VOLATILITY INDEX (VIX)

Volatility is an index created by Chicago board options (CBOE), which shows the market expectation
of 30 days volatility. It is constructed by using the implied volatilities on S&P index options, This
volatility is meant to be calculated forward looking, its calculated both from call and put, and is a
widely used to measure of market risk.

VIX is often referred the ‘”Investors Fear GAUGE” fear, volatility and the index move up when stock
price are falling and investors are fearful .The index, volatility and fear when stock prices are rising.

Volatility index from binary are simulated. They randomly generate numbers to reflect real financial
market behaviour according to binary the random numbers are generated by computer programme.
for transparency issues, binary is unable to influence or predict which numbers will be generated in
other words due to broker regulations binary not game the market.

Different types of volatility indexes Volatility 10 .25 .50.75 .100 . The numbers indicate level of
volatility in the various index market, Volatility 10 is the least volatile and volatility index 100 is the
most volatile of these, in addition there are high frequency volatile index 10.50 and 100 move faster
than the corresponding volatility index for example HF moves 4 times faster than volatility index 10

Advantages Of Trading Volatility Indexes :

1. Vix’S are not affected by fundamentals (Minus one problem) vix minic the behaviour of
financial market but since they are not like currencies they are not affected by fundamentals
like Interest rates, Retail sales, CPI and NFP.

2. You can trade VIX 24/7 and 365 days, volatility are not only open during working hours like
forex, they are available all year round including holidays this makes them very attractive.

3. Volatility have low spread, spreads are major cost in forex trading , It get trickier when
consider a fact that different brokers have different spreads, this means that if you choose a
broker with high spreads your trading cost will shoot up. Additionally, brokers manipulate
spreads and make stop hunts using the news release, VIX has fixed spreads very low 0.01 pip
in some instance.

4. Volitality index can be traded with price action. This is the best of all advantage, I believe
PRICE ACTION simplifies trading process
5. as (MASTER SERVER Vix75).

6. Margin requirements are less as compared to other financial instruments (forex, crypto,
stocks and indices)

Disadvantage Of Trading Volatility Index :

1. Not all Volatility index can be traded with 0.01, this helps risk management and stop loss
placement.

Below is the list of volatility and their smallest lot size.

 Volatility 10 0.01

Volatility 25 0.50

Volatility 50 0.50

Volatility 75 0.01

Volatility 100 Index 0.01

High-Frequency 10 Index 0.10

High-Frequency 50 Index 0.50

High-Frequency 100 Index 0.50

You have to be very careful when you trade you have to ensure that you use the correct lot size, for
example if you use 0.50 on volatility 75 then you will open a very big position but if you use that lot
size for Hf 50, the position will be not so big .Be careful of this you can easily get into trouble that
result on losing your investments.

2. There are fewer volatility indices to choose from compared to forex pairs, this can be both
advantage and disadvantage . It can be an advantage in that It makes it easy to track them,
on other hand it may mean that at times there will be not tradable set ups on any of the
indices.
3. Volatility indexes are very volatile, This may be obvious but need to be stressed. What it
means, the market moves very fast in a short period of time and your account can be easily
wiped if you use the wrong lot size.
4. Sometimes past market data of volatility index disappears server maintenance.

The MT5 servers that runs volatility index are regularly maintained. At times when they get
back up the historical data may not be available. This make it hard to identify information
like areas of support and resistance. However this can be combated by looking at trading
view which has all history.
MARKET STRUCTURE

The price can simply be found in one of the 3 phases below:

1. In a CONSOLIDATION

2 .In an UPTREND

3. In a DOWNTREND

Market Structure In Bullish Conditions

The bullish market is characterized by making Higher Highs and Higher Lows, but this
characterization is not enough, it is necessary to say that bullish markets are always breaking swing
Highs and respecting swing lows.

The fact that the price has broken a swing high, indicates that higher prices should be expected, so it
is negotiated in the trend in which the market structure was broken.

I WILL GO DEEP IN DETAIL , THESE ARE BASICS OF TRADING I BELIEVE Y’ALL KNOW AND UNDERSTAND THIS
CONCERPT BY NOW .
 LIQUIDITY

The FOREX market is a zero sum game, which means that for a trader/institution to buy/sell 1 index it's
necessary that there is another trader/institution with an opposite position. If Smart Money (Banks) want to buy
a index they will need sellers in the market, the existing facility to place these positions In the market is called
LIQUIDITY.

The Liquidity is defined by Stop losses, where the Stop losses exist is where the liquidity also exists, Smart
Money need to activate the top losses of existing orders in the market so that they can place their positions in
the market.

The banks manipulate the price because of liquidity, but why? banks negotiate large trading volumes and
sometimes find it difficult to find the other side of their trades, so they manipulate the price so that they can
have their positions in the market.

LIQUIDITY TYPES

In the FOREX market there are two types of liquidity, which are:

1. Buy Stops Liquidity (BSL)

2. Sell Stops Liquidity (SSL)

Buy Stops Liquidity (BSL)

The BSL is originated by Stop Losses of sell orders, after the BSL is taken, the market reverses to the downside,
because banks use the BSL to place sell orders in the market.

What to focus on (for BSL) :

• PDH - Previous Day High

• HOD - High Of Day
• EQUAL HIGHS = Retail Resistance
• OLD HIGH - Swing High
PDH - PREVIOUS DAY HIGH ✅

HOD - HIGH OF DAY ✅

EQUAL HIGHS = Retail Resistance ✅

OLD HIGH - Swing High ✅

 Sell Stops Liquidity (SSL)

The SSL is originated by Stop Losses of Buy orders, after the SSL is taken, the market reverses to the
Upside, because banks use the SSL to place Buy orders in the market.

What to focus on (for SSL) :

• PDL - Previous Day Low

• LOD - Low Of Day
• OLD LOW - Swing Low
• EQUAL LOWS = Retail Support

PDL - PREVIOUS DAY LOW ✅

LOD - LOW OF DAY ✅

OLD LOW - Swing Low ✅

EQUAL LOWS = Retail Support ✅

When BSL is taken, the market reverses to the downside. ( SELL SIGNAL )

When SSL is taken, the market reverses to the upside. ( BUY SIGNAL )
 Stop Hunt: Manipulation For Liquidity

SH is a movement used to neutralize liquidity (stop losses). It's a false breakout above / below the
zone where there is LIQUIDITY.

THE MARKET MARKERS (BANKS) USUALLY USE HIGH IMPACT NEWS TO TAKE LIQUIDITY.

Stop Hunt: Manipulation For Liquidity

Stop Hunt: Manipulation For Liquidity

 MONEY PATTERN (NEW) .

MONEY PATTERN BULLISH & BEARISH SCENARIOS :

1. Wait For Price to test high/low at support/resistance.

2. Make a pull back up/down mark it as BMS(Break In Market Structure) .

3. Price will Be Retest previous high/low At support/resistance.

4. Price will now break the Market Structure (BMS) before going below (Price Violation) .

5. When price comes back above/below the BMS line :

Wait for the candle to close ✅

Buy or sell on the next candle's Open ✅

NB : ALWAYS MAKE SURE THAT YOU HAVE HIGH/LOW THEN RETEST , BREAK IN MARKET STRUCTURE,
PRICE VIOLATION BEFORE ENTRY ✅
LET’S HAVE A LOOK AT SOME EXAMPLES :

EXAMPLE NO :1

EXAMPLE NO : 2

I DISCOVERED THIS PATTERN NOT SO LONG , SO EVERY TIME I TRADED THIS PATTERN I MAKE A LOT OF CASH .
THIS PATTERN IS 95% ACCURATE . TRADE IT WITHOUT FEAR .
 PURE PRICE ACTION ( BONUS LESSONS ) – PICTURES WILL DOMINATE

Trendlines

Trend lines are looking like channels, the difference is that the trendline has no line parallel to it they
are drawn the same way. To draw a trendline we need to connect two points and extend them so
that when the price comes back to the trendline we will anticipate a bounce. We have two types of
trendlines as follows:

(a) Upward trendline

(b) Downward trendline

Upward trendline ✅

Downward trendline ✅
We have two type of breakouts.

1. Breakout and Retest

2. Immediate Breakout

1. Breakout and Retest (Pullback Set Up)

Breakout and retest is when the price breaks the trend line or channel line and come back before it
continues going down or up. Here are some examples of how it looks like:
#RULES FOR BEARISH

• Wait for candlestick that is very close to or almost touches or touches or break the broken
trend line and may close above it during its temporal upward pullback.
• Place your Sell Stop order a few pips under the low of the candlestick that intersect the
upward trend line for added confirmation.
• Place your stop loss a few pips above the high of the candlestick which you have placed your
pending order.
• You must ideally use reversal candlesticks for even more added confirmation.
• Target previous troughs for take profit.

#RULES FOR BULLISH

• Wait for candlestick that is very close to or almost touches or touches or break the broken
trend line and may close below it during its temporal downward pullback.
• Place your Buy Stop order a few pips above the high of the candlestick that intersect the
downward trend line for added confirmation.
• Place your stop loss a few pips below the low of the candlestick which you have placed your
pending order.
• You must ideally use reversal candlesticks for even more added confirmation.
• Target previous peaks for take profit.

2. Breakout (Immediate Set Up)

This is where a price just breaks and immediately continues trading lower or higher without coming to
re-test the broken trend line. Look at some examples bellow.
LET’S LOOK AT EXAMPLES :

EXAMPLE NO :1

#RULES FOR BEARISH

• Wait for the candlestick that intersect or breaks the upward trend line to close below the
trend line (it must not be too long).
• Place a Sell Stop order a few pips below the low of that candlesticks.
• Set your take profit target within the previous significant troughs.
• Set your stop loss a few pips above the high of that candlestick.

EXAMPLE NO :2
#RULES FOR BULLISH

• Wait for the candlestick that intersect or breaks the downward trend line to close above the
trend line (it must not be too long).
• Place a Buy Stop order a few pips above the high of that candlesticks.
• Set your take profit target within the previous significant peaks.
• Set your stop loss a few pips below the low of that candlestick.

Chart Patterns (Signals that breakout is about to happen).

(a) Reversal Chart Patterns

(b) Continuation Chart Patterns (Breakout patterns)

(c) Bilateral Chart Patterns (Breakout Chart Patterns)

THIS PDF WILL COME TOGETHER WITH PRICE ACTION PDF . USE IT TO LEARN MOREABOUT
THESE PATTERNS .

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