Transcription
Hello everyone. I trust that you're all doing well today. Today, I will be going over the prerequisites, the topics that you need to understand before being able to grasp what I will be sharing with you tomorrow. So, this will be, um, one of the first lectures under the topic of understanding order flow. So, this will be very basic. We'll, for the first half of it, we'll be going over things that you already know, things that I've already talked about. And if you're brand new, this is a chance for you to catch up. So please pay attention. In my opinion, this is, these topics are the most important topics that you need. With these alone, you can build a, build a fully functional, functional trading model. You can become profitable with this alone. You don't need anything else about this. And yeah, now we'll begin.
What is needed to gauge order flow? In order to gauge order flow, you need higher time frame levels. More specifically, you need balanced price ranges, fair value gaps, and liquidity pools, right? Which is basically old highs or old lows, either of those. I have listed these in the order of importance. So, balanced price range, balanced price ranges will hold price better than fair value gaps, and fair value gaps are better to use than liquidity pools, right? These will serve as the base of your setups, right? So whenever you are going into price action and you want to trade, you need a higher time frame level, either a balanced price range, fair value gap, or old high or old low. If you're new, you're going to benefit from this, right? Because I wish that when I just started out, I got this advice that I should just focus on balanced price ranges, favor the gaps, and the clear lows, right? I wouldn't be trying to find a setup within a higher time frame block then or a higher time frame breaker or anything like that, right? I'll just be focused on balanced price ranges, fair value gaps, and liquidity pools. And I'll be introducing something new today. Um, I think some of you have been going, getting close to it. It's, um, stacked true opens, right? So basically, it's premium and discount true opens, right?
And now we'll look at, we'll, I'll give you guys a visual depiction of the higher time frame levels and what to look for. So first, we'll talk about the balanced price ranges, right? I went over this with you guys before, but now I've, the reason why I, I went over it as I did in the, the first lessons of this month was because I wanted you guys to go into your charts and look for yourselves, right? And, and do some back testing. You know, get your hands dirty because without that, you cannot learn, right? If I just give this to you like this, most of you won't even probably just look at this once and then try to go and trade it, and it doesn't work like that. So, as I said, the balanced price range is basically a double fair value gap, right? So you have this gap that cuts through another gap, right? There is on this, this is a down closed candle. That's what the block candles depict. So you have this wick and then the candle to the right of it has no wicks, right? It's just, um, this is, this is an imbalance, unbalanced liquidity, right? If this wick met with this, then it would be balanced price action. But due to the fact that there's, there are no wicks here, and the same thing goes for this candle right here, which is in the middle of the one to the right and the one to the left, there's only buying being done right here, and there's only selling being done right here. So when this imbalance meets with this, it becomes balanced, right? So this is very powerful. You can use this to see a change in the state of delivery, and this is what you're looking for on your higher time frame level. I've put a key down here so you guys can see to the left of the, to the left of the slide, you guys can see the left bottom corner, sorry about that. You guys can see I have higher time frame to lower time frame, right? So if the higher time frame is, for example, a weekly chart, then on the lower time frame, which you guys can see I have made a few images, I hope that they're pleasing to the eye. This is exactly what you want to see, right? You, you need a lower time frame low, which is located above a higher time frame level, right? This, you can, you can have the low inside of the higher time frame level, but above it, it must be above equilibrium, right? Which is the center of the higher time frame level, which we are looking at in, in regards to imbalances, right? So price must be above the 50% range of imbalance for this to actually, you know, be fruitful to you. But the best setups will have the low right above the imbalance or right above the higher time frame level. So you need like a 15-minute low above a 4-hour balanced price range, right? And that will give you a proper setup. The same thing goes for the fair value. You need to have a low above the gap, right? That's where you'll get the best setup, the cleanest setup. That's what's usually in that's, that's what's usually in the cleanest price action. So if you're running, you can look at the key at the bottom left corner of the screen, and you'll see weekly, the 4-hour, daily to 1-hour, and so on. If you have a daily chart, you're looking at a daily chart and you see a daily fair value gap, then you want to annotate that fair value gap. Then you want to drop down to the 1-hour time frame, and then if you see a low form, price drops, but retraces and leaves the low above that fair value gap, then you would try to find a setup when price trades below that low, a buy setup, right? So this is what you'll be looking at in regards to gaps. You don't need inverse fair value gaps, too confusing. You don't need those. You need things that you can see, things that are easy to see, right? But price ranges for fair value gaps, very easy to see.
Then we have liquidity pools, right? I'll just be talking about sell-side liquidity pools, but buy-side liquidity pools is just the opposite. So if you have a daily low, you would want to see a 1-hour low above that daily low. I hope that I'm being clear. If I'm not, then I'll probably have to answer a few questions, and that's fine, right? So if we have a daily low, you need a 1-hour low. If you have a 4-hour low, you need a 15-minute low above that 4-hour low. When price breaches the lower time frame and then breaches the higher time frame, then that's when you will find the setup, right? So in bullish scenarios or bullish markets, you need a lower time frame low to be breached before reacting to your higher time frame liquidity pools. The same thing goes for balanced price ranges and fair value gaps. This diagram probably explains it better than me, which is why I spend so much time doing it. And if you have any questions, of course, you can ask me now.
I'll be introducing stacked true opens. So most of you guys know what is premium and discount in regards to price. Now I'm going to share what is premium and discount in regards to time. So in bearish markets, you will have stacked true opens, which is a lower time frame cycle's true open above a higher time frame cycle's true open. Let me repeat that again. In bearish markets, when price is above a lower time frame cycle's true open, which is already above a higher time frame cycle's true open, that's when you should look to go short, right? If it's just, if you're just looking at one true open, you're doing it wrong. You need two true opens. And at the bottom of this slide, I've put the hierarchy of cycles for you guys from the larger down to the smaller cycles, right? So for example, if, if you're looking at a daily cycle, you want to trade the daily cycle, right? Which you're going to use the 1-hour time frame to trade. Oh, my bad, the 15-minute time frame to trade. If you're looking at a daily cycle, you need a lower time frame cycle's true open to get that precise entry, right? And the opposite goes for bullish markets. So in, in regards to time, you can be in a discount market without even looking at a higher time, looking at higher time frame levels or whatnot. You would be looking to buy in a higher time frame cycle, which is below a higher time, higher time frame, but you'll be looking to buy below a lower time frame cycle's true open, which is located below a higher time frame true open, right? So if you're looking at the 90-minute cycles to trade, which for 90-minute cycles, you need the 5-minute time frame, right? Write this down. You need a 5-minute time frame when looking at 90-minute cycles. So for example, if it's, you're trading in New York session, and true open for the New York session is 7:30 AM, you would need that to be below the true day open. You understand? So this is just an introduction. I will be going deeper as we go along, right? And it's very hard to be, um, you know, giving this information knowing that there are like a few, a few guys in here that's actually stealing the information. But I have fixes for all of you. I deliver the way I deliver on purpose because most times, um, I like when you guys ask me questions because the people that are stealing the information cannot ask me questions. And there are a few, you know, blank spots that that are left in between each lesson. But as we go along throughout the year and weed out everyone that needs to be weeded out, we will be filling all of those. And also, most of those blank spots can be filled just by you going through your charts, just by you back testing, which is very important. You need to back test, right? I'm giving you this information, and it will make you a better analyst, of course, but you have to make yourself the trader, right? I can help you to know where price will go, teach you how to anticipate market swings, and so on. But you need to work on your skills in regards to trading by yourself, right? So you got to go through price action and get acquainted with these things that I'm talking about. You need to build your confidence and work on yourself. And I'll be talking to you guys tomorrow at 6 PM. I hope that this was insightful, and I hope that you have a wonderful night. Talk to you guys tomorrow.