2022.3 Flashcards
What is Internal Range Liquidity?
It refers to short-term highs or lows within a price leg that is being retraced, including stop levels or imbalances in the same price action range
What is a Market Structure Shift (MSS)?
A market structure shift occurs when price takes out an old high or low, signaling a potential change in trend.
What is the significance of a Market Structure Break (MSB)?
An MSB represents more than just an intraday shift; it can indicate a multiday structural change in the market.
What does “Hunt for 5 Handle Trades” mean?
It refers to targeting trades with a 5-handle price movement for optimal gains.
How is trading cost calculated per handle?
Micro contracts: $2.00 per handle, $0.50 per tick
Mini contracts: $20 per handle, $5 per tick
What is a Stop Hunt or Stop Raid?
It is a strategy where price moves to trigger stop-losses, often before reversing direction.
What is a Fair Value Gap (FVG)?
It is an imbalance in price where the market moves too quickly, creating a gap between price levels.
What is an Order Block (OB)?
A key price area where institutional traders have placed orders, often leading to future price reactions.
What are high-quality Order Blocks?
They have the following characteristics:
Contain a gap
Have taken liquidity
Occur with a Market Structure Shift (MSS)
Their opening price extends in time
What is the concept of “Low Hanging Fruit” in trading?
It refers to taking easy profits from simple liquidity setups.
What is the recommended order of operation for analyzing trades?
Start with 15M markups
Move down to 3M, 2M, and 1M charts
Annotate everything for study
What are New York trading session hours?
Active hours: 8:30 AM – 12:00 PM
Lunch break: 12:00 PM – 1:00 PM
Additional setups: 2:00 PM – 3:00 PM
What is the risk management strategy mentioned?
Max risk per trade: 4.5%
Suggested lower risk until confidence grows
Example: Risking 3.25% on a confident trade
What is the strategy for trading Fair Value Gaps (FVGs)?
If price drops to a lower FVG, wait for a return to a higher FVG
If there’s no long wick, be willing to sacrifice the trade
What is a Liquidity Pool?
A zone where a high concentration of stop orders exists, typically above resistance or below support.
What is Buy-Side Liquidity (BSL)?
The collection of buy stop orders placed above a significant market high.
What is Sell-Side Liquidity (SSL)?
The collection of sell stop orders placed below a significant market low.
What happens when SSL is taken out?
Price often rallies upwards, breaking through the old high and indicating a possible Market Structure Shift (MSS).
What is a Short-Term High (STH) and Short-Term Low (STL)?
STH: A small upward price movement forming a minor resistance.
STL: A small downward price movement forming a minor support.
How does an Intraday Market Structure Shift differ from a Multiday Market Shift?
Intraday MSS may not lead to a prolonged trend.
Multiday MSS indicates a more significant change in structure over multiple days.
What are the key steps in identifying a trade setup?
Identify liquidity pools (BSL/SSL).
Look for Market Structure Shift (MSS).
Confirm Fair Value Gap (FVG) presence.
Enter at an Order Block (OB) if conditions align.
What is the importance of Fair Value Gaps (FVG) in trading?
They indicate imbalance areas where price is likely to return before continuing in the trend.
What is a Bearish Order Block (OB)?
A zone where smart money institutions placed sell orders, often leading to downward price movement.
What is a Bullish Order Block (OB)?
A zone where institutions placed buy orders, often leading to upward price movement.
