Standard Deviation Projections & MMXM - (Simple Strategy)

Summary

In this video, the creator explains how to use standard deviations within the context of Market Maker models. The video covers topics such as identifying consolidations, projections for price expansion, and reversals using tools like breakers and order blocks. It highlights how traders can utilize these methods to predict market movements, including areas to target for profit-taking. The video provides both bullish and bearish examples of these techniques, and the creator also offers practical templates and settings for applying standard deviations in real-world trading scenarios.

Takeaways

• 😀 Standard deviations in market maker models help predict price expansion and reversals.
• 😀 The ideal reversal zones for standard deviations range from -3.5 to -4.5, particularly when matched with high time frame liquidity pools.
• 😀 The consolidation zone in the market maker model can act as a target for reversals once price reaches the key deviation levels.
• 😀 A breaker, formed from a price leg, can be used for projecting price movement, with the ideal target being between -2.5 and -2 for profit-taking.
• 😀 The use of order blocks is a key part of projection methods, with changes in the order block’s state of delivery indicating ideal trade entries.
• 😀 A bullish market is identified when price fails to trade to 50% of the previous price leg and moves higher, forming an order block in the process.
• 😀 Market maker models use both consolidation and breaker strategies to project price movement and identify target areas for reversals.
• 😀 For bearish trades, standard deviation projections can help identify when price has reached key levels such as -2 for profit-taking.
• 😀 Reversals occur when price reaches beyond maximum expansions (such as -4), particularly in relation to liquidity pools and fair value gaps.
• 😀 Price action analysis can further validate projections made by standard deviations, as seen in real-life examples using NZD/USD and USD/CHF charts.

Q & A

What are standard deviations in the context of Market Maker models?

Standard deviations in Market Maker models help in identifying key price levels and potential reversal points. They allow traders to project where price might expand and reverse based on the consolidation areas and liquidity pools in the market.

What is the significance of the max expansion values of -4 and -4.5 in standard deviation settings?

The max expansion values of -4 and -4.5 indicate areas where price is expected to reverse or face a high probability of reversal. These values are critical for understanding price behavior and can be used to project potential price action based on consolidation and liquidity zones.

How do you use a consolidation to project price movement in Market Maker models?

To project price movement using consolidation, traders measure from the low to the high of the consolidation range and apply standard deviation projections. The price is expected to expand and may reverse at key levels like -4, often aligning with higher time frame liquidity pools.

What role does a breaker play in understanding standard deviations?

A breaker is a critical price action tool in understanding standard deviations. It forms after a price leg, and projections from the breaker (usually between -3.5 to -2) help identify ideal target areas where price is likely to reverse or reach a target before correcting.

What is the importance of liquidity pools in conjunction with standard deviation projections?

Liquidity pools provide a key reference for projecting price movement. Standard deviation projections, especially when they coincide with liquidity pools, enhance the probability of reversals. For example, after trading into a liquidity pool, price is more likely to reverse and continue in the opposite direction.

How do order blocks affect the projection of price action in Market Maker models?

Order blocks act as zones where price may reverse, and they can be used in conjunction with standard deviation projections. When an order block changes its state of delivery, it forms a key level that can be projected for possible price reversal or continuation, often aligning with standard deviation targets like -2.5 or -2.

Why is the range of -2.5 to -2 significant when using order blocks for price action projections?

The range of -2.5 to -2 is considered an ideal area for profit-taking when utilizing order blocks for price projections. These levels are seen as areas where price may either reverse or reach a short-term premium for bearish markets and a discount for bullish markets.

Can you explain the concept of a mitigation block in the context of Market Maker models?

A mitigation block occurs when price fails to break a key high but creates a lower low, signaling a potential shift in market structure. In Market Maker models, this block can be used for projecting potential price action when combined with standard deviation and liquidity levels.

What are the ideal stop-loss and target areas when using standard deviations with breakouts?

When utilizing standard deviations with breakouts, the ideal stop-loss is placed just below the reversal low, and the target should be aligned with the standard deviation range, typically around -2.5 or -2 for targets. This ensures that the trade is within a favorable risk-to-reward ratio.

How can traders use the Market Maker model strategy in their own trading?

Traders can adapt the Market Maker model strategy by focusing on key elements like consolidation ranges, liquidity pools, breakers, and order blocks, all while applying standard deviation projections. These tools can help identify entry and exit points with higher probability and clarity in their trades.