[0:00]I made two and a half million dollars and broke the prop from payout record using one strategy, which may seem boring to some, but if there's anything I've learned in my 14-year career, it's that sticking to one simple strategy is the key to real success.
[0:13]Today, I'll teach you my three-step strategy and show you multiple examples, so you can finally stop blowing accounts and become a profitable trader.
[0:19]So, the first step is to build a plan using the higher time frames. Now you've probably heard about daily bias, but the truth is that 90% of people talking about it get it completely wrong, and without this, you'll never stop blowing accounts.
[0:30]So, let me explain. Let's talk about the elements of daily bias. What does it actually include? And why do I use these higher time frames?
[0:37]So, what we're looking at is our higher time frame trends. So that means the weekly, daily, 4-hour, maybe even the monthly time frame. So, if I have a bullish bias, I'm looking for higher highs and higher lows to form and continue.
[0:49]And if I have a bearish bias, I'm looking for lower highs and lower lows to form and continue. And then when we have market structure shift, that's when typically we'll maybe see a trend change.
[0:58]So, let's draw this out real quick. What we're looking for with a bullish bias is that the market is just going to continue making higher highs and higher lows.
[1:06]And a lot of times what happens to a lot of traders is that they see these dips here and then all of a sudden get short. And where they end up getting short is they get short at the bottom of the market.
[1:16]So, instead of riding this trend higher, they're always assuming that a top is being put in place. They try and go short, maybe it just rejects the low and then keeps going higher.
[1:25]And that's the issue with, I would say 90% of traders out there is that they don't know how to trade with a trend and they don't know how long the trend is going to continue for.
[1:31]Which we all never know how long the trend is going to continue for, but in my opinion is always better to trade in line with where that higher time frame chart is going. So if the weekly is continuing to make higher highs, higher lows, and lower highs, lower lows, right, we should be leaning on one side of the market. So either bearish or bullish.
[1:50]Now, when it comes to a market structure shift identification, we're looking for a closure and a follow-through of that level. So, if we have an old low here, what I'm looking for is an actual closure below that level.
[2:00]And then if we get a retest, I do not want to see it take out this high. So, as long as this high is being protected, I would say any retracement higher is just manipulation to try and get people to go long again.
[2:12]If the trend is going to change, we actually want to see a lower high being put in place and then shifting, and then maybe if we get in early enough, this trend change will signal lower prices eventually.
[2:22]So, the biggest key here is that we are not trying to determine or predict when that trend is going to change. We have to be able to see it in the market.
[2:30]So, we have to be able to see these levels being closed above or below, right? To signal that trend change.
[2:36]And what'll happen a lot of times is traders love to try and pick tops and bottoms. So, if a market is just completely rallying higher and higher and higher, traders for some reason love to try and predict where that top is going to be.
[2:47]You know, you probably see it and hear it all the time. People say, we're in a bubble, the bubble's going to crash. Well, sometimes the bubble will just continue going higher and higher and higher, and instead of you just riding that trend higher, you miss out on a lot of gain.
[2:59]So, as long as, you know, our weekly, daily and 4-hour charts continue respecting old lows, they continue breaking old highs, right, getting market structure shifts, above these old highs.
[3:09]As long as that continues happening, there should be no reason for us to try and pick a top, assuming when that trend might change. What we actually want to see is the charts actually telling us before we predict it, okay?
[3:20]So, you trying to predict when that top is going to be put in place is a lot harder than waiting for the market to actually tell you.
[3:27]Because if the market is telling you it's ready to change trends, at least you can position yourself properly, and you're not the first one into a market. You know, there's that saying, the first one through the door always gets shot.
[3:36]And if you guys experienced that in your own trading, you guys can agree with that. If you're the first person trying to sell a market as it's going higher, or the first person trying to buy a market as it's going lower, often times you're getting ran over because maybe it's going to go lower.
[3:49]And then when that actual move does happen, where it does, you know, shift momentum and start going to the upside, now all of a sudden you're extremely unconfident in your trading, then you miss out on the larger moves when it does change and go in the direction that you expected to.
[4:02]So again, market structure for me is very big. Is the market creating higher highs or is it creating lower highs? Those two things will help you determine if you're bullish or bearish on a specific market.
[4:10]Now, the next thing that goes into daily bias is finding an actual target. So old highs and old lows where significant trading activity occurred, maybe it's a previous monthly low or previous monthly high, maybe it's previous weekly low or previous weekly high.
[4:24]Maybe it's equal highs and lows where multiple levels align. So, this is a level that I typically like trading. So, we have, you know, double tops that get built up, and there's level of liquidity above there, I tend to like targeting those levels as we start trading towards it.
[4:37]You know, vice versa, if we have equal lows and there are levels that become very obvious where the market may want to trade to, that's what I like looking for.
[4:45]Typically, if I don't see specific level that really jumps out at me, as far as a target, it's much harder for me to take a position and it's much harder for me to hold that position.
[4:55]So not only that, if you're a short-term trader, you're going to be looking at previous day's highs and lows acting as those liquidity magnets. So, if you don't have a higher time frame equal high or equal low setup, maybe you're just going to target the previous day's high if we're bullish, and maybe you're just going to target the previous day's low if you're bearish.
[5:10]Okay, those are very short-term targets. Now, trend confirmation, price respecting old lows/highs to continue trend, retesting and rejecting higher time frame fair value gaps.
[5:20]So, as the trend is going higher, right, you might have old lows here that it gets really close, right, trades down to a discount, gets really close to that old low, never penetrates it, and then goes higher.
[5:32]Or we may run out short-term lows and then reject afterwards. Okay, these are both characteristics of a bullish market. So, it could do both.
[5:40]It could respect those old lows, right, and trade away from them, or it could purge those old short-term lows and then go higher. Okay, those are both still characteristics of a market trading higher.
[5:50]Now, when I talked about the market structure shift, sometimes we'll get a close and then a quick rejection. Sometimes we might might take a loss on that specific idea.
[5:57]Okay, so if we take a loss and we close below the low and then it rejects shortly after, well, maybe we want to shift gears again and get back on board with the bulls.
[6:04]So, a big thing that I'm looking for is can I predict the next 24-hour or daily candle? Do I have a very strong indication of where that next 24 or 48 hours is going to trade to?
[6:15]So, often times if we get a rejection right away on that next day, I'm looking to go long. Okay, I'm not looking to trade it for multiple days. I'm just looking for that next 24 hours to have that some continuation.
[6:25]Vice versa, if we trade into a fair value gap. Let's say we have a fair value gap that's down in here, and then we reject. That next 24 to 48 hours, I'm looking for it to continue higher.
[6:34]Okay, so things to avoid. What I typically avoid is when the market is neutral or ranging for days with no clear direction. Okay, we don't have any fair value gaps.
[6:44]We're not anywhere near old lows or old highs. Maybe we're just trading in the middle of a range. Okay, so we have a previous swing high, we have a previous swing low, and we're just seeing the market kind of trade in the middle of that range.
[6:55]We're not rejecting any fair value gaps, maybe there aren't any fair value gaps. A lot of times, I'll just wait those markets out, which is why I have a larger watch list that I can follow, because there may be other markets that are trading into fair value gaps that are rejecting those levels, and I would prefer to go into those markets when it has a clear direction, rather than trying to trade in market that is neutral or ranging.
[7:14]Conflicting high time frame structures or maybe even fair value gaps. Maybe there's a bullish fair value gap and a bearish fair value gap above and below you.
[7:25]When those scenarios are typically in place, it's more of a coin toss. We don't know which levels can be respected, we don't know which levels going to get traded through, and we don't know which direction the market is going to continue.
[7:33]So, when that happens, I typically wait it out and wait to see which direction the market wants to go. Okay, if it wants to go higher, I want to see that sell-side imbalance be penetrated through and then continue higher.
[7:44]And then also markets with equal liquidity on both sides. So, if we have a market that has equal highs above us, but then there's equal lows down here as well.
[7:54]Okay, and maybe the market is trading somewhere in the middle. If the market is currently here, right, and we have equal highs and equal lows, I am sitting it out because I don't know if the market is going to trade lower first before going higher.
[8:05]And I don't know if the market is going to trade higher first before going lower. Okay, this scenario, we have liquidity on both sides, is basically just setting up the markets for a major trap.
[8:14]It's going to try and trap retail traders on one side or the other and get them in the wrong positions early.
[8:20]So here are just some examples on the S&P chart. So, as you guys can see, this market is creating higher lows and higher highs as the market is trading higher.
[8:30]So very clearly, we have been in an uptrend. Now, that doesn't mean that there isn't short opportunity, but the skewed risk to reward is on the upside.
[8:39]So, even though there are bearish days, if you are swing trading or even if you're day trading, the larger risk to reward opportunities are on the upside.
[8:47]So, even if you're taking losses as the market's trading lower, if you can position yourself long, if the market is going lower, right, you are finding those better opportunities as the market's trading higher.
[8:56]Because overall, the market is trading higher. And until we start losing this market structure, right, we need to get closures below old lows, we need to see bearish fair value gaps being printed, and we need to see lower highs and lower lows being printed.
[9:10]And until that happens, I'm mainly just leaning long on these markets. Now, when it comes to targets, we need to find obvious levels, and these obvious levels for me are levels where there are a lot of lows or highs being printed in a one specific area.
[9:24]So you guys can see here that we have these old lows, yes, but we have lows that are lining up with them that are very close to each other. So here we have equal lows.
[9:34]So there are a lot of equal lows in here. And up here there are a lot of equal highs. And even on the lower time frames, you could find areas where we have these shorter term equal lows in place.
[9:42]So, when I have an idea of where the market is going to go, I am trying to find these areas where it makes sense to trade to, and then wait for the reaction from them.
[9:50]If we don't get a strong reaction away, it's likely to just continue trading to the next target. So you guys can see here that we got a major flush on all of these old lows here.
[9:59]So up here, if we get a market structure shift, right, taking out an old swing low and get a closure without any real response. You guys can see here that we got a closure here on this next candle.
[10:07]We are going to start targeting the equal lows down here. So, once it trades to that target, though, we might not have an indication of where the market is going to go. We might have to wait, wait it out a couple days to see where the next target is.
[10:18]So, after we take out these lows, if we don't get a strong rejection again, we are now trading this again as another market structure shift. And if it continues dropping lower and lower, there are other targets on the downside.
[10:29]And then when it rolls over and we start getting the market structure going to the upside, now we have targets here and here, and all the way up here that can then be the target. You guys can see here, this takes a very long time to get to.
[10:43]But this is a level of equal highs that eventually get purged out of the market. And then fair value gaps, right, we want to see retests and rejections.
[10:50]So, even if we have a bearish fair value gap, if it doesn't reject and continue trading lower, and it gets inverse, right, we can use these levels as they get traded away.
[10:59]You guys can see this bearish fair value gap here. Once we got above that level, we got a nice retest and then rejects and continues higher.
[11:05]We have this bullish fair value gap here, retesting, rejecting, creating another fair value gap, retesting, rejecting, right, and as it goes higher and higher, we have these fair value gaps.
[11:15]Some of these don't get retested at all. But if that order flow is telling you the market is bullish, right, it's creating that fair value gap, the next candle is trading higher.
[11:22]You guys can see here, each daily low is being respected as it continues higher. So all these things, right, market structure, having a specific target and using fair value gaps, help me determine what my daily bias is.
[11:34]And I used to trade against this flow of the market without realizing it. I used to try and pick tops and bottoms, and learning how to read this daily bias through this, through liquidity, through market structure, changed everything.
[11:46]Now I follow smart money instead of fighting them. Getting clear on the higher time frames is cool, but this alone won't make you any money if you don't know how to avoid getting faked out.
[11:53]And that's exactly what I'm going to teach you. So not only are you going to avoid fakeouts where most traders lose, but how you can turn the tables and make money from them.
[12:00]So, what we're looking for is a liquidity raid. And if you don't know what a liquidity raid is, we're going to talk about it. So, what does a liquidity pool look like? Why do markets need to raid those stops and what is the swing failure pattern?
[12:11]So, what a liquidity pool looks like is just what I talked about. A level of equal lows, or maybe it's a significant lower high, where stops are being built up.
[12:20]So the market is generating all of this interest where retail is putting their stop losses. So the market often needs to trade to these levels to generate interest, maybe it's stopping out a ton of retail traders before going in the continued direction.
[12:33]Right, because the market needs liquidity to operate, and they're trying to screw over as many traders as possible. So, they're trying to trap traders above those old highs when the market is going lower.
[12:42]Or they're trying to trap them short as the market is going lower before it goes higher. So, what is a swing failure pattern? The swing failure pattern essentially is we have an old swing point.
[12:52]And what I look for, if I'm bearish in this example, is I want to see a raid on that old high, and then I need to see a closure back below that old high.
[13:02]That to me is a signal that this bearish market structure, maybe the high time frame is overall bearish, right? This to me is a signal that they are trapping traders, trying to get long in the market, especially if I have an overall bearish bias.
[13:13]This is a signal where I can lean short and have the understanding that they've already purged out whoever was up here, right? And I'm trying to take the opposite position of that trader.
[13:24]So vice versa, if the market is overall bullish, I'm looking for a short-term low to be raided and then a closure. Okay, so it needs to close back above that old low in order to create a swing failure pattern before going higher.
[13:36]Because then it allows me to understand that this is where traders are being trapped. They're trying to pile in on the markets here and accumulate their longs again before that next run higher.
[13:45]So here, I'm going to go through some examples of that swing failure pattern. You guys can see here that we do have these old lows here, and I'm waiting for a strong rejection from that low.
[13:54]So once we get that strong rejection from the low, this becomes a swing failure pattern. You guys can see that we never got a closure below this low.
[14:00]This candle never closed below that low. Just get a really long wick. And the wicks do the damage. The wick will take everybody out of that trade, get everybody to short at the lowest point of the market.
[14:10]Then when we get a closure back above here, right, it closes back above the low, we're targeting the next point in the range. Okay, so typically this will happen at the low end of the range.
[14:19]Right, we take out the low, we purge all that liquidity out, and then it turns around. You guys can see here, it did the same thing here. So, we took out this low here, purged the low.
[14:28]As soon as you get the closure, it goes to the range high. Okay, so as soon as it closes back above that low, we can understand that there's a lot of traders getting trapped inside of that level.
[14:38]So you guys can see here, a lot of traders that went short on the market, get trapped in here, and then it trades to the opposing end of the range.
[14:44]So again, the swing failure pattern will occur when that next candle closes back above that old swing low.
[14:51]So here, we purge the low, it doesn't get a closure. You could even go long here, put your stop loss below that previous low because we got a closure here.
[14:59]But even if you waited for the bullish rejection here, maybe you got in on this candle after closure, right, we're targeting the high end of the specific range, from this low to this high.
[15:07]And again, here, we have this swing failure pattern here, where we've taken out this old low. You guys can see here that this is where all the bears get trapped.
[15:17]And then where does it go? It goes to the swing high in the range. So, now you've got the higher time frames down, and you know how to avoid getting faked out.
[15:24]Now, let's talk about why you're all here, how to find the best trades. So, if you want to see me break down more examples of this strategy and get access to my complete trading checklist, I've put together a free Blackbook resource that goes even deeper.
[15:33]I'll leave that link in the description below. Now, the final piece. So, after the raid, we're looking for a very simple and obvious sign that even beginner traders can use to find these trades easily. Yet most traders completely miss this.
[15:45]And I'm talking about displacement. So, what actually is displacement? The characteristics of it are large bodied candles, break in market structure, and a fair value gap creation.
[15:55]So, what we're going to do is identify a clean fair value gap after the swing failure pattern, entry position within the gap or after rejection, and then a stop loss placement, which I'll talk about in just a second.
[16:04]Then we have our target selection. So, going back to those examples that I had just shown. Okay, after we took out that old low, we are waiting for displacement higher, creation of a fair value gap.
[16:15]So, you guys can see here after we took out this old low, right, we got a very, very strong closure here. But now we're going to wait for a fair value gap, which doesn't occur until the next day.
[16:24]We get a fair value gap here, and then we have a logical place to put our stop loss. So, once we have our fair value gap, we can either use this low or the low down here.
[16:33]And then we're going to target the high of the range here. So, you guys can see here that this is a 4R risk to reward setup.
[16:39]Another example is here. So, we have this old swing low back here. Then we're waiting for a swing failure pattern.
[16:44]We're not taking any trades until we get a run on an old low and a rejection. So, we have this run down here, and then we get a strong rejection. But we're waiting for displacement, right?
[16:54]And let's say if we don't have a fair value gap that appears, maybe we have a fair value gap that gets inverted. Okay, so we have this fair value gap here that closes through it.
[17:03]Now, if the market were bearish, why would it close through that level? It wouldn't, right? So, now that we have swing failure pattern and displacement above a bearish fair value gap, we can still use this fair value gap for entry.
[17:15]So, as it trades back into the inverted fair value gap, we're going to go long. You know, maybe you could use the stop loss at the low end of the fair value gap. That's pretty aggressive.
[17:21]Or find a swing point that's lower. Okay, so I put my swing, my stop loss down here and targeting the high of the range, which is the old previous daily high.
[17:29]You guys can see here as well that these are equal highs in here. If we were to play in this trade out, it would be a 2.4R. And then one last example.
[17:37]So we have this swing failure pattern here. So, we have this old low, we're getting a purge of that old low, and then we're getting strong displacement through this fair value gap here.
[17:46]So, the fact that we are so close to the target, you may not want to take this trade, and this is kind of where you're going to filter out your trades as well.
[17:51]If the risk reward is not high enough, and we're already too close to the target, you might want to pass on this trade. You now have the full strategy, but as we both know, the strategy alone isn't what got me to where I'm at.
[18:00]What got me here was the years of lessons of how to think, how to manage my emotions, how to stay consistent, and the other things that make a real trader.
[18:08]Many of you will watch this video and then another, hopping from strategy to strategy and staying unprofitable.
[18:13]But for those of you who are serious about becoming a successful trader this year, I'm opening up a limited amount of spots to work directly with me. If this is you, click the link in the top of the description to apply now.
[18:23]So, there you have it, the complete boring strategy that generated my biggest payout ever. Three simple steps: find a clear daily bias, wait for liquidity raids, enter on displacement with fair value gaps.
[18:33]Remember, the market doesn't reward complexity, it rewards patience and discipline. Master these three steps before you try anything fancy. You now have everything you need to trade profitably.
[18:42]Stop overcomplicating it, start following this process, and I'll see you guys in the next video.
