0% found this document useful (0 votes)
36 views

Trading Education

The document outlines various trading strategies and patterns, including the 3-Drive Pattern, Optimal Trade Entry (OTE), and the Power of 3, which help traders identify potential market reversals and entry points. It emphasizes the importance of liquidity, volume profiles, and market structure in making informed trading decisions. Additionally, it provides tips for trading during different market sessions, such as New York and London, and highlights the significance of waiting for confirmation before entering trades.

Uploaded by

harbingerofdeath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
36 views

Trading Education

The document outlines various trading strategies and patterns, including the 3-Drive Pattern, Optimal Trade Entry (OTE), and the Power of 3, which help traders identify potential market reversals and entry points. It emphasizes the importance of liquidity, volume profiles, and market structure in making informed trading decisions. Additionally, it provides tips for trading during different market sessions, such as New York and London, and highlights the significance of waiting for confirmation before entering trades.

Uploaded by

harbingerofdeath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 21

In Order of Importance:

1.Break of Structure
2. FVG Inversion
3. Level Reclaim
4. Swing Failure Pattern (AKA Burj Khalifa pattern)

The 3-Drive Pattern is a reversal pattern in trading, consisting of three movements in the same direction.After the
third movement, a reversal is often expected.

Features: Three movements: The price makes three similar upward or downward moves. Symmetry:

Each move lasts about the same time and is of similar size. Fibonacci: Each correction between the drives is often
around 61.8% or 78.6%.

Example: Bearish 3-Drive: The price makes three peaks. After the third peak, the market moves down. This helps
predict a trend reversal and gives a smart entry point.

1
Impulsive Move:

• An impulsive move happens when the price suddenly jumps up, signaling the start of an uptrend. This
indicates strong buying interest and momentum in the market.
• Building Liquidity: As the market moves, it begins to build liquidity, preparing for another significant price
movement, either up or down. This creates opportunities for traders to enter or exit positions.
• Entry Patterns: Identifying the right entry patterns is crucial for successful trading. These patterns help you
enter the market at the right time to ride the trend, increasing your chances of making profits.

By spotting these patterns, you can trade more effectively and take advantage of market movements.

2
The Optimal Trade Entry (OTE)
The optimal entry zone is a price level where the market is likely to reverse, offering a good opportunity to enter a trade. This
is usually found using Fibonacci retracement levels, especially around the 61.8% or 78.6% levels. These are common areas
where the price pulls back and then continues in the direction of the trend.

Tips:
1. Use Fibonacci: Look for the 61.8% or 78.6% levels to find the OTE zone. (I like other Fib levels as you can see.)
2. Wait for Confirmation: Don’t just enter because the price hits the level. Wait for a signal like a candlestick pattern or a
break of trend to confirm the reversal.
3. Check the Trend: OTE works best in a trending market. Make sure there’s a strong trend before looking for a setup.
4. Set Stop Loss: Always place a stop loss just outside the OTE zone in case the price moves against you.
5. Higher Timeframes are Stronger: The OTE zone is more reliable on higher timeframes (like the 4-hour or daily
charts.) (If you're experienced, you can also use it on the lower timeframes.)
6. Be Patient: Wait for the price to reach the OTE zone and show signs of reversal before entering the trade. Patience
pays off!

By understanding the OTE zone and following these tips, you’ll have a better chance of finding good entry points in the market!

3
Trade Entry Checklist

This is my checklist before entering a long or short, especially on lower timeframes. You'll be able to spot whether a move is
legit or just a fake break of structure.

Master this, and you'll know exactly when to enter! (Print this out and keep it in front of your desk!)

4
Understanding the Volume Profile and How to Use It in Trading
The Volume Profile is a powerful tool that helps traders see where the most buying and selling happened at different price levels.
Instead of focusing on time, it shows how much volume was traded at each price.
This helps identify key areas where price may react.

Key Parts of the Volume Profile Value Area (VA)


This is the range where 68% of the total volume was traded. It’s the area where most buyers and sellers agreed on price. (68% is the
first standard deviation, a statistical term).

Value Area High (VAH) This is the highest price within the value area. As price reaches VAH, sellers often become stronger, and
buyers weaker. If price rejects VAH, it may be a good place to look for a short trade (betting on price going down).
Value Area Low (VAL) This is the lowest price within the value area. As price approaches VAL, buyers usually become stronger. If
price rejects VAL, it may be a good place to look for a long trade (betting on price going up).
Point of Control (POC) – Most Traded Price This is the level where the highest amount of volume was traded. It is a magnet for
price—price often moves back to this level. If price reaches the POC, it may bounce because traders who entered before may close
their positions.
How to Use the Volume Profile: When price is ranging (moving sideways) The levels (VAH, VAL, and POC) give clean reactions,
making them useful for finding trade setups. When price is trending (moving up or down strongly) Volume gaps (areas with low
volume) show where price might move quickly.
Price tends to move fast through low-volume areas and slow near high-volume areas. Works for any market or timeframe You can
use it on stocks, crypto, or forex. You can apply it to specific timeframes (daily, weekly, monthly) or the entire market history.
How to Trade Using the Volume Profile:
Long Trades (Buy) Look for long entries near VAL (where buyers are strong). Confirmation is key—don't buy just because price is at
VAL. Wait for signs like liquidity sweeps, bullish structure breaks, or confluence with support levels.
Short Trades (Sell) Look for short entries near VAH (where sellers are strong). Again, don’t short just because price is at VAH—wait
for confirmation. Signs like bearish structure breaks, liquidity sweeps, or resistance levels aligning with VAH are helpful.

POC Strategy If price is far from the POC, it often moves back toward it. If price touches POC, watch for reactions—if it holds, price
might bounce; if it breaks, price might continue moving away.

Final Tips:
✔ Always wait for confirmation before entering a trade.
✔ Use Volume Profile with other indicators like liquidity zones, market structure, or moving averages.
✔ Pay attention to volume gaps—price moves fast through areas with low volume.
✔ When price is at POC, VAH, or VAL, watch how it reacts before making a decision. By understanding these key levels, you can
make better trading decisions and avoid unnecessary risks.

5
Power of 3 (Po3) – Accumulation, Manipulation, Distribution The Power of 3 —also known as AMD (Accumulation, Manipulation,
Distribution)—is a price action pattern that follows three key phases:

Accumulation – The Calm Before the Storm


• Price moves in a tight range with low volatility.
• This usually happens near key liquidity zones on higher timeframes.
• Both buyers and sellers get trapped as liquidity builds on both sides.

Manipulation – The Liquidity Grab


• Price fakes a breakout, sweeping liquidity outside the range.
• It quickly returns inside, tricking traders into thinking the move was real.
• This is also called a failed auction or range deviation.
Distribution / Expansion – The Big Move
• Once liquidity is taken, price moves aggressively in the opposite direction.
• This is the move traders want to catch—the real trend shift!
Po3 vs. a Normal Range Deviation
• A normal range deviation just brings price back inside the range. Po3, however, leads to a powerful breakout—either
continuing or reversing the trend.
Top Tips for Trading Po3:
• Look for it during periods of low volatility.
• Wait for the manipulation phase—the failed auction is your sign to prepare for the big move!
• Don’t rush—let the manipulation happen and confirm the breakout before entering.
• It’s a great strategy for the weekend! With lower market activity, Po3 plays out nicely, giving you clean setups without too
much noise.
Stay patient, watch the phases closely, and get ready to catch that explosive move when it comes!

6
Liquidity

Liquidity is the amount of an asset available to buy or sell, needed to open or close a trade. For example, if you
want to buy 1 BTC, there needs to be a seller who is willing to sell 1 BTC at the price you agree on. Liquidity is
important for large traders (institutions) because they trade in big sizes, so they need more liquidity to fill their
orders.

A common way to create liquidity is by forcing people out of their positions by triggering their stop losses. Retail
traders usually set stop losses above or below obvious price points. When the price hits these points, traders are
forced to close their positions, pushing the price in the direction that big players want. This is called market
manipulation or stop hunting.

What is Liquidity Theory?

Liquidity theory says that buy and sell orders, especially stop orders, are placed below every high and low.

Price uses liquidity to balance the market, which helps us understand the direction it might move next.

Why is Liquidity Important? Liquidity is a key factor in trading. Here's how it helps: It can form a directional bias for
price movement. Liquidity pools can be used as targets. It can help develop an entry point after a sweep (when
liquidity is taken out).

Tips:
1. Identify Liquidity Zones: Look for areas where the price might hit obvious stop-loss levels. These areas are likely to be
swept by large players.
2. Use Liquidity for Entries: After a liquidity sweep (stop hunting), consider entering trades in the opposite direction
when price moves back to its original trend.
3. Manage Risk: Always use stop losses and don't chase the market. Wait for a confirmation to enter once liquidity has
been triggered.
4. Keep an Eye on Large Moves: Watch for moments when the price breaks out after liquidity is grabbed, as these can
signal strong momentum in a specific direction.
5. Understand Market Manipulation: Big players move the market, so watch for signs of stop hunting, especially around
key levels like swing highs and lows.

7
RANGING STRUCTURE

A ranging structure occurs when the price is neither bullish nor bearish, showing no clear directional movement.
Instead, the price fluctuates between a defined support (range low) and resistance (range high), forming a
consolidation zone.

How to Trade a Ranging Market:

• Wait for Deviation – Instead of entering blindly, wait for the price to sweep liquidity above or below the range
before considering an entry.

• Patience is Key – Avoid overtrading inside the range; instead, look for high-probability setups at the extremes.

• Confirm Before Entering – Wait for confirmation, such as a reclaim of a key level or a break in market structure.

• Set Clear Stop Losses – Place stop losses outside the range to avoid getting caught in false breakouts.

• Identify the Next Move – A strong breakout above resistance or below support can signal a potential trend shift.

So, on Monday, we don’t trade immediately—we wait. We allow Monday’s range to form before making any major
decisions. Let the market show its hand first!

8
NY Reversal – How to Trade It.
The New York Reversal happens when price moves one way during London, then flips after the New York open
(13:30 UTC). This is often a trap to grab liquidity before the real move starts.
How to Trade It:

• Look for the Trap – A fake move in London that sweeps liquidity.

• Wait for Confirmation – Price needs to break structure or reclaim a key level.

• Watch NY Open (13:30 – 15:00 UTC) – This is when the reversal usually begins.

• Aim for Clean Levels – Target imbalances, liquidity zones, or key highs/lows.
• Be Patient – Don’t jump in too early. Let NY show the real move first.

Wait, confirm, and take the high-probability setup!

9
NY Continuation
The NY Continuation happens when the price keeps moving in the same direction as the London session,
without a big reversal. Instead of trapping traders, the market just follows the existing trend.

How to Trade It:

• Stick with the Trend – If London was bullish, look for longs; if bearish, look for shorts.

• Wait for a Retest – Price often pulls back before continuing, giving a better entry.

• Use NY Open as Confirmation – A strong move in the same direction signals continuation.

• Take Profit at Key Levels – Look at previous highs/lows and liquidity zones for targets.

• Tip: Don't rush in—wait for NY to confirm the move before entering!

10
Search & Destroy – Asia, London & New York Sessions
The Search & Destroy (S&D) strategy is based on liquidity grabs across different sessions. The market often hunts liquidity
before making a real move, so understanding this concept helps in timing entries and exits.

How to Trade S&D in Each Session:


• Asian Session: *Mostly a ranging market with liquidity building up. *Identify key highs and lows—these will often
get taken out in later sessions. *Best for scalping small moves but not ideal for major trend trades.
• London Session: *The first real volatility of the day. *Price often sweeps the Asian range (Search) and then
chooses a direction (Destroy). *Wait for a fake move in one direction, then trade the reversal.
• New York Session: *The most aggressive liquidity grab. *Look for a London trap—if London created a fake
breakout, NY will often reverse it. *The NY reversal or NY continuation depends on market conditions. *If price
takes out a key level and holds, expect continuation. If it sweeps liquidity and rejects, look for a reversal. Tip:
Always wait for confirmations. Let the market show its hand before entering!

11
Inducement Model

The market traps traders before making a real move. It tricks people into entering too early, then grabs
liquidity before going in the intended direction.
How It Works & Tips:
1. Fake Breakout → Trap. Price breaks a level, attracting traders.
• Tip: Wait for confirmation before entering.
2. Stop Hunt → Liquidity Grab. Market sweeps stop losses, then moves up/down.
• Tip: Look for wicks below support or above resistance.
3. Trap Highs/Lows → Inducement. Equal highs/lows act as a target for liquidity.
• Tip: If price quickly reverses after sweeping, it's likely inducement.
4. Strong Move (Displacement) → Smart Money Enters. Price moves aggressively in one direction.
• Tip: Follow the trend after a strong move with volume.
5. Entry on Pullback → Best Opportunity. Price returns to fill imbalance or test an order block.
• Tip: Enter on a retrace instead of chasing price.

Extra Tip: Inducement happens a lot before major reversals or breakouts. If you see it, be patient, wait for
confirmation, and enter at the best price!

12
High Probability Point of Interest (POI) Entry Model.

Strong move breaks the market's pattern


• Leaves empty spaces (imbalances or supply/demand areas)
• Liquidity is created on both sides
• Price moves slowly back to the starting point
• Sweeps up or down to the key area
• Enter when confirmed on lower timeframes, aiming for liquidity
Tips: Wait for confirmation on a smaller timeframe before entering. Look for areas with lots of liquidity for better chances of
success. Be patient and wait for price action to show the right setup. (edited)

13
Trend Continuation Entry Model

The Trend Continuation model helps you enter trades when the price is moving in the same direction as the
current trend. This model works after a small pullback or retracement, where you can get in on the move before
the trend continues.

How to Enter a Long (Buy) Trade:

1. Check the Trend: Make sure the market is in an uptrend (price making higher highs and higher lows).
2. Wait for a Pullback: Let the price pull back to a support level (like a previous low or Fibonacci retracement).
3. Look for a Break of Structure (BOS): On a lower time frame (like 15-minutes), watch for a price move that confirms
the trend will continue up. This could be the price breaking a resistance level or forming a higher low.
4. Enter the Trade: Once you see the price is moving back in the direction of the trend, enter the trade (e.g., when the
price closes above the previous high).
5. Target the Next Resistance: Set your target at the next resistance level or a key area where price might face trouble
going higher.
Example: If Bitcoin has been rising and pulls back to a support level, look for a price action signal (like a bullish
candlestick) on a 15-minute chart to enter a long trade, targeting the next resistance.

How to Enter a Short (Sell) Trade:

1. Check the Trend: Confirm the market is in a downtrend (price making lower highs and lower lows).
2. Wait for a Pullback: Let the price pull back to a resistance level (like a previous high or Fibonacci retracement).
3. Look for a Break of Structure (BOS): On a lower time frame (like 5-minutes), watch for the price to confirm the
downtrend will continue. This could be the price breaking support or forming a lower high.
4. Enter the Trade: Once you see the price moving back in the direction of the downtrend, enter the trade (e.g., when the
price closes below the previous low).
5. Target the Next Support: Set your target at the next support level where price might find a bounce.

Example: If Ethereum is in a downtrend and retraces to a resistance level, look for a bearish signal on a 5-minute
chart to enter a short trade, targeting the next support.

Quick Tips:

1. Confirm the Trend First: Always make sure the overall trend is in your favor (uptrend for long, downtrend for short).
2. Wait for a Clear Break: Don’t rush into a trade. Wait for confirmation (like a break in structure) that the trend is
continuing.
3. Use a Stop Loss: Set a stop loss just above the last swing high (for short) or swing low (for long) to protect your trade.
4. Be Patient: Trend continuation setups may take time to develop, so wait for the right price action before entering.
5. Manage Risk: Always think about how much you are willing to lose on the trade and set your targets accordingly.

14
Trend Continuation Entry Model

15
Ineficiencies

Volume Imbalance:
This happens when there’s a big difference between the amount of buying and selling at a certain price. It shows that the
market moved quickly in one direction, and might come back to that price level later to "balance out" the buying and
selling.
• Tip: Watch for price to retrace to these areas—this could be a good entry point if the market revisits
the level.

Fair Value Gap (FVG):


This is when the price moves too fast, leaving a gap where the market didn’t trade much. The market might
come back to fill this gap and trade more normally. It's like the price got too high or too low too quickly, and
will likely correct itself.

• Tip: Keep an eye on these gaps. Price may fill the gap in the future, offering a chance to trade.

Opening Gap:
This happens when the price opens much higher or lower than the previous day’s closing price. It can be
caused by news or big events. The price often moves back to this level during the trading day, so traders watch
for these gaps to be "filled."

• Tip: If there’s an opening gap, look for price action to reverse back to the gap area. This can give you a
good entry after the price moves in your favor.

By watching these types of inefficiencies, you can find potential areas where the market might return to,
providing you with good trading opportunities.

16
Single Candle Order Block

18
What’s SCB/SCOB? A Single Candle Order Block (SCOB) is a powerful concept in Smart Money Concepts (SMC) trading. It marks a
crucial price level where big institutions—like banks and hedge funds—likely placed huge buy or sell orders. These zones often
trigger market reversals or trend continuations.

Why traders watch SCOBs: When price revisits these areas, it usually reacts, making them great for: Trade
entries Stop-loss placements Trend confirmations
How It Works: A Single Candle Order Block (SCOB) is a strong bullish or bearish candlestick that causes a
sharp price movement. This happens because institutions (smart money) have placed large orders at that level.
This creates a key price area that traders monitor for future reactions. When price returns, it tends to either
bounce or continue, allowing traders to take precise entries.

Bearish Example:
Liquidity Sweep: The market takes out liquidity above a key level (hitting stop losses & weak hands).
Strong Drop: Price falls rapidly, forming a Single Candle Order Block (SCOB) & leaving an imbalance (FVG).
Retracement: The market pulls back to a premium zone, filling the imbalance.
Order Block Tap: When price reaches the SCOB, it signals a potential bearish move.
Profit Target: Traders aim for at least 2R risk-to-reward or the next liquidity zone.

How to Trade SCB/SCOB with Aligned Timeframes


To increase accuracy and reduce noise, align your execution timeframe with a higher timeframe for confirmation.
This helps you trade in sync with the broader market trend:
• 1D Trend + 1H Execution → Swing traders looking for high-probability reversals.
• 4H Trend + 15M Execution → Great for intraday traders seeking precision.
• 1H Trend + 5M Execution → Best for short-term traders needing tight risk control.
• 15M Trend + 1M Execution → Scalpers catching quick intraday moves.
Conclusion: SCB/SCOB is a high-probability tool for spotting reversals & key trade setups. But no strategy is 100%
guaranteed! Trading is about probabilities, not certainties. The secret to long-term success? Discipline + strategy +
proper risk management.
TIP: Don't trade SCB/SCOB blindly!
Combine it with:

• 3-Drive Pattern – Confirms potential reversal zones.


• IMB (Imbalance Zones) – Highlights areas where price is likely to return.
• FVG (Fair Value Gaps) – Identifies price inefficiencies for high-probability setups.
• Key High-Probability Price Areas – Strong supply/demand levels where big moves happen.
• Liquidity Sweeps – Watch for stop hunts before entering trades. Trend Confirmation – Align with higher
timeframes to trade in sync with market direction.
• Break of Structure (BOS) – Confirms trend shifts and potential entry points.
• Divergence – Use RSI, MACD to validate trade setups.
• Volume Analysis – Ensure strong volume supports the move for confirmation.
• Previous Session Levels – Check daily, weekly, and monthly highs/lows for reactions.

The more confluences align, the stronger the trade setup!

19
Single Candle Order Block

20
Single Candle Order Block

21
22

You might also like