PT 01 LQ 01 High Level Trade Plan Theory
Introduction
The instructor introduces the topic of liquidity and explains that before diving into technical analysis, it's important to understand the overall strategy and framework behind trading.
- The instructor emphasizes the importance of understanding the philosophy behind trading before getting lost in technical details.
- A high-level trade plan is presented, focusing on market structure and supply and demand.
- The instructor notes that liquidity will be added to this trade plan later in the module.
Trading with Market Structure and Supply & Demand
This section outlines a basic trade plan using market structure and supply & demand.
- When price is bearish, supply is in control, so shorts can be taken from supply targeting weak lows.
- When there is a bullish shift in structure, supply has failed and demand may be taking control. If demand holds, previous unmitigated supply zones become reaction points for pullbacks. Longs can then be targeted at weak highs.
- Following a hard time frame, a lower time frame can be used for confirmation of zones holding and increased refinement to improve risk-reward ratio.
- By dropping down to a lower time frame when price comes into an area, traders can look for confirmation of shifts in order flow before entering trades with smaller stop losses.
Philosophy of Trading
This section discusses the philosophy of trading and how to follow everything on a hard time frame.
Hard Time Frame Philosophy
- The philosophy is to follow everything on a hard time frame waiting for price to enter our hard time frame POI.
- Understanding the hard time frame narrative is important as it tells us the high time frame story.
- We get increased risk reward by following this philosophy.
Lower Time Frame Execution
This section explains how to execute trades on lower time frames once price enters a hard time frame POI.
Waiting for Price Entry
- Once price gets here, rather than just entering along directly, we wait for the exact same thing to happen on the lower time frames.
- Markets are fractal surprise comes in the lower time frames and this pattern is the exact same as this pattern all right it's just price being bearish then it's just bullish and we get into another demand same thing here right but this load time frame execution is what we're going to be using in every one of these hard time frame pois right not every single one.
High Probability Trades
- Whenever you want to trade a hard-time-frame poi if you deem it to be high probability, you've built the hard-time-frame story I.E we've been heavily bearish we pull back up to this extreme Supply at a strong High when price gets here what do you do you jump down and you look for your lower timeframe execution model okay but obviously it would be a bearish one not a British one okay so that's the general idea um there are very essential models and that's what you're going to learn towards the end of the liquidity module.
General Philosophy
This section discusses the general philosophy of trading and how to make consistent profits.
High Time Frame Ideas
- The general idea is high time frame ideas, hard time frame pois, lower time frame execution.
- We're not sitting on the lower time frames just trading lower time frame all the flow right this is what comes first right this is how you will get consistent how you will make good money this is just what you do once price gets to those areas.
Market Movement
This section explains how the market moves and how we look for trade ideas.
Three Time Frames
- When thinking about your trade plan philosophy, strategy, or what you're doing really it comes down to three-time frames.
- It's having a higher time frame, a medium-time-frame, and a lower timeframe.
Hard Time Frame Objective
- The higher time frame is the objective; it's what you're looking at.
- You want to know kind of what the objective is and when you want to know what the narrative is.
Medium Time Frame Bias
- Your medium-time-frame bias is kind of like your ideas' timeframe.
- These are the pois that you're going to be looking to trade from.
Understanding Time Frames and Trading Strategies
In this section, the speaker explains the importance of understanding time frames in trading and how to use them to develop a trading strategy.
Importance of Time Frames
- It is important to know whether you are in a Pro Trend run phase or a higher time frame counter Trend pullback phase.
- The higher time frame signals when the medium time frame may change trend.
- The medium time frame fulfills the objective of the higher time frame.
Trading Strategies
Swing Trader
- Use M15 entries for lower time frames and trade four-hour ideas for medium time frames. Daily charts are used as higher time frames.
Day Trader
- Use one level lower than swing trader: four-hour chart for higher time frames, M15 for medium, and M5 or M1 for execution.
- These are not strict rules but general guidelines.
Developing a Trading Plan
- A four-hour break of structure is used as a hard time frame signal.
- Follow bullet structure on medium-time frames for immediate bias and POIs.
- Look to buy bullish POIs during Pro Trend runs and expect mid-time frame trend changes during hard-time-frame supply levels.
Trading Strategies for Medium Time Frames
In this section, the speaker discusses trading strategies for medium time frames.
Medium Time Frame POI
- Look for Longs when bullish order flows in.
- Be aware that M15 internal structure or swing structure could switch bearish and we could have a deep four-hour pullback.
- Only look for a trade entry once your medium time frame POI has been mitigated.
Lower Time Frame Entry
- Wait for your medium time frame to shift bearish before looking for a lower time frame entry.
- Wait for an M15 shock that gives you a fresh M15 POI again and then look for an entry on the M1.
- Target the weak M15 low and be quick with your targets.
Bias
- When coming into the session, your immediate bias should be based on the new M15 internal range.
- The higher time frame (four-hour chart) is bullish, so be quick with your targets when trading from bearish M15 zones.
Understanding Medium Time Frame Ranges
In this section, the speaker explains how to identify medium time frame ranges and outlines the steps to take when trading within them.
Identifying Medium Time Frame Supply Zones
- Mark out the current medium time frame range you're within.
- Look for where your M15 pois are located.
- Wait for price to come into it and then look for an M5 entry model or wait for an M15 shock.
Trading Within Medium Time Frame Ranges
- Focus on shorts from M15 zones.
- Drop down to your low time frame engine and look for it to get the week low.
- Take your profits reset now what do we have well this becomes our new strong M15 higher took out that low this becomes our Newman 15 low so this is the range we're within.
Switching Bias in a Medium Time Frame Range
- As we pull down into the four-hour strong swing low, if you look left, you may find an M15 Zone within the higher time frame.
- Once you get a medium time frame POI, that's when you're technically allowed to look for your lower time frame execution.
- Shorting from here now is a lot lower probability because that four-hour higher local form so maybe you want to take shorts up here maybe here but now once we've pulled below for our discount or maybe there's something you know for our demands here this is where you may want to hold off in shorts and just be patient and now you want to start thinking about longs.
Trading Framework
In this section, the speaker explains a trading framework that can be used to identify trading opportunities in the market.
Identifying Bias and Concentrating on Buying
- The first step is to identify the medium time frame bias, whether it's M15 or 4H.
- When the bias is bullish, concentrate on buying from medium time frame POIs.
- Look for M15 demands and set alerts for price to come into them.
Execution and POI Selection
- Once alerted, jump down to lower time frame execution and look for entry points.
- Learn how to do POI selection by looking for ones stacked with 4H zones or in the discount of the range.
- Liquidity concepts are another filter to consider.
Trading Against Medium Time Frame
- When trading against medium time frame, there's no guarantee that POIs will hold.
- You could play a quick pullback play or wait for more confirmation before entering a trade.
Higher Time Frame Objective
- Higher time frames help understand how medium time frames are likely to behave.
- Focus on buying M15 POIs until medium time frame shifts bearish.
- Then focus on shorting from supply during hard time frame pullback phase.
Understanding Trading Timeframes
In this section, the speaker discusses how to trade inline with your medium time frame and understanding higher time frames.
Trading Inline with Medium Time Frame
- Trade inline with your medium time frame trend or at least order flow from your medium time frame pois.
- Understanding the high time frame can help you know when to leave trades alone.
Importance of M15 Zone
- The speaker's strategy is trading M15 ideas and zones with M1 timing and execution.
- Understanding higher time frames is a big part of trading an M15 zone.
Liquidity Concepts
- Liquidity concepts are important in trading.
- Start by getting good at swing style before introducing day trading style.
Probability of Trades
- Taking initial entry from the M15 POI on the M1 has a high probability in general.
- Focus on textbook bread and butter setups for clean setups on the M1.