Beginners Guide

To Trading - Part 3
Cameron Benson
Pips2Profit
 Table Of Contents

Part 1 - Beginner Part 2 - Intermediate Part 3 - Intermediate LVL 2

1. Expectations and Perspective For The 1. Market Structure 1. Setups Vs Direction

New Trader 2. Chart Patterns 2. Peak Formations
2. Starting Off a. Double Top/Bottom 3. Opening Range/Initial
a. Chart Setup b. Triple Top/Bottom Balance
b. Indicators c. Ascending/Descending 4. Market Maker Intro
c. Layouts And Templates Triangle 5. 3 Day Cycle Intro
3. Pips, Ticks, Points d. Head & Shoulders/Inverse 6. Signal Days Intro
4. Candlestick Charts Head & Shoulders
a. Open - High - Low - Close 3. Candlestick Patterns
b. Fractal Markets 4. 3 Things Markets Do
5. Psychology - Constant Battle Against 5. High And Low Of The Day
Yourself 6. Previous High And Low Levels
6. Flowchart Of Trading Success - Build A 7. Opening/Closing Price Level
Plan
 Introduction and Mindset

1. Videos 1-2 are not to teach how to trade or anything about setups, but more about a way of viewing
the market.
2. This video is going to expand upon those ideas and also reinforce them.
3. Next 2 videos will be all about setups and entries, but without these first 3 videos that information is
useless.
 Setups That Repeat Vs Direction
Direction Setups

1. “ This looks like it is going to go up or down.” 1. Playbook: Meaning you have exact things you are
2. “I only trade this one pair because it is my favorite.” looking for to occur in order to build a certain kind of
3. Hard to size into these trades because of their choppy trade.
nature and small swings. 2. Repeatable and show up consistently over a basket of
4. Tend to produce 50/50 results due to their instruments.
unpredictable behavior. 3. Scalable In Size due to the repeatable nature, over
time and as performance dictates.
4. Usually going to be quick, fast explosive moves that
are over in 5 minutes to 1 hour.
5. Tend to be higher probability due to their repeatable
nature.
 Peak Formations And The Market Maker Cycle

Important To Understand:

The market moves in 3’s

There are a ton of theories and systems that

demonstrate how the market moves such as:
1. Elliot Wave
2. Wyckoff
3. Dow Theory
4. Taylor Trading Technique (3 Day Cycle)
5. Beat The Market Maker (BTMM)

The understanding of WHY the 3 day cycle

and setups work lie within the idea that the
market moves in 3’s and will make learning
about the different kind of setups easier
and more simple.
NQ over multiple weeks
1 hour chart
NQ over 3 Days
5M charts
NQ over the course of 1 Day
5 Minute chart
 Opening Range And Initial Balance
Opening Range Definition: The term opening range (OR) refers to a
security's high and low price for a short period just after the market opens,
often the first fifteen minutes of the trading day. Sited from
Investopedia.com

Initial Balance Definition: First 2 Trading Periods within in a given

time period.

This could be within the trading session, stating the first 30 minutes as the
opening range and the second 30 minutes as the initial balance. Combined,
the high and low of the 1st hour within the session can create a high and
low range.
Now Apply The Concept Over A Longer Period Of
Time…
Stacey Burke From SBT Uses Monday as the Opening Range And Tuesday As The Initial Balance
 How Can This Be Used
Up until this point, over the course of this series we have gone over:

1. How the market moves (In 3’s)

2. That the market only does 3 things
a. Breakout/trend
b. Breakout/Reverse
c. Trading Range
3. Peak Formations
4. Open/High/Low/Close Of Candles (People make decisions on the close of strong up close and down close candles).
5. Previous Days, weeks and months high and low (Looking for breakouts and the understanding of breakouts traders
being triggered into the market).

The combination of these understandings is what builds the system. This information is what the setups are built on and why
they are so effective.
George Douglas Taylor - Taylor Trading Technique
1. Book was written in the 1950s.
2. Original 3 Day Cycle
3. Noticed a constant rhythmic 1,2,3 of the market
4. Used this rhythm, and his studies in the pits while watching the big money, that became the “3 Day Cycle”.

Buy Day

● After 1-5 Days of decline, a market that has opened, made its low in the morning, and closed in the upper 3rd of the days range…
(Day 1)

Sell Day - Covering the Long from previous day

● Day that trends aways from the buy days low, typically trading higher than the buy days high…..(Day 2)
● If The Sell Day Has A Strong Close - Follow through could occur the following day

Sell Short Day

● Could come immediately following the buy day, if the buy day behavior present in the opposite direction
● After the market moves higher for 2-3 day you can expect a sell short day (with the exception of strong breakouts, there might be
an addition few days added to the trend).
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 First Red And First Green Day

1. Day 1 or 2 of the 3 Day Cycle

2. Will present at either the high or low of the current week.
3. First Green Day
a. Peak formation low
b. Can be an inside day
c. Failed Breakout at the low of the week
d. Best found either:
i. After 3-4 weeks of breakouts to the downside
ii. In a breakout market to the upside (weekly breakouts), followed by 1-3 days of dump and a First Green
Day
 First Green Day
1. First Green Day
a. Peak formation low
b. Can be an inside day
c. Failed Breakout at the low of the week
d. Best found either:
i. After 3-4 weeks of breakouts to the downside
ii. In a breakout market to the upside (weekly breakouts), followed by 1-3 days of dump and a First Green Day.
2. The Day After the First Green Day is the day to look for the BUY LOW Opportunity
a. Buy Low= Low of previous day, low of current day, low of session or closing price, depending on how the days price movements have
presented.
 First Red Day
The exact same as First Green Day, except everything is in reverse

Multiple weeks of breakouts to the upside and a first red day

Multiple days of pump and a first red day

Looking for sell high the next day

 Trade Setups Simplified
First Red And First Green Day

FRD:
1. Pumping day
2. 3rd level of rise
3. Peak formation high
4. Close below the open
Following day:
HOD Sell
HOS Sell
 3 Days Of Breakouts
1. 3 Days of breakouts - Caution: Sometime the
market is going to just keep going in that
direction. DO NOT think just because there are 3
days of breakouts, that means there will be a
trade.
2. Upside breakouts - You want to see the market
put a lower low on the inside and pump back up.
3. Downside breakouts - You want to see the
market put in a higher high and dump back
down.
 3 Days Of Breakouts
1. 3 Days of breakouts - Caution: Sometime the
market is going to just keep going in that
direction. DO NOT think just because there are 3
days of breakouts, that means there will be a
trade.
2. Upside breakouts - You want to see the market
put a lower low on the inside and pump back up.
3. Downside breakouts - You want to see the market
put in a higher high and dump back down.
 Inside Days
Inside day is an inside bar on the daily chart.

Inside day is also a consolidation.

The market will either breakout and execute a

measured move (trend) of the inside day OR

Breakout of the inside bar and FAIL.

Inside day is an inside bar on the daily chart.

Inside day is also a consolidation.

The market will either breakout and execute a measured move (trend) of the inside day OR

Breakout of the inside bar and FAIL.

Inside Days
Buy Day - AKA Peak formation day - AKA First Green Day
- Could be expected after 2-3 days of down movement. Note: Similarities to our current understanding
- In a strongly trending market, might only be one day of decline of the market maker templates. “Peak
- Might be mistaken as a sell short day (First Red Day). formation low, 3 levels of rise, peak formation,
- Could be expected after one LARGE down day or outside day 3 levels of drop.

1 Day Of Large Decline - Anticipate following day to be a buy day. Define A Strongly Trending Market

1. Usually begins after transitioning from

breaking out of previous WEEKS lows
and closing, usually 2-3 weeks.
2. First week the market BREAKS OUT AND
CLOSES A WEEK TO THE UPSIDE COULD
INDICATED THE BEGINNING OF A
STRONG TREND.
3. Weeks that breakout of previous days
high and close, with one day of pullback
(mistaken for a sell short day/First Red
Day) that immediately continue to up
move the following day.
Practical Application
 Links to other videos for reference of topics
3 Day Cycle

1. https://youtu.be/mFXQTucbwJs
2. https://youtu.be/sE-DOfQdNj4

Peak Formations And Market Maker Cycle

3. https://youtu.be/su7ITsZa_TI
4. https://youtu.be/LeSqOUhn7q8
5. https://youtu.be/UXIPlXIChj8
6. https://youtu.be/5HN7AlWjQA4