Market Update 23/07/2021 – Compression Phases
Hello traders and welcome to Market Update it’s Thiru Nagappan here founder of Master the Markets, Elite Trader’s Conference, and Trader’s Open day. So here we are on the market update for the month of July 2021. Can you believe it, time flies, just one more week and then we are going into August, this great thing is the sun is out here in London. Most of you are basking in the sunshine and enjoying it. And wherever you are listening from whichever part of the world, I hope your weather is doing fine, too.
So today’s topic, what I wanted to look at was basically compression phases, okay, compression phases, that is what we are going to be looking at. Now, what do we mean by a compression phase, what does that mean? I’m sure the when the other traders have done it I believe that Sathvik has done a topic on the different variations that the trend goes through. So one of the variations that you looked at is what we call a variation to something is an uptrend and it does this, it comes back down and makes a lower high. But not a lower low yet. Okay, so that is what we call a single market compression, and then if it continues to compress further without taking out the lows and fulfilling the definition of the trend, that becomes an extended market compression. Now you see traders that is one way of defining compression through pattern recognition. Another way that you can add to, is that the second factor is other than pattern recognition. Sometimes you might not really fit into this pattern but you can still consider this compression. Okay, what that would be, is basically when it’s less than a certain number of distance.
You see, if the average distance is this and if something does lesser than the average distance, and we can consider it as compression. So is the what is the compression phase? One is the definition of pattern recognition which I mentioned to you. The second is through a distance that you define. Now, how do you get the distance? Use your open equity tables, and use the 50% mark. Anything less than 50% which is almost more or less your average. Then, you will be using this, okay.
So usually in the currency pairs what we have found is about 100 pips. Anything less than 100 pips is a compression, so you can see, but of course, before I can define this as I’ve mentioned before, as you mentioned this many times before your tops and bottoms must be quantified, just like here you see look, it’s all compressing here isn’t, but you can’t see that if you haven’t quantified your ups and bottoms. So that is what is a compression phase.
Now, let’s move on to why that is important. As you and I know. Why is that important, because usually, we know the principle that after compressions. we get a big break out. And of course, based on that, you will get a high reward to risk potential actual reward risk potential, And you can make a strategy of that, that’s why it’s important. Okay, finally, how do you take advantage of them. How do you build strategies around them, two main ways traders one is to put your entry criteria based on what I’ve told you here, pattern recognition and distance-based compression phases define the compression very clearly. And after you’ve done that, after your entry criteria then, after that you must look at your trade management and your exit criteria. Usually, compressions usually will run longer, so you can use a much bigger target based on your UI tables again, and then your trade management can be based on how the market will move, based on the different market structures which we have defined here, at master the markets. Okay, so that’s what I would say, I mean to reflect on that here you see you can see this one good example here on a compression phase we broke up, we did capture this life, as well here at master markets.
Now let me just show you that particular trade that we captured. There you go, that’s the trade over there that we caught on dollar Swiss 14 June, you’re looking at entering here that’s where we entered, and then we existed at 9141 around here. And that also took us on which also confirmed mid-1000 It was a bit less than a little bit over 1500. Okay, so that’s what we did on that trade
I believe three have taken home on the compression visit so what is a compression phase two is why the important three, how to use them, which is what I gave you the idea, last point I want to give you on how is that if let’s say after a certain compression, it doesn’t break out. Then what you can do is follow the compressions and increase your stake size, because eventually at one point, it’s got to break it can’t compress forever, especially on the liquid market.
All right we also have got our compression tables on when the 80% probability happens after X amount of compression phases. If you have any questions regarding all of this, you can always email us, we’ll be happy to help you. And then in terms of starting off on your trading journey, you can always go on to our trader’s starter pack video course and you can start looking at fundamentals here as well as the intermediate-advanced material that we’ve included in the video course, as well as if you’re a bit intermediate-advanced professional, and you can look at a trade like a master video course as well, really high-quality content that we put on there on our mission to spread the truth of trading, should have been doing since 2010.
Now let’s go on to the second part of the market update which is the market overview. So let me just quickly take a look yes we have a market watch here, dollar Swiss beyond uptrend over here on highly definitely say that open equities towards the upside over here, you’re also having a continuation pattern, move forward here as well. We should be looking at it in the elite room. Dollar Yen is nicely swiftly on the move up over here which we’re on the Elite room as well as the live trading room as well. And in terms of GBP USD over here, what are we having at the moment, open equities still more to the upside, before it carries on into the downtrend towards the downside, Eurodollar on the other hand traders open equity diminishing to the bottom so I would look at trading stocks times towards the long side over here. Aussie dollar on the other hand traders we’re looking at open equity, more to the upside diminishing to the downside, GBP ye, same open equity to the upside. Bitcoin lifting up very slightly over here of its 30,000 marks over here. So I would say more open equity to the upside because this is diminishing momentum is decreasing. Brent oil, on the other hand, I can say more open equity on the upside, in line with its trend also just got this confirmation just more for the swing move there. Gold, on the other hand, has more equity to the downside, in line with its trend at the moment, footsie more than equity until to the upside before it resumes its trend on the downside.
Dow Jones, lifting up very strongly. I would still say open equity diminishing to the upside. So a trail my stops tighter towards the long to capture that swing SMP much more stronger, more open equity to the upside. Silver, on the other hand, open equities diminishing to the downside, tighter stops over here. And if it does revert then revert it to the upside. But for now, it’s inline the trend, Wheat on the other hand more open equity is definitely on the downside.
Alright, so that’s that on the market watch over there. Then in terms of our performance so far as you can see on the elite room only on the 100 pips a little bit small was minus point four three been keeping our loss really small. In a really good run on the condition better slow exists about two weeks ago, pushing the equity curve up about 4%. So that’s how we do it. Keep the losses small little 20% or 70% took a bit of a hit minus to do so primary very little minus point three 170 percent. Really overall minus 2.61% down on the live trading room.
So big major runs in the market for this year are really getting them away patiently on them. Overall, with just a little bit down minus 3% for this.
I guess that’s pretty much the full update over there. So I’ve mentioned just now on the compression phase, any strategies that you do, keep your drawdown small and wait for the big runs with patients, that is what this game is about, and remember that in this game. The money works for you, so do not confuse it with other professions, but you’re actively working to change something once you’ve done your homework, let the system, look after itself as long as you’ve looked after the downside the upside will look after itself.
The last just reminder video courses, bigger slashed intermediate-advanced traders, you can look at trade a starter pack. If you’re a bit more advanced, more professional, you need more advanced stuff. You can look at Trade like a Master video course over here. All you got to do is put your name, email address, and the video course we sent to you, really good quality content that we put out there, all in our mission to spread the truth of trading.
Traders ‘til the next time as we always say, stay disciplined follow your trading plan, keep trading, like a master.