Video Transcript:
Hey guys, it’s Dale here and today I have something special for you. This is a full trading webinar created by Dan, one of the mentors in our Funded Trader Academy. Dan is a full-time intraday trader who mainly focuses on ES and NQ. His method combines volume profile, smart money concepts, and order flow. The idea behind his approach is simple. First, he looks at the bigger picture and finds the key support and resistance zones. Then when price reaches those zones, he uses order flow to confirm the trade and time his entry.
In this webinar, Dan will walk you through his whole process step by step. You will see how he sets up his charts, how he finds his levels, and how he executes trades with order flow. I’m really happy that he made this webinar for you because Dan is a great guy. He is an excellent trader and many of our students are getting impressive results using his trading method. So, let’s get started. Here comes Dan. All right, guys.
Welcome. Dan McKaige from Funded Trader Academy. In this video, I’m going to cover my entire order flow trading strategy, the value shift from A to Z, from concept to execution to trade management, the whole works. I’m one of the head traders at FTA for the past couple years, and I’ve been trading the footprint for over a decade. So, in this video, we’re going to cover, like I said, the entire order flow trading strategy from A to Z. We’re going to show you how to set up your order flow charts. We’re going to show you how to set up the road map charts as I call them.
And we’re also going to cover platforms used, the ones that I specifically use, the ones I like, and some other options that are available as well. But we’re going to start with an overall 30,000-foot view of the entirety of the strategy and then we’re going to work our way down. We’re going to drill down into the specifics, how to frame your trading day and find the strongest levels for intraday trading. Okay, we’re then going to shift into how to execute and trade my two main setups. All right, we’re going to follow that up with some position and risk management, some common mistakes that take place, and then we’re going to finish it all off with a road map for you to follow to get started yourself.
So my goal for you in this webinar is to walk away with a repeatable structured methodology to answer two questions that day traders struggle with every single day. Where should I look to be a potential buyer or seller? And when should I pull the trigger? Right? Something that has to be answered every day. And this is the methodology that I have used and developed over the past 10 years to do just that. All right? So, we’re going to cover this methodology in detail today.
So, sit back, grab a pen and paper, and take some notes and enjoy. Okay. So, let’s dive in and take a look at your charting platform. Here are the two that I use. I use TradingView and I use NinjaTrader. I use TradingView as my analysis platform where I do all of my pre-market analysis, longer-term analysis, so on and so forth. I like it because it has user-friendly charting capabilities and its ability to really cycle in and out of different time frames.
Okay. I like NinjaTrader for their order flow footprint suite. I like their order entry models or their order entry ease of use to get in and out of trades. It’s a really good feature. But by no means are these the only two that you can use. There are tons of options out there for both order flow and for charting. These top four here, ATAS, MotiveWave, Sierra Chart, Bookmap, all pretty popular order flow footprint platforms all get the job done as far as I’m concerned.
Thinkorswim, pretty good charting platform. Also been using that one for years for stocks and options. And then also TrendSpider is another good comparable to TradingView. So let’s dive in. This is kind of the plan moving forward with this segment. We’re going to look at adding on these tools. We’re going to start with your road map, your TradingView chart. And what we’re going to do is we’re going to just start with a blank chart. And we’re going to add in these tools.
I’m going to show you how to do that, where to find them, so on and so forth. And then we’re going to move into the order flow footprint. Start with a blank chart, add in the footprint software, show you how to load that, and so on. You can use either third-party software add-ons if you’ve got that, or you can use native NinjaTrader Volumetric bars, if you are a license holder for the NinjaTrader platform, or if you subscribe to it, you can also do that as well. I will show you how to add on the VWAP and the block trade tool. This is my baseline setup for my order flow chart.
So, let’s get to it. So here is your trading dashboard and this is what we’re setting up. We’ve got NinjaTrader over here on the left-hand side of my screen and we have TradingView over here as my road map. So, we’re looking at this is and then we’re going over here to execute on here. So we’ve got the broader view here. We’ve got the micro view over here. Okay. So, when it’s all said and done, your charts are going to be set up and they’re going to look similar to this.
All right. So, let’s start with TradingView. And let’s just take it from the top. Okay. So, when we get into it, you start with basically a blank chart. Okay? And this is the list of all your indicators that you’re going to have on there. So, you basically start with your blank chart. Okay, let me just delete all my indicators. You start with your blank chart. So I like to have a blank chart that has the overnight highlighted.
And the way that you do that is you go over here, right-click your screen, go to settings, and then you’re right on this symbol section here, you can customize to whatever color scheme you like, but the electronic trading hours background, you go ahead and select one and then select its opacity and then it will go ahead and highlight that overnight for you. I like this feature. I think it’s a nice it’s easy on the eyes and allows me to identify those New York sessions real quick at a glance. Okay. So from here the tools that I use are all right here. Okay. So this we have a periodic volume profile and then your basic volume is on there too.
I use Ripster EMA clouds as kind of a spot check for trends, but there’s another way that I do that as well. And then there’s VWAP on here and session volume profile, which is your sessions profile. Okay. Another periodic profile on here. This one I set up to a week. And then I’ve got the ICT kill zones on there for the overnight hours. Your fair value gap tool, which is this one I have set up as inversion gaps.
And then this one I have set up as regular fair value gaps. And we’ll cover all that here in a second. And then I have just an automatic tool on here that covers your prior day, week high, and low. And you can go ahead and take a look at any of these. And when you’re looking at those and you want to apply them to your chart where you can find the periodic volume profiles and the session volume profiles is you’re going to go to technicals. You’re going to well, first you click on your indicators button up here at the top. You’re going to go to technicals.
You’re going to go to profiles. And then here they are right there. And we’ll walk through those here in just a second. Actually, let’s walk through them right now. So the two main ones that I use periodic volume profile for the week. Let’s go ahead and open that up. So this is what it looks like when it’s all customized the way that I customize it. So, let’s go through those settings. Okay, period I have set to one week.
This stays the same. This stays the same. Row layout number that stays the same. And the only thing I really adjust on the inputs is the row size. I like it a little more granular, so I jack the number up to usually about double of what it comes out of the box with. All right, then I go to style. And the only thing I really do on here is I just flush it all one color. I like the weeks to be blue and then the POCs on there.
I just change that to an orange. And you can again customize this to whatever you like. And I remove the histogram box around it by just crushing the opacity down to zero. Okay, that’s pretty much it for the weekly profiles. That’s all I do. All right, and we’re going to go through a whole spiel on the profiles here in a bit, but these are just how you set up these tools. Okay, session volume profile. This is what these look like.
These are your daily profiles. So let’s go through the settings on that. Pretty much the same thing. Sessions I put to all. So it covers the entire day, not just a singular session like the London overnight New York session but the full the full day’s run from the futures open Sunday night futures open all the way to the closing bell and settlement period through Monday. All right, for example. All right. So, everything stays the same value area.
I keep it at 70% numbers. And then again, I just jack this up to about double what it comes at. Okay. And I don’t extend any of the POCs. Just gets too cluttered, right? I can still look at those totally fine without it. And then volume profile. Again, I flush all the color to the same color red. It gives me my red profiles. And then I change the POC to a teal color. Again, you can customize this to whatever you want.
And then get rid of that histogram box around it. All right, that’s all I do. And then those are set and good to go. There is a monthly on here as well that just looks like this. I don’t keep that on my chart. I remove it after a while when the month closes. I just kind of take a quick glance at it and see if there’s anything that I that I’m missing. But you can do the exact same thing and just set it for a month and then customize it to a color you like.
Okay. Ripster EMA clouds. Let’s go through that one. All right. So, these are what that looks like. This just your EMA if you have an EMA tool or whatever. This is kind of customizes it a little bit and puts a different flavor on it. Right. So, let’s zoom in on this is and I’ll show you what this. Okay. So, you have let’s look right here. This easy to explain right here. Okay. So, you have a five EMA, which is the closest one that hugs price.
It’s the outer edge of this green stream right here. Okay? And you have a 13, I’m sorry, a 12 EMA. That’s the bottom side. That creates what I call an aggressive trend stream. Okay? These are your aggressive trends. And then I also have a passive trend. Right? Here’s your 34 and here’s your 50. Okay? And these often get respected. I like to use these as a spot check. I don’t necessarily keep them on my chart all throughout the day, but I just like to look at it for broader term analysis to see if we have crossed over and if we have crossed over and flushed in any kind of different way, shape or form.
So, it’s a helpful tool to keep on my on my roster. And you can find that just go to indicators, type in ripster EMA clouds top one, and then you just set those settings to let’s see, what did I do here? Inputs. Yeah. Okay. So, I have an eight. There’s also a 89 in the middle. That’s that thicker that thick line in the middle of the aggressive trend. There’s a 89, there’s a five, and I was right.
13 and a 3450. And then I just go down here and I only show EMA cloud 1, two, and three. That’s it. Okay. And you can again use whatever color scheme you like, but that’s the way I set up that tool. All right. VWAP. Let’s go take a look at VWAP. VWAP is not available on a hourly, so let’s drop this to a 15 so that we can put VWAP on here. All right. So VWAP again go to indicators, type in VWAP, very first one, volume weighted average price.
Just that simple. Okay. And you’re going to go to your settings. And what I do is on the inputs, I get rid of all of the standard deviations. I don’t want them on there. All I care about is the actual VWAP itself. I like to use it as a reference. And then the style, you just keep VWAP on there and color code it to your liking. That’s it. Okay. Pretty simple on that one. All right. We covered these two ICT kill zones.
This is what these are right here. Okay. What this does is it code it or color codes out the Asian session first, I believe it’s 3 hours, and the London session first two hours. They give us nice idea of what the overnight is doing and it also gives us session liquidity areas to operate from in the New York session. I like this tool a lot. And so to find that you just go to your indicators ICT kill zones and pivots right here. Okay, pretty simple.
And then you go through your settings on here. And let’s go to inputs. And it’s been a while since I did this, but let’s see. I have this it’s the first four hours, I should say. So, or no, yeah, it’s 10 to 8 to midnight. All right. So, it’s 4-hour and then it’s 3 hours. London 2 to 5. This is all central. Oh, it’s all actually well, this central time that I have this peg to. So, just adjust accordingly and color code them.
I don’t put these ones on here. There’s other ones you can throw on there for the New York session. Don’t need it. I just like to see when I open up my charts in the morning, what did Asian do? What did London do? Okay, with a quick glance. Okay, it’s a great tool. All right, let’s move on to the fair value gap tool. So right here, you’re going to go to your indicators. You’re going to plug in FVG.
And I like the one by nephew Sam. This is the one right here. I put two of them on my chart. Now, you don’t need to use two of them for really how I trade, but one I like to make set to inversion gaps and one I like to set to just regular straight fair value gaps like so. Okay. And if you don’t know what fair value gaps are, we’re going to cover that here in just a little bit. But let’s go through the settings on here.
So, I like to just set it up exactly like this is where I don’t have it set to the chart, but I have it set for 15 minutes, 1-hour, 4-hour, and daily time frames. I want the candles to close before they identify hide fair value gaps lower than enabled time frames. So, I check that box, show the fair value gap. Now, on the other one, the other one, if you want to set one up to just show the inversion gaps, then you just click this off and click that on, and it will just show you the inversion gaps. Okay? And those are just areas of imbalance. We’ll get to those here in a little bit.
Set max bars to look back to 1,000, delete boxes after they fill, and show the labels. Yes. And then you can color coordinate those as to how you would like to see them. All right, that’s really all I do with this one. And that’s that sets up that tool. And then this one right here, this is your prior day and week high prior day and week high and low. So, let’s go take a look at that one.
That just sets and establishes lines of prior day high and low. And let’s go put that one on there. Make sure that’s on. All right, there they are. Prior day high, prior day low, prior week high, prior week low. Good. Got them on. All right, let’s go look at the settings on that. Pretty self-explanatory here. Just pick the lines you want on high of the week, low of the week. You can add those in if you want to.
Don’t have to. All right. And then there’s one more that I put on here. And don’t know why it’s not on here, but there’s another one. And this just called the initial balance. And I use this one here from Noop. Okay. And then what I do on this one, I go ahead, I check off the settings. I don’t put the extensions on there. Intermediate level, I do show that. Initial balance color. Let’s see. Yeah, I like to drop that down.
So, it’s a little bit don’t have that color IB areas. Yeah, I do that. I don’t put the labels on there. All right. And then I go down to IB area background. I make that yellow. I make it kind of a light faint yellow. Okay. All right. So, initial balance low. Make that one a purple. And I’ll make this top one a purple as well, just so I know what they are. All right. That’s really all I do to it.
Just so I have that. And I have my IB mid. Let’s see. 50%. We’re going to make that black. All right. And we’ll crank that up just a little bit. All right. Perfect. So now you you’ve got your initial balance set. You have it set for well I’ve got to put it to central time, don’t I? So you’ve got to make sure you get your time zones in here. All right. So my start time’s 8:30 and I want this thing to run till 9:30.
Okay, that’ll cover it. That gives you the total of the initial balance. This gives us another set of key areas to look at throughout the course of the trading day. So that covers it. When you’re all said and done, you should have a chart that looks like this. Okay, maybe a little bit of an eyesore at first. Not really. Once all the components and what they are, and we’re going to cover all that here in a bit.
And most of the time, during intraday trading, I’ll go ahead and I’ll just take off the weekly volume profiles. And actually, honestly, during trading, you can take off the actual profiles themselves. Not really relevant for what I do until after the bell is over. But this is what you’re going to have set up heading into each trading day before you start marking up your chart with your areas and levels of interest. So let’s move on and let’s go take a look at the order flow chart. Let’s do the exact same thing. Okay.
All right. So, we’re going to just fire up a new chart, right? And when you do that, you’re going to go new chart. You’re going to go right to your command center. You’re going to go to New, and you’re going to go to chart. Okay. I already have one up here. So, we’ll just add another tab to this one. But we’ll just start from a blank, let’s just say we started from a blank one minute chart.
Okay? And I’ll just show you how to set up a NinjaTrader Native order flow. Okay. All right. Turn that Oops. Turn that off. Okay. All right. So, we’ll let that load for the S&P 500. Okay. So, when you first open it up, it’s going to look something like this. Okay. And it’s pretty faint on on a white background. We can change that background so it’s a little darker. We’ll go with a light gray. How about that?
All right. So, now you can see your order flow your order flow footprint. Okay. You’ve got your two columns of information. You’ve got your candles right here. You’ve got your wicks, so on and so forth. So, let’s go ahead and customize this here for a second. All right. So, we are going to go through the instrument here. We’re going to trade is the S&P. Well, I already got that on there. So, let’s remove that. So, we’re just going to start from the top and work our way down.
So, when you’re on a minute chart, okay. You want to change this thing all the way down to volumetric. Okay. And let’s just make volumetric. Let’s do three minute charts just so we have a little bit more data to work with. Okay. Delta type bid-ask ticks per level. We’ll just do one on the S&P. When you start getting into stuff that’s a little bit harder to read on a tick-by-tick level, you want to compress that down.
Like the NASDAQ, I put it to like a three or a four, so it compresses the data. Or it adds a couple of levels together. All right, we’ll go back. You want to keep this to a minimal. 3 days is fine. And then we’ll go Yep. Chart style volumetric name volumetric. That’s fine. Chart style type bid-ask. There’s I like the bid-ask where you have the bid and the ask columns. You can also merge it so that it’s just one delta column so that it does the calculation for you and just gives you one number per tick per level.
And we’ll just keep all the rest of this is the same. Okay. And we keep going. Keep going. Keep going. Candle body outline black. The color for up bars lime green. The down bar is red. Pretty standard. I like to remove the box grid. So, I just make this to transparent. And then I like to let’s see. Yeah, we’ll keep going. Opacity 50. Width one. No more box grid. All right. Box outline. Same thing. We’re going to go ahead and turn this into transparent.
So that’s gone. Dash style solid 100. Color for positive strength. Red strength. Show maximum: yes. Color for maximum. This is your POC. And I’m going to get to that here in just a bit. And we’re going to color that blue. Color for text. We’re going to make that black. Okay. And we want to show bar statistics. Okay. So, there’s only a few things I like to see on here. Trades, volume, buy volume, sell volume, delta bar, delta percent.
I don’t look at cumulative delta, min, max, delta, delta change. Okay, these are the only four that I put on my chart. All right. And then let’s see. Statistics grid. Solid. Done. Done. Done. Let’s see. What else do we like to put on here? All right. Oh, yeah. We also want to click show as a profile. All right. So, let’s go ahead and apply the settings that we have so far. Let’s see. Delta, show the volume.
Let’s go ahead. Yeah, there we go. All right. Oh, did I put this on a delta chart? Hang on one sec. Yeah, I want bid-ask. All right. And we want to center that open close bar. All right. All right. There we go. So now you are all set up. So now you have the settings set up for your order flow footprint. You’ve got your candle by candle on the three minute chart. You have your bid, your ask, all the transactions going off.
You can see clearly your bars, your open, high, low, close, all the data in between. And you you’ve got your stats bars set here down at the bottom as well. Okay. So, now I go in and layer in a few more things. Okay. What I like to layer in on here. Go to your indicators as soon as it wants to pop up. Yeah, here we go. All right. So, now I scroll all the way down to let’s see where is it?
Oh, the order flow section here. Okay. So, what I like to add on here are the block orders. I like to add on the order flow Trade Detector. I go ahead and I hit add. And you want to change this to block. And minimum size, or minimum volume for the marker, is 100. And I leave the rest of it the same. That’s for ES. I use 100. Okay. So, we’re going to go ahead and put that on there.
Probably not too many to work with. It looks like the it’s this. It’s this detector right here. So, we have a 500 block order. On the ask aggressive buyers here, 500 block order, something you may want to know about, right? I like to just know where the big orders are. Okay. And then I go back to indicators and I go ahead and I go back to that same section and I’m going to add the Order Flow VWAP.
All right. So, we go ahead and add that. And I’ve set up a few templates on here. So, I’m going to go ahead and load those. I’ve got electronic hours and regular trading hours. And that’s all just an adjustment in the reset interval session time. So we’ll go ahead and add the electronic trading hours. That’s your full VWAP. And then we’re going to add another VWAP on there. And then we’re going to go and load regular trading hours on there as well.
Okay. We’re going to go ahead and apply. Okay. So this is your regular trading hours VWAP. I keep that one dotted, and then the electronic trading hours VWAP is a straight line. Okay. All right. So that’s on there. Let’s go all the way back to current price here. And then I’m going to go and do one more thing. I like to add volume on this chart. And I kind of customize it. Not really. But I go ahead and add this is add.
And then really all I do to it is I go to the volume plots. I make the width a 20. All right. So now you you’ve got your volume chart or you you’ve got your volume on here as well. And so now your order flow is all set up. So, when it’s all said and done, you’re going to have a dashboard that looks like this. Okay, just like what we talked about up front. So now your charts are set up.
So, what now? What is the ultimate strategy that we are running here? So the strategy that I run here is called the value shift. And this is again, this is a 30,000-foot view of the strategy upfront. Okay? And we’re going to dive into the details of this, but I just want to give you a little broad overview of what it is. All right? So, I look to take advantage of day-to-day value shifts in the equity indices, primarily the ES and the NQ.
Okay. So looking at the main core concept is I’m using these volume profiles and key levels and I’m looking to see where value has been, where it is currently, and where it is likely going. Right? So I’m wrapping my arms around where value currently is and I’m looking and gauging for potential areas where the value can shift to. So we had value set here. We had a value shift lower and then we broke that value area on this is the 14th and broke down to the downside and down she goes shifting value lower. Okay.
So, how do we do this? How can how can one predict this or how can one frame a strategy around this? Well, there’s a process I use takes typically 5 to 10 minutes each morning called the top-down multi-timeframe analysis. We’re going to get into that shortly. But before we dive into that, let’s cover some basics on the volume profile. So this is a core concept, a core tool that I use. If it, well, this will be a nice refresher for you.
If you don’t know it, this will be some pretty decent information for you. So we’re just going to cover what a basic volume profile is. So what is it? It is a visual representation of transactions executed over price. So what you’re seeing here is a visual representation of transactions over price. Your price axis over here. These are the visual aids, right? So up here you have relatively low volume. You have all the volume stacked up here in the value area.
And then you have your low volume down here. Okay. So some of the pieces to note, okay, and this true for every volume profile you look at. Some may or may not have them labeled on there or have them highlighted or so, but the key components of this is the value area right through here. Okay, the value area represents 70% of the volume. So on the S&P 500, for instance, there’s 1 to 3 million contracts executed every single day. Okay?
So 70% of that volume was done right in here. Okay? So you have your value area high, which is this line right here, that upper portion of that 70%. Okay? In the middle there somewhere, usually you have your point of control. That’s your POC. And that’s the singular level, singular price point where the most transactions went off throughout the course of the day. It’s the high volume node. Okay? And then just below there, you you’ve got your value area low.
Okay? That’s the lower 70 or the lower part of that 70% of volume of the transactions that went off. Okay, a couple more pieces. You’ve got your low of day, your high of day. That’s easy to see. You don’t need a volume profile for that. But you do have an extreme high price point of the day or price zone of the day, and an extreme low price zone of the day. So these are the basic components.
They don’t change. These are always going to be there. All right. So, let’s dive into just a couple different couple more things here before we get rolling. What we’re looking at here is the basic profiles and shapes. Okay. So, there’s different profiles that come out throughout the course of the day or any trading day or any trading week. Okay. So, this one here, this is your basic D-shaped profile. Okay. Why is it a D-shaped profile? Because it’s shaped like a capital D.
This is your standard bell curve distribution. Okay, it means it tends to mean balance. It tends to mean consolidation. And it’s just usually a tight- ranging chop, right? If it’s tight ranging, it’s usually just a consolidation day. All right? And there’s more there’s more to it than that comes through it. There’s things that can derive from that D-shape and things that can that can be anticipated from that D-shape. All right? So, let’s go on to the next one.
The other basic one is a capital P-shape profile. Again, it is called a capital P because it’s shaped like a capital P. Okay? It tends to mean a bullish trend. Not always, but it tends to mean a bullish trend. Okay? When price moves from lower prices, distributes higher, followed by consolidation, and it tends to leave some thin prints along the way. What do I mean by thin prints? I mean very little volume to zero prints. Okay?
And you can see that by this big explosive candle right here. Price ripped through here very quickly with very little volume. Okay, you want to note those moving forward. All right, let’s go to the lowercase B-shaped profile. This is the inverse of that, right? So, it tends to mean a bearish trend. Not always, but it tends to mean a bearish trend. Okay, price leaves value a higher value, distributes lower, and establishes some lower value down here.
Okay. And you can see that value by what’s highlighted here, which is the value area. And as a quick glance of the eye, you can see that value would have been up here and it rolled downhill and established itself right through here. Okay. Again, tends to leave some thin prints, some areas of imbalance in the wake of that move. Okay. Now, you have your capital B-shaped profile. All right. So this just a shift in value intraday shift in value from a D-shaped profile breaking out or down distributing and reestablishing value also known as some sometimes referred to as a double distribution.
But the POC shifts okay so price started off down here in a nice tight ranging D-shaped profile late in the day. It broke to the upside and established value higher. Okay, you have a high volume node here. You have a high volume node here. And in the middle you have an imbalance. Again, worthy to note moving into the next trading day. Okay. Lastly, you have a trending profile and it’s just kind of an one directional chop movement, right?
Price grinds or chops its way to its closing price destination, leaves multiple high volume nodes along the way. Right? You can see one, two, three, four on this one. And one, two, three low volume nodes in there that are some imbalances. Okay. And again, we want to note those moving into the next trading day. All right. So, those are the five basic profile patterns. Now, the question that I’m going to get or that I usually get from this, well, what can I do with this information?
It’s backwards looking, right? I don’t know that these profile shapes nor the meaning until the profile session is closed. Correct? You don’t. However, what makes this different from other indicators that you just throw on your screen that’s built off of some calculation that’s backwards looking that has no future valuation to it that you can assess to it or you can there’s no there’s no anything that you can use forward looking in this right from the other indicators that do that. You can actually do that with this, right? You can pull out key levels for the next trading day and you can carry them forward.
Okay? Okay, you can string together multiple profiles to offer a broader context of the market and you canticipate potential scenarios where you are interested in being a buyer or seller. Okay, this one of the key things. Where do I want to be a potential buyer or seller? Well, we’re going to help answer that question here in just a minute. Okay, by simply knowing where areas of balance and imbalance are from the previous few previous few days. All right.
It’s it is one of the more powerful tools that’s available on pretty much every platform. Okay. So, we’re going to go through that process, I’m going to show you how to frame the day here. Okay. But before we do that, right, it is it’s worthwhile to note the underlying philosophy for the way that I trade every single day, right? I operate under the premise the market does two things, and that is it. Doesn’t do anything else.
Okay, it moves from balance to imbalance, from liquidity to liquidity voids over and over again. That’s it. That’s all it does. So we’re going to go down or we’re going to go through my top-down multi-timeframe analysis. I’m going to show you how this works. So, let’s get to it. So let’s take a look at this top-down multi-timeframe analysis. Now, I’m just going to start off with an I’m just going to start off with a blank chart.
So we’ve got nothing on it. Just a blank chart. Just actually just some volume on it. We’re going to start from actually we’ll start from a weekly chart. So the top-down multi-timeframe analysis you are scanning through not every day. I don’t look at the weekly every day, but I do I do check it every so often, but you’re going to start from the higher time frames. You’re going to work your way down to about the 1-hour, sometimes the 15 depending on what you’re looking at.
But and you’re just really going to find areas of liquidity and areas of imbalance and balance. Okay, that’s it. That’s all we’re doing from the top to the bottom. So right off the get-go, I don’t typically put too much on the weekly, but you can see that there areas right here that we’re going to want to notate. Obviously, the all-time high here and the major swing points. Okay? And by swings, I mean a swing low. And if you don’t know what a swing low is, you have a low, lower low, higher low.
Okay? So, we have a clear protruding swing low down here, a clear protruding swing high right there. All right? And what we’re going to do when we just first start looking at this we’re looking for a fair value gap. And we’re looking for those areas of imbalances from the higher time frames. Now, if you don’t know what a fair value gap is, I’m going to show you. Okay, it’s a three candle phenomenon, and I’ve got one right here that I can show you on the weekly right here.
Okay, it’s a three candle phenomenon. So you have this big bullish surge through here, right? We’re looking for areas where there is an imbalance of transactions. Okay, and right here, you have a wick high. You have an incredibly bullish body candle right through here. And a wick low. Note how these candle wicks, this one right here and this one right here, do not merge. Okay. So, what’s left in the middle is an one-sided transaction all the way up.
Right? Okay. So, if you were looking at this on the ask, you would see a heavy imbalance of transactions. And on the bid, you would see a lower volume of transactions. Now, this is a fractal thing that takes place on every time frame you can find it, but you want to note where these areas of imbalance are and you want to highlight them. So on the weekly we have one here. I don’t really have anything anywhere else that’s relevant.
We do have one way down here, right? So, we can mark this one on here, too. So, that one’s obviously there, too. Okay. So, now we’ve got a relatively recent swing high, swing low, and we’ve got a weekly imbalance on there as well. Now, we’re going to zoom down to the daily. So we’ve got our weeklies set here. Let me go ahead and highlight that. So now we’re going to look for areas of daily imbalance. Okay.
Well, I can see one right here. And yeah, over the course of time, you just kind of train your eye to it and you can see it real clearly. But until then, you can go ahead and just plug on your fair value gap tool and it will highlight those out for you. Okay. So, and I just like to put a rectangle over them because I don’t always keep this on there. But we have bullish daily right there. Okay.
So, in this weekly we have a whole bunch of imbalances. I’m not going to go ahead and highlight all of those. Just know that imbalance exists. This imbalance exists. This weekly here exists and so does this bearish daily up here. So that about covers it. There’s no real new swing points here except for this one right here, but we just took on the overnight Sunday night futures open right through here on that gap up. Right. So, we do have one there and that area has been taken.
All right. So, now that we’ve got the daily covered, now we’re going to shift gears and go down to the 4-hour. Okay. And here’s where my volume profile comes into play. This is where it starts to get a little bit interesting, right? We’ve got more bearish imbalances to the upside. We’ve got 4-hour here. Bearish 4-hour. Bearish 4-hour. And this just infusing a little bit of smart money concepts in here. And I’m going to tie this is all together here in a little bit.
Okay. All right. So, now we have Oh, this supposed to be bearish. Ah, okay. So, we now have our precise areas of imbalance set up, ready to go. Okay. Got a couple more areas of liquidity to mark off here. Again, you want all those major swing points. Okay. And one more down here. All right. So now you’ve got some areas, some levels to operate from, some areas of liquidity and some areas of imbalance. And then we’re going to layer in on here.
All right. I don’t have any more imbalances to mark off. Okay, they’re all kind of in there. I do have one bullish 4 hour right here. I didn’t extend that one. Okay. So, the last thing I’ll do right here is I will mark off this volume gap up. Okay. All right. All right. Now, we’re going to drop it down to the 1-hour and see if there’s any areas of imbalance that I really haven’t hit. Well, okay.
Can convert this one right to an one hour because it’s bigger. That imbalance is bigger. We have one more 1-hour down here. Okay. And we’ve already got this one marked off. This new one here that just formed. You can go ahead and mark that one off, too. Okay. So, now we’ve got our areas of imbalance marked off. Okay. We have some longer-term bearish order flow to the downside here. We have stalled out at this weekly and this daily down here and we’ve created new bullish order flow on this leg.
So the dominant flow right here is bullish. Okay, I know we’re right smack in the middle of this swing high to swing low, but right here we have a bullish dominant trend that has not been disrespected. We are now disrespecting bearish flow. If you can see right here, we have disrespected this bearish fair value gap. We inverted it. So where’s my bearish? There it is. So we just notate that on there. So the order flow on this went from heavily bearish, heavily bearish, heavily bearish.
We stalled out down here. We inverted another one right here. Two of them right back to back. Okay, a bearish inversion right here. So we went from bearish all the way bears in total domination and control of the market until that Thursday we stalled out down here in this daily and we created new bullish flow and inverted bearish. Okay, that flips the order flow. It’s been bearish since down in here. Okay, even more bearish as we made more.
So this is how you keep yourself on the side of the market. This is how you keep yourself on the side of the dominant flow of the market. Okay, we’ll cover that here again in just a little bit, but that was part of it. So now you’re thinking you’ve got too much stuff on your chart here, Dan. No, not really. That’s about it. So now we’re dropping down to the hourly. We’ve got all of our areas and levels of liquidity that we want.
Okay. So, now we have a road map, do we not? We have areas up here where we’re potentially interested sellers, right, under the right conditions. And we have areas down here where we’re interested buyers. So, now here comes the sum total button for you Excel spreadsheet out there, right? Okay. So, what I’m looking for is I’m looking for price to offer me a failed breakdown somewhere. I’m bullish. I want my failed breakdown model. And we’re going to cover that model here in a little bit.
But if price, okay, holds this fair value gap or this true gap up right here, right? If price holds here, if we dip down into here and it holds, well, then price is likely going to move up to this is area of liquidity up here. Okay, bullish flow. You’d like to see a dip, recovery, and rip. Okay. All right. So, if we’ll color code this one green. All right. So, if price fails this new gap up here that we have, right, and we trade through it and below it, and what do we also have right here?
We have a POC, an area of confluence. Okay. If price fails and trades below here, holds below. Okay, then I’m going to target this is area of liquidity. So now you have an actual game plan, an actual road map for what you want to see when that bell rings. Let’s say we’re a few minutes away from the open. You now know that if price moves hard off the open to the downside, what to look for. And we’re going to cover the very specific things on what to actually look for.
But you see, you have a general idea mapped out in your head as to what you want to see happen if price moves down. Okay. Well, let’s flip this is around. If off the open price surges, okay, if we see price surge, okay, I then would like to see the creation of new bullish flow for a pullback and rally back through the highs. Okay, now this one is these are not drawn out to the specific levels, but this just a general idea of what you want to see. Okay, now let’s go to the downside or the other the other failure up here. So, if price comes up here and fails, you want to see any bullish flow created up in here, you want to see that inverted and you want to see price move down.
Okay. Now, the primary scenario that I would want to see off the open is I would want to see price dip off the open. I don’t care what it does, but my primary scenarios I’d like to see price dip and then assess what it does. Okay, this something that I give to Funded Trader Academy community every single day. Every morning I map this out in a quick video and I’m showing everybody what I’m thinking in the morning. Okay, now let me jump in here just for a second guys. What Dan is talking about the Funded Trader Academy is our community of traders where me, Dan, and other mentors help our students to become funded traders.
We help them to stay funded and to make their trading their business. If you want to learn more about the Funded Trader Academy, you want to head over to our website. It’s in here, Trader-Dale. Com. And if you click this button, which says FTA, which stands for Funded Trader Academy. Here you can learn more about what we do and how to join us and what’s included in our membership. So let’s go back to Dan and the webinar.
So now you have your road map. Now, if you want to, you don’t have to because they’re already listed on your charts, but you can go ahead and you can extend out your prior week POCs, right? If you really want to gum the works up on your chart and add more levels, if you like more levels, it’s totally fine. You can throw your prior week POCs. Throw these levels on there right here. You can throw on your prior week value area highs. All right, prior week value area high.
You can throw on prior week value area low value area low and that other value area high way up in here. Okay. So again, the analysis doesn’t change. You’re still looking for the same thing. You’re wanting to see if price is going to fail above this prior week high and start to penetrate back into prior week’s value. But if price does continue on up on its bullish trend up here, if we do get a bullish break up here, there’s potential for that bullish value shift to the upside. Okay, you can see values down here.
Where could it potentially go? Well, it could potentially either come back down through and dig back into last week’s value or it can break to the upside and expand value higher. So that’s what we’re looking to do at the end of all of this is analysis. You’re coming up with a couple of different if-then scenarios. If price pushes to the upside, what are my likely options up here? If price moves to the downside, what are my likely options down here? And you’re using these tools to gauge yourself as to who is the dominant flow in the market and what do I need to see for that dominant flow to reverse.
Okay, that’s all we’re doing here. So just some final thoughts on framing the day. We just kind of covered this topic loosely and I want to cover it here just one more time. So in this scenario here we have two trends, right? We have a broader bearish trend and some short-term bullish trend here, right? So, in this instance, which one is the dominant flow that we want to key in on? Is it the bullish or is it the bearish?
I’ll give you a few seconds here to note your answer. Okay, in this situation, it is the bullish flow. Okay, that’s the dominant force. It’s the current leg, right? And the reason for that is we want to day trade this thing. Yes, this is the longer-term trend. Okay, but that doesn’t mean a whole lot here when we have this shorter-term bullish flow that is holding its weight. So how do we tell this? How do we know what side of the of the of the market to be looking for?
Okay. All right. So, we have bearish flow dominating just creating more bearish flow creating more bearish flow all the way down through here and we stall out at a bullish imbalance a daily bullish imbalance. We stall out. Okay. We then disrespect a bullish or I’m sorry, a bearish gap right through here and we inverted. Okay. And then we respected the upside of that inversion. And then what did we do? We created new bullish flow out of this.
Okay. So we stalled out. We disrespected bearish and inverted it and created new. Okay. That is the recipe for an order flow flip from bearish to bullish. This is how you can not pinpoint exactly, but you can find those rotations low on that price curve. Okay? All right. So, this trend, this bullish trend that’s right here, this short-term bullish trend is going to remain bullish until the opposite happens. Until price, like for instance, comes up here, stalls out.
Okay? We start to disrespect any bullish imbalances to the upside here. We rip through them and we go back to the downside and then we create new bearish flow. Okay, that’s when the order flow will flip and we’ll start to look for bears. So let’s take a look at the final product. So we have clear areas and levels of interest. Okay, above price and below price. You have a clear sense of the dominant trends. Okay, you have the immediate dominant flow into the open.
Hopefully that’s clear. Sometimes it’s not so clear, but most of the time it’s pretty clear. Okay. Into the open. And in this instance, it’s the bulls. Okay. And then finally, you map out your plan. Okay. You map out your if-then scenarios of what you want to see happen. In this instance, I want to see price dip off the open offer me my entry model either here or displace through, fail, and rotate back to the downside. And we’re going to get into these specifics here in a little bit.
And this completes the road map portion of your trading dashboard. And we’re going to dive into the execution chart here next. Okay. So, now we’re going to dive into my specific setups that I like to trade. All right. And let’s just define this here for a second. There’s a big difference between a setup and an actual trigger to execute. Okay. So, we’re going to identify the setup and explore the execution model in a little bit later segment.
Okay. So, the setup, we’re identifying conditions to look for an entry. We have the proper market conditions where we can then go look for an entry. All right. Bullish market, bullish dominant flow. Price pulls back, retests a key level, and at that moment, we investigate and identify the price action at that level. Does price displace or fail to displace through those key levels? Once it’s clear, now you’re on the edge of your seat awaiting your entry model to develop and to trigger.
This distinction in cadence is critical. It’s crucial to be able to trade effectively. So let’s dive into that here for a second. So my primary setups, my very first one, my favorite one, is a failed breakdown or a failed breakout. Okay. And this is where the volume profile and the value shifting becomes or the value shift methodology becomes so valuable with these two execution models. This one and these two. It’s the same thing but just the opposite side.
Right? I have one more that we’ll show here in just a second. But what we’re looking for is a failed breakdown. So we have a current leg of price right here. This is your bullish leg. Okay. Coming into the open just at the New York session or just before the New York session open which is right here. We have London session high peeking out and that pre-market New York session dipping. Perfect. Okay, we have two very key levels right here.
POC value area high and we probably have some imbalances down here to the downside. We’ve got one right here. I can notate that right there. And look where price dipped into. So all of a sudden price comes screaming to the downside off the open. Okay, we have a little bit of pre-market run to the downside. Price pops just before the open and then tags both of those levels to the downside. Tests the first one, which is the overnight POC, tests it, bounces, fails.
No execution model, no entry model there. Price swoops back to the downside, tests that other one, holds it, right? How do I know it holds it? Well, it wicked through it. The bodies never broke to the downside and held. Okay. Then price reverses in a screaming fashion back to the upside. Breaks some structure and off to the races it goes. So where does she go? Okay. Right back to a known swing point in prior day high.
Two prior day highs in fact. Okay. So this one of my favorite models and the inverse is true just to the downside. But this one of my favorite models to trade. Bullish market, bullish flow, dominant, and we have a weak pullback. Failed some key levels and recovered them. Okay, let’s go on to the next one. My other setup that I like to look at is called a breakout. Okay, you have essentially the same thing. Bullish market, bullish flow, pullback right down, tagging a key level.
Okay, coming up to another key level, value area high, and breaking out. See how we didn’t fail it here? We actually just ripped right straight through this value area high and created a smaller term fair value gap through there. So this called displacement. This displacing through a key level. Okay, and we created new bullish flow right here. Okay, and then what we want to see after this happens, we want to see price pull back into it, offer us our entry model, and then we’re able to go long.
We’re going to cover the entry model here in a little bit. Okay. So, as price is testing a key level, you want to see price do one of two things. Rip through it clean or fail to do so. Okay? And that will be clear when it happens. Okay? When this happens or this happens at a level, here’s your POC key level. You did not displace through it. You wicked through it, failed it, and then recovered it.
Okay, let’s look at the other one again. Oops. Let’s look at the other one again. Displacement failure. Okay. So, let’s go and wrap up the where. Okay. All right. So the very first section of this, the road map, your TradingView chart if you’re using my setup is all 100% dedicated towards understanding where you want to look for potential areas to trade. Okay? You’re using the volume profile, you’re using smart money concepts, fair value gaps, and you’re using that top- down multi-timeframe analysis to frame the day.
Start from the higher time frames. Identify your swing points. Identify your imbalances and then go back through it with your volume profile and add in your POCs, value area highs, value area lows, high of days, lows of low of days. Same thing for the weeks. Okay? And you create yourself a nice matrix. Okay? For the day that are relevant areas to trade. Okay? So now we’re going to move into the when. All right? We have an understanding of the key signals we’re looking for on the footprint, but how do we actually execute?
Right, we’re going to dive into the footprint here. Next, okay, on to the when portion of our webinar here, we did spend quite a bit of time on the where because that’s where we spend most of our time in our trading day. We spend it at the where. Where do I want to see price? We are waiting for price to arrive at our location and then we’re looking for very specific things when price arrives. We’re nothing more than observers until that takes place. All right.
So now we’re going to move on into the when and this to do this, we’re going to look at the order flow footprint. We’re going to we’re going to take a dive into reading the transactions in the marketplace. How to read a footprint. How to read the key signals shed by the order flow footprint more specifically. And then we’re going to identify those key signals to identify a shift in control. So let’s go ahead and do that. All right.
So let’s first define what a footprint is. Okay. So a footprint chart, it’s essentially an expanded version of the basic candlestick. Think about it as a magnifying glass that allows you to zoom in and see what’s actually taking place underneath the surface of that candle. Most traders don’t know this exists within each candle. All right? And when properly read in context, you can gain an understanding of who’s in control of the market and when. When read improperly, you can get highly confused.
Right? So, if you’re advanced in order flow, once you get to that point, you can then read the intent of the market before major moves. And that’s what we’re going to dive into here right now. Okay. So, if you’re here and you made it all the way this long, I assume this stuff. But we’ll go ahead and we’ll cover it here real quickly. All right. So, these are your basic candles and we’re going to expand off of this.
This is your bearish candle. You have your open, your high, your low, and your close. Okay, the close is below the open. All right, here’s your bullish candle. You have your open, your low, your high, and your close. And the close is above the open. This is your bullish candle. Everybody that trades knows these specific things. All right. What folks don’t tend to know is what an order flow footprint looks like and what’s all involved. Now, don’t fall off your seat.
There’s a lot of data on here. There’s a few more components to take a look at. All right. But let’s put it all into context. All right. These again, we’re not assessing this candle. I’m just telling you what’s on the chart when you open it up. Okay. Again, you you’ve got your high. You’ve got your candle volume profile over here. You have your bullish imbalances over here. And you have your bearish imbalances over here. Okay. Now, in the middle here, you can see this faint histogram.
Not all of them have this. But it shows you selling volume over here. Shows you buying volume over here. If you have one of these volume profile on each individual one of your candles, you’ll need the other and vice versa. Okay. Just down over here, you have this blue mark here. This is your POC, and usually it is marked off on every single order flow candle and what that means is that is the high the high the single price points in that candle with the most transactions executed would be right here.
Okay. Then you you’ve got your open, you you’ve got your close, you you’ve got your low. All right. That is your candle. Got your two columns of information here. We’re going to cover those here in just a second. Okay. And down below there you have your statistics bar. This is where all the stats are driven from. Okay, you have up top here you have delta. Okay, think of deltas the summation of these two columns. The buying pressure minus the selling pressure.
You get a summation here. Okay, it can give you a sense of magnitude of the candle you’re looking at. And historical candles as well. So below that you have your cumulative delta. This is your delta for the net balance of the day. So for the balance of the day at what time is that? 610 you had a net difference of 960 more 61 more aggressive buyers than sellers in the marketplace. Just like on this candle you had -3.
So that means you had three more aggressive sellers in this candle than buyers. All right. And now here comes the stats of the bar. It’s like an absolute term, right? You have your delta min and your delta max. So what was the low water mark on delta for sellers was – 37 on this one and the positive high water mark was 142. So this candle came up here started off fairly bullish. Okay. Ended up failing up in here.
We were at that 142 mark of aggressive buyers over sellers. And then as we came back down here and price sold off, we saw more aggressive sellers step in and erode that 142 down to one or to 237 and finish up at -3. Okay. And then just below that, you have a volume bar here that just shows a visual representation of the volume that’s gone off at this particular time. So that completes the vertical look at your delta or at your order flow footprint. So the question on this is what’s important, right? Well, let’s cover that.
So the things that become important that you want to look at are the imbalances, the stacked imbalances. And you want to notate the difference here of what’s taking place in these two columns. Okay, over here. This is your bid. Okay, and you have aggressive sellers transacting here. Okay, this is what shows up when folks are aggressively selling and they’re hitting that market order. Okay, they’re impatient and they want out now or they want to initiate a short now.
Okay, they’re executing over here on the bid. Over here you have your ask. Okay. And here you have aggressive buyers executing when they are hitting that market buy order right now. They want in now. They have no patience. They don’t want to wait and they want in. They are executing over here on the ask. Okay. Now for an imbalance to take place, this is a horizontally calculated imbalance. Okay. So you have 30 sitting up here at the top and its horizontal counterpart is zero.
If this three times more, that’s usually the standard is three. If this three times more than its counterpart, it gets a highlight. That shows a surge of aggressive behavior at this particular tick. Okay. All right. So, what’s happening on the other side of that transaction? If you have aggressive buyers that are buying, who are they buying from? Well, they’re buying from passive sellers. Okay? And vice versa is true over here. If you have, what is that?
86. If you have 86 aggressive sellers over here, who are they selling to? They’re selling to passive buyers. So you have two things happening in each one of these columns, but you’re what you’re really looking at is the net aggression, right? Which is why I focus a lot of my time on the delta. Okay. All right. So, let’s keep going. What is delta? All right. We kind of covered it here a little bit. It is the net difference between aggressive buying volume and aggressive selling volume at each specific price level within a single price bar or candle on a footprint chart.
Okay, it is delta volume equals volume traded at the ask. Aggressive buys buyers lifting offers or the buyers lifting offers minus volume traded at the bid, aggressive sells or sellers hitting the bid. Okay, positive delta typically displayed in green, more aggressive buying pressure at that price level. Okay, negative delta typically displayed in red. More aggressive selling pressure at that price level. Sellers were the more aggressive force in that particular small microcosm of an area. So simply put, delta tells you or can tell you who is in control at specific prices.
Gives you a sense of magnitude of each candle. All right. Okay. So, TradingView order flow has a couple of add-on tools that you can add on to it that simplifies a little bit that just shows you delta moving overlaid over your price, right? You can see aggressive sellers, and traps coming in off the open. You can see aggressive buyers coming in to trap up some traders up at the top. Sellers coming in. Those red bubbles represent the sellers and price moves back to the downside.
You can see aggressive sellers popping back into the downside. Okay. Some of the some of the tools are pretty cool. But this is another view of that TradingView. Order flow tells you the exact same thing. You’ve got to read a little bit in depth on some of this to pick that out. But this is the one that I like to use. This just your standard NinjaTrader order flow footprint. Okay. All right. So, let’s try a little exercise here.
Okay. What is the read? We’re going to go ahead and we’re going to do an exercise of reading delta. Now, the very first thing you want to do when you open up your chart, what the components are. You’ve got your statistics bar down here. You’ve got your individual bars. I think they’re five minute candles in here. You’ve got your block trades on. You’ve got your VWAP. You got so on and so forth. The only thing we don’t have on here are the actual key levels.
All right? Or zones. All right. Now what you want to do the very first thing off the open the opening bar is the opening bar is right here. The very first question you want to ask yourself is are delta and price aligned. Okay. So what’s price doing? Price is moving down for about 30 minutes. Okay. What’s delta doing? Delta you can see right here is ramping hard in the opposite direction. It is dominated by aggressive buyers.
Now, how is that possible? How can you have aggressive buyers dominating the order flow yet price is moving down? It means that passive sellers are pressing this market down. All the aggression on the buy side is getting absorbed and shoved to the downside. Also means this delta divergence. Okay. So, we’re going to come back at the end of this is and we’re going to ask a few more questions as when does the when does the flow shift, okay?
And we’ll be able to answer that after we go through a few more slides here. All right. So, one of the very first key signals that I look for is a shift in delta, right? I’m looking for a change in control. Okay? And again, I don’t care what happens in between my levels. It does not matter to me. I’m not interested there. I don’t care what happens. I care when we start to ramp in the direction of my key levels.
That’s when I start to pay attention. Especially when we get into my key levels or my key areas, that’s when I care. I don’t care anywhere else. Okay? It’s very important to understand. All right? So, a shift in delta, this ideal situations. All right? So, we’re going to see a shift in delta. We’re going to really look for it after a clean extended trend to the upside. Okay? We’re going to look for aggression or weakness into the highs or lows if you’re shorting, right?
But in this instance, we’re going to look for heavy aggression into the highs or we’re going to look for weakness coming into those highs or lows. Okay? We’re going to look for an abrupt stall out. Okay? And then we’re going to look for an actual shift from aggression one way to the opposite direction. So, let’s go ahead and walk through this here. Okay. So, we’re starting off right down here, and we’re just coming in looking into our charts, and we’re just kind of making heads or tails of what’s taking place.
Okay. All right. So, we have some bullish flow here, a little bit more bullish flow. 468, 382 on the delta, 637 to the delta. Then we have a little slight pullback here, and then price takes off. 727, 404, 139. So we have some fading buyers pressure to the upside. Okay, the aggressive buyers are indeed pushing price to the upside, but they are fading. They are getting weaker. You can see the decline in the numbers. Okay, then we come up here.
Come up to this candle right here. We have a green bar with red delta. Okay, that’s a delta doji. That tells you sellers are starting to pour in or starting to come into the marketplace. Then we have another one. This puts me on the edge of my seat. Now I’m looking and I’m on alert and I’m looking for a shift in delta. Okay, a shift in delta means two things. It means that not only does the delta shift, but price coincides.
So what do we have? Price comes all the way up here. We have fading buyers to the upside. It’s getting very weak. Okay. Then we see sellers take over -1,454 back to the downside. Price agrees and pushes to the downside aggressively. You can see the sell stacks coming in. Okay, those imbalances start to get peppered and they become more frequent. Okay, you see the bulls on the way up, bulls stalling out, bears taking over. That is your delta shift.
And you’re just looking at the numbers going from bullish, fading, weakening, reversing, price agrees, and then down she goes. Okay? That’s your delta shift. You’re just watching these bars. Okay? And you’re looking for that initiation, initiative action in that opposite direction. And then you’re looking for that price to expand delta to coincide. All right? That is your shift or your change in control, your delta shift. All right. And again, this only matters at key levels. All right.
So, let’s look at traps. What am I looking for when I say I’m looking for a trap? I’m looking for trapped traders. Again, looking for this on for price on an extended run in one direction. Okay. I’m looking for aggression at the highs. For a bullish trap or I’m looking for aggression at the lows in a bearish trap. So again, same chart. Price is coming up here. We’re notating that delta is in control, pushing price and driving.
Okay, but it’s getting weak. We note that going up. Okay, price is getting weak, weaker, weaker, even more weak. Okay, now we see a triple stack imbalance on the ask right at the wick, the wick highs. Okay, this right here is notable as a potential trap. We don’t know it’s a trap yet if we don’t see this bar yet, right? We don’t know this is a trap, but it’s notable. Okay, especially on declining bullish delta up to the high side.
Even more so if there’s a key level up in here. So this basically your textbook trap. Heavy aggressive bullish flow at the wicks at a swing point. Okay. All right. Now, what is it actually that we’re seeing here? We’re seeing late breaking retailers get into this trend very late. Okay. Well, they’ve waited. They’ve waited. They’ve confirmed. They’ve overconfirmed. Well, we’re still going up. We might as well get in now, right? We see it all the time.
Okay, we see traps, we see a delta shift, and then we see acceleration. Okay, these are this is these are two of the signals that I look for. Okay, last one I’m looking for is I’m looking for a break of structure. Okay, now this can be a little bit subjective and there’s a little bit of an art to it. Okay, but let’s go back to this. Well, well, so let’s just say we have a bullish market moving up. Okay.
All right. And we do in this instance. There’s a bullish market moving up. Okay. We have price weak a weak buying going on up here, right? Then we have heavy aggressive buying going on, right? A little mix and match back and forth. Just back and forth of aggressive buyers on price, weak delta. Okay. Back and forth with delta. Nothing is making sense up here, right? Nothing is in alignment. Okay. Now price stalls out. We see a little bit of a small trap up here.
We see aggressive bullish flow up in here and here. And then price moves away from it quickly. And we can see we have a clean structure right here on the on the body lows. Okay. So as soon as we displace through there, okay, now we have something. Now we have a break of structure to the downside. Price comes back up, traps up some more traders at that break of structure and then fails. Okay, this is your break of structure.
What you’re really looking for is the immediate trend of the bullish uptrend to break. So let’s kind of tie it all together. So this that same chart we’ve been looking at except for that breaking structure one, but this is the same chart that we’re looking at, right? That we were looking at earlier. So we have a nice clean bullish trend here on declining aggressive buyers. Okay, we start to see two things here. We see a green bar on a green bar with red delta.
Sellers are dominating the flow within these two five. These are two-minute bars. So a two-minute bar, green, red delta, green, red delta, declining urgency to the upside, declining horsepower to the upside. Okay, then we see this potential trap. Now, we don’t know it’s a trap right away, but we’re notating it as a triple stack up at the top. Okay, then we see a shift in delta right here. Okay, our structure is right here. Why is this our break of structure?
Because this uptrend, if we break down below here, that will kill this uptrend. Okay? If we break down and hold, here’s your break of structure. We broke down and we closed through it. Take your short. One, two, three. Delta shift traps break a structure. Okay, the immediate trend is broken and we’ve now traded to the downside of it and held. Okay, with selling momentum. Okay, and then down she goes. So question again, where did the shift in control take place here?
So let’s walk through it. Let’s walk through it. All right, here’s your opening bar right here, your 830 bar. Okay, price is doing its thing on its open on the opening 15, right? Just oscillating back and forth. Tough to make any kind of heads or tails out of it. Then we get a heavy aggressive bullish bar failing to push prices upwards. 2,124 on this bar. More aggressive buyers than sellers. Okay. Then we get 622 and price seems to agree and pushes price down with that net aggression.
Okay. Then we have more aggressive buyers but yet more selling. So now we notice here that something is off. Okay, this bar right here tells us that something is off and we have a divergence. Okay, we have heavy aggressive buyers and price is moving down. More heavy aggressive buyers and we still fail to pop prices up. So this tells me that we have a divergence and we’re approaching a key level. So now we’re just going to wait and see how price responds down at this key level.
So, what do we get? Aggressive buyers all the way into it. And then here we flip. Okay, -1019. We’re now nearly a hour into the market and we don’t have a trade. Okay, that’s fine. All right. So, then we come down here and we see potential traps. We see price push through almost a displacement, right? And we don’t know if it’s a displacement yet because price hasn’t come back up and tapped into this or pushed into or retested this level.
Okay. So now we have heavy aggressive bullish flow coming up here and failing. Okay. More aggressive bullish flow failing to reclaim. [sighs and gasps] Okay. Still bullish flow. Red candle failing to reclaim. Failing to reclaim again. 1390. Now we have price move away. Now, people might look at this is and say that this potential retest of a key level. Failed to reclaim it and now down she goes just by looking at this candle. If you’re looking at the order flow, you note there’s no sellers in this candle.
None. Okay, we’re kind of a neutral bar on this press down. So, there’s nothing to do there. Okay. Now, all of a sudden, we get more bullish flow. Pops price up. Price starts to agree with Delta. We come back through. We reclaim, we create a higher high, and then we break this little built-in structure and break that downtrend. Okay, here’s your 1131 breaking clean initiative action. You can see the buy stacks right through here. Okay, take your trade long.
You have a shift. You have you have a singular direction. You have traps. You have your delta shift. And you have your break of structure. Take your trade. Okay, this is a similar kind of a thing. Let’s just focus over here on this one. Okay, you have your key level right here, 29734 price aggressive bullish flow. Boom, boom, boom, boom, through a level. Okay, stalling abruptly, trapping up traders, sellers come in, break structure, reclaim to the downside, enter your trade.
Down she goes. Okay, remember those three things. So these are your order flow key signals. Key level taken. Okay, often times that’s a liquidity sweep. All right, or it’s a bounce off of a balance area like a value area high, value area low, or a POC. All right, and you’re looking for that delta shift, that change in control from aggressive buying to selling or selling to buying. All right, you’re looking for those traps, those late retailers about to get run over.
Okay, I showed you what those look like. Look for imbalances on the wicks. The more the better. Okay, and then you look for that break of structure. The immediate trend is broken or that key level failure or reclaim with opposite momentum depending on what side you’re playing. So, let’s tie some of this together with the entry model. Okay, we talked about it earlier, the failed breakdown or the failed breakout. We talked about the setup. Now, let’s go with the entry checklist.
Let’s tie in what we just learned. So we have the setup. We have a bullish broader market, very short-term bearish pullback. Key level gets tested. Ideed a failure to displace through that key level. So, you have your conditions are met. Okay, your key levels taken. You have traps. You have a shift in control and your break of structure with bullish momentum. So, those are your four qualifiers to get you into a trade. So, let’s go take a look at a failed breakout.
Here’s an A+ failed breakout model. So here’s your open right here. Okay, the opening range kind of does its thing, right? The opening 15, 5, 10, 15, 20 minutes does its thing, right? Just chops back and forth. Nothing really to see here. You’ve got your key level right here is 29743. Price all of a sudden rips to the upside. Heavy aggressive bullish flow. Okay. Stalls abruptly, reverses, traps up some late retailers up at the top. Okay.
Then sellers take over and they reclaim that key level back to the downside. Okay. Take your trade short to the downside. Okay. Let’s go take a look at the breakout. Okay, your setup bullish broader market bullish dominant flow. This is your setup. Your key level gets tested. Identify bullish displacement through that key level. And now you go through your entry checklist. The same stuff that we just learned. Your key level is taken and displaced. Upon that displacement, you create a fair value.
There’s a few other things in here, right? But price pulls back into that zone for a retest, traps sellers, shifts control back to buyers, breaks structure out of that zone. The breakdown is the inverse of this. So let’s go take a look at that real quick. So you have the bulk of the day, right, is just in this chop zone range, right? This chop range right through here. Price breaks to the upside. Okay, what do you do?
Are you chasing? You chase that market right here and try to get in right upon the break. No. This is how people get trapped in failed breakouts. Okay. So, we wait. We displaced through a key level right here and here. We displaced through it. We created more bullish flow. What do we get? We get price to stall out. Tap back into it. Bulls re-engage. Break your structure. Take your trade back to the next level higher. Okay.
So, let’s recap the when. All right. When price arrives at my area and level of interest. So, now what? All right. We flip over to our order flow chart and we start assessing who’s in control. We’ve defined the order flow chart, the components, the bid-ask, the aggressive and passive sellers along with the aggressive and passive buyers. We defined three key signals. A delta shift traps and a break of structure. Okay. And we tied all that together with specific setup an entry model criteria.
Okay. So now we’re going to move on into some position management. Okay. Let’s manage our position. So once we’re in a trade, where am I placing my stop? What am I targeting? Right? Your stop in these specific instances or these trades I just showed you is going to go near or above below the traps ideally. So let’s go back to this chart here for a second. So your entry goes right here as soon as you break structure.
Okay, we covered where to enter. Your stop is going to go down by this trap or this swing low or this bullish engagement, the body lows here. So you’re entering up here. Your stop is going to go down here and you’re targeting this 7405. This has already been known. What price is targeting. If you get a trade as you go as you walk into this trade setup here, that if this happens likely this next. Okay. So your stop is going to go down here.
Your target is going to go up here. So what you want to do in this instance is you want to qualify that trade before you pull that trigger. Can I at least make a 1:1? Okay. Ideally, you want to make about a 2:1. But it’s your call, right? So, let’s go back to that chart here again. So, as price starts to break these swing highs, right? As soon as you get out of the gates on this trade and you break above here or possibly even here, this is where you start to notch up your stop, right?
Ideally, you’d probably want to wait for this one here. Okay? You can either take off half your position and then move your stop up and squeeze to the final. But ideally you want to look directly to your left and as you’re in this trade and it gets out of the gates. Right now once you’ve cleared this hurdle right here at that 1:1. Okay. Now you’ve cleared it. Okay. So now you can start notching your stop up for a risk-free trade.
You either take it to break even or below the swing lows. Right. And then you squeeze that rest of the remainder to target. So let’s go back. Yeah, and again, take profits along the way and squeeze that trade to the final upside target if possible. You may get stopped out on that part of it, too, but that’s totally fine. You’re already at a break even or in the money on that one. So the standard sizing, let’s talk about position sizing.
So, the sizing of your on a per-trade basis, right, is typically 1 to 2% of your account balance. So, for instance, if you have a $50,000 account and you’re risking, as your rule 1% of your balance on a per-trade basis, you’re risking $500 per trade. This rule would require you to lose 100 trades in a row to blow your account out. All right? It’s very low probability if you stick to your rules and have an edge. And these two are the main two components. Stick to your rules and have an edge.
You trade only at your levels and the right conditions with a trigger and a setup. Okay? Period. You don’t do anything else. Okay? And then the reward side of it, minimum, you’re looking for that 1:1 ideally a 2:1 or above. If your risk outweighs the potential reward, don’t trade it. So, for instance, go back to that previous slide. Okay? If we were entering up here somewhere and we only had just a few points to get to, but I had to take all this risk, I just wouldn’t take the trade.
I’m not going to take that risk for this very minimal reward here to this known target spot. Okay. So, just something to keep in mind as you’re trading this live. Okay. All right. So, let’s go through some common mistakes. What are the most common mistakes that I see traders make? So, I see them trading overleveraged positions for their account size. That’s number one. That is probably the biggest one. And then I see people trading against the dominant flow.
I see folks trading the footprint blind without a higher time frame structure or plan. I see folks trading outside their areas of interest. They’re just kind of gunslinging it wherever, right? People misreading the order flow. It’s not really that big of a deal once you get the hang of it. That kind of comes with it comes pretty quickly once you get the hang of it, right? One of the biggest ones is not following a specific set of conditional guidelines and entry checklist before risking and engaging capital.
Okay? Like the like I just laid out for you. All right? And also not journaling your trades daily. Okay? Journaling to me is like the ultimate cheat code. If you want to walk into the marketplace every single day and know with specificity and confidence what you’re looking for, start journaling every single day. Here’s why I took this trade. This is the trade I took. I put my stop here. We were targeting up here. I had my boom, checklist is done and the conditions were proper 2:1 risk-reward.
Took my money and ran or I didn’t follow my rules. None of that happened and I just gunslinging it. Right? One of those two things in somewhere in that scope of possibilities, right? Okay, let’s go to the next steps. So how do you get started with this? We covered an awful lot of information tonight. Okay, we covered an awful lot of information. Okay, what you want to do the very first thing to go back to is start framing your day using the volume profiles and fair value gaps.
Understand where you’re looking to trade. Okay, this is where it all starts and where it is rooted. Okay, where am I looking to trade? If you can pinpoint that with precision, you’re 90% of the way there, right? Okay, then go back and back test. Okay, go back through a month’s worth of trading days and look for A+ setups and entries that we covered in this video. Journal them. Journal them just like you were trading them, right?
This is what I saw here. I would take this trade on this entry right here and we’re going to target up here. This is what this A+ entry looks like. Screenshot it, print it, put it on your chart or put it on your desk. Okay? Get comfortable and confident in dissecting out your key areas and levels. And the only way to do that is to go back through historical data and keep doing it and then do it ongoing on a daily basis.
All right? Get comfortable and confident in reading the footprint. Practice it. Read the last 10 opening ranges of the ES and the NQ. Identify the shifts in control. Screenshot, journal them, circle them. Pull out a pen and paper and write them down. Right? Get comfortable reading that footprint live. Okay? Going back through and back testing it and trading it live is a different deal. So on an ongoing basis, read that footprint live. Understand who’s in control.
Do things make sense. Are price and delta aligned? Are they misaligned? Are we on our way to a key level? Okay. So on and so forth. Understand who’s in control? And when it shifts, get comfortable doing that. Okay? You’re going to want to practice both those skill sets. Crafting your road map and reading the shifts in control at key levels on the order flow. So that does it. You now have a good grasp on answering the two questions traders face daily.
Where and when, right? You have seen how to drill down into the charts and find where using volume profile and smart money concepts. You’ve seen the key signals from the order flow footprint to identify when to pull the trigger using the full entry model you just saw. And now you have a road map as to how to get started. Hope this was helpful. Thanks for watching. We’ll see you guys over on the next video.
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