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The Only Trading STRATEGY you'll EVER need — Transcript

by Andrea Cimi · 8,735 words · 1,221 segments · language en · Watch on YouTube

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0:00In this video, I'll teach you the
0:01ultimate trading strategy that you'll
0:02ever need as a trader. Why am I saying
0:04this so confidently? Well, I've
0:06personally learned this methodology from
0:07a team of Wall Street traders, hedge
0:09fund managers, and world trading
0:10champion with documented 200% yearly
0:13returns on the most famous trading
0:15competition in the world. So, there's
0:17that. Not exactly your average TikTok
0:19guru. And this very simple framework
0:21took me from losing money and being
0:23unprofitable with all the classic stuff
0:25you find on social media, Fibonacci's,
0:27technical indicators, and S&C, and blah,
0:29blah, blah. To now be able to generate
0:30consistent returns on my accounts as
0:32well. And in this video, I will take
0:33this pro-level trading framework, which
0:36is the result of the most brilliant
0:38minds in the market, Nobel Prizes, down
0:41to a stupid simple strategy with three
0:43trading models, three setups that you
0:45can start implementing today with some
0:47practical examples of live trades that
0:49we took with our community. This model
0:51is called the PBD method, and it's a
0:53model based on the most scientifically
0:55accurate, proven, documented, and
0:57accredited theory around financial
0:59markets, which is the auction market
1:01theory. Let's dive right in, starting
1:02from the basics. So, in the theory of
1:04games, the auction theory has typically
1:06three models of auction. A forward
1:08auction, which is the classic auction, a
1:10reverse auction, where sellers compete
1:13for buyers, and then you have a double
1:14auction, which is something more similar
1:16to financial markets. And in a classic
1:18auction, you have the paintings, you
1:19have the auctioneer, and you have of
1:21course all of the people, all of the
1:23rich guys wanting to buy the painting.
1:24So, we can divide the participants of an
1:26auction in the bidders, which are the
1:28demand, the auctioneer, which is the
1:30middleman, and the paintings themselves,
1:32which are the supply. And for example,
1:34this painting is being sold with a
1:36starting price of $1 million. Well,
1:39someone comes in and say, "I'll pay $1
1:41million 100,000 for that." So, he's
1:43willing to pay a slightly higher price,
1:46and that becomes the new price. Someone
1:47else comes and says, "Hey, I'll pay $1.2
1:49million." Well, that becomes the new
1:51price. So, price goes up and keeps going
1:54up because there's someone always
1:55willing to pay a slightly higher price,
1:58a spread between the previous price, if
2:00you will. Well, this is exactly what
2:01happens in financial markets as well.
2:03And the difference with a normal auction
2:04is that instead of paintings, you have a
2:06supply of buy and sell order at each
2:08level of price. So, you have sell
2:10paintings being offered at the upper
2:13prices, and buy painting being offered
2:15at the lower prices. The auctioneer, or
2:17the middleman, is actually the exchange,
2:19which is in charge of matching buy and
2:22sell orders. And then there is a demand
2:24of buy and sell orders. So, there is a
2:26supply of buy and sell orders, and a
2:28demand for buy and sell orders. Let's
2:30say this is the supply. We call these
2:32market makers or passive liquidity, also
2:34resting orders. And they're displayed in
2:36the so-called order book, or market
2:38depth. And up here, you basically have
2:40sell limits, or passive sellers. This is
2:42called the offer, or the ask. And these
2:44orders are offering to be a seller. They
2:46are the auction of sell orders. They
2:49wait for someone to accept their offers
2:51and accept paying a slightly higher
2:53price. Down here instead, you have buy
2:55limits, or passive buyers, also known as
2:57the bid. They are offering to be a
2:59buyer. They are the auction of buy
3:01orders. And they wait for someone to
3:03accept that buy offer. We call these the
3:05best bid and the best ask. And again,
3:08these are just resting order. They're
3:09offering liquidity, just like paintings
3:12sold as an auction. Price will not move
3:14if someone don't come and say, "Hey, I
3:16am willing to pay a higher price." So,
3:18let's say someone comes and say, "Hey, I
3:19will buy those two contracts someone is
3:21selling at 100." We call this a market
3:24taker, or an aggressive buyer. And he
3:26says, "I'll buy two of those." And these
3:28two are going to be matched, so he will
3:30buy market those two sell orders. That's
3:33a match, and that becomes the new price,
3:35so the candle opens. Then another buyer
3:37comes and say, "I will buy two contracts
3:39at the best possible price, where
3:40there's at least someone selling." And
3:42two of those five contracts are matched
3:44with this buyer. That's a match, and the
3:46candle ticks up because this is the new
3:48price. Then a seller comes and says,
3:50"Hey, I will sell five contracts at the
3:52best buyer." Well, he's going to find
3:54two contracts here, and three contracts
3:56here, so that's a match. And this, 98,
3:58becomes the new price, and the candle
4:00ticks down and leaves a wick above where
4:02it used to be. Now, the difference
4:03between the best sell offer and the best
4:06buy offer is kind of wide, and this
4:08difference is called spread. So, as you
4:11can see, markets, just like in an
4:12auction, move because someone is willing
4:15to pay a slightly higher price, which is
4:17the spread, as long as they can get
4:19their hands on the counterpart. Just
4:21like in an auction, you want that
4:22painting. Everyone is buying it, so you
4:24want to offer a best price, so that you
4:26can get your hands on that painting,
4:28right? And it's exactly the same in
4:29financial market. Think about it. If you
4:31want to buy, you have two options. You
4:33either place a buy offer, which is a buy
4:35limit at a good price, so say you want
4:37to buy now, you offer one contract at
4:3998, see if someone will sell. So, you're
4:41going to hope that an aggressive seller
4:44will accept that offer, but you have no
4:45guarantee that that will happen, because
4:47someone needs to take action. Here,
4:48you're just passive. You're just
4:50offering to buy. Or the other option is
4:51you buy market. So, you immediately pay
4:55a slightly higher price and accept that
4:58sell offer to guarantee that you're
5:00going to get filled now. Do you
5:01understand the difference? So, markets
5:03are moved by traders who cannot afford
5:05to wait to get filled. Let's make an
5:07example. Let's imagine that Apple has
5:09just discovered this new technology that
5:11will 10x their profit. Well, what will
5:12happen to their stock price? Well, let's
5:14imagine this is the order book of Apple.
5:16Well, the first thing will happen is
5:17likely there's going to be less willing
5:19sellers at higher prices. And secondly,
5:21you're going to have a lot of aggressive
5:22buyers who cannot wait to just put an
5:25order in the order book and wait to get
5:26filled. There's a little bit of FOMO
5:28around, so they will start buying tens
5:30and tens of contracts, tens and tens of
5:31Apple shares, and they will eat all of
5:33this liquidity in the book, and the
5:35candle from here will smash above your
5:37screen, and a very real and documented
5:39phenomenon typically happens, which is
5:40the candle pokes through your ceiling.
5:42So, this does not happen because there's
5:45more buyers than sellers. There's always
5:47a match between the buyers and the
5:48seller. So, there's always the same
5:49amount of buyers and sellers. But this
5:51happens because buyers are willing to
5:53pay worse and worse prices as long as
5:57they could get their hands on a seller.
5:59So, now that we understood the basic
6:00mechanics of how price moves, we can
6:03define two main moments in each auction.
6:06A moment where the auction is in a
6:08situation of balance, where aggressive
6:10sellers and aggressive buyers and
6:13passive sellers in the book and passive
6:16buyers in the book are pretty much
6:17agreeing that this is a fair price to
6:20auction, to trade. So, there is no
6:23prevalence of aggression from either
6:26side. And then, maybe something happens,
6:28as we said. Maybe a news comes out, or
6:31the perception of the market is changing
6:33on that specific asset, or simply
6:35because of order filling mechanisms,
6:37where there is simply an imbalance
6:39between aggressive sellers and
6:41aggressive buyers, we see price moving
6:43in a situation of imbalance, where this
6:46is not considered a fair valuation by
6:48both sides of the market, but it is
6:50considered very cheap, for example, by
6:53buyers, and this will drive the price of
6:55the underlying asset up until prices
6:57will be high enough for sellers,
6:59aggressive sellers, to start being
7:01interested in selling as aggressively as
7:05buyers are buying aggressively. And this
7:06will bring the auction back to a
7:08situation of balance, or fair value. So,
7:11we distinguish two phases, a phase of
7:13balanced market, or fair value area, a
7:15phase of imbalance market, where there's
7:17no real fair value area, and then again,
7:20a balanced market, fair value area. But
7:22this is just the first level. This is
7:23just the first very basic model. And
7:25what you want to see, for example, in an
7:27uptrend is instead of looking at where
7:29price does its highs and its lows, you
7:32want to take a look at where the ranges
7:33are, because that's where the market is
7:35agreeing that's the main price. Where
7:37market is agreeing that's the value,
7:40that's a fair valuation of whatever the
7:42underlying asset is. Is it Bitcoin? Is
7:44it gold? Is it stocks? Whatever. But of
7:46course, markets are much more varied,
7:47and it doesn't always happen that way.
7:49What is very likely you will see before
7:51we see a a really imbalanced market, is
7:54you're going to see failed auctions. So,
7:56for example, sellers willing to pay
7:58lower and lower prices as long as they
8:00can get filled, but then buyers that
8:02were buying here and were buying here,
8:04driving the auction up, considering
8:06these prices to be even cheaper than
8:08what they bought until now. So, driving
8:10the auction back up. Same thing when
8:12buyers are willing to accept a higher
8:15price as long as they could get filled,
8:16they might reach a level of price where
8:18sellers might start getting aggressive
8:20and drive price back inside, either
8:22because of a strong selling pressure, or
8:26because the buying upward pressure isn't
8:29that strong anymore. So, typically,
8:31before you see a clear situation of
8:33imbalance, you always have some form of
8:36failed auction, very, very often, where
8:38price tries, where the market tries to
8:41auction higher, but can't. Because if
8:43sellers are selling here, are selling
8:45all the way here, are selling all the
8:47way here aggressively, well, it's very
8:49likely that if you go up above this
8:51range and up above this range, they will
8:53sell even more aggressively. Same thing
8:55over here and over here, the same buyers
8:58that considered these prices cheap
9:00enough to keep buying higher and worth
9:02paying a spread, and that kept buying
9:03all the way here and here and here, are
9:05likely going to consider these prices
9:07that are even cheaper, way cheaper, and
9:09drive the auction back either in a
9:11situation of balance, or to a new
9:12breakout. And then, the next layer comes
9:15with volume. If you actually look at
9:16volume, which is trading activity,
9:18you'll notice that wherever price spends
9:21more time trading and the forces of the
9:23market are in a situation of balance,
9:25that's where typically you're going to
9:26see a lot of volume. The areas of
9:29imbalance instead, where just one side
9:31of the auction is pushing price higher,
9:33there's not a lot of trading going on
9:34here. There's not a lot of volume, not a
9:35lot of trading activity at that
9:37particular area. So, you're going to see
9:38low volume areas. And again, when all of
9:40these buyers finally find some
9:43aggressive seller willing to keep price
9:46into balance, to have a more effective
9:48filling of their orders, and create a
9:50new situation of fair value, that's
9:51where most volume of trading, the volume
9:54of transactions, the most amount of
9:56money, if you will, is being traded. So,
9:59by noticing this, so the underlying
10:02mechanics of supply and demand, the
10:04total volume traded, that is normally
10:06where price spends the most time, where
10:09price is in a situation of balance. This
10:11is the basic of the PBD methodology. So,
10:14for example, in a market situation like
10:16this, where people, you know, will
10:17basically do the classic thing, they
10:18will look at microstructure, break of
10:20structures, swing highs, swing lows in
10:22the upper timeframe, and then go into
10:23the lower timeframe and see what happens
10:25with swings of price that can be random
10:28at times. Well, instead of just framing
10:30it as a sterile series of market highs
10:32and lows, which are just a visual
10:35reference of the results of an auction
10:37that we can read, we just take into
10:39considerations where the ranges are,
10:41because that's where most of the money
10:42was traded, and we want to follow the
10:44big money. We want to follow the smart
10:45money, and we do that by looking at
10:47where the ranges are. And I invite you
10:49to start analyzing the market as a
10:51series of situation of imbalance going
10:54to a situation of balance with some
10:56failed auctions here and there, followed
10:57by situations of imbalance again, a
11:00phase of price discovery, a search for
11:02liquidity that eventually finds
11:04aggressive counterparts with, of course,
11:07their due failed auctions here and
11:08there, and then again a situation of
11:10imbalance followed by situation of
11:12balance with its due failed auctions,
11:14again situations of imbalance followed
11:16by situations of balance, and then again
11:18imbalance. And if you try to simplify
11:20this even more, you'll start noticing
11:22that these shapes of a P or a B are
11:26constantly being formed. And this is the
11:28basic of the PBD methodology. That's why
11:31it's called PBD. So, let's take an
11:32overview of the PBD models and how
11:35exactly they work in a very simple way,
11:37and I'm going to give this to you guys
11:39as a document that you can study and
11:41work with. I'm going to put it in my
11:42Telegram channel completely for free.
11:44And let's start from the P setups. And
11:46the P setup is based exactly on the
11:49concept that the auction was driven
11:51higher and higher and higher by
11:53aggressive buyers coming up and
11:55accepting to pay higher and higher
11:57prices as long as they can get filled,
11:58right? And at some point up here, you
12:00had sellers starting getting into the
12:02auction. So, we know that this area of
12:03price is an area where it's likely to
12:05see sellers take control of the auction.
12:07At the same time, the more we go down,
12:09the closer we get to prices that these
12:12buyers were considering cheap all the
12:14way through. So, if they bought here and
12:16here and here and here and here and
12:18here, very likely that if price drops
12:20hard enough, they're going to start
12:21taking control of the auction again and
12:23push the auction again higher up to a
12:25point where prices will consider these
12:27prices to be premium enough to sell and
12:29take control of the auction again. So,
12:31this is what happens in the market on a
12:33daily basis and on every single
12:36timeframe that you can name. We're going
12:37to see some example very soon, and also
12:39some example from a trade that we took
12:41live inside of our deep charts
12:43community. And what basically happens
12:45here is this range forms, right? So, you
12:47could take, let's say, a long here on
12:50the bounce and a short here on the
12:51bounce. That's an option, but the option
12:53with the highest win rate, possibly, and
12:56the highest risk to reward ratio is, if
12:58you plot, if you consider this to be a
13:00volume area where at least 70% of the
13:03volume is traded, statistically
13:05speaking, anything that happens outside
13:07of this area is considerable a
13:09statistical anomaly. So, it's something
13:11that will get out of the current
13:13standard deviation of short-term volume.
13:16So, whenever you see price dropping
13:18outside of it, there's a really high
13:20chance that price will drop back inside
13:22in an area of comfort, in the same area
13:25where both buyers and sellers are
13:27considering these to be fair prices to
13:29trade aggressively at. So, this is why
13:32the P, the first P setup is you wait for
13:35price to break out of a range and then
13:37to break back in. This is what Tom calls
13:39the break-in setup. Because imagine if
13:41buyers were ready to buy all the way
13:43here, all the way here, all the way here
13:45and take control of the auction, imagine
13:47if we go even lower, where it's like
13:49very likely that the same buyers that
13:51pushed the auction up and created the
13:53situation of imbalance in the first
13:55place are going to step back in and push
13:57the auction back inside. So, what you
13:59can do here is wait for a candle to
14:00close inside of the range, wait for a
14:02test, and buy to go to the other side.
14:04Similarly, the next idea is the
14:07breakout. So, and this one is, let's
14:09say, the last idea that probably
14:11happened after some failed auctions here
14:14and there happened, right? Because we
14:16define these as failed auctions. So,
14:19some failed auctions might already have
14:21happened here and there, but at some
14:22point, the buyers might take control of
14:24the auction as, you know, we've already
14:26clarified when in an uptrend. So, if
14:28this was the fair price before and now
14:30this is the fair price, the auction is
14:33officially bullish. And whenever we see
14:34a candle breaking outside with strength
14:37and initiative, another idea is to trade
14:40the breakout. But not when the breakout,
14:42for example, immediately drops back
14:45inside, because that could be easily the
14:46same concept of failed auction below
14:48here, but above here. So, we want to
14:50maybe take some extra caution here and
14:52wait for maybe a couple of candles to
14:54stay outside and then join the party. Or
14:56we want this candle here to have like a
14:58lot of volume and a lot of initiative,
15:00which is something we can verify with
15:01order flow, as we'll see later. So,
15:03these two are the continuation type of
15:06setups, where we know we're in a bullish
15:08auction, and so we trade with the
15:10current trend. But we have also the
15:12opportunity to look for reversals. So,
15:14we might want to look for a failed
15:16auction on the upside, where during the
15:18breakout, maybe, there was not a lot of
15:20buying going on. You see buyers getting
15:22a little weak, exhausting the movement,
15:24and then you see a big, strong, red
15:26candle that drops back inside. Well,
15:28that's a cool idea to take a short to
15:30the other side of the current range with
15:33still a really high percentage chance
15:36that this will happen. Maybe not as much
15:38as this type of failed auction, because
15:39again, we're going against the current
15:42trend, but this is still a valid short
15:44auction idea. And this is the third
15:45setup. The fourth setup, which is also a
15:48reversal setup, this is the most
15:49reversal type of setup, is you wait for
15:51a P to form, a breakout to happen with a
15:54lot of volume, but instead of breaking
15:56back in and opting to go up, more
15:58sellers take control of the auction and
16:00break below here with a lot of
16:02initiative and vengeance. And so, you
16:04want to short this all the way to the
16:06beginning of the impulse. And these are
16:08the P setups. The B setups are basically
16:10the same, but opposite, right? So, we're
16:13in a qualified short auction, not market
16:16structure auction specifically. So,
16:18probably here there was some form of
16:20consolidation that was broken through by
16:23a phase of imbalance and initiative, and
16:25then a new situation of balance of fair
16:27value, where both buyers and aggressive
16:30sellers, where both aggressive sellers
16:32and aggressive buyers and passive
16:34sellers and passive buyers are agreeing
16:36that this is a fair price to trade at.
16:38And, you know, all of these sellers that
16:40were considering these prices to be very
16:42expensive, and they sold them, and that
16:45continued selling here and continued
16:47selling here and continued selling here,
16:49whereas buyers started considering these
16:51prices to be decently cheap enough to
16:53take control of the aggressive auction
16:54once more up until the point that they
16:56started buying and buying and buying all
16:59the way here. Well, these very strong
17:01sellers that considered these prices to
17:03be cheap enough to sell the crap out of
17:05this market, they're likely going to
17:06step in again and take the auction back
17:09where most of the auction is, so the
17:11first standard deviation. Everything
17:13that is outside of it will be considered
17:14as an anomaly, and so this is our first
17:17short idea to continue a current trend.
17:20You could evaluate also these short
17:22idea. I'm not saying it's not right, but
17:24a lot of the time they will get these
17:26levels dirty. It's very hard that these
17:28areas will just push all the way super
17:31easy, otherwise it would be too
17:32easy to trade, right? So, the idea here
17:34is the same as before. We are in a short
17:36auction that is qualified by not a break
17:38of structure. It's a clear set of
17:41auctioning and volume and a lot of money
17:44being traded here, so this is the new
17:46fair valuation of the underlying asset,
17:48and we want to see a breakout from here,
17:51likely after have having seen also this
17:54type of thing, right? So, we very likely
17:57could have already seen some form of
17:59failed auction here, just like this one.
18:00So, you can also take this type of
18:02trade, and then when we break out
18:04officially with strong volume, with
18:05initiative, with vengeance, with volume
18:07increasing, then it makes sense take
18:09this test and continue joining the short
18:12auction. The other ideas are, again,
18:15reversal type of setups, where we want
18:16to either take a failed auction to the
18:18downside, where sellers are keep selling
18:21this market to the downside up until the
18:23point where they break this level, but
18:25the same buyers that kept buying here,
18:27here, and here, and took control of the
18:29auction might take control of the
18:31auction even more now that we are
18:33outside of a comfortable area where 70%
18:36of the volume is. This is the first
18:37standard deviation, so outside this
18:39could still be an anomaly, and
18:41statistically speaking, buyers are very
18:43likely to take control of the auction
18:44again as they have shown us throughout
18:47the last short-term auction. Again, not
18:49the same type of win win rate of a
18:51failed auction that concurs in the
18:53trend, cuz this is reversing the trend,
18:56but still a good setup to go to the
18:58upside. Same thing over here. If we have
19:00a breakout where sellers clearly aren't
19:03not that present, and buyers are clearly
19:05taking control of the auction, we want
19:06to see if they don't break back inside
19:09and they take control again up to the
19:11point where they break another high with
19:14strength and with volume and with
19:15initiative and with vengeance, we want
19:17to see this market reach the beginning
19:20of this impulse, and this is a buy idea
19:22to basically reverse the trend if, of
19:25course, maybe we are in a key area of
19:27the volume profile, blah blah blah blah
19:28blah. All of these frameworks, as you've
19:31seen, both the B and the P can be used
19:34in all sorts of timeframe. You can use
19:36it in the daily timeframe to spot
19:38long-term trading ideas or bias or to
19:41build actually your bias, or you can use
19:44them in the lower timeframe to look for
19:45your entries, such as in the 5-minute
19:47timeframe and the 1-minute timeframe.
19:49And then you have the D setups, which is
19:50basically the same idea. The only thing
19:52here is we're consolidating, right? So,
19:55we're consolidating, we don't have a
19:56clear direction, we don't have either an
19:59uptrend or a downtrend, but we're in a
20:01consolidating environment, and the first
20:03idea is to short every upwards failed
20:06auction and long every lower failed
20:08auction, and trade the breakouts only
20:11and only if there's strength volume
20:13initiative, and so on and so forth. So,
20:15it's the basically the same setups. So,
20:17just by thinking about the shape of a P,
20:21the shape of a B, and the shape of a D,
20:24you get very easy setups that simplifies
20:28auction mechanics in a very unique way.
20:30And the next level is to understand what
20:33happens during these breakouts. Let's
20:34say this is a P, right? And what happens
20:37in a P type of price action setup is
20:40you're going to see volume increasing,
20:42and most of the volume being traded in
20:45this range, because we're spending a lot
20:47of time here, there's a lot of trading
20:48going on. And this is where you see
20:50where the smart money is. This is where
20:52you see where the most big amounts of
20:54money are traded by both sides of the
20:57market. That's why we call this phase an
20:59acceptance phase. And And if you
21:00consider this volume distribution with a
21:04normal distribution of volume with a
21:06standard deviation, just like you do in
21:08statistical analysis where uh you know,
21:10you take the distribution of height of
21:13males in a population, and you're going
21:14to see that for example, 70% around 70%
21:1768.9 will fall under this category where
21:20maybe most people are between 165 cm
21:24tall and 175 cm tall, and there's going
21:28to be way less people that are 190 cm
21:30tall, and there's going to be way less
21:32people that are 150. So, most of the
21:34elements in this sample of data will
21:37tend to fall under this area, which is
21:39called a standard deviation, or around
21:4270% of the elements that we're taking
21:44into analysis. So, the same thing we can
21:46say about volume, right? So, in this
21:48auction, most of the volume was exactly
21:51traded inside of our P. That's why we
21:53consider everything outside to be
21:55statistically speaking some form of
21:57anomaly that is likely to revert back to
22:00its mean. So, this is exactly the P
22:03setup that we saw, and the P setup that
22:05we saw before with the long failed
22:07auction where we opt for a reverse type
22:09of setup, and a short auction that fails
22:12where we opt to buy this market, okay?
22:15And we can go even a level deeper, and
22:18we want to see, for example, what is
22:20volume doing, right? Because typically
22:21every breakout of this magnitude will
22:24typically have some buying activity,
22:26right? Because we have a lot of buyers
22:28that simply buy breakouts, a lot of
22:29algorithms, a lot of you know, retail
22:32traders or banks or algorithms in
22:34general that simply buy every breakout.
22:37So, you're going to have some breakout
22:38liquidity pushing the auction price up
22:41at least temporarily, and then you're
22:42going to see a dry up in volume. You're
22:44going to see volume decreasing,
22:46decreasing, and on the way down, on the
22:48way back inside of the range on the P,
22:51you want to see volume increasing
22:54instead. So, that's why we need to kind
22:56of check with volume if we want some
22:58extra very powerful confirmation what is
23:01going on in these candles, so that we
23:03can confidently execute such trades, and
23:06change our idea dynamically if we're day
23:09traders with a level of dynamicism that
23:12allows us to be profitable and to
23:14dynamically manage our position. And the
23:16same thing happens here, right? The same
23:17thing we want to see here. Of course,
23:19there's going to be some selling
23:20activity when you break below a range,
23:22so you're going to see some level of
23:24increase in volume, but you want to see
23:26that increase dry up as we go on, and
23:28you want to see especially on the way up
23:31volume increasing as we drop inside
23:34[snorts] of the range again, as we
23:35pierce through the lowest part of this
23:37range and get back inside. So, these are
23:40our buy ideas, right? So, it's the same
23:42concept that we just saw. So, this is
23:44the same concept that we just saw.
23:46Simply, we add an extra layer of
23:48confirmation with volume. And we're
23:50going to get We're going to see some
23:51example very soon. And the same thing
23:53happens with the breakouts, okay? So,
23:55the breakout setups are the same
23:57concepts, and what you want to see is,
24:00for example, if you want to opt for a
24:02reversal type of setup, you want to see
24:03strength on the way out of the range,
24:06weakness on the way up, and then
24:08strength again on the way down. You want
24:10to see sellers being clearly in control
24:13of the auction. The same thing would
24:14happen here. What you want to see here
24:15is volume increasing on the way up,
24:17volume kind of decreasing on the way
24:19down, and then strong again. And if you
24:21have these type of extra confirmation,
24:24then you're up to taking a very high win
24:26rate type of trade. So, these are the
24:28theoretical models. Let's now see some
24:30examples. So, let's start from taking
24:32this idea on daily time frame. If you
24:34are a swing trader, this is typically
24:36the time frame you're likely going to be
24:38using, one of the time frames at least.
24:40And when do we qualify that we are in an
24:42upward trending auction? Well, we're
24:44going to take a look at where price
24:46pumped up, then created a range. This is
24:48our first P. to zoom in there, see what
24:50happened really. We had pump up, then
24:53price started dropping, then a response
24:55up. So, whenever you see that there's,
24:56let's say, big move up, a move down,
24:58small move up again, well, that's pretty
25:00much your range, and that's when you
25:01know this is your P. And then what
25:03happened? Broke outside, we broke back
25:05inside there. Why? Because the buyers
25:08that here drove the auction so quickly
25:11and so aggressively up are very likely
25:14to be doing it again. And if we, for
25:16example, draw a volume profile of this
25:18area over here, let it build for a
25:19second cuz he has to download some
25:21volume data. And if we exactly take a
25:23look at the main value area, which is
25:26the one in blue, we can see that this is
25:27the upper area, this is the lower area.
25:29So, we could say that this is our P. And
25:32we can simply wait for a breakout and
25:35then a break in, and this is our buy
25:37idea to get to the other side. The
25:39second idea, as we discussed, is the
25:41breakout. So, we wait for a breakout and
25:43maybe for a test, and we move up. Easy
25:45as that. And this is a very high win
25:47rate setup because you have both the
25:49statistical anomaly that we're outside
25:52of the standard deviation, so there's a
25:54very high likelihood that we will see
25:55more trading activity inside of the 70%
25:59first standard deviation rather than
26:01outside, so you have this statistical
26:03advantage on your side that 70% of the
26:05next auction will happen from this place
26:08to this place, so that's your edge, plus
26:11all of the buyers that here drove price
26:13up very aggressively because of
26:15fundamental reasons, because of their
26:17valuation of the underlying asset, are
26:19going to be present again if price
26:22becomes cheaper than here, because here
26:25they were still buying, still buying,
26:26still buying, still buying, still
26:28buying, still buying. So, if price drops
26:30even more, they're likely to keep buying
26:32again, right? And then the second setup
26:34pops up. So, you see price creating a
26:36candle that clearly closes above the
26:38main value area. Well, that's your
26:40signal that this can be a potential buy
26:42trade. This case is a very decent
26:44profitable trade. So, that's it. That's
26:47all there is. Now, we can look at the
26:49next auction and see, okay, this is the
26:50next impulse, where is the next
26:52consolidation? Likely here. Okay, so I
26:54can again take my volume profile if I
26:56have deep charts or even not, okay? It's
26:58just to show you the auction mechanics
27:00behind it. And I can see, for example,
27:02that majority of the volume was traded
27:04here, actually here. Yeah. And what do
27:06we see then? See a breakout happening, a
27:08test, that's our second long trade idea.
27:11And of course, on the way out from here,
27:13we clearly saw that another range has
27:16formed. So, for example, when we have
27:18the move up, then the move down, and
27:19then again a little move up, that's our
27:21range, okay? And we see here, for
27:24example, that we have our breakout right
27:26here. Not much of a failed auction
27:28around except for this one. But now that
27:30we are pretty sure this is a range, this
27:32is the first idea we have, okay? We have
27:33a breakout where? Outside of the main
27:36area value, this one now, and we have
27:39our breakout. We have our test, and then
27:41we move all the way up, okay? Also, here
27:43we have Let's summarize a little bit of
27:45the trade we could have taken in this
27:47situation. This was our first idea. Our
27:49second idea was this breakout over here.
27:52And let's even say we have just a
27:53one-to-one risk-to-reward ratio to be
27:55really, really pessimistic about the
27:57performance of this approach with very
27:59large stop losses and stuff like that.
28:01And then we had this other setup when we
28:03had this breakout. This test probably
28:05would not have filled if we placed like
28:08a pending order right here. It probably
28:09did not get filled, so let's not even
28:11consider it even though it would be a
28:12win. Then we had a breakout that filled
28:15on the test. Ideally, your stop loss in
28:17this situation could be below the point
28:19of control, or if you want to be more
28:20conservative, you can put it below the
28:22entire area. And here even just a
28:24one-to-one risk-to-reward ratio would be
28:26profitable. And then what happened here,
28:27if you wanted, was the candle closed
28:29back inside, right? So, this would be a
28:31reversal setup, which, as we know, has a
28:33lower win rate. But still, let's, for
28:35the sake of science, propose a
28:36one-to-one risk-to-reward ratio here.
28:38That would still be a profit. If you
28:40were a little bit more conservative with
28:41your stop loss above here, this would
28:42probably not be a target, okay? So, we
28:44can also consider this a stop loss. And
28:46then the second breakout would also have
28:48been a profit. We had another breakout
28:50right over here, and that would have
28:51been a profit as well. And we continue
28:53like this analyzing the auction. We have
28:55an upward impulse over here, and this is
28:58our new P, which is this one. Price
29:00moves up and then consolidates. This is
29:02the main area value. Let's drag it a
29:04little further. There you go. So, now,
29:06our statistically speaking, our standard
29:08deviation is this one. And as you can
29:10see, we have the first breakout here.
29:12Even with a one-to-one risk-to-reward
29:15ratio, this could have been easily
29:16target. Then we broke back inside. That
29:19was probably a stop loss. We would have
29:21sold here. As you see, this setup is
29:23particularly less profitable. This would
29:25have been a direct stop loss. Then
29:27again, we had this big move up. So, in
29:30this situation, you could argue, yes,
29:32this is the current value area. We had a
29:34first buy idea here that probably would
29:37have gone to stop loss. This was a stop
29:38loss. The sell idea over here would have
29:41been probably more profitable, so we
29:43would have a one-to-one risk-to-reward
29:45ratio, and it would be a target. And the
29:47second breakout over here would have
29:48been a success. Very successful trade
29:51over here. Then another big impulse up
29:53started. This is our new standard
29:55deviation. Then a new impulse up
29:57started. This is our new standard
30:00deviation. And then, you know, this is
30:01just a very simplistic approach, but
30:03this is a trade idea. This is a trade
30:05idea. This is a trade idea even as the
30:08range is forming. But for the sake of
30:10the basic version of the strategy, let's
30:11say this is a first trade, and then we
30:13break back inside even outside of this
30:15range. I don't know what happened
30:16specifically in this day, probably some
30:18fundamental news, but we didn't have a
30:20candle close inside that gave us a test
30:22to go to the other side. We only had a
30:24close below and a close back inside. So,
30:26this was the first idea, which was, I
30:28would say, profitable depending on how
30:30you open it. And then you have another
30:32breakout here, which was profitable. I
30:33mean, you get the point. So, for
30:35example, in this type of environment, we
30:37would have had a lot of profitable
30:39trades and very few losses. And we're
30:42just considering a 1:1 risk-to-reward
30:44ratio. We're not optimizing the entry.
30:46We're not timing the entry perfectly
30:48with order flow. Let's remove all the
30:49drawings, and let's see together what's
30:51happening now. How I would do it
30:52personally is I would start with a daily
30:54time frame and see that this is
30:56currently the main consolidation area.
30:58So, this is the main area. We had some
30:59failed auction up, some failed auction
31:01down. So, my first idea is to take this
31:03as the main value area. But let's say
31:05that the range is still forming, so
31:07let's say we're here. And here we just
31:08had market dropping down at the same
31:10levels where these buyer pushed the
31:12auction up and up and kept buying all
31:13the way here. So, of course buyers are
31:15going to be very tempted to keep
31:17controlling the auction on the way up
31:18here. So, what happens? A daily candle
31:20closes inside of the range. That's our
31:22first buy idea. So, we take the test and
31:25we move to the other side. And by the
31:26way, this trade we took live in front of
31:31hundreds of people in the last boot camp
31:33we did at Deep Charts, and I'm going to
31:34show you later the trade and how we took
31:36this idea on the daily time frame to
31:39then go to the lower time frame and take
31:41trades on the 5-minute time frame using
31:43the exact framework. So, let's say that
31:45this is our main idea. And now what
31:47happened is we had price closing above
31:51and creating another range. But this,
31:53for example, can be our new fair value
31:55area. And what just happened is we broke
31:58out and then we broke back in. So, this
32:00is still a short idea. And now there's
32:03two options. We either have a failed
32:05auction over here, which is my ideal
32:07setup, and buy until we reach the
32:09all-time highs. Or if we're not ready
32:11yet because we're too overextended and
32:13this is still the main value area, we
32:15might drop outside of here, and if we
32:18break below here, I can look for ideas
32:21to go to the other side of our D in this
32:23case. So, I'm combining this D with this
32:26P to find this type of setup as a
32:28confirmation for this type of setup.
32:30Now, let's drop into some lower time
32:31frame. Let's get to the 5-minute chart.
32:33So, now we can see a lot more detail.
32:35And if we drop into the intraday time
32:38frames, we can clearly see what the
32:39auction is doing even without taking
32:41care of higher highs, higher lows, and
32:44stuff like that, but simply taking a
32:46look at where the ranges are going,
32:48right? And we clearly see that from
32:49situation of balance, we had a situation
32:51of imbalance, and then price getting
32:53back to a situation of balance inside of
32:55the main area we are looking to trade
32:58at. Let's extend this area just to have
33:00it here. So, from the main value area,
33:03what happened here? We created value
33:05accepting lower prices as the main fair
33:08valuation, and then immediately after
33:11accepting higher prices as the main
33:12valuation inside of the main area of
33:15value where 70% of the trades will
33:17happen. So, we expect price to do this.
33:19And I can already see here that, for
33:21example, this was our fair value area on
33:23the way down on the where we had this
33:25sort of B setup, and then we had this P
33:27on the way up. So, we're officially in
33:28an upward auction. So, what do we do
33:30here? We either wait for a failed
33:33auction below here, or we wait for a
33:35breakout here because the overall trend
33:37is upwards. The overall auction is
33:39bullish. So, what we can do here is wait
33:41for a breakout of these ranges, which
33:44ultimately happens. And we want to drop
33:46into some even lower time frame and
33:47really zoom in into the breakout and see
33:50what happened during the breakout. So,
33:51we zoom in. And even here, you can spot
33:54and zoom inside and see, for example,
33:57that this breakout didn't hold. We're
33:58just, by the way, at the beginning of
34:00the session. So, you could use a filter,
34:02for example, like the opening range
34:03breakout, and then wait for a P close
34:06outside. So, we have a failed auction
34:07below here. We have finally a candle
34:09breaking out of this main value area.
34:11So, you either buy here, and that's your
34:13intraday trade, or you wait for another
34:15P to form and another breakout to
34:17happen. Either way, your trade is not
34:20only extremely successful, but in a very
34:22directional asset like stock indices or
34:25in general the stock market, these are
34:27very beautiful trades to take. So, you
34:29either buy here, stop loss below the
34:31point of control, and up for a 1:3, 1:4
34:34with a very high win rate. Or, again, we
34:36zoom in, we take this as our short-term
34:39auction model, trade this breakout
34:42instead, put your stop loss below the
34:43point of control, and reach again a 1:3,
34:461:4, 1:5 with extreme ease. The
34:49following day, guess what happens? You
34:51see price moving up, creating its P.
34:52Let's see how this went, and guess what
34:54happened. You're going to see this if
34:55you start reading the market with Ps and
34:57Bs, you're start going to really get it.
34:59Failed auctions, failed auction, failed
35:00auction, failed auction, failed auction,
35:02failed auction. P closing here, another
35:04breakout. I bet your ass that volume is
35:06increasing here. And then guess what
35:08happens after this P and this P, another
35:10P. What happens during this P? Failed
35:12auction, nice breakout again. So many
35:14trading opportunities here, here, here,
35:16here, or even here simply following the
35:18main trade idea of the higher time
35:21frames. And then guess what? We reached
35:23the other side. And now you're probably
35:24going to say, "Yeah, thank you very
35:25much, but with the benefit of hindsight,
35:27everyone can be able just to tell, 'Hey,
35:29this is what happened, so I'm right.'"
35:31But to truly prove your thesis, you have
35:33to do this live. I completely
35:35agree. That's what we did in the boot
35:36camp, and that's what I'm planning to do
35:38on this channel if this video reaches
35:405,000 likes. But let me go into Deep
35:43Charts in the live events that we've
35:45hosted. This was on the 24th. Let's go
35:49on the 24th and see what happened. So,
35:52this is a live session that we hosted
35:53live in front of around 500 people on
35:56November 24th, which was exactly here
35:59where I've told you. And we simply took
36:01a look at the main And we simply took a
36:03look at what was the main area of value,
36:05where were the low volume nodes, where
36:07all of the failed auctions happened.
36:08Let's hear it. This is the area.
36:10Couldn't. Try it again. Couldn't. Try it
36:12again. Couldn't. Try it again. Couldn't.
36:13These are all failed auctions. So, yes,
36:16we created some value here. We created
36:18some decent area volume. But then what
36:20happened? Great buying pressure, strong
36:23upwards momentum, and we went back
36:25inside of an area of comfort, which is
36:26where we are now, okay? And now, looking
36:29at the macro perspective, we are
36:31breaking outside of two days of ranging,
36:34which is a lot of volume, and we're
36:36breaking out right now. So, this is
36:37actually a long setup, guys. This is a
36:39long It's going to be likely to be a
36:41long session. So, the first trade idea
36:43is whenever we break above the range,
36:46we'd like to buy here as soon as we have
36:48some confirmation, and maybe get to the
36:50other side of the value area, taking out
36:52these highs and these highs, and this is
36:55where we're going to probably respond
36:56after. So, that was the main idea. Now,
36:58let's see the development of the setup
37:00itself. Ooh, there we have it. Let's see
37:02if we can be able to close. But we have
37:03a big trade here. So, breakout with a
37:05big trade means we're probably going to
37:07keep going up, and this is our setup for
37:09the day. If we close this candle like
37:10this, we close this candle like this
37:12with a strong delta, and yes, we're
37:14ready. This is a qualified buy setup.
37:16Let's see how aggressive sellers will be
37:17now. If they're too fast to drop back
37:20down, this is not a good sign, of
37:21course, but this would be a stop loss
37:22I'm I'm happy to take. It would be
37:24somewhere like here, and stopping
37:26probably here. The ultimate goal would
37:28be to have a very strong bullish session
37:30and reach this side, okay? But that's a
37:32very, very ambitious goal. You can
37:35either wait for your stop loss cuz we're
37:38happy to take a stop a stop loss like
37:39this one cuz it has all of our
37:40confirmations. We have the big trade on
37:42a breakout. We have a strong rejection.
37:44Or if you want to manage more
37:45dynamically, if you see a very strong
37:48conviction of sellers inside here with
37:51increasing volume, then you know it's
37:54probably going to go to stop loss. So,
37:57we took this trade live in front of
37:59everyone, and we had this little P. We
38:01had the breakout of the P with high
38:02volume and with the big trades that you
38:04guys know Fabio likes to use a lot, and
38:06we had strong volume on the way up. So,
38:09you see volume from three gradually
38:11increasing to four, four, five, etc. So,
38:14this was a qualified breakout. We
38:15entered once. It gave us another test
38:18just in case, and let's see how this
38:19session performed. Like this could be a
38:21scalp idea to go to the other side and
38:23then break above below above, sorry.
38:26Break above again. Could I scalp with
38:28everything I'm teaching? I'm literally
38:29calling every single market movement in
38:31front of your eyes live plus the trade.
38:33And this was exactly the trade that we
38:35saw here up until here, and then the
38:38following session did the exact same
38:40auction and reached our final target.
38:42Now, if we had to make a prediction from
38:45scratch, now that we are outside of the
38:48main value area of this D, but at the
38:50same time we broke outside of it with a
38:52very strong P, what I would personally
38:55do is take this into consideration and
38:57look for failed auction, which, by the
38:58way, we did, and we took live this short
39:02as well. Let me show you that one as
39:03well. This was December 8th. Let's get
39:06back to the calendar and take a look at
39:08December 8th, which is this one, and
39:10let's see what happened here. So, as you
39:11can see, we've identified the main area
39:13of value. We just saw that this was a
39:15breakout, and we just dropped back
39:17inside with a lot of volume. But then
39:19buyers started being absorbed at the
39:20top, right? We can clearly see it from
39:22here and the previous value area. We
39:24open, and what happens? Sellers take
39:25control of the auction. Okay, that's our
39:26first indication. And then what happens?
39:28We create some value here. There you go.
39:30Exactly. So, again, we see the P being
39:33formed. Again, here we see a B being
39:35formed. An opening range break. So, we
39:37have the breakout of the B and of the
39:39opening range breakout plus a breakout
39:42of these two areas here that are simply
39:44the previous value area. And so, our
39:46idea is to short from here and keep
39:48going down for the rest of the session.
39:49Let's see what happened. And we're now
39:51trying to break out. So, what we're
39:52going to do now is going to analyze
39:53these two candles and go to the 1-minute
39:55time frame and decide if it's an auction
39:58worth selling, okay? If we were to
40:01apply, let's say, half of our risk, 1%
40:04of let's say 50% of our daily risk on
40:06two trades, one of them would be now,
40:09okay? So, the first idea is just to sell
40:10here. We can place our stop loss
40:12slightly above here and ideally have a
40:14target at least on the lower end of this
40:16value area. Not sure we're going to get
40:18there by today. It depends on how the
40:20overall sentiment is. But, this is the
40:21mechanical approach, okay? This is the
40:23mechanical approach. We have the first
40:2415-minute opening range, we sell the
40:26breakout, okay? So, this is our first
40:28sell idea for today. And then we're
40:29going to take a look at the auction and
40:31with a little bit of discretion, we're
40:33going to try and understand if it's
40:35still worth selling. Realistically, I
40:36would say it is, okay? But, let's take a
40:39look at our auction and see if we need
40:41to break out from here again. But, now,
40:43as you can see, we're this breakout is
40:45really good. So, yeah, we can confirm
40:46we're in a sell auction. Now, as we have
40:48the confirmation that we're finally in
40:49control of the auction, this is the
40:51first idea, so the first the first
40:53areas you could consider selling, you
40:55either sell momentum here or, which is
40:57more conservative but better, is you
40:59sell on the imbalance if if it fills.
41:02So, this was the first trade idea, this
41:03was the second trade idea with some
41:05extra confirmation, but the same concept
41:07is still there. We have a drop down P, a
41:10very strong breakout with a lot of
41:12volume that creates almost another P,
41:14and then, you know, this is another
41:15trade idea to the downside, but we just
41:17traded on the test on the breakout of
41:19the B. So, now, we basically just took
41:21this B, wait for a strong breakout, wait
41:23for a test, entered our trade, placed
41:25our stop loss very conservatively above,
41:26and now we're going to wait and see what
41:28happens. So, yeah, for the entirety of
41:30the session, we dropped below. This was
41:32the original area, this was the level.
41:35We've dropped, we've created some range,
41:37we've broken out of it, and we've
41:38targeted the other side. And before the
41:40end of the session, we went very close
41:42to that target and then ultimately
41:44smashed it using the exact same
41:46framework that you just learned. So, I
41:48strongly advise you to test it out. Let
41:49me know in the comments if you tried it,
41:51if you found an edge with it, and like
41:52this video to get it to 5,000. So, we're
41:54going to start trading these type of
41:55setup live here on YouTube all together.
41:58And for that, you might want to
41:59subscribe to the channel and activate
42:01the notification bell, so you don't miss
42:03it. That's all for today, folks, and
42:05I'll see you in the next one. Bye.

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