How To Select The Best Between Orderblock and a Fair Value Gap for Trade Entry

Summary

In this video, the speaker addresses a common question from traders about prioritizing order blocks and fair value gaps within smart money concepts. They explain market rhythms, detailing price movements through trends and consolidations. The speaker emphasizes the importance of identifying discount and premium levels using Fibonacci tools, and the significance of order blocks and fair value gaps in trade entries. Through practical examples and a focus on lower time frames, viewers learn how to effectively navigate trading strategies, ultimately enhancing their decision-making in various financial markets.

Takeaways

• 📈 Understand market movement consists of uptrends, downtrends, and consolidations that deliver liquidity.
• 🔍 Define trading ranges by identifying key support and resistance levels on the chart.
• 📊 Use the Fibonacci tool to determine premium (above equilibrium) and discount (below equilibrium) levels for trading.
• 📝 Prioritize Fair Value Gaps (FVGs) over Order Blocks when identifying entry points.
• 🏦 Order Blocks represent areas of institutional buying/selling and must be unmitigated to be considered valid.
• 🚦 Analyze changes of character and breakouts to confirm market direction before entering trades.
• ⏳ Utilize lower time frames for clearer insights into market structure and to find optimal entry points.
• ⚖️ Always look for price to react to FVGs before considering Order Blocks for entries.
• 📉 Ensure that buying occurs at discounts (lower prices) and selling occurs at premiums (higher prices).
• 📺 Continuous learning through video resources can enhance understanding and application of smart money concepts.

Q & A

What is the primary focus of the video?

The video explains how to prioritize order blocks and fair value gaps when trading using smart money concepts.

What are the three directions of market movement mentioned?

The three directions are uptrend, downtrend, and consolidation.

How do traders identify liquidity delivery?

Traders identify liquidity delivery by observing price movements between defined ranges and recognizing breakouts and retracements.

What is an order block?

An order block is defined as the last bearish candle before a bullish movement, which institutions have not yet traded into.

What is a fair value gap (FV Gap)?

A fair value gap is the space between the high of one candle and the low of the next, indicating a potential area for price to return.

What is the significance of premium and discount levels?

Premium levels are where traders look to sell at higher prices, while discount levels are where they seek to buy at lower prices.

What should traders do when both an order block and a fair value gap are present?

Traders should prioritize the fair value gap first, as it is considered more critical for potential price reversal.

How can traders confirm their entry points?

Traders can confirm entry points by analyzing lower time frames to observe market structures and changes in character.

What role does the Fibonacci tool play in trading?

The Fibonacci tool helps traders define ranges and identify premium and discount levels for better trade planning.

What is the importance of continuous learning in trading?

Continuous learning helps traders deepen their understanding of market concepts and refine their trading strategies for better outcomes.