PD Rays and Fair Value Gaps

Jul 21, 2024

Trading Basics: PD Rays and Fair Value Gaps

Introduction

  • Presenter: Ario Jansons, Dutch trader
  • Background: Trading since age 17, funded by investors since 21
  • Goal: Build the best trading educational company by providing high value, even for free

Setting Expectations

  • Follow the series’ steps and give it time to see results
  • Time is the cost of all good things

Credits

  • Money-making Concept: Philosophy focused on making profits, not just understanding algorithms
  • Inspired by ICT but not a copy; unique concepts taught by Ario

Extras

  • Resources: Study notion and PDF files available in descriptions

Key Concepts

PD Rays

  1. Definition: Price always moves towards a PD Ray, guiding the direction of the market
  2. Types:
    • Premium Array: Bearish, can trade towards it or from it
    • Discount Array: Bullish, can trade towards it or from it
  3. Importance: Determine direction by understanding which PD Ray price is moving towards

Primary PD Rays

  1. Fair Value Gap (FVG)

    • Structure: Three-candle pattern; second candle closes above the first, third doesn't trade back
    • Role: Act as a magnet or a point to trade from
    • Hierarchy: FVG is fundamental; other PD rays (Fair Value Area, Swing Points) rely on it
    • Example: GBPUSD and EURUSD daily time frames

  2. Fair Value Area

    • Focus: Discussed in the next video alongside Market Structure and Order Flow
    • Usage: Trade from, not towards

  3. Swing Points (Liquidity)

    • Definition: Swing highs and lows where liquidity exists
    • Importance: Big entities (like institutions) need liquidity for big orders
    • Role: Used as targets, marking liquidity
    • Example: GBPUSD and EURUSD daily time frames

Advanced Concepts

  • Market Structure: To be covered in the next video along with Order Flow
  • Previous Candle Highs and Lows: Fractal understanding useful for candle signs

Case Study Assignment

  1. Objective: Mark out all Fair Value Gaps and Swing Points on a chosen chart and time frame
  2. Goal: Observe and understand which PD Rays price trades into next
  3. Recommendation: Use the daily time frame to stay aligned with the series’ timeline

Conclusion

  • Action: Start doing case studies using the provided concepts
  • Engagement: Share case studies on social media

Full transcript