The only trading strategy you need to use if you're starting out...

I've been day trading for eight years now. Last month was my most profitable month. I came out with a gross profit of $208,000. Now if I had to go back to day one, the advice I would give myself if I first started out trading would be the advice I'm going to give you all. Watching this video, I'm going to explain the only day trading strategy that I would ever use or ever learn again if I started back in 2016 again with zero knowledge about the markets. So if you're just starting out as a new trader or you're even struggling to find success, listen to advice. Because this is the only day trading strategy that you would ever need once you understand the fundamental truths about how the market actually moves and what causes the market to move up or down. Now this is video number one of an eight video series regarding order flow and regarding how I navigate and trade the markets. If you're new to my channel, I would recommend subscribing and also following me on my social media. I'll post a link in the description below. That way you stay up to date on all future videos in this series. So the the first thing that we have to understand is the stock market is just like any other marketplace. Because all marketplaces are auctions where buyers or sellers are looking to transact and fulfill their needs. The stock market has other participants looking to profit off of a future expectation of where prices could head. In real estate, in cars, in watches, in art. Those buyers and sellers are looking to fulfill the same need to profit the most amount of money. Now, normal traders are used to a candle chart representing the market. If we were to chart the prices of real estate, cars, watches, we can formulate a similar candlestick chart. Because all a chart does is portray where the market has currently traded and where it was trading in the past. So there's no difference between the stock market and any other auction. Majority of other auctions don't classify their prices in the form of a candlestick chart like traders in the stock market do. In fact, back in the 1980s, early 90s, before computers were a big thing, you had essentially a bunch of traders trading in the pits for their specific marketplace. So you didn't have to go on a computer to buy or sell. You would just transact with other participants in the pit. Without a computer screen and without even a candlestick chart, you would have hundreds of guys and girls throwing up their hands, shouting, yelling. Whether they want to get in or out of a position. They would fight, they would push, they Would curse out each other. Because whoever is the loudest, whoever shows they are looking to buy or sell, would then get fulfilled to profit is their end goal. So take a step back and look at it at this perspective. We are so used to computers and we are so used to technology that we really forget back before computers were a thing that this is how the market was. Traders going into the office, traders going into the pit and transacting with other physical participants. It wasn't until technology that we can do it behind the screen, not face to face with other people. However, the concepts still apply. Back in the 60s, 70s, 80s, 90s, before computers were a thing. Nothing has fundamentally changed with the market other than us being able to transact by a click of a button on our computer screen without having to talk or shout at any other participants in the pit. Our pit is the candlestick charts behind the screens. There's no difference now in 2024 than there is in the 1970s, other than technology and other than computers. This old style of trading was an open outcry system. You would communicate to buy and sell. Signals and shouts made in a particular manner and sequence would convey trading information, intentions and acceptance in trading pits. Now, similarly, this open outcry system back in the pit trading days, all participants had an equal shot that the market was transparent, efficient and fair. Price discovery to complete transactions where orders were placed based off of other participants needs to buy or sell those goods. Now, we can use this information back in the day because again, the fundamentals are the same to then use it to our advantage. Now behind the computer screens where US retail traders can compete with other institutional traders to profit with this increased participation in the market. And this is the component to the strategy is reading the participation in the market with the information that we are reading behind the screens. We now have to understand how this relates to what chart and how we can read this information and use it to our advantage. To make it simple, let's not really get so much into stocks. Again, they're very relatable. And let's talk about cars because I'm sure everybody watching this video has a car. Well, in a fair market, let's just say the fair value for a specific vehicle is $35,000. In every market there are two participants. In this example, we could say that there's a dealer, someone who owns that car, and the purchaser who is looking to purchase that car. In the stock market, we can say that a purchaser is someone who is looking to buy or sell a specific stock or future instrument. And the dealer could be a market maker, making that market and giving out the spreads or controlling the volume and the shares of that specific instrument. So in this example, let's put ourselves in the position of a purchaser of a car. Well, we look on the market and we've been looking for the past three months and we've seen the value of the specific car we're looking at has been between 35 and $37,000 for three months. I haven't really seen any extremes of this. And this has been the fair value of the price of that car. As a purchaser, I am comfortable paying 35, $37,000, because this is what the market has been for the past three months. Now, as a dealer, if I'm looking to clear off my lot or I'm looking to profit, and I know the market finds fair value at $35,000, and then I'm willing to sell the car to whoever is willing to buy it around $35,000. This is fair value, where both the dealer and the purchaser will make out on the deal. Now, there will be a point where the market has to then discover new prices. This is where a price imbalance forms. Now, let's say four months later, we see a car that gets listed, the same car, and it gets listed for $40,000. Then all of a sudden, a few days later, we see every other dealer and that has stock of this car is selling at between 40 to 42 thousand dollars. And now as the sellers are willing, the dealers are willing to sell here at $40,000. Are the purchasers. This is the question mark. Are the purchasers willing to spend $40,000? If they are willing to spend $40,000, then the market will find fair value up here at 40,000, because you have both the purchaser willing to pay for it and the dealer willing to sell at this $40,000. Now the market has shift. We've created this imbalance from 35,000 to 40,000 that now the market has found fair value where both buyers and sellers are in agreement at that specific price. Now, if the purchaser was not willing to buy at $40,000 and the dealer is trying, but no buyer is willing to pay $40,000 from that dealer, well, then that dealer will then be forced to lower its price. And this is where a sell imbalance comes, where the buyers are not willing to pay these high prices and that forces the dealer to then lower their price so that they can complete the transaction and still make a profit, maybe for not the most profit that they would like, but now they have to lower it if they want to clear the cars from their lot. And the market will then move down in a sell imbalance to fulfill the need of those purchasers and then find fair value again. So the market constantly moves from fair value to unfair value, from balance to imbalance. This is how a market works, whether we're talking about cars, stocks, futures, options, crypto. This is how an auction facilitates its trade. Now put yourself in the position of you are looking to purchase a home. You see a beautiful house on the market. It just got listed and the seller listed their house or they offered it, or their asking price. Two keywords there they're offering and their asking price is $400,000. This is what they are willing to sell their house for. Now, as a buyer, you really like their house, but you're not willing to pay $400,000 for the house. You're willing to pay 100, you're willing to pay 200. But now you put out a bid for $300,000. You say, okay, this is the most amount of money I'm willing to pay. The market moves up until the last buyer buys. If no buyer is willing to buy at $400,000 for this house, then the only option for the market to work would be for this seller at $400,000 to lower their price. And this is going to be relatable to the stock market moving down. Or you see a very large red candle to the downside because the sellers are essentially forced to lower their prices to fulfill the need of buyers, because the buyers are willing to pay a certain maximum price. And in this example, it's $300,000. So this seller had their house listed for five months and no one is willing to buy it. The seller's getting frustrated. The seller's ready to give up. The seller is ready to panic, sell. He's got to get out of it. Maybe he's in trouble, maybe he's foreclosing and he has to panic, sell or drop or lower the price to basically find a buyer who is willing to pay a comfortable price at a much lower discount. In this example, call it $300,000. Now, let's say you want to purchase Apple stock. You're willing to pay $100, you're willing to pay $200. Now you're willing to pay $300 for Apple stock. And now within a three week period, Apple stock has been stuck in a range where we are basically moving sideways around $300. We're in this period for call it three months. Now, the next concept of the market is the markets going to have continuation moves. This is where we get the imbalance and the market's going to have reversal move. Now, this is really what makes up a market. Some markets find fair value and some markets find unfair value. Well, when the market finds a period of fair value where buyers and sellers are willing to sell and buy at that range, when an external force comes and they find acceptance of those prices, then the market will move up the market once it finds unacceptance or a rejection. This is when you are going to find the reversal. Like I just stated about the house being listed for so long and no one was willing to bite, so the seller was forced to drop the price. This information in the stock market is an edge where we can look to play reversals versus an example where we look to play continuation, where the market finds their fair value. For three months, we've traded $300,000. Then all of a sudden a seller is trying to get the best bang for their buck at $400. But the buyers that were willing to pay $300 still find $400 to be very undervalued that they are willing to now pay $400. And now the market may do the same thing where we move sideways for three months. Because now buyers and sellers have found fair value here at $400. This is how the market continues to auction and continues to trend once value has been accepted. If value is not accepted, then the market will reverse. Now, I'm sure a lot of you have heard market versus limit orders. What is the better one to use? And while that is important, what's more significant is understanding how each order affects the market. Because being able to read if a limit or a market order comes in will give us an advantage. Briefly, a limit order. You're gonna hear me use the word passive a lot. Passive, when I refer to, essentially means a limit order. And when I place a limit order, I'm placing a buy or sell order at a specific price or better. I'm looking to sell my house at $400,000. $400,000 is the minimum I am willing to sell my house for. I have a limit order there. I'm offering or I am asking to sell $400,000 or more. It's better because I'm looking to profit. When we speak about or better price, we are speaking to make more profits, depending if we're a buyer or seller. Now, a passive buyer buys on the bid. You want to buy Apple stock, but you're only willing to pay $100 for Apple stock. Well, you can put a limit order at $100, and that order will then be placed on the bid. Or you're asking to sell your house at $400,000. You're placing a limit order because you are asking to sell at that specific price. This adds liquidity to the market. Essentially, what I said earlier about being a dealer, when you place a limit order, I don't really want to say you're a dealer, but you're adding liquidity to the market because you're putting an order on the book which then adds liquidity because you are looking to buy or sell at that specific price. This essentially is you being very patient and you're letting the market come to you. You're willing to pay $300,000 for the house. Well, you were only willing to pay that when it was at 400,000, and you're not willing to pay 400,000. Well, guess what? The seller comes in and the seller says, hey, I see that you just put a bid on my house for $300,000. I was foolish for asking $400,000. I think 300,000 is a better price. I'm going to accept your bid of $300,000. And keep in mind, this is all represented in the stock market off of a candlestick chart. That seller, in that example, essentially is taking the liquidity away from the market. That seller has basically completed a transaction because they were aggressive. They couldn't sell their house for $400,000, so they had to be aggressive and accept the bid for that buyer that came in. This, in the stock market, is a market order. It's taking liquidity away from that bid that was placed there. And you're hitting that passive buyer. And this then completes a transaction. This is something good to save. Write down, print it out. It may be confusing at first, but it's all about repetition. A passive buyer buys on the bid, and that transaction could only be complet if an aggressive seller then market orders and hits the bid. A passive seller limits on the ask and his limit order for whatever asking price he was looking to sell that good for will only be completed or he will only be fulfilled. If a buyer comes in and says, hey, I'm willing to accept your asking price. You're selling the house for a fair value. There will always be a buyer and a seller for every transaction. There can never be more buyers than sellers. There can never be more sellers than buyers. This is crucial because a lot of people say, hey, there's more buyers here. Hey, there's more sellers here. It's impossible. For every transaction, there is equilibrium between buyers and sellers. There will be a disequilibrium between passive participants and aggressive participants. And this is where the strategy comes in, is figuring out the difference between passive and aggressive participants and seeing how the market reacts and responds to this. This is how the strategy is built and this is where the edge comes to profit in the market. Again, this is just video number one of this eight video series. This is just setting the foundation to understand the real examples behind the candlestick charts of actual stocks like The S&P 500, like the NASDAQ, like Apple, Tesla, Amazon. We can even relate this to crypto forex. Every market. But setting the foundation, a buyer who wants to buy the car can place a bid at any price they are willing to pay. And the buyer will only, if he is willing to only bid a specific price, will purchase a car. If a seller is willing to come down in price and fulfill that bid, versus a seller who owns the car could ask whatever price they want to to sell the car. But if a buyer is not willing to say, hey Carmine, I'm willing to pay your asking price of $40,000, if a buyer's not willing to do that, well, then the seller who owns the car will be forced to lower the price, which then results to the market moving down. But if a buyer comes in and says, hey Carmine, I'm willing to pay your $40,000, your asking price is, I think, very low. I think you should ask more money. And then five other buyers are willing to pay that price as well. That's how you know you have a fair value and that good is undervalued. And most likely the market will continue to move up there after that. And how do we relate this to the charts? Like, what are you talking about, Carmine? It's all relatable. Think about this. If the market's coming up to this level of resistance and we see a lack of buying volume and we see a lot of sellers here, but the buyers are not willing to pay this price, well, then guess what? We can look to capitalize and profit on a reversal setup at this level of resistance or at these prices, because we know buyers are not willing to pay the price, and sellers, if they want to profit, are going to be forced to lower the price. And we can capitalize on this information and look to take the market short to play a bearish position because we know the chances of the market moving down to facilitate trade, lower to fulfill the needs of those buyers will be very high. Or if the market's selling off into this level of demand at a level of support, if we see a lot of buying activity stepping in down here and buyers are willing to pay these lower prices and sellers are willing to also sell to these buyers at these lower prices, well, then guess what, what the market then does after. And if buyers are willing to pay higher prices and they're bidding and bidding and bidding, well, guess what? That's when we're going to get the trending market to the upside and we're going to get these continuation type of moves. We need to use this information to our advantage. When you create a strategy around how volume and other market participants affect price, this will be the best strategy to use. I'm going to explain how I use it and how I navigate the markets and exactly every single thing that I look for. But you have to agree and understand that the market is an auction place and its main objective is just to advertise the prices and to see if participants agree or disagree with those prices, because the market's main objective is to facilitate trade. Once you understand this, this is the best strategy to use and we can formulate it and build an edge around this. It's not off of these moving averages. It's not off of all these indicators that all these traders use. Yes, I'm not going to disagree that you cannot form a strategy off of this. You can easily form a strategy, but these indicators is not the reason why price moves. These are tools to represent how or where price is. The market doesn't move because the RSI is oversold or overbought. The market doesn't move because we just rejected your moving average. Think about this in terms of a funnel. We have a funnel. We got water going into the funnel. The water at some point will come and flow out the bottom of the funnel at the top of the funnel. Let's just call it indicators, moving averages, RSI or any other trading tool. Under it we have ict, we have Smart money concepts, and then under that we have any algorithmic trading or any other trading strategy, Fibonacci, any strategy that you want to call or use. Regardless of the strategy, regardless of the tool, an order has to be placed. So at the end of the tunnel, a buy or sell order is placed. Let's relate it back to this example. Let's say you see the RSI is oversold. Well, yes, that information may cause other people to buy or sell. That buy or sell order is at the bottom of the funnel. Because regardless of what causes people to buy or sell, ICT indicators, moving averages, regardless of what causes them to buy or sell, an order has to be placed for the market to move. So being able to read the orders essentially avoids all the other noise at the top of the funnel. And you want to focus on what is causing the market to move the water at the bottom of the funnel, and that is a buy or sell order. So regardless of the strategy, an order has to be placed. It's the only way a market can move. And I'm telling you all, reading this volume and reading this information through the order flow is the best strategy one could use. And if I had to go back to 2016, I would start with this. I would remove the indicators, I would remove the holy grail and I would read the market as an auction. Look at it this way and see how volume affects price because this will be the truest picture of the market. And we can represent all of this through a normal candlestick chart. Now, in the next lesson, I'm going to show you my favorite tool to read this buy and sell volume and how it affects price and how we can use this information to our advantage. I'm going to show you trades that I've taken. I'm going to show you profitable ones. I'm going to show you losing trades. We're going to relate it to the charts. I'm going to show you exactly what it is that I look for that I make these buy and sell decisions by reading this volume. Like I said, you have to stick around. Follow me on my Instagram because I'll update you all on there when the next video is coming out. If you're new to my channel, hit the subscribe button. And if you have any questions, let me know in the comments. I'll read through the comments and any questions in regards to this, I have no problem answering it. But on that note, I'm ending it. Peace out.