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How I Use Liquidity Sweeps, Order Blocks and FVGs For PERFECT Entries — Transcript

by Craig Percoco · 4,433 words · 627 segments · language en · Watch on YouTube

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0:00Most traders stay confused not because
0:02they don't understand smart money
0:04concepts, but because they don't know
0:05how to sequence them and use them
0:07together. They see liquidity sweeps,
0:09order blocks, fair value gaps, market
0:11structure shifts, but not how to piece
0:13all of that together into a repeatable
0:15system that allows them to execute exact
0:18entries and catch huge moves in the
0:20market. My name's Craig Percoco. I've
0:21been trading for over 9 years and so far
0:24in 2026, I've been able to generate a
0:26little bit over $280,000
0:28using this one combination model as a
0:30framework. I've also taught this to
0:32thousands of traders as the founder of
0:34Enigma Trade, which is a mentorship
0:36dedicated to developing consistently
0:38profitable and funded traders by having
0:40a simple one-track process to follow to
0:43learn all of this together. And these
0:44same systems are exactly what I deploy
0:46with this model every single day. So,
0:48that's exactly what I'm going to outline
0:50in today's video. I'm going to show you
0:52my smart money model, how to find it so
0:54that you can see for yourself and test
0:55it and then hopefully be able to deploy
0:57it to your own trading and finally start
1:00having repeatability and consistent
1:02profitability in your trading. Okay, so
1:04let's dive right in. And I first want to
1:05start by saying this model is applicable
1:07to every single market because it shows
1:10how markets trade in its most basic
1:12form. The market is constantly trying to
1:14seek equilibrium. So, it's going to
1:15sweep into an area and take out
1:17liquidity. We're then going to be able
1:19to see areas where institutional buyers
1:21step in. Then we'll see displacement as
1:24a result of that institutional buy
1:26pressure and we can use that
1:27displacement as well as previously
1:29respected areas to be able to find where
1:32the market is likely to pull back into
1:34before continuing in that new direction.
1:36Once you see this and understand it in
1:38its fullest form, you'll understand why
1:40you don't need to adapt a specific
1:42strategy for a specific market. You'll
1:44start to understand this is applicable
1:46to every trading strategy and every
1:48trading process because this is reading
1:50simple market mechanics rather than
1:51requiring some sort of fancy indicator
1:54that only works on one pair and one
1:56market. Okay, so before we go over a
1:58bunch of different examples on chart
2:00finding this during real sessions. I
2:02want to explain the model in full, but I
2:04want to go over each mechanical process
2:06that is required to understand this
2:08model. Okay, so the first thing to
2:09really understand is the market is
2:11always attempting to seek equilibrium.
2:14Okay, which is basically following the
2:15path of least resistance while managing
2:18the supply and demand from algorithms,
2:20institutional buying, retail buying,
2:22etc. And so all we're seeing on the
2:24chart here is a visual representation of
2:27mass human psychology pushing the market
2:29around to try to find that equilibrium.
2:31And what the market is going to do is
2:33seek something called liquidity. Now,
2:34simply put, liquidity is the
2:36availability of traders to buy and sell
2:39at any given price. And so there's going
2:41to be areas on our chart with key prices
2:43and key levels where banks,
2:45institutions, etc. are going to want to
2:47enter and exit positions. But in order
2:49for that to happen, there has to be
2:51availability and that's done through
2:52something called market makers. Okay,
2:54which brings us into our first concept,
2:56which is a liquidity sweep. So what
2:58tends to happen is say you have an
2:59uptrend where we're having higher highs,
3:01higher lows, and we start to have lows
3:03that keep being put in right here. That
3:05means that the market is generally
3:07confirming in this direction, which
3:08makes it logical that positions are
3:10going to want to be placed underneath
3:12these key levels if traders,
3:14institutions, etc. want to follow the
3:16current trend that the price is in. And
3:18what that does is that produces a lot of
3:21liquidity underneath these key levels.
3:23And what will often times happen is
3:25price will come through those areas,
3:27absorb all of that liquidity, and
3:29provide a ripe opportunity for big
3:31buyers to step in to be able to flip the
3:34market. Now, this doesn't happen every
3:35time, but you can see it through
3:37something called a liquidity sweep.
3:38Basically, these levels put in, price
3:40pushes, and then immediately displaces
3:43back up through those key areas. Okay,
3:45and often times what happens is a lot of
3:47traders will try to position themselves
3:49once a key level like this breaks
3:51because they're not understanding when
3:53really the exact opposite thing is
3:55happening and they're being manipulated
3:57out of those zones. So this can be our
3:58first telltale sign that if we see a key
4:01level broken and then immediately
4:03displaced, large players in the market
4:05can lead to momentum that we as traders
4:07want to be able to take advantage of.
4:09But we can't only look at that. The
4:10second thing that we want to look at is
4:12something called an order block. Okay,
4:14there's a few different ways to be able
4:15to read and look at order blocks, but
4:17the technical definition of an order
4:19block is the last candle in the
4:21direction of the move before an
4:23engulfing candle that displaces that
4:25move and moves drastically in the other
4:27direction. What we can use this for is
4:29basically to determine where the large
4:31players have potentially stepped into
4:33the market to position ourselves outside
4:35of as key areas to place stop losses.
4:38Okay, there's a good saying, look where
4:39everybody else is probably placing their
4:41stop losses and place your entries
4:43there. Okay, we're not quite doing that,
4:45but we're taking that into consideration
4:47when we're building these positions to
4:48be able to see where those players have
4:50stepped in. This is going to be our
4:51first look at potentially entering in on
4:53the market. The third thing that I want
4:54to look at is something called a fair
4:56value gap. Now, a fair value gap is a
4:58series of three candles where the first
5:00candle's wick high doesn't overlap with
5:03the third candle's wick low, and that
5:05leaves a space between here. And what
5:07that indicates is that there was
5:08momentum at that certain point, in which
5:10case the fair value has not been
5:12determined until price wants to pull
5:14back in and gravitate towards that area
5:17once the temporary momentum shift starts
5:19to wear off for the market to determine
5:21whether or not that's a fair new value
5:23for the price to continue moving in our
5:25direction or continue to move down and
5:27fail through our levels. Okay, there's
5:29one big key identifier that I like to
5:31pay attention to, which is the 50% point
5:34of this fair value gap. And this level
5:36is something called the consequential
5:37encroachment level. And basically what I
5:39want to see is whether or not price
5:41respects when it trades into the
5:44midpoint of this fair value gap.
5:46Oftentimes when there's high levels of
5:47momentum, price is going to pull just
5:49barely into the midpoint and then
5:51continue moving in our direction. So,
5:53while we can use these generally as
5:55targets, and that's not always going to
5:57happen or sometimes it will come a
5:59little bit lower through it and then
6:00continue, what I'm really looking for is
6:02to see how the candle responds off of
6:04that consequential encroachment level,
6:06and I'm also aiming towards this
6:08midpoint as my trade entry when I'm
6:10looking to enter on a fair value gap.
6:12Okay, and then lastly, I'm looking at
6:13something called a liquidity inflection
6:15level, which is just basically a fancy
6:17term for a trend line level. But, what
6:19I'm looking at particularly is areas
6:21where the chart previously wasn't able
6:24to break through, which meant in this
6:26case the supply was outweighing the
6:28demand and causing price to continue to
6:30reflect off of these areas, which
6:32intuitively means that if price is
6:34eventually able to displace through that
6:36area, there's a high probability that
6:38that same area, but now on the other
6:40side, will be a key area that price will
6:42respond off of and then continue moving
6:45in that direction if it's going to hold
6:46that level. Now, notice how I keep
6:48saying if it holds these levels. We
6:50[music] can't have a crystal ball and
6:52predict exactly what's going to happen
6:53every time, but what we can do is start
6:55to use a lot of these mechanics to be
6:57able to find key areas instead of
6:59trading in all of the craziness that the
7:02market has to find high conviction areas
7:05where the probability of the move
7:07happening is higher, and we position
7:09ourselves accordingly. Okay, so in
7:10summary, the sweep is the manipulation
7:13where the market is seeking equilibrium
7:15in absorbing liquidity and manipulating
7:17under key levels. The order block
7:19indicates the key area where large
7:21players potentially stepped in to drive
7:23the displacement in the price, and then
7:25the fair value gap imbalance is showing
7:28us the potential retracement zone where
7:31if price is going to continue to
7:32displace through that area, it will
7:34likely pull into before continuing. And
7:36the liquidity inflection level is a
7:38confirmation support or resistance area
7:40that can help us pick the right gap to
7:42trade and position our entries. Okay, so
7:44now let's take a look at an on-chart
7:46example of this in real time. Okay, what
7:47I'm going to do when I'm setting up my
7:49chart is I'm going to be trading the New
7:51York Stock Exchange open. Okay, and
7:52you're going to see that's going to come
7:53in at 9:30 a.m., and you'll see these
7:56volume bars here indicating an increase
7:59of market activity, which is going to
8:01increase the liquidity of the markets
8:03and give us powerful in opportunities to
8:05trade. Okay, and you'll see on my chart
8:06I have this gray area with this red
8:09dotted line showing me my 9:30 open as
8:11well as I have my fair value gaps
8:13automatically populating on my chart.
8:15And I also have these key market
8:17structure indicators showing me my break
8:19of structures and change of characters
8:21on my price. Okay, this can make it a
8:22little bit easier to start spotting
8:24these key areas having everything on one
8:26indicator on TradingView. If you want to
8:28add this to your chart and follow along,
8:30you can go in the description of this
8:31video and go into my tools and
8:33indicators. Okay, inside of that I'm
8:35also going to share with you a ton of
8:36other information as well as a playbook
8:38with some of my models, my indicators,
8:40my journals. So, if you want to access
8:41to that, it's in the description. Okay,
8:43so the first thing that I'm seeing is
8:44that the market is moving down in this
8:46direction and is putting in lower low,
8:48lower high, lower low, lower high, lower
8:51low. And this area right here is the
8:53last lower high that's put in because we
8:55have this candle close underneath the
8:57low, which means that in order for us to
8:59see a market structure shift, we need to
9:02see a close above this area. Price comes
9:04down, manipulates this low and
9:06immediately starts to displace in the
9:08other direction. So, this right here is
9:09indicating our sweep area. We see price
9:12starting to displace in a major way,
9:14okay, which is showing us our potential
9:16order block value here from the candle
9:18high to the low of the last bearish
9:20candle before a displacement higher. And
9:22at this point, we see the candle finally
9:24close up above this area. That's showing
9:27me a full market structure shift. The
9:29last thing that I want to look for is
9:31any sort of liquidity inflection level.
9:32So, I'm going to draw a trend level from
9:35this high over to this high, that's
9:36going to show me my potential inflection
9:38and a potential area where price could
9:40respond off of the opposite side. Okay,
9:42so now we have a range of price action
9:44that we're dealing with. And what we
9:45want to see is if price is going to pull
9:47back into our key area. Okay, and you
9:49can see what we're looking for is to see
9:52if this midpoint of the fair value gap
9:54is going to have a response. Now, at
9:56this point, one of two things is going
9:57to happen. Either price is going to
9:59respond off of this key area and
10:01continue moving in our direction or
10:03price is going to invalidate this area
10:06and move down through this fair value
10:08gap, in which case our idea is
10:10invalidated. And we're going to set up
10:12our position according to this. And in
10:14order to set up our position, we're
10:15going to look at two key things. We're
10:16going to look one at where our order
10:18block is, and number two, where our fair
10:21value gap is in conjunction with this
10:23liquidity inflection level. Okay, so I'm
10:25setting up my position to be able to
10:26target the midpoint of this gap. The
10:28first areas that I want to set up for my
10:30stop losses are pretty much any area on
10:32the chart that can act as a buffer or
10:35sort of an insurance policy on the
10:37position. So, outside of an order block
10:39is going to be key if it is within a
10:41reasonable range of the price action. In
10:43this case, our order block is down low,
10:46which would be a really, really big stop
10:48loss in comparison to how the overall
10:50market is moving. Okay, so there's going
10:52to be some scenarios where if this order
10:54block is close, we're going to try to go
10:56outside of the order block. What we want
10:57to do in scenarios like this is at least
10:59put the stop loss outside of the fair
11:01value gap producing candle, which would
11:03be right along here, and make sure that
11:05this liquidity inflection level has
11:08space to have the market respond off of
11:10before continuing to move up without
11:12stopping us out of the position. Now, we
11:14can't be perfect about this every single
11:15time, but that's kind of the sequencing
11:17that I'm looking to do. I'm trying to
11:19find a key area where the market can't
11:21break below. Okay, so when I'm setting
11:22my position up, once I have my stop loss
11:24placed, all I want to do is set a one to
11:26four risk reward, and I also want it to
11:29make sense with other parts on the
11:30chart. And I'm going to go over here in
11:32a second what I'm looking for as my
11:33broader targets for my take profit.
11:36Because entering is the easy part in
11:38trading. Being able to effectively
11:39manage the position and knowing where to
11:41take profit is what truly makes traders
11:44either profitable or not. Okay, so
11:46positions are going to be placed at that
11:47midpoint, take profit is going to be set
11:49just for the time being at one to four,
11:51and the stop loss value is going to at
11:53least be below that fair value gap
11:55producing candle. Okay, so we'll see
11:57price comes down, tags the exact
11:59midpoint of that fair value gap, and
12:01starts displacing and moving in our
12:03direction. Now, there are different ways
12:05to be able to manage this position. What
12:07I like to do is let these trades run to
12:09what are called key points of interest
12:10on my chart. Okay, and the next thing
12:12that I'm looking at for managing my
12:13position is looking at this previous
12:15swing point before we got a pull down
12:17into our entry and waiting for price to
12:20make a clean close above this area in
12:23order to reduce our risk and our stop
12:25loss to break even. Okay, so once we get
12:28a close above that high, right here,
12:30this is where we would be reducing risk
12:32on the trade. And the reason I'm doing
12:34this is because if we're following
12:35market structure on this trend, this is
12:37our last low before a higher high, which
12:40would mean if price is going to drop
12:42below this area and make a close, this
12:44trend is now invalidated, in which case
12:46we don't want to try to play to the
12:48upside anymore on this position. Okay,
12:50but for this scenario, we'll set our
12:52take profit at 1:4, and you can see
12:54price comes up, tags that area, and we
12:56now lock in four times what we were
12:58risking on the position by being able to
13:00snipe a key area like this with all of
13:03our layers of added confidence. Okay, so
13:05now let's flip out of crypto and move
13:06into a futures example on MES. Okay, so
13:09playing forward into our New York open,
13:11we see price is trending down in this
13:13interior structure here, and we have
13:15this key area which price swept below
13:18and then immediately displaced back up
13:20higher. So that takes care of our sweep.
13:22If we look, this sweep candle before we
13:24got our displacement higher creates our
13:27order block area. Okay, we have
13:28displacement up, but we don't yet have
13:30any closes above this high level yet.
13:33And we also don't have any fair value
13:35gaps being put in on this price action.
13:37So if we play the market forward, price
13:39pulls back down into that area, and here
13:41finally makes a close up above this
13:43area, which also leaves behind our fair
13:45value gap. And you'll notice here this
13:47little green diamond here. This is a
13:48proprietary indicator that we have on
13:50the private side of our trading team
13:52that basically indicates key buy zones
13:54based off of running this through
13:56statistical data. Okay, on our private
13:58trading team, okay, I'm talking about a
14:00lot more indicators and ways of trading
14:02this that drastically improve the win
14:04rate. We live trade each morning in our
14:06Discord. Okay, if you're interested in
14:07our team, you'll see in the description
14:09below this video, you can get more
14:10information and access about joining us
14:13in the link right here below the video.
14:15Okay, so now we have our change of
14:16character and a close above this high.
14:18The last thing that I'm looking for is
14:20where our liquidity inflection level is.
14:22So, I'm looking at this key area,
14:24looking where price is consistently
14:25responding off of, and then drawing this
14:27inflection. Okay, so once again, our
14:29position would be slightly higher than
14:31the midpoint of this gap. Okay, in this
14:33scenario, we have our order block here.
14:35We also have a sweep and then a huge
14:37displacement right out of this area,
14:39which we technically could maybe
14:40consider our order block being this
14:42candle, in which case I'm comfortable
14:44placing my stop loss underneath this
14:45candle close here on the sweep area. So,
14:48this is where I'd be placing my buy
14:49order. Price comes down. Notice how it
14:51hits that consequential encroachment
14:53level before continuing to make a move
14:55up higher. I'm setting my position up at
14:571:4, and then we come up and smash our
15:00take profit level. Okay, but you'll
15:01notice, sometimes the chart is going to
15:03drastically run for the rest of the day,
15:06which means that if we're able to
15:07capture this systematically, we can
15:09capture substantially more than what
15:11we're risking on the trade, to the tune
15:12of 10, 15, 20 times what we're risking.
15:15It doesn't happen all the time, but when
15:16it does, this can really, really add a
15:18huge buffer in your trading performance,
15:20cuz that could effectively mean that you
15:22can now lose 10 trades in a row, which
15:24is very unlikely if you're following a
15:26methodical process, but now you have a
15:28really, really safe buffer built up as
15:30long as you're allowing the trades to
15:31run, which I'll get into here in a
15:33second. But, I want to show you a
15:34bearish example now, because we can also
15:36trade this in both directions. So, for
15:38example, price is trending up, New York
15:40open happens. We have this key area here
15:42where we have our sweep. Price
15:44manipulates through and then immediately
15:45displaces. This is the range of where
15:47our order block could come in. Huge
15:49displacement down. We can look at this
15:51key area as our liquidity inflection.
15:54Entry right here. In this case, this is
15:55the last bullish candle before our major
15:58displacement, so I would put my order
15:59block potentially in here and place my
16:01stop outside of this key area. Set take
16:03profit at 1:4. Price comes back into the
16:06midpoint of this chart, hits that
16:08liquidity inflection level, drops all
16:10the way down to this area, but notice
16:11how it doesn't make a close below this
16:14level, which means we haven't yet set
16:16our take profit to break even, responds
16:19off of our order block, finally makes a
16:21close below this low, which means we can
16:22now reduce our risk to break even, and
16:25price comes out and takes us out for a
16:27full profit win. Okay? And just so that
16:29you can see how often this is going to
16:31actually play out, in the same breath,
16:33if we're tracking this same market move,
16:35we have our market structure moving
16:37down, we have our sweep level underneath
16:39this low, our market structure shift up
16:41above this high, so we need to see a
16:42close. Notice how we get our gap with
16:44the diamond. Sorry, I can't share the
16:46diamonds. Okay, we don't have our
16:47liquidity inflection level, but what we
16:49do have is this key area where price
16:51clearly responded off of, which is an
16:53important support and resistance level.
16:54Not every trade is going to have 100% of
16:56the confluences. You You can kind of
16:58look at what you want to pay attention
16:59to or not. We have our order block
17:01indicating potential buyers stepping in.
17:04Notice how price pulls exactly into the
17:06midpoint of this gap, makes a close
17:08above this area here, which brings our
17:10stop loss into break even, reducing all
17:13risk on the trade, and then comes out
17:15and tags us out of the trade. That was
17:16for 1:03, and that honestly wasn't the
17:18cleanest setup, but you'll see even in
17:20this area where we had our sweep, and
17:22then we had this little candle close
17:24above this high, this was the gap that
17:26was left behind, and price pulled right
17:28into that before continuing to make its
17:30move up. You can see here again, off of
17:32this liquidity inflection level, this is
17:34where price responded off that gap
17:36inside of the liquidity inflection
17:38level, and then continued moving up. So,
17:39all I'm trying to show you is that no
17:41matter what strategy you're really
17:42trading, these market mechanics can be
17:44applied into a framework, and it's going
17:46to show you why markets are moving in
17:48certain areas that can give you higher
17:50probability setup. Okay? And as an extra
17:52bonus, if you want to add fuel onto the
17:54fire to add confirmation that these
17:57trades you're entering are going to play
17:59out, which will allow you to hold them,
18:01oftentimes what I'll be doing is
18:02targeting previous day high on a higher
18:05time frame. So, you'll see over here I
18:06have a 15-minute interval pulled up. I
18:09can set my take profit to that previous
18:11day high, and notice right out of New
18:12York I'm getting a 15-minute fair value
18:15gap response off of this key area.
18:17Anytime I can enter in on a short-term
18:19position while it's confirmed with a
18:21higher time frame gap, that gives me
18:23conviction that I can allow the trade to
18:25fully run, develop, and oftentimes those
18:28key areas are going to be exactly what's
18:30targeted on the day. You can see it
18:32ended up trading up through it still,
18:33but that was a key response area for the
18:36session that allowed me to now get seven
18:38units of risk out of the trade, and
18:40there's all sorts of different ways that
18:41we can do this to be able to trail these
18:42positions. You can see one of our
18:44private trading team members is saying I
18:46got 12 R this morning on ETH right at
18:48market open. You can see Pronzer 17 R on
18:52Bitcoin. Okay, by following these
18:53trailing methods, I can't share every
18:55single thing on YouTube, but I'm trying
18:57to show you the framework of exactly how
18:59you can see this work and be possible in
19:02practicality. This is not some fairy
19:03tale expectation. I'm showing you in
19:05real time how exactly this works. Okay,
19:07but it's also important to remember that
19:09a lot of people are going to use this
19:11and trade this wrong. And the reason a
19:13lot of people will have issues with this
19:14is a few things. For example, if we're
19:16just trying to find a random bearish
19:18fair value gap, where there's no clean
19:20market structure shift, and the fair
19:21value gap isn't a high impact candle the
19:24way you'll see some of these explosive
19:26candles here, which is what we want to
19:28see, price will just chop in and out of
19:29entries, and you'll get chewed up doing
19:31this. You want each fair value gap to be
19:32a high impact move. Notice how there was
19:34a decent amount of volume in this area.
19:37Okay, secondarily, we don't have any
19:39liquidity inflection level that's
19:40indicating that prices could drop off of
19:43this area. So, even though we did get a
19:44temporary response off of this zone, the
19:47move didn't follow through and would
19:48have stopped you out if, say, you were
19:50trying to take a short position like
19:52something like this. You need to lean on
19:53inflections, make sure that the market
19:55structure shift is actually confirmed,
19:57that the fair value gaps are high
19:59impact, and most importantly, get those
20:01repetitions in, journal your
20:02information, and track it. I have a
20:04really good video that you can start
20:06with right here if you want to learn how
20:07to actually implement a system for
20:09yourself to start scaling. Okay, if
20:11you're still here, make sure you hit the
20:12like button on the video, subscribe to
20:14the channel if you want to know when I
20:15put new videos out. Again, if you're
20:17interested in trading live with us and
20:18learning more about the proprietary
20:20systems, you can check out the link
20:21right here, but until next time, guys, I
20:23will see you all in the next video.

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