Trading Lecture Notes Review

Question-and-answer flashcards covering candlesticks, discipline, trends, Break of Structure, liquidity, risk management, Fair Value Gaps, news, and order blocks for day-trading review.

What do candlesticks visually represent on a price chart?

Price movement shown through a candle’s body and wicks.

Why are candles called “candlesticks”?

Because they leave wicks that resemble those of real candles.

Which color candlestick generally signals bullish price movement?

Green (also called a bullish candle).

In a 5-minute chart, what does a single candlestick represent?

Five minutes of price action from open to close.

On a bullish candle, which part of the body marks the closing price?

The top of the body.

What does a long wick usually indicate about market momentum?

A loss of momentum or rejection from that price level.

What is a Doji and what does it typically indicate?

A candle with a small body (often long wicks) showing market indecision.

Why should traders wait for a candle to close before acting?

A forming candle can change; confirmation comes only after the close.

Describe a strong bullish candle according to the notes.

Large body, small upper wick, and a long lower wick showing strong downward rejection.

What daily exercise was suggested to improve candlestick reading skills?

Predict how price will react based on the candle knowledge learned.

What is a key method for developing discipline?

Create and complete an uncomfortable but beneficial daily habit.

How long to build a habit versus fully ingrain it, per the notes?

21 days to build, ~60 days to truly fulfill and enjoy it.

When motivation fades, what trait should remain?

Discipline.

Define an uptrend in market structure.

A series of higher highs and higher lows.

Define a downtrend in market structure.

A series of lower highs and lower lows.

What constitutes a Break of Structure (BoS) to the upside?

A candle close above a recent high.

What signals a BoS to the downside?

A candle close below a recent low.

Where are liquidity pools typically located?

Above swing highs and below swing lows.

Why do institutions target liquidity zones?

They need large volumes for entering or exiting positions.

What often happens after a liquidity sweep?

Price frequently reverses direction.

Why must traders still wait for confirmation after a liquidity sweep?

Spotting liquidity alone isn’t an entry; confluence is needed.

In an uptrend, what can taking out a previous high signal?

A liquidity sweep that may precede a downward reversal.

What outlook should traders have toward taking losses?

View losses as learning opportunities without emotional reaction.

What is the recommended maximum risk per trade?

1–2 % of account equity.

What is a Fair Value Gap (FVG)?

A 3-candle imbalance where price moved quickly, leaving few opposing orders.

Why is an FVG important for traders?

Price often retraces to fill the imbalance, offering entry opportunities.

List the basic steps to trade an FVG setup.

Identify FVG → wait for revisit → watch reaction → drop to lower TF → look for BoS → enter with confirmation.

Why can trade execution be emotionally dangerous?

It releases dopamine, encouraging impulsive decisions (FOMO).

What’s the recommended approach to avoid FOMO?

Trade only when all criteria in your plan are met.

Which major economic releases should traders generally avoid?

CPI, PPI, FOMC, and NFP announcements.

If DXY (Dollar Index) rises, what usually happens to assets like gold or GBPUSD?

They tend to decline because a stronger dollar pressures other assets.

What is an Order Block (OB)?

A price zone where many orders filled before a BoS/liquidity sweep; price often revisits it.

How many valid order blocks typically exist per trend direction?

Usually one main order block per trend direction.

What is the recommended sequence for trading a pullback into an Order Block?

Price revisits OB → wait for lower-timeframe BoS → execute entry.

What makes a single candle a valid order block?

It sweeps liquidity and immediately causes a Break of Structure.

Why are Order Blocks favored over chasing breakouts?

They give high-precision pullback entries with better risk-to-reward.

What principle turns trading mistakes into positives?

Treating mistakes as tuition and journaling to improve.

What exercise was assigned to build patience and discipline?

Sit in a dark, silent room for 30 minutes without moving (meditation).

How is a bullish FVG measured?

From the top wick of the 1st candle to the bottom wick of the 3rd when no overlap exists.

Which factors create stronger FVG trade setups?

Confluence of liquidity sweep, BoS, and lower-timeframe confirmation.