Transcription
All you need is one candle every day. And I know that this sounds too simple and boring to work, but it's the reality. Because after nine years of over complicating trading, this one candle made everything click for me. It showed me how simple and boring is actually what works.
So here is what I do now. Every morning at 9:30 a.m. Eastern Standard Time, the market opens in the first 5-minute candle of the day begins to form. Now, this candle is different from every other candle in the day because it has the highest volume of any 5-minute period in the entire session. This means that more buy and sell orders are being executed in this 5 minutes than any other 5-minute window.
So, at 9:35 a.m. when this candle closes, I just mark the high and the low, and those two become my only two levels for the day. And then I drop to the 1 minute chart, and I wait for one thing, a fair value gap to break through one of these levels.
Now, a fair value gap is just a pattern where the middle candle is so expansive that it leaves a gap between the first and the third candle. And when that gap breaks through my high or low, it's telling me something. It's telling me who just took control of the market, whether it was buyers or whether it was sellers. And now I know which side I want to be on.
Once I see this, I just enter on the next candle. Place my stop at the first candle that closed outside of the range. And my target is a fixed 2:1 risk-to-reward. And then I'm done. Either the trade works or it doesn't. I don't touch it. I don't micromanage it. I let the system make the decisions for me.