Applied Market Mechanics: The Lab Book
| Field | |
|---|---|
| Class | Introduction |
| Entry | Introduction |
| Markets | All |
| Timeframes | All |
| Builds on | Understanding Market Mechanics, Parts 1 to 7 |
| Tools used | None |
| Last revised | 28 October 2026 |
A physics degree hands you two books and expects you to keep them apart. The textbook explains why the world behaves the way it does. The lab book is where you find out whether you can make it behave that way on a bench in front of you, with your own apparatus and your own hands, which is a very different thing. The rules for keeping a lab book are strict and a little old-fashioned. You write in ink. You date every page. You record the settings on the apparatus before you record a single result, so someone else could set it up the same way. And you never tear a page out. When a run goes wrong, you strike it through with one line, so it can still be read, and carry on underneath.
Understanding Market Mechanics was the textbook. Across seven parts it set out why price moves at all: the long shadow one market casts over another, the Pareto Trap that turns consensus into fuel for the few positioned against it, liquidity as the thing every participant is actually hunting, Wyckoff's script and Elliott's rhythm, derivatives as a shadow engine that shapes the underlying it supposedly follows, market makers who hold a stake in every outcome they appear to referee, and a blindfold the crowd wears far more tightly than the people selling it the view. What that series never did, deliberately, was tell you what I do with any of it on a Tuesday afternoon with a chart open.
This series is the lab book.
For a long time the method has lived in three places: my TradingView templates, my head, and fragments posted to Twitter and Telegram, where things like
An Edge, Published
There is an obvious objection, and the textbook raises it against me. Part 2 argued that an edge decays the moment it's widely recognised. If that's true, publishing a method ought to be the quickest way to destroy it, and I've thought about this more than I'd like to admit.
I think the objection mistakes what decays. Most of the tools in this series are ones you already have. The Fibonacci retracement ships in every free TradingView account, preloaded with
The parts of a method that survive being published are the dull ones. Choosing an anchor honestly, before you know which answer you want. Waiting until every condition is met instead of most of them. Closing the position when the invalidation prints, instead of redrawing the chart until it agrees with you. These are cheap to describe and expensive to do, and nobody can front-run patience.
Two Kinds of Entry
Every entry after this one is either a Tool or a Setup, and the two are built to do different jobs.
A Tool is apparatus. It answers one question about the market (where are the edges of this range being negotiated, say) and nothing more. A Tool entry tells you how to configure it, how to apply it, how to read what it shows, and where it lies to you.
A Setup is an experiment run with published apparatus. It describes a situation the market produces repeatedly, who is doing what inside it, the conditions that identify it, and what it tends to resolve into. Each Setup gets a coined name for its mechanism, because the mechanism is the lasting part. The tickers in it are case studies, and they will age long before the mechanism does.
Two rules hold the system together. A Setup may only use Tools that have already been published, so any Setup can be reproduced from the series alone without some private indicator doing the real work off-screen. And the two classes are numbered separately (Tool 01, Setup 01, Tool 02), so cross-references hold whatever order things are published in. Every entry is collected on the series page here on Valeon as it's published, which is the place to find the full list. The part numbers on that page count publication order, so Tool 01 may well sit beside Part 2; when one entry refers to another, it uses the entry number.
Reading an Entry
Every entry opens with the same header as this one. Treat it as the entry's interface: if you only read one part of an entry before deciding whether it's relevant to you, read that.
| Field | What it tells you |
|---|---|
| Class | Tool or Setup (this entry is the one exception) |
| Entry | Its number within its class |
| Markets | The asset classes it has been used on (crypto, equities, ETFs, and so on) |
| Timeframes | The chart timeframes it has been used on |
| Builds on | The Understanding Market Mechanics parts and other Valeon posts it assumes you've read |
| Tools used | For a Setup, the published Tools it depends on, each linked; Tool entries leave it blank |
| Last revised | The date of the latest change to the entry |
A short preamble in my usual register follows the header, and then a fixed set of sections. Both classes have eight, and both end on a reference card, so a returning reader can scroll to the bottom of any entry and find the whole thing compressed into a few lines.
| Tool | Setup | |
|---|---|---|
| 1 | The question: what the tool answers, in one sentence | Thesis: the coined name, the situation, and what it tends to resolve into |
| 2 | Mechanics underneath: why it works at all | Mechanism: who is doing what, and why it leaves a footprint |
| 3 | Configuration: my exact settings | Conditions: a checklist, every item checkable on a chart or data feed |
| 4 | Procedure: the steps, in order | Trigger and invalidation: both stated before any example |
| 5 | Reading it: what each level or state means | Case studies: the chart at the decision, the conditions as read then, the outcome |
| 6 | Worked example: one chart, walked through | When it fails: at least one failure or stand-aside |
| 7 | Failure modes: where the tool misleads | Expression and risk: instrument, horizon, and where risk is defined |
| 8 | Reference card | Reference card |
The essay voice lives in the preamble and the mechanism sections. Configuration, conditions and reference cards are written plainly on purpose, because they are the parts you'll come back to with a chart open and no patience for prose.
Ground Rules
The examples are retrospective. Every case study shows the chart as it stood at the moment of decision, with nothing after it, alongside whatever public record I made at the time, and every one of them has already resolved. That keeps this a method series. If you want signals, there are plenty of people selling them, and you may already have noticed what most of them have in common.
Trigger and invalidation come before the examples. A rule written after you've seen the outcome can be bent to fit any outcome you like, so every Setup states what has to happen to act and what has to happen to be wrong before a single chart appears.
Failures stay on the page. Every Setup has a section on when it fails, with at least one instance where it triggered and went wrong or where I stood aside. A Setup with only winners in it is a highlight reel, and a highlight reel teaches you nothing about the part of trading that actually costs money. This is the strike-through rule from the lab book: the failed run stays legible, with the next one written underneath.
Positions are never disclosed. This series is purely educational, and whether I hold anything it discusses, now or at any point, stays private. An open position published to a readership is exactly the crowded trigger described above, and the market has no reason to leave it open for long.
Conventions
A handful of conventions run through every entry, so they're set out once here.
- Time is UTC. Charts set to London time are an hour off UTC for half the year, which is enough to put an anchor on the wrong candle.
- Instruments are named by venue. COINBASE:BTCUSD and an index ticker for the same asset print different candles and very different volume, so the venue is part of the name.
- Anchors are written in full, as ticker · timeframe · candle open time (UTC) · body edge, so any drawing in the series can be placed exactly where I placed it.
- Figures and captures are different things. A figure is a chart rendered from a written specification and a frozen copy of the data, with platform clutter removed and every level exact. A capture is an untouched original, such as a timestamped tweet or a screenshot of a settings dialog, and it is shown as evidence. Every caption says which it is: a figure carries its specification line, a capture carries its source and timestamp. A reconstruction should never be mistaken for a record.
- Every chart has a caption telling you what to look at, in one sentence. Learning to read charts is mostly learning where to put your eyes.
- Charts use a linear scale by default. Log or linear is your call; where the choice changes a reading, the entry says so.
- Notation is defined by the Tool that introduces it, and every later entry that uses it links back there. The first is the
notation, in Tool 01. - This series is written only. It has no audio version on the podcast, because tables, checklists and charts don't survive being read aloud.
Before You Start
Every entry links back to what it assumes, but if you're arriving here first, this is the foundation the series stands on.
- Understanding Market Mechanics, all seven parts. Part 3 on liquidity and Part 4 on Wyckoff and Elliott carry the most weight early on, and the derivatives material in Part 5 matters as soon as the Setups reach crypto.
- Read the Spec Sheet, on contract specifications: inverse against linear, contract size, and why contract-count volume understates dollar value.
- The Ledger That Costs Something and The Ledger That Does Something, on Bitcoin and Ethereum, for anyone who wants to know what the crypto examples are actually made of.
- Trading Big Bags and A Small Edge, on sizing and risk. The Setups link to these instead of re-teaching risk every time.
A lab book is of no use to anyone but its author until someone else tries to repeat what's written in it. That's the standard this series sets itself: every entry should be repeatable by a reader with a free charting account and the patience to read the conditions before looking at the chart. Where one isn't, tell me. The correction goes on the page, dated, with the original struck through above it.
Acknowledgements
None of this was worked out alone. Long before I had a method worth writing down, I had a browser full of tabs and a shelf that kept getting longer, and most of what I know about reading markets came from the places below. I am self-taught in the sense that nobody sat me down and taught me, which in practice meant teaching myself the right ideas under the wrong names. For years I called ratio pairs "correlated products", and drafting the recent posts here turned up a few more terms I'd been using with complete confidence and slightly incorrectly. The concepts held. The vocabulary came later, and much of it came from these.
Online
- ThePatternSite, Thomas Bulkowski's site, where chart patterns are measured instead of admired: how often they work, how far they run, and how often they fail.
- ChartSchool, StockCharts' library on indicators, overlays and chart analysis.
- Investopedia, for definitions, one unfamiliar term at a time.
- FXStreet, for currency markets, market news and the economic calendar.
On the shelf
- John J. Murphy, Technical Analysis of the Financial Markets, the comprehensive reference the rest of the field tends to assume you've read.
- Jack D. Schwager, Market Wizards, interviews with traders who share almost nothing in method and almost everything in discipline.
- George Soros, The Alchemy of Finance, on reflexivity: prices shaping the fundamentals they're supposed to reflect.
- Lawrence H. White, The Theory of Monetary Institutions, for the machinery underneath money itself.
If you want to go further than this series can take you, any of them is a good place to start.
Applied Market Mechanics is a record of how I read markets, published purely as education. Nothing in it is financial advice or a recommendation to buy or sell anything, and I'm not a financial adviser. Every example has already resolved. I don't disclose positions, so nothing in an entry should be read as a statement of what I hold. Markets take money from people who follow a method exactly as often as from people who don't; size accordingly.