Overview
This lecture explains a simplified, repeatable day trading strategy focused on predicting price action using key levels, with a step-by-step process for trade entry and exit.
The Problem with Overcomplicated Trading
- Many traders fail by using too many indicators and constantly switching strategies.
- Chasing money directly rather than understanding price action leads to losses and frustration.
The Core Principle of Successful Trading
- The key goal is to build the skill of predicting price movement with high probability.
- Making money is a side effect of mastering this skill.
The Simple Four-Step Trading Strategy
- Step 1: Find Daily Bias by identifying high time frame key levels (1H, 4H, session highs/lows).
- Step 2: Wait for Key Level Reaction when price hits a marked key level.
- Step 3: Look for Low Time Frame Reversal by scaling down (1m or 5m) and finding confluences (inverse fair value gap, break of structure, 79% Fibonacci extension closure).
- Step 4: Confirm Trend Continuation using continuation confluences (fair value gap, equilibrium, breaker block, order block) and enter the trade.
- Exit at opposite key levels or draws on liquidity.
Trade Examples and Application
- Mark highest and lowest points (key levels) on multiple time frames before market opens.
- Wait for price to react at these levels, then use low time frame confirmation before entering.
- Targets for exits are set at the next major key level in the direction of the trade.
- The same approach works across different markets (e.g., NASDAQ, S&P 500) and in both trade directions.
Keys to Long-Term Profitability
- The strategy requires patience, practice, and sticking to the process.
- Jumping between strategies leads to consistent failure.
- Consistent improvement and sticking to one method increases the chance of success.
Key Terms & Definitions
- Daily Bias — The expected direction of price for the trading day based on high time frame key levels.
- Key Level — Significant price points (highs/lows on various time frames or sessions) used to predict price movement.
- Draw on Liquidity — Price areas where large numbers of orders are likely to be filled, leading to potential reversals or continuations.
- Confluence — A combination of technical signals (e.g., structure break, fair value gap, Fibonacci level) used for trade confirmation.
- Break of Structure — A visible change in trend on a lower time frame.
- Fair Value Gap — A price gap indicating inefficiency, used as a potential reversal or continuation signal.
- Equilibrium — A price level where buying and selling pressure are balanced, used for entries/exits.
- Order Block/Breaker Block — Zones where institutions likely placed large orders, acting as support/resistance.
Action Items / Next Steps
- Practice marking out high time frame key levels on your trading charts.
- Review the free course linked in the description for detailed explanations of confluences.
- Apply the four-step process in a demo account before risking real capital.
- Focus on building the skill of predicting price action, not chasing quick profits.