Full transcript
0:00Today, I'm going to show you an amazing
0:01scalping strategy that takes advantage
0:03of the first few hours of market open.
0:05And the best part, it's simple,
0:06repeatable, and effective. I've been
0:08trading for 9 years, and one thing that
0:09I've learned is that most of the
0:11opportunity is going to happen within
0:12the first couple hours of market open.
0:14So, if we master the open and learn how
0:16institutions treat it, we can exploit
0:18this and find daily opportunities. But,
0:20this requires the right type of trading
0:22strategy to be able to navigate. So, in
0:24this video, I'm going to share with you
0:25my scalping approach, and you're going
0:26to see why this is
0:30But, I've been using this entire year to
0:31consistently find solid trades. So, I'm
0:33going to first break down the strategy
0:35into three simple steps and how exactly
0:37I set it up. Then, I'm going to run you
0:38through several different examples of
0:40this happening within a close time frame
0:42of one another so that you know I'm not
0:43cherry-picking opportunities. Then, at
0:45the end, I'm going to show you
0:46recordings of me trading this in real
0:48time so you can see exactly how I apply
0:50it. It's going to take some practice,
0:51but I promise by the end of this video,
0:52you should see how effective this can
0:54be. Okay, so step one of this strategy
0:56is going to start off on a one-day time
0:58frame. So, you'll see on my screen here,
1:00I have a 1-minute, which is where we're
1:01going to be executing our actual
1:03entries, and I have a daily chart here.
1:05What we want to do is first mark off the
1:08previous day high and low. So, what I'm
1:10going to do is going over to a daily
1:12time frame here on my right side, and
1:14I'm just going to use this tool here to
1:15mark off my high and right here to mark
1:18off my low. So, I told you, pretty
1:19simple so far. Previous day high here,
1:21previous day low here. I'm going to
1:22explain to you why we're using this in a
1:24second. And this model has been tested
1:25on the future side on MES and MNQ. But,
1:28for today, I'm going to be doing an
1:29example on the crypto side. All right,
1:31so nextly, I'm going to move down to a
1:3215-minute time frame. What I want to do
1:34is is go back to the last couple days,
1:37and you'll see by these gray zones, I
1:38have from 8:00 to 9:30, which is going
1:40to show me the New York Stock Exchange
1:42open and sort of segment out the opens
1:44for the day. Largely, we're going to be
1:45trading around this open time frame. So,
1:47I just kind of want to look at the last
1:48couple days of price on the 15-minute
1:50time frame. And what I really want to do
1:52here is mark out my 15-minute fair value
1:55gaps. What a fair value gap is is when
1:56you have a sequence of three candles
1:59where the first candle's wick higher low
2:01doesn't overlap with the third candle's
2:03higher low. In this case, price is
2:04moving up, so we want to look at the
2:06high of the first and the low of the
2:08third. And if there's a space left
2:09between there, usually a significant
2:11space proportionate to the other
2:13movement on the chart, we're considering
2:15that to be a fair value gap. But, it can
2:17go in both directions. So, I'm just
2:18going to use this box tool here and
2:20start identifying key fair value gaps.
2:22So, first one that I'm noticing is right
2:24here. So, I'm going to mark off that
2:25area. Second one that I'm noticing is
2:27from here to here. So, I'll mark off
2:29that area. And the last one that I'm
2:30seeing here, we have kind of chop in
2:32between here, and we have this one right
2:34here. And then if I look here, I also
2:35have a small bullish fair value gap
2:37here. So, we'll also take note of this.
2:39So, now we have step one complete. We
2:40have our previous day high and low
2:42levels established, and we have high
2:44impact areas for the current trading
2:46session that we're going to be using as
2:48key points. Now, the reason this is
2:49important is because both at the
2:51previous [music] day high and low and at
2:53the midpoint of these fair value gap
2:55levels are high impact areas for
2:57institutions to want to execute their
2:59orders. Institutions need liquidity in
3:01order to fulfill their positions.
3:03Typically, retail traders are going to
3:05place their stop-loss levels outside
3:07these previous day high and low levels.
3:09They're also fundamentally important
3:11areas, and these fair value gaps tend to
3:13be areas where there's excess orders
3:16where price tends to want to gravitate
3:17to in order to reach equilibrium. Okay,
3:19so we're going to look at these for
3:21potential profit areas and signals for
3:23entries. And what I like to do is just
3:25right-click on these and turn the
3:26visibility up to 15 minutes. That way, I
3:28have a clear chart on my 1-minute, but I
3:30can still see everything on my
3:3215-minute. So, now all I have to do is
3:33basically hover my mouse over the areas
3:36here, and I can see exactly where it's
3:37going to match up on the other side.
3:39But, now I have visible clarity on where
3:41I'm looking for all of the other
3:42details. Okay, so let's get into step
3:44number two. Step number two, we want to
3:45switch down to focusing on our 1-minute
3:47time frame. So, now what we're looking
3:48for is general signals for us to want to
3:51enter in on the market. So, I'm looking
3:52for a few key things. So, the first
3:54thing that I want to do is take one of
3:55these trendline tools here and try to
3:57find areas where price tends to not be
3:59able to bounce through. So, I'm noticing
4:01we have a downtrend set up right here,
4:04and we're getting a response off of this
4:05level and this level. What I'm really
4:06looking for is for a trend level to be
4:08established, and then for us to get a
4:10candle where it's significantly pushing
4:13out of this trendline area. And it's
4:14creating two things. The first thing
4:16that we want to see is something called
4:17a change of character. So, a change of
4:19character is basically where we have a
4:21lower low, lower high, lower low, lower
4:24high, fail to break lower, and then this
4:27swing point is being broken up, and now
4:29we have a new high. This also needs to
4:31produce a fair value gap candle where
4:33we're seeing this overlap area. And if
4:35we can see this happening out of a
4:37reaction of either any of our key
4:38levels, so our previous day low or out
4:41of one of these fair value gaps in our
4:43range, this is showing us that larger
4:45players are stepping into the market, in
4:47which case, I want to try to enter in at
4:49the first signal of this and be able to
4:51position myself to ride into the
4:53potential of that new direction as we're
4:55seeing larger players step into the
4:56market. What we're going to be doing is
4:58using all of these areas for signals on
5:00what to do next. So, I have my trendline
5:02drawn. We're now at the 9:30 open, so
5:04we're going to play it forward and see
5:05what happens. So, immediately, we get a
5:07sell-off in the market. And then you see
5:09here, we have a big, what's called,
5:11engulfing displacement candle. So, this
5:13candle has attempted to push into the
5:16low. You'll see it hit almost perfectly
5:18off of that previous day low. We had a
5:20massive reaction off of it. So, if I
5:21play this one candle forward, you'll see
5:23after the reaction off of the previous
5:25day low, we now have this bullish fair
5:28value gap and a change of character out
5:30of this trend. So, we tried to push
5:32lower, we see a big displacement candle
5:34where institutions likely put in change
5:36of character fair value gap. Also, we
5:38have this trend level broken. Okay, so
5:40here comes the next important piece of
5:42information. So, whenever we have these
5:43fair value gaps, you'll notice if price
5:46is going to continue moving in the
5:47direction by pushing through them,
5:49coming back into them, and then
5:50continuing in that direction, you'll see
5:53it's very common that these candles
5:54don't make a candle close through the
5:5650% line, which is called the
5:58consequential encroachment line. So,
6:00they don't like to close below that
6:02midpoint if they're going to respect
6:03them. You can see it happening here as
6:05well. Midpoint here, price is constantly
6:07bouncing trying to break through it,
6:09can't make a close through it, and then
6:10continues to move in that direction. So,
6:12the same thing is going to be true on
6:14the 1-minute time frame. Okay, so at
6:15this point, what I want to do is set my
6:17entry right at this midpoint and place
6:19my stop-loss outside of the fair value
6:21gap producing candle. [music] So,
6:23stop-loss placed out here, and what I'm
6:25going to do is just temporarily set up a
6:271:4 risk-reward. What I'm going to do
6:29with this strategy is keep it
6:30open-ended, so I try to let them run as
6:32much as possible, but I'm starting off
6:34at this 1:4, and you're going to see why
6:35in a second. And if we go over to our
6:3715-minute time frame, you're going to
6:38see that our position is coming almost
6:41right up to the midpoint of this fair
6:42value gap. So, that's going to get us
6:43our 1:4 right around here. All right,
6:45and what this is going to allow to
6:46happen is for price to come back down to
6:49that point, have a chance to respond off
6:51of that gap. But, you can see price is
6:53closing through the midpoint, but is not
6:55closing outside of this gap before
6:57starting to make a move in our
6:58direction. So, now it gets into step
7:00number three. We've entered into the
7:01trade. Now, how do I strategically
7:03manage this trade? So, what I'm going to
7:05do is wait for what's called a break of
7:07structure, which after we get a push up
7:09and then a move down into our entry,
7:11once we get a push in a candle close
7:13over that swing point, to say my
7:15stop-loss is originally here, I'm now
7:17going to be walking my stop-loss to
7:19break even. So, now we have no risk on
7:21the table and only reward once we get
7:23that initial response to confirm in our
7:26direction. However, we're not
7:27necessarily in the clear yet because we
7:29do have a really, really big bearish
7:32fair value gap in here which price is
7:34yet to break through this [music]
7:35midpoint and close above. So, this is
7:37going to be a heavy area of resistance
7:39that we do want to consider. So, you
7:40see, as I play my candles up through it,
7:43we had a very, very decisive move to the
7:44upside into the midpoint of this
7:47secondary fair value gap. Okay, so
7:49you'll see, as the next candle comes in,
7:51it ends up closing back down here, but
7:53we had a clean break above this level,
7:55which allowed me to hold through it,
7:57right? We didn't respond and start
7:58teetering through this area. We actually
7:59moved up here, but then got a negative
8:01response off of this midpoint. Before
8:03you think that I'm just sort of
8:04cherry-picking these examples, this is
8:06actually a trade that I recently took.
8:08So, you'll see, I have my take profit
8:09set exactly at this area, and then as
8:12price went through it, this is where I'm
8:13closing out my position. So, in this
8:15case, I just wanted to be able to lock
8:17in my 1:5 risk-reward. However, it all
8:19depends on how much we want to hold the
8:21trade. So, typically, what I like to do
8:23is keep the trade completely open-ended,
8:25especially if we get momentum out of the
8:27gate. Say I'm losing on the day,
8:29typically, I like to just play into
8:30simple profit targets to make sure that
8:32I have profit locked in. However, if I'm
8:34in a good position, I will let the
8:36trades run. And once again, I'll look to
8:38see how price responds off of my next
8:40high impact areas on the 15-minute
8:43trend. So, the next area would be this
8:45point. So, price retraces down,
8:48eventually moves up to this area. You
8:49can see, first bearish candle comes off
8:52of the reaction of the midpoint of this
8:54fair value gap. In this case, breaks
8:56through it, in which case, once again,
8:58we can target this equal high area in
9:00that previous day high, which you can
9:02see had a temporary response, and then
9:04because of the bullish nature of the
9:05day, price just continued moving. But,
9:08you can see, even in this example, we're
9:10able to make 12 risk factors. In fact,
9:12on this trading day, I drew another
9:13trend level right here. And considering
9:16we had a break of structure over this
9:18area with a bullish fair value gap right
9:20at the same area of my bullish fair
9:22value gap, I was able to re-enter into
9:24my trade still following the same rules
9:27and have the market go up and fill my
9:28take profit again. You can see in the
9:30recording, I have my entry here. I'm
9:32setting up my targets, and then I'm
9:33fully out of the trade here. Okay, so
9:35now let's look at an example of a
9:36different day, and we're going to go
9:37through it a little bit quicker. So, I
9:39start on my daily, I set my previous day
9:41high, previous day low value, go down to
9:43my 15-minute. I'm identifying my fair
9:45value gaps here. And notice here on this
9:47price action, I really don't have any
9:49important fair value gaps. Even if I
9:51scroll out, all of them have already
9:53been invalidated or gone through. So, I
9:55only have this one, and then
9:56realistically, this one down here that
9:58has not been yet filled. And the top of
10:00that range is actually coming up to the
10:02previous day low level as well. Okay, so
10:04we have our daily analysis set up. Now,
10:06we want to see a response off of one of
10:07these areas, as well as our change of
10:09character, and our fair value gap. All
10:11right, so I'm playing the chart forward.
10:16So, you can see price came up, rejected
10:19off of that 15, and closed now below it.
10:26>> [music]
10:26>> Okay, we have price reject again off of
10:28this fair value gap. And now we have
10:30this [music] trend level forming. And
10:32now we're getting a high impact candle
10:34is more high impact in the direction of
10:36our bias. And technically, we have a gap
10:39here and a gap here. So, once we see
10:40that trend level break, we have a change
10:42of character in here, rejects off of the
10:44middle point, comes in and retests the
10:46opposite side of this trend, which is
10:48why this is an important thing that I
10:49look at, placing the stop loss outside
10:51of that retest. Notice how the candle
10:52doesn't close below this low level, so
10:54we don't reduce our risk yet. Then we
10:56finally have a candle close, so stop
10:58loss comes down to break even. And now
11:01the next high impact area on our chart,
11:04as crazy as it seems, is down here at at
11:06least the previous day low. And our next
11:09possible unmitigated fair value gap on
11:12the 15-minute time frame. Okay, and
11:13you'll see over the course of the
11:15session, this is exactly where price
11:17gravitated to before having a reversal.
11:20So, you can see that's 19R on a
11:22position. So, now we have new fair value
11:23gaps on our chart. We have this one, we
11:26have this one, and we have our previous
11:28day low fully rejected off of. So, you
11:30can see we have a change of character
11:31right here after a big rejection off of
11:34that previous day low, a big
11:36displacement candle with a large fair
11:38value gap left over right here. We also
11:40have a clean candle close outside of
11:42this temporary downtrend here. So, once
11:44again, displacement candle, change of
11:46character, reaction off of one of our
11:47key areas, showing that bigger buyers
11:50are entering the market. Stop loss
11:52placed underneath this swing low level.
11:54Target starts out but we also have this
11:57fair value gap to see how price responds
11:59off of it. Risk gets reduced.
12:03>> [music]
12:06>> We finally have candle close outside of
12:08this fair value gap. We have risk off
12:09the table. Notice how the price came
12:11very close coming back down to our
12:13entry, but because we waited for a
12:15candle close here, it didn't tag [music]
12:16the entry. Now, of course, sometimes it
12:18is going to tag the entry. Markets are
12:20still going to be random, but that's the
12:21ideology around this concept. So, if we
12:23want to be aggressive on the target, and
12:25price ends up tagging us for a
12:27break-even trade, we didn't quite get to
12:29our next take profit level. Not every
12:30time these trades are even going to work
12:32in the first place, and not every single
12:34time it's going to run as much as you
12:36want. So, everyone can have different
12:37take profit managements and figure out
12:38what works best depending on how your
12:40style of trading works. But we did have
12:42a potential opportunity to be able to
12:44come up to this point, which case that's
12:46another one to five risk reward. So,
12:48let's take a look at another example. We
12:49have our previous day high, previous day
12:51low set, fair value gap here. This time
12:54previous day high gets swept, so the
12:56candle tries to go above it and
12:58immediately rejects off of that area.
13:00Our next [music] important fair value
13:01gap on this entire move is here, maybe
13:05here, but nothing really super high
13:06impact until maybe this point as well.
13:08We have this point drawn out, only show
13:10that on the 15, trend level drawn, fair
13:13value gap in here. Didn't quite have a
13:15change of character here, so wouldn't
13:17have really entered. We didn't really
13:18get a confirmed break of that trend
13:20level. Here we get the trend level
13:22breaking, but this fair value gap is not
13:24yet invalidated. This would be our ideal
13:26for price to come up into test into.
13:28Entry set up, stop loss outside of fair
13:31value gap producing candle, position set
13:33to one to four.
13:36>> [music]
13:37>> Close below this swing point, stop loss
13:39moves to break even. This fair value
13:41gap's our next important area.
13:45>> [music]
13:46>> And you can see price reacts beautifully
13:48exactly off of the midpoint of this fair
13:50value gap. But you can see that exact
13:52area was responded to, and price wanted
13:55to on a larger time frame gravitate to
13:57this next macro area, at the very least
13:59have a reaction off of. Something to
14:01remember is that we're not going to be
14:02right about every single trade. Okay,
14:04sometimes the market is not going to
14:05work in our direction, but it's about
14:06positioning ourselves at least in
14:08technical areas where we at least have a
14:10higher chance of being able to have
14:11these moves. So, even though we can't be
14:13right every single time, even on my
14:15worst day where I have a 27% win rate,
14:17by following the process of reducing
14:19risk and letting the market play out, I
14:21allow big trades to be able to play out
14:23while keeping the losses small or at
14:25break even, and oftentimes I can really
14:27get ahead. On days where the market
14:29really wants to run, I'm able to
14:30capitalize on really large trades, keep
14:33the losers relatively small, and so to
14:35be able to play into that momentum of
14:37the market. Historical results don't
14:38dictate future performance. However,
14:40after nine years of trading, these have
14:42been my findings, and this is a really,
14:43really good framework that I like to use
14:45to be able to add other things to, add
14:47other confluences with the team, and
14:48work on. That's led and allowed me to be
14:50very consistent over time. But you guys
14:52can let me know in the comments whether
14:54you like this approach. Make sure you
14:55hit the like button if you're still
14:56here. Subscribe to the channel if you
14:58like trading and investing and want to
14:59know when I put out other videos. I'll
15:01put another video of me trading this
15:03right here in case you're curious. But
15:04until next time, I will see you all in
15:06the next video.