The #1 Pattern That Kills Your Trades

Summary

In this video, the speaker explains the concept of 'trapped order flow' in trading, detailing a step-by-step method for identifying and trading based on these price action signals. Key concepts include performing top-down analysis, recognizing key resistance levels, spotting where the market disrespects these levels, and identifying entry points when trapped liquidity is released. The video also highlights the importance of using specific indicators to enhance trading strategies and save time. The speaker offers a trial of their tools and encourages viewers to engage with the content and join their community for further insights.

Takeaways

• 😀 **Trapped Order Flow**: The concept of trapped order flow refers to price action where market participants are 'trapped' in positions that may lead to reversals once cleared.
• 😀 **Context is Key**: Before entering trades, it's crucial to define the market context and bias. The speaker shifts from bullish to bearish based on specific price action signals.
• 😀 **Top-Down Analysis**: Always perform a top-down analysis starting with higher timeframes (like daily or 4-hour) to identify the general market trend and key levels.
• 😀 **PDA (Price Delivery Area)**: Look for opposing Price Delivery Areas on higher timeframes, which serve as resistance and can trigger trapped order flow if violated.
• 😀 **Disrespecting Key Levels**: Pay attention when the market disrespects key resistance or support levels. This is when the order flow is 'trapped' and potential reversals or momentum moves happen.
• 😀 **Liquidity and Momentum**: Once the trapped order flow is cleared, the market typically moves toward liquidity areas with low resistance. This is when strong momentum trades can be executed.
• 😀 **The Importance of Gap Analysis**: Identifying gaps (bullish or bearish) on higher timeframes helps in gauging the market’s likely direction, and whether the bias should be flipped.
• 😀 **Step-by-Step Checklist**: The trader follows a structured checklist: mark out order flow legs, identify opposing PDAs, wait for price to violate these zones, and then trade with momentum.
• 😀 **Focus on Mental and Time Capital**: The speaker emphasizes how using indicators to track order flow and market context helps save mental capital and time in the trading process.
• 😀 **Tool Promotion**: The speaker promotes their own trading indicators and tools, offering a trial for $1 to help traders benefit from these resources in their daily trading.
• 😀 **Engagement Call-to-Action**: The video encourages viewers to interact by liking, commenting, and subscribing to support future content, as well as joining a Discord group for more personalized guidance.

Q & A

What is 'trapped order flow' in trading?

Trapped order flow refers to a situation where the market is stuck between two opposing price delivery areas (PDAs), creating a state where price movement is constrained. Traders can identify this as a trap, indicating a potential shift or breakout once the market escapes this zone.

How do you identify trapped order flow using the script's approach?

To identify trapped order flow, the script suggests performing top-down analysis to mark key areas of order flow. Then, look for price to disrespect a higher timeframe PDA, signaling a potential shift in momentum and price escaping the trapped zone.

What is the importance of PDAs (Price Delivery Areas) in this trading strategy?

PDAs are key levels that define areas of market equilibrium where price is likely to stay or reverse. They help traders determine where trapped order flow can occur, as price tends to react when it disrespects these levels, offering opportunities for entry.

What does it mean when the script mentions 'disrespecting a PDA'?

Disrespecting a PDA means that price has moved beyond or failed to maintain the boundaries of a key price delivery area. This behavior often signals a potential reversal or continuation, which could trigger momentum and allow traders to make profitable trades.

How do you determine when to flip your trading bias from bullish to bearish?

The bias flips when the market fails to maintain value in a bullish trend, indicated by price closing below key bullish support zones (like a daily bullish value gap), along with a rejection of key lows. This indicates a higher probability of price moving lower.

What is a 'daily bullish value gap' and how does it impact trading?

A daily bullish value gap is a price gap that forms on the daily chart, typically between the low of a bullish candle and the previous high or low. This gap represents a strong buying area. If price closes below this gap, it suggests a failure in the bullish trend, signaling potential for lower prices.

What is the purpose of the 'shield warning' mentioned in the script?

The 'shield warning' is a visual alert used to warn traders when order flow is trapped. It serves as a cautionary sign that the market may be in a potentially dangerous position, and traders should be careful before entering new trades.

What are the six steps in the trapped order flow checklist?

The six steps are: 1) Conduct top-down analysis and mark order flow legs, 2) Identify the first opposing higher timeframe PDA, 3) Treat that opposing PDA as resistance, 4) Wait for price to disrespect the trapped zone, 5) Once price escapes, look for low resistance to the next liquidity area, 6) Look for entry as price moves with momentum.

What is the advantage of using the 'trapped order flow' indicator in trading?

The 'trapped order flow' indicator helps traders visually identify when price is trapped between key levels, making it easier to spot potential breakouts or reversals. It saves time and mental capital by automating parts of the analysis, allowing for more efficient trading decisions.

Why does the speaker encourage viewers to join the Discord community?

The speaker encourages joining the Discord community for further learning and engagement, offering a platform where traders can ask questions, share insights, and receive support. It's also an opportunity to get real-time feedback and clarification on the strategies and tools discussed.