Market Structure Concepts and Trading Principles

Vocabulary flashcards covering core market structure concepts, trend identification, internal structure, CHoCH, and premium/discount pricing.

Market Structure

The framework that shows how price is moving, including whether it is trending, ranging, or changing direction.

Trending / Imbalanced Market

One of the two main states of market structure, characterized by directional price movement made up of key high and low swing points.

Ranging / Balanced Market

One of the two main states of market structure where buyers and sellers are in agreeance, keeping price rotational between boundaries.

Swing Points

Key highs and lows, identified specifically as Swing High and Swing Low, that form an uptrend or downtrend.

Uptrend Structure

A market structure in which the market displays higher highs and higher lows.

Downtrend Structure

A market structure in which the market displays lower lows and lower highs.

Trend Change

A market direction shift that occurs only once a key Swing is broken in the opposite direction, such as when an uptrend making higher highs and higher lows makes a lower low.

Internal Structure

Smaller, lower time frame price movement inside of the higher time frame (HTF) trend, representing micro price behavior inside a macro trend.

Change of Character (CHoCH)

A condition where internal structure goes from making lower lows to making higher highs, or vice versa, acting as a potential indication that momentum is shifting at key contextual levels.

Equilibrium

The $50\%$ ($0.5$) point between Swings used to understand where price is and how cheap or expensive it is relative to the range.

Premium Pricing

Pricing located above the $0.5$ equilibrium point between Swings, where traders look for shorts in a downtrending market.

Discount Pricing

Pricing located below the $0.5$ equilibrium point between Swings, where traders look for longs in an uptrending market.

Range High and Range Low

The identified boundary highs and lows that define a ranging market and between which price frequently stays rotational.