Unlock Consistent Profits with This 3-Step Price Action Formula

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Hey Trader! Welcome to another video here 
at ComLucro! Today, we’re diving into the  

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video "Unlock Consistent Profits with This 
3-Step Price Action Formula", an incredibly  

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powerful price action strategy that requires no 
indicators, no patterns—just a straightforward  

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yet effective approach to mastering price 
action. If you’re tired of overcomplicating  

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your trades and want a simple method to achieve 
consistent results, this is the video for you.

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Price action trading strips away the 
noise and focuses on what really matters:  

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the movement of the market itself. Whether you’re 
an experienced trader or just starting out,  

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mastering this method will empower you to take 
calculated trades with confidence and precision.

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At ComLucro, we’re all about helping you sharpen 
your skills and make smarter decisions in the  

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market. Be sure to explore our other videos 
and resources, including advanced supply  

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and demand strategies and market structure 
insights, available right here on our channel.

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Let’s jump straight into this 
game-changing three-step formula  

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that can transform your trading results.

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The first step revolves around understanding 
market structure. This is, without a doubt,  

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one of the most critical elements of the strategy.  

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Even a small mistake here can 
compromise the entire approach.

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As traders, one of the first concepts we learn is 
recognizing uptrends and downtrends. It’s trading  

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101—like the training wheels of the trading world. 
When a chart shows higher highs and higher lows,  

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it’s an uptrend. Conversely, lower lows and 
lower highs indicate a downtrend. Sounds simple,  

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right? Most traders think they’ve mastered this,  

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and you might be thinking the same: Why go 
over something so basic? I already know this.

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What if I told you that you’re probably 
approaching this all wrong? Let me explain.  

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Imagine a chart that’s making higher highs 
and higher lows. As we’ve established,  

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this indicates an uptrend. So far, so good. 
But then, something unexpected happens—the  

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chart starts moving downward, and in the process, 
price creates a low and breaks right through it.

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Understanding these subtle distinctions 
is critical because overlooking them often  

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leads to costly mistakes. This is exactly 
where most traders make a critical error.  

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When they see price breaking this low, they 
assume the trend has reversed and that we’re now  

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in a downtrend. As a result, they start looking 
for short trades, convinced the market is headed  

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lower. But here’s the catch: what if I told you 
that the chart is still fundamentally bullish?

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Yes, price created a low, but that low isn’t 
actually valid—or at least not the kind of low  

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that defines a trend shift. Why? Because the 
valid low, the one that truly matters, hasn’t  

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been broken. And here’s the golden rule: for a 
low to be considered valid, it must be one that  

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has broken the previous high. If you don’t grasp 
this concept, the entire strategy won’t work.

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So, if the price breaks this high, we now have 
confirmation that this is a valid low. Great!  

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This tells us the market is in an uptrend, 
which means we should focus exclusively on  

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bullish trades. The only scenario where we 
would consider short trades is if the price  

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breaks the valid low. Until that happens, the 
price can move up, down, or even sideways—it  

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doesn’t matter. As long as the valid low 
remains intact, the uptrend is still in play.

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Now, let’s say price continues to move 
upward and breaks another high. In this case,  

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the valid low shifts to the next point 
where the last significant move began.  

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This process of identifying valid highs 
and lows is crucial because it establishes  

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whether we are in an uptrend or a 
downtrend. And that’s the essence  

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of the first step in the formula: 
determining the market structure.

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So, what’s next? That’s where step two 
comes in—identifying supply and demand  

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zones. In an uptrend, we focus on demand zones;  

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in a downtrend, we look at supply zones. A 
straightforward way to think about this is:  

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you want to buy from demand zones and sell from 
supply zones. Let me break it down further.

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Now, let’s take a closer look. The market is 
trending upward, and we notice a significant push  

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from the start of this move. This tells us that 
a lot of buyers entered the market at this level,  

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creating strong demand. If the price revisits 
this area, we can reasonably expect that traders  

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will likely act in a similar way, buying at the 
same level and driving the price upward again.

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On the flip side, a supply zone works the 
same way but in the opposite direction.  

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When we see a sharp downward move 
starting from a specific point,  

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it signals that sellers dominated the market 
there. If the price retraces to this zone,  

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it’s likely to trigger selling pressure 
again, pushing the price downward.

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This concept of supply and demand 
forms the backbone of our strategy,  

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but we’re not done yet. There’s still one 
final step in our three-step formula. Let’s  

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move to a real-life chart example to see how 
everything we’ve covered so far fits together.

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Let’s analyze a real chart to put 
this strategy into action. Here,  

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we see the price moving 
upward, pulling back slightly,  

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and then breaking a previous high. This 
establishes higher highs and higher lows,  

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confirming that we’re in an uptrend. In this 
scenario, we only focus on long trades—shorting  

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in an uptrend would go against the strategy and 
significantly lower the probability of success.

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Now, since this low broke the previous 
high, it’s our valid low. The trend  

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remains bullish unless the price breaks this 
specific point. With the uptrend confirmed,  

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the next step is identifying 
demand zone opportunities.

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To locate demand zones, we look for areas 
of consolidation or sideways price movement  

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followed by a strong upward move. On this 
chart, we can see a consolidation phase here,  

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followed by a sharp upward surge. To mark the 
demand zone, I like to use the candle just  

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before the impulsive move. Using a rectangle 
tool, I highlight the area from the low to  

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the high of that candle. This becomes the zone 
we monitor for potential trade opportunities.

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To apply this step, grab your rectangle tool 
and identify the area of consolidation that  

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occurred before the sharp upward move. Mark this 
area by drawing a rectangle from the low to the  

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high of the candle just before the impulsive 
move. This is your demand zone. Since we’re in  

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an uptrend, we’re not concerned with supply 
zones—they’re irrelevant in this scenario.

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Next, wait for the price to retrace into the 
demand zone. Once it does, this is your entry  

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point. Place your stop loss just below the demand 
zone to manage risk, and set your take profit  

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at the recent highs. And there you have it—an 
efficient, high-probability trade! That’s just  

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one example of how this strategy works, but let’s 
dive deeper to show how accurate it really is.

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Looking at another chart, we see an uptrend with 
higher highs and higher lows. The valid low is the  

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one that broke the previous high, and this is the 
point that must be broken for the trend to reverse  

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into a downtrend. Eventually, the price does break 
this low, signaling a shift into a downtrend.

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Now that we’re in a downtrend, we switch gears and 
focus on supply zones for short trades. Identify  

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the areas of supply—where consolidation occurred 
before a sharp downward move. Once price retraces  

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into this supply zone, we enter the trade. 
Place your stop loss just above the supply  

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zone and your take profit at the recent lows. 
Boom! Another straightforward and winning trade.

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But hold on—we’re not done yet! The price 
creates another area of supply further up,  

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and since we’re still in a downtrend, 
we wait for the price to retrace back  

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into this new supply zone. Once it does, we 
enter the trade, set a stop loss just above  

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the supply zone, and target the recent 
lows. Another winning trade in the bag!

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But the opportunities don’t stop there. The 
price forms yet another area of supply. Again,  

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we patiently wait for the 
price to revisit this zone,  

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set our stop loss above it, and target the 
recent lows for another profitable trade.

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And it doesn’t end here. Yet another area of 
supply emerges. Using the same approach, we wait  

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for the price to return to the zone, set our stop 
loss and take profit levels, and secure another  

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win. This is the strength of this strategy—it’s 
precise, repeatable, and highly effective. By  

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always trading in the direction of the trend, you 
significantly increase your chances of success.

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Now that you’ve seen how powerful this 
strategy can be, let’s move on to the  

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third and final step to make it even better: 
mastering the risk-reward ratio. Sometimes,  

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even if a trade meets all the 
criteria from steps one and two,  

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the potential reward compared to the 
risk might be too low. When this happens,  

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it’s better to pass on the trade. Let’s dive into 
how to handle this crucial aspect of the strategy.

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For this strategy, the risk-reward ratio is 
non-negotiable—we only take trades with a  

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risk-reward ratio of 2.5 to 1 or higher. 
This means that for every $100 we risk,  

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we aim to make at least $250 in return. Even if 
a trade aligns perfectly with steps one and two,  

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if the risk-reward ratio doesn’t meet 
this threshold, we skip the trade. This  

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simple rule dramatically increases the 
profitability of the strategy over time.

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Let’s look at one final example. The price 
is making higher highs and higher lows,  

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confirming we’re in an uptrend. Following 
the strategy, we identify a demand zone  

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where the price consolidated before making 
a strong upward move. We mark this zone,  

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wait for the price to return to it, and when 
it does, we enter the trade. The stop loss  

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is placed just below the demand zone, and 
the take profit is set at the recent high.

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Now comes the critical last step—checking the 
risk-reward ratio. In this case, it’s three, which  

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meets our criteria. That means we proceed with the 
trade. If it were below 2.5, we would simply pass  

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on this opportunity. Once the price plays out, we 
secure a winning trade, and the process repeats.

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This three-step strategy—focusing on 
market structure, supply and demand,  

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and a strict risk-reward ratio—offers a 
disciplined and highly effective approach  

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to trading. By sticking to these 
rules, you can consistently find  

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high-probability trades and build 
long-term success in the market.

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In conclusion, mastering this three-step 
price action strategy can transform the  

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way you approach trading. By understanding market 
structure, identifying supply and demand zones,  

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and adhering to a strict risk-reward ratio, 
you’ll develop a disciplined and consistent  

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approach to trading that maximizes your 
potential for long-term profitability.

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Don’t forget to explore our other resources, 
including the Wyckoff Method Course, Smart Money  

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strategies, and technical analysis tailored 
for day traders—all available on our channel.

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Remember, here at ComLucro, we always recommend 
analyzing the market structure thoroughly,  

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backtesting your setup, keeping 
efficient risk management, and,  

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of course, always having a stop loss 
in place! Best of luck in your trades!

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I hope you enjoyed today's video. If 
you found the content useful or fun,  

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please give it a like, as this helps 
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