Every definition, formula and mechanism the video puts on screen, chased to a source.
All price on screen is generated, seeded and illustrative. It teaches a mechanism and it is labelled as illustrative wherever it carries the argument. No chart in this video is a window of a named instrument and nothing here asserts that a particular move happened in a particular market. Every figure a chart prints is computed from the series it is drawn from, so a chart and the number beside it can never disagree.
A trade’s risk R is the distance from the entry to the stop. A result is then quoted as a multiple of that distance, so an outcome is comparable across instruments, position sizes and strategies: a trade that returns twice what it risked is +2R, and a trade stopped out at its original stop is -1R. R multiples were developed and popularised by Van K. Tharp.
Used on screen at 003, 007, 009, 010, 011, 014, 016, 017, 018, 036, 037, 043, 045, 046, 048, 050, 052, 053.
Expectancy is the average result per unit risked over a run of trades. Stated in R it is the mean R multiple of the sequence, which is equivalent to
expectancy = (win rate x average win) - (loss rate x average loss)
Two consequences the video relies on, and both are arithmetic on that formula rather than claims about any particular market:
The ledgers at 009, 010, 046 and 049 are built from stated R sequences and the expectancy printed beside each one is computed from those same bars, so the number and the picture are the same object.
The video treats resistance, prior highs and round numbers as places orders collect, and that is documented rather than folklore. Osler’s study of stop loss and take profit orders at a large foreign exchange dealing bank found the requested execution rates strongly clustered at round numbers, with take profit orders clustered at round numbers more strongly than stop loss orders. The same work found take profit orders tend to reverse price trends and stop loss orders tend to intensify them.
The follow up paper found exchange rate moves are unusually rapid at levels where stop loss orders are known to cluster, and that those orders are sometimes triggered in waves, producing price cascades.
This is the basis for the liquidity area target at 008, the stall and rejection into a level at 012 and 026, and the reaction zones at 015.
Support is a level where demand is expected to be strong enough to stop a decline; resistance is a level where selling interest is expected to be strong enough to stop an advance. That is the definition the level lines at 008, 012, 015, 019, 026 and 043 are drawn to.
An uptrend is a sequence of successively higher peaks and successively higher troughs. An up trend line is drawn through two or more rising lows and acts as support while price holds above it. That sequence is what the trail at 020, 047 and 056 steps behind: each new higher low is a new place to put the stop, and the trail only ever moves in one direction.
A measured move takes the length of the first leg and projects it from the end of the correction to give a target for the continuation. That is the construction drawn at 008, where the first leg is traced over the bars that made it and the second is projected from the pullback.
True range for a bar is the greatest of: the current high less the current low; the absolute difference between the current high and the previous close; the absolute difference between the current low and the previous close. Average true range is that value smoothed, and it was introduced by J. Welles Wilder in New Concepts in Technical Trading Systems in 1978. Wilder’s standard period is 14. ATR measures volatility only and says nothing about direction, which is exactly why the video uses it to widen a trail rather than to decide one.
This is the band that opens out at 020 and the widening trail step that follows it.