JJWURLDIN - Ebook @falcon - Books
JJWURLDIN - Ebook @falcon - Books
JJWURLDIN - Ebook @falcon - Books
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@jjwurldin
TRADER
The algo controls the market, not just technically, but also
emotionally. The algo exploits the weak emotional mind of
retail traders and forces them to make irrational decisions,
in which they are trapped and consequently manipulated
out of the market and forced into margin trouble. The algo
also exploits retail traders poor understanding or price
action due to their strategies. However the algo doesn’t
know retail liquidity different to smart money liquidity, it
just see's money and wants to take it. The algo moves from
money to money, or in other words stop losses to stop
losses, and does this in the most efficient way. The most
efficient way can also be known as the most cheapest or
'discounted' way of moving price
A Bullish Week
Monday;
Monday is the beginning of the week and the day starts in a
liquidity deficit. This means Monday will typically create a
manipulation move in order to harvest liquidity to begin the
weeks price movement. The previous weeks Friday High or
Low is usually taken as liquidity, and also potentially the
PWH/L.
Another important characteristic of Monday is that most of
the time it forms the high or low of the week
Tuesday;
On Tuesday, price will accumulate some orders and then
typically establish the weeks direction. As shown in the
diagram Tuesday has taken out mondays high, meaning it
has established a bullish weekly direction and confirmed
Monday's low to likely be the protected low of the week
Wednesday;
Wednesday is usually a low volume day being the middle of
the week, in where price prepares itself for the final 2 days
of the week. Wednesday will build the largest volume of
orders on both sides of the market. Sometimes this
accumulation will cause a short reversal of Tuesday's push
up.
Thursday;
The purpose of Thursday is to manipulate Wednesday's
accumulation and Thursday typically will cause the largest
move of the week.
Thursday is the most common day for Higher time frame
levels to be met since it usually is the most manipulative day
with alot of volume, espescially relative to Wednesday.
Friday;
Friday, being the end of week, will distribute and also
potentially reverse the movement of Thursday to facilitate
an equilibrium price level for the new week to start Monday.
The distribution also leaves behind some orders that's will be
easy for Monday to capture the following week
On Friday price creates the last push of the week and forms
the low of the week
The Asia Range
The Asia range is a session which has multiple characteristics in
which can be used for developing a daily bias, and also taking
entries. The true Asia timing to the CLS algo pay in/out schedule is
23:00 PM - 05:30 AM GMT.
Commonly, once price raids the high of the asia range, it will then
come down to take the low of the asia range, and vice versa.
Using this concept can provide good trade opportunities at the
money transfer after a high or low of the range has been taken.
Buy opportunity off asia low
There a few rules you need know when it comes to this concept;
Chart link
In the image above, the red circles represent the open and
close of the session range. Where price has had a bullish
range, the day closed bullish and vice versa.
The blue range in the image above represents the London Open
range. In this examplem, asia high and the Frankfurt range has
been taken and used as liquidity, and as a by-product is used
by the algo to fuel london session. London open range is
usually very volatile. London forms the protected high of the
day in this example (HOD)
We can position ourselves in the market by knowing whether
London will form the high or low of the day, based on the HTF
and other confluences. Once a bias is developed we can trade
London open and look for entries , and then also continuations
throughout the day given we are expecting the high/low is
protected by the algo for the day. After the day is over, the
HOD/LOD no longer is protected by the algo, and may become
a future liquidity point for future days, due to lots of orders
being trapped at this level
The best concept this idea can be paired with is the Asia
bullish/bearish close. If Asia closed bullish, we would expect the
day to be bullish. So we would also expect London open to form
the low of the day and for it to be protected
NY session
NY session occurs after London and is also among the the most
volatile session. The opening hour of NY is 1pm GMT and within this
first opening hour the NY session often presents a common price
formation which can be used in our bias and for entries during the
session .
Ny session is indicated by the green box. The open of the box is the
NY open timing. As the session opens a large sell is injected, leaving
behind a trap. Most traps give a reaction before they faily, to induce
more sellers in this case. This fake reaction as a result gives a good
buy opportuinity, with anticipation the trap will fair and price will
continue in its daily bullish direction
We have a bullish day, due to a bullish asia close. Asia low and also
Frankfurt low were taken which formed a protected low. After this
liquidity was taken, the algo injected orders and bullish movement
occurred to the next intraday targets (e.g Asia high).
NY session contradicted London's direction leaving behind a trap.
SMC see this as a structure shift to bearish which leaved behind a
supply. The algo takes liquidity and then begins to shift and
ventually take out the trap and continue the longs
The Daily Cycle
From the knowledge taught so far about sessions, we can
come to a conclusion of the daily cycle, which puts together
all session characteristics
Vector candle
We call these aggressive candles with large displacement Vector
candles. Vector candles can also be seen as a liquidity trap- Traders
who trade based off structure and order flow see vector candles as
strong confirmation of price showing willingness to go in a certain
direction. In fact, vector candles store large injections of liquidity,
and therefore often price reverses and the vector candle is taken
out and/or used as liquidity. Vector candles also show up on HTF as
a large candle, which may induce higher time frame traders to get in
positions such as retail traders, who may trade emgulfing candles
Even using the example we just studied
for aggressive mitigations. We can see
this orange range here is representing a
vector candle, since its large
displacement in a quick time period.
The high of this candle stores alot of
orders which are unprotected, and may
become a potential liquidity target. This
makes sense, since we were looking for
buys- every move in the market has
purpose, the algo builds liquidity before
he takes liquidity. The algo is one step
ahead and always has his next targets
and direction in order.
2 push mitigation
The 2 push mitigation is a pretty self-explanatory concept. Essentially, is
when the first mitigation of an area gets swept, and is common price hasn't
necessarily took enough liquidity prior. This concept can be used fractally,
which is what I use a lot. In the fractal scenario, we would be looking for the
first candle to be swept by the second candle. Make sure however price still
obeys an agressive algo mitigation in which we have studied prior.
Lets take a look at a miniature case study using some of the things we
have learnt so far ...
So, what we can see is that price has taken a liquidity area, leaving behind and strong
high due to its algo rejection- no body closure only wick. We also have a potential
liquidity area for price to raid , which is the low of the large colume bullish candle. This
shows the fractility of the market, as this would be a vector candle on the lowertime
frame
Now dropping to the Lower time frames, we can see price has mitigated a level. It has taken out
inducement liquidity, and also 100% filled an area of inefficiency. We will study this pair
extremely in depth later in the book
Inducement occurs within a leg of price, and is essentially a block of liquidity in which
the algo uses as an equilibrium position within orderbook data formatting. What this
means as for when price may pullback, liquidity is usually harvested before the
continuation. No matter how high or low the inducement is in the leg of price, this
level is used as an equilibrium and price will use this level to fuel the next injection. In
the image above, we see a strong algo candle which is protected by the algo. The
orderblock formed at this algo candle is marked by the purple area, and inducement
is formed very close to it. The type of inducement which is most effective is known as
' immediate inducement' . This essentially is inducement that exists very close to an
orderblock or imbalance level- immediately as the inducement is taken, price can tap
the level since its very close. This pair of inducement and a mitigation area allows
almost 0 latency for a money transfer on behalf of the algo, and as a result a large
injection occurs after. Inducement is very efective also when play off a money
transfer. So on the lower time frame when price begins to shift after taking liquidity,
inducement can also be created on the lower time frame giving more precise entries.
The image shows how price uses inducement as an equilibrium point for continuations.
Inducement ranges can be seen as fake momentum ranges. Inducement is a concept
which violates structure, since SMC traders view this as a break of structure rather than
a grab of liquidity
Price is in a constant
state of inducing
traders into the market.
Inducement levels can
also be played without
mitigation- from just
the sweep and
rejection.
The fixed volume tool shows the formatting of volume between a range of
price. This tool can be used to see where the largest voids of orders are
located, hence clarifying where price may want to come mitigate and take
liquidity from for a trade opportunity. The green range in the image below
shows a price range which is contained by the protected algo candle at the
low
The purple box shows the mitigation of a rejection block, which forms after a
grab of Liquidity. We can draw the fixed volume tool from the protected low at
the algo candle , and the high of the range. The tool will show bard of the
volume within the range of price. The large bars show high volume price levels
and of course the small bars show low volume. A large volume bar which is
paired with a very small volume bar usually indicates a high probability level,
as this shows inducement within an imbalanced area of price
As shown, price sweeps below the large volume bar on the fixed volume
tool, showing a 100% clear of liquidity. As price takes this important
liquidity area, we have a money transfer and instantly a reinjection back
into the market to run liquidity highs. We also need to pay attention on
how price approached the liquidity level- as we discussed earlier, price
forms a vector candle which stores a very high batch of liquidity at its high,
giving us reasonable targets and bias to take a buy. Aggressive mitigations
lead to aggressive reactions; the large sell off induced a lot of traders into
shorts, as they think the market has shown its hand by heavy bearish order
flow, and as a result price hits the desired equilibrium level in which it has
now harvested liquidity to be capable of printing the next price delivery
cycle
Imbalance to re-balance theory
Not just liquidity, but imbalances within price action are important for price
to deliver in an effective way. Imbalances are very simple to understand
and are created from a large disproportion of one side of a transaction
relative to the other. This is simply created after an injection of capital,
were large volumes of orders are pumped leading to a vector candle being
formed leaving price levels where there's a very uneven formatting of buys
compared to sells and vice versa. The algorithm is designed to provide a
transparent and fair process for determining prices in the interbank market.
Imbalanced levels are re-balanced in future price action, which can occur in
a short time span or a long time span. When using imbalances, we want to
see 100% mitigation of the imbalance rather than a partial fill. The most
reactive areas for price to fill imbalance, is where there's also inducement
paired with it. This is more efficient for the algo to allow it to recuperate
more orders when re-balancing price levels for fair pricing. When price is at
an equilibrium valuation, there's more incentive for traders to get involved,
as they dont feel too early or too late. This gives an opportunity for the algo
to generate liqudity. After imbalances have been filled, a large injection
usually occurs which may leave further imbalance for future price delivery
to re-visit.
Most effective if the imbalance was created during an important and high volume
session , such as London or NY
Liquidity Issues: Order blocks can create liquidity issues, as they may be larger than the
available supply or demand for a security. This can lead to delays in the execution of
orders, or to orders being filled at prices that are different from the desired price.
Market Impact: Large order blocks can have a significant impact on the market, moving
the price of the security being traded and potentially causing volatility. This can be
disruptive for traders and lead to less efficient activity and reduced liquidity.
Market regulators may limit the size of order blocks that can be placed in the market to
mitigate the impact that large order blocks can have on the market and to reduce the
potential for manipulation. Large entities (The Algo) who use order blocks may also use
techniques such as algorithmic trading or dark pools to execute their orders in a way that
reduces market impact.
Algorithmic trading is the use of advanced computer algorithms to automatically execute
trades. These algorithms can be used to split large order blocks into smaller orders that are
executed over time, which can help to reduce the impact of the order on the market.
Dark pools are private exchanges where traders can buy and sell securities without
revealing their identities or the details of their orders. This allows traders to execute large
orders without revealing their intentions to the market, which can help to reduce the
impact of the order on the market.
Orderblocks need to be used with liquidity inducment existing before price
mitigated the level. Ideally, the inducement needs to be 'immediate' ; very
close by to the OB
Breaker blocks
A breaker block is a level of price also used for mitigation by the
algorithm- it is an effective way for price to mitigate orders without
having to deliver full targeted mitigation, meaning less capital is
injected and more is pumped to the next price delivery leg. Its a
simple concept- when a bullish order block 'breaks' and becomes a
bearish order block and vice versa
Just like every mitigation we study, always assure there is inducement that
exists before the level . Breaker blocks are most effectice when the price
which causes the break is agressive, and has no inducement inside it.
Rejection block
A rejection block is an area formed after price 'rejects' or reacts aggressively
off a level, usually an important liquidity points. Rejection blocks disobey
smart money traders concepts since most of the time they don't involve a
BOS (break of structure), which allows us to get in early before the move
occurs. In algo, structure isn't used like SMC , instead it is viewed as liquidity,
or 'algo structure'. A rejection block is lower time frame confirmation for a
trade opportunity off important liquidity levels. such as protected daily highs
and lows, and session high and lows
Pay attention to how price is still obeying smart money supply chains and also bearish
structure- this is a trap a RB uses often which we will speak about later
Premium/Discount
There are a few ways that the algorithm can be used to manipulate prices in a way
that deviates from true market equilibrium.
1. High-frequency trading: The Algorithm can use high-frequency trading that
execute trades at extremely fast speeds, allowing to take advantage of small
price movements before other market participants can react. This can lead to
prices that do not reflect the underlying supply and demand of the market, as
prices can be moved rapidly and unpredictably by this high-frequency
movement
2. Lack of transparency: The Algorithm may leave order blocks, meaning that
other market participants do not have a clear understanding of their
behaviour or how they are affecting prices. This can make it difficult for other
participants to react to changes in supply and demand, leading to prices that
do not reflect true market equilibrium.
Structure traps can also exist in another format, which is where price
reverses without showing a structure shift before hand. Most SMC and
retail price action traders want to see BOS for a shift or continuation in
price. Since no shift has occured, these traders still try to carry out price in
the direction its travelling. Us as traders who use liquidity, we may be
expecting price to reverse since raiding a liquidity point. If no shift in
structure occurs, we can enter and are contradicting price action traders
orders, meaning we are trading towards the markets liquidity formatting
which increases our prbability of being on the correct side of the market
This can also be viewed as a SND trap too; Supply and demand
chains are essentially formatting a retail trendline
S/R Traps
There are many forms of traps, one important one to understand is support and
resistance traps. Support and resistance traps are better when paired with other
confluences to increase the probability of a particular trade idea
Smart money traps are best paired with algo structure price
delivery
No inducement and high imbalanced zones both disregarding smart money
structure concepts
News
We don't trade news events, however we still need to study
the characteristics of news events. One thing we will study is
how to trade after news events, with a concept called the
news model.
The news model is a common series of events which occurs
after a new event, which allows us to get in to very high
probability trades. News is not a random event, the direction
the market moves from a news event was already going to
happen, news is just used as a catalyst for price to deliver.
News often mitigates very important areas or can be used to
grab important liquidity levels (Mainly HTF). The low or high
of a news event becomes a high liquidity area too, and price
tends to pullback after news to take this levels out on the
intraday timeframes.
Top down analysis usually begins with the Monthly Chart, and the
works down in small increments down to Weekly, Daily, 12H, 4H, 1H,
15M , 5M. On the Monthly its evident price is bearish. Price has left a
Large wick and began printing bullish candles for the previous
recent months, we may expect some form of a pull back, espescialy
since also running a previous low.
WEEKLY
H1
15M
Dropping down to the low time frames, we can see after Frankfurt
session price is dropping towards an inducement level which is below a
vector candle. Another reason this zone is valid is that its below FF
opening price, which we learnt about at the start of this book. The algo
generated buyside liquidity above in the form of a trendline , showing
buys maybe a short term target for the algo; This is in line with our bias.
As price is approaching the key inducement level where we will look for
a trade, we can also see how the algo is currently forming a market
maker model, which is a strong confluence since we are witnessing a
liquidity trapping before price hits our level. Because price has formed a
liquidity trap before hitting our level, we don't need to confirm the level
with lower timeframe confirmation such as a money transfer and sweep
of inducement. Rather, we can enter after confirming the level with our
agressive algo mitigation confluence. We wait until price hits the level
and gives an aggressive candle rejection; always wait for the candle to
CLOSE in this formation.
Now price has presented our aggressive
mitigation, we can look to enter, with
the safest place to put our Stop loss
covering the majority of the previous
candle since we deem this protected.
The most reasonable place for a first target would be Asia high, since
this is a significant level where there's a chance the algo may react
from. HTF, we except the target to be the relative highs which may be
taken and then price can inject back to sells, to take the daily low
which is our overall daily bias for price to end up
Case study 1
From HTF, our bias is to take out the high marked with a dotted line, which was the
mitigation of a smart money trap on the higher time frame
We have had a bullish asia range which lines up with our bias for buys. We
have indentified a valid level where the algo stores orders for price to
mitigate and take liquidity to fuel the move up. his build up of price is
occuring before london, which would make sense as when price comes to
mitigate at london open, we can expect it to form the low of the day here
As price approaches our level, we can see it creates a vector candle. We know
that above this vector candle stores a large amount of injected capital, which
gives more confirms for a buy; the vector candle also leaves behind a smart
money trap. Also remember how an aggressive move in = aggressive move out
Our bias is to raid the internal liquidity level above. We have recently swept a HTF
liqudity level which is a key level for a reversal to push up
Within the opening hours of the trading session, we see price has liquidated
Frankfurt low, as well as Asia low which provides fuel for the algo to inject into
London buys. We can see London open has put in a low which we expect to be
the protected low of the day, which makes sense for buys. Asia also had a bullish
close, therefore this is inline with our bullish bias.
We have identified a breaker block, which is in the discount of the london open range.
This breaker is high probability since it has inducement, and also notice how there is
no inducement which occurs for the order block below it, hence we favour the
breaker
Price mitigates the level, giving an algo mitigation, and leaving behind
some small lower time frame inducment. When studying how price pulled
back into the zone, we can see a vector candle was formed, leaving behind
and smart money trap
Thankyou's
I'd like to congratulate you for reaching the end of this book, and
also thankyou again for purchasing. I hope you found this book a
worthy investment of time and money. Always be a student to
the game, the ones who work the hardest, study the hardest and
network the most are the ones who succeed. Take detail notes
and re-read as much as you need to. Back-test and gather data
on all concepts and incorporate this into your trading or build a
strategy around it.
@jjwurldin
@JjWurldin #7045