No shoes, No Shirt... NWOG

Date: 2023-05-13

That candle should appear on your weekly chart as Monday, August 15, 2022 — that’s what it should say on TradingView. The next candle to the right should be Monday, August 22, 2022.

On those respective candles, where the wick does not even touch the separation between the bodies, that is the volume imbalance. And this week, I went one step further and drew your attention to the actual gap itself — that is a liquidity void.

My upside focus was primarily on one specific market, and that was the NQ. You can go back and look at the tweets. Any weakness—or any short opportunities—would have been on the S&P, or ESM 2023.

If you put those levels on your chart and compare them with the tweets—marking when and where I called them out—you’ll see that the major intermediate-term swings in the marketplace occurred right at those levels.

I also began this week’s analysis by telling you that I was looking at that gap as an upside draw. My concern, obviously, was CPI. CPI can be brutal for traders if we’re offside—meaning we’re on the wrong side of the market when the release hits. It can run you over and tear your face off. That’s why you do not want to be positioned ahead of CPI.

So on the daily chart for NQ, I made it clear that I favored the upside. What I have not been able to do is frame a model that is consistently reliable ahead of CPI.

Friday, May 5, 2023 — that specific candle marks your fair value gap on the daily chart for NQ.

The fair value gap we traded down into on that day reached its consequent encroachment, which is the midpoint between the low of the daily candle on May 8, 2023, and the high of the daily candle on May 4, 2023. Those two respective candles should be shaded with a rectangle extended to the right. The market then rallied up and fell just short of 13,453.

Then, on Thursday, price traded up into the consequent encroachment, which is the midpoint between 13,880.75 and 13,453, respectively, in reference to that weekly gap I mentioned. On Friday, we opened, rallied up into it, traded through it, and then gave up the ghost, dropping back down into the order block that formed on May 9, 2023, on your daily chart — that down-close candle.

With these levels in mind, and if you have shaded that fair value gap with a rectangle on May 5 on the daily chart, you’ll be prepared to drop down into the hourly chart with me.

So on Wednesday, the market did, in fact, rally higher, and then we had a large push up from 8:00 a.m. to 8:30 a.m. We had a news driver coming in, and price rallied up but fell just short of the high at 13,433.75. That candle is the 10:00 a.m. candle on Wednesday on the hourly NASDAQ chart.

From there, we dropped all the way down into a repricing of the 7:00 a.m. candle’s high on Wednesday’s hourly chart. So all of that buy-side imbalance, sell-side inefficiency on the 8:00 a.m. hourly candle for NQ was repriced back down into. But notice the bodies. Look at the bodies on the 1:00 p.m. and 2:00 p.m. candles on Wednesday on the hourly chart. The wicks do the damage, but the bodies tell the story.

Yes, we reached down into that imbalance. We also tapped back into the bullish order block on the 3:00 a.m. candle on Wednesday. See that big black down-close candle? My down candles are black, and that is your bullish order block. So we had a fair value gap on the 8:00 a.m. candle, New York local time, and a bullish order block at 3:00 a.m. We repriced down into it, but the bodies themselves did what? They stayed at the current New Week Opening Gap high and low, right inside that range. More specifically, the 1:00 p.m. hourly candle on Wednesday and the opening price of the 2:00 p.m. candle on Wednesday, May 10. Both of those candle bodies were right at the current New Week Opening Gap below, which would be last week’s New Week Opening Gap.

Then the market rallied up and traded into what you might want to pay attention to in terms of specific time—8:00 a.m. on Thursday, May 11.

We went up to consequent encroachment, which was 13,467.00.

So we went up to that midpoint, which is consequent encroachment, stopped right there, and then traded back down, repricing into the fair value gap and bullish order block. The bullish order block is the two consecutive down-close candles on Wednesday, May 10, from 12:00 noon to 1:00 p.m. And the fair value gap forms on the 2:00 p.m. candle, which is a BISI, that big green up-close candle. We traded down into the consequent encroachment of that.

The consequent encroachment for that range comes in at 13,364.75, and the low comes in at 13,361.50 on the 10:00 a.m. Thursday candle. So price traded just a little bit into it, then rallied right back up to the consequent encroachment of the weekly gap and pushed right on through it, just a little bit above, on the 9:00 p.m. candle on Thursday.

Price hugged that range and traded back and forth between the weekly gap high and the consequent encroachment of that gap on Friday, then gave up the ghost one more time—sweeping through the high of it, breaking down, and trading all the way back to what would seem like a completely random current New Week Opening Gap low. And your current New Week Opening Gap low for NASDAQ should be 13,310.50, which just so happens to be the Friday low of the day, right to the tick—not one short, not one over, exactly to the tick—formed at 2:00 p.m.

So my question to you is: we were only bullish on what market? NASDAQ. Okay, I mentioned that. If you were looking at both of those indices—if you were looking at Spoos, which is ES—it was unable to make higher highs and able to make lower lows when NASDAQ was not. Okay, so in your journal, when you’re looking at relative strength—not the Relative Strength Indicator, but actual relative strength analysis, looking for the weaker versus the stronger or the stronger versus the weaker—you want to be looking for longs in the market that is showing you it is willing to go higher when the others are not, and unwilling to go lower when the others are.

Either one of those scenarios matters. And I’ll say it again: if a market is willing to go higher when other markets are not—and not just any other markets, but closely correlated markets—then that matters. So what are we referring to when we’re talking about indices? We’re talking about the S&P 500, the NASDAQ 100, and the Dow 30. I don’t care about the Russell, okay? I don’t care about all these other garbage indices. You only need those three to watch these markets, and you’re going to use them comparatively.

So when an index is making higher highs or not, I’m not saying that in the sense of a trend—don’t think it’s limited to just that. Yes, it’s true, but I’m not looking at it on the basis of trend. I’m looking at it on the basis of market structure, liquidity, and relative strength analysis. So if I’m looking at a market that is bullish, or deemed bullish, I want to see that market perform to the upside faster than the other indices. That’s the one I want to be buying, because it is breaking out to higher highs before—or in contrast to the unwillingness of—the other closely correlated indices.

That is not always the case that creates a bearish SMT scenario. The logic behind what I’m saying is this: I want to focus on a specific market that I’m willing to go long in, and that market should be willing to make higher highs faster than, or before, the other closely correlated indices.

I’m talking about markets. I’m talking about price delivery. I’m talking about algorithmic price delivery. So it’s all the same thing. I’m not willing to trade Forex, so because I trade futures—specifically index futures—I’m teaching you the concept through the actual market.

NQ is stronger because ES is weaker than NQ. So from an algorithmic standpoint, if you take that logic and that data, you would say: Okay, I want to trade NQ. So where does the trade form? Well, I want to be long because NQ has a gap. And if NQ has the gap, and it’s willing to make higher highs while the S&P is not—and we’ll get to that in a moment—and the Dow is also unwilling to make those higher highs, then we’ve already figured it out. We’ve singled it out. We’ve highlighted the market: NQ.

What do we want to do with that market? We want to buy it. We do not want to sell it until it reaches the end of the weekly range. And when can that form? Thursday and/or Friday.

That doesn’t mean there won’t be a little spillover or a sympathy move. If NQ makes a strong move to the upside, it may pull the other indices higher as well—but not to the same extent that NQ itself will rally. And I can speak about this now in hindsight because I told you beforehand that it was likely to unfold this way. Look at your chart: NQ outperformed to the upside, while the Dow and ES were lethargic. They were not willing to go up there.

So my Sick Sister concept is multifaceted. You can’t just run along and watch someone put something on YouTube and think they know what I’m doing—you have no idea what I’m doing. There are different approaches to using the Sick Sister concept. There are times when it aligns with your present understanding of SMT—yes, that is one facet of SMT—but I’m teaching you a more advanced version of it, where you can see, almost like an X-ray, what is going on behind price and where your focus should be.

For instance, if you’re watching several Forex pairs—say, GBP/USD versus EUR/USD—and you want to know which one to trade, sometimes the euro is the better buy or the better short than cable, even though cable can be more exaggerated. Cable, by the way, is GBP/USD. Just as NQ is typically more animated than ES, GBP/USD is often a faster, more volatile market than EUR/USD. That’s a characteristic you need to be aware of.

So if you’re in a market environment where, for example, GBP/USD is willing to make higher highs while the dollar is either going sideways or trying to go lower, but EUR/USD is unwilling to make a higher high, which one do you want to be buying?

Now, if you’ve watched the last week or so, where I started introducing the Sick Sister concept, you might think, “Okay, well, it must be the euro because it has to catch up with what the pound is doing.” No, no, no—that’s not how it works. It’s not that cut and dry. You need to learn more of the logic.

It is complicated. It is not easy. So when I sit down and tell you which market I’m favoring, I’m factoring in that market’s willingness to behave in a specific way. That is market profiling. I’m talking about reading pure naked price action, and that relative strength analysis is what gives rise to the Sick Sister concept.

You want to be independent—independent from everyone else. You don’t want to be doing anything that relies on anyone else’s input. You want to trust what you know.

When focusing on longs, you should be looking at a market that is already showing strength and a willingness to go higher. If you look back at recent price action, there should be clues showing that it was unwilling to go lower on a specific swing, or on a number of candles in the past, while a closely correlated market was willing to do so.

In the case of the indices we’re discussing here, NQ was not willing to make lower lows when ES and the Dow were. Where did that occur? If you look at the NQ low at 1:00 p.m. on Wednesday, May 10, you’ll see that it is a higher low than the one formed earlier that morning. Look at your 4:00 a.m. low. Now toggle over to ES. On TradingView, all you have to do is type in ESM2023 and everything will stay the same, but it will switch to ES. You’ll then see that, comparatively, on ES those two turning points produced a lower low at 1:00 p.m. than the low formed at 4:00 a.m.

Now go back to NQ, or NQM2023, on your hourly chart, and you’ll see that this was a classic SMT divergence. What was it indicating? It was showing you that, if you were following what I laid out this week—looking for that daily fair value gap that should be shaded on your hourly chart where price dug down into it at 4:00 a.m. on Wednesday, May 10, 2023—NQ was willing to go higher.

Now look at ES, ESM2023.

On Thursday, ES failed to make a higher high than the high on May 10 at 9:00 a.m. So ES failed. That aligns with the idea I shared on Twitter: ES is weaker than NQ.

Now, if I’m telling you that one is weaker than the other, I’m indicating that if you are trying to trade intraday price action—just the intraday volatility—and you’re not trying to focus on big runs, which is really where we are right now, then you need to trade the stronger market. We still have not left this daily range in a way that gives us a higher degree of swing-trading probability, where the market can move for days or weeks in the same direction.

We are not in that environment right now, folks. We haven’t been for a while. I don’t know when we’ll leave it, but we have to trade accordingly. Does that mean we can’t trade it? Absolutely not. It just means you have to adapt. You have to adapt.

Look at all the consolidation around that level—from the 6:00 p.m. Thursday candle all the way to the move at 9:00 a.m. on Friday, where price broke lower, then came back and touched it again on the 10:00 a.m. candle. So that 10:00 a.m. hourly candle on NASDAQ opened and traded right back up into that gap low.

Write that down with a great deal of excitement, then go back through price action and study it. You’ll see that this does, in fact, repeat. It’s not just a one-trick pony. This, in and of itself, is a model.

This is a very specific PD array — the immediate rebalance. Hover over the Wednesday, May 10, 2023 candle on NQ. That bullish candle, the buy-side imbalance/sell-side inefficiency, is a fair value gap. It was not fully repriced down to its low, which is the high of the 1:00 p.m. candle on May 10, 2023.

When we dropped down on Thursday, May 11, 2023 — specifically on that 10:00 a.m. candle — we made the low at 13,361.50, but price did not fully trade down to the low of the fair value gap. So part of that FVG remained open.

That fair value gap becomes a draw whenever price is above it and begins seeking discount. If you then go back to the Friday, May 12, 2023 10:00 a.m. candle, that candle opens at 13,445.00.

The high forms at 13,454.75.

That repricing is doing two very specific things. It is repricing back to a low of importance — the low that was made on the 8:00 a.m. candle on Friday, May 12, 2023. That low comes in at 13,453.75.

Now, that .75 creates the opportunity for what I call a mohawk. A mohawk is when price action trades just slightly beyond a very specific level. When we trade, we look for precision, yes — but there is always a gray area. In Forex, I taught that this gray area is usually about three to five pips.

The reason for that is simple: different brokerage firms and brokers use different liquidity pools, including their own in-house liquidity. In Forex, there is no centralized exchange, so not everyone is seeing exactly the same price.

By contrast, futures have an advantage. Even though there can still be differences between in-house liquidity and centralized liquidity, everyone looking at the NQ June 2023 contract on Friday, May 12, 2023, at 8:00 a.m. agrees on that high price. Every trader sees the same candle, the same high, and the same structure. That gives futures a built-in advantage — it is a much more refined and mature marketplace.

On May 12, the 8:00 a.m. hourly candle on NQ printed a low at 13,453.75. The high of the 10:00 a.m. candle came in just one point above that low. No trader who was long—using that level as a target for a short entry or a long exit—would ignore how precise that repricing was.

If the 9:00 a.m. candle on May 12 had not been followed by a 10:00 a.m. candle that rallied high enough to match the low of the 8:00 a.m. candle, then when the 11:00 a.m. candle opened, we would have had a fair value gap left overhead. But because the market opened and rallied back up into the New Week Opening Gap, the move back up to 13,453.75—the low of the weekly gap and the low of the 8:00 a.m. candle—made that an immediate rebalance.

Whenever price offers that to you—an immediate rebalance—and we’ve already met an objective, what was the objective? The weekly gap.

Were we able to make higher highs after that? No. Price just hugged around slightly above the 13,480.75 level for multiple hours. From 8:00 a.m. to 8:00 p.m. on Thursday, and then into the 9:00 a.m. candle on Friday, it stayed around inside that gap, showing no real interest above the high formed at 9:00 p.m. on Thursday, which came in at 13,494.25.

So that immediate rebalance is a signature that tells smart money the algorithm is going to start spooling price—meaning it begins sending it.

Put your cursor right on the 10:00 a.m. candle on NQM2023. That high reprices back to a very specific level: the weekly gap low. We had already filled it. We had already balanced it. What does that mean? It means we traded up through it, back down through it, then up again and tested it one more time—and failed immediately with an immediate rebalance.

That’s the reason I coined the term immediate rebalance. When it rebalances like that, you don’t need to compress the timeframe further. You already have the entire story in just those three candles: the 8:00 a.m., 9:00 a.m., and 10:00 a.m. candles, with the 8:00 a.m. low acting as the key reference point.

It allows price to be offered one point above that level, giving smart money the opportunity to get short there. It should not return to the high of 13,480.75. Look at my trades, folks—look closely at where I place them and where I place my stop loss. I know the algorithm should not return to those levels. And if it does—fine, I’m wrong, I’m human, I can be wrong. If I am wrong, then I know I should step aside for that session and do nothing, or look to reverse.

You’re going to have a plethora of ideas you can use to find setups, and this is one of them. This model, in and of itself, can absolutely do everything you need for trading without requiring anything else.

You have to allow yourself to develop an affinity for one thing that I’ve taught, or will teach. Once you know what that is, pour all of your attention and focus into it. Become a master of one thing. Don’t try to become a master of everything.

You have to find something that resonates with you. This immediate rebalance can be a model in itself, or, for me most of the time, it serves as confirmation that I’m about to see a strong down move. I want to see large-range candles. How do you know when the market is likely to produce those big, sudden rushes and explosive candles?

It’s signatures like this. I have about a dozen very specific things I look for that tell me when speed and magnitude should enter the marketplace and when price is likely to take off. When I’m looking for something to happen immediately, it should take off right in that candle or the very next one. That is anticipation — not reacting to price.

So you need to know what you’re looking for, why it should form, where it will form, and where it is likely to go.

What did price do all week on NQ? It went higher. Where did that move originate? That long price swing higher began inside the daily fair value gap. As I mentioned, I was interested in that area as a draw into premium. So I gave you the discount-to-premium framework. I gave you the bias. I told you which market I favored: NQ.

So if you’re asking yourself which market you should have been focusing on for longs, the answer was NQ. Go back and do your backtesting on that this week—today or tomorrow. Study all the timeframes. See what you can find.

And don’t worry about the fact that you’re looking at it after the fact. Everything is learned in hindsight. Every doctor, before ever operating on you, your loved ones, or anyone else, did hindsight study first.

Don’t be afraid to work in the sandbox. Don’t waste your time doing silly things just to rush the process, thinking, “I need to trade a real account, because I won’t learn unless I use real money.” The only thing you’re going to learn that way is that you should never have done it as early as you did. I promise you, every single one of my students who has done that has eventually sent me an email full of regret, saying they wished they had listened.

That is one of the most common regrets I hear from students: they wish they had never gone into live or funded trading as soon as they did. The ones who rushed almost always ended up back at square one. The ones who eventually made it understood that rushing to live funds only makes the whole process longer. Why? Because now they are listening to me while stressed out, either because they lost money, they are in drawdown, or they wasted money trying to pass a funded account after already losing a live account. Or worse, they are now afraid to take trades. They can see the setups after the fact and know they were likely to work, but they’re too afraid to push the button. Why? Because they lost money before they learned how to reprice. So now everything is distorted. They no longer know what to trust.

When that happens, you need to step away from the marketplace. What does that mean? Two weeks. If you’re all messed up and confused, take two weeks off completely: no markets, no ICT, no videos, nothing, no social media, nothing related to the market at all. Unplug. Then come back and start again from square one. Don’t assume you know everything just because you watched the videos before, or did the exercises, or did the backtesting once already. Go through it all again. And forgive yourself for the mistakes you made.

Everybody who eventually succeeds had to forgive themselves for all the silly things they did. I didn’t really find myself until I forgave myself for all the foolishness I went through, trying to force something to happen while still carrying such an infantile understanding of price, thinking some indicator was going to explain everything. I had to strip all of that away.

And when you start seeing signatures like this immediate rebalance, and you notice how it repeats, it is showing you that price does not want to leave a fair value gap behind. Why? Because it isn’t going to want to come back to it in the immediate future. My fair value gap is a deferred repricing — a repricing that will happen later in time. It will come back to that level, but not right away.

“Partials are stupid. It’s dumb. You took this much risk when you put the trade on first, and then you took something off—it makes no sense.” Okay, then making money doesn’t make sense to you, period. Apparently, if you are entering on a fair value gap, you will be better served, as a developing student, to take partials when price offers them to you.

If you get an immediate rebalance—where price does something that, under normal circumstances, should have created a lower high on the 10 a.m. candle—look at NQM2023 on the hourly NASDAQ chart, Friday, May 12, at 10 a.m. New York local time, and focus on that candle’s high. In any other instance, if we had not traded back to that weekly gap low there, that would have formed a fair value gap on the 9 a.m. hourly candle. Absolutely it would have done that. I would have anticipated that. And then price would have instead run right back up into that, as long as the low at 10 a.m. on Thursday had not been traded through, because right below that is sell-side liquidity.

Now, from that low all the way up to the high formed at 9 p.m. on Thursday, there is no fair value gap in that price swing. There is no inefficiency. It’s back and forth, but still going higher. So what is going to be the draw from that immediate rebalance at 10 a.m. on Friday? Sell-side liquidity, and the open portion of the 2 p.m. Wednesday hourly buy-side imbalance, sell-side inefficiency—that big green up-close candle at 2 p.m. on Wednesday, May 10, 2023. So those are two targets.

And the best-case scenario would be what? Returning back to the New Week Opening Gap. It’s a magnet, folks. That’s where fair value exists for the week. The weekly range, the weekly candle, has a built-in fair value gap. That is my New Week Opening Gap.

You don’t take partials on an immediate rebalance, because it’s going to have a different type of delivery. It’s going to be sudden. It’s going to be one-sided. Avalanche, blastoff—straight up vertical or straight down.

Because it offered two-sided delivery, that range — which at one time was an inefficiency — is not a true liquidity void anymore. A real liquidity void is not the candle formed at 10 p.m. on Wednesday, May 10. That is not a liquidity void. It is a buy-side imbalance / sell-side inefficiency. Liquidity was offered there.

So what makes a liquidity void different? When you say “liquidity void,” the point is that it is void of liquidity — no real buying or selling took place there. A buy-side imbalance / sell-side inefficiency means the market offered price in a one-sided way. On that 2 p.m. candle on May 10, on your hourly chart for NQ, buy-side delivery was offered predominantly. What was inefficient, by comparison, was that price did not allow a return back down to the previous high from 1 p.m. on May 10 on the hourly chart for NQ — not until Friday at noon, when it finally traded down into the current New Week Opening Gap.

How many times have you seen my New Week Opening Gap get respected throughout the week, creating very specific highs and lows?

Price traded up, down, and all around that level, then ran quickly off the immediate rebalance. So what does that mean for you as a trader? It means you would not want to be taking partials inside the range of roughly 13,440 to 13,453. In that vicinity — within that 10- to 13-handle range — you could have been going short off that immediate rebalance.

Had I been in front of the charts on Friday instead of driving, I absolutely would have been selling short there. I would have been all over it, hammering it. If it had traded a little higher and tagged the low of the 8:00 a.m. candle on Friday, May 12, I would have added more. And I would have taken no partials until price drew back down into the New Week Opening Gap. It didn’t even need to get all the way to the low, but I would have been aiming for one tick above the high, which is 13,316.25. No partials would have been taken — none.

And how long did it take to move from the immediate rebalance at 10:00 a.m. down to the New Week Opening Gap? Three hours. It hit the high of the New Week Opening Gap at 1:00 p.m. Then at 2:00 p.m. it made the low of the day and traded very precisely — not one tick off. The low was 13,310.50.

You’re going to be profitable by developing an independent mindset and looking for very specific things. They are algorithmic. They repeat. They are timing-based and price-based in premise. These things repeat because there is an algorithm — it’s coded to do this because it is supposed to do it.

There are two types of delivery. One type of delivery allows you to sit back and wait, because that far target is coming. I’ve shown examples of executions like this where I take no partials. I pull out the heavy artillery — no partials, just dominance. When that type of delivery is present in price action, you have to know what it is doing beforehand, so that you can anticipate that kind of trade.

You have to learn gradually, which is why I teach all my students to take partials. You don’t yet know when you’re wrong. You can’t reliably identify the moment when everything has shifted and the setup you believed in is now confirming that you were wrong. Because you don’t yet have the experience, you can’t read that change clearly in price action. You can’t observe it, identify it, adapt to it, remove yourself from risk, or reverse.

So you fall victim to it. You may have had a handsome unrealized profit at one moment—on paper or even in a live account—and then something shifts in the market structure. You overstay your welcome, and the trade turns against you and becomes a loser.

That’s why you have to take partials as you grow. You have to take the fruit as it’s offered. It sustains you. It rewards you. And that is what’s necessary.

When I tell you these things, it’s for your edification — so you can improve, know what you need to know, and focus on what actually matters. Spend your time studying price action with those premises in mind: relative strength analysis, along with the incorporation of time, price, and day-of-week phenomena.

For ES, which is Spoos, there is a fair value gap on the daily chart on May 5, 2023. That’s a Friday. If you highlight it and place a rectangle on your chart, you would begin by drawing it from the high on Thursday, May 4, 2023, up to the low on May 8. Then drag that rectangle to the right. You’ll see that there are two candles that sweep below it, but only slightly — those occurring on Wednesday of this past week and Friday of this past week.

There is also a fair value gap on the daily chart of May 2, 2023. That’s Tuesday. The gap is formed between the low of May 1, 2023, and the high of May 3. Draw that rectangle to the right on your chart, and you’ll see that there are two candles that touch into that gap — those being on Wednesday, May 10, 2023, and the high of May 11, which is Thursday of this past week.

So my focus was primarily on the long side for NQ because of the weekly gap, and because it was showing a willingness to go higher while the Dow and ES were unwilling to do so. Every time ES and the Dow made lower lows, NASDAQ kept pushing back, as if to say, “I’m not willing to go down there.” That is a signature. It tells you that when internals shift in the marketplace, whatever is permitted to go higher will go higher. It’s like a billboard or a flashing neon sign telling you: this is the one you want to be buying.

Where did I learn that? I learned it from a 1970s book by Larry Williams, How I Made a Million Dollars Trading Commodities Last Year. It’s only a small section, a short chapter, but folks, I’m telling you, that shit works. It changed a lot about how I look at price. It changed how I look at specific indices or closely correlated markets. Those are building blocks. They are not the entirety of my analysis, but I took that information and supercharged it.

If you look at this premium fair value gap, which was formed on May 2, and the discount fair value gap that was formed on May 5, toggle your chart to the hourly timeframe and look at the wonderful price delivery between those two fair value gaps.

On the 10th, price delivered up into the premium gap, and the bodies didn’t even touch it. Then on the 11th, at 3 a.m., 4 a.m., and 5 a.m., every time price traded up into that premium fair value gap, it sold off down into at least the high of the discount fair value gap.

Think of it like an overbought/oversold condition between these two fair value gaps. Because I was not interested in going long ES, and I was not interested in going long ES this week, I was only interested in going long NQ. So NASDAQ was my choice for the upside. And I said that ES was weaker than NQ — that was your tip-off.

Now look at the fair value gap that formed on Thursday, May 11, at 6:00 a.m.

We rallied back up into that at 8:00 in the morning. Then the market report came out at 8:30. What it showed you in terms of price delivery was this: price traded up, pushed slightly above the low of the 5:00 a.m. candle, then gave up the ghost and sold off all the way down to 4122 (the February 19, 2023 NWOG), which is an old New Week Opening Gap.

Then the market traded lower again, breaking below the low formed on Thursday at 10:00 a.m. On Friday, it made the low at 2:00 p.m., then repriced back up to an old New Week Opening Gap low at 4136 and to the high of that discount daily fair value gap. So, in my opinion, the best moves for ES were short-only.

By having an expectation and anticipating upside price delivery to that weekly chart gap for ES, remember the levels at 13,480.75 and the low of that gap at 13,453. That was the draw on liquidity. The market wanted to reach up there, and it did. So there was nothing really clear with ES showing any willingness to go higher with NQ. It was telling you it was being held in a holding pattern, which means it was being manipulated heavily and not being permitted to trade higher.

But which market was telling you it could go higher? NQ. So therefore, if NQ is the market reaching higher and showing a willingness to continue higher, it has been given clearance to trade higher because it gave you the signatures. On the 10th, it did not make that lower low when ES and the Dow did, so it showed you SMT. Then, when it started making higher highs and down-close candles found support, it was telling you that order flow was bullish.

So what do you then reach for? The higher-timeframe objective — the draw on liquidity on the weekly chart, that gap. What did your chart print? That gap.

ES may be your main market to trade, but when there is heavy manipulation across correlated assets, you need to be able to distinguish their characteristics and switch between them when necessary. ES, NQ, and YM should all be observed and followed.

That may be true at times, but you’ll also become frustrated in weeks like this past one, where manipulation was heavy. Think about it in Forex terms:

To me, anything outside of the major USD-based pairs is effectively exotic. If you’re trying to trade those types of pairs, you’re generally better off when the Dollar Index is not poised to move directionally. If DXY is being held in consolidation, that’s the green light.

There is also cross-pair manipulation in Forex, and if you don’t understand what the dollar itself is telling you, you’ll misread the whole environment. If the dollar is being held in consolidation, you do not want to be trading EUR/USD or GBP/USD. You also do not want to be trading NZD/USD, USD/JPY, or USD/CHF blindly. Instead, you want to identify and trade the strongest-performing currency. What would that look like?

So that tells you it’s strong. Now, if you couple that with another currency that is showing easy price delivery to make lower lows and fail to make higher highs—or, in a more advanced version, fair value gaps that are not getting filled or even retraced back into—you’re looking at an exceedingly weak market.

So if you compare and look for strong Forex currencies—not pairs, but currencies individually—that are going higher or showing relative strength, versus a currency that is weak, then between those two currencies you can identify the exotic pair that combines them. If the stronger currency is listed first in the currency pair, then you want to be buying that exotic, and you’re likely to see a very strong price run while the dollar goes nowhere.

That’s the kind of stuff you do not learn from books. That’s what you learn when you spend time with someone who knows what’s going on and knows how to read price—not just look at price action. You have to know the lay of the land. You have to know the environment you’re trading, the market profile, and the schematic the market itself is following.

There’s a difference between knowing and simply being familiar with something.

We’re looking at NASDAQ on a 15-minute candlestick chart — Wednesday, May 10, 2023 — specifically the 2:30 p.m. New York local time candle. Draw a rectangle on that candle and extend it to the right. You’ll see that price drops back into it on the 10:30 a.m. candle on Thursday, May 11, 2023.

There, we get a little bit of a mohawk, where price trades just slightly below that low — just outside the fair value gap. That allows the algorithm to offer liquidity for anyone targeting that low. In order for that low to be booked — whether for a short cover or a long entry — price has to offer at least a one-tick difference. So it has to move just outside the line.

That’s why we’re not discouraged when price moves a little beyond what we were looking for. It’s still precise. A mohawk is simply my way of explaining how the market can sometimes color just outside the lines. In Forex, I’ve built that same concept into my framework with a three- to five-pip variance.

Note the 15-minute candle on May 10 at 2:30 p.m. Extend that level out, and then look at the candle that formed at 10:30 a.m. on Thursday. At that moment it looked bold-faced bearish, trading below that level, and I’m sure many traders were sweating, thinking, “Is this thing just going to keep going lower?” No. It was simply allowing for that delivery to reach the very low of the fair value gap.

Then the market did exactly what it needed to do: that 10:30 a.m. candle closed back at the high of the fair value gap, the next candle opened right at that fair value gap high, and then price ran away to the upside. It later dropped back down into the order block that formed at 10:30, then rallied higher again into the consequent encroachment of that weekly gap — that real liquidity void at 13,466.75. After that, it found support at the low of the gap on the 8:00 p.m. Thursday candle and then rallied to fill that weekly gap.

So this is price delivery you can go back and backtest. You can study all of these examples and see how they repeat. But I gave you a short on ES, and that short came from a fair value gap down into a liquidity pool.

The things you’re learning are not going to change. Unless there are no markets, everything I’m teaching will continue to fucking work. So stop worrying about that. Use your time and pour it into yourself. Invest in yourself. The only thing you’re doing by hesitating is kicking the can farther and farther down the road.

Instead, tear into this with the mindset: “I’m going to do this. It will probably take more time than I want it to, but that’s okay, because I’ve made up my heart, my spirit, and my mind. I’m not changing. I’m not deviating. And no motherfucker out there is going to tell me this isn’t for me, because I know it is.”

The more someone tells me it isn’t for me, the more I fall in love with it, because all that really means is that they can’t fucking do it. And it’s going to feel even better once I get there and they get to witness it—not because I rubbed their nose in it, but because they’ll simply see me living better as a result of it.

That’s the best revenge. The best revenge on the naysayers—the people who tell you that you won’t be successful at this, that you shouldn’t bother, that you’re going to lose your money and waste all this fucking time—is to quietly become successful anyway.

They had to fucking work until Friday just to get the same thing they got the previous week. Time stolen. You prostituted your life so someone else could tell you what you were worth to them. And what did you lose in the process? You didn’t see your wife, your husband, your boyfriend, your girlfriend, your kids, or your friends. You had no peace of mind, no relaxation whatsoever. You were fucking stressed out because you were in debt and felt like you had no way out.

Folks, this isn’t for everybody. But for everyone who wants to dig their heels in until it becomes for them — then it is for you. And don’t let anybody tell you that you can’t do this, because you can. The hardest part is getting through what you do to yourself when you stand in front of your own reflection and ask, “What’s the point of me doing this?” or “I failed yesterday. I failed last week. Should I just give up?”

Who’s stopping you? The market didn’t.

It’s you. You have control over whether you stick with this—come hell or high water—until you get it, or whether you stop. There is nothing out there, folks, that is going to stop us from succeeding except you. It takes time and effort. You have to make an honest effort.

That means getting in here, showing up every day, doing the backtesting, collecting the data: How many times has this formed? How many times has it performed? How many times has it developed a setup at this specific time? How many times has that happened over the course of a week, a month, a year, in one asset?

And then think about it realistically: If you got just one of those opportunities over the course of a week, and you stopped—if you exercised due diligence and discipline and said, “I don’t need to do more. I don’t have that level of experience yet. If I can get this one, I’ll stop and study the rest of the week, then go at it again the following week”—

that is a winning trader. That’s a fucking market maven. That’s someone with absolute control over themselves.

There’s a lot of risk right now. Does it make sense for institutional firms—those managing other people’s money—to aggressively pile into just anything at the moment? No. There is a lot of cash sitting on the sidelines right now because they are not comfortable taking that level of risk. They’re telling clients, “We need to sit still for a bit. We’re waiting for new developments.” That’s what’s going on, folks. That’s why the market is stagnant. That’s why it’s behaving the way it is. Big money is not moving right now. But when big money starts coming into the market—or coming out of it—then the dance begins, and trading becomes easier again.

Neither you, nor me, nor anyone else can change that by saying otherwise. So you have to exercise patience. You have to relax, settle down, and sit still. This won’t be the last time you’ll have to do that in your trading career. There will be future periods that give us reasons to stay still and avoid being too aggressive. Right now, you need to be more passive as a trader.

Contrast that with what you saw me do in previous years, when I could go into the marketplace and buy, sell, buy, sell—up, down, up, down—capturing just about every intraday swing, recording it, executing it, doing the whole thing. Is that the environment we’re in right now? No. Not at all.

What’s the most difficult thing in this? It’s you — the person you are, bringing all of your character flaws and all of your strengths. And I’m not saying that wrong: even your strengths can become weaknesses in trading. The very qualities you believe make you strong as an individual are often the exact things the market will use to whip your ass.

So when you come into this, you need to be very careful about what you identify as your strengths — the qualities you believe make you valuable or capable. Because those can become the very things the market uses, psychologically, to undo you. That’s why you never see it coming. Nobody starts this journey already aware of how they are going to fail. Most people come in focused on their strengths and never identify their weaknesses. They don’t take the time to fortify those weaknesses, build themselves up, and admit that they have them.

The people who come in narcissistically — thinking they already have everything, like they’re demigods — are usually the worst. They have so many character flaws that they constantly wreck themselves, but they only celebrate the few times they get something right. That’s unfortunate, because those are the people who need the most work and correction, and certain personalities are simply not willing to do that. They won’t admit they have weaknesses. In trading, you have to identify them. Otherwise, you’ll ignore your weaknesses, place too much confidence in what you think are your strengths, and those strengths will become your undoing. You’ll blow your account, you’ll fail, and it will be demoralizing because, subconsciously, you’ll tell yourself: This was the best I had. I came in with these strengths, and I still failed. I can’t do this. I quit.

But that’s not the truth. You’re just doing it wrong. You need to change, recalibrate, and approach it from a different angle. You need to give yourself much more time, more flexibility, and permission to not get it right in the beginning. That’s what learning looks like. But the moment you add real money to it, everything changes, doesn’t it? Now you feel like you have to be right. You have to be profitable. Otherwise you’re broke, or failing, or losing your account. It changes the scorekeeping mechanism from simply enjoying the process to are you making money or not?

In the beginning, you cannot think of it like that. You have to learn who you are. You have to discover how you’re likely to sabotage yourself, wreck yourself, derail yourself — and it is always the person. It is not the method. It is not the fucking method. It is the person. Good money management can even make a bad system survivable. Proof? Flip a coin, risk very small amounts, and let runners run. You won’t make millions doing that, but it’s still better than what most of you have done in the past, because at least it’s rule-based and it limits losses. That’s the first rule in trading: control capital, preserve capital.

But when you come into this as a new trader, you’re not thinking that way. You’re thinking: How much can I make? How fast can I make it? How soon can I quit my job? You’re not asking: How do I avoid losing all my money? How do I preserve capital while still being able to weather losing trades and continue forward? That’s the difference. That’s the difference between someone with a realistic mindset toward speculation and trading, and someone who just wants to rush in like during the crypto craze.

If you need other people to encourage you, then you are not fucking passionate about this — and you have to be in love with it. You have to love this shit. You have to live this shit. Because if you can’t do that, you’re not going to make it. Losing trades will come. Drawdown periods will come. There will be times when the market gets tough and you can’t find your way through it. That is going to happen. That shit is always going to be there.

And if you can’t find the encouragement within yourself to stick to the rules and trust that the process will eventually yield the results you’re looking for — just not on the timetable you want — then you’re going to struggle.

If you have that, then you are a unicorn — and you should be grateful for it. Be thankful. When I’m done with this, take the time to say:

You know what? I want you to know that I really appreciate you supporting me in this, because it’s very hard. It’s very hard for me to manage everything that comes with trying to find success in this, and I can’t imagine how much harder it would be if you weren’t behind me.

It can feel like there’s something wrong with you, like you’re broken. But that isn’t what this is. It’s simply you, as a human being, trying to do something extremely technical and extremely complex. And the problem is that you’re trying to apply human reasoning to something that has no human reasoning behind it. It’s algorithmic. That’s why you have to strip the human element out of it as much as possible.

You need to think in terms of how people lose money, and how someone else takes their seat on the bus. Because that’s what this business is. It’s about taking from those who can have it taken from them, and profiting from that. That is how this business works. That is how this industry runs, and there is no way around it.

It’s packaged and marketed as if the average person can come in, invest, and build a bright future for themselves. But very few actually find that. Very few find it. The recurring success story is the small group who do all the right things, make money, and live well because of it. The average person finds failure and frustration, then runs away saying nobody can do it. And yet new suckers enter this industry every single day. Social media keeps that revolving door spinning, constantly giving people a reason to speculate.

But if you’re still stuck in that revolving door and haven’t found your place yet, then hopefully this conversation sparks something in you — that you need to stop looking outward and start looking inward.

I want to see you succeed. If you did everything according to the rules, that’s all you need. Log it, learn from it, and keep moving forward.