Overview
This session covers combining five trading building blocks to make sound trading decisions and develop a solid execution plan for market entries.
Building Blocks
The five core concepts are:
- Liquidity sweep
- Break of structure
- Order block
- Fair value gap
- Equilibrium
What Each Building Block Reveals
Liquidity Sweeps
- Show potential for orders to get filled
- Indicate a high or low getting taken out
- Require confirmation before acting on the signal
Break of Structure
- Confirms that orders were actually filled
- Shows a market structure shift has occurred
- Validates liquidity sweep when paired together
Order Blocks
- Identify the price range where orders were filled
- Represent the move that caused the liquidity sweep
- Serve as optimal retracement entry points
Fair Value Gaps
- Show price range with lack of liquidity
- Represent large imbalance candles with no counteracting orders
- Indicate absence of opposite-direction orders in that price range
Equilibrium
- Helps find discounted price between highs and lows
- Used to confirm favorable entry pricing
Entry Strategies by Risk Level
| Strategy | Components | Risk Level | Key Characteristics |
|---|
| 1 | Liquidity Sweep + Break of Structure | Most Risky | Enter at top of move after confirmation only |
| 2 | Strategy 1 + Order Block | Medium-High Risk | Wait for retracement to where orders were filled; better risk/reward |
| 3 | Strategy 1 + Fair Value Gap | Medium Risk | Enter when fair value gap fills; useful if order block missed |
| 4 | Strategy 1 + (Order Block or FVG) + Equilibrium | Least Risky | Ultimate confluence; foolproof for beginners; confirms discount pricing |
Strategy Details
Strategy 1 (Highest Risk):
- Enter when liquidity sweep is confirmed by break of structure
- Represents top of the move
Strategy 2:
- Same as Strategy 1 but wait for price to retrace to order block
- Place stops above the highs
- Better risk/reward than immediate entry
Strategy 3:
- Can be used if order block entry is missed
- Price must fill the fair value gap (lack of liquidity zone)
- Enter on fill or reaction from that level
Strategy 4 (Recommended for Beginners):
- Requires all confirmations: liquidity sweep, break of structure, order block or fair value gap, plus equilibrium
- Most conservative approach with maximum confluence
- Confirms price is at discount before entry
Key Principles
Understanding Market Movement
- Avoid relying on simple indicators like EMA crosses
- Understand why markets move based on order flow concepts
- Know what each building block represents and why it matters
Strategy Selection
- Choose one strategy that fits your experience level
- Beginners should use Strategy 4 for maximum confirmation
- More experienced traders can use riskier strategies with less confirmation
Action Items
- Write down all five building blocks and their definitions in notebook
- Document what each building block tells us about the market
- Choose one entry strategy for your execution plan
- Include chosen strategy in your trading plan
- Review bootcamp videos on each building block if concepts are unclear
- Revisit YouTube videos on individual building blocks from channel start
- Prepare for Part 2 video with chart examples of all strategy combinations