Qualification

What defines opportunity? What does a trade look like?

This document will outline the conditions that must hold trade for a trade to be qualified and placed. As well as define the method for entering into that position.

Narrative

For a trade to start the qualification process, it must first be based off of a HTF reference that was generated in the Pre-Market Prep. (See Construction of a Pre-Market Prep/Narrative for more info) This is a zone that is generated from the zone qualification process as described in the Construction of a Pre-Market Prep/Narrative documentation. This will ensure that you are engaging the market in a location that offers a high R:R and increases the probability of HTF players to be also supporting your move and proving the energy required for that market movement.

All trades should have a narrative behind them or they will be treated as a scalp. See scalp section.

Acceptance

Acceptance will determine the bias you currently have on a market. It is a boolean factor relative to a narrative based reference. Acceptance requires that one of three conditions have occurred in an area:

  • Re-test of that breached zone.

  • Above average rotation holds into that zone in which > 50% of that rotation is above the zone.

  • We have held just above the zone for more than 5 minutes.

Acceptance cannot be defined while price is tangled up inside a zone/reference. It must exit that reference and make itself clear.

Example of shift in context/acceptance.

ETH Developing Value Area

ETH DVA allows for a solid read on developing condition for that market relative to the overnight value established. It is a primary tool to gauge intraday context.

Balanced Market

In a balanced market, for a entry to be valid, it must be fading an extreme of DVA.

Standard RPB

Price moves to or beyond developing value area high, but not accept outside of DVA. Fading the 1.5 before acceptance is established is still a standard RPB. Fading the 2 is not allowed.

Advanced RPB

Price has accepted outside of developing value, however price is no longer maintaining the established trend. The fade should be on the 1.5 or the 1 after the imbalance rhythm has shifted.

It is ideal for there to be a shift in order flow during this entry type. The previously strong participant should have backed off.

Imbalanced Market

In an imbalanced market, for a entry to be valid, it must be in the DVA H/L or in a fast trend the 1.5. Trades cannot be taken within the 0.5 to -0.5 standard deviation of VWAP.

Confluence with the RTH

All the above trade types should be confluent with the RTH and the RTH point should be used for more precise entry. For example, a fast trend IPB on the ETH off the 1.5 should be confluent with a IPB of DVAH on the RTH.

Do not fade the first opposite extreme touch following a failed imbalance.

Rhythm

For an entry to be valid, it must be within the regular eb and flow of the market. It should not be mid rotation or in some super choppy range.

Using Heikin-Ashi bars the entry will be on a closed bar that supports your trading bias.

All trades should be on a real valid rotation not a micro pullback. That can be determined by the avg rotation size the market is currently displaying.

Order Flow

There should be no divergence or absorption that contradicts the direction you are trading in. Order flow should be used as a tool with Rhythm to gauge turning points and enter in rhythm.

Volatility Consideration: If price moves rapidly in a high angle move to a location, it may be better to wait for another pullback to enter on. An example is provided below. Furthermore, consider how price moves into that reference and starts to compress. This shows sellers weak where you would like to see strength. This indicates there is a higher probability of that IPB failing than succeeding.