I just found a brand new strategy that I myself personally use all the time. It involves,
drum roll please Fair value gaps. If you don t know what fair
value gaps are, well, you re in for a treat. If you do know what fair value gaps are, well
you re even luckier, because I m about to show you an amazing strategy using them.
And most of the trades, have risk to reward ratios like this.
And the crazy thing is, a good majority of the time, it succeeds.
Well you know me, I like to get straight to the point with these videos let s see how
this strategy works. First off, we are trading Euro/USD.
This trading strategy will work in all markets. Including stocks, crypto, forex, whatever
you trading. Also, as a quick side note. I just hit 100K
subscribers recently and I wanna say from the bottom of my heart. Thank you. Seriously.
I love you guys. As a way to say thanks, hankotrade has agreed
to help host a forex trading competition with me.
Which means, there s a prize pool baby. I m hosting a trading competition where the
top 2 people with the highest % gain on their account after two weeks of trading will receive
$1,000 each. So we are giving away a total of $2,000 to you guys.
The only requirements is that you need to deposit a minimum of $100 on hankotrade, follow
both me and hankotrade on Instagram, and of course get first or 2nd place. That s it.
If you do those things, you get a free $1,000. Hell, you could even use this strategy that
I m about to share with you to help you win it.
Hankotrade is a great broker, and I ve been using them for a long time. You can use up
to 500x leverage, they have extremely low spreads starting from 0.0 pips (yes you heard
me correctly), low commissions, negative balance protection, and they will match 100% of whatever
you deposit. So yeah, they re pretty awesome If you re interested in joining the forex
trading competiton, I ll leave the sign up link in my description. It will start once
this video get s released, so yeah, enter now. It will end in 2 weeks. You can also
check out my Discord where I ll updating a live leaderboard of the competition. Good
luck. Thanks again for 100k subscribers. Back to the strategy.
So the very first step for this strategy is finding a key support or resistance depending
on if you want to go long or short. For this example we want to do a short trade,
so, we need to find a key resistance. You can do this by finding a recent swing
high, or by going on a higher timeframe like the 1 hour and finding a key resistance there.
So here, price just made a recent high. It has also been a pretty strong resistance on
the one hour time frame. So we mark a line on our chart to let us know there is a strong
resistance here. The next step to make this strategy a high
probability setup is we want a fake out. A fake out is simply when price breaks your
resistance or support and it ends up being a false breakout and starts heading the opposite
direction. The reason why we want a fake out is this.
There are going to be people entering long positions for this break of the recent high.
So you know what they are going to do? Set stop losses down in this area. So if price
does end up doing a false breakout, once price comes down, it will hit all of their stop
losses adding fuel to the fire, giving price momentum to keep heading downwards. Which
is exactly what we want when going shorting. So we have our resistance, price starts coming
back up towards it, but doesn t quite break it. So, its not considered a breakout.
Price rejects, then try to break the resistance again, this time it does end up breaking the
resistance just barely tho, then starts falling. This is the false breakout we are looking
for. So that is step 2 completed.
The next thing we are looking for is price to confirm its heading downwards.
How we confirm this, is we want price to make two lower lows. Like this.
If price ends up making two lower lows, we can confirm that there is a high probability
of price to continue to head lower, considering this is the start of whats considered a downtrend.
So here, price had the false break out, price makes a low, goes up a little bit, then makes
another low. Looks what s happening. Price came to this
resistance area, and not only that, but it also did a false breakout, which is an extremely
bearish sign. Then on top of that, we made two lower lows. All of these signs are extreme
indicators of price wanting to move downwards. Now you may be asking.
Ok, price made two lower lows, but where do I enter?
*fair value gap enters the chat* We are going to get our optimal entry from
a fair value gap. A fair value gap is just when price makes
a huge move in one direction and doesn t give the buyers or sellers enough time to counteract
the movement. Creating an imbalance in the market.
Price will naturally want to come back to this area to test it again.
You can get this area by getting the big movement, and going from the candle wick before the
move, and the candlewick after the move, and this is the fair value gap area.
Now what s cool is my private indicator has an option to where you can enable fair value
gaps, and it will automatically show case all the fair value gaps on the chart. So you
don t have to do any of the work, it does it all for you.
It will also color code the fair value gaps to tell you if they are bullish or bearish.
So that s what all these rectangles are on my chart. Fair value gaps.
If you re interested in the indicator, I ll leave a link in the description so you can
go check it out and use it for yourself. So price did a false breakout, then made two
lower lows. You can also see that on this second low, it made a bearish fair value gap,
which is exactly what we are looking for. This, will be your entry signal.
Sometimes price will create multiple fair values gaps on the 2nd low. If you want to
short and it does this, always just aim for the entry of the highest fair value gap as
this will give you the best entry. You will have cases, where price doesn t make
it there, and you miss out on the trade, but you will have better risk to reward ratis
by trading off the highest fair value gap. Anyways, so we have our fair value gap target.
What I like to do is use this tool on TradingView. The Gann Box.
Place it anywhere on your chart, click on it, and then go to the settings. Pause the
video and make sure your settings match mine. Once you have the correct settings. Display
the gann box exactly on the ends of the fair value gap.
This will draw a line exactly in the middle of the fair gap. This, is our entry point.
Price will often go to this 50% mark and reject here. So, we wait for price to hit this line.
Price ends up coming back up and hitting the fair value gap just as we expected.
So we enter our trade. You can set your stop loss at the recent swing
high, or if you want to be a little more risky, you can set it above the original resistance.
I usually just set it at the recent swing high. You will get stopped out a little more,
but the risk to reward ratio is way better. In the end, it s up to you.
Then, you re gong to set your take profit at the low of the whole move.
What makes this strategy so successful, is the risk to reward ratio. With most of these
styles of trades you are going to have huge room for gains, and little room for losses.
So basically you only need 1 out of every 4 trades to be successful in order to make
money. Often times when prices has a huge spike up
like this, and starts consolidating at the top, price will usually come down and mirror
what the move did while it was going up. So it will hesitate usually at the same exact
spots it did while going up. The end goal is where the move started. Which
is where we will set our take profit. I also recommend to increase the win rate
of the strategy to take profit at key hesitation levels.
So here during the move up, price hesitated here and here. These are potential areas to
sell a % of your position to get guaranteed profits, rather than wait for price to make
it all the way down here. As a quick hint. Another way to find potential
take profits is by going on a higher timeframe and looking for bullish fair value gaps and
use the gann box tool. These could also be good areas to take profit.
It s important to incorporate risk management when dealing with strategies like these.
So we have our stop loss setup, our take profits setup and, and we are enter in a short trade.
Price starts heading downwards right after hitting the fair value gap just like we expected.
Then hits our first take profit area and starts hesitating, also, just like we expected. So
we sold 25% of our position here. Then we let price do it s magic.
It starts heading downward some more and hits our 2nd take profit and starts hesitating
again at our take profit area, so we sell another 25% of our position. This way, we
are guaranteeing these profits. Then finally, price ends up hitting our final
take profit and we exit the trade, making an absolute killing off this one single trade.
That s the thing with this strategy. You get these massive wins and because of the all
the precautions we take before entering the trade, it makes an extremely high probability
setup. If you wanted to do a long trade, just do
the complete opposite of everything said. Again if you want to check out the indicator
to help show value gaps go to tradinglab.ai And if you want the chance to use this strategy
in a trading competition and win a free $1000 sign up for it in the description. It starts
right now. Good luck.