FVGs Don’t Work Unless You Use THIS - Ep. 14

Summary

The video analyzes the key differences between winning and losing trades, explaining that the underlying factor is time and volatility. It outlines how economic news events create market volatility on higher timeframes, while session open/close times drive volatility on lower timeframes. Checking the economic calendar and planning trades around major news events can improve probabilities. It also covers trading session guidelines - when volatility typically occurs for indices vs forex. Ultimately, time must agree with price for a trade setup to have a higher probability of playing out successfully.

Takeaways

• 😊 The key difference between a winning and losing trade is the presence of time/volatility to move price. Without energy/volatility, price will not move to take profit.
• 📈 Higher time frame volatility comes from high impact news events like CPI, FOMC, NFP. Avoid trading the day before/of, but fine afterwards.
• ⏰ Lower time frame volatility comes from sessions - 9:30-4pm for indices, 2-10am for forex. Lunch time dips still tradable if setup is valid.
• 📰 Other red folder USD news besides big 3 can be traded before/during/after the news release.
• 😎 Winning trades need agreement between time and price - time brings volatility for price to move. Reliable volatility makes strategy profitable.
• 📊 Trading revolves around probabilities. Clean setups can play out without news, but trading with news has higher probability.
• 📉 Losing trades happen when time disagrees with price - no energy for price to continue direction.
• 🗓 You can trade crosses like AUD/CAD if no suitable USD news for the day.
• ☝ Asia session still tradable for Asia pairs like AUD/USD and NZD/USD.
• 🎯 Time is the differentiator between winning and losing setups that otherwise look similar in terms of price action.

Q & A

What is the underlying factor that makes a winning trade versus a losing trade?

The underlying factor is time and volatility. Winning trades have volatility and energy from news events, economic calendar releases etc. to push the price towards take profit. Losing trades lack this energy and volatility to sustain the move.

What are the big three news events to avoid trading around?

The big three news events to avoid are: CPI, FOMC meeting minutes, and Nonfarm Payrolls (NFP). It's best to avoid trading the day before and the day of these events.

Can you trade other USD news events besides the big three?

Yes, you can trade other USD red folder news events like PPI, Consumer Sentiment etc. before, during and after the releases. Only the big three require avoiding the surrounding days.

What brings volatility to the lower timeframe?

Kill zones, which are essentially volatility sessions, bring energy to the lower timeframes. For indices, the main kill zone is the 9:30 AM - 4:00 PM New York session. For forex, volatility comes more from economic news versus sessions.

Why do some fair value gaps hold while others do not?

Fair value gaps hold when time and volatility aligns with the gap. If volatility dries up, gaps are likely to fail even if price action looks similar across gaps.

Can you trade forex pairs during the Asia session range?

The Asia session is usually seen as a low volatility consolidation period. However, Asia-centric pairs like AUD/USD and NZD/USD can be actively traded.

What is the launch time in forex and is it tradable?

The launch time is 5 AM - 7 AM NY time. It can be traded if volatility and momentum supports the price direction despite being between two sessions.

Why is trading based on probabilities and not certainties?

No setup or trigger will have 100% accuracy. Trading is probabilistic with certain conditions skewing the odds favorably but not guaranteeing an outcome. Risk management is key.

How can you call price action live with a high accuracy?

Through practice and having a trading strategy that incorporates the key elements covered - higher timeframe context, volatility, kill zones etc. But accuracy will still involve probabilities.

What discount and premium rates refer to in trading?

Discount rate refers to periods of decreased volatility and ranges where price may be cheaper to enter. Premium rate refers to higher volatility directional moves where price is extended.