How to Trade Like Smart Money (Even If You’re a Retail Trader)

If we want to trade in line with the smart money, which are the big institutions, we have to— Prices just swept the range high. And if this works also on a meme coin, then, you know, you can be sure that it's gonna work on everything else. What's up guys? In this video, I'm going to be giving you a step-by-step, very simple trading strategy that you can use to day trade your way to 50% gains or potentially more every month. If you guys have been struggling with finding a trading strategy that you can use that doesn't involve a lot of fancy indicators and is just something that works, and is actionable, then I'm going to be giving you the full guide in this video. Now, this trading strategy took me pretty much 5 years of trial and error to develop. And just like yourself, I have been through countless trading strategies over the course of my 5-year career that either ended up not working, not working well, or just flat out lost me money. So hopefully with this video, I am trying to help you skip 5 years of that trial and error process so that you can get right to the good part. Now, before we get into this video, hello, my name is Xuan. I'm currently on a mission to create the world's best trading education suite by making trading simple. And without any further ado, let's jump into this simple day trading strategy. So we can break down this trading strategy into 3 very simple steps. Step 1 involves the use of some kind of higher timeframe. And the thing that we're trying to accomplish on this higher timeframe is to identify higher timeframe key levels and then using those key levels to determine the higher timeframe bias. Because one thing that you have to understand is that it doesn't matter what strategy you are using, you need to first determine what direction you are supposed to trade in in the first place. And that's what we're trying to do here in step 1. Before we can start getting into execution and stuff, like I need to know If I should be focusing my attention on longs or should I be shorting, right? This is what step 1 is for. And I'm going to teach you how to do this reliably and in a very simple manner. Step 2 is we go down to our lower timeframe to determine the lower timeframe key levels. Now, the purpose of these key levels are going to be a little bit different in the sense that we're using these key levels to find areas to execute from. So on a higher timeframe, we're looking for key levels to determine direction and what is the long-term target that the market is aiming for. On the lower timeframe, these key levels are areas that when hit will give us high probability areas of entry. So that's what step 2 is. And then step 3 is finally we get into the execution. Now in terms of the execution, I'm going to give you a very step-by-step guide later on, but it just involves something called displacement, then into some kind of PD array, which if that doesn't make sense to you right now, it will. And then I'm also going to give you an exit strategy that you can comfortably use to gain 4 to 5 Rs every trade consistently at a very high probability. Now this part is probably the most important part of any trading strategy because a lot of you have no trouble entering. But when it comes to exiting, like it gets really inconsistent. But this is where the money is made, right? Entering is always easy, but it's always determining where you want to enter from. It's not about the way that you start; it's about the way that you finish that most of the money is going to be made. So now that you have a high-level overview of the strategy, let's get into some of the nitty-gritty details and teach you how to actually use this. So to start off with, the higher time frame that we're going to be using in this strategy is going to be the one hour, and the lower time frame is going to be the fifteen minute. Now the reason why this is the case is that this is primarily a day trading strategy. Strategy, meaning we're trying to ideally close out most of our trades within the same day or within a couple of days. This is the essence of day trading. Now there is another type of trading called intraday trading where you are very much looking to close the trade within the same day, hence it's called intraday. And in this case, for day trading, I don't think anything quite beats the 15-minute chart for execution. And the reason why the 1-hourly time frame is the higher time frame in this case is because the simple rule that you want to follow when it comes to time frames is to use the rule of 4 to 6, meaning whatever timeframe that you choose to execute on, the ideal higher timeframe is take that executional timeframe and just multiply it by 4 to 6. This allows you to zoom far out enough to where you're getting a really good big picture, but you're not too far out to the point where it's completely irrelevant to what you're trying to achieve in the markets. A very big mistake people tend to make is that they either zoom too far out or they don't spend enough time zooming out. They're just, you know, staying in one timeframe. And a really good symptom to tell if you are spending too much time on the lower timeframe and not zooming out is that you keep getting caught up on countertrend moves, meaning you think this is the bottom and then the price just keeps going down and you just keep getting stopped out and again and again and again. And this is because you haven't used the higher timeframe to determine the bias, right? You don't even, you're not even sure of what are the big picture levels that you want to be executing from. And also you're not sure what is the direction that the higher timeframe is targeting. And you are also not too sure on what direction the higher timeframe is going in. And On the opposite side of the spectrum, a really good symptom that you are spending way too much time on the higher timeframe and not enough time on the lower timeframe is that your trades have like really wide stops. And I'm talking like wide. Like you look at all these other people online and they're able to consistently get 5Rs or even 6, 7, 10Rs. Meanwhile, you are stuck here struggling to even just get a 2R trade. And whenever you start going onto 3R or 4R, like your win rate just plummets immensely. And that is a product of placing your trades on the higher timeframe instead of zooming in. To execute. And that's the reason why I'm giving you this rule of 4 to 6. It really helps you find the balance of having a lower time frame that you can use to refine your entries and also a higher time frame that you can use to just get a sense of how the environment looks like. Hence why the higher time frame is usually referred to as an environmental time frame, why the lower time frame is usually referred to as an executional time frame. So hopefully that clears up the time frame confusion for you guys. And by the way, you can apply this Like rule to anything moving forward. If you are, say, trading on the 5-minute chart, your higher timeframe could easily be the 15-minute chart. I know it's not exactly 4 to 6, but it's 3x. That's one of like the exceptions to the rule. And it could also potentially be the 30-minute chart as your higher timeframe. For you, you just need to figure out what works best for you. Every single trader, like every single human on the planet is different and we have our own unique strengths and weaknesses that we're born with and our unique personality types. So not one strategy's going to work for everyone. So it's like you just got to do some trial and error, see what— see, just see what you like, right? Some people really enjoy not looking at the charts for like days or weeks on end, and some people just really enjoy the stimulus and the excitement that you get from executing trades and seeing the result play out within an hour or 2. So now that you understand even more about the high-level overview of the strategy, it's time to get into how to actually do this. So to get into it, first thing that we're going to do is To start off on the higher timeframe. And on a higher timeframe, the first thing that we do is our higher timeframe key levels. And to find these key levels, all you want to look for is some kind of liquidity point, like major liquidity point. And liquidity basically boils down to some kind of swing high, swing low. Like you don't have to overcomplicate it. Now I'm just going to walk you guys through like the concept of liquidity for anyone that's new to this channel and you have not had any exposure to smart money trading before, which is the stuff that we cover on this channel. I want you to understand that the entities that are primarily moving the markets are these entities known as market makers. Now, they're not necessarily humans, but they're more like institutions and algorithms. And the reason why they are the ones that manipulate the market all the time is because they are the only ones who have access to immense amounts of capital to be able to move the markets in a meaningful way. Meaning this move right here that you're seeing from— with that brought the price pretty much like 30-50% up— is not primarily caused by retail. The truth is, like, 10,000 of us could like band together to try to pump this shitcoin, but chances are it's not going to work. I know there's the story of WallStreetBets and that turned out really well, but that is quite literally a once in a lifetime event. It's really tough for us retail to move the markets. But on the flip side of the equation, there are the market makers. The reason why I bring them up is because every time you make money in the markets, you're not actually just making money out of thin air. The markets is a zero-sum game, meaning for every dollar that you win, that dollar is being lost by somebody else. And usually when you lose money, guess where their money is going to? Bargain makers. And the opposite is also true in the sense that if you win money, the bargain makers are losing money out of their own pockets. So it's in their best interest to stop out as many people as possible throughout like the delivery of price action. And so liquidity is important because I want you to imagine for a moment that above every swing high and below every swing low is traders that either have their stop losses set there or traders looking to get into the market when that level is hit. And just to understand the psychology behind this one level deeper, I want you to imagine for a moment that if you were like shorting the market from any point here, where would you realistically set your stop loss? Well, you are— most retail traders are often taught that, you know, above the swing high or swing low is quote unquote resistance. And thus, if I were to place a stop loss, I might place it above resistance, right? Because resistance is supposed to prevent or like resist the price from going above that level. And similarly, this is quote-unquote support where a lot of people might place their stop losses underneath this level. Now there is also the second type of people that are breakout traders and like support and resistance traders where when price comes into support they might go 100x leverage long here and have their stop loss directly below or their liquidation point directly below. And thirdly is that once this level gets broken through even just a tiny bit, you're going to have the breakout traders try to short the market here. All in all, these liquidity points, the reason why they are liquidity points and the reason why they are hotspots on the map is because everyone is just looking at that level, right? And there are huge concentration of orders that goes into the market once these major levels get taken out. And hence, when the market moves, you always— like, at any given point, I want you to remember this, at any given point, the market is always reaching for some kind of liquidity, right? The market is always oscillating between liquidity point to liquidity point. When most of the like sell orders. When most of the liquidity below here has been taken out, then the market will start going up. And once most of the liquidity above has been exhausted, the market starts going down. It's as simple as that. So our job as traders, especially if we want to trade in line with the smart money, which are the big institutions, we have to first step try to figure out, or like just take an educated guess on where they might move the markets next. And to do that, we apply our understanding of liquidity to find higher timeframe key levels. So the way to do that is very simple. I want you to look at just current price on your higher timeframe and just determine number one, Where are like major key levels that you think price is trading in a range of? Example, I could say that price is currently trading for the most part between this high and this low. So if I extend this level out further, you can see that the majority of price has been between these two levels. And the reason why I'm not drawing every single line here has to do with another rule that I will set for you guys. If you guys have ever struggled with like drawing way too many lines, like when you start going on a chart, like every line, every level seems to be significant, and then you just end up drawing like five to ten lines, and then at the end of the day. Like you just get confused. The rule of thumb here is that when you're doing this step 1 of determining your higher time frame key levels, you must have no more than 4 levels on the chart. So out of those 4 levels, we'll try to break them down into 2 that are relevant to current price at the moment, meaning just 2 of the major levels that are closer to price at the moment, and then 2 levels that are a little bit further out just in case I am, you know, missing the big picture. So in this case, the 2 levels that are closer to chart will be here and here. And the 2 levels that are further out would be here, right here at the swing low here, and then potentially like there. So let's say here, or potentially even all the way up there. Although the reason why I'm not going to put it up there is because like, let's face it, this price here is about 50% away from current price. And as a day trader, I'm literally looking to close my trade out within the next 2 to 3 days at most. And let's just say that I'm not expecting a 50% move to occur over the next 3 days. Now, Granted, this is a meme coin that I'm looking at at the moment. This strategy works even better on the larger cap coins like AVAX, Solana, Bitcoin, Ethereum. But if this works also on a meme coin, then, you know, you can be sure that it's gonna work on everything else, which is why I'm using a meme coin as the example for this video. The thing that gets a lot of people is that when they start zooming out as a beginner, they tend to zoom out way too far to an area where it's completely irrelevant to them. Meaning that level that you are looking at, or that level that we were looking at, sure, Popcat will eventually go to 70 cents, and sure, Popcat might eventually retrace all the way to 20 cents. But as of current price, that is a level that takes weeks to play out. And given the fact that we are trying to catch trades on the 15-minute chart, it's just irrelevant for us. This is the reason why I do not advocate that, oh, you know, you're supposed to look at the daily chart no matter what kind of trader you are. Not really. Like, a lot of the times when you start looking at the daily chart, especially if you're trading on the 5-minute, you get so lost in the clouds that you completely lose sight of what's going on in the small picture, which is the type of trade that you're trying to catch in the first place. So I'm just going to mark this out anyways, right, just to— just so I don't lose sight of the big picture. But more often than not, I will be using this level instead of that. Like, again, that will be like a 2-week play. I'm trying to catch it like a 2-day play, right? And so that level makes much more sense as a level that's a little bit further out, and this level makes sense as a level that's a little bit further down. So I know, like, just to, like, not to contradict myself but to explain myself, this level is also kind of irrelevant for where price currently is right now, or for the purpose that we're trying to do. But it never hurts to just mark out a further key level so that you don't lose sight of the bigger picture. And also, like, this brings us on to step 2, which is now using these key levels that we've marked out, we want to determine the higher time frame bias. And the higher time frame bias is essentially Like, I know it sounds really fancy, but it's just what direction do you think the market is going to go on the higher timeframe? And a lot of the times this is like, I know it sounds like a really glorified thing where like we're predicting where the market is gonna go, but in reality we're just taking an educated guess here on where the market's going to go next. And I know that sounds kind of off-putting, like, whoa, you're just gonna take a guess? Isn't that gambling? Not really. The thing about crypto or like trading in general is that once you do this exercise enough, and I'm going to teach you how to practice this later, but once you do this enough, like you sort of get a feel for you know, where the market's going to go next. And in the first place, like you need to have this direction before you can even look for entries because you don't have direction, you're supposed to look for short, like areas to short from, or you're supposed to look for areas to go long from. So when you first start out doing this, like let's just be honest, you're not gonna be amazing at this, but you will pick this up really quick. If any of you have watched any of my market updates, I seem to be able to predict the markets really accurately. And I've been doing this for like 3 years and all my videos are there for everyone to see. I'm able to usually predict the direction at a very high rate, and it's all a part of this higher time frame bias thing that I'm about to teach you how to do. So in terms of your higher time frame bias, there are two things that you want to look at. The first of all is your key levels, and the second of all is recent price action and market structure. So let's look at the first one first, and let's study the key levels that we marked out. So between here and here, right? And then we have here and here. So that is already pretty self-explanatory. So to determine the higher time frame bias, you need 2 things, which let's get into right now. So it's a combination of both, right? You're going to look at like liquidity levels you've already marked out. So that's done, like step one done. So now it's just step 2, which is looking at recent price action and the levels that recent price has taken out and to study the market structure. This part is going to take a little bit of getting used to, but basically all you're trying to do is using the key levels and what price has done recently, and you're just trying to try to piece like bits of information together to come up with like a coherent guess. So I'm going to show you how I do that right now. So Pay attention to more my thought process rather than like what I'm like doing on the chart, right? So I can see that recently price has took out this buy side liquidity, right? This area here, price has swept all the liquidity that was present above these 2 highs and potentially this high. And also at the moment I can see that price is trading in a range right now. Price has just swept the range high. And right after sweeping this range high, you have broken structure. You've come to try to break above and try to maintain bullish market structure. But at least in this most recent move here, You have broken market structure and currently it's looking bearish. Now, I can also see that there is liquidity points here, like relatively equal lows, plus this low here, plus this low here that has yet to be taken out. Remember what I mentioned earlier about when all the buy side liquidity has been taken out, there's no reason for the market makers to continue moving the markets higher because there's just not enough money to be made from stopping the people that are still remaining up here, right? There's just not enough money up here. So they're going to target the money down here. To give you an idea, Everyone that basically went long at any point here has yet to have— like, if they placed their stop loss here, for example, everyone here would still be in profit. And knowing retail traders, like, we have a really strong tendency to not take profit when we're supposed to, hold on to a trade like for way too long, and we just put ourselves at risk of getting like the market just coming back down to stop us out. And this is exactly what the market makers know as well. And so my hypothesis, based on looking at the key levels and based on looking at recent price action, I do think that The market in the near term, right, at least at a scale that is relevant to me, is going to continue coming lower. So for me, what I would do is when we move on to step 2 and move on to the lower timeframe, I want to find areas that I can short from to target these liquidity points on the 1-hourly chart. Now, if I zoom even further out a bit, and if I, for example, draw a fib from where the move began, so basically there to when the move ended, which is right there, I can see that this level here just happens to line up within a premium discount zone. So any— just to give you an idea of what that means, before you guys start thinking that this is complicated. In every given trading range, you always have a premium, you always have a discount. And the way to identify both is very simple. Whenever you draw a fib from any swing high— like, basically any swing high and low is just a trading range. For example, this is a trading range. For example, even this is a trading range. Like, the market is always just in some kind of range, and it's super simple to identify that. And also, it's in your best interest to identify it because trading ranges is— but I'm not going to get into this right now. Let's get back to what we were talking about before, premium rate, like premium and discount. So in every trading range, you always have a premium and a discount. Ideally, as a trader, you always want to be selling in a premium and you always want to be buying within a discount. So the best way that I can explain this to you is that if I were to sell you an iPhone right now for say $3,000 US dollars, you'd probably be like, no, I wouldn't buy that because $3,000 is a huge premium relative to the fair market price of an iPhone, which is about $1,500. Now, If the flip side of the equation, if I were to sell you an iPhone for say $500, you'd probably buy that because, you know, if you just put it onto any sort of marketplace for even $1,000, somebody's probably gonna buy it. And that's the same way the market makers think as well. And it's the reason why we also as traders, if we wanna catch high probability trades, we want to be able to focus our buys mostly in the discount and to focus our sells mostly in the premium zone. So the fact that this is the level that I think price is gonna come to, right, from premium into discount, right? Anything starting, anything below the 0.5 is a discount. Like, this is a really good sign, right? It just adds confluence to what I was already guessing. So that's something that you can use to add confluence to your trade. But anyways, now I do think that in terms of the higher timeframe, you're going to take out this level right here potentially, right? There is a world where you can come lower into the, like, a deeper discount region between like 0.4 to— yeah, quite literally around 0.4. And then here you're either going to bounce from either one of these levels and go back into an uptrend to target either 0.6 or 0.65 or even 0.7. So that's my guess on what the higher timeframe is going to do. And I want you to notice what I was doing there. I wasn't just thinking like, what is the most recent move? But I like to explain this as like the one of the best ways that I think about building a higher timeframe bias is to build a narrative. The better that you can let like build a story essentially, like, okay, part 1 of the story, part 2 of the story, part 3 of the story, right? And I know that sounds really fancy, but it's really just the way that you improve at reading the markets and analyzing the markets, especially when it comes to the higher timeframe bias, is to learn to think 2 steps ahead. It's not about just what price is going to do next. It's like, can you build a story, right? In this case, my story makes sense, meaning like, okay, right now you're in a premium, you're going to head into the discount. I also see that, you know, there is potentially, you know, liquidity still above. The fact that we're still in a bull market at the moment means that we should be buying dips, not trying to short things down to zero. I can also see that on a major, major retracement, we've just went through a 50%, like 55% retracement. So if anything, a lot of the sell-side liquidity present underneath these lows should have been taken already, and just pairing All the, just pairing everything together, like I think there is a higher chance that the market stays bullish overall compared to bearish. Now, of course I could be wrong. At the end of the day, this is all just an educated guess and you are going to be wrong sometimes, and that's perfectly normal. Even when you're wrong, you can still make money. That is your reality as a trader. Now, how do I realize that I'm wrong? To look at the signs, right? Like, sure, I will build a narrative, but it doesn't mean that I'm just going to be certain that this scenario is the scenario that will play out. In fact, one of the things that's going to help you guys out a lot and just a frame of thinking that is going to help you in the markets is to think in probabilities and never in certainties. Because at the end of the day, the only thing that's certain about a financial market is that nothing is uncertain. You can never predict, like you can never truly 100% know what the market is going to do next. You can only take a really good guess. Sometimes you win, sometimes you don't. And just being able to switch your thinking away from like, okay, this will happen and hence I will do this. Instead of thinking that, think more like if this, than that. For example, if scenario 1, like this is a scenario that I'm looking at, this is the narrative that I'm painting. So if price comes to here and it starts showing bullish market structure, then my scenario is proven correct and I will do this, right? For example, I will take trade. Or if price hits this level and fails to make a new high and breaks even lower, then I will wait for scenario 2, right? If then. And then even when it comes to here, if price hits this level and starts showing the signs that I want to see, then I will take trade. Scenario, if price were to hit this level and just completely blows through it, then I will look at this level, right? Notice how all of these are if-then statements. I'm sort of just preparing myself for any scenario that might happen in the markets rather than settling on one and losing sight and just basically getting married to that idea, which, which is something that really hurts you as a trader. So essentially now, like, we have successfully determined what is the higher timeframe bias, what is my educated guess, and I did that using a combination of both the key levels and recent price action and market structure. Now it's to move on to step 2, which is your lower timeframe. And similarly, we are going to look for key levels, or rather executional levels that are in line with the higher timeframe bias. And that is the only thing that we're going to do in step 2 before we move on to execution. So a lot of people make the mistake of just doing step 1 and then not doing step 2 and then just jumping right into execution, meaning like, okay, I have a feeling the market's going to go down. I'm just going to go short right now. I think a lot of the time, as some of you might be testament to this, it's wildly inconsistent in the sense that you are going to get stopped out quite often doing that. For example, oh, you know, liquidity level just got hit right now, I'm going to go long here, which fair, could work sometimes, but it would be much better if you have actually a clear, well-thought-out plan for every trade execution that you do take. And the way that we're going to be identifying these lower timeframe executional levels is again through the same exercise that we used before to determine the higher timeframe key levels, only this time around The purpose that we're using this for is completely different in the sense that we're going to be using this to determine where we want to execute from. Like, I already made the hypothesis that we're going short, so what we're looking for is areas that we can go short from. And so same thing here, like, and one of the mistakes that people tend to make when they're trading, especially when they're on the lower time frame, that every level sort of looks significant in the sense that, okay, they might mark out this one, this one, that one, but But the mistake that they make here is that if you pay attention to what I wrote above, we only want to jump in on these executioner levels if they are in line with our higher timeframe. So if you remember earlier on, what I wrote was that we only wanted to use executioner levels that are in line with the higher timeframe bias. Meaning if my higher timeframe bias is short, I will completely ignore the stuff that is, well, sell-side liquidity, which in this area here I would be considering a long. So just to explain why, I want you to take a moment to just a simple quick lesson on on how market structure works. If you look at this entire point here when the market was, you know, jumping up, notice how like every single sell-side liquidity just gets blown right through without any sort of retracement. And you're seeing it again here, like tiny retracement but blows right through immediately. And then once again over here, like just blows right through this level without stopping. The reason why this happens is that when the market is in bullish order flow, for example, highs are always attacked, meaning old highs, current highs, like the highs are never safe. So everyone that keeps trying to short a high, trying to catch the top of the market, which by the way is something that you should never do. Remember that top pickers and bottom pickers eventually become cotton pickers. Like, it's just something that's super unprofitable to do, so don't do it. Not only that, but like, and the opposite is true when it comes to, you know, bullish— when it comes to bearish order flow, where the lows are always constantly attacked and there is no like retracement, right? And similarly here, if the market is in bearish order flow and if the target is bearish, then chances are you're not going to see a huge bounce from this level. And you're seeing it right here. When this level was taken out, you sort of have a bounce, but not really. It just goes right back down again. And so when you are in bearish order flow, in this case my target is bearish, what you want to look for is the opposite. Now the opposite is true when, like, let's say you're in bearish order flow. If there is buy side liquidity that gets swept, it usually leads to an expansion, like an insane expansion in price, and it tends to lead to lower lows. So for example, once liquidity gets taken out, boom, right? The lows get attacked again. So So in this case, this is a very classic type of setup where a lot of people are going to lead— like, get to a false breakout essentially. And the thing that's going to prevent you from falling prey to these false breakouts is identify the higher time frame bias, to understand the direction or the order flow that is present on a higher time frame, and then only trade in the direction of the order flow instead of trying to counter-trend trade, which is also another very common reason that beginner traders tend to lose money. They just keep trying to catch the bottom and like try to catch the top, and they end up like just like just playing all of these tiny moves when they could have been the expansion the whole time. And a lot of it has to do not only with not able to— not being able to identify the direction, but also the fact that they can be pretty stubborn and they get married to their ideas, which the importance of what I said earlier about thinking in terms of probabilities and not getting married to any single scenario. And so in this case, the— it would be a mistake to mark out this level here because I'm not looking to go long. Like, sure, you might have some kind of retracement, like pump here, but like, this is going to be a lower probability move compared to this one right here, which is a much higher probability move. And so So in the event that, for example, this level gets taken out, if price were to retrace back to this level, hell yeah, I would look to execute from there. So that's, you know, level number 1 that I'm going to mark out, which is, remember, in bearish order flow, buy side liquidity sweeps. So this is a buy side liquidity. When that gets swept, it usually leads to lower lows. Now the second thing that we can look for is some kind of a retracement entry. We can just draw a fib from the most recent move that happened, and then we can look for any key levels within the premium zone. Remember, we want to sell within the premium and we want to buy in the discount. Ideally, we don't want to be selling our iPhone for $500, which is equivalent to taking a short when you're still in a discount. And in this case, I would mark out on the 15-minute chart this fair value gap here and potentially that fair value gap right there. Now both of these are valid executional levels. I'm just going to set an alert, for example, on here and here so that when these levels do get hit, I'm going to look for my execution steps to take a trade, and which I will walk you through later. But for now, these are the 2 levels that I would place in terms of a retracement. And the reason again why I'm not taking this is because this is in a discount still. Like, sure, if the market is moving really aggressively, it might just come in here and dump. But I do think that the higher probability area is on these fair value gaps here that also match with the premium zone of this move. So all of a sudden now I have 3 potential levels that I could play: one here, one here, and one here. And, or like, I could just start shorting here, like, wouldn't be a problem as well. But I missed this buy side liquidity sweep over here that led to this, you know, explosive expansion in price. I wish I recorded this video earlier and saw that. Definitely would have But anyways, now the reason why I'm not marking out a level all the way up here is, again, comes down to relevance. Like, you're trying to get into a trade ideally— like, just to give you an example, if price were to pump all the way here, it would have already broken market structure and like continued to make a new high. Chances are this would not be an ideal level where my bearish idea is still valid, in a sense that the price comes all the way up here, it's already at range highs pretty much. And my hypothesis is that it goes to the range low first to wipe out all the liquidity underneath these lows before going back to the range highs. I'm not expecting price to wipe out the range highs and then go back down to the range lows. In this case, then price is very likely just going to go higher instead. So that's why that level is not valid. Number one, it's not relevant. Number two, it invalidates our higher timeframe bias. So in terms of the lower timeframe levels, like this is pretty much all that I would look at. Now you could argue also that, you know, if you draw a fib from this move here to this move here, that this is still within a discount zone and that we don't really wanna be selling there. But again, hopefully I've established the fact that this level here is just not relevant to us. There's a very high chance that price hits the low. Like it's happening right now as of the time that I'm saying this, like this is happening in real time. I'm not in backtesting mode. So you can see that a lot of these concepts are not just pulling it out of my ass. So yeah, there's a very high likelihood that price hits this before coming back to here. And in which case, if price does come back to here, I'm not going to be looking at this level no more. I'm going to be looking at this one, for example, right? Because once— fun fact, 80% of the time when the market sweeps one extreme of the range, it does tend to want to have a tendency to stay in the range 80% of the time. So now that we have our execution levels, it's time to move on to step three, which basically just involves looking for some kind of displacement to happen on the 15-minute chart and a retracement into some kind of PD array. And a PD array, by the way, just means a fair value gap, which essentially is like on the chart. You just want to look for like a very explosive candle, and then like the week. Wick, there's like a gap between the wicks, right? Notice how there's zero price action in between these levels. So that is known as a fair value gap. This presents an imbalance in the markets that these algorithms are literally programmed to, you know, bring the price back to before moving the price in the direction of the trend. And these levels present like really hidden levels for you to jump into trades at a very high probability. For example, this would have been the bottom, and this is where the move would have began. Notice how the move began first with a displacement. Now, displacement is a very aggressive candle that basically engulfs the candle right next to it. This is a sign that the smart money potentially is getting involved. And the way you know this is from what I taught you earlier before about the smart money. They are the only ones who have enough capital to move the markets in a meaningful way. This type of candle is usually caused by the smart money. This is why you look for displacements before you jump into any trade. It's just a sign that smart money's gotten involved. And especially if whatever they're doing, like if the displacing candle is in line with your higher time frame bias in what direction you think it's going to go, especially if it's also in line with some kind of key level, which in this case wouldn't be, you know, it wouldn't be in line. Just giving you an example of how displacement looks like, especially if it's in line with, or like if you have confluence with all of those other factors, then you know it's a really good sign that the market makers are also looking to bring the markets higher. And usually, well, usually not always, once you have this kind of displacement candle, you do leave behind something that is known as a fair value gap, where notice how the wick of this candle is here, the wick of the previous candle is here, and you have a gap between them. Price literally retraces immediately on the very next candle into to fill in this imbalance. And then the price takes off. And you see this across every single timeframe out there. Like, it doesn't get filled all the time, but when it does, it presents really high probability areas where it almost like— once you understand fair value gaps, it's one of the most powerful concepts because it, to people, like to the untrained eye, it looks like you're catching a bottom. For example, who would have known that the market would retrace to this fair value gap? Well, we know because if we draw a fib, for example, you can see that this fair value gap lines up with the 0.705 retracement. And we also have a fair value gap, which is known as a PD array. So all we want to look for once these levels get hit is again a displacement, right? You want to see some kind of aggressive move. You want to see some kind of a fair value gap getting left behind. And then you're going to take that trade like once price retraces back into that fair value gap. So in this case, these two would be fair value gaps. Oops, I was on the one hourly chart. So once price retraces back into these areas, this is your fair value gap, and you're going to place the stop loss on the most like recent week high. Fine, like that is one way that you can place your stop loss. The other way is to place it on the top of the fair value gap. And when I say top of the fair value gap, I mean like you're just going to place your stop loss at a point of invalidation. Now me teaching you guys this point of invalidation theory works way better than just giving you like some set guideline on how to place your stop loss. For example, if I'm expecting to take a trade from this fair value gap here, I'm probably expecting the price not to blow through this fair value gap and like just, like just completely take me out, in which case then Then you know this idea here that this fair value gap will pose as a area of execution is probably wrong, right? That idea gets invalidated. But at the same time, if price comes into this fair value gap here and just blows right through it, then my idea that this fair value gap here is going to lead the markets lower is probably also invalidated. So you just want to place your stop loss at a reasonable invalidation point. So perhaps you can say that okay, I'm going to split my entry up into this, this, and So you're just going to place your stop loss at an area where your idea gets invalidated. So for example, once this fair value gap gets hit and you get a displacement candle, price retraces into the fair value gap, then you know that if the price continues to go higher, your your idea that this fair value gap is going to be the point where you want to be shorting is probably wrong. And so you place your stop loss at a point where your idea gets proven wrong. So here would be where your idea gets proven wrong, and so that's where you place your stop loss. This is the benefit of being on a lower time frame so that you are actually around to see this happen, and you can look for this without. Just setting a limit. And if you set a limit, by the way, you're probably going to have to set it all the way up here because like you need to give it enough room to run. Otherwise, you know, otherwise you might risk getting stopped out before the move happens and you just got stopped out for nothing. And by the way, you don't have to be around the markets. You don't have to monitor the chart for like minutes or hours on end. This is not a strategy that requires that. If you're someone that is a little bit more busy, if you would like to take a more passive approach to trading, then Then something that you can do is to just, as I've mentioned before, there's nothing wrong with just setting a limit. For example, you can split your orders up even on this, this, and this, and you set your limit on this wick high here. And by the way, one thing you will realize as I'm drawing— oh, look at that, and my alert is hit! So like, basically seeing in real time right now that like whatever I've just talked about is playing out and that I'm not just again pulling this out from somewhere. But yeah, going back to what I was talking about before, you might have realized throughout this video that when I draw liquidity points, I don't use the wicks. I'm using the candle bodies. The reason why I'm doing that is I want to give you an example. Let's say that this is how a 1-hourly candle look like, like that. And let's go on to the 15-minute. On the 15-minute, it would look a lot more like this, where the majority of the volume is going to concentrate within the candle bodies. Meanwhile, the wicks are super easy to manipulate, especially if you're a market maker with billions of dollars at your disposal. Wicks are really easy to create, right? Wicks are the easiest way to manipulate retail traders into thinking that they have some kind of Meaning when in reality most again most of the institutional volume is concentrated in the bodies. Now I just want to give you a couple of examples of this in play, and just zooming back in price for a little bit, you see a really good example. Notice how over here you sweep the candle body, but then you don't come close to taking out the candle wick. Once the candle body has been swept, most of the liquidity has already been taken, and the market reverses from here. Similarly, once you take out the candle body here, right now I know this one you take out the wick. Sometimes it does take out the wick, it is what it is. But for the most part, using the candle bodies has never really failed me. I found a lot more success using candle bodies compared to candle wicks because primarily this strategy is one that trades alongside the smart money rather than retail concepts. And wicks by nature is a retail concept. So notice how you take out a body, you don't take out a wick, and boom, reversal. Same thing again here, you take out the candle body right there, and you will— if you shorted there, you would have pretty much caught the high, and then boom, right, you just go down from there. You see this time and time again where candle bodies These are the ones that gets targeted. And so if you're more of a passive trader and you cannot afford to spend too much time on this, which there's nothing wrong with that, just place your orders at the executional levels you've identified on your lower timeframe and just place your stop loss above a wick high or a wick low or below a wick low if you're going along. So for example, if I'm going in here, like I might place my limit order, like let's say that was the executional level that I came up with, right, right there just now I drew that. So my stop loss might be below the wick here, right? Just slightly below. And so this is how I would place a limit order so that I don't have to be around the markets all the time. Now, will you have a slightly lower win rate? Will you make slightly less money? Yeah, like just by nature of being able to spend some time on the charts means that you're probably going to get a better entry. But is it worth the hours that you would need to spend looking at the chart when it happens and having to take time off work or not being able to be present with your spouse and your loved ones? Probably not. And honestly, the difference in profitability using both tactics are not that different. Don't be limited by the belief that limit orders is not something that can make you profitable and that you must spend hours and hours looking at the charts. And if you want to be like making real money, it's just not true. For the active approach, you want to see some kind of displacement to create some kind of fair value gap, and then you're going to get in on a fair value gap and you're going to place it above wherever the most recent wick high is. And if you're going long, then you're going to wait for a displacement, wait for fair value gap Get in there, and you're going to place your stop loss underneath the wick low, right? That's how you're going to do it. And for the passive side of things, well, you're just going to set limit orders and place your stop loss at invalidation points. So now it's time to get into how do you take profit, because that's like one of the most important parts of any system. Like everyone knows how to get in. You probably don't struggle with entering, but it's always the exit that you know messes a lot of people up. There are two ways that we can use for this. One is a fib extension. That will guarantee you like five R per trade. I think four R is the number, or second is to place a manual TP at opposite side of range. So note that we are not trying to catch like ten X moves with a strategy like this. We're just trying to catch high probability moves that we can take over and over again that ideally closes within the same day or at most closes within two to three days. And it's really important, by the way, to get clear on what TP strategy or like what you're trying to accomplish because a lot of the time. Especially— I see this especially with beginners, that they are— sure, they might be taking a trade on a 15-minute, but they're thinking of the trade in terms of like, you know, I want a 50% gain out of this trade. But then you're trading on a 15-minute. This is not that feasible. Like, if you're looking for 50% gains— and I see this all the time with beginners, like it's a mistake that beginners tend to make— is that they confuse the goal. They take a trade on the lower time frame, but then they set their expectations as though they were trading on the daily chart. Don't lose sight of the big picture. All right, there is a reason why you are using this time frame to trade, and if you are using this time frame to trade, stick with it till the end. If I'm trading on a 15-minute, like for example, one of the TPs, I might say, okay, once the range low swept, price will definitely come all the way back here. If my thesis is correct that this is the bottom, it will start— like, if this is the bottom, it means that all the sell-side liquidity has been swept, and then now you're going to start targeting the buy-side liquidity, which would, based on an educated guess, be above this level here. So from this low, we'll create a trading range Right? With this being the high, this being the low, once you take out the range low, boom, you take out the range high. And then potentially next step could be anything, like next step could be all the way up here, or it could retrace, take out a low again before going up. That I don't know, and it's not my job to know. So let's talk about that first TP strategy first. You want to ideally take profit at a Fib extension, meaning if you expect this to be the low, you start seeing some displacement, whatever. Essentially, when you take this trade here, you are expecting the markets to go in a bullish direction. You're not expecting the markets to just like come here into this area here and then to retrace and go lower. Like we've established the fact that on the higher time frame, once liquidity levels have been taken out, we do expect it to continue to make higher highs. This, by the way, is another mistake that beginners tend to make a lot. Like when they take a long, for example, they look at all of these like potential resistance levels and they just start taking profit on like the first resistance level. Like that's not how things are supposed to work. Like essentially what happens when you take profit at a retracement level is that you're expecting the market to retrace here to form new lows, right? That's essentially what you're thinking when you're taking profit here. It's not as simple as, oh, you know, I'm in profit, you never go broke taking profit. That's not true, by the way. You do go broke taking profit because you hurt your long-term profitability. So if your thought process is for the market to retrace into some kind of retracement area before making a new low, why wouldn't you just make a higher time frame bias prediction that the market's going to go lower and then just use like the key level, like just draw this as the key level instead, right? Don't take this long, just wait for the market to come back here before taking short, right? So that's a very big problem that a lot of beginners do make that really hurts their profitability, is just setting your TP at a retracement level. That's not what you want to do. What you want to do instead is to set your TP at a liquidity point. Meaning, remember what I told you earlier, once all the sell side is taken out, you always target the buy side, and you usually target the buy side on the other extreme or the other end of the extreme. So if this is the trading range that we're working with, once you take out the range low, you are going to go to the range More likely than not, statistically speaking. So a manual TP, for example, if you want to close the trade out earlier, would be, for example, the first swing high that you do see, right? Let's say over here, this would be your manual TP. Now, if you were looking to close your trade a little bit further out, let's say you are somewhat of a risk taker and you're fine waiting longer for the trade to play out, if it's going to mean that it's going to give you a bigger reward, then you might potentially place it all the way up here, right? So these are the potential two TP points that you can use for a manual TP. Notice how I am not using this level because here's another rule of thumb that. Should potentially help you when you see two key levels like in very close proximity to each other. Always use the one that's a little bit more extreme, like on the edge. It usually ends up being the higher probability level anyways. That's how you do the manual TP. And as for expansions, the way you want to do that is just draw a fib from your range, like your most recent range, and put this level on your fib. Like just double-click your Fibonacci retracement. I know if your fib doesn't look like mine, you can just always change it here. Just add. This sorry, just add the negative zero point five and add negative one to your fib. This is how it's going to look like. Essentially, how this works when you draw a negative zero point five, essentially it's just from zero to one. That's one box. And if we extend this box, it's negative one, right? This is standard deviation. This is not exactly a Fibonacci number. And the reason why this works, by the way, the same is the same reason why Fibonacci levels work is that the algorithms that are delivering the price that are programmed by the market makers are literally programmed based on set parameters, right? Every market expansion tends to be calculated either. Using standard deviation numbers or Fibonacci extension numbers, there's a reason why that is the case. There's also a reason why the market like retracements are also calculated, right? Most of the time you do fall back to the 0.618 or the 0.705 as the bottom for retracements. Is that? That's because these algorithms are literally programmed on this, and for this strategy in particular, standard deviations tend to really work. So essentially you're taking profit at a standard deviation number, and the reason why this theory works. Works is that it comes down to your higher time frame bias again. If you're expecting the market to take out sell-side liquidity and it starts taking out buy-side liquidity, remember what I talked about also earlier before about bullish order flow. When you are in bullish order flow, not only is the market making new highs and these old highs are always attacked, but notice how like every new high is some kind of range expansion, right, in the direction of the trend. It's always some kind of expansion, and this is what we're trying to capture here. So whenever you take profit, let's you— that's your entry right there. Take the range, extend it out, and this would be your TP1 and this would be your TP2, right? -0.5, by the way, just means like half of a range, half of a range of expansion outside of the range. Okay, very simple, very straightforward. Now what if you're someone that's a little bit more conservative, right? Let's say, wow, you know, this, this seems like it could be very risky. And the beautiful thing about taking profit like this is— I'm just going to give you an example. Let's say this is our trade and this is where we're placing our stop Majority of the time, as long as you're not screwing up something royally, you will almost always have a 4 to 1 risk to reward ratio, meaning risk relative to the reward. This is worth 4 times and this is 1. And this is at the minimum if you just set this as a TP, right? And at most you can, you are looking at a potential 6R trade. Now there are a few ways that you can take profit when it comes to this exit strategy. The first one is that let's say you're someone that's a little bit more conservative. Let's say you don't really wanna risk taking trades or like taking profit at expansions because it could take longer to happen and you're not someone that's comfortable with sitting with a trade for too long before it hits the TP. In that case, then yeah, just take profit at the most recent high. Nothing wrong with that. You're looking at anywhere between 2 to 3 Rs depending on how tight your stop loss is, and that's still a really good trade. Or you can also say that you want to take 33% profit at each one of these levels. So for example, 33% here would be 2.5, so 0.33 of that would be around 0.8R, and then you take another 33% here, which 4.32 divided by— it would be around like 1.4R. And then again up here, you take the rest of your TP, and that would give you roughly 2Rs. So you're not actually losing that much when you're taking just partial profits on each level. Instead of a final like 6R trade, you're looking at a final 4.2R trade, right? All of this adds up to 4.2. And this has the benefit of allowing you to be much more consistent, meaning like, okay, once you take profit here, you're going to set your stop loss to break even. And I've already taken something home instead of risking. Like, like let's say if you are super like risk, like you just love risk and you just wanna like go all in or go home and you wanna be able to extract the biggest amount of profit out of every move and you only take profit here. Well, guess what? Your win rate's gonna go, win rate's gonna be lower, but when you do win, you're gonna win a lot bigger. But at the end of the day, the trade-off is yours to make. Remember when I said earlier that everyone has unique personalities, everyone's different, they have tendencies, they have situations that they favor. Some people might be more impulse loving, some people are more passive and they prefer just taking profit and like being conservative, right? Taking profit often and being consistent and having a really good win rate. It's your job to— you determine that for yourself. But none of those are bad strategies to go forward with. By the way, if you're someone that truly believes that trading can give you the freedom that you deserve and to allow you to spend your time and money however you want, but you cannot for the life of you figure this whole trading game out and make it work consistently, then what you saw in this video was a little bit of a sneak peek to what you will get in the service that I provide. And, and you will find more information on What I do is able to help you solve your problem in the first link in the description box below. Now, you don't have to click it. In fact, I don't really mind if you click it, but only if this is relevant for you. Then the link is there whenever you feel like you're ready to get some help to solve this problem and to potentially fast track this learning curve. But anyways, if you enjoyed this video, drop a like. Like it really does mean a lot to me. And if you want to see more content just like this, make sure you subscribe. And if you want to see a video on a topic you would like covered, drop it in the comment section below. Otherwise, thank you so much for your time. I do truly appreciate. You spending your time with me, and I'm wishing you a blessed day. Cheers.