How to Find Your Daily Bias in Forex | IRL to ERL Trading Bootcamp | Episode 2

0:00Good day everyone.

0:01>> [clears throat]

0:01>> So now we're in episode two of the IRL

0:04to ERL trading boot camp. And in this

0:07episode, we're going to be talking about

0:09bias.

0:11Now I think I've created quite a number

0:13of videos about bias on this channel.

0:15And after this video, you can also go

0:18and check some of them out. But here I'm

0:20also going to try and explain it in a

0:22little bit more detail so that even if

0:24you understood it before, you'll be able

0:27to understand it better.

0:28And if you've never heard of bias

0:30before, this is also a very good place

0:32to start. So now,

0:35what is a daily bias?

0:36A daily bias is simply your prediction

0:39of what the next day or the next few

0:41days would most likely do.

0:43It's very simple.

0:45You just want to understand what the

0:46next day or the next few days are most

0:49likely going to do. So if you have a

0:51bullish daily bias, you'll only be

0:54looking for buy trades. And if you have

0:56a bearish daily bias, you'll only be

0:59looking for sell trades. It's literally

1:01that simple.

1:03Now we're also going to talk about

1:05something we call draw on liquidity. And

1:09what is this? A draw on liquidity simply

1:11gives you an area or areas where price

1:15would potentially target based on your

1:17bias. And just like I talked about with

1:19daily bias, daily bias helps you

1:22understand what the next day or next few

1:24days are most likely going to do.

1:27But let's say you're expecting the next

1:29day to be bullish.

1:30Price isn't just going to buy all

1:32through the day.

1:33There are certain areas in the market

1:35where price could get to and potentially

1:37retrace or even completely reverse. And

1:41that's where draw on liquidity comes

1:43into play.

1:45Because draw on liquidity now tells you,

1:47"Okay, since price is bullish, I'm

1:50expecting it to remain bullish up until

1:52this high before we potentially see a a

1:55or possibly a reversal."

1:58That's how the two go hand in hand. Your

2:00bias gives you the direction while your

2:03draw on liquidity gives you the area

2:05you're expecting price to target.

2:07Now, let me explain draw on liquidity

2:10with a graphical representation. So,

2:12here you can see we had a market

2:14structure shift to the downside.

2:16Price retraced back into an internal

2:18range liquidity.

2:20So, now we're going to be expecting

2:21price to push from internal to external.

2:25And the external range liquidity becomes

2:27our overall draw on liquidity.

2:30But, now the problem is we're not

2:31necessarily going to anticipate that

2:33price will take out that external range

2:35liquidity on the very first day of the

2:38bearish move.

2:39It's going to be a gradual process. So,

2:42the question now becomes where are the

2:44areas we believe price could get to

2:47during the next day?

2:49Right here, we can see price printed

2:51what? A candle rejection.

2:53This is a candle sweep. Price swept

2:56above the previous candle's high and

2:58closed back below it.

3:00Now, because of this exact price action

3:02we've had, the previous candle's low,

3:05and then the low of the next previous

3:06candle, become the areas we're going to

3:09be targeting for the next day.

3:11And those areas become our immediate

3:13draw on liquidity.

3:15That's how draws on liquidity are found.

3:18So, as you can see, our bias is bearish

3:21and these lows are the areas we're

3:23targeting,

3:24which makes them our draw on liquidity.

3:27And once price gets towards these lows,

3:29there is a possibility of price

3:31retracing or completely reversing.

3:34So, now, what are the concepts I use to

3:37get my bias?

3:38There are two main concepts I use.

3:41The first one is internal range

3:43liquidity to external range liquidity.

3:46And the second one is candle science.

3:49In the first episode, we've already

3:50talked about internal to external range

3:53liquidity

3:54and external to internal range

3:56liquidity.

3:57So, if you haven't watched episode 1, go

3:59back and watch it first.

4:01But, here you can see a graphical

4:03representation of what I mean by

4:05internal to external and then external

4:09to internal.

4:10Now, the second concept I use is candle

4:12science.

4:13Candle science is simply the use of the

4:16previous candle to determine what the

4:18next candle will most likely do.

4:21So, you're basically using what the last

4:23candle did to understand what the next

4:25candle or the next few candles could

4:27potentially do.

4:29Now, here we have four examples. These

4:31two at the top are bullish examples and

4:34these two at the bottom are bearish

4:36examples.

4:37So, let's go into them so that you can

4:39understand why they're bullish and why

4:41they're bearish.

4:42Now, let's start with the first bullish

4:44example.

4:45Why is this bullish?

4:47Because price swept the previous

4:49candle's low.

4:50And as price swept the previous candle's

4:52low and rejected from it, this is

4:55showing us bullish rejection.

4:57So, now where would our target be?

5:00Because remember, it's not just about

5:01knowing that we're bullish. We also need

5:04to understand where our targets are most

5:06likely going to be.

5:07Our first target would be this candle's

5:09high and then this other candle's high.

5:12Those would be our targets.

5:14And these are also regarded as our draw

5:17on liquidity just like I explained

5:19previously.

5:21Now, let's look at the second bullish

5:23example.

5:24Here you can see price closed above the

5:26previous candle's high. So, this gives

5:29us another bullish scenario. And where

5:31would our targets be? This candle's high

5:35and then other swing highs just above

5:37price.

5:38Now, let's look at the bearish examples.

5:40Here you can see price closed below the

5:42previous candle's low.

5:44So, where would our target be?

5:46This

5:47low.

5:48And then, in this example,

5:50price swept the previous candle's high.

5:53So, our first target becomes this low.

5:57And then, our second target becomes this

5:59low. Very simple.

6:01So now, let's combine candle science

6:04with internal to external range

6:06liquidity in an actual example.

6:09Here, just like I explained previously,

6:11we had a market structure shift. Price

6:14came back into this level, swept the

6:16previous candle's high, and closed back

6:19below it. So now, look at everything we

6:21have aligning. The structure is bearish.

6:25We have a bearish internal range

6:26liquidity, and we also have bearish

6:29candle science. So now, where would be

6:32our target for the next day?

6:34Where would be our draw on liquidity? It

6:36would be this low,

6:38and then, this low.

6:40And here, you can see price took out

6:43those lows. Now, we're beginning to see

6:45that the bearish momentum is kicking in.

6:47So, what are we going to be expecting

6:49next?

6:50We're going to be expecting this

6:52previous candle's low to become our next

6:54target.

6:56And what did price do? Price took it

6:58out. Now, after price took it out,

7:00according to candle science, we closed

7:03below this previous candle's low, which

7:06means this next low becomes our target.

7:09And eventually, price continued lower

7:12and hit our external range liquidity.

7:15So now, you've been able to see how

7:16candle science, together with internal

7:19to external range liquidity, helps us

7:21determine our bias.

7:23Because on those specific days, once we

7:26knew our bias was bearish, all we needed

7:29to do was go down to the lower time

7:31frame, and look for sell setups that

7:33align with that bearish idea.

7:35We're not looking for buys. We're not

7:38trying to predict every little move

7:40price makes.

7:41We already have our direction. We

7:43already have our draw on liquidity, and

7:45now we're simply looking for an entry

7:47that aligns with both.

7:49So now, let's leave the graphical

7:51examples. Let's go into the actual chart

7:54and look at a real example, so you can

7:56see exactly how all of this looks in

7:59real market conditions.

8:02So let's just start. Here the first

8:04thing I can see at this current price is

8:06that we just recently shifted structure

8:08to the downside.

8:10So here, you can see we had a market

8:12structure shift. And after this market

8:15structure shift, you can also see that

8:17price left behind this internal range

8:19liquidity.

8:20And this one right here also.

8:22So price left behind two internal range

8:25liquidities,

8:26which clearly means price is going to at

8:28least come into one if it wants to

8:30continue pushing lower.

8:33So let's play price forward and see the

8:35one it respects.

8:36So here, you can see price gave us a

8:38rejection candle, which gives us more

8:41confirmation that this first fair value

8:43gap is the one price is going to respect

8:46for us to then continue pushing lower.

8:49Now, where would our targets be?

8:51Our targets would be the previous

8:53candle's low, and also the external

8:55range liquidity which we had.

8:58And here you can see price took out

8:59external range liquidity. And after

9:02price took out external range liquidity,

9:04what kind of price action did we see?

9:07We can also see that price closed below

9:09the previous candle's low, which means

9:12we are still bearish.

9:14And where would our targets be? The

9:16previous candle's low, and also the

9:18swing low just below it. So let's play

9:21price forward and see how price

9:23eventually played out. So here, you can

9:25see price took out that swing low, and

9:28also took out the previous candle's low.

9:30Now, this is a very important swing low

9:33in price. So we're not just going to

9:35automatically continue selling at that

9:37moment. We just need to wait to see how

9:39price reacts from that area first before

9:42we look to take any trade. So, on the

9:44next day, we're going to be neutral and

9:47wait to see how the price action

9:49eventually forms.

9:50And here you can see price printed a

9:52bullish candle.

9:54Now, this doesn't mean a clear reversal

9:56to the upside because you can see that

9:58we're already bearish. And also this

10:00bullish candle left behind two fair

10:02value gaps. So, just like we saw

10:05earlier, we're going to be anticipating

10:07that one of these fair value gaps would

10:09hold if price wants to continue pushing

10:12lower.

10:13So, let's play price forward and see

10:15which one price would respect.

10:17So, right here, you can see price almost

10:19closed above the first fair value gap.

10:22So, it wouldn't necessarily be the area

10:24where I'd be looking to take my sell

10:25trade from. And also that wasn't the

10:28only thing.

10:29Price also closed above the previous

10:31candle's high, which is also a bullish

10:34sign.

10:35So, what I will be anticipating on the

10:36next day is for price to push higher,

10:40take out the previous candle's high,

10:42and also tap into the other fair value

10:44gap. And price did exactly that. Now,

10:47after price did that, we're not going to

10:50turn bearish just yet because here you

10:53can see that price didn't actually tap

10:55into the fair value gap properly. So,

10:57we're going to wait for the next candle

10:59to tap into the fair value gap, and then

11:02we can see what would eventually happen.

11:04Here you can see price now tapped into

11:06that fair value gap quite well.

11:09Price almost printed a massive bullish

11:11candle,

11:12but before it closed, it closed below

11:14the 50% of that fair value gap.

11:17That's a very good sign that the fair

11:19value gap is going to hold. So, now

11:22we're going to be anticipating that

11:24price would potentially push from

11:26internal to external.

11:28But we're not going to be anticipating

11:30that the external would be taken out on

11:32the next day.

11:33So, where would our draw on liquidity

11:35be?

11:36The previous candle's low

11:38and then the low just below it

11:40because we need to take it gradually.

11:42And what did price do?

11:44Price took out those two levels.

11:46Now, here is something interesting

11:48happened. You can see price gave us a

11:50candle sweep and this is a bullish sign.

11:53But because we're inside an internal

11:55range liquidity and price is bearish,

11:58that candle sweep would most likely not

12:00hold.

12:01So, my next target for the next day

12:03would be the low.

12:05But here you can see price didn't

12:06actually take out the low on the next

12:08day. So, we wait for the next day again

12:10to see what price did.

12:12And here you can also see price didn't

12:14take out the low for that next day,

12:17which means those two days would have

12:18been days where our bias wouldn't have

12:20played out. And that's completely fine.

12:23But here you can now see on the third

12:25day price eventually took out that level

12:28and gave us the bearish move. And after

12:31that specific day, we're now going to be

12:33anticipating that price would also

12:35continue lower.

12:37And here you can see price gave us a

12:39rejection, which is also a bullish

12:42candle sweep. But just like I said

12:44earlier, because we're still bearish and

12:47price hasn't taken out the external

12:49range liquidity, this bullish candle

12:51sweep would most likely not hold. So, I

12:54will still be bearish on the next day

12:56and my draw on liquidity would be the

12:59swing low

13:00while overall the external range

13:02liquidity is still our main target.

13:04And here you can see on the next day

13:07price now gave us the massive bearish

13:09push that took out external range

13:11liquidity.

13:14This is how it happens in the market. It

13:16doesn't always happen this clean.

13:19Even while I was showing you this

13:20example, there were still some times

13:22where price didn't move exactly as

13:24anticipated. But that is just how price

13:27moves.

13:28Once you understand the basics, which is

13:31candle science and internal range

13:33liquidity,

13:34you would most likely have a much better

13:36understanding of your bias. And, this is

13:38where we're going to be ending today's

13:40episode. In episode 3, we're now going

13:43to talk about how to align order flow

13:45with bias. I'll see you in the next one.