Transcription
Hello everyone, this is Mr. Topad. I'm over here today to explain to you what the Strat is.
Now, the Strat is created by Rob Smith, a former floor trader with 20-plus years of experience. It relies on price action and time frame analysis and plays with the trend, not against it. So, one thing you need to familiarize yourself with is what the C-STI formations are. So, as you need to learn the bodies, the highs, and the lows, the open, and the close of each body, and familiarize yourself with what a bullish candle is and what a bearish candle is.
After you familiarize yourself with that, you go ahead and you learn the types of candles, which you have the doji, which represents indecision between buyers and sellers. You have the hammer, which represents bullish pressure, and you have a shooter. A shooter represents bearish pressure. So, that means the sellers are in control, the buyers are in control, no one is in control. Once you learn these three, you will then be able to watch the candlesticks as you go to learn what is going on when you are reading a chart.
So, as you can see here, we have a couple of these uh hammers and uh shooters as well. Um, and once you understand the candles and the bodies, then you will know exactly how to use the Strat. So, I'll dig deeper into that in another video. But as for now, if you know what's going on with the candlesticks, we now want to teach you what the STRAT numbers are.
Now, as you can see here, we have the twos, the ones, and the threes. So, there's one, two, and three. A one bar is called the inside bar. This fails to break the high or low of the previous candle. It represents consolidation. Now, you have a two bar, and it's a directional bar. This breaks the high or the low of the previous candle, which represents directional movement. So, as you can see here, this is a two because it broke above the candle. So, it's two. That means it's inside the body and outside the body. So, that's a two. And then you have a three. A three indicates that it was inside the body, below the body, and above the body, if that makes sense. So, then we would have to sit here and understand what kind of bodies we are looking for and what kind of patterns we are looking for.
So, I want to go ahead and direct you guys right over here into this area. So, so as you can see here, we had a 212 up. So, what is a 212 up? A 212 is we had a lower two, we had a one bar, which means it stayed inside of the previous bar, and then we had a two up, which indicates that we are in a bullish trend. So, what 212 up means it's bullish, and a 212 down would indicate a bearish pattern.
So, once we see that we got a two bar, let's say right now we are in the obviously in a four-hour, but let's say you are day trading in a five-minute or a fifteen-minute, you want to wait until this bar goes ahead and reaches the top of the one. So, as you can see here, the wick on the one, you want to wait till this bar went down and reached right back up to here, and this is where you want to take entry. So, I'm going to go ahead and say entry. Go ahead and take this out. So, this is our entry.
So, how, how do you, you know, analyze and say, okay, where's my stop size or uh, stop loss, and what's my price target? So, your stop loss would be at the previous candle from this two that was up. Your your stop loss would be right over in this candle, or it could be on this other candle two to the left. So, it can be a stop loss here, or a stop loss here. It's up to you. It's on your reference, how much you're willing to lose. I personally like to go over here just because if it does change its mind over here and goes down and becomes a three, then at least we'll get out at a very small stop loss. So, I'm going to set my stop loss over here. My price target during this situation would be the previous candle as well. So, it would be right over here. So, this would be my price target. I'm going to go ahead and call this price target one. This would be my price target. My second price target would be the candle previous to that, which would be my ultimate price target high. So, I'm going to go ahead and say PT2.
So, now we have our entry, our stop loss, our first price target, and our second price target. And once we go up, you know, obviously it can continue to keep going. And as you can see here, it became a two up, two up, two up, two up, two up, two up all the way. We could have continued this because there was, there's no indication of an inside bar or a two and a two. As you see here, a two and a two down, all of this could have been kept going up. We could have taken these price targets, maybe held a few cons if you're doing futures or uh, a few contracts and options, you could have kept holding this until you saw any reversal uh indications, as we saw around this area.
So, as you can see here, we had the 212 bullish reversal. This was a two bar, a one bar, and a two up. As you can see here, we had a two bar, a one bar, and a two up. So, this is one uh, one way of identifying a bullish reversal. And if you know, if you go ahead and look into the Strat book that I'll put the link to on here, or you can just message me and I'll send it over to you, we have 212 bearish continuation, 22 bullish continuation, 322 bearish. We have a lot of different patterns.
Now, once you learn all these patterns and keep these in mind and keep them next to you while you're trading at the same time, you'll start to understand and learn what a 22 up is and what a 22 down is, as you can see here. And and you can see that in here, as we had a two, two down, down, continue to another two down, a two down, and then we got a three. Now, once we got a three, we got to see where the next bar is, and it became a two down. The next bar was a two up. The next bar was a two up, and then we had an uncertainty, which was an inside bar. So, all of these things uh, to put in mind work out for us almost, I want to say 85 to 90% of the time. Now, are these going to work all the time? No, but 80% to 90% is great, and I've been using this for a very, very long time.
If we can go ahead and look into the five minutes, let's say right here, we're in the mini uh NQ, as you can see here. If we open these up, once we open these bars up, we can kind of see a trend, you know, when when it happens over here. We had a 212. So, a 21, we could have entered here, got all this money right here. This was would have been our price target, price target two. And then we had a two, two up, and then another two up. Then we had a 212 down, that's another price target, as I said, you always want to make, set your price target at the prior level. And then we had another two, two, another two, two up, and then we had a two. But we also had the doji, which which means uncertainty on where this candle wants to go. Now, once we got a two on the next candle, we'd wait to see what the next candle does. And then right when we hit the two over here, this is when we would enter on the second candle. And then two again, two again, two again, two again, another doji star, and then we got a green up. As you can see, these patterns is all you need for the STRAT to work.
And um, once you understand and learn exactly what each STRAT does, the two two ups and the two two downs and 312 down and 312 up, then there's no telling how much confidence that you'll have when you're trying to enter a play on a daily basis, whether it's you're trying to take something in a long term, because as you can see when we went to the four hours, you know, these these indicate longer time frames. As you see here, we have a 222 bearish frame.
Now, you can add this to your uh, to your TradingView. As you can see here, this is called the Strat Assistant. All you really have to do is go into the indicator, go to Strat Assistant, and you'll see the Strat Assistant over here by Ricky Carol. Once you turn that on, all these settings are set up. You can change them and change the colors as you please. But have fun with it. If you have any questions, please uh, place them in the comments, and I'll try to reply to you all. Um, thank you for watching, and I'll try to make some more videos later in the future. Thank you.