The MMXM Trader's 2024 YT Mentorship - Episode 1

Summary

This educational video focuses on high probability trades, emphasizing the importance of higher time frame analysis (monthly, weekly, daily) to establish market context. Key concepts like premium/discount levels, smart money techniques (SMT), and order blocks are discussed to pinpoint profitable setups. The strategy involves using a 'Power of Three'—higher time frame context, key levels, and SMT—to manage risk and identify ideal entry points. Real-world examples with DXY and USD/CAD demonstrate how these principles are applied to predict price movements, making this video a valuable resource for traders looking to enhance their trading strategies.

Takeaways

• 😀 Smart money trades on higher time frames (monthly, weekly, and daily) to set the foundation for profitable trade setups.
• 😀 It's essential to identify key levels relative to premium and discount to align with institutional order flow for higher probability trades.
• 😀 To spot when smart money is active, look for the SMT (Smart Money Tool), which highlights cracks in correlation between two assets.
• 😀 Risk management is crucial: reduce risk by only entering long positions from discount levels and short positions from premium levels.
• 😀 After establishing the higher time frame trend, switch to lower time frames for more precise entries using key levels and stop hunts.
• 😀 The opening price, key levels, and SMT (Smart Money Tool) work together to form a high-probability trade setup.
• 😀 A fair value gap on higher time frames indicates potential areas for price reversal or continuation, as seen in the DXY monthly chart example.
• 😀 Order blocks in discount areas and a bullish market structure provide higher probability for a profitable long trade.
• 😀 The concept of order pairing helps align sell and buy stops with key levels, improving the probability of successful trade entries.
• 😀 By using the 'Power of Three' (opening price, key level, stop hunt with SMT), traders can identify the optimal moments for market reversal or continuation.
• 😀 Real-time examples from the private Discord group show how the methodology works, with detailed analysis of DXY and USD/CAD trade setups.

Q & A

What is the key factor that makes a trade setup worth taking?

The key factor that makes a trade setup worth taking is establishing the higher time frame context, including key levels and alignment with institutional order flow. Focusing on higher time frames like monthly, weekly, and daily charts is crucial to determine the broader market direction.

What are the three main points to focus on when lowering risk in a trade?

The three main points to focus on when lowering risk in a trade are: 1) only taking long trades from discount levels, 2) only taking short trades from premium levels, and 3) using a combination of key levels, SMT (Smart Money Technique), and the change in state of delivery for better entries.

How does one determine if smart money is active in the market?

Smart money activity can be identified by looking for an SMT, or a crack in correlation, between two assets. This indicates that one asset moves differently compared to another, signaling potential smart money manipulation.

What is the importance of premium and discount levels in trade setups?

Premium and discount levels are critical because they help determine the price zones where institutional traders are likely to be active. A discount level is below the 50% mark of a range, while a premium level is above the 50% mark, guiding traders on where to position themselves for higher probability trades.

What role do SMT and order pairing play in high-probability trades?

SMT (Smart Money Technique) identifies market manipulation and inefficiencies, while order pairing involves aligning buy and sell stops within key levels to create a liquidity pool that enhances the probability of a successful trade.

What is the power of three and how is it applied in trade setups?

The power of three refers to three key components in a trade setup: 1) hitting a key level, 2) a stop hunt with SMT, and 3) a change in the state of delivery. These elements together increase the likelihood of a successful trade by indicating institutional activity and market manipulation.

How do you identify a high-probability trade on a lower time frame?

On a lower time frame, a high-probability trade is identified by looking for inducements or manipulation around a key level, where price moves into a discount or premium zone, followed by a stop hunt and an SMT, and then a shift in market structure indicating a potential reversal or continuation.

Why is the opening price important in the trade setup process?

The opening price is important because it acts as a reference point for manipulating the market. It is used to identify key levels for inducement, trigger stop hunts, and then drive price toward a higher probability target, creating a more favorable risk-to-reward ratio.

How is a market structure shift used in trade analysis?

A market structure shift occurs when price breaks a significant level and changes direction, indicating a shift in institutional activity. This can signal a change in market sentiment, which is a strong indicator for executing a trade setup with high probability.

What is the significance of liquidity pools in high-probability trades?

Liquidity pools, often found below relative lows (sell stops) or above relative highs (buy stops), represent areas where market makers can trigger orders to push the price in a desired direction. Pairing these liquidity pools with key levels increases the probability of a successful trade by ensuring the presence of significant order flow.