Transcription
If you're still struggling to become a profitable trader trading smart money, then this video is for you. In this video, I'll be breaking down our full smart money strategy step by step and then implementing it on the chart so you can take it away and use it and test it for yourself.
Ladies and gentlemen, welcome back to another video. In this video, I'm going to be breaking down the step-by-step system used to take this profitable trade in mid-January this year. Not only am I going to break down this trade and the strategy, I'm going to break down step by step each component of market structure, how to use it, how to use market structure in relation to each time frame, supply and demand zones, how to pick the right areas, how to avoid liquidity traps, and then liquidity as a whole. Understanding higher time frame narrative and how to target areas of price, how to understand what areas are going to be liquidated. It's going to be one of the most valuable videos I've ever created on this channel, so stick around to the end to watch the entire thing. You won't want to miss it.
And just before we do that, to share your love and support, make sure you subscribe to the channel and leave a comment down below on your thoughts about this video and what you want to see next.
Now, starting off, I want to just break down some very basic knowledge, right? Basic market structure. Now, the market operates with a structure, and at all times, price will either be bullish, increasing, or bearish, decreasing. So, if we look at this chart right now, you can see that price puts in a high, then we have a low, followed by a lower high, right? So, this high is lower than the previous high. This makes this a lower high. That already is pretty indicative of lower prices, followed by the lower low. Now, the moment you have a lower low in price, meaning this low is lower than the previous low, now you are confirmed bearish. You are confirmed that price is going to be decreasing, and then you'll be expecting some sort of lower high, right? Once again, followed by a lower low, and then again, same again, you'd be expecting some sort of lower high, followed by lower low.
Now, that's very basic market structure, both for bearish and bullish. But what you probably don't know, or haven't known, is that we don't have just one time frame. We have multiple time frames, and we use multiple time frames. And so, if we just go over to the right for a second, this is called fractal market structure. Now, just like the analogy on the left, one thing that we notice is that every time we have a break of structure, right? So, we have a break of this low, what happens? At some point, price reverses and gives us a pullback. Then we have a break of structure again, and what's going to happen is almost guaranteed that price is going to start pulling back before trading lower again.
And so, why is this important? Well, fractal market structure is ultimately the combination of different time frames understood by market structure. So, the market is just one constant. There's no separation between time and price. It's just one constant that's going on. However, you can perceive it on multiple different time frames. So, don't let me lose you right here. In black, let's say we have the 4-hour time frame. So, the black represents the 4-hour, and the red represents the 15-minute. Now, what's going to happen is you see on the black, if you look on the black, you'll see a down move, a lower high, a lower low, a lower high, and then a lower low. So, you'll see bearish price action on the 4-hour time frame. So, the 4-hour is bearish, right? Okay, great. Then we look at the 15-minute. We have high, low, lower high, lower low, lower high, lower low, higher high. So, this higher high right here is the shift from bearish, as we've just shown, to bullish, which we term a change of character.
Now, there are two characters in the market: there is a bull and a bear. And ultimately, when price shifts from bearish to bullish, lower low to higher high, that is the change of character. So, what we have right here is a bearish 4-hour and a bullish 15-minute. What does that mean? That means that it is now time for the H4 to start its pullback phase. Pullback meaning price is now going to put in a lower high. And so, we see that. We see higher high, higher low, higher high, higher low. And you're seeing this market structure be shown on the 15-minute. But when you go to the 4-hour, it's just one price leg that goes high, and then we see higher high, then we see lower low.
So, what happens here? Well, the 15-minute time frame has just shifted from bearish to bullish, back to bearish. And we call this a realignment. This is a change of character, but it's a realignment because the lower time frame, in this case, the 15-minute in red, has realigned itself with the 4-hour intention, which is lower prices. So, the moment that this happens, let's say you can't see anything past this line, you can only see what's here. The moment that this happens in here, we already know that the H4 is now going to attack these lows down here. So, that's our essential edge. We've already determined that price is going to trade into this low before it's even got there. Then it's your essential ability: can you take a trade between that discrepancy? Right? That is essentially the edge.
But let's follow along here. Change of character, lower low, lower high, lower low, lower high, lower low, lower high, lower low. Now we've just taken out the 4-hour low. So, we expected that, right? So, there's our break of structure on the 4-hour. And then notice the 15-minute goes from lower low, taps into this 4-hour area, and then goes higher high. What does that mean? The 15-minute is now bullish, but the 4-hour is bearish. What does that mean? It means that the 4-hour is now going to be coming for a pullback once again. So, we're expecting the 4-hour to trade higher before then it trades lower again. And we can always read the higher time frame with the lower time frames because what the lower time frame does is it gives us a more immediate understanding of what's happening on a larger picture. Meaning that before something happens on a higher time frame, we can already see it developing on a lower time frame. That's how we use fractal market structure to gain our edge in the market.
So, let me take this now to the charts, and I'm going to apply this and show you how you can apply this for yourself. So, guys, the pair that I trade here, we are here's the trade. And what I'm going to do is I'm going to pull us back to before we even get into this trade, before we even know what's happening with price. And we're going to break down everything completely from scratch together so you can get an insight into how I see the market. So, we're going to pull price back. Before we even get into our price, this is what we see. But before we do anything, this is the 15-minute time frame. What we need to do is we need to go to the 4-hour time frame, which is the time frame that I use to understand the bias. I use the 4-hour that gives me the overall bias as to where price is heading to.
So, we're going to use the same principles of market structure. We can see right here, we have a high, price pulls back, we have a low, then we have a higher high. So, price is bullish, right? I think everybody would agree with me that price has gone from lows to higher high. Then what happens? Price pulls back, higher low, price breaks out, higher high. Okay, from there, this is the low, and this is the high. So, in theory, you should be expecting that price respects this low and then trades higher. If it doesn't, then price will shift from bullish to bearish, and that's exactly what happens in this scenario. Price actually, very barely, but nonetheless, does break this low with a candle close, which is an important differentiation between a wick and a candle close. So, this becomes a change of character because the 4-hour time frame is now what? Bearish.
And then, as we said before, what happens when this 4-hour time frame finally takes a low or takes a high? If we go and look at every time price breaks structure, what happens? We get a reversal. Let's take a look. Here's our swing high, price breaks structure, and then very shortly after, we get a reversal. Okay, cool. Price breaks structure again, and then very soon after, we get a reversal. Great. Price breaks structure, and then we get a reversal. And so, you can see that, you know, there's it's very evident that every time price breaks structure, at some point, there's a reversal, right? Great.
Now, I want to introduce you to this concept of premium and discount, understanding, you know, where price will likely pull back to. So, we just explained that we have, you know, uh, market structure, and this is what market structure looks like. And we can map out our highs and our lows: lower low, lower high, lower low, right? And notice that every time price breaks structure, at some point in time, it pulls back. When price breaks structure, it's at some point going to pull back. The key is, how do we know where price is going to pull back to? Well, we can use the FIB tool, the Fibonacci retracement tool. And let me just reverse this so I have these exact settings set out on my FIB. That is the one, the 0.786, the 0.618, the 0.5, and the zero, right? So, you can set those as levels as well. And I can guarantee you, 80 to 90% of the time, when price breaks structure, it's going to at minimum pull back into the 0.5. And the 0.5 is a key, key level. And the reason is, is because it separates the premium to the discount.
And so, if you want to think about this, you can think of the top half of a price leg as a premium, and the bottom half of a price leg as discount. And so, think of this in just standard economic terms. If you're a buyer, right? So, you want to buy, which, and if people buy, then price is going to trade higher. If you're a buyer, you want to be buying something at a discount. Everybody who buys something would like to get a discount, obviously. It's human nature. When you sell something, if you have something to sell, you would like to get the best price that you possibly could get for that thing that you're selling. You would like to get a premium pricing. And so, the top half of a price leg is premium. That's essentially, you know, explained as a premium for price at this moment. And the lower portion of the price leg is a discounted price for this moment. And that's why you'll see as price gets into discount, price begins to increase. When price gets back into premium, we begin to decrease because it's just human collective consciousness, our understanding of how things operate.
So, we have premium, discount. We have our 0.5%. And I can almost guarantee you that 90% of the time, 85% of the time, price is going to pull back into at least this 0.5, if not this 618, 786, and sometimes even higher, before then trading lower. So, when price breaks structure, what you can do is you can actually map out the 0.5 and the 618 and 786 as key areas to expect price to gravitate back towards before it begins trading lower. So, something like this, right? So, I just want to get that out there in theory so I can now apply it with you practically.
Now, if we're looking again back at the 4-hour, you can just kind of see where we've just came from. You can see we have break of structure, pullback, break of structure, change of character. So, that means we have just changed character, right? Ultimately, we have now shifted to bearish. Well, at the point in doing that, what you can do is you can take a fib from the low to the high of the of only that price leg, right? From that high to that low. And then you can look and you can say, well, there's my 0.5. So, I know that price is at least going to pull back to this 0.5. So, the moment that price breaks this low, you know that at some point price is going to at least pull back to here, right? Again, that in of itself is a good logical understanding of having a value discrepancy and edge, you know, where price is likely to go before it gets there. That's the whole point of trading. So, that is something that we knew. And then again, as I said, ultimately, you know, at worst case, 0.5, often times 618 to 786 as a key area, sometimes even higher, right? Great.
So, we had the understanding that price was going to have its pullback. So, what does price do? Price pulls back, and then eventually, what do we get? Another break of structure to the downside, a confirmation. So, price goes higher high, lower low, lower high. Because the, how you actually dictate a swing level, right? Is you take the high and the low of the current range. You can pull a box across, and anything inside of this is internal. So, this right here, external, external. All of this becomes internal until you break outside of the box, in which we break outside of the box here. And then how you determine the next swing is the highest point in a bearish example, the highest point that price reached before breaking out of the box, which is exactly here. If we look at that, that is the exact highest point that price reached before we got into these lows. Great.
So, what do we have here? We have a break of structure, right? So, if this is our high right here, right? This, and then this is our low down here, and again, just making sure that they're on the right side, right? We can pull it across like this. We can see that price is likely going to come at least 0.5. Well, it's already done that, you see. But also, it's also likely to come into this 786 to 618, which it has not done yet. Additionally, on top of that, we also have what? A fair value gap, this right here. Now, for those of you who don't already know fair value gaps, or even for those of you who don't, let me teach you something about fair value gap. So, first of all, for those who don't know what fair value gap is, in simple terms, you can take any three candles. So, let's go with candle number one, and we'll mark out the high and the low of that candle. Candle number two, the high and the low of that candle. And then candle number three, the high and the low of that candle. And if you have a gap between, in a bearish scenario, if you have a gap between the low of candle one and the high of candle three, that is called a fair value gap, or imbalance, or inefficiency. It has many names.
And what it actually means is that there is illiquidity at that specific area of price. You see, for price to run efficiently, there has to be an equal opportunity of liquidity at each side of the market on any one given time. That is ultimately the purpose of a transaction. Everybody gets to transact at a set price at that set moment. Now, what happens with a fair value gap, and that's why it's called a fair value gap because it's a gap in fair value, is that there becomes an event which creates a level of illiquidity, which simply means that a seller, there was far more orders of sells than there were buys in this scenario at that exact price point, which meant that price had to gravitate much lower to fill its orders, meaning that on one side of the market, sellers, and on the other side of the market, buyers, there was a huge imbalance between the two. There was far more liquidity for the sell side than there was for the buy side, hence why price rapidly expanded to the downside and left a gap. And ultimately, the purpose of this gap, which is called a fair value gap, imbalance, or inefficiency, whichever you want to call it, is, and for whatever reason, market gravitates towards those levels to rebalance price, meaning offering liquidity at that price once again. So, always look out for these gaps. They don't have to be balanced straight away, but I can guarantee you, you will very rarely find one of these gaps that don't eventually get traded back into to rebalance liquidity.
So, with that being said, we have a fair value gap, which some of it has been filled, right? Some of it has been filled, but still some of it hasn't been filled. So, there is still an illiquidity in here. There is still a fair value gap. So, that's what it's about. It's about stacking confluences as to where the market may want to go to. So, we know right now that we've just broken structure on the 4-hour time frame to the downside. We know that price wants to gravitate toward this 0.5%, which is already done. But we also know that there is a likelihood that price wants to come into this 618 and 786. We also know that we have a fair value gap in here that may want to be, um, rebalanced for price. On top of that, we know that price wants to collect areas of supply, right? Order blocks or supply zones. We have a very clear supply zone in here. We have another clear supply zone in here. Price has not yet, as of now, tapped into any range of supply. The supply range really begins in and around this area where there is an interaction between buyers and sellers before a heavy distribution. Price has not traded back into any of this area. So, we have a bunch of confluence and reasons why price may or may not want to trade into higher levels. So, we have potentially a bias. We have a bias that price wants to trade higher. We've just broken structure. We have many reasons as to why trade wants to, as price wants to trade higher before it trades lower.
Inevitably, our overall bias on a longer time horizon is for price to come into here before then trading lower. But you can have a macro bias of what's going to happen over the next week, and then you can have a micro bias of what's going to happen in this session or today. And what you need to do is you need to connect relatively. You need to connect the relativity of today's bias in relation to the week's bias. And so, how that would look is, I had the bias that price wants to trade lower overall on a larger time horizon, whether it be a week or the next month, I believe that price is going to take out this low. However, before I get there, I also have the bias that price would want to collect more orders and rebalance more pricing at the premium areas of this price leg before going there. And so, that's the key differentiation. Time is a very important aspect. It's not enough to understand where price is going to. You have to understand in which time frame, relatively speaking, is price going to get there, and what's going to happen in between price doing that. As an intraday trader, as a trader that trades trades individual sessions of just a three or four-hour window in London and a three or four-hour window in New York, I make decisions on daily time frames, not the daily time frame, but within a time of a day. That's where my trading windows are. So, I have a larger term bias of where price is going to head to because it gives me a clear understanding and objective of smart money to understand what they want to do. And then I have to have biases within that overall arcing perspective to help me understand what price may want to do today. And so, that is again how we understand and differentiate the different, uh, phases of when a bias actually plays out.
So, yeah, with that being said, I look at this. There are a bunch of reasons as to why I think that price may want to trade higher. But all of those biases are completely irrelevant without confirmation, which leads me into our next time frame, our medium time frame. That is what I use as the 15-minute time frame. So, as we come into the 15-minute time frame, right? And we look in, all we're doing really is zooming in to what we've just seen, and we're getting to see a little bit more of a zoomed-in and fractal-out perspective of the same price action. So, nothing has changed. Our bias hasn't changed toward the 4-hour time frame. Our understanding hasn't changed. All we've done is we've take a zoomed-in perspective that gives us a deeper understanding as close to possible as right now that we can get. And so, again, without me, you know, going into too much detail and confusing you all, all we need to understand is what's the 15-minute time frame doing? Because as I explained previously with our structure type, this thing, if we believe that, let's say the 4-hour is bearish, right? If we believe that we're in this pullback phase, as I've just explained to you, I think we are. Then what do I need to see? If you guys remember, I need to see the 15-minute, right? I need to see the 15-minute realign itself, uh, sorry, not realign, go against the higher time frame. So, I need to see that if the 4-hour is bearish like this, and we're going to have this pullback, so let's say I think that price is going to trade into, you know, here, but on the 4-hour time frame, we're only here, right? That's the value discrepancy. That's what I want to trade. We are here right now. I think price is going to trade into here. How can I get involved in that move? That is an edge, right? It's about understanding that you have a probab, you have a probable understanding of price heading to one area before it gets there, and then how do you have a model that gets you in that trade to that destination without being taken out before you get there? That's it. That is literally what a strategy is. So, that is literally what we're looking for.
Now, if in order to confirm that bias of price trading higher into these areas, I need to see the medium time frame, the 15-minute time frame, align with price. I need to see that the 15-minute in red here goes like this, right? Um, let's get into it. We go higher high, okay? We go lower low. So, at this point in time, the 4-hour and the 15-minute are bearish, great. So, if the 4-hour and the 15-minute are bearish, I should not be looking for long positions. I only trade at all times in alignment with the 15-minute trend, period. I don't care if the 4-hour is bullish, the 4-hour is bearish. I trade with the 15-minute. However, I need to understand the 4-hour time frame because I should not be longing if we're in a premium area of the 4-hour area of bearish supply. That would be foolish. So, I have to understand where we are in the 4-hour because I have to understand the 4-hour's objective, and then I have to relate the 15-minute to that objective, and then look to see if I can get involved.
And so, what we see here is we see bearish price action from the 15-minute. So, I should not be looking at anything other than selling at this point. I would literally be looking for sales. But at the moment that the 4-hour breaks structure, and I've already explained that when the 4-hour breaks structure, at some point it's going to reverse, and it's going to reverse within the 50% if not higher, which we've just looked through. I need to see the 15-minute shift from bearish to bullish because the moment that this happens, right? The the 15-minute goes from lower low, lower high, lower low, higher high. That is my clear indication that now the 4-hour is pulling back. It's very evident the 15-minute is now bullish. There are more buyers in this time frame than sellers, thus is why price is increasing on all time frames at this moment in time. So, that gives me a zoomed-in understanding of potentially what the sentiment of the market is doing, and we're heading higher. That's plain and simple. That's my confirmation. Then I ultimately, after getting that confirmation, I want to get involved in something like this where price pulls back. And then once again, if we get into some demand zone that caused this shift in here, I want to go to a one-minute time frame and see the same thing. And I'll get to that in just a moment. So, I don't want to confuse you too much. Let's go back to price action.
So, here we are, right? And just to confirm, you know, this is where we are on the 4-hour time frame. I've already just explained everything with broken structure. We're now pulling back. I still think that price is going to trade higher into these areas. Great. Let's go to the 15-minute time frame. What does the 15-minute time frame look like right now? Well, we have to understand where we've come from to understand where we're going to. And I also want to introduce the concept of liquidity. So, this indicator that I use is called ICT kill zones and pivots TFO, and then you kind of have to, um, make sure that you know, all of these are done to, you know, what makes sense, uh, for your sessions and everything of that nature. But what this does is it gives me Asia session, London, New York, and that's how I differentiate my trading windows. Now, what you'll notice is that it also gives you the days, and it also gives you, uh, yeah, it gives you the specific days and the specific sessions.
What I want to make abundantly clear is liquidity. The purpose for this market operating is to do one thing: transact. That's the whole purpose of the market. The market is there to transact, and for it to transact, there needs to be liquidity. So, price, a lot of the times, has one sole objective, and that is to fill liquidity, to gravitate toward liquidity. So, just like a magnet gravitates toward metal, the market gravitates toward liquidity. And it's that simple. And typically speaking, right? Let's say, and what is liquidity? Okay, liquidity is money. Just a fancy word for money. And how do we see money portrayed in the market? It's either in entries or stop losses, right? It's that simple. So, you have to understand the herd, the collective consciousness of the market, where are there likely to be a lot of orders and a lot of stop losses? And can you get involved in where there are lots of orders that are going to outweigh the opposing side? And can you avoid putting your stop loss in areas where there are lots of other stop losses? And the reality is, you will not be 100% successful. You will get stopped out a lot of times, but that doesn't matter.
So, liquidity, if we look at the market like this, and we say that there's a bunch of liquidity in here, right? And at the same time, we create liquidity up here. A lot of the times, what you'll see is they gravitate into one pocket. Now, it's fulfilled its objective. It will gravitate toward the different pocket. And in doing so, in filling that objective, it's created liquidity on the downside once again to go, what? Fulfill its objective. And once it fulfills its objective, it creates liquidity on the other side, and so on and so forth. And price forever gravitates toward creating and taking liquidity. That's liquidity in a nutshell, right? In a brief nutshell. I don't want to go too in depth with you here. I don't want to lose you. But in a nutshell, that's kind of the operation of liquidity.
So, we have to understand, well, where are the areas of liquidity? Before that, well, we've just taken out on the 4-hour time frame, a major, major pocket of liquidity. Look at these lows. All of these lows on a higher time frame represent a huge pool, a pocket of liquidity. Not only have we done that, if we look at this price leg as it gravitates up, how many lows do we have? We have low, we have low, we have low that wasn't taken, relatively equal lows. We have low, and then we have all of these lows. Each one, every one of these lows represents liquidity. So, liquidity is found typically in highs, in lows, and then in internal lows, internal highs, and also at the high and low of every session. And again, I'm making this very brief, and but all the information is in there. Maybe you watch this multiple times.
So, what do we do? We clear this liquidity. We have all of this liquidity in here. What does price do? Price, when the 4-hour shifts and takes out the lows, it it takes out all of the liquidity on the sell side of the market. Therefore, why would price need to gravitate any lower? Because what did it do upon taking all of that liquidity? It created all of the other liquidity on the other side of the market, on the buyer side of the market. So, if I just remove all of this for now, now let's mark out all of the liquidity as we've kind of just briefly explained with the other side. Well, as price was coming down before we had this shift, so I'll kind of pull price back to let's just say here, right? We've just, we've just broken the 4-hour low. We've now fulfilled the objective of taking all of these, all of the liquidity. Where is the liquidity now? There is none on the sell side. There is no more liquidity on the sell side anymore. It's all been taken. Price is heavily, um, overextended on the, uh, on the sell side. So, where are the liquidity? We have highs and Asia highs. We have internal highs and New York highs. We have internal highs, London highs. We have internal highs, Asia highs. We have, uh, daily high, which is also a very important pocket of liquidity, the high of a specific day, which is here at Tuesday. Then before that, we have more New York highs. We have internal London highs. We have Asia highs. Notice that on the way down, all of these areas are getting created, pre-created as areas of liquidity to target when we come back.
So, if the, if we understand the objective of the market is to collect liquidity at all times, and it's just collected all the liquidity to the sell side, and the only liquidity left is to the buy side, plus we understand we've just broken major structure on the higher time frame, therefore, it's likely that we have a pullback. We're just stacking confluences, and everything is screaming higher prices. There is a very clear need and intention behind. So, there's a motive behind why price may do what it wants to do, which is to trade higher to capture that liquidity and to have a pullback and to, uh, rebalance illiquidity on the way down. So, everything screams higher prices, right? It's that simple.
And so, what happens is we need to now identify what the market structure of the 15-minute time frame was upon, uh, trading lower. And so, um, again, we can go all the way back and we can look at, you know, uh, we had a high, we had a low, uh, okay, let's say price pulled back, price broke structure here. This isn't a high, doesn't meet our pullback rule. So, this becomes the high. This does meet our pullback rule. So, then this becomes the high of that range. And then what happens? Well, price breaks this low down here. That is a wick. That does not count as a break. So, price breaks structure here, and there we have low. So, at that moment in time, that is our market structure. Our market structure is from low to high to low, which makes what? This right here is our current swing high that's in control. So, M15 swing high. So, let me remove all of these liquid highs for just a second. That's our M15 swing high, great. Break of structure. Now, if price wants to continue trading lower, it will respect this high. It's that simple. If price wants to trade lower, it will respect this high until this high is disrespected. I believe that price will trade lower because until market structure shifts, then it's very clear that sellers are still in control of this market, as they are, as they are controlling the overall sentiment of where price is heading to, which is lower, right? It's that simple.
And so, what happens? Okay, so Asia opens, Asia closes. We have a huge run on liquidity. We take out Asia liquidity. We take out all of the liquidity that was down here. We take out the previous month's low. And so, what are we, uh, then looking for? Oh, no, sorry, we haven't taken out the previous month's low yet. I'll get into that at a later date. Um, so, yeah, we have all of those lows that have just been taken out, all the liquidity has been taken out. But we're still bearish. And so, until we shift bullish, I'm not interested in anything other than shorts, right? And it's that simple.
So, let's play price. What happens? So, price comes up to the high and begins respecting it, great. If price respects it, and this is what I'm telling you, as of this moment right now, I'm still bearish. I'm not looking to short because I don't like how price has already just took out all the liquidity. I have the bias that price is going higher, as I've already explained. But I'm not going to act on it until I'm confirmed that my bias is correct. And how do you confirm the bias is correct? Is the market participants show you. The market shows you its hand. It takes out a key swing high. That tells you now there are more buyers than sellers. Sellers who have been selling in all of this region should be willing to protect this high if they want to see their continuation come into fruition. If buyers take it out, buyers have taken control of the market, thus price will go higher. And so, I'm just waiting for the battle of sellers and buyers to become more clear. And so, it's just a waiting game.
And so, eventually, price takes out this high. That gives us a, what? Change of character. So, that gives us a change of character. And at this moment in time, London has started. There's nothing for me to do. London is now finished, and heading into, uh, New York. And this trade doesn't come until after this session, anyway. Um, but we changed character, and now we have what? We have a swing low. We don't yet know if this is our swing high because it needs at least three candles to pull back. So, that's not another candle because it's a bullish one. Okay, now we know this is our swing high. So, we have low, and we have high. That's our trading range. And all we're expecting is literally, if we look at this again, reverse. Make sure that we have the, anything below this is considered discount. So, if you're bullish, right? If you have the bias that price is bullish, and you want to buy because you're bullish, you want to buy at a discount. It's that simple. If you have the bias that you're bearish for whatever reason, you'll want to be selling at premium, which is why all the sells come in.
And so, again, let's just keep playing price out. See what price does. Price comes into the, price comes into the, the discount of the range and then begins to trade higher. Price ranges around because obviously the day is finished. We're coming into Asia now. Uh, keep playing price out as we come into May areas. Okay, great. So, as London opens on the next day on the Thursday, we've just taken out the high, which means that is a break of structure, break of structure to the upside. Let me remove this for now. Price did its objective. It went change of character, pulled back at least 50%, and then broke structure. So, now I think it's pretty safe to say that price is bullish on the 15-minute. We already have the bias that on the 4-hour, price wants to trade higher into these areas. And so, all we, all we need to do now is find a way to get involved, which comes into my entry models and how I get involved in market price, which is where I use the lower time frame. So, I'll get into that now.
So, now this is the picture that I have when I'm coming into London session. I realize that we've shifted bullish. We've had a pullback. We've confirmed that bullish object, uh, intention with a continuation break of structure. Now, what do I need to do? I need to pull out my from low to the highest point, right? And make sure that I'm reversing this so that the levels are lower. And I need to now pick areas of price that have significant importance to me, that price could potentially trade higher from. And so, this is done through process of logical elimination. Let's get into what that means. First and foremost, you can firstly eliminate any area of interest, any order block, any demand zone, any liquidity point that's above this 0.5. So, we have this right here as an area of demand, right? This range, and then demand kicks into the market. This for me personally has already been eliminated. This to me is liquidity. It's a trap. Why is it a trap? It's a trap for early buyers. Early buyers see price run highs and they want to get involved early. They're too early. Price needs to come back to this 50% for me. In my rules, I will only take it in typically speaking, the premium or discount, depending on what direction it is. So, that's liquidity for me, okay?
So, now we go to the next one. Well, this is also an area of demand, right? It's a little bit over the 0.5, and so that for me is already a little bit meh. But what makes it completely invalid is we have these equal lows. These equal lows represent very clearly liquidity. And so, that is internal range liquidity. Therefore, this one also becomes to me as liquidity, a trap, right? So, we're looking at this as a trap. We're looking at this as a trap. So, I'm instantly avoiding those two. Well, this one in here, this area of demand, which is below these equal lows, which is below the 0.5, that is interesting to me. So, I will, I will keep that. And then we have the origin area of demand, which is here. And this one is below the 618, 786, but nonetheless, it's still an area of demand in the discounted region of the price leg, in the bullish price leg. So, I have this area of demand and this area of demand. These are my two, what I call points of interest. Points of interest refer to areas in which I believe that there could be a reaction of price because of how supply and demand operates in the market and how we determine, uh, how we identify, uh, supply and demand zones through this concept of order blocks, right? Sell before buys and things of that nature, where orders come into the market. And so, what you'll see with all of the areas of demand that I choose is aggressive orders come in, right? I chose this one because we have these aggressive orders that leave fair value gap, right? It doesn't always have to leave a fair value gap, or it does, but even if the fair value gap has been filled, it can still be used as an area that's unmitigated. You can see the, the first one we use, right? Is a range sell and then an impulsive move. So, that is a clear area of demand. The next one, again, uh, pretty much a range sell, buy, so an area of demand. So, that becomes an area of demand. This one, we have obviously this sell before the buy leaves behind the fair value gap. This is the area of demand below liquidity. And then a lot of these candles in here that don't leave any real fair value gap, but this one, this does, right? We have the sell and the aggressive buy candle that first and foremost left behind the fair value gap, which has now been filled, but only part partially, right? We haven't even come back to the body yet. So, that for me is just an area of interest.
Now, what I will say is, in my ability to use discretion, meaning my own critical thinking of logic, if price hypothetically came into this region in here, not in this zone or in this zone, and gave me my lower time frame entry model, I would still trade this, right? Because it's just logic. I'm just trading price action primarily, but I'm trying to identify key points where price may want to reverse. So, there are a lot of times where price will come, you know, something like this, and then shift, and I'll still take the trade. And sometimes in those scenarios, price will come in, give me the entry, I'll take the trade, and I'll take a loss, and then price will come back in here, and then I'll take the trade after that, right? But nonetheless, it's just about essentially some level of discretion. But everything is just objective thinking. You can very clearly see the objectivity behind my thinking and my logic. So, I wouldn't take these because they're not in the discount, and they're therefore this is an early buyer area. This is, uh, it was subjective, still early buyer area for me, but with the equal lows, it makes it completely void. These don't have any equal lows, and obviously, this is the, the, the final area of price to be able to respect this leg.
So, let's play price until price comes into these levels. I literally sit and wait. I have no need or desire to get involved with anything because price hasn't shown me the, it hasn't shown me anything worth getting involved into. So, it's just a waiting game. And price isn't guaranteed to come into my levels. Price could pull back now and break, and I would re-evaluate my assessment. But price, London, pretty much ranges. I mean, it comes into this first area, you see it has some reaction, and this reaction is probably early buyers, or reaction is probably inducement for early buyers, which very quickly gets stopped out. The same thing happens again. We have the reaction inside of this level. We have some level of reaction, but nonetheless, you know, um, eventually, as you'll begin to see, that reaction fails, right? So, we have reaction, we have reaction, it fails. We have reaction, we have reaction, it fails. This one, which was an interest to me, gets completely just, just destroyed, right? Price trades through it. Doesn't even give me an opportunity to go to a lower time frame and look for an entry. Therefore, that is completely void. So, those three areas fail, which leaves me with this kind of last area in here. And so, if we just play this, you can see then that price comes into this area and immediately has an aggressive reaction.
Now, my entry model is this, right? If we are, and I'll give you it in theory first, if we are, we were bearish, right? On the 15-minute, then we've shifted bullish, we've broken again, great. So, we're bullish on the 15-minute, right? We had this is our price leg, this is our price leg from low to high. We're bullish. We've come at, we've come into the, uh, the discount, which I'm happy to buy inside of that discount. And then we've come, you know, we have one area in here that we want to trade from, another area in here that we want to trade from, right? So, this is what this is what our picture looks like. And so, then just the same as the H4 and the 15-minute when I explained fractals, the same is obviously true for the 15-minute and the one-minute. This is relevant for every single time frame. Every time frame is just a fractalized version of the other time frame. So, just as we had, you know, the 4-hour like this and the 15-minute inside, you would also have the 15-minute and the one-minute inside, right? It's the exact same thing. So, when the 15-minute breaks structure, what do you think is happening on the one-minute time frame? It's obviously bullish. And when the, and the 15-minute starts pulling back into these areas, what happens to the one-minute? Well, it shifts bearish. And so, what we do is when we get into a key area, we wait for the one-minute, just as we did with the 15 and the four, to shift back.
To bullish, that is our indication, and then we go long from there. I'm not just longing based on this; I want another layer of confirmation to confirm that my bias is correct. Because if it is correct, you will see an overload of buyers over sellers. Therefore, that's the only way that you can know that price is increasing. If you visually see more buyers come into the market than sellers, that's the only way that price can increase. The only way that can happen is either you read the data through the candlesticks or you read the actual order book, right? The amount of orders that are flowing into the market. That's it. That's the only way that you can actually do that.
And so I choose to use price action and candlesticks because it represents the exact same thing. There is no difference between the order book and the candlestick; it's one and the same thing, just different representations of it. The same way that there is no different price action, but time frames differentiate the price action across time frames. It's one and the same thing; it's the same set of data perceived differently, and that's it.
So when we come into this area, right, when we come into this area, I want to drop down to the one-minute time frame and I want to see price shift. And so if we look and we go far enough back again, I'm just going to start here because I already know the structure. Let's just say we have a high, we have a low, right? And so this is our swing high on the one minute, this is our swing low on the one minute. Everything, as we've already explained with the principle of structure, until price breaks out of this box, everything is internal, right? Until price breaks out of this box, everything is internal.
So what happens? Price breaks out of the box with a body here. Great. That means that that is our, what? That's our low. Where do we determine our high? Remember the highest point inside the box before price breaks out. Principal thinking: that is our high. And you can see here, everything that I do is the same over and over again. Go and watch all of my YouTube content; it's the same thing over and over again. Nothing changes; it's the same principles. That's how you know when someone actually has a strategy that's consistent. If you see people changing their strategy every week in different videos, you'll know there's a problem.
So this is our high. We break out. That is bearish. We continue the trend. This becomes our high, then we break structure, then this is our high, and then we break structure. So notice at this moment in time, right, let's say hypothetically we can't see what has happened. As we get into our area, we are bearish. And so we do not just go, "Okay, now let's buy." No, we wait for the confirmation. Because if price is going to continue bearish, then just as we've seen in the 15-minute, this high should be respected, right? Price, if we're going to continue bearish, we should see this, right?
But if we see this, what has just happened? Buyers have overpowered sellers. Price is going to increase. Law of supply and demand: if there is more demand than there is supply, then price increases. That's it. It's just principles. So what do we do? We wait. We wait. Price breaks. That is our change of character. That is the confirmation that we were waiting for. Change of character. Okay, great. So everything has come to this. We've literally just dissolved the entirety of the higher time frame, the medium time frame, and the lower time frame for this moment. And this is why our trade frequency, you know, we may take an average of, you know, three, eight, ten maximum trades a month with this system. And again, one of the prop firms released a statistic that said, you know, that basically their best traders trade less. And so I won't get into too much because I don't want to change subject, but everything, wait for this. That's the ability to be disciplined and patient, right?
So we get this, we get our confirmation. Now we know that price, price is, well, we don't know, but we now have all of the confluences to believe that price will trade higher, at least to this high, because this is our 15-minute high. And as we already know, right, if we just look at things, we know that this is our 15-minute. This is just a one-minute representation of our 15-minute. And obviously, if you are bullish, what do you expect? You expect a pullback and then a higher high. To get a higher high, you have to take out the previous high. That's why most of the time, that is our core take profit. Our main target is the high that we're coming from because that's the only logical area we can justify that price will trade to because of the structure. So that becomes the area that we're looking at taking price to.
So with that being said, we now have the value discrepancy. What is that value discrepancy, you may ask? What is the edge, you may ask? The edge is the fact that we know price is going to here, or we have the bias, the probability is higher that price is going to here than it is to go lower. So we think in probabilities. We know that we think that price is going to head here, and we're here, right? So we have all of this room to be able to take a trade, and that is our bias, that is our edge.
So how do we take a trade? Here's how I do it. I will go to the five-minute time frame and look for an order block. And as you've already seen, right, now the order block is typically speaking the final, you know, sell-off, the liquidation before the momentum comes in. So if we look at this objectively, what do we see? We see that price pushes up, price pushes down, price pushes up, price sells off, and then momentum comes in. So the sell-off before the momentum coming into the market, right, this little doji candle, that is my order block, right, my demand zone, as I reference it many times. And so that is where I'll take the trade because my, just through the collecting of the data, this is a majority of the time where price will come back to mitigate. Eight and a half pip stop, right? Again, the stop, the size of the stop loss is completely relative and dependent upon the trade. And then I always go for a fixed target of 5R for my first take profit, just because at least sometimes when there's a much larger trading range, the size of the take profit always varies. The reason is because the trading range is different. So this trading range right now, you know, if it's eight, if it's 8 by 5.5, it's, you know, looking around about a 50 pip range. But sometimes it may be a 50 pip range and your stop loss is a three pip range, you understand what I'm saying? And so you'll have like a 15 risk to reward. But in this scenario, it's only a 5.6 risk to reward because the math of 8.5 pip stop divided by a 50 pip range gives you a 5.61R multiple. So the size of the take profits always changes.
So what I do is I always take a fixed profit at 5R because sometimes when there's a large range, if I have a 150 pip range move or, you know, even if I have a 70 pip range move, I can still be wrong in my overall judgment of the structure and still make money because price, a lot of times, can still have some sort of move where it will give me a 5R, you know, in here for example. In some scenarios, I'll get my 5R and then price will come back and take me out, and I'm wrong, and I still made money. And so that's how I've ensured that over time. But then my second, and my second take profit is this 5.61. And what I'll do is, as a third take profit, which I leave a very small portion of the position on for, I will fill this fair value gap, right? Again, usually looking at around 10% or so of the position, I'll fill that fair value gap.
So what I'm looking for, if we just recap for a second, is I'm looking for higher prices on the 4-hour. I've confirmed it because the 15-minute is bullish. Now I'm in the discounted region of that 15-minute time frame, coming from an area of order block. We've taken out a bunch of internal liquidity. We're looking at taking out this high. We've had our lower time frame confirmation. And so now the one-minute is aligned with the 15-minute, which is aligned with our overall objective. And I'm looking at taking 5R, the 15-minute high, and filling the 4-hour order block as my three take profits. That is literally the trade. And you can literally go and backtest this all you want. And yeah, that is, you know, the predominant edge that we teach inside of our mentorship program. We have a couple of different systems and different strategies, but this is a predominant strategy. And that's pretty much it. You know, there is more to it, because, you know, when to use discretion, when to not use discretion, blah, blah, blah, but let's keep focused here for now.
So, you know, subjectively, maybe we got tagged in, maybe we didn't. You know, maybe we didn't get tagged in because of spread. But anyway, price ends up coming back in for definite and tagging us in. And now I just want to go to break even when we take out this high. I only go to break even when we take out this high. Okay, we've taken out the high. Only liquidated it. In some scenarios, I'll go to break even. In some more, that's where discretion comes into this. And anyway, we end up taking the high.
If we go to the 5-minute time frame, there's another key thing that I want to show you because it's how do you scale into a position, right? And so again, just following the order flow, what we can see is we've had the shift, right? So currently we're looking at, you know, low to high in this internal range. Let's play price, okay? So the high is now here. Let's keep playing price till we have a pullback. So there's our pullback. Great. And then what happens? We trade higher, right? So in this scenario, we've just broken out of the range on the one minute, at least. How can we scale in? Well, we're looking again at what we're looking at, the final sell before the buy. When in reality, the final real sell comes from where? This final candle in here, which has a fair value gap. Right? There's still a fair value gap inside of there. The first doesn't meet the third. If I go to the one-minute time frame, you'll see very clearly a sell before a buy. And that's how you can scale. That's how you could potentially scale into this position, or if you miss the first entry, get involved in the second one. And the rules would be the same, as long as it's a 5R, then it makes sense. And sometimes you have to adjust the size of the stop and stuff to make it a 5R. For example, here it's a 3.94. In a scenario where it's a 3.94, if you want to get into this trade, minimum risk reward has to be five. And a lot of the times, what you will genuinely notice is that just as we did here, price will often times pull it in, you know, sometimes 50%, sometimes even 75%. Sometimes it comes right next to your stop loss, but often times it will come at least 25% in. And so just making something like this, right, and just lowering your entry just a little bit, risking the chance of not getting tagged in, but making sure that you have your minimum risk rewards set, that's the only thing that you can really justify. And so maybe you look at getting involved in a position like that, providing price doesn't take the high. If price takes the high, then you obviously can't get in. And you can see this, just one of those scenarios, right? I had to refine it to meet my risk reward. If I didn't refine it, it would have tagged me in. I had to refine it to meet my one to five, and therefore I didn't get tagged in. And that's just somehow sometimes how the cookie crumbles.
So we've just hit the first take profit for the first position, right? If we remove this for now, we've just hit the first take profit for the first position of a one to five. We're looking at price trading into here. So I've taken 50% off. Next is the higher. Next is the high. And now we've taken that. So then I'll take off, you know, the 80% of the remaining 50%, which leaves around about 10% or whatnot. And then we'll just look at taking that up to this order block, this 4-hour order block. 10%. I have no emotion left on this position. And small amounts of percentage flow in open already, taking the predominant amount of my profits. And yeah, pretty much that just is the all in all.
Now, what I've done is below this video, there's a link for a free training, right? It's a free training. And in this free training, I'm going to go deep into the stages that you have to go through to be a profitable trader. So that isn't anything to do with technicals, really. It's the actual blueprint that I wish somebody had given me when I first started trading. Because I thought that I could just take this strategy and then go and be a profitable trader, but the reality is is I'll give you the strategy and I can guarantee that 99% of you won't be able to go and use this and become a profitable trader because you won't do it in the right order. You won't follow the right steps. So below, I've given a completely free training on what those steps are and how to move through them so that you make sure that you learn correctly, cut your learning time in half, and get to your goal, which is a consistently profitable trader, managing multiple six figures from prop firms and trading full-time. Enjoy, and don't forget to subscribe if you found value in this video. Ciao guys.