Transcription
All right, welcome, internet. I'm going to give it about five minutes or so. Just waiting for some people to come in, and I just start a minute early, so, you know, we'll just give it some time. In the meantime, let me get everything situated. For those who are watching the replay, I'm going to make like little chapters so you can just skip where I put "session start," just so you're not waiting five minutes and just watching me look at a [Music] screen.
All right, let's share my screen. For whoever's in here, let me know if you can hear me and let me know if you can see my screen as well. Hey, Irn, how are you? I think it's Irwin. Should be Irwin. I think your username is just different here on YouTube. We'll give it a few minutes for people to come in, so we'll just hang out in the meantime. Oh man, while we wait for people to come in, I'm gonna look for random skins. Let's look for swing setups. I haven't looked for any swing setups in a while. Let's see. Double inside on the four-hour Carvana. Interesting. Yeah, I had a feeling it was you from yesterday when you mentioned the Tesla trade and we spoke about that in the morning, so I just put two and two together. Inside on the daily, huh? This might be a little off. Let's look for three ones. This is on the four-hour Carvana. Carvana's $106. Sheesh, that thing was like $5 a year and change ago. Wild. Hold on, let's look at this chart. Yeah, that's right. I forgot you're in Japan. Yeah, I'll go long above this level. Let's go to the, let's put it on here. $6 ATR. Interesting. Nice. Have you ever been to New York? If you have, how does the subway in Japan compare to New York? For, yeah, it'd be the same stop loss. Yeah, I can definitely imagine the one in Japan being a little better.
All right, let's see if you can hit that like button. That would be fantastic. All right, so welcome everybody. For those who aren't here, you'll catch the replay after this, of course. I prefer you guys to be here live. Um, I do apologize since I made this kind of last minute in the last two hours. I usually plan these things a day or two ahead of time. Uh, but as always, you know, my name is Advent. We're going to be going over broadening formations, what they are, how to draw them, uh, you know, how they can help us, so on and so forth. Um, as always, I'm not a financial advisor. Everything that you see on my channel and everything that I say is only for educational purposes. It is not financial advice. Trading does have its risks, so please do your research before engaging in trading. Cool. So that out the way, let's get started.
What are broadening formations? Let's turn all this off and let's expand this so we can all see a big screen. So broadening formations, before I get started, is support and resistance for Strat users. Um, it was the Strat was created by Rob Smith, and he's, he always mentioned that, you know, price doesn't move in a straight line, right? Or price doesn't stop in a straight line. It kind of, uh, stops a little below or a little above a specific level. For example, um, let's say, well, this is actually hilarious because it did stop in a straight line here, but we'll get more examples. So in this case here, um, while the price doesn't stop exactly at this level, it stopped a little higher and then it got rejected, right? So instead of price stopping at a straight line, it'll be at a more of a diagonal line, which is where broadening formations come into play. So let's say, for an example, I had, uh, actually, let's not do that one. That one's a little wide. So let's say here, for example, and let me just do this line real quick. So as we can see, you know, price generally, it'll wick off of broadening information. The wick will be a little less, sometimes, sometimes it'll be a little longer, and we'll go over some more examples when I started drawing them and showing you guys different examples. But, you know, like Rob, like Rob mentions, price doesn't stop at a straight line. It'll stop at more of a diagonal, uh, fashion. In this case, with this lower BF being drawn, um, you know, where, uh, price is, while still being bought up in this area, it's not stopping in a straight line, as we can see with this horizontal line compared to the BF line. And even in the later candles, we still get these bounces off of the broadening information level until it breaks through it. So, uh, what broadening formations are, like I mentioned earlier, their support and resistance levels for Strat users. I'll post a, a link on the Strat overview in the description of this. Uh, but essentially, broadening formations are telling us where price wants to go. So let's say, for example, I have them drawn on Apple. So what broadening formations do is they're telling us, similar to support and resistance, is where price is going, right? So let's say if we're breaking through a level or we're bouncing off a level. In the sense of a lower broadening information or BF for short, it's letting us know that if we're breaking through this level or we're bouncing off of it, price wants to head to the next broadening information level, which is here. Or let's say, for example, um, in this case, every time Apple got around this broadening information, it kept on getting rejected and heading to the lower ones. And then it, it bounced off this level, went to this level, broke above it, and hit these over here, so on and so forth, at X, Y, and Z. Now, of course, sometimes you get something like this. We get a big gap up and it reverses near a broadening information level. It's not guaranteed to come back to the bottom, but we see a little pullback and then it continues heading higher until it hit this level and then it broke through it. Broke through this level with a big candle, came back down, broke through, so on and so forth, kind of just bounced in that area for a bit until it kept on going higher, which is where we're at now. So I'll show you an example with Tesla that has been a little annoying since I trade that daily. Tesla has been trading in this broadening formation range back and forth. Every time it hits this level, comes down, and then just bounces back and forth between this level here. Now, something to note is that for broadening formations, they're expanding the range. Meaning, let's go to the daily real quick. If you're drawing your broadening formations and they look like this, you're drawing them correctly. You know, remember, it's broadening, it's expanding the range. If you do something like this, for the sake of the conversation, that's more of like a trend line, which of course broadening formations are trend lines, but not in the conventional sense. So if you draw them like this, where the bottom BF is angled upwards, that's incorrect. If you draw the top one and it's angled downward, that is also incorrect. So remember, they're going to be expanding the range like this. Is that making sense? Any questions? And any questions that come up, feel free to type it in the chat. I have my other screen up here so I can see it a little better and not get too sucked into the chart. But so far, making sense? Any questions?
All right, no questions. So I'll first go over how to draw them on TradingView, and then I'll go into Thinkorswim. Now, something to note when we're drawing our broadening formations, we're going to go all the way from the yearly all the way down to the daily. I used to draw it on the four-hour all the way down to the four-hour, but I stopped doing that. Um, being transparent because I'm lazy and, and, you know, to me, the daily works just fine, but you can definitely go down to the four-hour if you would like. Um, so what we're going to be doing is we're going to be looking for three candles. Three candles are broadening formations on lower time frames, and I'll explain what that means before I continue. So if I, let's say, draw this here, and then I draw this there, this broadening formation is done. I've already finished drawing this one. So this is on the daily time frame. If I go to the 15-minute and let's say I zoom out, we can see that price is just bouncing off of these levels here, so on and so forth, and then it heads higher, gets rejected, X, Y, Z. So that's what I mean by it's a broadening formation on a lower time frame. Cool. While of course, you can draw your broadening formations off of two candles, um, I just prefer to draw them off of three. That's how I was taught, and it's just simpler because with, you know, this right, like right here could be a broadening formation. Uh, what would the low here be? So that could be a broadening formation right there if I wanted to draw it like that, or if you wanted to, you could draw it like this. You know, different, different ways of doing it. But to me, three candles, since they're broadening formations on lower time frames anyway, it only makes sense to do so.
How far back do you want to go to? Or how far back do you draw them? Great question. We'll go over that in a bit when I go over how to draw them. So when it goes over, when it's, you know, when we're going over how to draw them, we're going to find our three candles and we're going to get our, uh, ray tool on. Excuse me. We're going to get our ray tool on TradingView, which right under the, on the left side, is the second tool. It's going to be the ray. Make sure that when you're drawing them, this little magnet tool, if you're using a Mac computer, you can hold down left command to turn it on, or if you're using Windows, I think it's, uh, left control or left Alt, one of those. I forget. Um, so you're going to take your first level and you're going to remember, you're going to snap it. You're going to turn on the magnet, um, tool while you're drawing it on the ray tool, and you're going to snap it to the top of the wick. Let's just find the highest high in the range of the three, which is this candle. And then let's find the lowest low in the range of the three, which is going to be this candle here. Now, what does it mean when I say the lowest low in the range of the three or the highest high in the range of the three? What that means is, and you can use a horizontal line to, uh, make it easier to understand. So if I snap this to the top of this wick, and then I snap this at the bottom of the wick for the top, any candle that's above this level, I'm not even going to look at because it's, it's not in, it's not within the range of the three. So I'm going to ignore that. So what I'm going to be looking for is the highest high or the highest candle in the range of the three behind it. So if I zoom in a little bit, we can see that this candle right here is the highest of any of the candles. If I go left on SPY, there aren't any other higher highs here within the range of the three. So I'm going to get my ray tool, going to snap it here, and then going to connect it to the top of the wick, and then there's my top broadening information drawn for that candle. Now, for, uh, the bottom, same thing. I know in one of my videos I mentioned that you can draw it from the candle right before it, but, you know, sometimes you'll get something like this. It's just like almost a straight line down, which to me is useless. Um, you can do that if you want to, but again, I was taught to just draw from the lowest low in the range, which would be right here, and then right there. Did that make sense how I drew that and why I drew it where I drew? Cool. Now let's get rid of this.
Now, since I'm a little lazy and don't want to type it all out again, give me one second. I'll write down exactly what we'll do for broadening formations and how back, how far back to draw them. Uh, let me just find my notes real quick. Give me a sec here. We go. All right, broadening formation guidelines. For those who are watching the replay, you can, um, you can just pause it. Let me just get this so it makes sense for you guys. Cool. So these are the broadening information guidelines from the yearly all the way down to the monthly time frames. I'm going to draw every single broadening information, every single three-candle that I can find. Uh, for the weekly, I usually go back two to three years. Uh, you can go back one to two years, uh, but I find two to three years, uh, good. For the daily, I usually do six months back, but you can start off with like one or two months. And again, like I mentioned, while you can draw them on the four-hour, um, I don't really bother with anything under the daily since I want the strongest levels. You can draw your BFs on like the one-hour, the two-hour, whatever you want, but they're not going to be as strong as the higher time frames. And the higher the time frame, the, uh, stronger, uh, the move or the rejection may be. So something to keep in mind of.
Now, when we draw our broadening formations, and let's say we get a rejection off it or a bounce off it, we don't delete them. We keep them there forever. So what I do is, let's say, for example, if I just drew this one and nothing to the right exists after over the weekend, I'll just go on the chart, I'll be like, all right, cool, a new broadening information or a new three-candle has printed. Let me draw the new one. And then what's the lowest low here? This candle. All right, cool. So I drew the new broadening information off that level. And then the same thing for this one here. And then I'm done. That's it. Also, make sure to save your chart after you, um, finish drawing your BFs because I spent one hour and a half drawing Apple broadening formations, forgot to save it, and I guess my TradingView glitched and they were all gone. So that was annoying. So make sure to save your chart. It, it autosaves, but you still want to manually save it just in case. So again, this is the, the BF guideline. If you're watching in the replay, just pause it. You can just write down those notes yourself wherever you guys want to write it down and go from there.
Now, something to note for those of you who use Thinkorswim, if you can do this, please let me know. I haven't figured it out, but what I love about TradingView is that I can organize my drawings a lot, a lot easier than Thinkorswim. Again, it might be possible, I just don't know how to do it. So if you do know how, please let me know in the comments or just hit me up on the side. I will greatly appreciate it. So for those who use TradingView, on the right side, in your, um, I don't know what this bar is, but the, the tools that you have on the right side, there's going to be one that looks like a box like this. Um, you're going to, this is the object tree. So you can open that up and you can make folders to organize things. So on the daily, also, I forgot to mention earlier, when I'm drawing my BFs, as soon as I draw one, I'm just going to type in the box, and that's not what I want in there. I'm going to draw in the box and the title of that, uh, drawing, so I know what broadening information that is because I draw them all with the same color. There's people who draw them with different colors so they can know what, uh, time frame it's on. To me, using different colors just makes it confusing to me, which is a little ironic after I show you what it looks like when you're done drawing them, but we'll go over that later. Um, so as soon as I'm finished drawing them, I immediately, uh, type in the time frame that I drew it on because what you don't want is to have a bunch of lines that you don't know what time frame they're on. And then what you can do is once you draw them, uh, you can choose, you can select like one of the lines and then go up here in the little folder icon and create a group, and then you can double-click or right-click and then you can rename it. So this is daily. So now I have all my daily broadening formations in one folder, and I can turn them off really quickly at the same time. Be sure to lock your drawings so you don't move them around by mistake. So that definitely helps a lot. So something to keep in mind of. Again, if you can do this on Thinkorswim, please let me know because I don't know how. I would greatly appreciate that.
So, for example, on Bitcoin, I have them drawn. I only really swing Bitcoin, I don't really day trade it, so I only went down to the weekly. But the weekly, I went back like four or five years just so I can get some more levels. Now, when you're done drawing your BFs, they, your chart should look like this. If your chart looks like this, you're drawing correctly. Now, something to note, while it does look crazy when you go on a lower time frame, let's say like the 30-minute, as we have here, you can see it's, it's a little more relaxed. You know, we just have a few lines, they're not everywhere. And if you're going to be zooming in, you know, we only have like one on the chart. So something to keep in mind there. Cool.
If the higher high is three and three, read that. Hold on. Like, little heart thing that's in the way of. Can I move this? That's annoying. Hold on. If the higher high is three and three, that is. So if you're asking if there's a three and then the, then, all right, so let's say, for example, there's two three candles. If the three that were connecting it to, if that previous high is another three candle, if we should connect it to that high as well? Is that what you mean, everyone? Yeah, so it doesn't matter what candle it is. It could be a three, a one, a two. It doesn't matter as long as it's the highest high in the. Oh, perfect. And almost a perfect example. So let's pretend this two-candle here doesn't exist, and this was the high, and then this was the next high. Three to three candle. So you can do that if, again, assuming this was the highest high. Let's pretend this two-candle doesn't exist. So it doesn't matter what candle you draw it from. It just has to be the highest high or the lowest low. Cool.
Now, how can we use? Before I go into that, let's go to Tra, uh, Thinkorswim. And let's go to SPY since I don't have any drawn there, and we're already on the SPY chart anyway. So I'm thinking what I might do it a little differently where I just, I kind of do it backwards, just the way my drawing tool is set. Uh, so I just have it set to, oh, something to note before you start drawing, where it says snap drawings, make sure it's set to "all" or "candle" so it can snap to the candles or the wicks. And another thing, when we're drawing these, we do not use extended hours. We're using regular trading hours. So remember, keep that in mind. So on Thinkorswim, I kind of do it backwards where I get the, the three, and then I connect the highest high. So I have like the lines facing this way and onto the upside. But you can easily edit that and just turn the left extension off, hit okay, and then you can just draw it how I showed on TradingView. So you go, you know, you'll go, uh, left to, well, whoops, you'll go left to right instead, and then it'll just be showing one direction. However you want to do it, that's fine. So after I draw my BF on Thinkorswim, similar to TradingView, I edit. I go to edit, and then I name the broadening formation so it doesn't get lost. So this is the four-hour BF. So when I highlight over it, I know what time frame that was drawn on, so it's not just a trend line being vague. Um, like for Tesla, for example, I have all of them drawn here. This lower one is a monthly broadening formation. This higher one is a weekly broadening formation, and so on and so forth. So I know what they are when, when it's approaching that level.
Now, how can we take trades off of broadening formations? Again, we want to take the highest probability trades, especially if we're going to be going off of, um, if we're going to be going off of, uh, against time continuity, which I'll make a video this week since I haven't done one yet. But like I mentioned, you know, we get the move up, price rejected and reversed off of this level. It came off to this level, kept on going up again, rejected off of this level, and now we're kind of just hanging out. So we're either going to head back down to this level if it triggers a short, or we're going to try to hit this level again up here if it triggers long. But again, we'll have to wait and see. Now, a pretty straightforward when we're taking trades off of it, we're just going to look for reversals off of broadening formations. So in this case, with Nvidia on what was this Thursday? On Thursday, if you had your broadening information drawn, you could have taken this 22 reversal off the 15-minute time frame, and you would have caught this entire candle. That was what, 12:32 all the way to 11:84? That's what, almost 50 points, 48 points in 15 minutes. That's fantastic. Now, of course, that doesn't always happen. Like, for example, a trade that I took, I think was last week or two weeks ago. On one of the trade recaps, I go over it. So right here, I took this trade. So we were short that day. I missed the initial entry because I was trading Tesla, but I took the two down, two up bullish reversal, and I took this two up. I entered in right here, and for Nvidia, I take profit every five points that it moves in my favor. So I got in as soon as it broke above, uh, 1095.33, and I trailed my position when it hit 1133, and this candle went 1101, and then it reversed and it stopped me out and kept on going lower. So that's how you can, uh, take trades off of broadening formations. And again, you want to draw them because if you're just taking reversals in the middle of nowhere, while of course you can take actionable signals like we have, like kind of like a hand gesture here, you could take that back up, but again, you want to get the highest probability reversals, uh, which can be off of broadening formations or if it's like off a TTO and stuff like that. Is all that making sense? Any questions?
Cool. I guess it, uh, made sense. Um, anything else for broadening formations? Um, I think that's pretty much it, um, from what, from what I can think of. Um, is everybody clear, at least the ones that were here from the beginning, how we draw them, why we draw them, and what they mean? Cool. All right, uh, that's pretty much all I have, um, for, uh, broadening formations. Again, you know, if you're in the Discord, just be sure to, um, I have the entire Strat section here, so please be sure to check all of it out. Again, everything for the Strat is here. Please study it. You have all of the resources for you. And again, if you're going to be, if you're new to the Strat, please be sure to, um, paper trade until you get used to it. Don't use your real money as you're learning something new. That doesn't make sense. Um, you know, you're, it doesn't make sense to give money to the market when you're still learning something. Now, after you're comfortable with it, then yeah, you know, you can definitely go in and, um, you know, use your live money or whatever you want to do. But again, that's what I would do. I would paper trade it. That's what I did when I first learned the Strat. Paper traded it for a month. It made a lot of sense. I went live, and it's been great ever since. That was two years ago.
The horizontal lines on top and bottom of the three candles helped a lot with understanding. Sweet. Yeah, that helped me a lot to like, really understand. All right, any candles that are above this candle, the three-candle, the line, I don't even bother looking at it. It's whatever's inside of the three-candle and the highest high and the highest low. For those who are not in the group, be sure to consider joining. Again, it's only $25 one-time payment, lifetime access. There's a lot of material in there, a lot of educational content, and, you know, we, to make self-sufficient traders. So please be sure to join up if you haven't already. Other than that, uh, remember guys, this upcoming Sunday at 8:00 PM Eastern is the next Trader Circle. So any, it's my group coaching class that I have that I hold every second, uh, Sunday of the month at 8:00 PM Eastern. So be sure to sign up if you haven't already. If you want to join up, um, other than that, before we wrap up, what was everybody's biggest takeaway of the session today? And of course, Mike, I saw you mentioned the horizontal lines that helped. Anybody else? Any big takeaways from today's session? I would say just drawing them in general is what I struggle with. So again, the horizontal lines helped. Yeah, definitely. And trust me, if you don't get it immediately, that's okay. When I first discovered or tried to learn them, I was still confused. Shout out to Faith in the Strat for, um, teaching me and helping me understand broadening formations. The session that I had with him really, really, really helped a lot. Cool. Well, if that is all for today, again, I appreciate all you guys for stopping by. Um, the replay will be up probably in the next like 20, 30 minutes, maybe less. I think YouTube posts these within like five minutes of me ending this. Um, but yeah, you know, I appreciate all, all of you guys for coming out and attending and asking your questions. I will see you guys on the flip side. Later.