Balance Price Range (BPR) - ICT Concepts

Summary

In this video, the creator explains how to trade using aggressive price action and BPR (Bearish Price Rejection) strategies. They discuss identifying fair value gaps, combining bullish and bearish gaps to form a BPR, and the importance of waiting for a retracement into these areas for ideal entries. Key concepts include avoiding longing in premium zones, using higher timeframe points of interest, and employing liquidity sweeps. The video also touches on price action, deviations, and setups to gain bias for potential long trades, offering practical advice for traders to refine their strategies.

Takeaways

• 😀 Use aggressive price action to your advantage by identifying BPR (Bullish Price Reversal) setups.
• 😀 A BPR occurs when a smaller bullish fair value gap overlaps with a larger bearish one, indicating a potential entry point.
• 😀 Avoid longing in the premium area; instead, wait for a retracement to a lower price area to improve your entry.
• 😀 Look for liquidity areas, such as previous lows or fair value gaps, as targets for price action and potential setups.
• 😀 On higher time frames (e.g., 15-minute chart), identify points of interest like old lows to set your bias for trade entries.
• 😀 If price action moves aggressively below a low and creates fair value gaps, it might indicate a bullish reversal.
• 😀 In case of too much risk on a direct entry, wait for an internal low to form and then look for a long setup after it is broken.
• 😀 Combining the smaller fair value gap with a larger one provides a higher probability of a successful entry.
• 😀 If you miss the initial trade, observe higher time frames for price action patterns that can give a narrative for future trades.
• 😀 The strategy aligns with concepts from other traders, such as Alex's Box method, where price breaks out, returns, and retests before continuing in the intended direction.

Q & A

What is BPR and how is it used in trading?

BPR stands for 'Bearish Price Reversal.' It is a trading concept where a bearish fair value gap overlaps with a bullish fair value gap. The combination of these gaps, with the smaller one being the focus, helps in identifying price areas where potential reversals can happen. Traders use this to anticipate retracements and get entries.

Why is it important not to long in a premium area?

In trading, a premium area refers to a price range where the market is considered overvalued or too high in comparison to its typical range. Entering a long position in such an area may increase the risk of a price reversal, as the asset may be too expensive to sustain the upward movement.

What does 'point of interest' refer to in this context?

'Point of interest' refers to specific price levels where there is a high likelihood of market movement due to liquidity or a significant price action event. In this script, the point of interest is often identified by previous lows or areas where liquidity is resting, which may trigger price reversals.

Why are equal lows important for identifying potential trades?

Equal lows indicate that there is resting liquidity in the market at a specific price point. When the market moves towards these levels, it may trigger a significant reaction, such as a reversal, making it a potential entry point for traders.

How do liquidity raids affect price action?

Liquidity raids occur when the market moves to take out orders placed around key support or resistance levels, often leading to a sharp price move. These events can cause aggressive displacement in the price action, which is useful for identifying potential reversals and trade setups.

What is the significance of using multiple time frames in this strategy?

Using multiple time frames helps to confirm the trade bias. Higher time frames give the overall trend or point of interest, while lower time frames, like the 1-minute chart, can help identify precise entries and manage risk effectively.

How does a fair value gap influence the decision to enter a trade?

A fair value gap represents a price range where there is a discrepancy between supply and demand, often leading to an imbalance. Traders look for these gaps as potential areas where price may retrace to before continuing in the trend, making them key points for entry.

What is meant by 'aggressive price action'?

Aggressive price action refers to rapid, large moves in the market, often accompanied by high volume. These moves can indicate strong market sentiment and can create opportunities for traders who are looking to capitalize on quick reversals or continuation moves.

How do you manage risk when the BPR setup is too risky?

When a BPR setup appears too risky, traders can wait for additional confirmation, such as the formation of an internal low or a deeper retracement. This approach can help reduce the risk by providing more confirmation that the price action is reversing in the desired direction before entering the trade.

What does the 'deviation from the range' mean in this strategy?

A 'deviation from the range' refers to a significant price move away from a consolidation or a range-bound market. This move may indicate a shift in market dynamics, providing an opportunity to trade in the opposite direction once the market returns to a key level or fair value gap.