IRL to ERL Trading Bootcamp | Episode 1

0:00So,

0:01this is the first episode of this

0:02internal range liquidity to external

0:05range liquidity trading boot camp.

0:08And in this one, we're just going to

0:10talk about the core concepts.

0:13Now, one thing I would advise you

0:14throughout this boot camp is take it

0:17very seriously

0:18because this could most definitely

0:20change your trading

0:21if you actually apply every single

0:24concept that is being taught here.

0:26You don't need to binge watch this. You

0:28need to get a paper, get a pen, and jot

0:31down most of these things.

0:33And sometimes go back to these videos

0:36and revisit them over and over and over

0:39again until you actually understand

0:41them.

0:42So, let's just start. In these core

0:45concepts, we're going to go over what

0:47internal range liquidity means,

0:49what external range liquidity means, why

0:52price actually moves from internal to

0:55external, and so many other things.

0:58So, let's start with what an internal

1:00range liquidity actually is.

1:03An internal range liquidity refers to

1:05the liquidity found within a specific

1:07range of price.

1:09Now, what does this actually mean? You

1:11know, price moves from ranges. So, if

1:14there is liquidity found inside the

1:16range of a price,

1:18that is what we regard as internal range

1:20liquidity.

1:22Now, the most effective internal range

1:24liquidity I found is fair value gaps.

1:28And that's the only one we're going to

1:30be talking about in this entire boot

1:32camp because that's the one I found the

1:34most consistency in.

1:36>> [clears throat]

1:36>> We also have order blocks and so many

1:39other concepts that can be regarded as

1:41internal range liquidity.

1:43But fair value gaps is the one that has

1:46done so much wonders for me.

1:48Now, some people might ask, why fair

1:51value gaps?

1:52And the reason is fair value gaps are

1:55objective and not subjective.

1:58Now, what do I mean by this?

2:01From the dictionary meaning, objective

2:03means being based on real facts and free

2:06from personal bias.

2:08While subjective means being based on

2:10personal feelings, opinions, or

2:12individual perspective.

2:14So, when I say fair value gaps are

2:16objective, what I mean is everybody can

2:19see it. We already know what a fair

2:22value gap is when there is a gap between

2:24the first candle's high and the third

2:26candle's low for a bullish scenario. And

2:29for a bearish scenario, when there is a

2:32gap between the first candle's low and

2:34the third candle's high.

2:36Once you see this on the chart, you

2:38already know this is a fair value gap.

2:41But for some other concepts, they can be

2:43quite subjective because something could

2:46be regarded as an order block by one

2:48person

2:49and then another person could look at

2:51that exact same area and say, "No, this

2:54isn't an order block."

2:56And that creates a whole lot of

2:57confusion.

2:59And honestly, that was one of the issues

3:01I had at the beginning.

3:02And that's something I also don't want

3:04you to have.

3:05That's why I want you to just stick to

3:07fair value gaps because once you see a

3:10fair value gap, it's a fair value gap

3:12for everyone. There's no confusion about

3:15it. That's one of the reasons. And the

3:17second reason is fair value gaps are the

3:20most effective internal range liquidity

3:22I found.

3:23And I'm not just the one saying it. You

3:25can also go to the charts and look at it

3:27for yourself.

3:29So, let's look at one example here.

3:31When you look at this chart, you can see

3:33this is the Euro USD 4-hour chart.

3:37Now, let's mark out every single time

3:39price reacted from a fair value gap.

3:42And here, you can see it. These are the

3:45amount of times price reacted from a

3:47fair value gap within this specific

3:49price range.

3:51Every time price wanted to retrace or

3:53most of the time when price retraced, it

3:56was retracing into a fair value gap

3:59before then pushing lower or pushing

4:01higher as the case may be.

4:04And this is why I love it. If you look

4:06at this chart very well, you would see

4:08that price reacts more from these fair

4:10value gaps compared to some of the other

4:13concept on the chart.

4:15Now, the main thing is you would also

4:17notice that there are some areas where

4:19price didn't actually respect the fair

4:21value gaps.

4:23And that's something we're also going to

4:24talk about more throughout this boot

4:26camp.

4:27How to actually find the best internal

4:29range liquidities or fair value gaps to

4:32trade.

4:33So, let's move to the second one, which

4:35is external range liquidity.

4:38Now, an external range liquidity refers

4:42to the liquidity found outside the

4:44specific price range of price delivery,

4:46which is basically the opposite of

4:48internal range liquidity.

4:51Internal range liquidity is found inside

4:53a price range while external range

4:56liquidity is found outside a price

4:58range.

5:00Now, how can you identify external range

5:02liquidity?

5:04You can identify external range

5:05liquidity with swing points.

5:08For those who don't understand what a

5:09swing point is, a swing point consists

5:12of three candles where the middle candle

5:14is beyond the candle on the left and the

5:17candle on the right.

5:18So, for a swing high, you need the

5:21middle candle to be higher than the

5:23candle on the left and the candle on the

5:25right. And for a swing low, you need the

5:28middle candle to be lower than the

5:30candle on the left and the candle on the

5:32right. That is what gives you your swing

5:34point. And these swing points, because

5:37they are outside of the trading range,

5:39are what we use to identify external

5:41range liquidity.

5:43So now, we've talked about internal.

5:46We've talked about external, but how do

5:49they actually come together?

5:51What is the relationship between

5:52internal range liquidity and external

5:55range liquidity?

5:57Well, the logic is actually quite

5:59simple.

6:00When price comes into an internal range

6:02liquidity, it would usually target the

6:05external range liquidity next.

6:08And then when price takes out an

6:09external range liquidity, it often comes

6:12back into an internal range liquidity.

6:15So, from this example, you can see that

6:18price is inside an internal range

6:20liquidity.

6:21What we're going to be anticipating now

6:24is for price to get towards an external

6:26range liquidity.

6:27And then, if price takes out this

6:29external range liquidity, we're going to

6:32be anticipating that price would push

6:34back lower into an internal range

6:36liquidity because that is how the market

6:39moves.

6:40But, for this exact boot camp, we're

6:43only going to be focused on price moving

6:45from internal to external

6:47because that's the most

6:48beginner-friendly of it all.

6:50When it comes to external to internal,

6:53it gets a little bit more technical.

6:55But, the use of internal to external is

6:58the easiest, and that's the one we're

7:00going to focus on. So, we're only going

7:03to be anticipating for price to move

7:05from an internal towards an external.

7:08Just as you can see here in the image I

7:10shared earlier,

7:12you can see how every time price got

7:14towards an internal,

7:15it pushed towards the external.

7:18I think it did that for almost all of

7:19them, apart from this one right here.

7:22But, the majority of them, you can

7:24clearly see when price goes to an

7:27internal range liquidity, it takes out

7:29an external.

7:31And this clearly shows you that the

7:32concept works. So, all you need to do is

7:36find the reason to take your entry from

7:37here, and then target the external.

7:40Very simple.

7:42And these are also of the things we're

7:44going to talk about as the boot camp

7:45progresses. Like entry confirmations,

7:49how to actually enter, and all those

7:51other things.

7:52Now,

7:53why is this concept of internal range

7:56liquidity to external range liquidity

7:59actually important?

8:01Well,

8:02it's actually important because of

8:03market structure.

8:05If you've been trading for quite a

8:07while, you would understand that market

8:09structure is one of the most important

8:11concepts in the Forex market.

8:13And the concept of market structure and

8:16internal range liquidity actually go

8:18hand in hand.

8:20So, here you can see we have a bearish

8:23market structure.

8:24And here, you can see we have a bullish

8:26market structure.

8:28Now, in a bearish market structure, the

8:31best areas to sell from are from the

8:33lower high.

8:34Because that is the most premium price

8:36you can get in a bearish structure.

8:39And in a bullish market structure, the

8:41best area to buy from is from the higher

8:44low.

8:45Because that is the most discount price

8:47you can get in a bullish structure.

8:50Now, where internal range liquidity to

8:53external range liquidity comes into play

8:56is that most people will simply tell you

8:58sell from a lower high or buy from a

9:02higher low.

9:03But here's the question. How do you know

9:05where that lower high or higher low is

9:07going to form?

9:09And that's where the concept of internal

9:11to external range liquidity comes into

9:13play.

9:15So, when price is creating lower highs

9:17in a bearish structure, we want that

9:19lower high to form inside an internal

9:22range liquidity. Because we've already

9:24seen that this is an area where price

9:26has a higher probability of creating its

9:29high in a bearish structure

9:31before then reversing and continuing

9:33lower.

9:35And the exact same thing applies to a

9:37bullish structure.

9:38We want the higher low to form inside an

9:41internal range liquidity because that's

9:43where we have a higher probability of

9:46price creating its low before then

9:48reversing and continuing higher.

9:51So, let's put everything together. If we

9:54see that price is in a bearish market

9:56structure, we want price to first create

9:59a lower low. Then, we want price to

10:02retrace and create its lower high inside

10:06an internal range liquidity.

10:08Once price gives us that lower high, we

10:10can then look for our entry from that

10:12area because we already know that a

10:15lower high is one of the highest

10:17probability areas for price to continue

10:20lower in a bearish structure.

10:22And where are we expecting price to go

10:24next? We're targeting the previous lower

10:26low, which now becomes our external

10:29range liquidity.

10:31So now, you can see how these two

10:33concepts actually go hand in hand. We

10:36have our market structure, we have our

10:38internal range liquidity, and we have

10:41our external range liquidity.

10:43The internal range liquidity gives us

10:45the area where we're looking for price

10:47to form its lower high, while the

10:49external range liquidity gives us the

10:51destination we're expecting price to

10:54deliver towards. And this is why

10:56internal range liquidity to external

10:59range liquidity is a very very crucial

11:02concept in the Forex market because it

11:05doesn't work against market structure,

11:08it works with market structure.

11:10You're not just looking at a lower high

11:12and saying, "Okay, this is where I want

11:14to sell." You're asking yourself, "Where

11:17is this lower high most likely going to

11:19form?" And if that lower high forms

11:22inside an internal range liquidity, now

11:25you have another layer of confluence

11:27supporting your idea.

11:28Then, you can target the external range

11:31liquidity, which in this case is the

11:34previous lower low.

11:36And that's how the entire concept starts

11:38coming together.

11:39Internal range liquidity gives you the

11:42potential area of reversal,

11:44while external range liquidity gives you

11:47the potential destination.

11:49And once you understand this

11:51relationship, you'll start looking at

11:53market structure completely differently.

11:56Because now you're not just identifying

11:58highs and lows. You're beginning to

12:01understand where those highs and lows

12:03are most likely to form,

12:05and where price is most likely trying to

12:07go next.

12:09So,

12:11this is where we're going to be ending

12:12episode one.

12:14And I'm pretty sure this episode has

12:16been able to explain the core concepts

12:19you need to understand about internal

12:21range liquidity and external range

12:24liquidity. It's not hard. It's actually

12:27very simple and very easy to grasp once

12:30you understand how the two concepts work

12:32together.

12:34But understanding the concept is just

12:36the beginning. In the next episode,

12:38we're going to talk about bias.

12:41I'll show you exactly how I identify my

12:43bias, how I determine where I expect

12:46price to go, and how I use that bias

12:48together with the internal range

12:50liquidity to external range liquidity

12:53concept. I'll also show you how all of

12:56this looks on the chart, so you can see

12:58exactly how the theory we've discussed

13:00in this episode is applied to the

13:02market.

13:03So, make sure you take your time with

13:05this episode. Go back to it if you need

13:08to. Write down the important points, and

13:11make sure you actually understand the

13:12foundation before moving on.

13:15Because everything we're going to build

13:17in the coming episodes will be based on

13:19these core concepts. So, I'll see you

13:22guys in episode two.