Video Transcript:
You see how there are two fair value gaps here on the three-minute inverses? Yeah. Okay. I waited. I did not enter on this one right here. Why did I not enter on this candle right here? Can anybody tell me? The rejection of the FVG above? The rejection of the FVG. No, I did not buy on the close of this candle, which inversed this three-minute fair value gap. Why didn’t I buy this on the close of this candle inside the order block?
Nope. Oh, your break-even point?
Yep. It already took out this little internal liquidity level and rejected from it.
That’s a red flag. But then the next one easily broke above, and I just bought the order block right here. This was my entry right here—not down here.
Does everybody understand that? Now, this is not necessarily an internal high, but it is the order block. And since we didn’t close above the order block and we rejected—crossed above and rejected—this is just a little bit of a red flag. You want to see momentum. You don’t want to see rejection. You don’t want to see price cross that internal high and reject. But the next candle was very strong and then closed above the 15-minute order block. And then you bought the retracement—that black candle.
I didn’t even buy the order block. As soon as this closed, I waited a couple of seconds just to see if we got a pull-in. And I entered right in the middle, right here—not just a little off this high. I didn’t necessarily wait for the order block. As soon as this closed, I saw it pulling in a little bit. And as soon as I saw that, I just market-ordered right here. Didn’t matter to me anymore because now we have this fair value gap. Now I can have my stops here—right below this candle. It doesn’t need to be below this fair value gap. It needs to be below this inverse fair value gap. Nice.
Yeah. And that way, the move up to London was about five-to-one, six-to-one. Five and a half to one. So here’s the deal with this, okay? We’re talking about a couple of different ways to enter, okay? But let’s put this into perspective. Whether you entered on the three-minute fair value gap, whether you entered on the order block, whether you entered on the CISD, or whether you traded the ES—it doesn’t matter. They all worked out, didn’t they? Right? And why is that? Because you are trading from a key level. And when you’re trading from a key level with SMT and a failed auction, your entries don’t have to be perfect because you’re trading from a great level. I’d rather have a so-so entry at a great level than a great entry at a so-so level. Does that make sense?
So if you concentrate on trading from good key levels, whatever you do on your entries—even if you make a mistake—you’re still going to be fine because you’re trading from an important key level. It’s when we stop trading from important key levels that we start losing.
And Gerbelto, this is a perfect example of what we talked about—looking to get those equal highs. The setup you had might have been a good setup, but you weren’t trading from a good key level. So you had a good setup, but it wasn’t at a key level. But if you’re trading from key levels and from the right spots, and you make a mistake or you’re a little late on your entry, you’re still going to be rewarded because you’re trading from the correct area. Right?
If I’m going from point A to point B, okay? As long as I’m leaving from the right place and heading in the right direction, it doesn’t really matter if I accidentally make a right or left out of the driveway. I may have to just loop around once, but I’m okay because I’m still leaving from the correct area. So if you’re delivering and trading from key areas—and you have the right draws on liquidity—you’re going to be rewarded. No matter what you do.
And coming in this morning, if you’re marking up your charts properly, you have to have this drawn out. When you have this drawn out, these liquidity levels—the market—it’s not an accident that they’re perfect. It’s not an accident. It’s engineered liquidity. We see it all the time. And when we see it, and we hit a key level, we know it’s going to be a great draw on liquidity. I see this trade a hundred times a month. Always see this trade: trendline, trendline, trendline, manipulation down, hit a key level, inverse fair value gap, trade through that level, then the London highs.
Now, let’s say you just followed the rules this morning and didn’t take into account anything we talked about—the 4-hour, the 15-minute. You were delivering from a same-timeframe fair value gap. You took out a key level of liquidity. You had an inverse fair value gap. And if you went long on the inverse right here—even though it hit and rejected from that internal—you still made money. Why? Because you traded from the right spot. So you made money whether you took this, or bought the order block, or traded the change of state of delivery. You made money because you were trading from the correct level—and toward the correct draw on liquidity.
If you concentrate on doing that, any entry you take will be forgiven. On most days, there shouldn’t even be an issue because our entry model is pretty clear. There’s no subjectiveness to it. All right?
And even if you bought the close of this fair value gap, yeah, it pulled in a little bit, but you still made money. Why? Because you took liquidity, you came from the right spot, and you traded toward the correct draw on liquidity. And we can’t draw to an opposite end of liquidity until we take the first end. It’s an auction. We need to see if there are sellers. In order to see if there are buyers, we need to make sure there are no sellers. And the way we do that is we go to the lowest bid.
Just like if we were auctioning off a piece of art, the only way we’ll find out if someone will bid higher than $100,000 on this painting is to ask—and go higher—and ask if anyone’s willing to pay $101,000. If we get to that level, you might hear 101, 102, 103, 105, 110. That means price is being accepted, and we’ll see a continuation lower. But if we get to that level and hear crickets—or in this case we have buyers coming in, not sellers—then we know this is a failed auction to the downside.
And what happens to a failed auction to the downside? We then have to go price discover to the upside. We’re not taking stops here. It’s an auction. And in order to go higher, we need to make sure we can’t go lower first. That’s why we have these moves sometimes where price goes lower. Any manipulation move in an AMD is always about flushing out the sellers—or making sure there are none—before going higher.
That’s the concept of an AMD. You have accumulation. And if the market wants to go higher, the market makers are saying, “Okay, I don’t know where we’re going because everyone thinks there’s a fair price here.” So what do I need to do? I need to price discover. I’ll take the market down and see if it attracts sellers. If it does, then I know the market is accepting lower prices. We’ll keep bidding lower until the market balances. Or, we’ll go down, attract no sellers but instead attract buyers—and suddenly we shoot up. That’s how we get an AMD. That’s the philosophy. We’re not grabbing stops. We’re inducing some, but it’s about price discovery more than anything.
Remember—we always talk about retail traders’ stops. It’s BS. The retail market only makes up maybe 5% of the volume. And nowadays, so many retail traders use prop accounts, which are often simulated. They’re not even on the live order books.
If you look at a volume profile, all the volume is in the middle. It’s not at the London highs. There’s no volume there. And down here, where all the stops were supposedly taken—where’s the volume? There wasn’t any. Because when price came down here, there were no sellers—only buyers. And that’s why price moves quickly to the other side. There were no sellers below, and what can’t go down must go up. What can’t go up must come back down—in an auction.
Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm funded traders every day, then click the link below the video and hop aboard. We look forward to trading with you.
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