Introduction

In this video, the speaker will explain how to use breaker blocks in trading strategy. The speaker will cover what a breaker block is, how and when to use it, and provide live examples of using a breaker block to enter trades.

What is a Breaker Block?

• A breaker block occurs when the market takes liquidity into a reference point or point of interest.

• It marks a shift in structure after taking liquidity.

• It is also called a failed order block.

How and When to Use Breaker Blocks?

• Look for confluence with the breaker block by trading into an area where you're likely to see a reaction.

• Always look for some form of reference point or some form of old low on higher time frames.

• Breaker blocks are used when traders are shorting market structure and they have their stop losses at an unexpected level.

Entries Using Breaker Blocks

• Be patient because after the breakout there may be retests before entering trades.

• Look for the last level high as traders who are underwater will close out their positions near entry.

Conclusion

The speaker concludes by emphasizing that patience is key when using breaker blocks. Traders should wait for retests before entering trades.

Using Breakers in Harsh or Consistent Market Conditions

In this section, the speaker emphasizes the importance of using Breakers when the market is moving in harsh or consistent conditions. The speaker explains that Breakers should be used when there is a clear bias and liquidity is drawn.

When to Use Breakers

• Use Breakers when the market is moving in harsh or consistent directions.

• Only use Breakers when you are very confident in your bias and the market is clearly moving towards the drawing liquidity.

• Do not use Breakers every single time they arise. Instead, use fair value gaps or order blocks.

• Look for the breaker to occur before price reaches an old reference point.

Entering a Breaker Block

In this section, the speaker explains how to enter a breaker block and what to look for on the chart.

How to Enter a Breaker Block

• Look for a short-term high before a liquidity rate on sell-side liquidity.

• After taking out stops into a reference point, enter into a breaker block.

• Look for that last up or down candle that forms short-term structure after liquidity has been taken and there has been a market structure shift with displacement.

Bearish Example of Using Breakers

In this section, the speaker provides an example of using breakers in bearish conditions.

Bearish Example of Using Breakers

• Look for that last down candle that forms short-term structure after taking out highs into a fair value gap.

• Target more lows instead of looking for an order block in harsh trending markets.

Entries using Breaker Blocks

In this section, the speaker discusses how to use breaker blocks for entries. They provide a live example of a bullish range on the ES one-hour chart and explain how to identify potential breaker blocks.

Identifying Breaker Blocks

• Look for areas of South Side liquidity with reference points resting below.

• Potential breaker forms as market pushes through sell-side liquidity.

• Need displacement to the upside after taking out sell-side liquidity.

• Pay attention to the last up handle that formed the short-term high.

Using Breaker Blocks for Entries

• Two types of entries: direct entry on breaker block or swing low/lowest low of rate.

• Use breakers full candle range for entry and put stop loss under breakers low or high or under high or low level of structure.

• Target recent Pro Trend liquidity.

Example Trade

• Market is in clear trend when it moves up straight to liquidity.

• Relatively equal highs are used to target Pro Trend liquidity.

Trading Breakers and Fair Value Gaps

In this section, the speaker discusses how to use breakers and fair value gaps in trading. They explain two methods for entering trades and provide tips on taking partials.

Using Breakers and Fair Value Gaps

• Wait for price to tap into a level and watch lower time frames for confirmation.

• Entries vary, but clear breaks of structure with displacement are recommended.

• Targeting method remains the same regardless of entry method.

• Breaker blocks with nested fair value gaps provide strong confluence.

• Take partials along the way, especially if you're a beginner.

Taking Partials

• Look for liquidity and fair value gaps when considering where to take partial profits.

• Even experienced traders should take partial profits because no one is right all the time.