The Market Maker Buy Model | Full Trade Breakdown $NQ

Summary

In this video, the trader provides a detailed breakdown of their trade on the NASDAQ, focusing on market maker buy models, liquidity pools, and price structure. They emphasize the importance of understanding both internal and external range liquidity, and how to use various time frames for analysis. The trader walks viewers through key technical concepts, such as fair value gaps, market structure breaks, and mitigation blocks, all while showcasing the execution of a successful trade. The video aims to help traders understand the step-by-step process behind identifying liquidity and executing precise trades in the market.

Takeaways

• 😀 The video focuses on a market maker buy model, explaining a specific trade setup and the logic behind it.
• 😀 The trade breakdown involves NASDAQ and utilizes various timeframes, such as monthly, weekly, 4-hour, 15-minute, and 1-minute charts.
• 😀 Key concepts include 'internal range liquidity' and 'external range liquidity', with price moving between these ranges in the market.
• 😀 A sponsorship for Crypto Fund Trader, a prop firm, is featured, highlighting their trading opportunities in crypto, Forex, indices, commodities, and stocks.
• 😀 Crypto Fund Trader's key features include no trade restrictions, low fees, high leverage (1:100), and a supportive 24/7 Discord community.
• 😀 The speaker provides a step-by-step breakdown, starting with analyzing the NASDAQ monthly chart, and explaining price movement expectations based on liquidity levels.
• 😀 A critical focus is on 'fair value gaps' and 'mitigation blocks', which help identify entry points and potential areas for price reversal.
• 😀 The concept of 'smart money reversal' (SMR) and 'market maker buy models' is used to identify entry points in a trade, with low-risk buy setups highlighted.
• 😀 SMT Divergence (Smart Money Technique) is utilized to identify strength between asset pairs, like NASDAQ and ES, where NASDAQ shows more strength.
• 😀 The trade setup involved a 1 to 2.25 risk-to-reward ratio, with entry points marked on lower timeframes like 1-minute and 15-minute charts.
• 😀 The speaker emphasizes a consistent top-down approach to trading, from identifying key levels on higher timeframes to executing trades on lower timeframes.

Q & A

What is the main focus of the video script?

The main focus of the video script is a breakdown of a trade executed on NASDAQ using a market maker buy model. It discusses the concept of internal and external range liquidity, the identification of key levels on multiple timeframes, and the use of smart money techniques to identify entries and exits in the market.

What is the significance of the market maker buy model mentioned in the video?

The market maker buy model is a key strategy for identifying low-risk buy entries. The model uses liquidity and price action to determine entry points, with the goal of capitalizing on price movement towards resting high liquidity targets. It helps traders frame their trades based on the market's behavior and structure.

What role does 'liquidity' play in the trade breakdown?

Liquidity plays a central role in the trade breakdown. The video explains how price moves between internal and external range liquidity pools, with the goal of targeting resting liquidity (e.g., previous highs or lows). The identification of liquidity pools helps determine the direction of trades and potential price movements.

How are the weekly chart and its key levels used in the analysis?

The weekly chart is used to identify key levels like the weekly external range high and internal range fair value gaps. These levels help the trader forecast potential price movements and define the draw in liquidity. The trader anticipates price moving from internal to external liquidity and adjusts the strategy based on this analysis.

What is the importance of time frame alignment in this strategy?

Time frame alignment is important for ensuring consistency and reinforcing the trade setup across different timeframes. The trader starts with a higher timeframe (weekly) to establish key levels and then moves down to lower timeframes (4-hour, 15-minute, 1-minute) to refine entries and manage risk more precisely.

What does 'smart money reversal' refer to in the video?

A 'smart money reversal' refers to a price action pattern where price moves against the prevailing trend, signaling a potential reversal and an opportunity for traders to enter a trade. In this context, it’s associated with price action that breaks structure and provides a low-risk entry to ride the price back toward liquidity targets.

What is the purpose of using the 'Fibonacci retracement' tool in this trade?

The Fibonacci retracement tool is used to measure price swings and identify areas of premium and discount. It helps the trader identify potential entry zones where price may reverse or consolidate, such as the 15-minute bullish fair value gap. This tool is used to refine entry points and manage risk effectively.

Why does the trader expect the low to not be run through after the bullish fair value gap was created?

The trader expects the low not to be run through because of the structure that was created with the bullish fair value gap and the previous price action. The market made a higher low on NASDAQ while ES made a lower low, indicating that NASDAQ was stronger, and the price was more likely to push higher rather than break the low.

How does the concept of 'mitigation blocks' contribute to the trade setup?

Mitigation blocks are key areas of price action where price retraces into previous areas of imbalance or order blocks. These blocks are significant for reaccumulation or redistribution of liquidity. By identifying these areas, the trader expects price to reenter and continue towards liquidity targets, providing further confirmation of trade direction.

What is the risk-to-reward ratio of the trade mentioned in the script?

The risk-to-reward ratio of the trade mentioned in the script is 1:2.25, meaning for every unit of risk, the trader is expecting to gain 2.25 units in reward. This ratio reflects a favorable setup in which the trader expects significant price movement relative to the risk involved.