Overview
This lecture explains how to combine key market concepts—liquidity sweeps, break of structure, order blocks, fair value gaps, and equilibrium—into a cohesive strategy for trading execution.
Building Blocks of Market Structure
- The five core building blocks are liquidity sweep, break of structure, order block, fair value gap, and equilibrium.
- Liquidity sweeps indicate potential for orders to get filled by taking out a high or low.
- Break of structure confirms that orders were filled and signals a shift in market direction.
- Order blocks mark the price ranges where large orders were filled, causing significant moves.
- Fair value gaps show where there was a lack of liquidity—areas of rapid price movement with little opposition.
- Equilibrium represents discounted prices between highs and lows.
Combining Concepts for Trade Entries
- Liquidity sweep followed by break of structure suggests a safe entry point as orders are filled and the market shifts.
- If the first entry provides a poor risk/reward, wait for price to return to the order block for a better entry.
- Alternatively, after liquidity sweep and break of structure, enter at a fair value gap if a retracement occurs.
- The most robust setup uses liquidity sweep + break of structure + order block or fair value gap entry + equilibrium for maximum confluence and reduced risk.
Execution Plan & Strategy
- Write down and select which entry combinations fit into your personal trading plan.
- These entry strategies form a critical part of your overall execution plan.
- Understanding why you take trades based on these building blocks is essential for consistent performance.
Key Terms & Definitions
- Liquidity Sweep — Taking out a market high or low, indicating potential order filling.
- Break of Structure — Confirmation of orders filled and a shift in the market trend.
- Order Block — A price range where significant orders were previously filled.
- Fair Value Gap — Price areas showing imbalance due to lack of opposing liquidity.
- Equilibrium — The discounted price range between highs and lows.
Action Items / Next Steps
- Write down all building blocks, their meanings, and entry combinations in your notebook.
- Choose which entry methods to implement in your execution plan.
- Review previous materials or videos on these concepts as needed to reinforce understanding.
- Be ready for "Putting the Pieces Together Part 2," which will show chart examples.