I Don't Care How Liquidity Works. I just profit from it — Transcript

Full transcript

1. 0:08In this video, I show you how to
2. 0:10actually make money from liquidity
3. 0:12[music] and I mean actually make money.
4. 0:14Not study it, not debate it, not spend
5. 0:17another year studying what millions of
6. 0:19retail traders study and [music] still
7. 0:21lose. Because online you have thousands
8. 0:23of gurus screaming about it. Is it real?
9. 0:26Is it stop hunting? Is it order flow? Is
10. 0:29it smart money? Honestly, I don't care
11. 0:32and honestly, you shouldn't either. I
12. 0:34just want to make money. That's it. The
13. 0:36only way to do that isn't understanding
14. 0:38why liquidity happens, what banks are
15. 0:40doing, what smart money is thinking,
16. 0:43what ICT says, what your favorite guru
17. 0:45says. The way that I found is finding a
18. 0:48pattern, testing it across thousands of
19. 0:50trades and monetizing it every single
20. 0:53time it shows up. I built that filter
21. 0:55and I call it the week gap. Let me show
22. 0:58you exactly what I mean.
23. 1:00>> [music]
24. 1:01>> You're looking at a setup. Everything is
25. 1:03right. Your triggers fires, but there's
26. 1:05a near eye sitting just above you and
27. 1:08your brain ask, "Is there liquidity?
28. 1:10Will price whip it before dropping?"
29. 1:12Every trader I know freezes at this
30. 1:14exact moment and then does one of
31. 1:16[music] two things. Either they skip the
32. 1:18trade and watch it hit target without
33. 1:21them or they say it looks far enough and
34. 1:24get stopped out by exactly the move they
35. 1:27were afraid of. Both outcomes come from
36. 1:30the same problem. No rule, no number,
37. 1:32just a feeling. And the moment you trade
38. 1:34on a feeling, you're not a trader
39. 1:36anymore. You're pulling a slot machine
40. 1:38lever thousands of times, but at least
41. 1:41the casino gives you free drinks while
42. 1:44you lose. Trading doesn't even do that.
43. 1:46When you trade mechanically, questions
44. 1:48like, "Is there liquidity above or will
45. 1:51price stop hunt here?" stop mattering
46. 1:53entirely. You don't need the answer. You
47. 1:55need the number. The point is one thing
48. 1:58only. Does this setup perform in the
49. 2:00data across sufficiently historic
50. 2:02samples? That's the only question worth
51. 2:05asking. And I run that test. Let me be
52. 2:07precise about something most educators
53. 2:10get wrong. You've been told that the
54. 2:12smart money, banks, institutions
55. 2:14deliberately pushes price to level where
56. 2:17retail traders have their stops above
57. 2:19near highs to hunt those stops and then
58. 2:22reverse. But this framing has a problem.
59. 2:25The idea that a specific institution is
60. 2:27targeting your stop loss is a myth. No
61. 2:30fund manager is watching your MetaTrader
62. 2:32account. But what is true is this. When
63. 2:35thousands of traders independently place
64. 2:37stops at the same level, those stops
65. 2:40cluster. And price moving through that
66. 2:42zone triggers them mechanically. It's
67. 2:45cause and effect, nothing more. Now, the
68. 2:48practical consequence is real regardless
69. 2:50of the mechanism. If price is near a
70. 2:53level where stops cluster, there is a
71. 2:55higher statistical of a spike into that
72. 2:58zone before continuation. Which means if
73. 3:01your entry is short and there's a
74. 3:03cluster of stops sitting just above near
75. 3:05high, price may sweep those stops before
76. 3:08dropping. This is not conspiracy, it's
77. 3:10the nature of the market. And that's
78. 3:12exactly where most traders fail. We look
79. 3:15at two near high. We judge visually.
80. 3:17This look close, this look far. I think
81. 3:20it's fine. And I think it's fine is not
82. 3:22a rule. And without rules, every loss
83. 3:25feels like bad luck. It's not, it's the
84. 3:27system working exactly as it should
85. 3:30against you. So, I decided to stop
86. 3:32judging visually and I started
87. 3:34measuring. The concept is simple. When I
88. 3:37have a valid setup and the trigger is
89. 3:39confirmed, before entering, I do one
90. 3:42additional check. I look at the two most
91. 3:44recent near high relevant to my entry
92. 3:47and I measure the distance between the
93. 3:50top of the first week and the top of the
94. 3:52second week. This concept is what I
95. 3:54called the week gap, my personal
96. 3:57liquidity filter. Now, what does that
97. 3:59number mean on its own? Nothing. The
98. 4:02number needs data behind it. [music] So,
99. 4:04I went back 15 years of historical data,
100. 4:07thousands of trade, and I tested one
101. 4:09variable. At what week gap value does my
102. 4:13performance change? Here what I found.
103. 4:15When the week gap was 0.1, almost no
104. 4:19distance between the two near highs, the
105. 4:21results were poor. Win rate and risk
106. 4:24reward below my minimum threshold, so it
107. 4:26was not profitable. So, I checked 0.2,
108. 4:30slightly better, but still not there. I
109. 4:32checked 0.3, 0.4, and it was profitable,
110. 4:36but I knew I could do better. The
111. 4:38numbers were positive, but not
112. 4:40consistent enough to satisfy me. At 0.5,
113. 4:44I started seeing something real, and at
114. 4:460.6, the number locked in. When the week
115. 4:50gap was 0.6 or greater, the setup
116. 4:53performed across 15 years of data. Below
117. 4:570.6, the result existed, but didn't meet
118. 5:00my standard. So, I built a rule. One
119. 5:03rule, binary, absolute. Week gap 0.6 or
120. 5:07above, enter. Week gap below 0.6, skip.
121. 5:11Not it looks far enough. Not I think
122. 5:14it's fine. A number, a threshold, a
123. 5:17rule. And I want to be clear about
124. 5:19something. Because this is the part most
125. 5:21traders miss. This rule has nothing to
126. 5:24do with whether liquidity is actually
127. 5:26resting at that level. That question is
128. 5:30irrelevant. It will always be irrelevant
129. 5:33when you trade mechanically. What this
130. 5:34rule tells you is, across thousands of
131. 5:37back-tested trades, setups with a week
132. 5:40gap below 0.6 didn't perform well enough
133. 5:43to take it. So, I I take them. That's
134. 5:46it. Not at 0.5 there is liquidity, so I
135. 5:50don't take it. And at 0.6 there is no
136. 5:53liquidity, so I don't take it. I don't
137. 5:55care about it. That's it. No theory,
138. 5:58data. So, let me show you this on a real
139. 6:01chart. AUD/JPY 15-minute time frame. I
140. 6:03won't go into the full entry mechanics
141. 6:05today. What I want to show you is just
142. 6:08the weak gap check. Let's say this is a
143. 6:10long entry setup. Identify the low of
144. 6:13this setup that is actually this. So, I
145. 6:16run my test. I take the rule, I take the
146. 6:19magnet with strong magnet, and I see the
147. 6:21difference between these two week that
148. 6:24is actually the lowest week. And you see
149. 6:27this number, it means the distance, and
150. 6:29it's 1.2. What does it mean? That the
151. 6:31number is above 0.6. So, I can simply
152. 6:35take the trade after the closing of an
153. 6:38engulfing, for example, like this. Let's
154. 6:40say we have another trigger, another
155. 6:42long trigger, and this is the case.
156. 6:45Let's see what we have here. This can be
157. 6:47my trigger. Yes, this can be my
158. 6:50position, but I have to run the weak gap
159. 6:52check. And we can see that the lowest
160. 6:55weak, in this case we don't have weak,
161. 6:57we have only body, but it's okay. We can
162. 6:59check that the difference is for sure
163. 7:02below 0.6. You see, it's 0.0. What does
164. 7:05that mean? That this exactly setup
165. 7:08doesn't have a positive expectancy over
166. 7:10years of data. Let's try again with a
167. 7:13short one, so the opposite side. Let's
168. 7:15say that this is our short trigger. What
169. 7:18we do? We just see the higher weak that
170. 7:21in this case is this. We run the check,
171. 7:24and we can see 0.9. So, in this case, if
172. 7:27this was a short trigger, but it's not,
173. 7:30we can just simply enter at this candle.
174. 7:32And don't get me wrong, remember that
175. 7:34the concept has nothing to do with
176. 7:37liquidity. There are no liquidity here,
177. 7:39there are no liquidity here, there are
178. 7:41no liquidity here. Or maybe there are.
179. 7:44Simply, we doesn't know because we are
180. 7:46trading AUD/JPY as a CFD. We are not
181. 7:49talking about futures. We are not
182. 7:51talking about regulated markets. But
183. 7:53honestly, we shouldn't care if there is
184. 7:55liquidity or not. The only thing we
185. 7:57should care is it work or it doesn't
186. 7:59work. That's it. So, now that you
187. 8:02understood the concept, before you take
188. 8:04everything I just showed you and you
189. 8:05apply it, there's one thing you need to
190. 8:07understand first. And it has nothing to
191. 8:10do with the chart. It has to do with
192. 8:12where your chart come from. In this
193. 8:15case, we are talking about CFD trading
194. 8:17as I mentioned it before. And I want to
195. 8:19be clear, this is not the only
196. 8:21instrument that I trade, but it's the
197. 8:23context where this specific filter
198. 8:26applies. There's something about CFD
199. 8:28that almost nobody explains. When you
200. 8:30trade futures, CME for example, there is
201. 8:33one central exchange, one price. Every
202. 8:36participant in the world sees the exact
203. 8:38same bid and ask at the exact same
204. 8:41moment. CFD are different. There is no
205. 8:43central exchange. Each broker source
206. 8:46price from its own network of liquidity
207. 8:49providers and the quotes its own price,
208. 8:51which means FXCM and OANDA may be
209. 8:55looking at different providers. Their
210. 8:58spread differ. Their wick formation
211. 9:01differ. Their price history is not
212. 9:03identical. But why does this matter for
213. 9:06the wick gap? Because the 0.6 threshold
214. 9:09was calibrated on a specific provider.
215. 9:11If you take that same measurement on a
216. 9:13different broker chart, the value will
217. 9:16be different. The wicks are shaped
218. 9:18differently. The threshold may not
219. 9:20apply. This is not theoretical. I have
220. 9:22tested it. FXCM, OANDA, Forex.com,
221. 9:26Tickmill, all major retail CFD provider
222. 9:29show different wick structure on the
223. 9:32same asset, same time frame, same moment
224. 9:34in time. So, how do you solve this?
225. 9:37Simple, you pick one provider, you build
226. 9:39all your data on that provider, you
227. 9:42never cross reference. My calibration is
228. 9:44built on FXCM data. Every backtest,
229. 9:48every trade, every data point. If I open
230. 9:50a trade analyzing one lot tomorrow using
231. 9:53the same 0.6 threshold, I would be
232. 9:56applying an uncalibrated rule to an
233. 9:58uncalibrated chart. That is not a
234. 10:00strategy. That is hope. One provider,
235. 10:03one calibration, always. So, let me
236. 10:05bring this back to the beginning. For 2
237. 10:07years, I traded with feelings. I looked
238. 10:10at the charts and made decision based on
239. 10:13what looked right, and I lost
240. 10:14consistently. Not because the market was
241. 10:17against me, because I had no rule, and
242. 10:19without rule, every loss feels like bad
243. 10:21luck, but it's not. It's the system
244. 10:24working exactly as it should, against
245. 10:26you. The weak gap is not a magic
246. 10:28concept. It eliminates a category of
247. 10:30losing trade, the ones you should have
248. 10:32skipped, but didn't know it yet. The
249. 10:34trader who wins long term is not the one
250. 10:38with the best intuition. It's the one
251. 10:40who has turned every decision into a
252. 10:42rule and follow it without exception. If
253. 10:45A equals B, enter. If A does not equal
254. 10:49B, wait. That's not oversimplification.
255. 10:52That's professionalism. This was a
256. 10:54single small layer of the prop killer,
257. 10:57the strategy that took me from zero to
258. 10:59world trading champion at 22. I'll see
259. 11:02you in the next one.