Understand Risk On vs Risk Off Market Conditions (Daily Trade Recap)

Welcome back to another video on this channel. Now, this is going to be probably one of the most important lessons that you ever hear about trading, and it has nothing necessarily to— for you to actually be entering into trades. It's the art of knowing when price action is in risk-on market conditions, meaning that you can be more aggressive, meaning that you want to be more aggressive with your entries, versus risk-off market conditions where you want to be taking your take profit sooner, you want to be more careful with your entries, and overall trade a bit safer. So let's jump into— to— in today's full market breakdown, starting with open. And now I'm going to explain why today was more of a risk-off day. So if we look at open right here, we have two sets of equal lows. If we go to the daily time frame, we have nothing really obvious. We have nothing obvious. We've got this strong displacement candle up We have no unmitigated FVG. We're trading into all of this daily consolidation. I mean, what can you do when the daily time frame looks like this? Okay, just pure chop on the daily time frame. You have to be patient and you have to wait for the right setup. So then we go to the 4-hour time frame. If we're looking at this 4-hour time frame, what information do we have? We have no IFEGs, zero. We have no We have nothing. That's good. To put it simply, we have nothing to really go off other than marking some unmitigated— sorry, other than marking swing highs and swing lows. Yesterday it was a very obvious bearish bias because we had the unmitigated FVGs. Now it's a bit more unsure. Are we going to come down and fill at least 50% of this fair value gap? Most likely. When is it going to happen? Nobody knows, okay? We just have to be patient here. Now let's go to the 1-hour time frame. Look at this 1-hour time frame, guys. Now it's not a coincidence that price is doing this and just consolidating. It's because there's no obvious draws on liquidity and there's no obvious context, you know. Price is just going sideways after this massive, massive move up which happened in Asia session. We have a 1-hour unmitigated FVG, which is probably the nicest draw on liquidity. But the lesson that I need you to learn here is know that this is simply risk-off market conditions. This means that you should not be aggressive with your entries. You should not be looking to hold to the 1:5 risk to rewards, the 1:4 risk to rewards. You need to be taking profits sooner and just locking in profits when you do enter into trades, okay? And yeah, it's just— you guys can all, all clearly see, look at this chart. We don't have any higher time frame conviction in any direction with any strong draws on liquidity. Now this actually goes into, into today's trade. So at open right here, we get this interesting move down. We inverse some of the fair value gaps. We come up, we inverse a small 2-minute FVG. Again, we risk off market conditions. There's no need to take a riskier play like this. We then come up, sweep buy side liquidity. We also tap into a 5-minute fair value gap, I believe, to the left. Yes, we have 15-minute equal highs above. Which is a very, very nice strong liquidity. So at these highs at 2 PM yesterday, we left equal highs. Again, a very clean draw on liquidity that will most likely get swept at some point as well. We came up, swept that buy side liquidity, tapped into this 2-minute— sorry, tapped into that 5-minute. Then we have this 2-minute FVG. Now some people were interested in 2-minute shorts here. I personally was not. The first reason being I just don't have that higher time frame conviction. I don't have the conviction for shorts Is this a good setup? This is a— okay, this is a good setup. It's an okay setup if I had the conviction, but because I do not have the conviction— we came down, tapped into this small 1-minute. Now yes, I know that this is a small fair value gap, but would I take a trade off of this fair value gap directly? No. Is this still a valid fair value gap? Yes. It doesn't matter how big or small a FVG is. If it is a fair value gap, then it is still a valid fair value gap. Okay, and if you make it to this end of the end of this video, by the way, I'm going to be dropping from some source that will make you so much money that not a lot of traders will know about. And it's literally happening right now as we speak. I'm checking the markets on my second monitor. So yeah, I was not interested in these potential shorts. And over time, trades like this will fail. Trades like this will see a retracement off of this small 1-minute. You could have potentially entered on the displacement here again, but just nothing super interesting. And from here we kind of just consolidate. Of course, risk-off market conditions— are we going to enter into this trade, any trades on risk-off market conditions here when there's nothing high quality? No. It's the same as these shorts, by the way. In these shorts, if my bias was bearish, if we had some obvious draws on liquidity below, then I most likely would have entered into shorts here. But again, we're taking everything into consideration. We're not just mechanical traders that trade off a checklist. Then here we're coming into 10:30 PM. Look at this, we're just slowly, slowly coming down. Getting some consolidation. We did get a very nice reaction actually. Oh, that happened earlier. So when you're trading, what you want to do is look out for 50% of fair value gap. So here we are, 50% of this 15-minute FVG. And as you can see, earlier in the day we tapped this a few times, but sadly we didn't get any, any trades from it. But that's just something to look out for in the future. Now what's also extremely important is the LFG. The last fair value gap of the leg. As you can see, this is a 5-minute LFG. There is no other FVGs below this point. This FVG is holding like a brick wall. Absolutely nothing is getting past this FVG. And this leads me on to the next point here. When you're— when we take it— okay, seriously, get your notepads out for what I'm about to say. It's not actually happening just yet, but when we have so much sell-side liquidity taken from the New York AM session, when price just comes down and down and drops, we don't really have anything clear on the higher time frame. What will most likely happen from 11 to 12 is we will most likely get some very high quality long positions, very high quality buy positions with an extremely high win rate. It's statistically proven. Okay, so The only play that I was interested in here, if you're in my stream, you know it, this is the only thing that I was talking about, was this 1-minute FVG. If we got a candle close above this FVG, my breakeven point would be here, and I would have held— I would have trailed my take profit, but I would have took this play something like, something roughly like this with a nice risk-reward. I probably would have entered a bit lighter just because, again, this risk-off market conditions. But sadly, we did not get this play. Look at that candle close. Now, the reason why I like this play so much was because what I just said, 11 to 12, most of the time we come up and take— or it doesn't necessarily have to be 11 to 12, just towards the end of the session, anything around 10:50 mark. If we only take out sell-side liquidity, then buys and longs just work amazingly, especially in 11 to 12. So I did watch the 11 to 12 session here as well, but just sadly no entry. And look what happens. This is— this one's painful for me because I know the chances that we go up here are so high Ah, I thought there might be a potential entry right there, but whoa, look at that candle! This is a live market right now, literally happening right now. So yeah, we, we came down, respected this 5-minute LFG, one of the strongest context confluences right now. Then we got this move up. Sadly no buy position, sadly no entries, but you need to know when not to enter and when to enter. And this was just one of those days, risk-off days, We'll make our money on the risk-on days. There's no point in over-risking, over-leveraging. Of course, as you know, I have my launch happening April 16th. Make sure you click the first link in my bio. I'm putting out lots of educational content. Yeah, subscribe to this channel as well because I'll be posting every single day. Over the weekend, I'll be posting some more educational videos as well. I'll do another trade recap tomorrow for the winning trade that we'll catch tomorrow. Let's go, everybody! See you all on the next video.