Welcome tothecourse on the Foundation Model

Within this course, you will learna money-making approach

to all markets.

This is where members ofThe Market Lens begin their

understanding of the charts as it sets the baseline for future
lessons. While the Foundation Model acts as the
introduction, you can learn this and never need anything else.
This approach offers opportunity in abundance when applied
as intended.

Section 1: Economic Calendar

The section on the economic calendar providesa refined

protocol with rules to ensure both proper market conditions
and risk management. This is the first layer to every trade
idea.

Section 2: Price Delivery Cycles

The section on price delivery cycles explains how to align

daily and hourly price delivery in order to set an initial
expectation for price. Once charts are opened, this is the first
step to determining what tofocus on.
Section 3: Weekly Range

The section on the weekly range covers several topics

including the reasoning foravoiding Monday, how to frame
an intraweek reversal, and pairing logic with weekly profiles.
The weekly range is the core to the narrative of trade ideas.

Section 4: Daily Range

The section on the daily range walks through the

understanding of how to pair the high timeframe narrative
with specific confirmations. This is where theframework for
all entries begins as it will confirm if the bias correct and
determines how to position an entry.

Section 5: Entry Logic

The section on entry logic shares how to framea high quality

entry within an established narrative. You are givena
complete approach as thetopics covered are opposing close
candles, volatility drivers, and stop loss placement.

Section 6: Trade Management

The seciion on trade management providesa more

systematic and rule-based approach to managing trades.
Establishing proper stop loss placement, position sizing, and
objective targeting is how profits become maximized within
each winning trade.
Calendar Settings

How to set up the economic calendar?

Link to the economic calendar: https://
[Link]/calendar

Settings

The goal of adjusting the format of the economic calendar is

to remove all the noise which is present on the standard
settings. Most oftheevents which occur throughout the
week either do not hold enough significance to take it into
account orthey do not have any impact on the market you
aretrading. All you want on your economic calendar is red
folder news events which are relevant to the market you
trade.

Step 1: Remove gray, yellow, and orange folder news events

Step 2: Choose thecurrencies which correlate to the market

you trade

Step 3: Set the calendar to the current week view

After you complete these simple steps, you should have an

economic calendar which only displays red folder news
events within the current week forthemarket you trade.
How to select the right currency?

Indices: USD (direct correlation)

Forex Major Pairs: USD (main focus) and the cross currency

Crypto: USD (secondary correlation)

Below is what your economic calendar should look like after

all adjustments are made

Calendar Settings
Market Conditions

How does theeconomic calendar impact market conditions?

The economic calendar is the foundation to anticipating
market conditions.

Studying the layout of news events withina single week sets

the initial expectation for how favorable the price action will
be upon entering the market. If the market is in anticipation
fora news event, the previous price action is likely to be
manipulative in the form of consolidations or opposing runs.
If the market has released news events, the following price
action is more likely to expand in the intended direction.

High Impact News

When high impact news events are present within the weekly
layout of the economic calendar, it will have an impact on the
weekly range. This will determine the days which arechosen
to seek potential trade opportunities.

Medium Impact News

When medium impact news events are present within the

daily layout of the economic calendar, it will have an impact
on the daily range. This will determine the sessions which
arechosen toseek potential trade entries.
You will learn how to blend these two principles intoa basic
protocol within the next lesson.

By focusing on the weekly and daily range in relation to these

news events, we can be confident that trades will be opened
only during favorable market conditions. Expansion isa
requirement to make money from the markets; withouta
directional move, there is no profit to be made.

Refined Protocol

What aretherules around the economic calendar?

Rules around specific events within the economic calendar
layout are applied in order to ensure participation in
favorable market conditions and to be in respect to
sustainable risk management.

The Rules

1. Avoid opening trades the day prior toa high impact news
event.

This is done asa precaution to avoid the days which are

more likely to be ranged than expanded. When themarket is
waiting in anticipation fora high impact news event, price
has the tendency to either consolidate or make false price
runs. The closer the time gets to the release of the high
impact news event, the more unfavorable the price action
becomes; filtering out the day prior is enough tostay clear of
that negative effect.

2. Avoid opening trades any session prior toa medium

impact news event.

In the same way that high impact news negatively effects the
day prior, medium impact news negatively effects the
sessions prior. Within the scenario there isa medium impact
news event (orhigh impact news event) ona day you are
seekinga potential trade opportunity, only seek entries
following the release. You will understand how this can be
used as an edge forentries ina later lesson.

3. Never hold an open position through eithera high or

medium impact news event.

Once released into the market, both high and medium impact
news events cause significant fluctuations in volatility as the
market is highly correlated to the outcome oftheresults.
This isa brief time in the market where spreads widen and
and price becomes highly manipulative; you lose complete
control of risk management during these moments. No
matter how confident you feel on the direction, the reward of
being correct does notoutweigh the unlimited potential loss
of being incorrect.

What arehigh impact news events?

Consumer Price Index M/M (CPI)
Non-Farm Payroll (NFP)
FOMC Press Conference

What aremedium impact news events?

Core PCE Price Index M/M

Producer Price Index M/M (PPI)
FOMC Statement

These aresmall sacrifices to make in order to guarantee you

are giving yourself the best chance to protect your mental
and monetary capital in times of unfavorable market
conditions. You will make yourself in trading by how you can
limit unnecessary losses, all while exploiting the winning
trades; this is the first step towards that.

Daily Price Delivery

What arethedaily phases of price delivery?
There are four phases of price delivery to be defined on the
daily chart; expansion, consolidation, reversal, and
retracement. Understanding this order of operations sets the
foundation for reading the daily chart.

Expansion
Daily expansions produce large range daily candles which
aretrading in one direction. Bullish expansion daily candles
will open near the low and close near the high. Bearish
expansion daily candles will open near the high and close
near the low. This is the phase of price where we make
money asit provides the most favorable intraday price action.

Consolidation
Daily consolidations produce indecisive daily candles which
trade within an internal range foran indefinite period of time.
There isa lack of clear direction as both bullish and bearish
daily candles often will close near the opening price. This isa
phase of price where we avoid participation in order to
protect capital.

Reversal
Daily reversals are variable in the type of daily candles which
can be produced. While there can be either large range
candles or candles with large wicks, one thing always
remains true; all reversals engage external range liquidity.
This isa phase of price delivery which we look to frame and
then trade the following expansion once confirmed.

Retracement
Similar to daily reversals, daily retracements are variable in
ihe type of daily candles which can be produced. Opposing
daily candles to the draw areformed during periods of
retracements as price trades back into the internal range.
This isa phase of price delivery which we look to frame at
levels around equilibrium of the dealing range and then trade
the following expansion back towards the draw.
 Daily Price Delivery

Expansion Rule

What is the rule for expansion on the daily chart?

Understanding how expansion starts and ends on the daily
chart is the basis of how to apply daily price delivery cycles.

Intermediary Phase

On thedaily chart, expansion is the intermediary phase of

price delivery. There are only three different ways thedaily
chart can print in relation to price delivery cycles.

1. Expansion to consolidation to expansion

2. Expansion to reversal to expansion

3. Expansion to retracement to expansion

Never expansion to another expansion

Expansion Rule
 Maximum Expansion Expectation

There aretwo ways todetermine the end ofa daily phase of

expansion.

1. Three consecutive, one-sided, large range daily candles

withina single week

2. Two consecutive, one-sided, large range daily candles into

a significant objective

After one of these two scenarios occur on the daily chart, we

avoid trading continuations in the previous direction and
allow the next phase of price delivery to reveal itself;
consolidation, reversal, or retracement.
 ‫ד‬

I Expansion Rule
Can price expand beyond three consecutive days withina
single week? Yes, the market can do anything.

Is it the most likely outcome in these scenarios? No, it is very

uncommon.

Can themarket continue expanding througha key objective?

Yes, the market can do anything.

Is ita favorable condition to attempt tradinga continuation?

No, there is no other objective to target.

Now that you understand how to anticipate the end ofa daily
phase ofexpansion, the next lesson will teach you how to
frame thethree other phases of price delivery in order to get
onside with the following phase ofexpansion. That is where
trade opportunities exist.
Daily Phase Protocol

What is the protocol for each daily phase of price delivery?

Following an expansion, there is an anticipation fora new
daily phase of price delivery to take place.

When is ita consolidation?

Followinga daily expansion, price trades internally between

an external range high and low

When is ita reversal?

Followinga daily expansion, price trades intoa relevant

external level with an opposing draw

When is ita retracement?

Followinga daily expansion, there isa protected swing with

the previous draw remaining intact
Daily Phase Protocol
Consolidation

Consolidations form on the daily chart once an external

range high and low is set following an expansion and price
begins to trade within the internal range. Since
consolidations last an indefinite amount oftime, avoid
trading internally to externally prior to the external range
being engaged. Instead, simply define the external range
high and external range low of the daily consolidation and
wait for price to reach either side.

What happens once theexternal range of the daily

consolidation is traded through? The next phase of
expansion begins. The run through one side of the external
range is viewed asa manipulation and the anticipation is to
see expansion in the opposing direction; this is what we
trade.

1. daily consolidation, external range high manipulation, daily

downside expansion, external range low objective

2. daily consolidation, external range low manipulation, daily

upside expansion, external range high objective
F

‫ו‬

I Daily Phase Protocol

Reversal

Reversals form on the daily chart when price achievesa

relevant external level with an opposing draw on liquidity.
Unlike consolidations where the narrative is relatively neutral
fora period of time, reversals have an intended direction. The
universal principle of reversals is that they all form daily
swing points;a swing low ona bullish daily reversal and a
swing high ona bearish daily reversal.

1. discount external level, daily swing low, opposing upside

draw, daily upside expansion

2. premium external level, daily swing high, opposing

downside draw, daily downside expansion
 ‫ך‬

[ Daily Phase Protocol

[2} external range

Retracement

Retracements form on the daily chart when price trades

internally back towardsa protected swing while the original
draw on liquidity is still intact. Seek internal levels around
equilibrium of the daily range that is being retraced back into;
that is where theretracement will end and begin the
following phase ofexpansion in the previous direction.

1. protected low, daily upside expansion, internal

retracement, daily upside expansion, intact upside draw

2. protected high, daily downside expansion, internal

retracement, daily downside expansion, intact downside draw

Understanding this concept in the simplified manner

presented here is all you need forthe Foundation
Model as this provides an expectation of price that
we look to trade alongside. What youwill learn in
the following lessons refine the narrative and the
final lessons will provide the confirmations. These
basic expectations form into high probability trade
ideas as it passes through the filters of this process.
Hourly Price Delivery

How does hourly price delivery pair with daily price delivery?
The end of each phase ofprice delivery results in an hourly
reversal into an expansion.

At the external range fora daily consolidation, the hourly isa

reversal into an expansion

At the external level fora daily reversal, the hourly isa

reversal into an expansion

At the internal level fora daily retracement, the hourly isa

reversal into an expansion
Hourly Price Delivery

hourly reversal
daily consolidajion: external range
daily reversal: externąl level
daily retracement: internal level
Remember this graphic forthe Intraweek Reversal lesson,
that is where you will put this all together.

Monday Rule

What is the rule for Monday?

Monday isa day of the week that trading will be avoided in all
scenarios. Why? Learn the three reasons below.

Reason One

Based on data collected across the past three years, Monday

is the smallest ranged day on average in both the range from
the daily candle high to low and from the daily candle open
toclose. This means that Monday is the least likely day of
the week tooffera large range, directional daily candle. We
are filtering out the lowest probability conditions by simply
avoiding this one day each week astheFoundation Model is
aimed atcapturing expansions.

Reason Two

There is never medium orhigh impaci news evenis on

Monday. All of the relevant news drivers throughout each
week occur across Tuesday, Wednesday, Thursday, and
Friday. This means that on Monday, the market is always
waiting in anticipation for something more significant to be
released ona following day within the week. Not only does
this play into the reasoning forwhy the data shows Monday
having the smallest average range, but also provides logic to
this rule. The way in which news events enter the market
adds narrative to price; you will learn this in an upcoming
lesson.
] M on day Rule

Tue Core PPE F'rice Index M/M

VVeO q A:UO

Reason Three

Utilizing weekly range profiles isa major part into the

effectiveness of this model as it removes certain levels of
discretion in the charts. This is done by looking back athow
theprevious days printed in order to build an expectation for
where and how thefollowing days within the week will print.
However, on Monday there is no day within the week tolook
back [Link] would be tradinga weekly profile that is
nonexistent which would invite that unwanted discretion
back into your analysis. To apply the process of weekly
profiles, avoiding Monday is an indisputable rule to simplify
the approach.
Monday Riale

Intraweek Reversal

How to frame an intraweek reversal?

Intraweek reversals are framed on the basis of aligning daily
price delivery with hourly price delivery.
Alignment

Recall the previous section of lessons on price delivery

cycles. Oncea daily phase ofprice delivery is identified and
completed, an hourly reversal into an expansion is formed as
a result.

At each ofthese hourly reversals there are two signatures

which occur forconfirmation of the following expansion.

If bullish,a run on the previous day low anda bullish change

in state of delivery

If bearish,a run on the previous day high anda bearish

change in state of delivery
Intraweek Reversal
Previous Day Level

There arethree truths about reversals.

1. They all forma daily swing high or low

2. They all run the previous day high or low

3. They all havea change in state of delivery

The false run into the previous day levels leaves behind
opposing close candles that, once closed through, offersa
confirmation to trade the following expansion which aligns
with the previously established narrative from the daily chart.
Intraweek Reversal
Change in State of Delivery

The wick ofa reversing daily candle is an intermediate term

change in state of delivery. When aligned with the narrative,a
close through opposing close candles is considereda
confirmation tool fora reversal within the weekly range.

If bullish, seeka close above thedownclose candles which

formed atthe reversal

If bearish, seeka close below the upclose candles which

formed atthereversal

While this model does notrestrict trading anticipated

reversal days, it is recommended toavoid speculating on
reversal days forthose who are still adapting to this process.
The levels to trading reversals can be outlined as follows:

1. Usinga hourly change in state of delivery, avoiding the

reversal day, and focusing on the following daily
continuations

2. Usinga 30-minute change in state of delivery, seeking

trades on both reversal and continuation days

3. Usinga J 5-minute change in state of delivery, seeking

trades on both reversal and continuation days

The more advanced and effective you become atreading the

narrative, the less restrictions you need to place on yourself.
However, you could have an advanced understanding and
still find plenty of opportunity solely in the daily
continuations; doing more does notalways correlate to
better results.

( I ntraweek Reversal

With the next lesson about weekly profiles, the element of

time will be added toenhance this process.
Weekly Profiles

How to blend weekly profiles with price delivery?

Weekly profiles offer the element oftime to the weekly range
and partially reduces discretion by applyinga series of “if
this, then that" statements.

Weekly Profiles

Using the previous lessons on price delivery which setan

initial expectation for price, weekly profiles add to the
narrative by introducing an element of time. We can look
back on how the previous days printed on the chart to tell
how the following days should deliver. Understanding this,
anticipating price swings becomes more obvious as the
weekly range develops; Tuesday is more obvious than
Monday, Wednesday is more obvious than Tuesday,
Thursday is more obvious than Wednesday, and Friday is
more obvious than Thursday.

Instead of making unnecessary predictions on price, take

advantage ofthe weekly profiles to establish systematic
criteria. If the previous days didthis, then the following days
should do this. What if you are unclear on the weekly profile
at any point? Then you wait for another daily candle to print
for additional narrative. Take it one day at a time until the
weekly profile is either validated or invalidated.

In no particular order, there are four weekly profiles to seek

within this model.
Classic Expansion
Midweek Reversal
Consolidation Reversal
Thursday Counter

Determining the Weekly Profile

Once it is understood what theexpectation is for price based

on the daily and hourly price delivery, we will pair weekly
profiles to bring everything together on the higher
timeframes. Following the intermediate term change in state
of delivery at the relevant point of reversal, look back on how
the previous days traded. This will either invalidate or add to
your anticipation for the following expansion.

As you move through these lessons, do not lose sight of

what was mentioned previously; it all blends together witha
purpose. Think about how these weekly profiles look and
form in relation to the lessons on the daily expansion rule
and price delivery cycles.

Classic Expansion

Anticipatinga reversal on a Tuesday? Look back aihow

Monday traded.

If Monday was consolidated or madea shallow opposing run

from the weekly opening price, then the narrative is
supported forTuesday to reverse into an expansion
You then trade with the expectation of the complete Classic
Expansion weekly profile until it is otherwise invalidated.
What is the expectation? Wednesday and Thursday
expansion away from theTuesday reversal.

If Monday hada large range expansion to either direction,

then the narrative is not supported forTuesday to reverse
into an expansion

You then wait forthe narrative to reestablish and a new

opportunity to present itself
 Weekly Profiles

Classic Expansion (Counter-Trend)

Anticipatinga reversal ona Friday? Look back athow

Monday, Tuesday, Wednesday, and Thursday traded.

If Monday orTuesday formed an opposing reversal and

expanded through Thursday, then the narrative is supported
forFriday to reverse into an expansion

You then focus on trading back into 20.0% to 50.0Oó back into
the weekly range as an objective.

If Monday orTuesday didnotform an opposing reversal or

there was no expansion through Thursday, then the narrative
is not supported forFriday to reverse into an expansion

You then end your trading week and wait fora new
opportunity to present itself the following week
I Weekly Profiles
Midweek Reversal

Anticipatinga reversal on a Wednesday? Look back athow

Monday and Tuesday traded.

If Monday and Tuesday consolidated or make anyamount of

an opposing run from the weekly opening price, then the
narrative is supported forWednesday toreverse into an
expansion

You then trade with the expectation of the complete

Midweek Reversal weekly profile until it is otherwise
invalidated. What is the expectation? Thursday and Friday
expansion away from the Wednesday reversal.

If Monday and Tuesday expanded offanother point of

reversal, then the narrative is not supported forWednesday
toreverse into an expansion

You then wait forthe narrative to reestablish and a new

opportunity to present itself
I Weekly Profiles

validation inYalida UOP

Consolidation Reversal

Anticipatinga reversal ona Thursday? Look back athow

Monday, Tuesday, and Wednesday traded.

If Monday, Tuesday, and Wednesday were consolidated, then

the narrative is supported fora Thursday reversal into an
expansion

You then trade with the expectation of the complete

Consolidation Reversal weekly profile until it is otherwise
invalidated. What is the expectation? Friday expansion away
from the Thursday reversal.

If Monday, Tuesday, and Wednesday failed to consolidate,

then the narrative is not supported fora Thursday reversal
into an expansion

You then wait forthe narrative to reestablish and a new

opportunity to present itself
I Weekly Profiles

validation invalidation
Thursday Counter

Anticipatinga reversal ona Thursday? Look back athow

Monday, Tuesday, and Wednesday traded.

If Monday, Tuesday, and Wednesday each expanded in the

same direction, then the narrative is supported fora
Thursday reversal into an expansion

You then trade with the expectation of the complete

Thursday Counter weekly profile. What is the expectation?
Friday expansion away from the Thursday reversal.

If Monday, Tuesday, or Wednesday failed to expand in the

same direction, then the narrative is not supported fora
Thursday reversal into an expansion

You then wait forthe narrative to reestablish and a new

opportunity to present itself
 Weekly Profiles

These aresimple atface value, which is as intended forthe

Foundation Model. However, it is important to spenda lot of
time to genuinely understand this process as it can evolve
into something ever more effective with study and
experience.
 High Impact Volatility

How do high impact news releases impact the weekly range?

Studying the reaction ofa high impact news release can bea
significant confluence tool for narrative.

Reversal Confluence

High impact news events are significant drivers of the

market and arehighly manipulative. For the Foundation
Model, understanding that reversals aligned with the
narrative become even more validated when they occur upon
a high impact news release. This isa signature to be both
aware ofand totake advantage of when offered by the
market.
| High Impact Volatility
What aretheaspects of hourly framework?

This lesson covers the framework ofthe hourly charts

followinga previously confirmed reversal.

Price Signature

Once this step of the Foundation Model is reached, you have

already put the market through several filters; economic
calendar, daily price delivery cycle, weekly range profile,
intermediate term reversal confirmation. The market has
passed all the tests you imposed on it and now you are
trading ina condition that is set to havea daily expansion, or
potentially several.

This means that the hourly charts will havea specific

signature to focus on.

If bullish, focus on 4-hour and 1-hour downclose candles

If bearish, focus on 4-hour and 1-hour upclose candles

 ‫ד‬
| Hourly Framework
How to use daily profiles to confirm an established bias?

Daily profiles are another profiling tool which can be used to

reduce discretion and give added confirmation to your
determined bias.

The Profiles

For the Foundation Model, we will refine everything down to

only two daily profiles.

1. London Reversal

2. New York Reversal

Just as every week hasa point of reversal, every day hasa

point of reversal. The intraday reversal which is framed
through daily profiles is the foundation forhow entries are
positioned.

London Reversal

If London reverses, then seek New York continuations

 ‫ד‬

I Daily Profiles

london reversal
New York Reversal

If London consolidates or makes an opposing run, then seek

a New York reversal

Daily Profiles

new york reversal

Invalidation

If London expands in either direction, then avoid New York

participation

Daily Profiles

london expansion
Why do wicks matter in the developments ofthe daily range?

The formation of the daily candle wick is telling about how

the rest of the candle will print; the wick is the framework
and thebody is the expansion.

Daily Candle Wick

Bullish expansion days open near the low and close near the
high

Bearish expansion days open near the high and close near
the low

Why does this matter? Since the goal of the Foundation

Model is to capture daily expansions, how far price deviates
from the daily opening price gives context to how the daily
candle will print.

If the framework createsa small opposing daily candle wick,

then it isa likely expansion day

If the framework createsa large opposing daily candle wick,

then it is likelya reversal or consolidation day

Daily Reversal and Continuation

This logic can be used to know when it is favorable to tradea

reversal day or to avoid it untila continuation day is offered.
On a day you are anticipatinga reversal, as determined in
previous lessons, the distance price has to deviate from the
daily opening price to frame the reversal tells you if the
reversal day should be traded or avoided.

Small daily wick reversal? Favorable to trade reversal

Large daily wick reversal? Avoid trading the reversal and

frame the following day continuation

The candle body is the expansion that we are looking to

trade. The farther that price deviations from the daily
opening price, the less likely it is to havea clear expansion
aligned with the daily profiles. Recall what was said about
the opening and closing prices within daily expansions in the
previous Daily Price Delivery lesson; that should now make
more sense to you now than it did before.
How to apply opposing candles fortaking entries?

During an intraday expansion, anticipate price to respect

opposing close candles to the objectives.

Why?

Bythelime an entry is considered in the Foundaiion Model,

the market has passed through all requirements fora likely
expansion day. When trading on days where price is eager to
move large in one direction, any opposing run from the
narrative createsa powerful signature to be used forentry.
Start on the 30-minute timeframe to seek opposing candles,
then refine to theJ 5-minute and 5-minute timeframes when
necessary.

Defining Opposing Candles

There aretwo principles to follow when marking out

opposing close candles forentry framework.

1. If there area series of opposing close candles, use the

opening price of the first candle in the series

Series ol downclose candles: use the opening price of the

highest downclose candle in the series

Series of upclose candles: use the opening price of the

lowest upclose candle in the series

2. Ignore opposing close candles that are withina larger

series of opposing close candles

Downclose candles withina larger series of downclose

candles: focus on ihe larger series

Upclose candles withina larger series of upclose candles:

focus on the larger series
 ‫ד‬
| Opposing Candles

‫ו‬.

.2
Timeframe Refinement

While the logic of application remains the same on all

timeframes, we can manipulate the timeframe to give the
clearest perspective on price.

When there is no clear series of opposing candles or there

are large wicks in an area you are seeking an entry, change
thetimeframe. We are looking fora series of opposing close
candles with bulky candle bodies.

The only condition to this is to not change timeframes in

order to justify an entry framework that is not truly there; this
mainly applies to moving down ona lowtimeframe when
trying to force the signature.
Opposing Candles

this
Volatility Drivers

Why do volatility driver matters?

Everything which occurs within the daily range isa byproduct

of the volatility drivers; daily profiles, reversals, expansions,
and more.

Times

3:00 London session open

8:30 high and medium impact news release

9:30 New York open (for indices)

J 0:00 low impact news release

These volatility drivers can be used to bringa more specific

element oftime tothe daily profiles and to increase the
quality of entries. Recall the lesson on daily profiles:

London Reversal

If 3:00 reverses, then the New York volatility drivers should

provide expansion
New York Reversal

If 8:30 reverses, then 9:30 should provide expansion

If 9:30 reveres, then 10:00 should provide expansion

Pairing the Logic

Now that you have an understanding of opposing candles

and volatility drivers, they can be brought together to forma
high probability entry.

1. Whena volatility driver makes an opposing run from the

intended direction, the close back through the opposing
candles is an entry

2. Whena volatility driver is set to expand, an entry can be

positioned in previous opposing close candles with the
anticipation that the upcoming time brings expansion
) Volatility Drivers

opposing run opposing candles

I y‘ DP C fee

y
łatllłt
vo dvar
d
Added Confluence

One of the best entry signatures when offered alongside the

narrative and framework is havinga divergence upona
volatility driver. This createsa scenario where one correlated
pair manipulatesa low or high, while the other correlated pair
respects the opposing close candles.

When offered this signature, take advantage.

Volatility Drivers

correlated pair correlated pair

Stop Loss Placement

Where does the stop loss get placed during entries?

Stop loss placement is the most important aspect of the
entry. You could do everything correct previously, buta
misplaced stop loss is the one way to get removed froma
perfectly valid winning trade.

Invalidation Point

The stop loss for the entry framework used in the Foundation
Model will always be ata swing point in relation to the
opposing close candles.

Series of downclose candles: stop loss placed atthe swing

low formed atthe bottom ofthe series

Series of upclose candles: stop loss placed at the swing high

formed atthetop oftheseries
Stop Loss Placement

swing point
Common Error

When choosing where to placea stop loss, the most

common error is to attempta tight placement. For the
Foundation Model, you will be trading in expansive markets;
that means twothings.

1. The side of the market you are looking to capture isa large
range

There isa luxury of being able to widen the stop loss as

needed since you know that it will not restrict the risk to
reward of the trade. What isa 30 point stop loss when there
isa J 00 point or more move on theother side of your trade?
It is nothing.

2. The time of entry will be during volatile market hours

When trading around volatility drivers, the market is ina time

of large movements in both directions. You will not get away
with keepinga stop loss too tight as the market is likely to
run it out and remove you froma position before it plays out.
 Stop Loss Placement

common error

You can miss market moves and you can take valid losses,
but takinga loss ona trade that should have beena win is
significantly costly. You are taking multiple steps back when
you should be multiple steps forward. Havinga properly
placed stop loss will protect you from that.
Position Sizing

How do you manage position sizing?

Focus ona fixed dollar position sizing in comparison toa
fixed point position sizing. This topic ties into the previous
lesson on stop loss placement.

Fixed Point Risk

Fixed point risk is whena stop loss is placed ona

predetermined amount ofpoints regardless of the trade
being put on. For example, placinga fixed 20-point stop loss
on all trades. This is an error (see below) to avoid as the size
and placement ofa stop loss is highly dependent on the
trade being placed and the current conditions of the market.
There always needs to be consideration for the true
invalidation point ofa trade and the amount ofvolatility the
market is experiencing.
I Position Sizing

eniry

fixerl pomp stop loss

COf UC I SI OJ IOSS
Fixed Dollar Risk

Fixed dollar risk is whena stop loss is placed in respect of

the chart for the trade being put with the position size being
adjusted to the fixed dollar amount. For example, entering
with three contracts when thestop loss is 40-points and
entering with four contracts when thestop loss is 30-points;
same dollar risk, but different point risk. That is an
oversimplified scenario of how risk should be adjusted
based on the required stop loss for any given trade. We must
adjust to the market as the market will not adjust to us.

The actual dollar amount you place on your trades is up to

you to decide asI am not advising you how much torisk.
This lesson simply explains how to position yourself with the
dollar risk that you choose.
I Position Sizing

$2,400.00 fixed dollar risk

(NQF 520 per poinl ,'’ contract

3 contracts 4 contracts
40 point sloy less 30 p0inl stop oss
 Objectives and Scaling

How to scalea position based on specific objectives?

Properly scalinga position is crucial to realizing profits while

maximizing the potential of trades.

Risk to Reward

The minimum expectation for all trades under the

Foundation Model is 2R; one risk for two reward. Expansion
conditions allow for large ranges to capitalize on regardless
of the necessary size of the stop loss. Begin looking to scale
a position upon achieving the first price objective which is
beyond the 2R minimum. This is where around half to more
than half of the position should be scaled. The amount that
is taken offthe position at this level is based on both the
framework ofthesetup and personal discretion.

Never allowa position that was once in profit by at least 2R

turn intoa breakeven or losing trade outcome.
I Objectives and Scaling
Trade Objectives

The initial objective should always bea price level that is the
absolute minimum expectation of the trade idea. An
objective that, if it is failed to be achieved, the trade idea
would be considered incorrect.

What should be targeted? Objectives can be simplified into

three categories.

1. external highs and lows

2. internal highs and lows

3. equilibrium of ranges

Seek these objectives on the daily, 4-hour, and 1-hour charts

 Objectives and Scaling

Oncea position is scaled atthe initial objective and there is

stilla draw intact, this is where profit is maximized with
proper trailing stop loss management toreach final trade
objectives.
How isa stop loss trailed throughouta trade?

Understanding how to properly traila stop loss introducesa

way to more systematically hold trades.

Breakeven Rule

Prematurely trailinga stop loss to breakeven isa usual factor

for many tobe removed from valid trades. While it may feel
like an effective approach to protect risk, your entry is not an
invalidation point which is recognized by the market. We
want totrade the charts and not our feelings. Oncea position
is set up, there is an initial stop loss which acts as an
invalidation to the idea. There is also the initial target which
acts as the minimum expectation of the idea. In order to get
the expected value out of the trades, these are the two points
ofa trade that must be committed to.

Avoid moving the initial stop loss to any point beyond

breakeven untila new invalidation point is created as the
trade moves in profit. Ideally, the initial stop loss would not
be moved until the initial objective is reached and the
position is scaled. As close to that principle which you can
comfortably and logically get to, the better.
 ‫ד‬

I Trailing Stop Loss

6E LMT —o
Invalidation Points

New invalidation points will be formed asa trade moves into

profit. Recall throughout this course on the logic that
opposing close candles are respected during expansions
once closed through; this is what is used totraila stop loss
towards objectives.

Focus on the opposing close candles with bulky bodies

which have respecteda previous signature. For example
opposing close candles which respected previous opposing
close candles or ran outa short term swing.

Understanding how to traila stop loss in this way opens the

possibility to pyramid entries, but that isa topic to cover for
another lesson outside of the Foundation Model.
I Trailing Stop Loss