FULL GUIDE (Trading Strategy: Combo Algorithm)

Summary

This comprehensive guide introduces the Combo Algorithm trading strategy, breaking it down into five key steps: understanding variables and timeframes, logical elements, the combo process, and identifying trouble areas. It explains the use of volume tools and functions like Order Block and Fractal Point, and demonstrates how to combine these elements for effective trading setups on real market charts.

Takeaways

• 📈 The video presents a trading strategy called the 'Combo Algorithm', which is broken down into five key steps for clarity and ease of understanding.
• 🔍 Step 1 focuses on 'Variables, Functions, and Timeframes', emphasizing the importance of four key variables in market analysis and position opening: Order Block, Rejection Block, Fair Value Gap, and Fractal High/Low.
• 🛠️ The script explains that these variables can perform different functions such as Volume Confirmation, Inducement, Trigger, and serving as Entry points or Trouble Areas in trading.
• ⏱️ Timeframes are crucial in the strategy, with larger timeframes providing stronger variables, and a hierarchical approach to analyzing the market from broader to narrower timeframes.
• 📊 Logical elements are introduced, which are combinations of variables that, when present, indicate market conditions conducive to trading according to the Combo Algorithm.
• 🔗 The video details six logical elements divided into three groups based on their market function, which are essential for confirming volume, inducing market movement, and executing trades.
• 🔑 The 'From zone to zone' rule is highlighted as a fundamental principle of the strategy, derived from the Smart Money Concept, guiding traders to understand the cause and effect of price movements.
• 🎯 'Trouble Area' and 'First Trouble Area' are defined as important concepts for identifying potential targets and entry points in the market based on the established logical elements.
• 🤝 The script simplifies the application of the strategy by dividing it into High Time Frame (HTF) and Low Time Frame (LTF) components, streamlining the process of identifying trading opportunities.
• 📚 Eight specific combos for entering a position are outlined, providing a structured approach to applying the logical elements in practical trading scenarios.
• 📉 Two common combos are analyzed in detail with real chart examples, demonstrating how to identify and act on trading opportunities using the Combo Algorithm strategy.

Q & A

What is the Combo Algorithm trading strategy discussed in the video?

The Combo Algorithm is a comprehensive trading strategy that involves the use of specific variables, logical elements, and timeframes to analyze market conditions and identify potential trading opportunities.

What are the four main variables used in the Combo Algorithm strategy?

The four main variables are Order Block, Rejection Block, Fair Value Gap, and Fractal Low or High. These are often referred to as Volume Tools or Inefficiencies and are used for market analysis and opening positions.

What is the role of the Order Block in the Combo Algorithm?

The Order Block is a price action element that has performed a liquidity raid or rebalanced a Fair Value Gap, breaking through resistance or support levels and closing with the body of the candle above or below, indicating a bullish or bearish sentiment.

Can you explain the Rejection Block in the context of the Combo Algorithm?

The Rejection Block is formed by two candles where the wicks have performed a liquidity raid or rebalanced the Fair Value Gap, forming a zone that can be either bullish or bearish depending on the candle formation.

How is the Fair Value Gap different from other volume tools in the Combo Algorithm?

The Fair Value Gap is a price action element formed by three candles where the maximum of the first candle does not cover the minimum of the third candle for a bullish scenario, and vice versa for a bearish scenario, indicating a significant price movement without overlap.

What functions can the variables in the Combo Algorithm perform?

Variables can perform Volume Confirmation, Inducement, Trigger, Execution or Entry into a position, and act as a Trouble Area. Each function is associated with specific variables, such as Order Block, Rejection Block, Fair Value Gap, and Fractal Point.

What are the timeframes used in the Combo Algorithm for intraday trading?

The timeframes used for intraday trading in the Combo Algorithm include 1 Week, 1 Day, 4 Hours, 1 Hour, 15 Minutes, 5 Minutes, and very rarely, 2 Minutes. These timeframes are arranged in a hierarchical order of importance.

How are logical elements in the Combo Algorithm categorized and what are their functions?

Logical elements are categorized into three groups based on their market function: Volume Confirmation, Liquidity Injection, and Execution. Each group contains specific logical elements that help in confirming market volume, inducing market movements, and executing trades.

What is the significance of the 'From zone to zone' rule in the Combo Algorithm?

The 'From zone to zone' rule is crucial as it is based on the Smart Money Concept, indicating that price moves from one zone of interest to another due to liquidity or inefficiency. This rule helps in identifying the Point of Interest and the Target in the market.

Can you provide an example of how the Combo Algorithm is applied in real market analysis?

An example would involve identifying a Volume Confirmation on a higher timeframe, such as a 1-day chart, and then looking for a corresponding confirmation on a lower timeframe, such as a 4-hour chart. Once the high-timeframe conditions are met, the trader would then look for a Trigger and Entry point on an even lower timeframe, such as a 15-minute chart, to execute the trade.

What is the importance of the Trouble Area and First Trouble Area in the Combo Algorithm?

The Trouble Area and First Trouble Area are important for determining the target and potential obstacles for the trade. The Trouble Area is on the same timeframe as the Point of Interest, while the First Trouble Area is associated with the Trigger, helping to identify potential resistance or support levels that could affect the trade.