Boot Camp Day 14: Fair Value Gaps Pt. 1

Summary

In this Miami-based boot camp video, the speaker discusses fair value gaps, liquidity voids, and market imbalances. They explain how these concepts help traders understand price movements and execute trades with confidence, rather than relying on support and resistance levels. The video also emphasizes the importance of discipline and balance in trading and life.

Takeaways

• 📝 The speaker is recording a video on fair value gaps, liquidity voids, and market imbalances, with the intent to break down complex concepts into simpler parts for better understanding.
• 🔍 Fair value gaps, liquidity voids, and imbalances are essentially the same concept, which the speaker prefers to call 'liquidity voids', representing areas in the market where there are no opposing orders.
• 📈 The speaker emphasizes the importance of understanding these concepts to identify areas of the market where price moves are likely to occur without resistance.
• 🤔 The speaker expresses a preference for trading based on market confluence and actual order fills rather than relying on support and resistance levels alone.
• 📉 The concept of a liquidity void is used to explain why prices can move sharply in one direction without hesitation due to the absence of opposing orders in that price range.
• 📊 The speaker plans to discuss how to spot these liquidity voids in a future video, highlighting their importance in trading strategy.
• 💡 Fair value gaps are particularly useful for understanding retracements in the market, helping traders to identify potential entry points.
• 🛠 The speaker suggests that by combining various trading concepts like liquidity sweeps, breaker structures, and fair value gaps, traders can create a robust and versatile trading strategy.
• 🌐 The speaker believes that these trading concepts can be applied universally across different financial markets and time frames.
• 🚀 The speaker encourages viewers to simplify their trading approach by focusing on market execution and order fills rather than relying on subjective chart patterns.
• 💪 The video concludes with a motivational message, urging viewers to balance work and fun, and to seek growth through facing challenges and discomfort.

Q & A

What is the main topic of the video?

The main topic of the video is discussing fair value gaps, liquidity voids, and imbalances in the market.

What does the speaker plan to do with the concept of fair value gaps?

The speaker plans to split the concept into three separate videos to help the audience understand it better and use it for trading decisions.

Why does the speaker prefer using fair value gaps over support and resistance trading?

The speaker prefers fair value gaps because they are based on actual market confluence, orders being filled, and seeing market movements, rather than relying on support and resistance levels which they find less reliable.

What is a liquidity void according to the speaker?

A liquidity void is a price range where there are no contradicting orders, leading to a lack of liquidity and causing significant price movements without resistance.

How does the speaker describe the relationship between fair value gaps and market trends?

The speaker describes fair value gaps as areas where prices are likely to retrace to, as they represent a lack of liquidity that market makers can exploit to move prices in a desired direction.

What is the speaker's view on the importance of understanding fair value gaps for trading?

The speaker believes that understanding fair value gaps is crucial for making confident trading decisions, as it provides insights into where the market might move based on actual market conditions rather than just technical analysis.

How does the speaker plan to use fair value gaps in trading strategies?

The speaker plans to use fair value gaps for retracements and secondary entries, identifying areas where prices might draw back to and using them in conjunction with other market structures like breakers.

What is the speaker's advice on balancing work and leisure?

The speaker advises finding a balance between doing something productive and having fun, emphasizing the importance of not just working all the time and taking time off to avoid burnout.

What is the speaker's approach to trading in different financial markets?

The speaker's approach is based on universal market principles that can be applied to any financial market, focusing on market execution and orders being filled.

What homework does the speaker assign at the end of the video?

The speaker assigns homework to do something productive after watching the video, such as taking notes, exercising, or doing something that challenges comfort zones.

Outlines

00:00

📈 Understanding Fair Value Gaps and Liquidity Voids

The speaker introduces the concept of fair value gaps, liquidity voids, and imbalances in the market. These terms essentially refer to a lack of orders in a specific price range, leading to significant price movements without resistance. The speaker emphasizes the importance of understanding these gaps for trading decisions, particularly for retracements rather than entries. They explain that these gaps can indicate where the market might naturally draw back to, and how traders can use this information to make more confident trades. The speaker also mentions that they will cover how to spot these gaps in future videos.

05:01

💡 The Importance of Market Confluence in Trading

In this paragraph, the speaker discusses the value of using market confluence and actual order execution as a basis for trades, rather than relying on support and resistance levels. They argue that this approach provides a safer and more logical method for entering trades. The speaker also outlines a strategy that involves identifying liquidity sweeps, trend formations, and fair value gaps, and then using these insights to execute trades with high confidence. They encourage viewers to apply these concepts across different time frames and financial markets, highlighting the versatility of this trading approach.

10:02

🏖️ Balancing Work and Fun: A Call to Action

The speaker concludes the video with a motivational message, urging viewers to balance their work and leisure activities. They emphasize the importance of doing something productive after watching the video, such as exercising or engaging in other challenging activities. The speaker shares their personal experience of making and uploading the video while on vacation, demonstrating the value of pushing oneself out of comfort zones. They also touch on the need for discipline in trading and hint at future discussions on developing trading discipline.

Keywords

💡Fair Value Gaps

Fair value gaps refer to price ranges in the market where there are no contradicting orders, creating a void in liquidity. In the video, the speaker discusses how these gaps can be identified as areas where the market has moved significantly without encountering resistance, indicating a lack of orders to counter the price movement. This concept is integral to understanding market imbalances and is used to predict potential retracement levels during a trend.

💡Liquidity Voids

Liquidity voids are similar to fair value gaps, representing price ranges devoid of resting orders, which can lead to significant price movements in either direction. The speaker uses the term interchangeably with 'fair value gaps' and emphasizes their importance in identifying areas of the market that are likely to experience further price action as market makers look to execute orders in these voids.

💡Imbalances

Imbalances in the market occur when there is a disparity between buy and sell orders, often resulting in rapid price movements. The video script mentions imbalances as a key concept, illustrating how they can be identified through large price moves without hesitation, which is indicative of a lack of opposing orders in a given price range.

💡Market Confluence

Market confluence refers to the alignment of multiple technical or fundamental factors that suggest a particular market direction. The speaker in the video prefers trading based on market confluence, which includes fair value gaps and other indicators, rather than relying solely on support and resistance levels drawn on a chart.

💡Support and Resistance

Support and resistance are concepts used in technical analysis to identify price levels at which the market is likely to find a stopping point, either from falling (support) or rising (resistance). The speaker mentions these terms to contrast their preferred method of trading based on market confluence and actual order flow with the more traditional approach of drawing lines on a chart to predict future price movements.

💡Liquidity Sweeps

Liquidity sweeps are large market orders that quickly consume the available liquidity at a certain price level, causing a rapid price movement. The video script discusses how these sweeps can be used to understand market direction and to identify potential trading opportunities when the market returns to previously identified void areas.

💡Breaker Structure

A breaker structure in the context of the video refers to a technical pattern that signals a potential breakout or breakdown in the market. The speaker suggests using these structures in conjunction with fair value gaps to identify high-probability trading setups, particularly when the market has retraced to a previously identified void area.

💡Retracements

Retracements are temporary price reversals within a larger trend, often seen as opportunities to enter a trade in the direction of the trend. The video explains how fair value gaps can be used to predict where a retracement might end, providing potential entry points for trades that align with the prevailing market trend.

💡Execution

In the context of trading, execution refers to the process of carrying out a trade based on a specific strategy or signal. The video emphasizes the importance of market execution, particularly the filling of orders, as a basis for understanding price movements and identifying trading opportunities.

💡Discipline

Discipline is a key theme in the video, where the speaker discusses the importance of maintaining discipline in trading to ensure consistent application of strategies and to avoid emotional decision-making. The speaker also touches on the broader concept of personal discipline, encouraging viewers to engage in productive activities outside of trading to foster growth and balance.

💡Productivity

Productivity is highlighted in the video as a means to achieve personal growth and balance. The speaker encourages viewers to engage in productive activities, such as taking notes, exercising, or challenging oneself in uncomfortable situations, to foster self-improvement and maintain a healthy work-life balance.

Highlights

Introduction to fair value gaps, liquidity voids, and imbalances in the market.

Fair value gaps are areas where there are no contradicting orders, causing price movements without resistance.

Liquidity voids are price ranges with no resting buy or sell orders, leading to significant price movements.

Fair value gaps are used for retracements, not necessarily for trade entries.

Market makers can execute orders in areas of liquidity voids, moving the market in their desired direction.

Fair value gaps help traders understand where price wants to draw to during retracements.

Traders can use fair value gaps for secondary entries after observing a breaker structure on a lower timeframe.

The importance of identifying a lack of liquidity in an uptrend to predict future price movements.

Using fair value gaps in conjunction with trend analysis and market structures for more accurate trading decisions.

The concept of liquidity sweeps and how they can be used to understand market movements.

Executing trades based on market confluence and order execution rather than just support and resistance levels.

The simplicity of trading strategies based on understanding market liquidity and order flow.

Applying these concepts to any financial market and timeframe, making the trading approach versatile.

The importance of balance between work and fun, and the role of discipline in trading success.

Encouragement to do something productive after watching the video, emphasizing personal growth.

The upcoming discussion on discipline and its impact on trading performance.

The speaker's personal example of maintaining productivity even while on vacation.

Transcripts

all right this is attempt number two to

make this video

um we are currently in Miami right now

and I recorded this

I recorded this

um out on the balcony but my uh computer

overheated so this is going to be take

two and probably a sloppier version of

it but uh what's good Jets uh welcome to

[ __ ] boot camp day I don't even know

16 or 15 maybe four I have no clue what

day it is

um but yeah we're in this [ __ ] I think

we tapped it what like uh we've stopped

two weeks now right

um but anyways today we're talking about

fair value gaps

um liquidity voids imbalances whatever

you guys want to call them in the market

and most of the time we would do this on

like a little chart but as you guys know

how we've been setting like this whole

[ __ ] up uh for you know this boot camp

I'm pretty much going to split up all

those little building blocks into three

separate videos

um just so you guys have like a chance

to take everything in and like actually

properly understand the [ __ ]

um so today it's literally just gonna be

one-on-one me explaining what fair value

gaps are why we want to use them how we

can understand them in the market to you

know actually be confident in taking a

trade based off of it because for me I

would much rather you know have a uh

take a trade based off of actual like

Market Confluence and orders being

filled and actually seeing that versus

oh it bounced off a floor or like it hit

a ceiling so it's going to go down like

are we being dead ass about that off of

a drawing that you put on chart you know

like I have no hate towards supporting

resistance Traders it just doesn't make

sense to me why you would you know

essentially bet on something

um like that but I mean hey some people

make money doing it this just makes more

sense to me it makes me feel safer about

putting money into the market so with

that being said let's get into fair

value gaps part [ __ ] one boys

um so what is a fair value Gap what's a

liquidity void what's an imbalance it's

literally all of those are pretty much

the same thing so I like to call it just

a liquidity void so similar to how we

talked about liquidity in those past

three trading videos that's where you

know orders are residing that's where

Market wants to Target to take out those

orders to execute those orders at this

certain price point this is quite

literally the opposite this is a void a

price range where there are no no

contradicting orders so if we see a big

move up right why are we seeing that

move up in the first place because

there's no sell orders through that

price range that's the that's the

liquidity void that's the imbalance

that's the fair value Gap same thing to

the downside right if we see a big drop

to the downside with no like hesitation

and it just dumps right that's a

liquidity void that's the imbalance and

why is why is it a liquidity void

because there's literally no no resting

buy orders throughout that massive drop

down if there were resting buy orders

price would go down oh pull up a little

bit go down a little bit more yes maybe

it's bearish and it still closes bearish

but there's still resting buy orders so

this is what

um it helps us do we can actually be

able to spot where there is no liquidity

on the market and if we think about this

logically right when we're within a

trend and price obviously moves with

higher highs and higher lows where are

those higher lows going to draw to where

are those retracements going to draw to

you know probably into those areas that

where liquidity was not before right and

then what's going to happen once we get

into those areas market makers can

execute their orders because they know

right there is a emptiness of liquidity

they know that right when they Place

their orders within there Market's going

to move in their Direction so how is

this beneficial to us how can we you

know we'll talk about how we can spot it

in two days on the next trading video

but why is this beneficial to us one it

helps us accurately kind of understand

okay where does price want to draw to

when it's retracing right fair value

gaps are used for retracements I don't

use fair value gas for

like entries necessarily I use liquidity

sweeps to understand where Market's

going and then I use fair value gaps to

kind of like

figure out where price maybe wants to

draw to or for like a secondary entry

and we'll go into all of that stuff once

we get deeper into strategy but

um this is super useful because we see

price in an uptrend drawing back down

and we can find a liquidity void and

then we see a reaction off of that or

like a breaker structure on a lower time

frame boom like why wouldn't you execute

that because you know there's a lack of

orders lying within there you know the

trend is going up and if you see a

breaker structure on a smaller time

frame after a fair value gap or an

imbalance or liquidity void getting

filled on a larger time frame why

wouldn't you enter there you know that's

literally you know you see okay prices

in this range where there's a lack of

liquidity for opposing orders right if

we're in an uptrend there's no sell

orders laying within here and then we

see a breaker Market structure on a

lower time frame why wouldn't you

execute right doesn't that make so much

sense for you to execute on a trade like

that versus oh price hit

my

[ __ ] ceiling are we being dead ass

right now like let's use our let's use

our brains okay

um so I mean with that being said that's

that that literally is what what fair

value gaps are it's literally just a

lack of orders within the market and

that's what causes the imbalance to be

made the

um the big ass candle right you guys are

and we'll talk about how to spot them in

two days but when you guys like see them

within the market most the time it's a

big candle down why because there's

literally no orders stopping it from

dropping that far down

um same thing with the upside there's no

sell orders within there that's stopping

it from pushing so high up

um and then when price comes back into

that range

right it gives the market makers to you

know the opportunity to keep pushing

price in the direction that they want to

um and again once we start getting all

these pieces it's like you know I'm sure

even after this video you'll you guys

were so we'll start looking into that

even more by just seeing okay we got

liquidity sweep breaker structure we see

the trend starting to form and then okay

now I have a fair value Gap oh I notice

it gets filled smaller time frame break

of structure boom we're in okay and it's

it's literally as simple as that like

that people really make trading a lot

harder than it has to be and you guys

can really [ __ ] simplify it if you

just say okay this is exactly how price

moves you know what do we use for Value

gaps for retracements cool when we see a

retracement in the market figure out

where the imbalance is scale down to a

lower time frame find a break of

structure continuation boom like come on

like that [ __ ] is so easy

um and then you know liquidity sweeps

okay we see liquidity taken out of the

market okay if we see a breakup

structure perfect execute right all of

these building blocks we I pretty much

have the set up so it's like one size

fits all right you can trade this on any

time frame you can trade this

with any [ __ ] pair right you can

literally apply these Concepts to every

Financial Market

um because this is how price literally

moves this is how the market moves and

that's why I love the way that I trade

because you can do this on any time

frame if you can't sit on your computer

for like two hours a day

um you know like scalping or like you

know actually monitoring it you can do

swing trades where it takes several days

to hit

um and as we start adding all the

building blocks you'll start to see like

okay I can use this I can use this and I

don't really understand this so I don't

need it right that's the nice thing

about this all of these are pretty much

execution like pieces and it's just like

which ones you want to use and the more

that you know the better because then

it's like holy [ __ ] now I have like five

different confirmations that I can go

off of that are all very high Confluence

and that are all based off of actually

like Market execution and orders being

filled who wouldn't want to place a bet

on that that's why I love trading

because I can be like okay yeah I'm

actually going to bet on this because I

actually believe in this versus you know

oh like I think it's going to go down

because it you know like hit a ceiling

just [ __ ] don't make no sense

um so with that being said

that's where value gaps explained we'll

talk about how to spot them tomorrow no

homework today

um actually the only homework you have

to do is like do something that's

actually productive

um don't sit around

um I mean if you're watching this video

odds are you're doing something

productive right now but

um do something else after this video so

you watch this video go take notes go on

a run go to the gym do something that's

hard do something that's uncomfortable

trust that's where you grow all right

when you put yourself in uncomfortable

situations that's where the growth

begins and amen I'm still trying to you

know get uncomfortable even while on

vacation we're in Miami right now I very

well could have just said like yo the

Wi-Fi's ass

um I don't want to upload this video but

here I am on vacation making a [ __ ]

video and uploading it on ass Wi-Fi so

um and and then after this it's like

cool now I feel accomplished I feel okay

with myself like I feel proud of myself

I've got something good done for today

and then I can go have my fun like

there's there's a there's a perfect

balance of having fun and actual work

like and to be able to understand that

like if you're working 24 7 that's why I

always say like take one day off if

you're working 24 7 bro you're going to

get burnt out you need a good balance

but it's also like you can't just say oh

yeah I want my balance and then just

like not actually work right there's

there's you know you you know the

difference

um but yeah that being said go do

something fun uh do something productive

and then go do something fun

um I'll see you guys tomorrow when we

talk more about discipline and how we

can you know actually start [ __ ]

whipping your ass into shape because we

know how [ __ ] terrible you guys are

at staying disciplined Within These

markets so hopefully we can start

talking about some tips some tricks some

actual exercises

um for you guys to start practicing to

you know actually get you in mind so

that being said I'll see you boys

tomorrow peace out