SRC

Smart Raja concepts

Welcome to Smart Raja concepts, in order to fully apply what you’re going to
learn through this course give yourself first of all time, don’t wait for just two
or three months but stay patient and wait at least six months to fully
understand and experience price movements, stay disciplined because there
will be a light at the end of the tunnel.

1- RISK MANAGEMENT

The first thing we’re going through is risk management, we suddivide it in two
different types:

1- Static risk: it’s the basic type of risk you’re going to use most of all at the
beginning, the only thing you’ll have to do is to manage risk on one position.

2- Dynamic risk, it’s a little bit more complicated and for experienced traders,
you will need some kind of intuition because you’ll divide your risk
percentages throughout different positions during the same trade.

Applying static and dynamic risk

1- Static risk is when you enter with only one position on the trade you have
planned using max 1% or 2% risk. For example you’ve got a 1000$ account so
if you want to risk 1% you’re max loss will be 10$ based on how you will
manage the trade and if you want to risk 2% (wich should be the maximum
percentage you should risk per day) the potential loss will be of 20$.
































 2- Dynamic risk is where you’re going to add multiple positions on the same
trade, instead of risking a full 1% position you’ll divide it in potential two
0.50% positions so as it adds up you’re going still to risk only 1% but with
potentially having the second position at a better price; the second position
will be added mainly as price goes against you but still won’t hit stop loss, you
will have potentially less risk and more reward, it requires experience.

You could possibly divide your entries also in other ways, for example in four
positions with 0.25% risk each but the best way is to start with only two
0.50% positions.
The most important thing to remember when it comes up to risk
management, the number one rule is: you have always to be ok with how
much you could possibly lose.

Cutting losses short

We are on the 30m timeframe, the trend is

bullish, we have formed a support after the
formation of a bullish candle that broke the high
of the previous one, the range is about 4o pips,
there are good chances for price to continue to
go up; lets see how we would manage this trade
based on the use of static and dynamic risk

























 1% ENTRY Static risk
In order to manage risk on a single 30m candle we
need to scale down on the 15m timeframe to
understand what’s happening; we entered the trade
at the previous break of the bearish candle with the
second 15m bullish candle. At this point instead of
going in our direction price starts to retrace and
-0.50% breaks the low of the second 15m candle, at this
point the trade remains valid because the low of the
SL first 15m candle that forms the 30m candle where
we put our SL remains inviolated BUT we must not
give the market the chance to fully take our loss so
at the break of that low we will close 0.50%.
By doing so our loss will be less than 1%, we are
managing risk.

Dynamic risk
+0.50% Basically with static risk we managed our position
while with dynamic risk we just enter. One position
at the close of the bullish candle or at the break of
the high of the previous bearish candle and another
position halfway if the price retraces like in this
+0.50% case. Normally its very rare that once price breaks
the low its able to turn around and go back up but
what we’re focusing now here is the risk.
SL

At the end of the day the most important thing is to accept our losses with a
solid trading plan. At the beginning it’s normal to focus on wins but we have
to concentrate on reduce our losses because that’s the only way we can make
money out of the market.
You can’t control the amount of money you’re going to win but you can
control the amount of money you’re going to lose.









































 2- MARKET STRUCTURE

How sessions influence timeframes

In this chapter we’re going to learn how sessions influence the timeframes,
when do the big candles form and in wich session.

Usually big candles form during the main sessions, the most volatile wich are
London open and NY open, this happens in the majority of the cases but as we
know in trading there is no 100%, sometimes they can also form outside of
the main sessions.
We will focus on how and when to catch the big candles.

A daily candle is formed of six different 4h candles, what you have to do is just
to focus on the 4h candle of your session wich should be between London and
New York, in other frames of the day statistically the candles that will form
are less volatile and much smaller.

5pm-9pm 9pm-1am 1am-5am 5am-9am 9am-1pm 1pm-5pm

PRE SMALL PRE PRE LONDON SMALL

ASIAN CANDLE LONDON NY CLOSE CANDLE

LONDON NY
OPEN

Zones & ranges

Before taking a trade we must always

measure the range, a range is measured by taking the distance between a
support and a resistance.
We have to remember that support and resistances are not a specific price but
a range of prices, so they won’t always be round prices like for example
164.500 but rather more casual price like 160.460., we don’t necessarily need
to focus on round numbers.

Resistance

40 PIPS RANGE

Support



















































































 A range is gonna tell you how much probability there will be to take a trade.
For example by trading a 10 pip range there is a very low probability to take a
good trade, while a good range should be at least of 20 25 pips.

So how does price behave when it approaches a zone rather than when it’s in a
range?

Example 1: price broke a resistance,

closed above so now we can consider the
previous resistance a new support, it
shoots straight up and closes in-between
the range, would it be a good idea to take
a trade if price now breaks the new high?
Absolutely not, the higher or lower price
goes after breaking a resistance or a
support the more probability there is for
price to come down and have a retest. The
probability to go up is very low and we
only want to take high probability trades.
Meanwhile the closer the candle is to
the zone the more probability there
is to leave that zone

Example 2: we are in a a downtrend and

price bounces back and forms a resistance
with the formation of a bearish candle, is
this confirmation enough to enter the
trade? It would be too risky, yes we are
near a zone but we should wait for a
proper confirmation wich would be the
break of the low of the bullish candle, we
will still be near the zone and that would
be the confirmation that price will start to
leave that area.
















































 In conclusion:

1- We have to identify the zones

2- We need a big range

3- The range shouldn’t be lower than 20 25 pips, the lower the range the
harder the trade

4- Only take trades when price is still near the zone

5- In order to make money we need to control our feelings and only take the
best opportunities, we need way more than 50% probability

A strong recommendation will always be to just watch for at least the first six
months how price reacts and behaves in proximity of a zone and to always
identify the range we’re in.

Fakeouts

Fakeouts are when price seems to go in a way after breaking a zone but
returns quickly back in the range trapping all the people who entered and
were expecting for price to continue in that direction.

Fakeouts normally happen after a long period of consolidation.

There is no way we can anticipate a takeout.











































 As we saw in this last example, when we see a rejection there may be a
possibility for price to have a retest and go further down, but when the price
will fake out instead, close back in the range, with enough range we can
consider a trade in the opposite direction.

If it closes in the middle of the range there is no trade to take, we should just
focus on trades near a zone.

We have to wait for candle to print something that we can recognize, there’s
always a probability for a setup to not play out no matter what the setup looks
like, this is the moment where you have to mitigate risk.

Trading the trend and counter trend

In this chapter you’re going to learn when and how to buy at support and sell
at resistance and when it’s the right case to take a counter trend trade.
With this concepts we are going to simplify your vision, market are just
complicate as you make them.

The basic idea is: to trade a bullish or a bearish trend, you wait for support or
resistance to form, ideally on the 30m and the 1h.

































 This is an example:
the trend is bullish, we are in pre NY session, could
we at this point take any sells after one bearish
candle?
Obviously no, one single candle that goes in the
opposite direction of our bias is not a reason to enter
a trade or to think that the trend is changing.

The right idea is always to wait for

support to form in a bullish trend and for
resistance to form in a bearish one; the
idea is to expect for a trending price to
retest its own highs and lows and we
should take advantage of this concept.

In this example we can observe the same

scenario as before but this time once
support was created with a bullish candle
price wasn’t able the break the high and
going in the opposite direction instead;
this could be a case were with the right
confluences we could take a counter trend
trade but we have always to pay attention
if there is enough range to take the trade.
There can be infinitely variations in the
market and that’s why we should remain
fluid and adapt on what’s happening.



























 The same concepts will be applied on a
bearish downtrend, price falls, retraces
and creates a resistance, at this point we
expect for price to break the low of the
bullish candle in order to have a high
probability setup and enter the trade.
Obviously we have always to consider all
the other confluences like volume,
timeframe and if there is enough range to
go down like in the bullish examples.

This is an example of when price is in a

downtrend, we are waiting for a
resistance to form in order to take a trade
at the break of the low to go down but
price isn’t able to break it and goes
instead in the opposite direction.
Resistance has been broken and if
volume, timeframe, enough range are all
in place we can consider this as a high
probability setup.

In conclusion, the main idea is to wait for candles to print to give you the right
idea.





















































 3- ADVANCED CONCEPTS

Impulse entries

Ideally, to enter a trade we wait for candles to close but sometimes price will
just continue to rally or to drop in our desired direction without us being in
that trade, missing it. This used to happen to a lot of us so how do we take
these trades using confirmations?

First of all always ask yourself: where could I have taken an entry here?

To get in this type of trend we need to know the types of candles and how they
close.

Candle closed bearish but

Candle closed bullish but there is no wick at the top
there is no wick at the top so there is no range to
so there is no range to continue down, the
continue up, the probability probability for a sell to
for a buy to play out would play out would be just a
be just a 50% 50%

Examples:

Here is an example of a bullish impulse entry, the trend is up,

we have created an exhaustion candle on a resistance wich is
a candle that has the wicks bigger than the body and we have
volume; when all this confluences are in place normally price
goes in the opposite direction of the big wick when we are in
a trend continuing in its direction, this happens usually 90%
SL of the time.
Whenever we have a candle that is about to break the lows or
the highs after a wick formed we could use a regular lot size
cause the probability of the trade to play out well is high.
If the wick is smaller instead we should use a smaller lot size
cause the probability decreases.

















































 Here is an example of a bearish impulse entry, the trend is
down, we have created an exhaustion candle on a support
SL and we have volume; when all this confluences are in place
normally price goes in the opposite direction of the big wick
when we are in a trend continuing in the trend direction, this
happens usually 90% of the time.
Whenever we have a candle that is about to break the lows or
the highs after a wick formed we could use a regular lot size
cause the probability of the trade to play out well is high.
If the wick is smaller instead we should use a
smaller lot size cause the probability decreases.

When we’re trading by using impulse entries we usually want for candles to
go down before we continue up in a bullish trend creating a wick; the same
concept applies when we’re in a bearish trend, we want the candle that breaks
to go up creating a wick before we continue downwards.
This movement usually allows price to breath and grab some liquidity to
eventually make a bigger move in our desired direction.

We have always to wait for the candle to form as we want it to form, there is
no rushing or hoping for trades to play out if there hasn’t even been a break
yet.

Impulse entries work perfectly on all timeframes, the higher the timeframe
the bigger the SL will be but we’ll also have a bigger move.

Other examples:

Here we have a different scenario, price comes up from

an uptrend, creates resistance but here we can see the
main difference rather than the first example: no major
wick has been created in the opposite direction, this
concept is extremely important and gives us a big
confluence, in this case the risk raises, price breaks all
the highs on the left and just shoots up without
creating any liquidity.
What do we do? We may feel frustrated cause we lose
the move but we could really do just two things:
1- let price just rally and watch it
2-enter the trade with the SL below the lows but with a
smaller risk because the probability is smaller.
No major wick
The same concept will be applied obviously if there’s
no wick at all.




























































 So could we at this point possibly buy at the
break of the high? No, we are to far away from
the zone, we’re in the middle of the range and
resistance has not been formed yet.

We have been patient, we’ve waited for resistance

to form and now we can possibly enter a trade at
the break of the high.
We have always to wait for something to
print that we understand.

Price created a resistance, we want to take a buy

because price is breaking the high on the left, stop
would be under the last bullish candle, would this
be a good idea? No, because there is still a big wick
on the left wich is part of the resistance. This trade
is too risky because as price rejected that certain
area in the past it could happen again in this
particular case.
















































 However, If price closes bullish breaking the
resistance there could be a possibility for price to
go up regardless the big wick on the left, we have
just to wait confirmations at this point, in this cases
it would be ideal to wait for a support to form.

The hardest thing about impulse entries is to just sit there and watch them as
they play out without us being in the trade, this is something we should learn
and have control of, there is no bad thing as not entering the trade and it is
essential in the beginning to watch price action play out for possibly take the
same trade another time as we should memorize the movements, always be
patient.
By following these rules and applying them this can get really easy.

In conclusion:

Impulse entries can be very hard because they can really test your psychology
and trigger your weak points, it can be hard sometimes to stay clear minded
while so much movements happen in such a small matter of time and this is
why it should be important to initially just sit, relax and observe how price
action develops in the first months.

Don’t think or have remorse on the trades you are missing or missed because
there’s nothing you can do about it, entering with such a nervous mental state
can be very dangerous, we have to remember that we are trading with real
money and have to be very careful about it.

Once we master our minds in a way that we just act based on the rules we’ve
learnt without trying or hoping this is where it all gets easier and we can take
advantage of these kind of setups.










































 Giving your trades a second chance

We are talking of giving a second chance to a trade when we take a trade but
this doesn’t plays out well and we close our position, after hitting our stop loss
price starts to go in our desired direction, if we have enough confluences,
follow our plan and we’re still in the daily risk percentage we could consider
another entry on the same trade giving it a second a chance.

Once we take a loss first of all we all have to think how we could’ve done
things in the right way, there’s always a way to take a second chance if price is
going in our way.

Also the main concept of giving trades a second chance is to not change our
bias after the loss. We may want to directly enter the trade in the opposite
way once we take the loss but this is the moment when we start to not follow
our plan and our emotions get over the control.
This behavior is psychologically damaging that’s why we must always stay
concentrated and not lose control of our actions.

EXAMPLES:

































 Adding risk back to your trade

We talk about adding risk back to a trade when we enter a trade, price makes
a movement that we don’t like or doesn’t makes sense based on our trading
plan so instead of closing the full position we close a partial position,
normally 50%.
At this point we are still in the trade with a part of our position but we want to
re enter with that 50% back if the opportunity presents and giving the trade a
second chance.
If we really pay attention on what the market is doing instead of getting upset
of our losing positions we can really minimize losses in a way that in the long
term they won’t bother us anymore.
This can be hard initially but this is what trading is about, being in control of
our actions and not follow the feelings or the emotions the market is giving
us; this behavior will reward you.























 EXAMPLES:





 These concepts all work, we just have from now on fully apply ourselves to put
them in action, it’s just a matter of following the rules and staying disciplined,
when we make a mistake or get too emotional we know we’re not doing the
right thing but instead we blame ourselves, the market, the system,
everything; trading is a business where someone can grow infinitely on the
inside, it teaches you to take full responsibility and to be accountable for your
own actions such as in life.

Losses will come regardless, our job is to review them, analyze them and we
will be surprised how many mistakes we can adjust, mistakes that maybe we
couldn’t see because we were too emotional in that moment but this practice
will bring us to full mind clarity during every trade session.