Trading Bible
Trading Bible
HOW TO BECOME
a better
TRADER
THE SECRETS BEHIND THE PSYCHOLOGY OF TRADING FROM A TO Z
We created this E-Book for our community because we can no longer stand by
and watch as so-called trading gurus sell their worthless trading courses, which
only enrich those gurus with money and not the buyers with real value.
This bible will help you stay on the right path in trading, boost your confidence,
and remind you of all the rules and tricks you need to follow while navigating the
markets.
Have you ever regretted not being able to travel back time and have all the
necessary information before you started trading?
This feeling is common among many traders, especially those who had to face tough
lessons on their journey.
But don‘t worry, because today you have the opportunity to gain valuable insights
that can help you navigate the complex world of trading with greater confidence and
clarity.
Every successful journey begins with a first step, and in the field of trading, this first
step often involves diving into fundamental knowledge.
So, if you are serious about improving your skills and mastering the art of trading,
it‘s time to roll up your sleeves, stay focused, and dive into the wealth of information
waiting for you.
What you will learn in this trading bible:
Mastering the knowledge from this guide will help you gain the skills and give you
the ability to independently identify and execute real trades with confidence in
profitability.
Of course, there‘s no other way to learn a functional strategy than through practice.
For this, you can use trading demo accounts, for example.
Always aim to evaluate the knowledge you‘ve gained and develop your own
functional strategy.
Test it retrospectively on charts. Also, test the strategies provided in this guide.
Through backtesting, you‘ll see that everything in this guide truly works and that
success depends solely on you, your emotions, and your risk management.
None of us are psychologists, but we have learned all of this over the months
and years of trading.
It is essential to discuss how to think, how to stay positive and confident, and
how to deal with challenges in trading.
And this includes not only the stress and emotions you encounter in this ZERO
SUM GAME
Trading psychology involves the emotions and mental state that help dictate
success or failure in trading. It encompasses the perceptions, attitudes, and feelings
that individuals bring to the decision-making process in trading.
From fear to greed, from impatience to excitement. Each emotion plays a crucial
role in the trading process.
Trading is not just about technical analysis and understanding market indicators; it
is also about understanding oneself and the ability to handle both winning and
losing trades effectively. This is where trading psychology comes into play.
Firstly, it helps traders manage their emotions. The market can evoke strong
emotional reactions in individuals.
If these emotions are not effectively managed, they can cloud judgment and lead
to poor trading decisions.
Secondly, trading psychology helps traders maintain discipline.
Trading is not just about making the right moves at the right time, but also about
consistency in trading and sticking to their trading plan.
A disciplined trader will adhere to their trading plan, resist the temptation to
engage in risky trades, and be patient enough to wait for the right opportunities.
Losses are part of the trading process, and how traders react to losses can
significantly impact their future and trading performance.
Some traders may become overly cautious after a loss, missing out on profitable
opportunities, while others may become reckless and try to „win back“ their
losses, often leading to further losses.
The ability to keep a cool head under pressure, maintain a clear mind during
exciting situations, and stay positive even after losses can significantly improve
your trading performance.
Let‘s talk about those days when „I‘m winning.“
As an example, let‘s say I close a trade at 15,000. I opened that trade at 10,000.
That means I‘ve made a nice profit of 5,000. But let me tell you, I act normally;
that 5,000 profit doesn‘t concern me. I practically live as if that trade never
happened.
After a few years in the market, I understand that this is how the game must be
played to „win“ it.
Every time I enter a new trade, I have one thing in mind: „Say goodbye to your
money.“
Thinking like this, I‘m okay with putting my money into the trade and I‘m okay
with potentially losing it even if the stop loss is hit.
Whenever you invest your money into a trade knowing you could lose it, you‘re
mentally okay. You see other opportunities in the market clearly, without stress, and
you‘re not tied to your emotions.
This gives you much more room to make decisions—deciding which trades to
take and which are too risky.
What I mean by all this is - don‘t invest what you can‘t afford to lose.
Thanks to my established strategy, I feel okay even when I‘m losing. I know my
strategy works because I‘ve backtested it through all those closed trades repeatedly.
I also know the success rate of trading according to my strategy, so when I‘m losing,
I understand that I‘m in that small percentage of losing trades phase.
After losing money, I don‘t immediately jump into another trade just to try to recover
those losses.
I strongly advise against doing that, under any circumstances! It‘s a very dangerous
phase.
Traders call this phase „revenge trading.“ Please avoid this specific emotion when
facing losses.
The market will inevitably present some opportunity to you sooner or later.
LET‘S LOOK AT THE BASICS
OF TRADING
FREQUENT QUESTION:
„WHERE AND HOW TO START TRADING!?“
ANSWER:
„AT THE VERY BASICS, THAT‘S CLEAR.“
START DRAWING
TREND LINES
(OR ENTIRE CHANNELS)
The less volatile the timeframe, the fewer fakeouts we‘ll see.
Larger timeframes are more precise and have more data.
EXAMPLE:
Lower High
Lower High
Lower High
Lower Low
Lower High
Lower High
Let‘s quickly look at this example, and I advise you to try drawing these trend lines on
your chart. Connect these „points“ together.
Draw a line connecting lower lows and a second trend line with higher highs.
Once we break this resistance, which is currently our lower highs, we have the
potential to see a changing market structure.
In this scenario, the price will move upwards.
EXAMPLE:
Higher Low
Higher Low
Higher Low
Let‘s try again, but from a different angle and scenario. The price is moving upwards.
How to „predict“ the upcoming change in price movement?
Again, draw a trend line connecting higher lows and higher highs.
Once the price breaks below this support level (the trend line of higher lows), the
market structure will change.
After this breakthrough, you can start selling or shorting your asset.
EXAMPLE:
Lower High
Lower High
Lower High
Lower High
Lower High
Lower High
Here‘s another example that‘s more technical. After the price breaks out of this
market structure (this channel), we have the potential to see an upward movement.
The red box represents a resistance level that was also broken because the
price respected it the most.
We broke it, retested it, and started moving upwards. At this red support
(previous resistance), you can start buying or going long on the asset.
EXAMPLE:
Higher High
Higher Low
Higher Low
Higher Low
Another trendline that was
broken. Start selling/shorting.
Higher Low
Perhaps this example may seem complex, but it isn‘t. Again, by connecting
higher lows and higher highs - there is potential for a decline.
We broke through the trend line and retested our previous support, which
has now become our resistance (this level was retested, even twice).
During these retests (marked with arrows), you can plan for selling or short
positions.
IDENTIFYING
SUPPORT & RESISTANCE
Support 3
Support 4
Price found support. Support was broken
Buyers feeling ok buying but we found another support.
at this level.
We always strive to identify support and resistance levels to clearly see where we
are, where we are heading, and what picture the market is painting for us.
In this example, you can clearly see where the price is most respected, where
we have been rejected, where we received support, and bounced back up.
Again, try to connect these points horizontally.
In the top right corner, we can see that by connecting trend lines, we have
created a bullish pattern!
EXAMPLE (XAU/USD 1W):
Do
wn
The trendline was broken.
Tre
d
en
Ready to short/sell.
nd
Tr
Up
S/R IVI
The concept of support and resistance involves levels where people tend to buy
and sell the most.
We can see that the sellers (bears) „prevailed“ (we‘ve been rejected three times
now).
We broke the trend line and are heading lower again.
Also, notice that we‘ve seen a higher low, indicating potential to retest this
trend line where our lows are connected, and potential to break this resistance
in the upcoming/near future.
COMMONLY USED
INDICATORS
Moving Averages:
These smooth price data to make trends easier to identify. One common type is
the Simple Moving Average (SMA) and the Exponential Moving Average (EMA).
They are useful for identifying trend changes but can lag behind current prices.
Bollinger Bands:
These consist of a middle band (SMA) and upper and lower bands based on price
volatility. When prices are at the upper band, it indicates overbought conditions,
and at the lower band, oversold conditions.
Stochastic Oscillator:
This measures the current price‘s position relative to its price range over a specific
period. It helps identify overbought or oversold conditions. Like other indicators,
it‘s not perfect and can provide false signals.
Volume:
Shows how much of an asset was traded during a given period. High volume
often accompanies strong price movements.
Ichimoku Cloud:
Displays resistance and support levels, trend direction, and momentum. It helps
identify trend reversals and supports trend-following strategies.
Remember, indicators are tools to help you analyze the market but are not crystal
balls. They cannot predict the future.
It‘s important to use them in conjunction with other forms of analysis, such as
chart patterns and market trends, to make informed trading decisions.
Price action analysis comes first - indicators come second.
LET‘S LOOK LITTLE BIT
DEEPER INTO TRADING
FREQUENT QUESTION:
„HOW TO GET BETTER IN TRADING!?“
ANSWER:
„BY PRACTICE, THAT‘S CLEAR.“
LET‘S GET INTO PRACTICE
STRUCTURE
& PRICE DELIVERY
Let‘s quickly look at this example and familiarize yourself with terms such as:
EXPANSION
RETRACEMENT
DAILY RANGE
HIGH DAILY
RANGE LOW
REVERSAL
EXPANSION:
Definition: The price retraces back into the created price range.
Context: After a strong expansion, the price often returns to „Fair Value Gaps“
(FVG) and Liquidity Voids“ (areas with a lack of liquidity)
Action: The price pulls back to one of the „DISCOUNT levels“ before starting the
next expansion.
REVERSAL:
Definition: The price reaches a certain level/area and moves in the opposite
direction.
Mechanism: For a reversal to occur, the price must first take liquidity (essentially
move below a level where people have set stop losses).
Action: Strong reversals indicate that liquidity has been exhausted (such as old
highs/lows), signaling a new direction.
IDENTIFICATION OF MARKET
STRUCTURE SHIFT (MSS)
What is a market structure shift (MSS), and how can we use it to our
advantage?
Together with everything you learn here, it is a very good way to predict
price direction and choose entry points, which many traders actually fail to use
correctly.
EXPANSION:
Run on Buyside Liquidity: The price takes liquidity, such as at an old high point.
Repricing Lower: After taking liquidity, the price sharply moves lower.
Be cautious of patterns that resemble MSS but occur in infavorable conditions or
lack confirmation.
COMMON PITFALLS AND SMT DIVERGENCE:
Common Pitfall:
False Reversal: Be cautious in situations where the price briefly reverses direction
but fails to sustain momentum, which can lead to a trap.
Understanding MSS is crucial for traders to avoid pifalls and accurately identify
changes in market structure.
COMMON PITFALLS AND SMT DIVERGENCE:
SMT divergence:
SMT divergence: MSS can occur after SMT divergence, where the price moves
contrary to the trend strenght of the currency.
Confirmation: Confirm MSS through multi-timeframe analysis.
LET‘S TAKE A LOOK AT
ORDERBLOCK/BREAKER
An order block is a price area where institutions or large market players opened
or closed significant positions, leading to a sharp price movement.
It represents the last significant candle (either up or down) before a rapid price
movement in the opposite direction.
WHAT IS ORDERBLOCK?
Characteristics:
Identified on the chart as the last significant candle before a sharp price
movement.
Often located in areas of high liquidity and may contain Far Value Gaps (FVG).
Trading Applications:
Order blocks are crucial for setting entry and exit points in trades.
They provide zones where price retracements can be expected, making them
suitable for placing stop-loss and take-profit levels.
WHAT IS ORDERBLOCK?
Notes:
Bullish Orderblock: +0B
Bearish Orderblock: -0B
Midpoint/Equilibrium: MT
Key Points:
Focus on the body of the candle, not the wicks.
The majority of volume is typically found in the candle body.
HIGH PROBABILITY ORDERBLOCK
A Breaker is a specific type of order block that initially was expected to be a turning
point but instead let to a significant price breakthrough. It was originally anticipated
to reverse the price direction, but the price broke through it and continued in the
opposite direction.
Characteristics:
Acts as the opposite of an order block where the anticipated price reaction was
reversed.
Often found in areas with high trading volume that were not respected by the market.
LET‘S TAKE A LOOK AT THE
CONCEPT OF LIQUIDITY
Liquidity refers to the speed at which an asset can be bought or sold in the
market without significantly affecting its price.
Most traders target liquidity above old highs and below old lows.
BUYSIDE LIQUIDITY:
Concept:
Price expands upward to trigger stop losses, allowing traders to sell at higher
prices.
Mechanism:
Opening long positions at resistance forces the price to push upward and capture
liquidity.
Using liquidity to close long positions and open short positions at higher prices.
LIQUIDITY RUN AND RETRACEMENT:
Scenario:
Price captures liquidity, breaks the structure, and then retraces.
Expectations:
If liquidity is taken before the retracement, expect a deeper and longer
retracement.
If not, expect a shorter retracement focused on the liquidity pull of a higher
timeframe.
HIGH RESISTANCE LIQUIDITY:
Scenario:
The market creates higher highs and higher lows after capturing selling liquidity.
Expectations:
The price is unlikely to drop below the major low due to resistance from bullish
order blocks and stops.
The longer the price stays in this area and forms clear movements, the less likely
it is to drop to the old low despite liquidity below it.
LOW RESISTANCE LIQUIDITY:
Trader‘s perspective:
The double bottom is seen as strong support, meaning that if the price falls to this
level, traders expect it to turn upwards.
Liquidity perspective:
Traders target liquidity placed below other traders‘ stop losses. This means that
if the price drops below the double bottom level, it could trigger traders‘ sell
stops, further strenghtening the price decline.
LIQUIDITY GAP / FVG
(FAIR VALUE GAP)
Liquidity void is a term used in trading to describe an area in the market with low
trading volume or limited number of buyers and sellers.
This area may be characterized by large price swings or difficulty in executing
trades without significant price impact.
LIQUIDITY VOID:
Magnet effect: These movements act as magnets and are often filled in the
future.
Fair valuation: Once the price begins trading within the established range and
fills the entire movement, it‘s called fair valuation.
LIQUIDITY VOID:
Trading implications:
Filling the liquidity void involves moving through it with little resistance until
the price reaches equilibrium and enters the opposite side of the trading
range.
After crossing equilibrium, the price seeks areas from which it can react,
such as Fair Value Gaps (FVG) or combinations of order blocks.
FAIR VALUE GAP:
Specific range in price delivery where there has been one-sided buying or selling,
creating a price vacuum.
Trading application:
Confluence: Fair Value Gaps (FVG) are crucial for identifying areas suitable for
entry positions and as target levels for partial profits
Institutional trading: FVG indicate where institutional trading occurred and
where imbalance aggressively moved the price in one direction.
ORDERBLOCK AND FVG COMBINATION:
Liquidity extraction: A sharp reversal leaving a Fair Value Gap (FVG) or Buyside
Imbalance Sellside Inefficiency (BISI) indicates an order block with a high probability.
Focus area: The lowest significant closed candle during a sharp movement
becomes a key area of interest.
HOW TO SCALP
IN ANY TIMEFRAME
The key to success, together with these types of indicators, is to capture profits as
quickly as possible, to be able to catch the smaller „fish,“ and to be patient
because the larger „fish“ come with the flow of money.
Again, after reading this ebook, do your own research by backtesting this strategy
so that you can start understanding it through practice. Although I tell you it
works on any timeframe, remember that the smaller the timeframe, the greater
the volatility you will encounter, so you might want to try these swings on 15-30
minute timeframes and larger ones.
Just like with price action patterns, we need to wait for money flow and
momentum waves to create a perfect market structure before confidently
entering this trade. You‘ll see what I mean in a few seconds.
It‘s the most powerful tool I use on my charts in TradingView. I can truly say that
this indicator paints a complete picture of what‘s currently happening in the
market.
For instance, if the price is rising but all momentum waves are trending
downwards and money flow is declining, it suggests a high probability of an
upcoming downward movement.
Conversely, if we see the opposite — prices are falling but these indicator inputs
are rising — it indicates a potential upcoming upward price movement.
WHAT TO WATCH OUT FOR:
Bear Bea
ish D rish
iverg Volume Goes Down Dive
ence rge
nce
Volume Goes Down
Volume Goes Up
Another pump, because Volume drom the
ence
Bullish Diverg positive phase has another bullish divergence.
Bottom Phase Top Phase Another Top Phase
As beginners, try to identify these ‚bumps‘ that transition from decline to rise and
from rise to decline. Try to connect all the points, as I showed you in the section on
trend lines.
The best conditions for entering a long/buy position are when the money flow is in
red, but these momentum waves are trending upwards.
The best conditions for entering a short/sell position are when the money flow is in
green (or gray) and all momentum waves are trending downwards.“
EXAMPLES OF WHEN TO GO LONG AND WHEN TO GO SHORT:
Be
aris
hd
Bearish divergence Bearish divergence ive
1 2 rge
nce
3
Look at how steadily the price continues to rise. Now, look at the momentum waves
and money flow. Momentum waves are declining, money is leaving the market.
That‘s what creates divergence on the charts.
This should be your secret weapon against all other traders, this is your advantage.
In these cases, you open your short/sell (or long/buy) positions earlier than other
traders.
Just note that red dots represent crosses for potential declines, and white dots
represent crosses for growth.“
ANOTHER EXAMPLE:
Confirmation 1 Confirmation 2
Potential profts
that need to be
secured.
Bearis
h Dive
rgenc
e
Potential Top
How could the peak of BTC during the bull run and subsequent dump be predicted?
Look at those momentum waves and examine the money flow. When Bitcoin was at
$52,000, it had a greater money flow compared to the price range of $64,000 to
$69,000.
I wouldn‘t short here for sure, but I would definitely be selling bags. Reflect on this
illustration for a moment.
When reaching the final pages of our trading bible, we want to thank you for
embarking on this educational journey with us.
It has been our pleasure to guide you through the intricate world of trading, and we
hope you have found the information on these pages insightful and valuable.
Trading can be an exciting and potentially lucrative pursuit, but it‘s important to
recognize that it also comes with risks. The knowledge you have gained here is a
valuable tool, but it should always be used responsibly.
Remember, successful trading doesn‘t mean getting rich overnight. It‘s about
continuous learning, discipline, risk management, and the ability to adapt to
changing market conditions.
The journey to becoming a seasoned trader is ongoing, and we recommend that you
stay informed and never stop learning.
Always approach the markets with caution and respect for potential risks.
BUT THAT‘S NOT ALL, YOU CAN FIND MORE VALUABLE CONTENT IN OUR
COMMUNITY.