The 2 Main Ways to Trade Turtle Soup - Simplified

Summary

This video delves into the two main ways of trading Turtle Soups, focusing on both bearish and bullish setups. The first method involves price running above an old high, signaling smart money's move to sell. The second method relates to fair value gaps, where traders look for price action around key levels to trade liquidity. By understanding external and internal range liquidity and how to identify when price is likely to reverse, traders can strategically enter positions. The video also includes real chart examples and live trade applications to showcase the logic behind Turtle Soup trading.

Takeaways

• 😀 A Turtle Soup strategy involves trading liquidity zones, with two main types: bearish and bullish.
• 😀 In a bearish Turtle Soup, sell orders are triggered above an old high or within a fair value gap, signaling a potential price drop.
• 😀 A bullish Turtle Soup involves buying beneath an old low or within a fair value gap, as smart money targets sell-side liquidity.
• 😀 A fair value gap is formed by three candlesticks and can be used as a basis for Turtle Soup strategies, with the low or high of the gap being a key reference for entry.
• 😀 The external range liquidity involves looking for old highs and lows where retail traders' stop-losses accumulate, which smart money can exploit.
• 😀 Internal range liquidity focuses on price action within a fair value gap, where liquidity is also gathered and offers entry points.
• 😀 Stop-loss placement should be above the high of the fair value gap in a bearish scenario and below the low in a bullish scenario to protect against adverse movements.
• 😀 The key to executing Turtle Soup strategies effectively is having a strong market bias established before making trades, as this helps identify potential liquidity zones.
• 😀 Lower timeframes are essential for pinpointing specific entry points, especially when trading off swing highs and lows that align with liquidity zones.
• 😀 The strategies described are not just for theoretical knowledge, but practical application, as demonstrated by the mentor’s live trading examples and real-time market analysis.

Q & A

What is a 'Turtle Soup' in trading?

A 'Turtle Soup' is a strategy used in trading that targets liquidity, typically involving price movements above or below significant highs or lows to trigger stop orders. It focuses on exploiting liquidity by entering trades at levels where other traders' stops are placed.

What is the difference between a bearish and a bullish Turtle Soup?

A bearish Turtle Soup occurs when price moves above a prior high to trigger buy stops, with the intention of selling once liquidity is created. A bullish Turtle Soup happens when price moves below a previous low, triggering sell stops, with the intention of buying once liquidity is created.

How does a 'Fair Value Gap' relate to Turtle Soup trading?

A Fair Value Gap (FVG) is a price imbalance, and when it forms within a higher time frame structure, it creates an opportunity for Turtle Soup trades. In bearish Turtle Soup, the price can trade into the lower part of the FVG to trigger liquidity, while in bullish Turtle Soup, price can return to fill the gap and trigger buy stops.

What role does liquidity play in Turtle Soup trading?

Liquidity plays a crucial role in Turtle Soup trading. Traders identify areas with concentrated stop orders (liquidity) and then take advantage of price movements that trigger those stops, causing price to move in the opposite direction after the liquidity is exhausted.

What is 'external range liquidity' in the context of Turtle Soup?

External range liquidity refers to stop orders placed beyond key highs or lows that are outside the current range of price action. In a bearish Turtle Soup, price targets liquidity above a previous high, while in a bullish Turtle Soup, price targets liquidity below a prior low.

What is 'internal range liquidity' in Turtle Soup trading?

Internal range liquidity refers to stop orders placed within the current price range, often associated with fair value gaps. These areas are targeted by the market in a way similar to external liquidity, but on a smaller, more specific scale.

How does a trader execute a Turtle Soup trade?

To execute a Turtle Soup trade, a trader first needs to establish a market bias (either bullish or bearish). Once a bias is set, they look for a price movement that exceeds a significant high or low (based on liquidity), then enters a trade in the opposite direction once the stop orders are triggered.

Why is understanding the higher time frame important for Turtle Soup trading?

Understanding the higher time frame is essential because it helps a trader establish a bias for the direction of the market. A clear bias allows them to identify key areas where price is likely to move, making it easier to spot high-probability Turtle Soup setups on lower time frames.

What is the role of stop placement in Turtle Soup trading?

Stop placement in Turtle Soup trading is based on key levels such as external highs and lows or specific fair value gaps. Traders typically place their stops above or below the liquidity point that was triggered, expecting that price won't move beyond this level after liquidity has been absorbed.

How can a trader combine Fair Value Gaps with Turtle Soup for better trades?

A trader can combine Fair Value Gaps with Turtle Soup by identifying areas where the price creates imbalances (such as buy-side or sell-side inefficiencies). These gaps serve as internal liquidity points that can enhance the trade, especially when combined with the liquidity dynamics of a Turtle Soup setup.