Professional Documents
Culture Documents
Market Mastery
Market Mastery
Ziad Masri
Disclaimer
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Table of Contents
Let’s be real for a second. You’re reading this book for a reason. You’re
reading it because you’ve undoubtedly had the thought: my trading
sucks.
If you’ve been trading for any length of time, there’s definitely been
many times when you thought, “This is it! I’m finally going to make
it!”—only to get crushed by the market soon after. Each time you have
a sliver of hope that you’ve learned something truly different and
legitimate, you end up feeling sorely disappointed and outright
dejected. As soon as you start calculating all the money you’re going to
make from your newfound trading strategy, you’re slapped with loss
after loss. I use the word slapped because I know that’s exactly how it
feels. The pain is strong and the scars feel just as real as physical ones.
And it all makes no sense. How could it be possible that after all of the
effort and time and money spent on education and practice, you’re
still no closer to your goal than when you started? Especially since it
always feels so close. It always feels right there for the taking. Like
you can reach out and grab that consistent profitability. And yet it
remains elusive—always just beyond your reach. It’s the most
frustrating experience possible to endure in this business.
I know all this because I’ve been through it myself. Every up and
down. Every crushed hope. Every trading slap in the face. And it hurt
like hell. But I never gave up. I endured. And I made it my mission to
figure out the markets. I made it my mission to forget everything I had
learned from all the trading education sites out there and figure out
exactly how the true pros in the top firms are doing it. This became a
burning obsession for years until I finally had my answer. And this
answer was the dead opposite of what I had been taught. I was
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actually shocked that it ran against the grain and was often precisely
opposed to what I had paid so much money to learn from the trading
educators. But I guess I shouldn’t have been surprised, because we all
know that 99% of them aren’t even real traders.
And that’s why I’m writing this book. I want to share what I learned
with aspiring and struggling traders who are in the same place I was
in a few years ago. I want to take a stand against this industry of false
gurus who lure people in with amazing sounding trading systems,
only to take their money and leave them with nothing but more
market losses. It’s appalling for me to see, because I’ve been through it
myself on numerous occasions in the past.
But I’m here to tell you that not only is it possible to replace your
feeling of dread each trading day with a feeling of literally not being
able to wait for Monday to come, but that it’s highly achievable even if
everything you’ve tried so far has failed miserably, despite your best
efforts. And in this book I’m going to show you the exact hidden tactics
that the trading pros at the top firms are using to “kill it” in the markets,
week in and week out.
So, if right now you’re thinking that your trading sucks, or that you
have no clue what you’re doing, understand that there’s nothing
wrong with that thought. In fact it’s the best thought you can have.
Because it’s an honest thought. So many traders lie to themselves,
telling themselves that profitability is right around the corner—if they
can only learn to trade the simple strategy they were taught with
discipline.
That internal dishonesty causes more lost money and time than
anything else. The truth is that profitability is not just around the
corner. At least not if you continue trading the common trading
strategies taught out there.
Think about it.
It’s known that 95% of traders lose money. But what no one seems to
question is how you’re supposed to be among the 5% making money
if you’re learning from the same sources that the 95% who are losing
money are learning from.
2 | ZIAD MASRI
These sources are the trading “gurus.” They are the self-proclaimed
trading gods that in reality have never made any real money from the
markets … because their strategies suck. Their strategies have zero
edge in complex, real world markets. And any results that they show
you are either based on simulated, hypothetical, or back-tested trades.
Ask yourself, how many have shown you their real broker statements
proving that their strategies actually make real money?
Exactly.
But here’s what’s different this time. Not only is what you’re going to
be learning here the opposite of what 95% of trading educators are
teaching, but you’re going to see proof from my real brokerage
statements (trade by trade, down to the very Order IDs from the
exchange) that these strategies have made big money in real world
markets.
In fact, by the end of this book you’ll have learned:
1. The two hidden reasons that have been missing in your effort
to make consistent money from the markets, and they’re not
what you think or what you’ve been told at all.
2. The exact method to find areas where the market will likely
reverse with uncanny accuracy by knowing where the institu-
tions have their orders hidden.
3. The precise technique for entering trades in a counterintuitive
way that’s the exact opposite of how the vast majority of trad-
ers are taught, which aligns you with the professionals trading
in the top firms.
This will end up giving you massive benefits that will have an
incredible effect on your trading, including an instant improvement in
your accuracy and a better ability to hold your winners, which most
traders can’t do. In short, through this book, you will have received
several years’ worth of real market experience from an actual trader,
giving you some of the most effective trading techniques you have
ever seen and, most importantly, with proof that they actually work,
so you can start using them immediately in your trading.
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So yes, this trading e-book is very different. It’s different because it
gives the proof that backs up the talk. And that makes all the
difference in the world.
You see, I’m not a trading “guru.” I’m not a guy who started off
teaching traders. I’ve traded for a living for years, from my own home
office, with trading being my only source of income for numerous
years. In fact here’s a picture of my home trading office in my condo.
So I’ve walked the walk. I know how hard this is. But after discovering
the real secret to profitable trading years ago, and after making my
living solely from trading for years, I recently have turned to helping
others who are in the same place I used to be, i.e., the independent
traders struggling day in and day out to make money in the markets.
I’ve turned to helping people like you get over that hump to
profitability. And that’s exactly why I’m going to be showing you my
actual brokerage statements. Because for you to allow me to help you,
I know that you need to be able to trust that what you’re learning is
finally the real deal, after so many disappointments. You need to see
that the method actually works in real live markets and is not, yet
again, another false hope like so many before.
4 | ZIAD MASRI
MARKET MASTERY | 5
The Difference:
A Real Money Track Record
If you’re like most traders, you’ve probably read one or more of these
books, as they are the all-time bestselling books in the entire industry.
6 | ZIAD MASRI
I know it’s hard to read the small font from this image, but the
important part is circled in red and I’ve zoomed in on that on the next
image below.
How I Became
a Consistently Profitable Trader
10 | ZIAD MASRI
12 | ZIAD MASRI
Let’s start with one of the most common things that all traders are
taught these days—candlestick patterns. That’s all the rage now, made
famous by a few authors that have written candlestick books.
If you look at the right hand of the chart, you will see a large green bar
that completely engulfs all the bearish bars before it. In candlestick
terms, that’s called the bullish engulfing pattern. When I started out, I
learned all about this kind of thing. What you’re usually taught is, “If
you’re watching this market, and you’re seeing that it’s bearish, but
then all of a sudden you see this kind of very bullish candle which
closes near the high like that, that’s your trigger for entry. So if you are
near a support zone, you jump in right there, you buy the market, and
you put your stop right under the bar.”
Well, let’s look at what typically happens in these actual situations in
real-life markets, not in hypothetical situations.
When the large green bar shoots up, and you’ve probably experienced
this yourself, you buy it when it closes at its highs, thinking that’s your
MARKET MASTERY | 13
signal. But what happens next? Price moves straight back down, and
while it’s plummeting back down, you get scared out and you take a
loss.
Then you see another candle shooting up. You think, “Oh, maybe now
that’s it.” You buy again at the top of that candle, but then it drops
back down, giving you another loss, and so on.
The market is chopping around.
But why is this happening, despite this being called such a bullish
pattern that supposedly leads to big up moves?
Well, the reason it happens is because you are not taught to do
contextual market reading. What that means is you don’t realize that
when this market is coming down to a support level, the natural thing
for the market to do when it hits it is to reach an equilibrium point;
and when it does that, it will go sideways. It is natural for the market
to balance and form a trading range at these support areas. And what
happens during trading ranges? You get several up-thrusts and down-
thrusts, and all these candlestick patterns will fail.
Now without realizing that this is the context of the situation—that
we are reaching a balancing phase near a support level—you’re going
to look at these patterns, and you’re going to jump in just based on
these patterns, because you are trading in a vacuum. You’re not aware
of the overall context in which the patterns are appearing. And you
will sustain losses if you do this, one after another.
This is a very simple example of how simply understanding the
context of this market (the fact that it’s coming into a support zone
and likely to take some time stabilizing) allows you to not be fooled by
the short-term pattern in the candlesticks. You know from the context
of overall price action and market structure that the market is very
likely going to form a trading range and that you will get chopped up if
you buy after a big short-term thrust up. One candle does not mean
anything, unlike what you’re taught. It’s all about the context in which
it happens. That’s one of the things that contextual market reading
allows you to do: to skip low probability trades that get you chopped
up and cause so many needless losses.
Let’s take a look at another example.
14 | ZIAD MASRI
In this example, we have a very strong market that’s rising up, it hits a
top, pulls back, and then makes another top. Then off that (called a
double-top in technical analysis), you get a really big break that
confirms this double-top, which also signals that this market should
now plummet all the way back down.
And basically you’re told to short this market. Yet, that’s another
example of just thinking in a vacuum; again, like most of what’s taught
out there. “I see a technical pattern that I’ve learned, it says it’s a
double-top, and it looks like it’s confirmed. Short it.” And yet, what
does contextual market reading tell you to do? It tells you to look at
the context of this market. It tells you that, “Hey… this market was
originally in a strong balancing phase, and it has broken out really
MARKET MASTERY | 15
strongly to the upside.” This is a very bullish market, of which the
bulls are in complete control.
Of course there will be other things you would look at in contextual
market analysis to tell how bullish this market really is from a larger
perspective (which you can’t see in this example, but I’m going to teach
you how in the rest of this e-book). But for now, just going along with
this example, if you saw the signs from reading the market beneath the
charts, and you saw all the different things showing you that it’s a very
bullish market overall on the higher timeframes, you will not look at
this double-top and think, “I’m going to short it.” Instead, what you’re
going to do is visualize that the following is likely going to happen….
create a trap for all these bears. Everyone who shorted up there will
be trapped because they are shorting against the context, which in
this case is a very bullish market overall. The bulls that are in
complete control will step in with their buy orders, a lot of which
would already be in the order book (I’ll also be showing you how to
know where those orders are likely to be), and will absorb all the
short-term selling. The bigger picture will take control, and the
market will shoot up again. All those who shorted will be getting
stopped out, which will accelerate the up move pretty quickly and
lead to a large move to the up side.
So if you know how to do contextual market analysis, in this situation
you would actually be buying this market, knowing that there’s a very
high likelihood of it being a fake-out double-top, and then you take
advantage of everyone else that’s getting trapped by it. That’s how you
get on the opposite side of all the other traders.
Now let me show you another example of what you’re typically taught
and how contextual market analysis can help you.
Below is a crazy, messy-looking chart which looks like a lot of the
charts that I see in many of the courses that are sold. There are a
bunch of technical indicators from Bollinger Bands, to RSI and
Stochastic, which are three of the most common technical indicators
that are used.
MARKET MASTERY | 17
By the way and on a side note, even when you hear that there’s some
proprietary indicator or some kind of proprietary system that is being
sold, a lot of the time (actually 99.9% of the time), it’s just based on
this same stuff. It’s just these same typical indicators with some little
tweak to them, and then it’s given some proprietary name and sold to
you as if it’s something special, which, obviously, it’s not.
But going back to our example, when you’re taught how to read these
indicators, you’re usually shown examples of where price comes
down to the lower Bollinger Band, it hits oversold on both the RSI and
the Stochastic. What are you told happens right when all these
indicators hit oversold? Supposedly, the market will bounce up, and
you’ll get a nice trade.
18 | ZIAD MASRI
So you’re shown a nice example and you’re told, “Look. This works. It’s
great. It works all the time.” The problem is, that’s looking at things in a
vacuum, because just because it worked this time, it doesn’t mean that
you can use it blindly in all situations and make consistent money from
it in real world markets.
So now look in the middle of the chart in our example where the
market drops down hard. It hits oversold from both the RSI and the
Stochastic, very deep oversold in fact, and it crosses below the lower
Bollinger Band (the band around the price itself). And yet, what
happens? It keeps dropping. As it keeps dropping, it gets more and
more oversold and it’s riding down the Bollinger Band entirely—all
the way down. If you had bought when these indicators first hit
oversold, you’d have taken a loss. If you then saw that it’s now more
oversold, and you thought it’s an even better signal and you bought
again, you would have taken another loss. You just keep taking loss
after loss as it gets more and more oversold, and you get completely
run over. You might have experienced something like this in the past,
and I know it’s a common occurrence for most traders trading off
these indicators, and they’ll often lose weeks of profits with one such
occurrence.
The reason for that is because there’s no contextual understanding
that what’s happening here is a complete domination by the bears.
The institutions are selling this market. There’s complete liquidation
and all the bulls are getting trapped and selling. This is not a market to
be buying, no matter how seemingly oversold it gets. This is literally
what’s termed as “catching a falling knife,” and the only way you can
know that is through contextual market reading. You’ll know that
these oversold signals don’t mean anything, and that it’s probably
going to keep getting even more oversold. If anything, you try to get
on the short side of it when it pops up.
So you see these indicators don’t mean anything in this context. And
that last word is the key. It’s all about the market context. Something
that can be a setup or a signal in one context means nothing in another
context and could actually be an outright trap.
One last thing on this topic. There are three indicators on the chart
above. What most people do wrong (and what they’re even taught to
MARKET MASTERY | 19
do by the educators themselves) is that a better signal is to look for all
the indicators to line up and tell you it’s oversold. What’s missing here
is the understanding that all these indicators are based on the exact
same thing. They’re all based on price. They’re all derivatives of price.
They don’t actually give you extra information, they just mirror each
other. So if you think that just because three different indicators are
all telling you the same thing, that this means something, you’re being
fooled. A lot of those proprietary systems that you’re sold and all
those proprietary indicators are actually the same thing in disguise.
They are just combinations of different indicators, and they end up
being very ineffective in real live markets. If they work one instance,
you get crushed the next instance and lose much more than you
originally made. That’s why you can never find consistent results with
them.
And so that’s a very brief initial look at what contextual market
reading is. There’s a lot more to it, and I will be covering it more later,
but as you can see, just this initial understanding alone can make a
huge difference to your trading. When you start looking at the
markets in this way, thinking about the context in which things are
setting up, you’ll no longer fall for that simplistic notion that all you
need is the discipline to follow some simple setup, or indicators or a
system that gives you signals. Instead, you’ll be one of the few people
that understand that such oversimplification is nothing more than an
attempt to sell indicators and courses to you, by making things look so
easy and so simplistic. But the reality is that the true professionals are
seeing the market through a much more sophisticated and powerful
lens. It doesn’t mean it’s super complicated. It’s just much more
sophisticated and powerful, and it’s readily available for you to use
too. You don’t need crazy computer algorithms. I can teach you how to
do it.
20 | ZIAD MASRI
to know is how to time the setups in a way that makes you money.
This element, then, is all about timing.
Timing is all about taking advantage of the panic of the smaller market
participants, while being on the side of the larger players that are
actually moving the markets. This means that you’re actively looking
to align yourself with the big, smart-money traders and enter trades
on the opposite side of the amateur retail traders.
So essentially, when this latter group is selling, you’re buying, and
when they’re buying, you’re selling. Of course there is a very specific
method to doing this, which I’ll be teaching you in this e-book, but the
important principle that you need to understand now is simply that if
95% of retail traders lose, then the only logical way to make money is
to do the opposite of what they do on average. Now wouldn’t you
agree that this makes logical sense? If the big institutions are the ones
that actually move the markets (and they are), then wouldn’t it make
sense to find those instances where the institutions are opposed to
the retail crowd and enter trades right at that time, in line with those
big-money institutions?
Well, I discovered precisely how to tell where the institutions will be
positioning themselves, long or short, and how to get on board with
them so that I’m on the winning side of the trades that 95% of retail
traders are losing on. In fact, I’ve systemized all this into a powerful
methodology, and that’s precisely the method I’m going to teach you.
It’s the one that produced the huge returns that impressed the likes of
Jack Schwager. And it’s because it’s based on real market principles
that work in live markets, i.e., Contextual Market Reading and Fractal
Trade Execution. It allows you to know what’s actually going on in the
market beneath the surface, and then to align yourself against most
traders. And that way you end up making money, since most traders
lose money.
But because this industry has been so tarnished by false educators
who are not real traders and who teach methods that don’t make
money (and lead to nothing but more losses and disappointment for
you), I want to show you proof that my method actually works in the
real world before I teach it to you . I think you deserve that and have
MARKET MASTERY | 21
the right to see it. And I think it should be something you require—to
see the proof—before you place your trust in another trading
methodology. I also think it should be a requirement of every teacher
out there; if they want to teach trading, they should be ready to show
proof that it works with real money accounts.
22 | ZIAD MASRI
The Proof:
Real Brokerage Statements
So now let me show you my actual broker statements to show you the
money that I’ve made on my personal account, using this method. And
most importantly, I’m not going to show you my most recent results
after an entire decade of experience and tell you, “Look how great all
this is.” That would not be a fair comparison because in that case, you
could rightly say that my thousands of hours at the trading screens
and my extensive experience is what’s producing these results, and
not the power of the method itself. And that would be a fair conclu-
sion.
Instead, what I’m going to do is show you results that you can relate to
and where a fair comparison can be drawn. To do that, I will show you
my brokerage statements when I was in your exact position. That is, at a
time early on, when I was still struggling, and I wasn’t profitable yet, so
you can see what happened when I started implementing this method
that I’m teaching you today. Keep in mind, as Jack Schwager mentioned
in his e-mail, my more recent results had even better risk-adjusted
numbers than what I’m about to show you. In fact, he termed them
“spectacular.”
But I want to show you the early results because that’s what matters
to you. That is what someone in your position, with your relatively
limited experience (and possibly limited capital), who hasn’t spent
years in front of the screens, and who’s not profitable yet (and that’s
exactly where I was at that time), can potentially do with this method.
That’s what really matters to you. And the beautiful thing about this
method is that it has continued to work the same since late 2007.
That’s because it’s not based on some indicators or signals that work
for some time and then lose their edge, but rather on the very
MARKET MASTERY | 23
structure on which the market is built, and as such they have never
and will never lose their edge.
So having said that, let’s jump into it.
24 | ZIAD MASRI
As you can see above where I’ve now zoomed in, I had an opening
balance of a little over $43,000. The activity during the month shows
that I made around $8,300 bringing the account up to $51,000. So just
in that first month that I started trading with those big discoveries
that I told you about (after having spent a few months systemizing my
method and really fine-tuning it), I produced around a 20% return on
my account.
Now let’s take a look at the month in more detail, zooming in on the
day-by-day level.
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Here are all the specific days broken down. At that time, I was trading
the DOW Futures. And by the way, this method works on everything.
It works on Futures. It works on Stocks. It works on Gold, Oil, Forex,
or anything that you can think of, and I’ve traded it myself on multiple
markets. But I personally focus on Futures. There are numerous
reasons why I prefer Futures, which I’ll discuss later in this e-book.
Basically, the month started out with a few losses and a few losing
days. You’ve got to realize there’s no sugarcoating here. I’m not just
going to show you some hypothetical stuff that are just winners. There
are losers in real life, and you have to be able to deal with that.
Sometimes they can happen two or three days in a row.
The idea, though, is that you have more winning days, and that the
winning days are larger. So here, you see a few losing days that are
relatively small. But then you can see that right after that, I have a long
stretch of winning days. Then you’ll see some of the really big ones
(given my account size at the time), a $2,300 one, a $1,500 one, a
couple that are each $1,000, to end the month up $8,300. And this is
after all commissions. As you can see on the left of the red box, the
actual gross P&L was over $9,000, but there are NFA fees, commis-
sions, and exchange fees that get discounted from that.
As we drill further down, you can see in the screenshot below a
sample of every single trade that was taken during that month, down
to the Order ID at the exchange.
26 | ZIAD MASRI
As you can see from the statement, something has changed. Instead of
my name, it says 1400295 Alberta Limited at the top left. That’s
because I created my own Limited Liability Company to save on taxes
in Canada. My address also changed as I moved to a new house by that
time, but it still says the trading activity of Ziad Masri.
Now let’s once again zoom into this statement
MARKET MASTERY | 27
Again, you see that there is no open trade equity. I was strictly doing
day trading (and still do for the most part). By that time, from that
$43,000 starting account, I had taken my account to over $80,000 by
the beginning of October, and I added another $21,000 to end up at six
figures. So I had taken a $43,000 account to over $100,000 in about 10
months, which is about a 150% return, using this method that you are
learning in this e-Book.
And now let’s see how this month played out.
28 | ZIAD MASRI
As you can see, by this time I had switched to trading the E-Mini S&P
500 Futures. But again, all markets are extremely similar, and you can
trade them in essentially the same way. And while a lot of people
think that Futures or Forex are risky, it’s actually all the same if you
know how to use correct risk control.
The month started out with a few nice winning days and one losing
day, along with a withdrawal of $1,550 in between for personal
expenses as I was starting to realize that I could probably live off this
income. I also leased a seat from the exchange to save on commis-
sions, and you can see the payment for the seat lease. But to
summarize, most of the days are winning days with just a few losing
days (if you make sure to not count the withdrawals as losing days).
Again, someone who shows you results and doesn’t show you losses
or sometimes little mini stretches of losses is probably lying to you
because this is reality. Even professional traders have losing days.
The idea is simply to have a lot more winning days than losing ones.
And as you see above, there’s some really big winning days, given my
account size at the time, with $6,000 and $5,000 days. Overall, the
results actually grossed $24,000 and, after commissions, over $21,000
in net profit. That was a 25% return on the month to take the account
to six figures. That’s what this strategy was producing within one year
of starting to implement it as a previously losing trader.
And again, you can see below every single trade with every single fill
time, by Order ID (I’ve included a sample from the first week of
trading).
MARKET MASTERY | 29
30 | ZIAD MASRI
Also notice from the specific trades that this is not large size that is
producing these outsized returns. Trading four or five contracts is still
relatively very modest size, which means modest risk, and yet, the
method is still producing these large numbers, making over $21,000
in net profit on this month, and taking the account to over six figures,
starting from a base of only $43,000 just ten months earlier.
So now let’s keep going. I’m actually going to show you the very next
month because that was an interesting month which highlights
something that I want to show you.
MARKET MASTERY | 31
On this month, I started with $101,000 and added close to $74,000, to
bring the account up to $175,000. This was basically a 75% return
month. And since there was also a withdrawal of $1,250 included in
there, the real return wasn’t $74,000, it was over $75,000.
This month also started with two losing days, then a winning day, a
withdrawal, followed by a few losing and winning days, and then a
long stretch of big winning days. And here is the main idea. You get
stretches of winning days that are longer than the losing days and are
32 | ZIAD MASRI
MARKET MASTERY | 33
I was now trading over a quarter-of-a-million-dollar account by this
time (during that year I had withdrawn from, and added money to, the
account at various periods). On this month, which marked my two-
year anniversary as a full-time independent trader, I made $53,000
(the total shows $43,000 but you’ll notice that there is a withdrawal of
$9,500, so the actual profit was $53,000). At this point I was now in
Dubai, living it up more, as my lifestyle had changed, so I was
withdrawing a lot more from my account on a monthly basis. But as I
closed out this second year of trading, I had hit the $300,000 level in
my account.
34 | ZIAD MASRI
So this is what the method produced over the first couple of years.
And, as I mentioned previously, over the first full three years, after
going from this losing trader that wasn’t making money, that didn’t
know how to trade, that learned all these things that didn’t work, to
finally making those discoveries and creating this method—the
method actually produced an effective compounded return of 1471%.
MARKET MASTERY | 35
So if I had started with $100,000, and if I had been able to just keep all
the profits in without withdrawing money for my living expenses, that
$100,000 would have become around $1.5 million. This is what a
1471% return means. And this is real money, real live markets, and
real trades. In fact, I mention this specific three-year period because I
had an independent accounting firm look at my track record at that
time and do an official calculation of effective compounded returns for
investors who were interested in having me trade their money.
So as I mentioned at the start, I wanted to show you all this because I
really do think you have the right to see proof that what you’re
learning is legitimate and that it actually works in the real world with
real money. Again, my mission is to make it such that no one is able to
teach in this industry unless they can prove that what they’re teaching
works, because I had been through all the losses and all the struggles
myself. I felt the pain of that, and I don’t want it to happen to any
other traders. That’s why, even as I continue trading, I’ve made this a
sort of mission and the thing that I want to do to help other independ-
ent traders like me.
36 | ZIAD MASRI
The Method
So with that, let me now jump into the meat of the content of this e-
book and actually teach you how I did all this, showing you how the
method works and how it produced all these returns. I will be teaching
you two key techniques and three different principles which add a lot of
power and profitability to the method.
MARKET MASTERY | 37
As you can see, there are no numbers, and no time frame on this chart.
The reason for that is because this method and technique works on
every market and on every timeframe. These principles can be applied
to anything. So I’ve purposely left out what market and timeframe this
is because it really doesn’t matter. However, I will tell you that this is
intra-day trading, and I am a day trader, personally. There are a lot of
misconceptions out there that day trading is risky, and that is
nonsense. The reality is that it’s actually probably the safest way to
trade because you can control your risk so well, you have no overnight
risk, and you can use leverage very safely to produce very large
returns.
There’s also a common misconception that to do day trading, you have
to sit in front of the screens all day. No, that’s not how it has to be. It
can even be done part-time, technically speaking, and it produces
some very powerful results. Of course, even if you’re not a day trader,
this can still work on swing trading or longer-term trading.
38 | ZIAD MASRI
Going back to our example, just assume for now that this market is
coming down, and it’s coming into this predetermined support zone
that I’ve drawn in the chart. So what are the vast majority of retail
traders usually taught to do in this instance by all the educators? They
are taught to wait for the market to come to support and then wait for
some kind of bullish candle—something to give them the trigger to
enter—and only then will they enter.
When it hits support, and then a really strong bar opens and drives up
hard, you’re told to wait for it to close strong, and then buy. You’re
told that this is the trigger that tells you this support zone is working
and gets you into the trade.
Well, let’s look at what happens next (and note that this is actually a
very common example that happens quite frequently, in my
experience).
MARKET MASTERY | 39
As you see, right after that big green up-bar shows up off this support
zone, price chops around for a bit and then tanks right back down. I
had shown you something like this earlier when I was telling you why
a lot of the candlestick patterns “don’t work.” Here’s another one: a
very bullish-looking setup, and it goes up and then straight back
down, failing right away. Why?
Well, you have to understand what happens contextually as a market
comes into a key support zone. What happens is that there’s a
temporary equilibrium between buyers and sellers. All these sell
orders that are coming in and driving price down meet a wall of buy
orders as this market hits the support zone, and those buy orders
absorb the sell orders. The first absorption causes the bounce up, and
when that peters out, the often still-active sellers push it back down.
Then when it hits more attractive lower price levels (from the
perspective of the buyers), they become aggressive again, and drive it
back up. And what this kind of back-and-forth tug of war between the
40 | ZIAD MASRI
And now you’re thinking, “Oh, man. I just got faked out. I took this
unexpected loss.” Maybe you even shorted there and took another
MARKET MASTERY | 41
loss, and this thing is shooting up hard. So you think, “Oh, this is a
technical pattern. This is a double-bottom, and I should now jump in
here, and I can put my stop maybe just under, because it shouldn’t
really retrace. Then I can look for the big up move because this market
has confirmed that it’s going up, based on this technical pattern that
I’ve been taught.” And of course then the market cracks back down
before it can really go anywhere and give you any real profit. You’re
getting chopped up and this is the all-too-common experience of most
traders.
And after you’ve taken several losses, what often happens is this….
42 | ZIAD MASRI
You see, it turns out that sharp drop from the last chart that scared
you out after the seeming double-bottom was the end of the down
move, and then it shoots up again strongly, doing the very thing you
thought it would do in the first place. But guess what? You’re not on
board. You’re actually down multiple losses in a row and frustrated by
it. So you skip that trade, and it takes off without you on board.
Now, let me show you how a very simple little shift in execution
makes an entire world of difference. This is what I call the Automatic
Fade Trade. So, instead of waiting for that first bullish candle (like
you’re taught to do by all the educators) what if you simply had your
order right at the support zone, with your stop down below it, and just
ready to buy it as it slams into it? Then you would avoid getting
chopped up, taking losses here and there, then maybe jumping in on
yet another bullish candle and so on.
MARKET MASTERY | 43
Most people would think, “That’s crazy. How could you do that? Don’t
you need to wait for price confirmation that this zone is actually
working?” Well, let me ask you. What did waiting for a bullish candle
buy you? What did waiting for the breakout or “double-bottom” buy
you? Nothing but losses, and that’s usually the case. That’s why you
never really make consistent money from them.
Here’s the reality. The bullish candles, which you’re being told
improve your accuracy because they prove that this support zone is
working, are nothing more than normal chop at a support zone. They
mean nothing. A single candlestick bar means nothing without taking
into context what’s happening around it. So this thing that you’re
waiting for actually doesn’t buy you anything. It does NOT improve
the accuracy of the zone working. The zone is either going to work,
or it’s not.
From my experience, using my method, if you know how to build good
zones (and in the next part of this e-book I will be showing you exactly
how to do that by finding where institutions have their big buy orders
or big sell orders hidden), the market will slice through the zone very
rarely—maybe 10% or 15% of the time. At the very least, it will, at first,
balance and give some sort of a nice reaction to the upside if it’s going
to break through (the same thing works in reverse for resistance
zones). The majority of the time, if you’re doing it in the right context, it
won’t even break.
And so knowing that the odds are with you if you identified a good
zone of support or resistance, and you’re taking the trade in the right
context, then putting your order right there just ahead of time, and
trusting the zone is actually the thing that makes the most sense and
will produce the best results! Why? Well, if your buy is down at
support and your stop is down below the support, when the market
fills you and then shoots up, it gives you an instant edge. When it
comes back down and looks so bearish, guess what—you’re still at
break-even. The zone’s still holding and you can still hold on to the
trade and not get faked out. When the market shoots back up even
stronger, you’re still way in the clear in a nice profitable trade and
your stop could even be moved to break-even by now. This is so much
more efficient than waiting to buy at the top of the seemingly bullish
44 | ZIAD MASRI
candle, because in that case you instantly take a loss when it comes
back down, instead of comfortably sitting in a break-even trade.
You see, entering right at the support without waiting for bullish
confirmation gives you what’s called great trade location, and great
trade location does two things. First, it allows you to sidestep all the
chop and avoid needless losses because you’re in at such a good price.
Second, it even makes it psychologically much easier to hold the trade.
It’s actually easier to trade this way when you’re in from such a good
trade location. It’s much easier to hold through the chop because
while you’re holding, at worst you have a break-even trade ( still a
winner), which is quite different from holding when it’s a loss or
outright getting stopped out while the support is still holding.
Now a lot of people might say, “Yeah, but isn’t this buying a falling
knife? Isn’t this something that we shouldn’t do?” This is where we
have another huge misconception. Not all down moves are big
trending down moves in which the institutions are actually in control.
That’s the key differentiating factor. Yes, you definitely want to avoid
these big thrusts down if, truly, the institutions are in control. Again,
there are ways to tell if they are in control and I’ll be teaching you
some of that in this e-book. But some other down moves are just
created by the retail crowd or just by the intra-day movement, and
then they just suddenly end when they hit a wall of demand. Look at
your charts and see just how many seemingly sharp down moves
ended rather quickly and completely reversed, to see what I mean.
Remember when I talked to you about the second part of my
discovery, which I called Fractal Trade Execution? Well, this is it in the
charts above. This is a very bearish down move, but there is a stronger
timeframe in play here at the support level that absorbs all the selling
and can turn it completely around. So for everyone that says, “You
can’t just buy it here because what if it just sliced right through?” I say,
“Fine, it slices right through15% of the time and I take a loss. But what
about the other 85% of the time where it gives a nice reaction? If you
bought up after the market had already put in a reaction, you’re
getting a much worse price and you’re getting chopped up, while I’m
getting a great price and avoiding the chop. Well I’m very willing to
MARKET MASTERY | 45
take a loss a small minority of the time (which you would avoid), and
for a reward I’d get a better price and avoid the chop the large
majority of the time (which you would get stuck in). The difference
this simple technique can make on your results is greater than you
could ever imagine.
Now let’s assume the other scenario: You buy the top of the bullish
candle, and you’re told to put your stop not below the candle, but
completely below the support zone so you don’t get chopped up. Okay,
that’s valid. But even if you did that, think about how large your stop
(and therefore your risk) would be: while if you bought right at the
support your risk would be about half that. So yes, sometimes when
you buy down at support the market will still slice through, and if you
had instead waited for the bullish candle to get in, you would have
avoided the stop out because the bullish signal never comes. However,
that happens the vast minority of the time, based on my experience.
The majority of the time, the market actually does create a pop at the
support zone because of the inevitable latent demand sitting there in
the order book, and you get to be in the trade with half the risk because
you’re in at such a better price. This gives you a much larger reward-to-
risk ratio, which is a big key in profitable trading. If your stop was only
2 points and your target 12 points, then you’re getting a 6:1 reward-to-
risk ratio. But if you got in after the bullish candle, your stop is now
likely to be 4 points, and instead of a 12 points target, you’re now
looking at only 10 points because some of the move had already
occurred by the time you jumped in. So you’re now only getting about
2.5:1 reward-to-risk instead of 6:1. That is a vastly inferior way to
trade!
So despite the fact that, once in a while, waiting to buy after seeing a
bullish candle will save you a loss in case the market just slices right
through without giving a bullish candle, the vast majority of the time
you’ll end up entering, but only getting you half the reward-to-risk
multiple. So it’s a lot less profitable strategy even when it does
work; and so much of the time it doesn’t even work because you
get chopped up while waiting for price confirmation!
If that isn’t enough, yet another benefit is that not waiting for this pop
to get in actually improves your accuracy. Now how do I think that it
46 | ZIAD MASRI
would then take care of it. I would just sit there, waiting; it would fill
my order, and then I would let it play out. No wondering, “Oh, is this
going to come down? Is this going to come up? Should I move my
stop…?” None of that. Just a relaxed way to trade. Let it fill, and let it
work out.
But the key is that I was doing it against most traders. When everyone
is selling, I’m buying and taking advantage of the best prices instead of
waiting for the bullish price confirmation like all the other traders and
then getting poor reward-to-risk or outright chopped up with
countless losses. That’s the difference.
That’s what put me on the opposite side of 95% of traders, because no
one is being taught how to do this since it’s so counterintuitive, and it
goes against the grain of the “common wisdom.” But that’s precisely
why it works and has continued to work for many years.
So to summarize, what are the massive benefits of the Automatic Fade
Trade?
1. You are much less likely to get chopped up, take tough
losses, and end up missing the big move (which is usually
what occurs) because you’re in at a good price.
2. You get instant price edge in your direction. You’re in, and
price very quickly moves in your favor, instead of very
quickly against you, which is likely your current reality,
and that makes the trade psychologically easier to hold to
your target. It’s actually an easier way to trade, emotion-
ally and psychologically, despite it seeming
counterintuitively scary when you’re just jumping in
without waiting for that price confirmation.
3. You can have a smaller stop, which drastically decreases
your risk on the trade and actually gives you a better re-
ward-to-risk ratio. A lot of the times, literally twice as
much reward-to-risk because you are getting in at that
better trade location.
4. Your accuracy actually improves because your profit tar-
gets are closer, and they get hit a higher percentage of the
time if you’re shooting for absolute profit targets.
MARKET MASTERY | 49
So as you see, these are truly massive benefits, and this is a game-
changer. It literally changes everything. It puts you against 95% of the
crowd and puts you in line with the pros. This is how a lot of the
professionals at trading firms are trading. They’re on the opposite
side of your trades, and now you see how to do it.
And that is the first main technique that I wanted to share with you
about my method. It’s really a big part of Fractal Trade Execution, i.e.,
executing against 95% of retail traders that lose. But what I want to
do now is teach you how to use Contextual Market Reading, to identify
and create the support and resistance zones that have uncanny
accuracy, which will reverse markets better than anything you’ve
seen, because they are aligned with where the big institutions—the
ones with the huge orders—have their orders hidden. This will allow
you to create much stronger support and resistance zones. Right now,
you probably use very typical indicator-based ones or just simplistic
price-based ones, like previous highs and lows. I will be teaching you
how to look deep within the chart and see a lot more than you’ve been
able to see before, which will allow you to know where price has very
high odds of reversing.
Example 1
Here is a chart where you see a market that has been coming down,
and it’s pretty clear that the bears are in control at this point. It’s
coming down in a stair-step fashion and then it accelerates to the
downside.
50 | ZIAD MASRI
Now when you’re looking at a market like this, obviously you want to
be on the short side early on and taking advantage of the down move.
But the questions in the back of the mind of any trader are always,
“Where could this market reverse? Where will this down move
eventually end and a large reversal occur?”
The question I have for you is, “What if there is a way to find areas
where the institutions—the big money—have their orders hidden in
the order book?” You won’t be able to see them since they use various
tools to hide their orders because they don’t want the rest of the
world to see where they have huge orders; otherwise, other traders
will just start placing their orders ahead of them (front-running
them).
But what if you could, through reading the chart contextually, be able
to pinpoint and locate the areas where those orders are very likely to
MARKET MASTERY | 51
be and where the market has a high chance of reversing even a strong
down move like this? Well, let’s take a look at that…
So here is the same market (that same down move that you were just
looking at is in the upper right hand box), but now we are looking at it
from a larger picture view. So instead of just looking at the previous
chart and thinking, “Oh, this market looks so bearish,” we’re now
zooming out and seeing in what context this bearish-looking-down
move is occurring. That’s the key question.
So if you look at this larger timeframe view, you’ll see that this is a
market that has been up very strongly on very large, strong, upside
volatility (left hand of the chart shows the strong directional
conviction which took this market up). After that, it starts balancing
for about three days, going sideways before taking off again very
strongly and hitting a new high. And it’s at that point that it starts
falling back down on the very right hand side of our chart. Now what
does it mean when you see this initial kind of consistent and
52 | ZIAD MASRI
persistent strength in the market, with such large volatility bars all
persistent in one direction (as we see on the far left of the chart),
followed by a large phase of sideways movement?
What it means is that the larger timeframes (i.e., the institutions and
the big money that moves the markets) are in control of this market to
the upside. They are very long-biased and you are not going to see this
persistent, big strength that holds consistently like this over multiple
days unless you have some big buyers in control of this market. Each
time it dips back down, they buy it up. All this starts acting as support.
So for whatever reason, their perception is that this market should be
valued higher and that it’s going to continue moving higher, and
they’re buying it up on that basis.
But here’s the key thing that you need to note from looking at this
chart, to read it beneath the surface, contextually. The key thing is that
in the area where price moves sideways for about three days (3-day
balance area), a lot of volume is being transacted, and the more time is
spent at any given price, the more volume is transacted there. More
buyers and more sellers are building up because at this point, it’s a
fight between buyers and sellers. Buyers will step in at the low end of
the range as they perceive the market as a good bargain, and sellers
will again try to push it down at the top end of the range.
Now when we’re looking at a larger time frame like this, over a
multiple-day period, you know that there are larger institutions that
are involved there, because they move the market on the larger
timeframes. But to really understand how the markets work, you have
to think in terms of the psychology of market participants. These are
not just bars on a chart. This is not just simplistic indicators and little
patterns. You have to really think about what’s actually going on here,
contextually. And contextually, what’s going on is that all the big
players that were shorting in the three-day balance area thinking it’s
going to go down could be wrong. Keep in mind that just because they
are big money and able to move the markets, it does not mean that
they can’t be on the wrong side of things, and in fact most hedge funds
and mutual funds are not smart money but rather act like a group of
amateur retail traders. And when the market breaks out to the upside,
MARKET MASTERY | 53
some big money is momentarily stuck short and is losing big. They are
stuck in their short positions because these are not just day traders
that are quickly getting out of their positions. These guys are
sometimes trading hundreds of millions and even billions of dollars,
and they can’t just exit instantly. If they instantly exited their shorts,
they would push the market much higher and cause excessive losses.
So they need to have this more structured way of getting out of a
position that is going against them.
So what happens when the market comes back to the previous
balance area is that the large institutions that were on the wrong side
of the market (those who were shorting) are going to have a lot of buy
orders in the book to buy back those wrong shorts. That’s on the one
hand; on the other hand, everyone who missed out on this big up
move will be looking to use this as an opportunity to get back in. You
have to understand something about these hedge funds and mutual
funds. They are judged by their relative performance to the bench-
mark and to each other. So these guys have a lot of pressure to
perform well. When there’s a big upside move, and they’re not on
board, and another fund is doing better than them, you better believe
that they’re really anxious to take advantage of that move. Therefore,
when the market gives them a second opportunity, they’re going to
also have their buy orders in the book trying to get long to take
advantage of a possible next upside move.
So essentially, even though they’re big institutions, they seem to have
the same crowd or group mentality that most traders have. And what
happens when the market revisits that previous balance area? What
happens is that you will have a very strong support zone from where
the directional convictions started. Remember that term, “directional
conviction.” This is where the bulls took control. It’s where the large
upside bars started, and they were consistent and maintained to the
upside. That’s where everything started.
54 | ZIAD MASRI
Another important line here is where a lot of the activity was taking
place. That’s the place where price spent the most time, meaning that
a lot of volume was transacted there; which means it’s the area where
you have the most stuck shorts. Well, you better bet that these
institutions will be having a lot of big buy orders sitting in the book
right there at this area. Now you won’t be able to necessarily see them
because, again, they have tools (called iceberg orders) that hide their
orders, but there will be a lot of orders there, hidden.
Now what does that do? Well, that effectively acts as a wall of demand
and becomes a very strong support zone. And when the market is
slamming into it on the far right, even though it is a strong down
move, it is a down move that is coming in the context of an overall still
bullish picture that is holding above these key levels. This market
action is bearish over just the last day and a half, but it has been
bullish on the larger time frame. And when the smaller time frame
MARKET MASTERY | 55
meets the demand of the larger timeframe, all sell orders are likely to
be absorbed by the big hidden buy orders that act as a wall of demand.
Imagine a ball dropping or being thrown at a wall. What’s going to
happen? It’s likely to make a big bounce in the opposite direction. This
is very common and very normal in the markets if you know how to
look beneath the chart and pinpoint these areas where you might not
necessarily expect anything, just based on looking at technical
patterns.
Example 2
Let me give you another example so I can highlight a little more how
this all works. Here is a market that has been going sideways, or again,
what we call balancing, for about a full week or so.
MARKET MASTERY | 57
It tries to break down initially but is unable to sustain the down move
and pops back into the trading range. After that the real directional
conviction begins (again, note the term directional conviction) with a
gap, accompanied by huge volatility bars that break the market out to
the down side, completely out of this entire sideways, multi-day
trading range. The market then pops up to retest the breakdown lows,
balances again for about a day and a half, and then the breakdown
resumes resulting in a huge down move.
Now again, what is happening here? That’s what you have to ask
yourself, looking beneath the surface, not just at patterns or simplistic
indicators and setups. What is happening in terms of the market
psychology, the larger players that are driving this kind of move?
Well, when you see this big gap and then these huge bars to the
downside, you know that no one except the big money players could
create such bars. You’re not going to get that kind of massive
movement in a short timeframe, breaking out of an entire multi-day
balancing area unless there’s some big money on the short side.
For whatever reason, some institutions are selling this market. But
what about all the ones that were buying in that balance area when
the market was spending a lot of time at these prices before the
breakdown? At that time when the market was going sideways, there
was a fight between the bulls and the bears, and even though there
were a lot of shorts, there were also a lot of longs in that area. But
when this market suddenly gaps down and gets slammed hard, all
these longs are now stuck in their positions. And it’s not like they can
just click a button and sell hundreds of millions of dollars’ worth of
contracts without completely moving the market. So when something
like this happens suddenly, a lot of them are literally stuck in their
positions. That’s the first thing you need to keep in mind.
The second thing is that a lot of the market participants who wanted
to get in on the short side might have completely missed it because it
happened so suddenly. Keep that in mind too.
So now we have two levels of interest in this chart.
58 | ZIAD MASRI
The first level of interest is around the middle of that balance area
which is the place where price spent a lot of time and formed an area
of congestion (which also happens to coincide with the multiple
rejection points before the breakdown started). And second is the
area where the directional conviction started, which eventually broke
the market out of this whole sideways range.
So now we have a zone of strong resistance, constructed by combining
these two reference levels, and this becomes our hidden wall of
supply. The idea behind it is that if the market comes back up, there
will be a lot of sell orders that are going to absorb the demand or the
buying. Why? Because of the two main points we’ve already
discussed: many of the stuck, losing, long positions will be sold when
the price gets back there, and anyone who missed the big short will
use that area to try to get short at a great price.
There’s also what I call “confluence” around that key zone. Pay
attention to the concept of confluence. Confluence means several
technical things in one area. What is there? First, there is the area
where a lot of volume transacted. Second, there’s the level where
directional conviction started. Third, there is a gap, and a lot of traders
use gaps as resistance. And fourth, there are multiple swing highs
there that got rejected several times.
MARKET MASTERY | 59
So you have this confluence of multiple factors all lined up in one area,
and they’re all different factors. They’re not all like those indicators
where they’re all measuring the exact same thing in a different way.
These are completely different factors. One measures directional
conviction. Another measures volume at a certain price. The other
measures previous rejection areas, all happening in one area and all
this leads to more sell orders in that area. So you have to think, again,
in terms of market participants. Those big institutions that missed the
downside will have their shorts up there ready in that confluence
area. Those who got stuck long are also going to have their sell orders
to get out of their longs. Those that want to look at shorting gaps—
even the day traders—are going to have a lot of sell orders there.
Those that look at previous resistance points like this are going have
sell orders there as resistance. And when you combine all of this,
you’ll have this confluence of a lot of sell orders to absorb all of the
buying.
So let’s look at what can happen when something like this exists in the
market.
This market ends up going down a lot, and I don’t even show it here
on the chart because it went down so much. Then a couple of weeks
later, we get a massive move up on some news announcement, and
despite all the strength of this move, and despite all the buying, when
it hits this wall of supply that we had drawn in two weeks prior, based
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Here we have a market that was balancing for about a full month, in a
huge sideways range. Then we finally had this one last pull-back, and
the market just took off and broke out of this massive, one-month,
sideways balance area. As I mentioned previously in Technique #2,
this is going to become a very key support zone; not just because it’s a
low, but because it’s the last low before we took off and broke out of
this one-month balance. It’s the start of a directional conviction on the
larger timeframe, where the institutions are highly involved.
This support zone (the area between the two green lines), by default, is
going to become a larger time frame support. It’s not something that’s
created from recent smaller timeframe price action. This is a whole
one-month balance area followed by a breakout, so we know this is a
big picture, larger time frame, and a larger support zone. What this
means is that if the market comes into a big area like this, it can create
bigger intra-day bounces. The mistake that most day traders make is
that they only focus on what’s going on in the day, and they don’t
understand the big picture—that these larger timeframes completely
override what’s happening intra-day. So let’s look at that.
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Here is the day that the market finally comes back to this area of
support, several weeks later. In the morning of this session, the
market breaks down and is looking quite bearish. But you would only
think it’s very bearish if you were looking at this as most day traders
do—without being aware of that bigger picture timeframe support.
Most day traders will look at this market action, and they’ll say, “This
is a very bearish market. Let me wait for a pullback and short it.” First,
they won’t understand that there’s a major support zone there,
because it’s hidden in their view. They’re not taking a look at the
larger timeframe so all they’re focused on is the intra-day bearishness.
And maybe they’re trying to get on board and short the market, even
at the lows. If not, they’ll usually wait for a little bounce, maybe some
kind of a retracement level, and they’ll try to short it for a bigger down
move, not understanding that this massive zone is going to act as a
wall and really cause a new large move up that completely reverses
the morning down move.
So if you’re trading this day and like most day traders you’re not
aware of all this bigger picture contextual information, you’ll be trying
to short and end up with losses. However, once you are aware of this,
and perform Contextual Market Reading, you can not only avoid
shorting but can outright fade this move and have your long order at
the support zone ahead of time. Again, this is called the Automatic
Fade Trade. And you’ll understand that even though this market looks
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The day we just looked at in the previous chart is the day right before
this big move up, which I’ve zoomed out a little bit in this chart. So if
you bought it at that support area, you can often take advantage of a
massive move up that lasts several days. Why? Because massive zones
like this, which are created on these larger timeframes, create larger,
massive reversals. That’s the principle I’m teaching you here.
Understanding that you’re reaching a big zone can get you into a
massive reversal, and you can get very large winners this way. On the
day trading timeframe, you can take advantage of larger moves intra-
day, and on the swing timeframe, you could just buy it at the support
zone and take advantage of the whole move up.
But even on the day timeframe, as a day trader, you can understand
the bullish context coming into the day because of the huge zone of
support that was tested the previous day, and knowing of the likely
strength that’s coming you can buy early on, when price starts driving
higher right out of the gate. This way, you’re one step ahead of most
traders, once again, using the larger context to guide your intra-day
trading decisions.
So as you see, this is a principle that can really help you. The larger the
timeframe of the support or resistance zone, the larger the reversal
that can happen. And you can really take advantage of it. Just knowing
that it’s there can help you not be on the wrong side of it; but you can
also take advantage and hold your winners for larger moves. That’s
the idea. It’s not always about just having small winners. Sometimes
you can hold for larger moves, based on a deep understanding of how
and why it’s likely to happen.
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Here you can see that the previous chart we were looking at is just
that tiny little section on the top right of this larger timeframe chart.
And so the drop into the support zone that we see occurring in the
previous chart is happening within this much larger bullish market
environment. That drop that seemed so bearish in the previous chart,
which made you feel like you’d be catching a falling knife if you bought
it, is nothing more than a very structured, normal pull-back in a very
strong up market (of which the institutions are completely in control
to the long side).
So guess what that means. When you have such a strong bias to the
upside, these institutions that are in control of this market, will use
any minor pullback as a way to build their positions at short-term
favorable prices. And the ones who missed the original up move
completely are now using the smaller pullbacks to get on board. And
the ones who were completely on the wrong side of the breakout are
using the pullback to gradually unwind their short positions that can’t
be exited all at once, given their large size and what that would do to
market liquidity.
So what happens when you have a situation like this where the bigger
picture bias is so clearly bullish, but the short term is dropping
strongly into a small support zone, is that you have the wind at your
back. That is, even though the zone itself is not a very strong support
zone in this example, the stronger, larger timeframe bias provides it
with added support and turns it into a great area to buy. Now the odds
of this support zone holding and the price moving higher are much
better, because you have the larger timeframe trend aligned with that
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support zone. You can then take the Automatic Fade Trade, and put
your order there, trusting that the odds are very highly in your favor.
And often, here is exactly what will happen in this type of scenario…
The market slams into this support zone looking so bearish in the
short term and making you feel like it’s definitely going to keep going
down, but because the wind is at your back, and because of the larger
timeframe trend, those big hidden institutional buy orders are going
to be there to absorb the sharp, short-term selling.
Knowing that, the first thing is you definitely don’t want to do is short
that bounce off the support zone because it’s going against the bigger
picture bias. But also, what you want to do is put your order at the
support zone as an Automatic Fade Trade, like I taught you. It’s that
simple, and not much more analysis is required than that. You put in
the order at the zone. You put your stop below the zone, and you let
things play out. And because you’re in at such great trade location, it’s
psychologically easier to hold for the large up move. That’s what
understanding the larger timeframe bias does.
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Most traders will never consider that how the price gets to a certain
area of support or resistance matters a lot. They’ll just consider, “Well,
this is a support or resistance zone. Is it going to hold, or will it fail?”
But what I’m telling you is that if the market gets to the zone in a
certain way, it has higher odds of working than if it gets there in
another way. Let me show you what I mean by this.
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As you see, it breaks out of that area, comes down, and just slices right
through it. Now why does this happen? Well, here’s the counterintui-
tive thing. If this market had opened up there on the left and then just
drove right down into support sharply in a straight line, that would
have been a great buy. This is the counterintuitive thing. Most people
would say, “No, that’s catching a falling knife.” Well, it’s not in the right
context, like I’ve been showing you. It would not be catching a falling
knife if this is a strong zone of hidden demand from the big institu-
tions. It would not be catching a falling knife if the larger picture bias
was up, and this was just a short-term down move. That would be a
great buy if it had just slammed into it in those instances. Why?
Because it would be short-term exhausted by the time it got into it—
because markets don’t just move in a straight line all the time. They
have frequent reactions and reversals.
However, instead of doing that, this market went down, got close to it,
but then went sideways for many, many hours. Well, now this zone
below is no longer a good buy. Why? Because when this market finally
breaks, you’ll have buyers that have been in this area, buying it and
expecting a breakout to the upside for hours, and they’ll all now
suddenly be trapped. Some of them will have their stops being hit, and
others are stuck in losing positions—and will be panicking out when
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the move intensifies. Their sell orders cause the down move to
intensify even more.
Then the momentum players notice all the downside momentum and
jump into the short side. The breakout players also jump into the
short side. And therefore, there will be overwhelming short-term
supply that can overwhelm the support zone because of the way the
price approached it. It did not just drop into it and get short-term
exhausted. It balanced and balanced, basically picked up steam, rested
and attracted a lot of longs, and then broke down. And that has the
power to really break through a zone of support. So as you see,
understanding the structure of how the price got to a zone can make a
huge difference in whether that zone is likely to hold or not. In this
instance, understanding that we’ve been going sideways for multiple
hours before breaking down hard out of this intra-day balance area
can allow you to understand that you should not buy there because
there will be a lot of trapped longs, and that will overwhelm the
support area.
So do you see how this all comes together to form Contextual Market
Reading? It’s not the simplistic, “Oh, I see a bullish candle, so I’ll jump
in.” It’s not, “Oh, my indicators are oversold, so I want to buy.” It’s an
understanding of what’s happening in reality, with actual market
participants, and making logical deductions based on that. That is how
you gain an edge in the marketplace. That is why a lot of those courses
that you’ve probably bought—just like I did— don’t work in real
world markets. That is why you never get the results. They’re just too
simplistic. They don’t have a real edge.
But when you do things differently than 95% of traders like I’ve been
teaching you to do, things change. All of a sudden you have an edge. By
default. You have higher accuracy and larger winners, and that
combines to give you a very profitable strategy. And when that
happens, everything changes. That’s when you can finally start trading
like a true pro, and even do it for a living like you’ve always dreamed
of. And from there, the sky is the limit. Anything is possible, and it’s all
in your hands.
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So take command of your future now by doing things the right way.
Take on the challenge of learning to trade like the pros, and your life
will never be the same again.
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