A trader shows how to use the first five-minute candle of the day (9:30-9:35am EST) to set daily levels, then switch to a 1-minute chart to trade a three-candle fair value gap breakout with a 3:1 risk-to-reward target.
I use one candle to trade every single day and it just works. It's stupid, it's simple and it's repeatable. But after nine years in the markets, this has made me more money than any complicated strategy ever did. And if you're struggling to stay consistent, then this is probably what you're missing. What I'm talking about here is the first five minute candle of the day. It forms between 9:30 and 9:35am Eastern Standard Time with more volume than any other five minute period of the entire session. We markets high and low because the high shows where maximum selling pressure stepped in and the low shows where maximum buying pressure defended. And these become our two levels for the day. Then we drop down to the 1 minute chart and wait for a fair value gap to break through one of these levels. A fair value gap is a three candle pattern where the middle candle moves with explosive force and leaves a gap between the first and third candles. Wicks it shows us who is really in control, whether that is buyers or sellers. That way we know that we're on the right side of the market. And once this gap forms, we need one more step to confirm our trade. We wait for a retest into the fair value gap followed by an engulfing candle. And this confirms that the breakout is valid and that the market will likely continue. And at this point we enter the trade stop goes at the first candle of the fair value gap and the Target is a 3 to 1 risk to reward. This means that on your winning trades you make three times as much as you lose when you're wrong. Simple, mechanical and repeatable. Now save this so you can study it when you trade.
