because that’s how I personally trade.

There are various ways to apply risk management to gain an edge over the market.

What I am about to share works, and these strategies have been thoroughly tested.

Strategic Risk Approaches to Have an Edge

Mastering these three strategic risk approaches in trading will allow you to gain an edge over the market.

This skill set will enable you to navigate market manipulations effortlessly.

I have previously discussed who is responsible for market manipulations and how to protect yourself as a retail trader.

Today, I will dive deeper into three strategies and provide

a blueprint that you can apply alongside your technical ability.

Take note: if you have good risk management but lack technical skills, your trading business will collapse.

Similarly, if you have strong technical skills but lack risk management, your business will also fail.

Think of trading as a business that you run alone.

To gain an edge over the market, you need to find harmony between your technical skills and strategic risk approaches.

Strategic Risk Approaches in Trading: Using Stop Losses

This approach is crucial because it helps protect your investments.

You should internalize this formula or write it down and place it somewhere visible at your trading station:

Formula: Stop Loss = Edge over the Market

The S=D approach is a recommended starting point, suitable for traders with varying levels of access to capital.

Once your overall strategy is aligned and all components work in harmony, capital investment becomes your next focus.

Remember, we all come from different financial backgrounds,

so use your situation to your advantage.

Do not compare yourself or attempt to fully replicate someone else’s capital investment strategy.

Example 1: Mrs. Daenerys

Mrs. Daenerys saved R10,000 ($546) to invest in the forex market.

After spotting a setup, she quickly entered buy positions.

As prices rose above her entry point, she felt confident and left for work, assuming prices would remain stable.

Unfortunately, she did not place a stop loss.

Five hours later, during her lunch break, she checked the market and was shocked to see a drastic

price drop, reducing her account from R10,000 to R2,000 ($109).

She closed the trade, wondering what went wrong.

Example 2: Mrs. Reeves

Mrs. Reeves, on the other hand, saved R5,000 ($273) for forex trading.

After identifying an opportunity, she entered buy positions but ensured she placed a stop loss.

Like Mrs. Daenerys, the market dropped drastically, but her stop loss

limited her loss to 5% of her account, amounting to R250 ($14).

The strategic use of stop losses protected Mrs. Reeves from significant losses, ensuring her trading account remained healthy.

Conversely, Mrs. Daenerys’ failure to use a stop loss left her account severely depleted.

Strategic Risk Approaches in Trading: Risk/Reward Ratio

The second approach involves managing your risk/reward ratio. The formula for this is:

Formula: Target – Risk Exposure = Edge over the Market

A balanced risk/reward ratio ensures you win big and lose small, regardless of market conditions.

By exposing only 1-5% of your account and potentially gaining 10-15%, this approach

allows you to trade with discipline, ensuring long-term survival and profits.

It also helps curb fear and greed by clearly defining acceptable risk and potential gains.

Example 1: Nelson

Nelson reviewed his trading history, wondering why his account remained negative despite winning and losing trades.

Upon analysis, he discovered that his average profit per trade was $14, while his average loss was $30.

This imbalance revealed issues with fear—exiting trades too early in profits—and greed—holding trades too long, leading to losses.

Example 2: Adolph

Adolph’s trading history showed consistent growth.

He realized that, on average, he lost $40 per trade but gained $150 on winning trades.

With eight losses and four wins, he remained profitable due to his disciplined approach to managing risk and reward.

This demonstrates the importance of adhering to a favourable risk/reward ratio, especially

for growing small accounts into significant balances over time.

Strategic Risk Approaches in Trading: Overleveraging

In my previous article, “Protect Your Trades from Manipulations,” I highlighted the dangers of overleveraging.

Overleveraging can lead to significant losses, potentially

wiping out your trading account with a single trade.

However, there is a way to use overleveraging strategically without exposing yourself to excessive risk.

This approach involves amplifying gains while minimizing losses by not funding your entire trading account upfront.

Example: Mpumi_n_co

Mpumi_n_co saved R10,000 ($546) for trading.

Normally, he risks 5% of his capital, or R500 ($27), per trade, aiming for a 15% return (R1,500 or $82).

This time, he employs a strategic overleveraging approach.

Instead of funding the entire R10,000, he funds only R500.

He places more positions than usual and allows the trade to play out.

If he loses, he only loses R500, leaving him with R9,500.

However, when he wins, he gains an average of R2,000 to R3,000.

This strategy enables Mpumi_n_co to amplify gains

while maintaining effective risk management, even without placing an actual stop loss.

However, this method requires mastery of timing market entries and exits before attempting.

Strategic Risk Approaches in Trading: Conclusion

Strategic risk management is essential for trading success.

Using stop losses, maintaining a disciplined risk/reward ratio, and strategically

overleveraging are proven methods to protect and grow your trading account.

Mastering these approaches requires practice, discipline, and a thorough understanding of market behaviour.

By integrating these strategies into your trading routine, you can gain a significant

edge over the market while minimizing risks and maximizing returns.

My goal with today’s piece is to teach you how to protect your trades from manipulations.

To fully master this pure technical skill, one first needs to understand why

market manipulation occurs and who is responsible for its occurrence.

Since I’m a pure technical trader who does not use news or any other form of indicators,

I’ll teach you how traders like me navigate through this deception, which is designed to target retail traders.

Protect Your Trades from Manipulations: Overall Market Direction

On my YouTube channel, I always emphasize the importance of trading with the overall market direction.

The reason why most traders don’t adhere to this principle is their desire to trade every day (a lack of patience).

This is exactly what market manipulators want,

as they use it to take money from retail traders and into the pockets of the elites.

The Oracle of Omaha, Warren Buffett, is often paraphrased as saying, “The stock market is a device for transferring money from the impatient to the patient.”

I uploaded content on my YouTube channel titled “How to Triple Your Initial Investment,”

where I showcased all the trades I placed throughout 2024, trading only the Nasdaq100 and S&P500.

How I Avoided Unnecessary Manipulation

At the beginning of the year, I identified that the overall market

was in an all-time bullish trend by using the daily timeframe.

The daily timeframe allows me to identify the overall market momentum.

I focused solely on buying opportunities and ignored all selling opportunities throughout the year,

thereby trading with the market’s direction.

Trading against the market is like trying to swim against a strong current.

As I mentioned in my previous piece on “how market manipulation targets retail traders,”

manipulators have enough liquidity to move the markets. So why trade against them? Instead, you should trade with them.

Protect Your Trades from Manipulations: News Releases

News releases can be influenced by manipulators to drive activity in the markets.

They know a lot of retail traders will be looking for buying or selling opportunities to capitalize on market spikes or volatility.

How Manipulators Use News Events

This is when manipulators inject money to trap impatient traders. For example, John Lannister enters a buy order

at the support level because Non-Farm Payrolls (NFP) news has been released, and he sees volatile bullish candlesticks emerging.

Seconds after John and many retail traders enter, market manipulators place large sell orders,

driving the price of the stock/currency down below the support area (creating large bearish candlesticks).

This triggers John’s stop loss, along with many other traders’ stop losses.

With frustration, John tries to capitalize on the selling opportunities

since the market broke support, hoping to recover his lost money (revenge trading).

However, seconds after placing his sell orders, the market shoots back up

because the manipulators close their sell positions, leaving retail traders holding losing trades.

This happens to countless retail traders worldwide, enabling manipulators to make millions at their expense.

I don’t trade news events or get hyped about them;

I trade setups, not hype. If I spot an opportunity during a news release, I let the market wipe out impatient traders.

After the temporary unstable surge in price movements (± an hour),

I then look to enter under stable market conditions. This is one way I avoid market manipulation.

Protect Your Trades from Manipulations: Use High Timeframes

The lower you go down in timeframes; the more manipulations you can expect. Market manipulators target traders

who use lower timeframes (1 min – 30 min) more than those on higher timeframes (1 hr – weekly)

because less liquidity is required to move the markets.

Higher timeframes require significantly more liquidity, making manipulations harder to execute.

Difference Between Low and High Timeframes

It’s important to understand that you cannot avoid manipulation entirely as a retail trader.

However, you can control how much exposure you have to it by choosing your timeframes.

Low Timeframes

 Lower timeframes allow you to open and close trades within minutes or hours.

You don’t need to wait as long as you do with higher timeframes.

The downside is that there is a lot of market “noise” and frequent manipulations.

Fake breakouts at support and resistance areas happen often.

High Timeframes

 Higher timeframes are cleaner and less noisy, allowing you to make clear decisions.

The downside is that they require extreme patience.

When trading on high timeframes, you may find yourself holding positions for hours, days, or even weeks.

Understanding these differences is critical.

By knowing the obstacles you face, you can reinforce your trading psychology and develop better strategies for success.

Protect Your Trades from Manipulations: Overleveraging

Overleveraging can yield great returns, but it can also cause significant losses,

especially when manipulation is involved.

Market manipulation can wipe out your trading capital in seconds

if you don’t use proper risk management, regardless of your account size.

To protect your account from being wiped out,

implement a 1:3 risk-reward ratio: for every 1% risked, aim to make 3%.

This strategy gives you an edge over the market.

Even when manipulation occurs, your losses are minimized.

On days where manipulation doesn’t happen, you stand to make significantly more than what you may have lost.

Protect Your Trades from Manipulations: Conclusion

Protecting your trades from manipulation starts with adopting the right mind-set and strategy.

By trading with the overall market direction, avoiding unnecessary news-driven hype,

using higher timeframes, and implementing sound risk management,

you can minimize the risks posed by market manipulators.

While manipulation may never be fully avoided,

you can control your exposure and navigate the markets with confidence.

Remember, patience, discipline,

and proper strategy are your greatest tools as a trader. Stay focused, trade smart, and always protect your trades.

I remember two years ago when I was about to apply the concept of aligning trading patterns and principles.

My patterns, key levels, zones, trends, and impulse correction theory did not align at first.

They seemed to tell me different stories. For example, I would analyse a currency pair and spot a W pattern (indicating potential reversals for buying opportunities),

but at the same time, my key levels would signal a different narrative—price at a resistance level (indicating selling opportunities).

This contradiction left me wondering whether to buy or sell. I didn’t know—I only knew I had to enter the trade (FOMO took over). This lack of alignment led me to lose hundreds of dollars.

What It Takes to Master Alignment

The secret to mastering alignment is you. Unfortunately, that’s why many forex traders, whether they’ve been trading for months, years (unsuccessfully),

or have recently joined the industry, will never become profitable traders. The reason is simple: you are the key.

To effectively use patterns, trends, and key levels, you must master each concept and understand it inside out. Otherwise, you will struggle to align all these principles.

Your inability to stay focused and consistent will lead to failure. You need to have a deep conversation with yourself to assess if the way you are living or trading aligns with these principles.

If it doesn’t, make the necessary changes. As I mentioned earlier, your inability to stay focused and consistent will lead to failure.

Avoid These Behaviours

The reason many traders remain unprofitable, even after years of trading, is a lack of discipline, consistency, and problem-solving skills.

If you don’t learn from your losses or mistakes and keep repeating the same behaviours, you’ll find yourself stuck with a mountain of losses.

This stagnation prevents growth and evolution as a trader, no matter how long you’ve been in the industry. Don’t let yourself fall into that trap.

A lot of new traders fail because they enter the industry with unrealistic expectations of becoming millionaires within weeks or months.

I’ve been there, too. This mind-set is why many of them quit or never reach the next level.

Aligning Trading Patterns and Principles: How I Did It

As I mentioned, two years ago, I felt conflicted when my market patterns and principles didn’t align.

Instead of blaming my strategy, the market, or the market makers (as I often did back then), I acknowledged the problem and focused on finding solutions.

After months of losses, I went back to the drawing board and began by perfecting trends.

The more I analysed my setups and revisited them later (hours, days, or weeks), the easier it became to spot what I was doing wrong and what I was doing right.

Over time, this approach helped me understand trends effortlessly.

I applied the same method to patterns and principles, addressing each concept individually.

It wasn’t easy, but consistent practice, detailed note-taking, and determination helped me navigate through the challenges.

Eventually, I saw the light at the end of the tunnel. Always remember: focus on the skill, and the money will come; but focus on the money, and it won’t come as easily.

I made a habit of working diligently every day. I became so committed to perfecting my strategy that I stopped wasting time on distractions like partying.

The less attention I paid to the outside world, the better I became at aligning trading patterns and principles.

Aligning Trading Patterns and Principles: Step-by-Step

The reason I cover every topic individually in the Strategic Trading Academy is so you can thoroughly understand the principles of each concept—such as traditional trends, M&W reversal patterns, and trading psychology.

Once you achieve mastery, here’s your step-by-step guide to achieving total alignment:

Step 1: Trends

By this stage, you should have a clear understanding of how to apply trends. You should know which timeframes to use for analysis.

If you follow my weekly market breakdowns on YouTube, you’ll notice that I start by analysing trends on the daily timeframe.

Placing trends on the daily chart helps me determine if the market momentum is bullish or bearish. I then add trends on lower timeframes (4-hour or 1-hour charts).

Step 2: Key Levels

Next come key levels—critical points in the market where price reversals might occur.

At resistance levels, we look for selling opportunities; at support levels, we look for buying opportunities.

These levels are essential because they define my “playground,” giving me an idea of the potential pips I could gain over different timeframes (hours, days, weeks, or months).

By marking key levels on daily and 4-hour/1-hour charts, I can better predict whether a trend might reverse or break.

When trends and key levels align—for instance, when a bullish market is at a support level—it reinforces my confidence in my analysis.

Step 3: Zones

Zones, like key levels, are areas in the market where price reversals or continuations are likely.

The difference is that zones allow you to account for more price activity, enabling more informed decisions before entering a trade.

I use zones and key levels for different purposes. Key levels define my playground, while zones help me refine trades, scale in entries, or adjust stop-loss levels.

I apply zones on lower timeframes, such as 4-hour or 1-hour charts. Testing these tools extensively will help you understand what works best for your trading style.

For example, I used to create my playground using zones but later realized that it didn’t work for me in the long run.

Step 4: Impulse-Correction Theory

This is likely the easiest step. You need to train your eyes to spot impulsive and corrective price movements.

Consistent practice will sharpen this skill. Once your patterns, market levels, and zones align, allow the correction or pullback to occur.

When it breaks, enter the trade and capitalize on the impulsive price surge—provided it aligns with the previous steps.

Here’s an example of a trade I took on December 12, 2024.

Aligning Trading Patterns and Principles: Conclusion

This is my blueprint. Use it as a guide to improve your trading skills. Never give up, and always learn from your mistakes—otherwise, you’ll keep repeating them.

You don’t have to follow my strategy exactly. Everyone’s trading experience is different.

If you prefer starting your analysis on a weekly timeframe or exclusively using zones, that’s perfectly fine.

This blueprint is merely a starting point. Over time, as you gain confidence, you can adapt and refine it to suit your style.

In today’s piece, we will cover Mastering Expanding and Contracting Channels.

In our previous articles, I’ve discussed mastering the art of successfully trading Head and Shoulders patterns,

M and W patterns, and more for both bullish and bearish markets.

Mastering Expanding and Contracting Channels: Before We Begin

I urge you to read Mastering Technical Analysis: The Power of Price Action. If you’ve already read it, I recommend revisiting it.

Repetition is how we, as humans, are programmed to learn.

The reason I encourage you to read that article is because it covers traditional channels/trends, and this piece serves as an extension to that topic.

What to Expect Going Forward

To best approach this piece (Mastering Expanding and Contracting Channels),

start by reading a section—for example, expanding channels. After reading the entire section on expanding channels,

use the link provided in that section.

The link will direct you to my YouTube channel,

where I’ll demonstrate how to spot and capitalize on these channels. Once you’ve watched the video,

move on to the next section (contracting channels).

By doing so, you’ll effectively combine both theoretical and practical lessons offered in this article.

Take Action as Soon as Possible

After understanding the logistics of expanding and contracting channels,

it’s time to take action. You might wonder: How do I take action?

Start by analyzing charts and training your eyes to spot these patterns.

Through repetition and consistency, you’ll learn to identify these patterns with ease.

Once you spot one, practice taking advantage of these setups using a demo account until you’re comfortable applying them in a live trading environment.

Mastering Expanding and Contracting Channels: Expanding Channel

On my YouTube channel, I always emphasize the importance of having two identical trends

when trading a traditional bullish or bearish trend, like in the example below:

However, this rule does not apply when trading expanding channels. Here’s an example of how they take form:

As you can see, the distance from support to resistance starts narrow but gradually

increases over time as the price moves between support and resistance.

An expanding channel acts as a consolidation pattern, and once it completes,

we typically see a strong impulse move—either to the upside or downside.

This is why I also encourage you to read my previous articles under The Strategic Trading Academy.

Just as a car requires various components to function optimally,

mastering what I teach requires you to study all the pieces I’ve written.

They work together to achieve maximum trading performance.

How to Capitalize Using Expanding Channels

There are two primary ways to capitalize on expanding channels:

1. Trading Within the Channel
   This is effective when the pattern forms on the 1-hour, 4-hour, or daily timeframe.
2. Trading the Breakout and Retest
   Wait for the market to break and retest the channel. Once the retest is complete, capitalize on the anticipated impulse move—either for buys or sells, depending on the overall trend.

CLICK HERE to access my YouTube channel, where I provide practical examples.

Mastering Expanding and Contracting Channels: Contracting Channel

A contraction is the exact opposite of an expanding channel. Instead of the price range expanding,

it contracts (narrows) as the price moves between support and resistance.

A contracting channel differs from a traditional channel or trend.

The trends are not identical but instead form a triangular pattern that slopes to the right.

Once the price contracts to its maximum, we typically

see a breakout—either to the upside (bullish) or downside (bearish).

A contraction acts as a consolidation phase, and once it completes,

we can anticipate a strong bullish or bearish impulse movement.

How to Capitalize Using Contracting Channels

There are two main ways to capitalize on contracting channels:

1. Trading Within the Channel
   This works when the pattern forms on the 1-hour, 4-hour, or daily timeframe.
2. Trading the Breakout and Retest
   Wait for the market to break and retest the channel.
3. After the retest, capitalize on the anticipated impulse move—either for buys or sells, depending on the overall trend.

CLICK HERE to access my YouTube channel, where I offer practical examples.

By understanding and practicing these techniques, you’ll enhance your trading precision

and take your technical analysis skills to the next level. Keep learning and refining your craft!

Mastering Expanding and Contracting Channels: A Key to Precision in Technical Trading

Mastering expanding and contracting channels is not just about spotting patterns—it’s about understanding market behaviour and positioning yourself for precision trades.

These channels provide unique opportunities to identify potential breakouts and capitalize on impulse moves.

By integrating theory with practice—whether trading within the channel or targeting breakouts—you can refine

your technical analysis skills and elevate your trading performance.

The journey to mastery requires consistent practice, repetition, and a commitment to learning.

Take the time to study these patterns, apply them in demo environments,

and gradually transition to live trading with confidence.

Remember, every successful trade begins with a solid understanding of price action and a disciplined approach.

Stay dedicated, keep evolving, and let expanding and contracting channels become a powerful tool in your trading arsenal.

Let’s conquer the markets, one pattern at a time!

Welcome back to the Strategic Trading Academy! In today’s lesson, we’ll focus on how to master the head and shoulders pattern. Previously, we covered trading the M and W patterns.

Why It Is Important to Understand the Basics of Patterns

Understanding the basics of patterns is crucial because it lays the foundation for successfully trading our strategies.

Inverted Head and Shoulders

To master the head and shoulders pattern, we must first recognize its appearance

on both support and resistance levels, acting as a reversal pattern.

An inverted head and shoulders pattern appears at a support trend, key level, or zone.

If this pattern appears elsewhere, it could be a trap set by market makers.

As I often emphasize on my YouTube channel, our Funds and Galore community focuses on high-probability setups

to gain an edge over the market and maintain consistency and profitability in the long run.

How to Capitalize on an Inverted Head and Shoulders Pattern:

To capitalize on an inverted head and shoulders pattern,

patience is vital. Allow the pattern to form in the support area. The sequence is as follows:

1. The market drops to the support area, forming the left shoulder.
2. Prices drop slightly lower, creating the head.
3. The right shoulder forms at the same level as the left shoulder.

This confirmation indicates that the market has created our bullish

inverted head and shoulders pattern, signalling high-probability buying opportunities.

To master this pattern, it is essential to backtest and understand these setups thoroughly,

ensuring you can capitalize on these high-probability opportunities.

How Do You Know When to Enter an Inverted Head and Shoulders Pattern?

A practical lesson will be available; to access it,

all you need to do is click the link provided in this blog post.

The question now is; how do we know when to place our entries?

The best way to approach this is by placing your entries after the break and retest

from the neckline of the head and shoulders pattern.

After this confirmation, you can place your buy entries until the end of the pattern (take profit),

and you can also place your stop loss just below the neckline.

This will ensure you have an edge over the market by risking less than what you potentially stand to make. Click here to access the practical lesson.

Master the Head and Shoulders Pattern on the Resistance Area: Head and Shoulders Pattern

To master a resistant head and shoulders pattern, one should be aware that these setups

should only be traded on a resistance trend, key level, or zone.

If this pattern appears elsewhere, it could be a trap set by market makers.

As I often emphasize on my YouTube channel, our Funds and Galore community focuses on high-probability

setups to gain an edge over the market and maintain consistency and profitability in the long run.

How to Capitalize on a Head and Shoulders Pattern (Resistance Area): Unlock the Secrets to Profitable Trading!

To capitalize on a head and shoulders pattern that appears in the resistance area,

as I previously said, patience is vital.

Allow the pattern to form in the resistance area. The sequence is as follows:

1. The market pushes up to the resistance area, forming the left shoulder.
2. Prices then push further up above our left shoulder, creating the head.
3. The right shoulder forms at the same level as the left shoulder.

This confirmation indicates that the market has created our bearish

head and shoulders pattern, signalling high-probability selling opportunities.

To master this pattern, it is essential to backtest and understand these setups thoroughly,

ensuring you can capitalize on these high-probability opportunities.

How Do You Know When to Enter a Head and Shoulders Pattern?

A practical lesson will be available; to access it, all you need to do is click the link provided in this blog post.

The question now is; how do we know when to place our entries?

The best way to approach this is by placing your entries after the break and retest

from the neckline of the head and shoulders pattern.

After this confirmation, you can place your sell entries until the end of the pattern (take profit),

and you can also place your stop loss just above the neckline.

This will ensure you have an edge over the market by risking less than what you potentially stand to make. Click here to access the practical lesson.

Conclusion: Master the Head and Shoulders Pattern: Unlock the Secrets to Profitable Trading!

In conclusion, mastering the head and shoulders pattern is essential for profitable trading.

Understanding the basics of patterns provides the foundation for successful strategies.

Recognizing the head and shoulders pattern on support and resistance levels

helps identify high-probability setups. For an inverted head and shoulders pattern at support,

wait for the market to form the left shoulder, head, and right shoulder, signalling a buying opportunity.

Conversely, at resistance, a head and shoulders pattern signals a selling opportunity.

Patience and thorough backtesting are crucial for capitalizing on these patterns.

To know when to enter, look for a break and retest from the neckline, ensuring you risk less than your potential profit.

For practical lessons, follow the links provided in the blog post. Happy trading!

Secret of Success: Mastering M’s/W’s

Welcome to the Advanced Trading Academy, where we will be exploring the secret of success in trading.

Our first lesson will primarily focus on patterns that the market tends to repeat over and over again.

It is important for you to click the links provided in the upcoming headings because they will lead you straight to the practical lessons.

Always take notes to ensure you don’t forget any valuable information,

as this can be the difference between winning and losing in the long term.

Mastering M’s and W’s Patterns

The first rule for successfully trading M’s and W’s patterns is to understand

that these patterns occur at support and resistance areas.

As we always say, look for buying opportunities at the support areas and look for selling opportunities at the resistance areas,

as covered in the basic strategy of our academy.

Secret of Success: Mastering M Pattern

M patterns always occur at the resistance area, whether in a bullish trend,

bearish trend, or consolidation trend—the rule remains the same.

If you spot one anywhere else, you should not trade it,

as it could mean that market makers are trying to trap you.

By knowing this secret of success, you are already ahead of many traders

who have been attempting to trade this pattern but consistently fail to get it right.

Decoding the Secret: Importance of M’s

Understanding the importance of M patterns is crucial.

M patterns strengthen the continuation of a trend.

Trends that don’t experience reversal patterns like M’s at the resistance lack merit.

If you spot a trend without reversal patterns like M’s,

entering at the resistance means our trades won’t have high probability.

At Funds and Galore, we encourage our students to only place entries with high-probability setups.

Secret of Success: Mastering W Pattern

W patterns always occur at the support area, whether in a bullish trend,

bearish trend, or consolidation trend—the rule remains the same.

If you spot one anywhere else, you should not trade it,

as it could mean that market makers are trying to trap you.

Knowing this secret of success puts you ahead of many traders who consistently fail to get it right.

Watch how we successfully trade these patterns in the practical course, which will be presented to you shortly.

Decoding the Secret: Importance of W’s

Understanding the importance of W patterns is essential. W patterns strengthen the continuation of a trend.

Trends that don’t experience reversal patterns like W’s at the support lack merit.

If you spot a trend without reversal patterns like W’s,

entering at the support means our trades won’t have high probability.

At Funds and Galore, we emphasize that our students place entries with high-probability setups.

To do this successfully, you also need to master the skill of being a patient trader.

This will help you grow your account over time and balance trading with your personal life.

Professional traders don’t spend all day looking at the charts;

instead, we spend less than two hours in the market.

Secret to Success: How to Approach the Practical Lesson

The first practical lesson will show you how to trade these patterns effectively.

Stay tuned and prepare to put these insights into action.

Conclusion

Mastering the M and W patterns at their respective support

and resistance areas is fundamental for successful trading.

Understanding these patterns allows you to make high-probability

trades and avoid common traps set by market makers.

At Funds and Galore, we prioritize high-probability setups and emphasize patience and strategy.

By focusing on these principles and integrating them into your trading routine,

you can achieve consistent success and maintain a balanced lifestyle.

Understanding Price Action

Mastering technical analysis requires a solid grasp of price action. Price action refers to the movement of the overall market price.

Retail traders utilize price action to discern whether the market is bullish or bearish, using this insight to make calculated trades.

When an index like the Nasdaq is bullish, it simply means the market is trending upwards. Conversely,

when the Nasdaq index is bearish, it indicates that the market is trending downwards.

Retail traders who understand price action study past market trends to predict future market movements, enabling them to make informed and strategic trades.

Mastering Technical Analysis

Technical analysis encompasses various techniques that retail traders use to make calculated decisions on whether to buy or sell forex pairs (e.g., EUR/USD, GBP/USD) or indices (e.g., S&P 500, Nasdaq 100).

How Do Retail Investors Know When to Buy or Sell?

The reason many traders fail to make a profit is that they struggle to apply technical analysis effectively.

This prevents them from identifying whether they are strong buyers or sellers. It is crucial to trade with the market, not against it,

because we do not control the market—we only follow it. To understand the flow of price, one must first recognize that the market moves in three trends.

Bullish Trend

A bullish trend indicates that a specific stock, index, or commodity is performing well.

For example, when we observe a bullish market in Apple (AAPL) stock using technical analysis, it signals that retail traders should ideally look for buying opportunities (trading with the market).

Conversely, traders seeking selling opportunities in a bullish market are essentially trading against the market.

I personally do not recommend trading against the market. While it is achievable through practice,

I wouldn’t advise it, especially for beginners. I will teach you how I trade personally, not strategies I don’t use.

Bearish Trend

A bearish trend, identified through technical analysis, informs us that a specific stock, index, or commodity is underperforming.

For instance, a bearish market in Tesla (TSLA) stock suggests that retail traders should ideally look for selling opportunities (trading with the market).

On the other hand, traders seeking buying opportunities in a bearish market are trading against the market. Again, I don’t recommend trading against the market. Though possible with experience, it’s not advisable for those just starting out.

Consolidation Trend

The last trend you may encounter is a consolidation trend, which occurs when the market is indecisive.

This trend signifies a balance between sellers and buyers. Seasoned traders often watch for these trends as they can also be profitable.

Typically, after a period of consolidation lasting a week or so, the market often breaks into a bullish or bearish trend.

What to Expect: Mastering Technical Analysis

It’s important to recognize that trading is a game. Just like playing FIFA with friends, sometimes you win, sometimes you lose. Forex trading operates on the same principle.

Your goal is to avoid letting losses affect your mindset. Similar to FIFA, where your objective is to equalize and then score to win,

in forex, your goal is to outperform the market. How does one achieve this, considering only a mere 10% succeed? The answer lies in mastering technical analysis.

I’m excited to teach you how to use price action to your advantage, helping you become part of the successful 10%.

I will show you exactly how to trade in bullish, bearish, and even consolidation channels using technical analysis.

Mastering Technical Analysis: Support and Resistance

Support and resistance are areas in the market where traders look for buying or selling opportunities.

At resistance levels, traders typically look for selling opportunities because the market often reverses downward from these points.

Conversely, at support levels, traders look for buying opportunities because the market often reverses upward.

I continuously emphasize the importance of using stop-loss orders in my teachings.

Just as it is easy for us to identify these areas, market makers and institutional traders also target these zones to exploit traders who do not use stop losses,

are impatient, or do not know how to utilize these areas effectively. Market makers can legally manipulate these levels to close their own positions due to the size of their investments.

Warren Buffett once stated that the stock market is a transfer of wealth from the impatient to the patient, highlighting the importance of a disciplined and patient trading approach.

Impulse and Correction: The Power of Price Action

We have identified that the market moves in three trends: uptrend, downtrend, and consolidation trend.

While the market moves in these trends, it’s important to note that it also creates a series of impulse and correction moves.

An impulse move occurs when the price of a currency pair or index covers a wide distance in the market in a short period (buy/sell)

influenced by market volatility. Once you learn the technical approach required to successfully trade impulse moves, you will understand why I say volatility is your friend.

A correction, also known as a pullback or retracement, happens when the market temporarily changes direction to regenerate liquidity before continuing in its intended direction.

I sometimes place my entries (with proper timing and skill) during a correction (law: after a correction follows an impulse) to capitalize on the impulse move.

I will also cover advanced technical trading sessions later.

Conclusion: Mastering Technical Analysis: The Power of Price Action

Mastering technical analysis is about understanding the market’s movements and learning how to interpret price action to make informed trading decisions.

By recognizing bullish, bearish, and consolidation trends, and by strategically using support and resistance levels, retail traders can significantly improve their chances of success.

Remember, patience and discipline are crucial in trading, as highlighted by Warren Buffett.

Embrace the market’s volatility and learn to harness it through impulse and correction moves.

With dedication and the right approach, you can become part of the successful 10% of traders. Let’s embark on this journey together and master the power of price action in technical analysis.

Mindful Trading

Mastering mindful trading requires a deep understanding of your emotions.

Forex pairs and indices (stocks) can be highly volatile, with price fluctuations occurring in short periods.

To navigate this volatility effectively, start by practicing with a demo account.

Developing the right set of skills will enable you to trade with safety and precision,

leveraging market volatility to close large profits in a short amount of time.

Mindful Trading: Navigating Discouragement

In my four years as a student of the market, I’ve come across many instances

whereby I’ve had my fair share of people who supported me and those who tried to discourage me. Let us look at both of them.

Inspiring Influences in My Life: Positive Energy

In late 2021, I realized the importance of having someone guide me in trading professionally.

There were many moments when I felt stuck,

such as not knowing the best times to trade in my country (South Africa)

or how to determine if the market was bullish or bearish.

Bullish: When the market is rising (price increases).

Bearish: When the market is falling (price decreases).

Today, I look up to my mentors because they continuously motivate me to stay focused and never give up.

Their encouragement has been crucial in my journey to becoming a mindful trader.

I am also deeply grateful for the support from those close to me.

This positive energy helps me persevere and rise above challenges when the going gets tough.

It’s crucial to keep close those who support you, as their positive energy can motivate and help you

stay focused on your journey to becoming a mindful trader.

Navigating Discouragement: Dealing with Detractors in Your Trading Journey

On your journey to becoming a successful trader, you will inevitably encounter people who try to demotivate you.

These detractors can come from anywhere—friends, family, relatives, colleagues.

Always be aware of them and never let their words influence your path. This journey is yours and yours alone.

Overcoming Negativity: The Key to Success in Forex Trading

You might often encounter individuals who have tried trading but gave up

when they realized the forex market isn’t a get-rich-quick scheme.

They tend to project their negative experiences onto you. Be mindful of such individuals.

They might not mean harm; their negativity could stem from their failures, leading them to believe forex is a scam.

It’s crucial not to absorb their negativity, especially as you strive to become a profitable trader.

Some people discourage you simply because they lack knowledge about trading.

They base their judgments on the failures of others. Don’t let their ignorance derail your progress.

Importance of Back Testing: Mindful Trading

I remember the first time I backtested my trading strategy in 2021.

This was my chance to see the progress I had made since starting in 2020.

Back testing essentially tests whether your strategy can endure over time

Like farming, trading has its seasons of rain and drought. Skilled and experienced traders navigate these ups and downs

better than those without such skills. Developing your trading skills is essential.

When we get into the practical side of trading, I’ll show you how to back test the strategy I teach.

This will be a fun learning experience because you’ll test the strategy without the fear of losing real money.

It will also help train your subconscious to focus on sharpening your

technical trading skills. Eventually, you’ll be ready to test it out in the real market.

Remember to always have patience

When Should You Start Trading Your First Real Account?

While trading a demo account is essential, you should also start saving to trade your first real account.

This helps you understand how you engage with the market for real.

In the first quarter of 2022, I funded my first account after countless back tests using

Trading View (covered in Technical Trading Lessons). This tool allows you to gain years of experience in a short time.

My journey continued when I funded my first account with $53.20 (R1,000). By this time, I had honed my skills and felt confident.

I initially only traded the Nasdaq 100, an index consisting of the 100 most publicly traded companies.

According to Nasdaq.com, the top 10 most publicly traded companies include:

Microsoft (MSFT)
Alphabet Inc. Class C and Class A (GOOG, GOOGL)
Amazon.com Inc. (AMZN)
Tesla Inc. (TSLA)
Meta Platforms Inc. (META)
NVIDIA Corporation (NVDA)
PepsiCo Inc. (PEP)
Costco Wholesale Corporation (COST)
Apple Inc. (AAPL)
Broadcom Inc. (AVGO)

While trading the Nasdaq 100, I managed to flip my account, doubling it to $106.40 (R2,000) within a week.

The market provided countless setups that respected our price action strategy, leading to a streak of winning trades.

I withdrew my initial deposit of $53.20 that same week on Friday, just before my broker closed shop. That weekend,

I was excited and nervous—excited because I had flipped my account for the first time since 2020,

and nervous because it was my first time withdrawing money from my brokerage.

I remained patient, ensuring my emotions didn’t cloud my judgment.

On Tuesday at 10 AM, I received a notification from the bank confirming the deposit of $53.20 from my brokerage.

This was a turning point in my life, making me realize the potential of forex.

By not giving up, you can make significant progress in the world of trading.

Over time, consistency will enable you to see your growth as a retail trader.

Remember, just as it takes time to see progress when lifting weights for the first time,

Mastering your trading skills will develop based on your consistency.

A trader who makes the most mistakes will always outshine the one who does not, as long as they learn from their mistakes.

How Much Should You Fund Your First Account?

It’s ideal to start your trading journey by funding your account with anywhere from $53.20 to $159.61.(small account/mini accounts).

Small accounts help you worry less about blowing your account, especially when starting out.

When I first flipped my account and withdrew my initial deposit, I felt invincible, and my confidence soared.

After receiving my initial deposit, I started trading again, but this time things were different.

Understanding FOMO: Never Break Your Trading Rules

When I reopened Nasdaq and began analyzing, the market wasn’t giving the same setups as the previous weeks.

The market was not trending, meaning there were fewer opportunities.

I was unaware of this and let my judgment be clouded by the desire to flip my account again within a week.

Remember, there are times when the market gives, and times when the market takes.

We harvest at the end of a trending market and let it play out during a drought (choppy market).

A choppy market shows no clear trend, making small fluctuations in a short period.

It is when the price of a stock, currency pair, or commodity is indecisive.

During this time, the market gains liquidity by taking out impatient retail traders.

The elusive 10% of traders wait out the drought and emerge when the market trends again. I didn’t know this at the time.

All I could think about was flipping my account. I opened my trading platform and started analyzing Nasdaq again,

but this time the market wasn’t offering any high-probability buys or sells. Instead of avoiding the choppy market,

I was filled with a new emotion: FOMO (Fear of Missing Out). I didn’t like the idea of waiting because I thought if I waited,

I would miss out on an opportunity to capitalize on the market.

This impatience led me to lose 80% of my account. After this, I went back to the drawing board.

Keep in mind, I still had the $53.20 I had withdrawn. Instead of funding my reserves, I wanted to see what went wrong.

So, I back tested for a few hours until I realized I should not have entered the market.

This lesson taught me the power of back testing, testing a strategy with a small account, and differentiating between a trending market and a choppy market.

Conclusion: Mindful Trading

Remember, trading requires patience and a mindful approach. By funding a small account,

you can manage your risk better and learn valuable lessons without significant financial loss.

Always back test your strategies and understand market conditions before making trades.

This mindful approach will help you navigate the ups and downs of the trading world successfully.

Now that you are aware of the emotions you may encounter on your journey to becoming a mindful trader,

you are better suited to navigate your way more effectively than I did when I began my journey.

Next, we will delve into the practical side of trading—the fun part—where we’ll explore how to trade

using trend channels, support, and resistance levels and zones. Stay tuned for a lot of quality content designed to sharpen your skills. See you there!