What Is POI? In SMC | HINDI | BANKNIFTY| LECTURE~6

Introduction to Price of Interest and Analysis Techniques

Overview of Lecture Content

• The speaker introduces themselves as Gwyar and outlines the focus of Lecture 6, which includes understanding Price of Interest (POI), lower and higher time frame analysis, entry modules, and internal/external structures.

• A total of four key points will be covered step-by-step in this SMC lecture. The speaker mentions a PDF resource available for download via an application link provided in the description.

• The PDFs include materials from previous lectures (1 through 6) as well as fractal lecture PDFs. Students can ask questions related to the lectures through a chat option.

Importance of Previous Lectures

• The speaker encourages students who haven't watched lectures 1 to 5 to do so before proceeding with Lecture 6, emphasizing that prior knowledge is crucial for understanding the current content.

Understanding Price of Interest (POI)

Definition and Significance

• POI refers to specific areas where traders are interested in making entries. It indicates where interest lies for potential trades.

Identifying POIs within SMC

• In SMC, POIs can be found at order blocks and FGs (Fractal Groups). Multiple order blocks may form within a structure, indicating various entry points.

Entry Planning: IDM Concept

Introduction to IDM

• The first entry plan discussed is based on IDM (Inducement Market Dynamics), which occurs when price trends upward creating swings.

Analyzing Price Movements

• As price drops towards an IDM level, it creates candles that indicate market behavior. A significant candle formation below the IDM suggests liquidity grabbing.

Liquidity Grabbing and IFSC Candles

Understanding IFSC Candles

• An IFSC candle is defined as one that sweeps liquidity or swings. This type of candle plays a critical role in confirming market movements.

Entry Strategy Based on Liquidity

• Traders should plan their entries around IDMs while targeting higher highs or previous FGs just below them for optimal risk management.

Probability Assessment in Trading

Evaluating Trade Probabilities

• The probability of price moving upwards after hitting an IDM is assessed at 50%. However, if no other POIs exist below it, this probability increases significantly.

Conditions Affecting Probability

• If multiple order blocks or FGs are present beneath an IDM, the likelihood decreases back to around 50%, indicating more risk involved in trading decisions.

Risk Management Strategies

Managing Entry Risks

• When planning entries near IDMs with no underlying support structures like order blocks or FGs, traders can expect higher probabilities but must still manage risks effectively.

Time Frame Considerations

Understanding Market Structure and Entry Points

High Time Frame Analysis

• The discussion begins with the concept of a "sweep" occurring on a higher time frame, indicating that if a candle takes 30 minutes to form, it suggests significant market activity during that period.

• When a structure is established over 30 minutes, the probability of achieving target accuracy increases to approximately 75% to 85%, especially when lower time frames show buying structures.

• A reminder is given that when the 30-minute structure sweeps, probabilities can rise to 90% if lower time frames confirm buying signals.

Market Structure and Entry Planning

• The importance of recognizing single candles in shorter time frames is emphasized; these can indicate strong market movements and high probabilities for entry points.

• An example using Bank Nifty's structure illustrates how identifying lower lows and IDM (Internal Demand Model) helps in planning entries effectively.

Identifying Order Blocks

• The absence of order blocks or FPG (Fair Price Gaps) at critical points indicates a high probability (95% to 100%) for making an entry after an IDM sweep occurs.

• It’s crucial to plan entries based on the presence or absence of order blocks; without them, traders can set stop losses effectively while targeting their goals.

Risk Management Strategies

• Emphasis is placed on understanding liquidity dynamics; many traders' stop losses are often targeted by price movements, which can lead to profitable trades if planned correctly.

• Traders are advised not just to look for good exit targets but also understand the logic behind market movements and liquidity needs.

Adjusting Plans Based on Market Conditions

• If prices close below an IDM body, traders should wait for confirmation from subsequent candles before making new plans based on identified order blocks.

• The distinction between demand zones in uptrends versus supply zones in downtrends is clarified; this knowledge aids in better decision-making regarding entries.

Final Thoughts on Entry Planning

• Traders should be aware of how second candles react after tapping into order blocks; this reaction will guide further trading decisions.

Understanding Market Structure and Entry Points

Analyzing Order Blocks and Price Movements

• The focus is on utilizing the previous order block for entry, emphasizing that price will likely reject at this point before moving downwards.

• If a rejection occurs within a 30-minute timeframe, it can be used to plan an entry; however, if the structure shifts in one minute, adjustments must be made accordingly.

• The market structure is expected to shift after creating a swing high, indicating a potential change in trend direction.

• A "choke" point is identified where the market's structure has shifted; this indicates that the trend may change due to higher time frame price action (PI).

• Planning entries should consider higher time frame rejections before confirming lower time frame structures.

Entry Strategies Based on Time Frames

• Direct entries are discouraged on one-minute charts due to insufficient structure; instead, wait for confirmation from 30-minute candles showing rejection.

• Examples of IDM (Immediate Demand Model) entries are discussed, highlighting how lower lows confirm structural mapping.

• Observations about IDM indicate that when momentum shows downside movement but then reverses upwards, it suggests potential entry points based on liquidity conditions.

Understanding Supply and Demand Zones

• The importance of identifying supply zones above current price levels is emphasized; entering without clear demand zones can lead to uncertain outcomes.

• The first order block above an IDM during a downtrend serves as a critical reference point for planning trades effectively.

Confirming Trade Setups

• When planning trades around identified order blocks, it's crucial to set stop losses appropriately while targeting specific price objectives based on market behavior.

• Understanding both supply and demand zones helps clarify when and where to enter trades effectively while considering market conditions.

Advanced Concepts in Liquidity Engineering

• Discussion transitions into more complex concepts like liquidity engineering; however, simplicity remains key for effective trading strategies.

• Emphasis is placed on recognizing swings in market structure over time frames rather than complicating analysis with excessive details.

Understanding Order Blocks and Trading Strategies

Key Concepts of Order Blocks

• The discussion begins with the concept of "high to hire low" as a range for trading, emphasizing the importance of identifying order blocks.

• When price breaks a certain point, traders should focus on the nearest order block before this break, referred to as an "extreme order block."

• Traders often lack patience and exit trades too early; understanding how price interacts with these blocks is crucial for maximizing profits.

Common Misconceptions in Trading

• Many traders express frustration when strategies like SMC (Smart Money Concepts) do not seem effective due to incomplete knowledge.

• The speaker emphasizes that simply watching a few lectures does not equate to true understanding; deeper knowledge is necessary for successful trading.

Importance of Knowledge in Trading

• A trader's grasp of fundamental concepts such as "lethargic price action" and various types of blocks (mitigation, rejection, vacuum) is essential for informed decision-making.

• The speaker highlights that many hidden rules exist within trading strategies that are often overlooked by novice traders.

Personal Insights and Experiences

• The speaker shares personal experiences about balancing time between family commitments and trading education while acknowledging their success through funded trading.

• They urge others not to dismiss strategies without proper knowledge, stressing the importance of continuous learning in trading.

Practical Application of Order Blocks

• The last order block has a high probability (90%) of being tapped by price before moving upward; this principle applies similarly in downtrends.

• Traders should place stop-loss orders strategically while targeting significant points based on extreme order blocks identified during analysis.

Understanding Order Blocks and Price Action in Trading

Key Concepts of Order Blocks

• The price is expected to tap into the order block, leading to a drop towards the target. This indicates a potential reversal point where traders can anticipate market movements.

• Three primary points of interest (PIs) are identified:

• First PI: IDM sweep

• Second PI: First order block above IDM

• Third PI: Last order block, with other blocks being less significant.

Structure of Price Action

• In an uptrend, the first order block below IDM is crucial for planning trades. The focus should remain on these three PIs while ignoring intermediate blocks.

• A "boss sweep" occurs when the price drops and sweeps through a boss level, indicating liquidity has been tapped. This creates opportunities for entry as it signals potential reversals.

Entry Planning and Probability Assessment

• When entering trades after a boss sweep, it's essential to provide some buffer below the body close to avoid premature exits. This fourth PI emphasizes strategic entry points.

• Market dynamics require consideration of liquidity; both boss and chalk levels represent areas where liquidity exists. An entry plan should be based on these levels for higher probability setups.

High Probability Setups

• The probability of successful trades increases significantly (up to 95%) when using higher time frames like 30 minutes or more compared to lower time frames (1 or 5 minutes), which maintain around an 80% success rate.

• Understanding how price behaves during downtrends helps in identifying potential entries at key resistance levels formed by previous order blocks.

Execution Strategy and Risk Management

• After confirming that a boss has swept, traders can set targets based on nearby order blocks or liquidity zones. Proper risk management involves placing stop losses strategically below significant levels.

• Always aim for initial targets at first AGI levels before considering further moves. Recognizing repeated patterns enhances trade reliability over time.

Understanding Price Interest and Liquidity in Trading

Key Concepts of Price Interest (PI)

• The speaker introduces the concept of "Price Interest" (PI), explaining that there are four main points to consider, starting with IDM (Initial Demand Model) and moving through various order blocks.

• Emphasis is placed on respecting the "exm order block," which indicates potential price movement. If the price does not respect this block, it may lead to a liquidity grab.

• The importance of planning entries around significant points like order blocks is highlighted. If an order block breaks, traders should adjust their targets accordingly.

• A high probability (90%) for successful trades when following these setups is mentioned, indicating a strong likelihood of favorable outcomes if executed correctly.

• The discussion includes identifying specific entry points where trading should be avoided, emphasizing strategic decision-making in trading environments.

Engineering Liquidity

• The term "engineering liquidity" refers to certain market behaviors that can mislead traders. It’s crucial to recognize areas where one should avoid entering trades due to potential traps.

• The speaker explains that engineering liquidity often involves swings grabbing liquidity before prices move upward, suggesting a need for caution in such scenarios.

• Traders are advised to plan entries based on swing grabs rather than just focusing on order blocks alone, as this can lead to better-informed decisions.

Analyzing Market Trends

• Stop-loss strategies are discussed; they should be set at critical points like choke points. This helps manage risk effectively during trades.

• A warning against relying solely on short-term momentum is given. Many traders fall into traps by only observing order blocks without understanding broader market dynamics.

• The speaker stresses the importance of comprehensive knowledge over partial insights when engaging with market trends and making trading decisions.

Time Frame Analysis

• Transitioning into time frame analysis, the speaker notes how understanding both lower and higher time frames can significantly impact trading success.

• Examples illustrate how failing to analyze higher time frames can lead to incorrect trade placements and subsequent losses due to unexpected market movements.

• A call for deeper learning about higher time frame analysis is made, setting up future discussions about effective entry planning based on comprehensive market analysis techniques.

Understanding Higher and Lower Time Frame Analysis in Bank Nifty

Introduction to Time Frame Analysis

• The lecture discusses the importance of understanding both higher and lower time frame analysis, specifically focusing on the 30-minute time frame for Bank Nifty.

• It aims to clarify why traders often get trapped in lower time frames despite observing an uptrend that suddenly shifts to a downtrend.

Higher Time Frame Analysis

• On the 30-minute chart, an uptrend structure is identified, with the first higher high being established.

• After identifying this structure, it’s crucial to plan entries based on the first Point of Interest (POI), which corresponds to an order block.

Order Blocks and Entry Planning

• The concept of gaps as Fair Value Gaps (FVG) is introduced; these should be treated as single candles for entry planning.

• The discussion includes how to understand entry modules related to order blocks across different time frames.

Transitioning to Lower Time Frames

• The focus shifts to lower time frames, particularly analyzing data from December 21st.

• Observations are made about price movements in relation to POIs and how they appear weak on the 30-minute chart.

Analyzing Price Movements

• A strategy for planning entries is discussed: marking POIs on the 30-minute chart while waiting for price action before entering trades.

• Emphasis is placed on recognizing significant candle formations and avoiding traps due to incorrect entry points.

Understanding Market Structure Shifts

• The speaker explains that successful entries occur when large players enter at specific points, respecting order blocks.

• Signs of big players entering are compared using a swimming pool analogy—small movements versus significant impacts caused by larger entities.

Identifying Traps in Trading

• Traders must recognize signs indicating potential traps; if price moves without visible order blocks or support levels, caution is advised.

• A warning against entering trades during apparent momentum without confirming underlying structures or support levels is highlighted.

Conclusion: Avoiding Retail Trader Traps

• Retail traders often fall into traps during downward movements where stop losses are collected before actual market moves begin.

Market Analysis and Trading Strategies

Understanding Market Movements

• The market is experiencing a significant downward movement, characterized by strong bearish candles. Traders often react quickly to breakouts by selling immediately.

• Both buyers and sellers are trapped in the current market conditions, leading to potential losses as they attempt to scalp small profits from minor price movements.

Identifying Displacement

• Displacement indicates that major players have entered the market, creating an imbalance through large buying or selling actions. This is crucial for recognizing shifts in market dynamics.

• A one-minute candle shows substantial momentum (150 points), contrasting with a five-minute candle that reflects minimal movement (20 points). This highlights the importance of timeframes in analyzing market behavior.

Recognizing Market Structure Shifts

• A shift in market structure occurs when prices drop significantly, tapping into key levels which can serve as entry points for traders. Stop-loss placements should be strategically considered at previous defense points.

• The target for trades should align with higher timeframe analysis, ensuring that entries are based on solid technical foundations rather than impulsive decisions.

Fractal Nature of Markets

• Higher timeframe order blocks may not always be visible on lower timeframes; however, fractal nature allows traders to identify opportunities by analyzing smaller intervals where patterns emerge.

• Entry strategies must consider both higher and lower timeframe analyses to ensure comprehensive understanding of potential trade setups.

External vs Internal Momentum

• External momentum refers to initial traps identified on lower timeframes, while internal momentum follows after structural shifts occur. Understanding these concepts aids in making informed trading decisions.

• The first trap signifies external influences without order blocks present; subsequent displacement provides further insights into potential entry points within the trading strategy.

Analyzing Trade Risks

• When planning trades based on lower timeframe signals, it’s essential to consider higher timeframe trends. If there’s a contradiction between them (e.g., buying signals on high timeframe versus selling signals on low), it can lead to stop-loss hits and unexpected losses.

Understanding Internal Range Play in Trading

Concept of Internal Range Play

• The discussion begins with the importance of identifying the Price Indicator (PI) and how it influences trading decisions, particularly focusing on lower time frames.

• The speaker emphasizes understanding the internal range when a 30-minute IDM (Initial Demand Model) is established, indicating a clear direction for trades.

• Traders are advised to mark order blocks that prices are likely to approach after identifying the IDM, which helps in planning trades effectively.

Volume Imbalance Insights

• A volume imbalance is highlighted as a critical factor; areas without body presence indicate weak price action and potential entry points for traders.

• The absence of volume within certain price ranges suggests low activity, reinforcing the idea that significant movements occur where bodies exist in candlestick formations.

Confirmation Signals for Trades

• Multiple confirmations are necessary before executing trades; if prices tap into an order block while showing signs of weakness, it indicates a high probability of downward movement.

• The concept of setting stop losses based on swing highs/lows is discussed, ensuring risk management aligns with identified targets from higher time frames.

Execution Strategy

• Emphasis is placed on waiting for confirmation from IDMs before planning trades; premature actions can lead to missed opportunities or losses.

• It’s crucial to recognize that trading should only occur after confirming IDMs have been established and respected by market movements.

Practical Application and Student Experiences

• Real-life examples from students illustrate successful internal range plays following IDMs and their effectiveness in capturing market swings.

• The speaker discusses how students utilized these strategies effectively during live trading sessions, emphasizing learning through practical application.

Conclusion: High Probability Setups

• Identifying key order blocks and understanding liquidity dynamics allows traders to anticipate price movements accurately.

Trading Strategies and Concepts Explained

Understanding Lower Time Frame Trading

• The speaker discusses the importance of planning trades on lower time frames, explaining entry methods, displacement signs, and internal range play.

• Emphasizes the concept of liquidity voids, which occur when there is a gap in price movement where trading has not taken place.

Liquidity Voids and Market Behavior

• Describes how price gaps indicate areas where the market skipped trading activity, highlighting that these are referred to as liquidity voids.

• Mentions that understanding liquidity voids is crucial for identifying key thresholds in future lectures.

Volume Imbalance and Entry Points

• Explains volume imbalance as a critical factor in determining entry points; areas with low volume often present opportunities for traders.

• Discusses how to identify higher highs and potential entry points based on candle formations within these imbalances.

Rejection Patterns and Buyer Psychology

• Analyzes rejection patterns in candles to determine valid entry plans while cautioning against taking entries without proper displacement.

• Highlights buyer traps below certain lows where stop losses are placed, leading to further selling pressure from trapped buyers.

Importance of Market Structure Awareness

• Stresses the significance of recognizing market structure; lack of body presence in price movements indicates volume imbalance.

• Concludes that understanding these dynamics helps traders make informed decisions about their entries and stop-loss placements.

Final Thoughts on Trading Strategy Development

• Encourages viewers to focus on practical strategies rather than theoretical patterns like support/resistance or common chart formations.

• Urges traders to learn from recent examples rather than outdated ones for better trust and comprehension of current market conditions.

Resources for Further Learning

• Mentions available resources such as PDFs through an application link provided in the description for deeper learning about trading concepts.

• Advises maintaining awareness of both higher time frame trends and lower time frame entries while being cautious not to overtrade.

Understanding Higher Time Frame Analysis

Importance of Higher Time Frames

• The daily time frame reveals significant market formations, emphasizing the need to mark high points accurately.

• Acknowledges the role of order blocks in trading; highlights that lower time frames may indicate downward trends while higher time frames suggest buying opportunities.

Risks of Ignoring Higher Time Frames

• Missing higher time frame analysis can lead to being trapped in trades, as many traders fail to recognize the importance of these levels.

• Discusses how a substantial price movement (2600 points) requires adequate liquidity and preparation, akin to needing enough fuel for a long journey.

Liquidity and Displacement Concepts

• Emphasizes that understanding displacement is crucial; it occurs on both lower and higher time frames, affecting trading strategies.

• Highlights that while one can observe displacement on lower time frames, it's essential to consider its implications on higher time frames as well.

Analyzing Order Blocks and Market Movements

Characteristics of Order Blocks

• Examines volume elements associated with order blocks; notes no body closes below certain volume levels indicating potential traps for traders.

• Describes how traders might set stop losses based on daily order block analysis but could be misled by insufficient displacement observations.

Understanding Market Dynamics

• Explains that fake moves often precede genuine displacements; recognizing this pattern is vital for successful trading.

• Points out that liquidity creation within market movements is essential for understanding price behavior and future trends.

Market Behavior Over Days

Daily Trading Patterns

• Observes how gaps in opening prices can signify important market dynamics; emphasizes the need for awareness regarding extreme order blocks.

• Illustrates how prolonged sideways movement indicates potential liquidity accumulation before significant price action occurs.

Anticipating Future Trends

• Suggesting upcoming weeks may exhibit sideways trends due to established order blocks, advising caution in trading during this period.

• Encourages traders to focus on understanding displacements rather than rushing into trades without proper analysis.

Final Thoughts on Trading Strategies

Key Takeaways for Traders

• Stresses the importance of patience and thorough analysis over impulsive trading decisions based on incomplete knowledge.

Understanding Displacement in Trading

Lower Time Frame Displacement

• The speaker explains that displacement will first occur on the lower time frame before it happens on the higher time frame. It is advised not to plan entries based solely on lower time frame displacements but to use them as additional confirmation.

• Emphasis is placed on understanding lower time frame displacement, especially for beginners. Experienced traders may utilize this information more effectively.

• The importance of observing lower time frame displacements when analyzing daily or four-hour charts in Indian markets is highlighted. Beginners are cautioned against acting prematurely.

Analyzing Price Movements

• The speaker discusses how price movements tap into order blocks and why prices move downwards, indicating a need for further analysis of the daily time frame.

• A concept of volume imbalance is introduced, explaining that certain areas lack volume, which can affect trading decisions. Understanding these imbalances is crucial for effective trading strategies.

Entry Planning and Market Structure

• Observations about last price interactions with upper levels indicate potential upward movement; however, caution is advised due to pending taps at lower levels.

• The speaker mentions that despite seeing potential entry points, they will refrain from entering trades until specific conditions regarding volume balance are met.

Finalizing Trade Strategies

• After confirming necessary conditions such as tapping order blocks and achieving displacement across both time frames, the speaker outlines where future price movements are expected to go.

• Traders are encouraged to set safe stop-loss levels and consider swing trade plans based on identified market structures and targets.

Conclusion and Resources

• The discussion wraps up by encouraging traders to focus on trend direction rather than relying heavily on indicators or unnecessary courses.

Avoiding Common Trading Pitfalls

Importance of Self-Learning in Trading

• The speaker emphasizes the necessity of self-learning in trading, advising against reliance on indicators and tips from others.

• It is suggested that becoming a better trader is directly linked to personal effort and learning from one's own experiences.

• The speaker warns that depending solely on others for knowledge will lead to stagnation and lack of progress in trading skills.

• Acknowledging losses as part of the learning process is crucial; experiencing losses due to personal decisions can foster growth and understanding.