Smooth Edges as my +A Draw on Liquidity

Summary

In this video, Juno explains the concept of 'smooth edges' in trading, focusing on how to spot formations of highs or lows that respect an invisible horizontal level. Smooth edges occur when multiple highs or lows do not take liquidity from the previous ones, creating a liquidity pool above them. Juno outlines how these formations, when aligned with session liquidity (like Asia, London, or New York sessions), offer A+ trade opportunities. He also discusses how to trade these edges, combining them with high-timeframe points of interest for better accuracy. The video includes real examples and tips for spotting and trading smooth edges effectively.

Takeaways

• 😀 Smooth edges are a concept used to frame draw liquidity for trading, with 90% of trades based on this method.
• 😀 Smooth edges involve spotting a formation of highs or lows that respect an invisible horizontal level, where liquidity rests above them.
• 😀 A smooth edge is valid when new highs are created without taking liquidity from previous ones, maintaining liquidity above each high.
• 😀 The main invalidation of smooth edges occurs when one of the highs takes liquidity from the previous one, making the liquidity pool compromised.
• 😀 Unlike equal highs (which are just two equal highs), smooth edges require at least three or more highs respecting the horizontal line, indicating greater liquidity.
• 😀 Smooth edges align with session liquidity (such as Asia, London, or New York sessions), which enhances their reliability as A+ draw liquidity.
• 😀 Smooth edges should not be considered if there is an SMT (Symmetry) divergence between correlated assets, where one takes liquidity and the other doesn’t.
• 😀 A basic way to trade smooth edges is by waiting for price to move in the opposite direction of the smooth edge before entering at a higher time frame point of interest (POI).
• 😀 The goal when trading smooth edges is to capture the move from a high time frame POI to the smooth edges, using it as the ultimate draw liquidity target.
• 😀 In a trading example with NQ, smooth edges were identified with session liquidity alignment, and a trade was executed after price reacted from a POI, leading to a profitable outcome.
• 😀 The framework for trading smooth edges involves analyzing session liquidity, spotting the smooth edges, waiting for price reaction, and then executing the trade with the smooth edges as the target.

Q & A

What are smooth edges in trading?

Smooth edges refer to a series of highs or lows that respect an invisible horizontal level without taking liquidity from previous levels. This formation creates a 'zone' where liquidity is resting, untouched by price action. It's a key concept for identifying potential liquidity draws.

Why are smooth edges important in trading?

Smooth edges are important because they help identify areas where liquidity is likely to be drawn, giving traders a clearer zone to target for entries and exits. When aligned with session liquidity, these edges are considered A+ setups, making them highly reliable for trading.

How do you spot a valid smooth edge?

To spot a valid smooth edge, look for a sequence of highs or lows where each new high or low does not take liquidity from the previous one. The liquidity pool remains intact, allowing for a more predictable price movement towards that area.

What happens if a smooth edge becomes invalid?

A smooth edge becomes invalid when one of the highs or lows takes liquidity from a previous level. Even if the subsequent highs or lows do not take liquidity, the liquidity pool is compromised, and the smooth edge is no longer considered valid.

What is the difference between smooth edges and equal highs/low?

The main difference is that smooth edges require at least three or more highs or lows that respect an invisible horizontal line, whereas equal highs/lows only require two relatively equal levels. More highs or lows in smooth edges indicate a stronger liquidity zone.

How does session liquidity affect smooth edges?

Session liquidity, such as from the Asia, London, or New York sessions, can strengthen the validity of smooth edges. When smooth edges align with session liquidity, the potential for price movement toward those edges increases, making them A+ liquidity draws for trades.

What is the role of SMT (Smart Money Tool) in trading smooth edges?

SMT helps identify imbalances between two correlated assets. If one asset has intact smooth edges while the other does not (due to liquidity being taken), the smooth edge in the first asset should be disregarded. SMT helps filter out invalid setups based on the correlation of assets.

How do you trade using smooth edges?

To trade smooth edges, first identify the liquidity zone formed by the smooth edges. Then, wait for price to move away from this area and react to higher time-frame points of interest (POIs). Once a price reaction occurs, you can enter a position targeting the smooth edges as your take-profit zone.

What is a high-time frame point of interest (POI) in this strategy?

A high-time frame POI refers to a significant price level on a higher time frame chart where price has previously shown strong reactions. This level serves as a key area to watch for price reactions when trading smooth edges.

Can you give an example of using smooth edges in a real trade?

For example, on October 14–15 in the NQ chart, a series of highs formed smooth edges, with session liquidity aligning. After price pulled away from the smooth edges and reacted to a higher time-frame POI, a position was taken targeting the smooth edge for a potential profit as price moved back towards that liquidity zone.