The Investor Diary Entry #85: September 21, 2025
This article documents my current process of learning and testing a new Forex trading plan. It is a direct reflection of the concepts explored in my recent video and serves as a written record of my understanding. It is important to note that this is not financial advice; I am simply sharing my educational journey to become a successful Forex Trader as I work to build and refine the second pillar, which is my own systematic Forex Trading Plan.
The foundation of the methodology I am exploring comes from a trader on YouTube known as Luap (his channel name is his first name spelled backward). My own Forex trading plan is a personal adaptation of his teachings on Smart Money Concepts (SMC). For anyone interested in the original, detailed source material, I recommend visiting his YouTube channel directly.
The First Step: Identifying the Trading Range
The very first step in this methodology, and the focus of my recent study, is learning to identify the trading range. In simple terms, a trading range is a period where the price of a currency pair moves between a relatively consistent high and a low. Establishing these boundaries is critical because it helps define the current market structure and allows a trader to identify direction and potential reflection points.
To practice this, I use a free backtesting software called Traders Casa. It allows me to replay past market data and apply this concept without any financial risk. In my session, I applied this to the CAD/JPY pair on a 15-minute chart, though this concept can be applied to any asset and time frame.
How to Find the High and Low of a Range
The process of identifying the range is specific. It begins after a significant price movement, often following a “break of structure” or a “change of character,” which signifies a potential shift in market sentiment.
Identifying the Low of the Range: After a downward move, you look for the most recent significant pullback (a move against the prevailing trend) before the price made a new low. This pullback low is called the “inducement.” When the price later returns to hit this exact inducement level, it confirms that particular low as a valid part of the range. If the price had broken to a new low without first hitting that inducement, we would then look for a lower inducement to define the range low.
Identifying the High of the Range: Once a valid low is confirmed by its inducement being hit, you then look for the highest point the price reached from the previous low up to the current confirmed low. This highest point becomes the high of the new trading range.
In my practical example, I marked these levels meticulously. For instance, I identified a high at 109.573 and a low at 108.529. The price then oscillated between these two levels, defining the clear boundaries of the range.
This is better explained in the video embedded in this section.
The Difference Between a Break and a Sweep
A key part of this learning is understanding what happens when price approaches these boundaries. A simple “sweep” against the original direction if the inducement is minor is not considered a Change of Character. However, a confirmed “break” is a change of Character or break of structure in any case.
- If the direction is downward and the validated low of the range is broken, it constitutes a official “break of structure,” suggesting the downward trend may be continuing with renewed strength.
- If the direction is downward and the validated high of the range is broken, it signals a potential “change of character,” meaning the market sentiment may be shifting from bearish to bullish.
Minor vs. Major Inducement
Another important distinction I am learning is between a minor and a major inducement. This classification depends on the timing of the pullback relative to the break of structure.
- A Minor Inducement is a pullback that occurs before the price breaks a structure. In my current plan, I typically note these but do not trade based on them directly.
- A Major Inducement is a pullback that forms after the price has already broken a structure. This new pullback becomes a critical level to watch, as a reaction at this point triggers the next step of identifying the points of interest.
Why I Am Documenting This Journey
My primary reason for creating videos and articles on this topic is self-education. The best way to understand a concept is to explain it. By documenting each step—from identifying the trading range to, in future videos, plotting Points of Interest (POIs)—I am forced to solidify my own understanding. This process helps me test my knowledge and identify any gaps in it.
Furthermore, by sharing this process, I hope that others who are on a similar path of building their own Forex trading plan might find it helpful to follow along. Seeing someone else work through a methodology can sometimes provide clarity.
The next step in my learning will be to understand how to identify and trade from these Points of Interest based on the ranges I have now learned to draw. This entire process is a work in progress, a live documentation of building a trading plan from the ground up, starting with its most foundational element: the trading range.
The Investor
Sunday 21 September 2025
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second, as a place where I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links, I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
This blog is also part of something else I’m learning: blogging. I’m using a platform to learn that part. And if you’re interested in that it is called Wealthy Affiliate, look it up.
For more detailed information on my affiliate disclosure, please refer to the Full Affiliate Disclosure page.
Furthermore, this site is in no way or form giving any financial or investing advice, nor is it encouraging or discouraging people to buy or sell any financial instrument. This is a personal diary in which I track my own progress and share it for informational, educational, and entertainment purposes.