1.

Market Structure Basics

Market structure underpins the fundamental concepts used in this trading strategy. If you
can master market structure, you will likely be on the right side of the market more often
than not. And the good news is, it’s easy to learn!

Expectation:

Reality:

For simplicity, I will use bullish examples throughout this workbook, but you can apply the
exact same concepts to bearish examples just in the opposite way.

The fundamental idea behind market structure is that when a high is broken, we have a
confirmed higher low. The actual act of breaking the high ‘cements’ the higher low, so price
can print many different candles in between, but a break of structure is only confirmed after
the high is breached. After a BOS (break of structure) occurs, we expect price to pull back.

A series of HIGHER HIGHS and HIGHER LOWS gives a bullish trend.

A series of LOWER LOWS and LOWER HIGHS gives a bearish trend.
 Once we have a BOS, we expect a pullback

So, what does this mean?

Well, it means exactly that; once we have a BOS, we expect a pullback at some point. This
pullback can form straight away after the BOS, or price can go on for a long time before
pulling back, BUT, after the BOS, we expect a pullback at some point. This phrase is
extremely useful to bear in mind and I use it instinctively when looking at the charts. It
allows us to get a bias of where price is likely to be heading next, giving us a bias for going
long or short.

If we have had a bullish BOS and we are at the point in the white box:

We need to expect a pullback. This pullback can

happen straight away, or it may take a while, but we
expect a pullback. Therefore, our directional bias is to
take SHORTS to play the pullback.

If we have had a bullish BOS, we have pulled back to the strong low (Chapter 2) and we are
in the white box:

We expect the next bullish impulse leg to start.

Therefore, our bias will be to take LONGS to trade
with the trend.

Swing Range

Once the high is broken, and we begin the pullback phase, the swing range we are trading
within becomes the most recent higher high and the most recent higher low:
This is usually the trading range we are most interested in as day traders.

SWING HIGH = highest point in the swing range – caused by a swing low
SWING LOW = lowest point in the swing range – caused by a swing high

You must remember, this whole strategy is based on the fundamentals of market structure,
price can do whatever it wants while in a swing range, until it either breaks the high,
continuing the bullish trend, or breaks the low, reversing the bullish trend.

Real Life Example:

Here on the M15 timeframe on 29th December 2023, we see a clean bearish downtrend
making lower lows and lower highs.
As you can see, price can do whatever it wants when it is within the swing range, but once it
breaks out of that range, a new LH is ‘cemented’.

We try to capitalise on the moves at the LH points, to target the lower lows.
 2. Strong and Weak Highs and Lows
We want to trade from strong structure and target weak structure

This is what we call, expectational order flow

First, let’s define what a strong low and a weak low is:

• Strong Low – a low that has done its job – broken structure to the upside. A strong
low’s expectation is not to be broken.
• Weak Low – a low that has failed to do its job – failed to break structure to the
upside. A weak low is expected to be targeted.
• Strong High – a high that has done its job – broken structure to the downside. A
strong high’s expectation is not to be broken.
• Weak High – a high that has failed to do its job – failed to break structure to the
downside. A weak high is expected to be targeted.

Now we have defined them, let’s see what it looks like on our line chart from earlier:

Here, you can see there are weak highs because they have failed to break the strong low,
therefore they have failed to do their job, and are targeted.

There are also strong lows because they have completed their job, and broken structure to
the upside.
In this example, there are strong highs and weak lows because the strong highs have
achieved their objective of breaking structure to the downside. The weak lows have failed
their objective of breaking structure to the upside.

Real life example from earlier:

In this example, we have seen strong highs form and hold, while weak lows are targeted.
This is an example of a bearish trend where the expectational order flow goes from strong
highs to weak lows, then repeats.
 3. Trend Change
Obviously, a bullish trend or a bearish trend cannot last forever. The trend must change at
some point, and a strong high or strong low must be broken. Here is a representation of that
on a line graph:

1. The trend is bullish, creating higher highs and higher lows. At point (1), this low broke
structure to the upside, so is expected to hold to create another leg to the upside.
2. Structure is bullish and we expect the weak high to be targeted, and the strong low
at (1) to hold. This happens and we break to the upside again, continuing the bullish
trend. Point (2) now becomes a strong low that is expected to hold to continue the
bullish trend.
3. Point (2) doesn’t hold, the strong low is broken. Although we assume the trend will
continue and we base our trades off the expectation of price, strong highs and lows
must break at some point to change the direction of the trend. Point (3) fulfils its
objective of taking out a low, and therefore becomes a strong high.
4. After the pullback starts, point (4) is now considered a weak low and the expectation
is for the weak low to be targeted. This happens and we break to the downside.
5. Here, this low fulfils its objective and breaks a strong high, causing itself to become a
strong low, the trend changes from bearish to bullish again.
6. At point (6), the pullback starts, and we expect the strong low at point (5) to hold.
The expectation is for the weak high at point (6) to be targeted.
7. Here, the bullish trend continues, and point (7) breaks the weak high to the upside,
continuing the bullish trend and cementing the strong low.
Real Life Example:
Here is an example of when a trend changes, I have used the 4h structure here.

I have drawn arrows on to make it easier to see the swings in price:

 4. Three Kinds of Structure
Now that you have mastered the basics, this more advanced concept of structure is so
powerful, and will propel your trading journey forward.

With this strategy, there are three different kinds of structure: swing, internal, and fractal.
When combining these 3 structures together, getting the intended direction of the market is
so much clearer.

This may be difficult to understand at first if you are either new to trading, or you haven’t
traded in this way before. But I promise, if you can understand the three types of structure,
you will always have an edge in the market. I cannot stress how powerful this concept is
once you truly understand it and can map it perfectly.

Swing structure - Maps the major swing movements in price. The purpose of swing structure
is to show us the general direction of price

Internal structure - A pullback that is visible but not significant enough to call it swing
structure. The purpose of internal structure is to facilitate the impulse and correction legs of
swing structure. It tells us when the swing pivot point is likely formed, either the swing high
or the swing low.

Fractal structure - Very small movements in price of few candles. This tells us when the
internal pivot point is likely forming.

CHoCH - Change of character - how we map fractal structure. This is 100% mechanical.

I have demonstrated this concept on the line graph below before we go into a real example:
 1. After a swing high forms, price pulls back, then breaks structure (BOS) to the upside,
creating the swing HL.
2. Here, the pullback isn’t large or significant enough to be classified as a swing
pullback, so internal structure is formed. The dotted lines represent an internal BOS.
3. At the top of the internal leg, a CHoCH occurs – fractal structure, which signals the
internal pullback may be starting.
4. The strong internal low gets broken, and the internal structure shifts bearish, to
facilitate the swing pullback.
5. A series of lower lows and lower highs form. This is the internal structure forming a
bearish trend, to facilitate the pullback of the swing structure. Remember, the swing
structure is still bullish at this point, the internal structure is bearish to allow the
swing to pull back.
6. Fractal structure breaks here with a bullish CHoCH, signalling the end of the internal
impulse leg down.
7. An internal BOS occurs, signalling the swing has finished pulling back, and may now
be ready to target the weak swing high.
8. Bullish CHoCH forms at the low of the internal, signalling the internal has finished
pulling back and price is now ready to target the weak internal high.
9. An internal BOS occurs and a series of internal HH’s and HL’s form until the weak
swing high is taken out.
10. We expect these internal structure ranges to hold until the weak swing high is taken
out here.

This is probably quite a hard concept to get your head around if you are new to trading, and
so I will try to demonstrate this with a real-life example:
This concept can be used on every timeframe and helps to get a direction of where the
market wants to go.

Even if you are finding this concept difficult to grasp, the main things to take away from it
are:

- Swing structure maps the major movements in price.

- Swing structure is the structure we want to follow, capitalising on big moves in the
market.

- Internal structure facilitates the impulse and correction legs of the swing structure.
- Price will form a bullish internal trend for the swing impulse leg in a bullish market.
- Price will form a bearish internal trend for the swing correction leg in a bullish
market.

- Fractal structure (CHoCH’s) can be used to determine the turning points of internal
structure.
- Fractal structure is the most aggressive form of structure and can lead to false
signals.
 5. Structure Mapping
Candle Body Close Vs Wick Break

We use slightly different structure mapping for swing and internal structure compared to
fractal structure. For swing and internal, we must wait for a candle body close below or
above the most recent structure, for fractal structure, we map it using wick breaks.

Swing and Internal Fractal

This is exactly the same piece of price action, but if we were mapping swing or internal
structure, we would map it the first way using CANDLE BODY CLOSES. If we we’re mapping
fractal structure, we would map it just using WICKS.

Fractal High – a fractal high occurs when the following candle fails to break its high.
Fractal Low – a fractal low is confirmed when the following candle fails to break its low.
 CHoCH
Change of character – when fractal bullish structure changes to bearish structure or vice
versa.
Bullish CHoCH – the first fractal HH after a series of fractal LH’s
Bearish CHoCH – the first fractal LL after a series of fractal HL’s

Bullish & Bearish CHoCH - EXAMPLE

 6. Swing and Internal
When we get a BOS, we need a candle body close for swing and internal structure. In the
example below, price first wicked the low so we do not draw on our BOS line and we still
operate within the previous swing structure. We only map a swing BOS when there is a
candle close below the low like in the break after.
 Conclusion
This pdf gives a comprehensive view of market structure and how to map it. Implementing
these ideas will improve your trading no end and having a mechanical way to define market
structure puts you one step closer to achieving funding and consistency.

I hope you enjoyed this free taste of the way I trade. Market structure is the building blocks
of my entire strategy and how I am consistently profitable.

If you want to learn anything more and gain CONSISTENT PROFITABILITY within 10 months,
visit my website at:

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