Lecture Notes on Trading Indicators and Order Flow

Introduction

• Focus on becoming profitable by understanding key indicators by 2025.
• Discussing the 'Power of Three' indicator, specifically the daily and 4-hour indicators.
• Importance of understanding that indicators alone don't guarantee profitability.

Key Concepts

Power of Three Indicator

• Used with New York midnight opening price.
• Influencers use it for trading insights.

Fair Value Gap (FVG)

• Example: New York session market open at 2:30 UK time / 9:30 Eastern.
• Looking for entries when price returns to the Zone.
• Use order flow for trade entry.

Trading Strategy

• Identify levels with a stop loss below the level low.
• First target for trades should ideally be '2s and 3s'.
• Recognize regions for order flow analysis: three key regions to focus on.

Order Flow Analysis

Footprint Charts

• Analyze charts on NQ (Nasdaq futures) for detailed understanding.
• Focus on bullish fair value gaps.
• Recognize aggressive sellers not being rewarded.
• Delta analysis: Ask minus Bid.
  • Red Delta indicates more aggressive sellers.

Analyzing Aggressive Sellers

• Detected by red candles with aggressive buyers present.
• Red candles can indicate potential reversal zones due to aggressive buyer presence.
• Delta shifts from aggressive sellers to buyers indicate a strong FVG.

Trading Strategies

Entries and Stop Losses

• Long positions after aggressive sellers fail to hold levels.
• Stops below entry areas, target highs for better risk-reward ratios.

Retest Entries

• Utilize retest opportunities on ES and NQ.
• Monitor for Delta shifts to confirm entry signals.
• Understand absorption: sellers being absorbed by passive buyers.

Key Takeaways

• Importance of footprint charts for understanding market internals.
• Recognizing aggressive seller failures in bullish FVGs.
• Passive buyers' role in supporting price action.
• Detailed understanding of candlestick patterns vs. footprint charts for order flow.

Conclusion

• Essential to understand the presence of passive buyers in FVGs.
• Recognize more aggressive sellers than buyers as a sign of potential upward movement.
• Order flow understanding is pivotal for profitable trading.