hey Traders and welcome to another episode of smart risk in this episode we will present an advanced tutorial on Smart money Concepts delving into the effective identification of flip patterns and flip zones our aim is to demonstrate how to set up high probability trades using a variety of flip entry models these powerful concepts are the Cornerstone of smart money strategies and neglecting them in your trading plan may leave you a step behind the market and potentially leave you lagging behind the ever-changing market trends by understanding and incorporating these essential techniques you'll gain the expertise to identify high probability trade setups and make well-informed trading decisions Empower yourself with this knowledge and stay ahead in the dynamic world of trading so Traders if that's something you're interested in please give this video a thumbs up to show your support and subscribe to our Channel if you are new see you after intro [Music] thank you [Music] welcome back Traders so let's get started the term flip in flip pattern signifies the market flipping from one direction to another suggesting a shift in Market sentiment it is often observed as a significant turning point or a potential opportunity for Traders to take advantage of the changing market dynamics the flip entries are one of the best ways to hop in quick setup while the market plummets or sores so what is the definition of flip pattern a flip pattern refers to a specific price pattern or configuration on a price chart that indicates a potential shift or flips in Market Direction it signifies a transition from a prevailing Trend to a potential reversal or change in sentiment a flip pattern is all about reacting to a significant Zone and then breaking it flip patterns are divided into major categories reversal and continuation patterns now let's see how we can identify a reversal flip pattern let's imagine we have a bullish Market where the price is consistently forming higher highs and higher lows in order to identify a valid flip pattern there are several key criteria to consider firstly the price should experience rejection from a higher time frame Supply Zone next it should retest the last demand Zone and be driven upward displaying a rejection however it is important that the price does not establish a new higher high and instead breaks through the previously tested demand Zone this break creates a supply Zone known as the flip Zone it is crucial to monitor the flip Zone closely as the price will likely retest it at this point it is recommended to place a limit order within the flip Zone the same principles apply to the bearish scenario it's important to emphasize a key Point without a reaction from the last demand or Supply Zone a flip pattern would not exist flip pattern shares similarities with the change of character pattern but it's crucial to understand that while every flip is a change of character not every change of character is a flip in other words the flip pattern represents a specific type of change in market dynamics where the price reverses and creates a new structure this pattern is characterized by a distinct rejection from the last demand or Supply Zone followed by a subsequent break of that zone creating a flip Zone setting up a trade using the flip pattern is indeed similar to the change of character pattern and we can apply similar trading setups for both this allows us to use both aggressive and conservative entry types to execute trades within flip zones however before delving into the specifics of each entry type let's take a moment to break down the flip pattern through a quick candle analysis the effectiveness of the flip pattern is greatly enhanced when the price exhibits an aggressive push away from demand or Supply zones swiftly breaking through the last demand Zone and leaving behind an inefficiency it is important to note that the strength of the demand can be gauged by the level of Rejection it provides and whether it has the ability to propel the price to new highs in cases where the demand proves weak and fails to generate significant momentum resulting in a break it indicates a shift in control toward the new Supply Zone as Traders we can then focus on trading the supply side of the market in these scenarios now let's see the rules and criteria for identifying valid and high quality flip patterns and zones in the market there are four essential rules that we must follow in order to identify valid flip patterns and flip zones with a high probability of success rule number one states that for a reversal flip pattern to be considered valid price must first mitigate and get reversed from a higher time frame Supply or demand Zone this rejection signifies a shift in Market sentiment and sets the stage for a potential flip this means that price should encounter and react to a significant level of Supply or demand before forming the flip pattern if price does not mitigate A supplier demand Zone and simply creates a flip pattern it cannot be regarded as a valid flip pattern rule number two a high quality flip pattern should leave a significant inefficiency behind when flipping a demand or Supply Zone this inefficiency refers to a clear and noticeable break of structure or a Swift and Powerful movement that invalidates the previous Market sentiment inefficiency refers to an imbalance between buyers and sellers in the market resulting in a disequilibrium that needs to be filled this is often observed as a gap within the candles to clarify let's consider two scenarios if a three candle sequence does not exhibit any gaps it is considered an example of efficiency on the other hand if there is a gap present within the candles it signifies an example of inefficiency rule number three states that for a valid flip pattern to occur the price must react to a supply or demand Zone and create a pullback before breaking through them if the price does not create a pullback or show any reaction then it cannot be considered a flip pattern rule number four it must be unmitigated flip zones are considered one-time use meaning we focus on the trading opportunity when price first enters a flip Zone once a flip Zone has been mitigated we do not consider it as an area of interest for future trading because once a flip Zone has been mitigated meaning that price has moved Beyond its boundaries and the inefficiency has been resolved it loses its significance as a trading area subsequent retests of the flip Zone may not yield the same trading opportunities as the initial entry now let's dive into the details of using aggressive and conservative entries when trading with the flip setup now let's explore the aggressive entry model as you can see we have identified a valid flip pattern where the price was rejected from a higher time frame Supply and failed to make a new high after testing the most recent demand Zone it broke downward confirming the flip pattern to enter a trade using the aggressive entry approach we follow these steps once we have correctly identified the flip pattern the next step is to enter the market using the aggressive entry method in this approach we highlight the flip Zone created by the price action which marks the area of Interest we then place a sell limit order at the lowest point of the flip Zone and wait for the price to trigger our order to manage our risk we set our stop loss a few Pips above the flip Zone to protect against potential adverse price movements as for our take profit Target we aim for the next unmitigated demand Zone which offers a potential area for the price to reverse by following this aggressive entry strategy we can take advantage of the flip pattern and potentially profit from the downward price movement the same principles apply to the bullish scenario let's now apply these steps to a real price chart to see how this strategy can be implemented effectively so here we have the one hour time frame chart of the euro dollar we can see that the price was in an uptrend but then experienced a reversal to the downside this created a change of character pattern as the price broke and closed below the most recent higher low within this context we can identify a supply Zone that is associated with this change of character wave this Supply Zone has the potential to reverse the price and initiate a new downward movement as you can see the price made a significant move to the upside after sweeping the liquidity that it accumulated above the equal highs this movement also triggered the stop losses of traders who had entered the market with sell positions from the lower demand zones the price eventually reached the extreme Supply Zone in the one-hour time frame now let's switch our Focus to the 15-minute time frame chart to further analyze the price action we are looking at the 15-minute time frame of the euro dollar as you can see the market initially displayed a bullish Trend forming bullish bos's however the price reversed to the downside after mitigating the one-hour time frame Supply Zone subsequently the price reached the most recent demand Zone and showed a minor reaction to the upside with a series of candles however the price swiftly pushed to the downside and broke out of the demand Zone leaving behind a significant inefficiency in the process so we have identified a perfect flip pattern in the market our next step is to highlight the flip Zone which was created by the wave that flipped the recent demand Zone based on this pattern I will place a sell limit order at the lowest point of the flip Zone to manage risk I will set the stop loss a couple of Pips above the flip Zone as for the Target I will aim for the unmitigated demand Zone in the one hour time frame now that we have placed our sell limit order let's see how the market reacts and see if our trade setup plays out successfully as the trade unfolds we can see that the price starts to move downward after our sell limit order is triggered eventually the price reaches our predetermined take profit Target this trade has provided a favorable reward to risk ratio showcasing a successful outcome so now let's delve into the details of the other flip entry type which is the conservative entry suppose we have a perfect flip pattern on the higher time frame price has successfully mitigated the higher time frame Supply Zone and failed to create a new high eventually it flipped the recent demand Zone after a pullback to apply the conservative entry we need to follow a few steps first we should identify and highlight the flip Zone created by the wave that flipped the demand Zone then we need to zoom into a lower time frame and patiently wait for the price to return to the flip Zone and demonstrate a major change of character once the change of character is confirmed we can proceed to identify the order block created by Chalk's wave on the lower time frame subsequently we can place a cell limit order at the lowest point of the Zone with a stop loss set a few Pips above the highest point of the zone as for the take profit we have the option to Target the unmitigated demand Zone on the higher time frame or the swing low of the current time frame these steps will help us execute a conservative entry with a well-defined risk reward ratio let's take a look at an example to further illustrate the application of the conservative entry with a flip pattern but before diving into the real chart it's important to note a crucial step in your trading Journey Back testing your strategies before using a strategy or a setup in a real account it's recommended to back test it at least 100 times back testing helps Traders gain insights and enhance their trading strategies to help you with this critical step we use the trader Edge platform for back testing our exclusive trading strategies and setups if you're interested in using Trader Edge as your back testing tool be sure to check out the link in the description below so here we have the euro dollar 15 minute time frame displayed on the chart as you can see the price mitigated the one hour time frame Supply Zone reversed its direction and moved downward it reached the most recent demand Zone and exhibited a small upward reaction with two red candles however the price quickly resumed its downward momentum breaking through the recent demand Zone and leaving inefficiency behind this signifies the presence of a perfect flip pattern that we have identified next I will highlight the flip Zone that has been generated by the wave which flipped the recent demand zone now that we have identified the flip Zone in the 15 minute time frame our next step is to monitor the price as it enters the flip Zone as you can see the price has now entered the flip Zone on the chart let's switch to the one minute time frame to get a clearer view of the price action and look for any signs of a change in character as you can see the price has tapped into the flip Zone and reversed to the downside creating a major change of character by breaking and closing below the previous structure this confirms the reversal we were anticipating I will now highlight the supply Zone that has been generated by this change of character wave we have now identified our area of interest in the next step I will place a cell limit order at the lowest point of the zone and set my stop loss a few Pips above the highest point of the zone as for the take profit Target I am aiming for the swing low as I anticipate the price to move in that direction let's continue and see what unfolds next once our sell limit order is triggered we are officially in the Market at this point it is important to closely monitor the price action and how the trade unfolds as anticipated the price started to move downwards after our sell limit order was activated eventually reaching our take profit Target now that we have covered the reversal flip pattern in detail let's delve into the specifics of the second type of flip pattern the continuation flip the continuation flip pattern can be categorized into two types the supply to demand flip pattern and the demand to supply flip pattern so let's start with Supply to demand flip the supply to demand flip pattern is a continuation flip pattern where the price transitions from a supply Zone to a demand Zone from the word Supply to demand you'll be able to understand that we are talking about moving from a supply Zone to a demand Zone this flip pattern suggests that the selling pressure has subsided and buyers have taken control leading to a potential continuation of the bullish trend traders who identify this pattern can look for opportunities to enter long positions as the price reverses from the supply Zone and moves toward the demand Zone now let's examine this scenario in more detail imagine we are in a bullish Market where the price has mitigated the extreme demand Zone and started to reverse continuing its upward movement toward the next unmitigated Supply Zone however in this particular scenario something interesting happens instead of respecting the unmitigated demand Zone and reversing from it the price sharply pushes to the upside and breaks through it this break of the supply Zone indicates that there is a lack of bearish momentum in the market to sustain the selling pressure it suggests that the Bulls have taken control and there is a potential continuation of the bullish trend this scenario gives rise to a perfect demand Zone that is generated by the wave which has flipped the supply Zone to the upside typically after such a flip pattern occurs the price May return to the flip Zone and mitigate it before continuing its upward movement Traders this is what we refer to as a supply to demand flip pattern it signifies a shift in market dynamics from selling pressure to buying interest indicating a potential opportunity for Traders to consider entering long positions in anticipation of the continuation of the bullish trend the same Concepts apply to the demand to supply flip pattern as well in this pattern the price transitions from a demand Zone to a supply Zone this pattern suggests a decrease in buying pressure and an increase in selling interest indicating a potential continuation of the bearish trend in this scenario we have a bearish market where the price enters the extreme Supply Zone and starts to reverse continuing its downward movement toward the next unmitigated demand Zone however an interesting twist occurs in this situation instead of respecting the unmitigated Supply Zone and reversing from it the price sharply pushes downwards and breaks through the zone this break of the demand Zone indicates a lack of bullish momentum in the market signaling a shift in control from buyers to sellers it creates a perfect Supply Zone generated by the wave that has flipped the demand Zone to the downside typically after such a flip pattern occurs the price May retrace to the flip Zone and mitigate it before resuming its bearish movement Traders this is what we refer to as a demand to supply flip pattern it signifies a change in market dynamics indicating a potential opportunity for Traders to consider entering short positions in anticipation of the continuation of the downtrend now let's see a real chart example here we have the euro dollar one hour time frame chart as you can see the price has formed a series of bearish breaks of structures patterns until it reaches the unmitigated demand Zone in the four hour time frame when the price reaches this higher time frame's demand Zone many Traders anticipate a potential reversal and start looking for signs of a change in character to enter long positions however contrary to their expectations the price Taps into the four hour demand Zone and experiences a minor pullback before swiftly moving downward with significant momentum this movement causes a flip in the demand Zone indicating a shift in market dynamics and potentially signaling a continuation of the bearish trend this break of the demand Zone indicates a lack of bullish momentum in the market signaling a shift in control from buyers to sellers it creates a perfect Supply Zone generated by the wave that has flipped the demand Zone to the downside as you can see on the chart the price retraces back to the flip Zone experiences a reversal and then aggressively moves downward with significant momentum that's it Traders thank you for watching this video I hope you found it informative and useful don't forget to hit the Subscribe button and turn on notifications to stay updated on our latest videos we value your feedback and suggestions so please leave your comments below and let us know what topics you'd like us to cover in our future videos we appreciate your support and look forward to seeing you in the next episode