[0:00]Alright, ladies and gentlemen, welcome back to another video. In today's video, what we'll be taking a look at is how we can identify a perfect trading setup using my strategy, because a lot of you guys know how to use it, but you do struggle finding like the best high-quality setups, you know. Sometimes people say, how did you cash this trade? I totally didn't even see this one, or for example, they executed it incorrectly, even if they saw it.
[0:20]So, today we're going to do a complete A-to-Z dive into exactly what the best possible trades using my strategy will look like and how you guys can also trade that exact same way. And by the end of this video, you guys should be able to consistently cash the best possible trade of every single trading day.
[0:33]So, let's directly get into understanding how to find this setup. So, as you guys know, my trading strategy is the break of structure for alley gap, okay? It's a very simple setup. It has only two steps, which is going to be a break of structure or a breakout. And then we're going to wait for a fair value gap after that breakout and enter on the confirmation in the fair value gap retest.
[0:50]So, nothing really crazy that goes into it, it's just two simple steps and then entering on a fair value gap retest. So, the way this works is you're going to wait from 9:30 AM Eastern time all the way until 9:40 AM Eastern time every single day, okay? So that 10-minute period, you are going to do nothing. You can go on your phone or just watch the screen, whatever you want to do, but just wait.
[1:06]Then, exactly at 9:40 AM Eastern time, okay? You're going to see from 9:30 to 9:40, what's the highest point that price hit and what's the lowest point that price hit, alright? And the reason we're doing that is because price is just bounced out in that 10-minute period of the New York open, so this is where the most significant highs and lows have come in, alright?
[1:23]So, in this case, let's say this line right here is 9:30, this is 9:40. I look in between that, the lowest point we hit was right here and the highest point we hit was right here. Next, what you're going to do is you're going to wait for price to break either that high of day or the low of day. So, in this case, we get a break to the high of day right here, okay? It doesn't matter which side it is, it just has to be a strong break of either one of those levels, alright?
[1:42]After you get that breakout, you want to see a fair value gap form, again, very close attention to this part, after the breakout, okay? If it's all the way down here, I could care less. It means nothing to me. It has to form after the actual breakout itself. After you get that fair value gap, all you will do is you will wait for price to pull back into the fair value gap, and that is where you will take your entry.
[2:02]Very close attention to this next part I'm going to talk about, alright? This is where a lot of you guys go wrong and this is what makes the trade perfect versus not perfect, alright? When we get a pull back into the fair value gap, alright? There are three candles that you want to see. Now, I'll rank them in order to give you guys the best possible entry.
[2:18]So, the strongest entry that you can possibly get is going to be just a very strong green candle with no wicks, nothing. So basically, price will tap into the fair value gap right over here and it will get a very strong green candle push out of it. So that is the strongest candle that we want to see. You are going to have a candle that opens red initially and then flips to green. So that will look something like this. It will be a green candle with a very strong wick to the downside right here, alright?
[2:44]This is also beautiful when the candle first initially taps into the fair value gap and it's red and it flips to green. That is another very strong entry, okay? Not as strong as the first one, but again, super strong still, alright? And the third one, which is one that I rarely use, I mean, you can still use it sometimes, but like it's not going to be as strong as the first two, alright? Will be if we get a crazy wick, alright?
[3:09]But it doesn't fully close green. So, it's still a red candle after tapping into the fair value gap, but it didn't flip to green, alright? So, that's still a strong sign, but it's not going to be as strong as these first two right here. So, I don't use that one as often, but still will use it in some cases that you'll see in a second. So, that right there is the confirmation which does make or break a perfect setup, alright?
[3:28]Again, one thing I want to talk about, 1 through 5-minute time frame is what we're using for this setup, alright? And people say, how do I know when to use the 1, 2, 3, or 5-minute time frame? Very simple answer. If you have a 1-minute time frame fair value gap, 2-minute, 3-minute, and 5-minute, you will go for the 5-minute, alright?
[3:44]Let's say there's one on the 1-minute time frame and one on the 3-minute time frame, you will go for the one on the 3-minute time frame. So, essentially, you're going for the ones that have the highest time frame, and that's going to be the most powerful one. So, usually, like 90% of your trades will be on the 1-minute time frame because that's the one that shows up most often, but the strongest one is going to be the highest time frame fair value gap that you have.
[4:05]So, if you have a few opportunities, a few different fair value gaps, you will play the one that's on the highest time frame. And one last thing that I do want to talk about before we get into our live trade reviews, is the second way you can use a break of structure fair value gap, which is going to be very rare. I trade it maybe like 5% of the time, once again.
[4:20]But there are some trades that you'll see me take using this way, and I'll explain exactly how that works. So, the first way that we use the levels in the break of structure for alley gap is from 9:30 to 9:40 AM Eastern time. However, you can also trade the levels in the pre-market session, which is going to be from 4:00 to 9:30 AM Eastern time, alright?
[4:39]So, I sometimes take a trade with that, it's not going to be really common for me to do that, but occasionally, you'll see me do it, alright? And the way that works is, you will look for the highest point that price hit from 4:00 to 9:30 AM Eastern time. So, in this case, you have the high right here and the low right here. And instead of using the 9:30 to 9:40 AM Eastern time highs, you can also trade based on these.
[5:01]Again, to not confuse, if you guys are not fully advanced or fully profitable with trading in general, don't worry about this, okay? This is not something you want to worry about. Just focus on the 9:30 to 9:40 AM Eastern time. This is more for the people that are, uh, very advanced with my strategy or trading in general. You guys can mix this in sometimes and it will give you some really solid setups.
[5:19]So, that is everything you guys need for my strategy, alright? And that is what will make an A+ trade. Now, what I want to do is, I want to take a look at some live examples of trades that I've taken so you guys can see exactly what I'm looking at, exactly how I'm executing on it, and how you guys can also do that in the live market.
[5:37]So, with that being said, let's go ahead and take a look at our first example. So, this right here is a trade that we took on Amazon on the 1-minute time frame, okay? And let's really break down exactly what's going on with the setup, right? So, 9:30 AM is right over here. As you guys can see, that's 9:30.
[5:49]We wait for 10 minutes afterwards, so we keep going, we keep going. Where is 9:40 AM Eastern time? Boom! This is 9:40 right over here. What is the highest point and the lowest point that price hit during that first 10 minutes? This is the highest and this is the lowest, alright?
[6:04]So, first thing we have down, right? We have our high of day and low of day sorted, so that is step number one, down, alright? Number two is I look for a break of structure, alright? But very, very close attention one more time because this is where a lot of you guys might get confused. We got a break of structure. So great. First step is down. We have that. The downside got a break of structure, alright?
[6:40]Remember, if I have a break of structure with no fair value gap, that is no entry. If I have a fair value gap with no break of structure, that is also no entry. It has to be both together in order to take that trade, alright? Now, so price takes out the low, forget this stuff, nothing happens. It comes and rips to the high of day and we get a very strong break. So, once again, we just got a break of structure of the high of day level this time.
[6:58]So, that is step number one, down, alright? Step number two, what happens? Fair value gap actually forms after the breakout. So damn, we have break of structure and we have a fair value gap. So, what do we do now? Let's continue back to what we were just talking about, guys, alright? When we have the break of structure and the fair value gap left, I will look for the retest and it must show me one of these three candles in order for me to take that trade, okay?
[7:27]So, Amazon, let's see what happens. So, Amazon taps into the fair value gap and boom. What do we have in this situation? Beautiful candle that initially opens red and then flips to green. What was that? That was number two that we talked about. So, this is a valid confirmation. Boom, we're good to go. Let's take that trade.
[7:45]So, you're entering on the trade, okay? And where do I place stop loss? Where do I place target? I will give you guys the two ways that you're able to do this. Number one, you can go for a fixed risk reward. If you are newer to the strategy or trading in general, stick to a fixed risk reward. So, the way that will work is basically, I'll place my stop loss underneath the fair value gap and I will look at where is 2R from there, okay?
[8:12]So, if I took my entry there, I will take a look for where my target will be, will be 2R. I'll end up dragging this risk reward tool until I see the number two and this is where I'll exit the trade, alright? The second way you do that is you go for the next 1-hour highs and lows. So, in this case, this is the way that I trade, which is much more advanced. It's a lot more complicated, so again, if you're not fully there in trading, forget that, don't do that.
[8:31]But I target that, so I know my exit on this trade will be at the next 1-hour high, alright? So, once again, everything is sorted here. You have the most perfect possible setup. So now, let's see how this trade plays out and let the trade run, okay? So, if we take a look at this, stop loss or take profit, whichever one hits first, that's the one we close and boom!
[8:50]I got my target hit right there. Absolutely amazing and we're done with that trade. Absolutely beautiful, okay? Let's move on into our second example because this one was just a perfect example. I mean, you really can't go wrong with that. And that's a textbook setup, alright?
[9:05]Now, this second one is another one that we took again on the live trade, and I do have all of these recorded, by the way. So, if you guys want to go back afterwards and watch them in the Discord, it's all for free. Go ahead. I have a whole library of every trade that I've taken live, and you guys can watch it and see my executions in real time, alright?
[9:20]So, this is the same exact situation, guys. What are we doing? 9:30 AM opens right there. Okay, let's wait 10 minutes and go to 9:40. So, 9:40 is right over here. Highest point that we hit and the lowest point that we hit, we have that all marked out, alright? Now, price gets a break of the 9:40 low. Beautiful. That is exactly what I want to see. I have my 9:40 low taken out. I have my break of structure.
[9:45]Now, what am I waiting for, guys? Fair value gap, right? Number two. Do we have a fair value gap? Absolutely. Right over here. So, what is number three? We need a retest and it must be one of these three candles for me to take a look at it and be like, alright, let's go. Lock that in. So, in this case, let's see what happens, alright?
[10:01]Price, nothing so far. Let's see. There we go. That's exactly what we want to see. So, price taps into the fair value gap, gets a very long wick. Now, this is what that candle was. It's a candle number three. However, I can still take that trade. Is it the highest possible quality one? No, it's just like an A- trade instead of an A+. Okay?
[10:20]If this is A+, this is an A, and this is A-. So, you hop in that trade, okay? Because you have that rejection. Price got a green candle and it flipped back down pretty hard, right? So, you take that trade. If you are trading based on what's your risk reward, you will drag this until you see number two. Let's see, number two is going to be right over there. Okay? So, this is where a two risk reward ratio will be, and your stop loss is right above the fair value gap, alright? At the high of this middle candle.
[10:52]So, criteria, once again, break of structure, fair value gap, beautiful confirmation. Now we wait and see what happens to this trade, alright? Price drops, drops, drops, and you get your beautiful move right there, okay? Textbook. Again, I use the 1-hour low for this trade. So, if we go back, what is the 1-hour low in this situation? That's my target, okay?
[11:15]The next 1-hour low is what I use and I personally get more profit, obviously, but it is sometimes tricky for new traders to find that, so that's why I say, you know what? Fixed risk reward will make it easier for you. Now, let's take a look at one more example, and this one's going to be on the video, and it will explain what we were just talking about right over here where I said the pre-market levels versus the high of day level, and when we use that, okay?
[11:33]So, if you guys take a look right here, anything in this tan line right here, this tan colored area, is going to be the pre-market levels. So, what am I doing in this situation, guys? I take a look, what was the highest point that price hit from 4:00 to 9:30 AM Eastern time? So, in this situation, you can see your lowest point is right here and your highest point is right here. When we get a very strong breakout of that level, this is the rare case that I will use the pre-market high levels, alright?
[12:00]Price takes it out, super strong. One green candle, another massive one, another massive one, another massive one. So, instead of waiting for the 9:40 candle, I just enter that one based off the pre-market high levels. Again, much more advanced. Do not do it if you're still a beginner, alright? Now, we have our break of structure, we have our fair value gap, and another thing that I want to cover. People say, okay, we have one fair value gap there. We have another one here. We have another one all the way down there. How do you know which one to take the entry off of?
[12:30]And the answer to that is usually the first one that we test. So, in this case, let's take a look at this and see, alright? Price pulls back into the fair value gap. Am I taking my entry here, guys? Absolutely not. Why? Because it has not given me number one, number two, or number three, alright? So, we continue waiting and see what happens, alright? And then you get the green candle right there. That is number one. So, I take a look at that.
[12:54]Once that candle closes, boom, ready to go, alright? At this point, you will calculate where is 2R once again, alright? And you are good to go on this trade. So, you're in. You have your break of structure, fair value gap, and you have your 2R set. Your confirmation is also beautiful. Nothing more that you could ask for. So, let's see how this trade goes and see where, um, we get a move to, alright?
[13:16]So, if we continue, you get a beautiful push, takes out your 2R, and that is all you guys need, alright? Every single day, you will get the same exact setup. If you actually lock in and you take a look and see, okay, do I have these three things? The confirmation is the key, okay? A lot of you guys mess up on that part. If you lock in, you wait, and you get this, you will crush it day in and day out in the markets, alright, guys?
[13:40]So, very simple stuff, guys. It's genuinely the best strategy out there. Super simple, clean, concise, and there's not really much to it, correct? It works beautifully on futures, options, crypto, forex. I mean, there's nothing that it doesn't work on as long as it has volume, then you're good to go. So, I hope you guys enjoyed this. I hope you guys got a little bit more insight into what makes a perfect trade for this setup.
[14:00]I will also be hosting another free class on February 17th covering this stuff, so if you guys want to join in for that, I will leave a link in the comment section below. You guys can sign up. And also, if you guys have any questions, feel free to drop them down in the comment section below or on the Discord. I'm active on there 24/7. You guys can drop any question anytime there, and I will be answering it as soon as possible. So, with that being said, everybody, take care, enjoy the rest of your day, and I hope you guys learned something from this video and you guys are able to apply this correctly in the market.
