Once You Learn The Daily Sweep, Trading Becomes Simple

0:00 Right before the move you were waiting for, they take your stop. Every single time you see the breakout, you see the new high or low, and you jump in, and 30 seconds later, you're stopped out, watching price rip the other direction without you. That's not bad luck. That's a trap. And once you learn to see it, you'll realize the market's been baiting you this entire time. Today, I'm exposing exactly how smart money hunts liquidity, traps retail on the wrong side of the trade, and how learning this simple process is gamechanging for your trading. So, we're going to cover how liquidity moves price and how to read the market the moment it gets taken. Now, why is liquidity so important? Think about this. We're trading inside of a market and for every buyer, there needs to be a seller and for every seller, there needs to be a buyer. So, every trade needs somebody on the other side. So, think of liquidity as the pool

0:47 of orders that are waiting to be that someone. Now, if you're trying to buy the market, you need somebody on the other side of your trade. And if you're trying to sell the market, you need somebody on the other side of the trade willing to buy. And the biggest breakthrough that I had when it comes to liquidity is understanding where big players or institutions are trying to position themselves. So think about this. You have a one lot, okay? You're a very small trader in the grand scheme of things. We're talking about retail here. A lot of us are only trading a couple lots at a time. Now, think about an institution that needs to fill hundreds if not thousands of lots. Okay? they need a very large pool of retail in order for them to position themselves or they need smaller institutions willing to be on the other side of that trade. So, if we're thinking about you as a one lot trader, an institution might need 5,000 of you in order to participate in

1:33 the market. So, I want to group you as part of retail and I'm going to put you into a group. Okay? Imagine if all 5,000 of you need to place a one lot order. All it takes is one institution willing to sell 5,000 lots to fulfill that order of you and the other 4,999 people. Now, for a lot of you guys, this is going to be a light bulb moment because what I noticed was a lot of retail traders are getting stopped out in the exact same spot. And I was part of that. Often times, I'll get stopped out and then see the market move towards my target after I've been stopped out, right? And it's not random. You're not being targeted. the market just needs to move to an area where it's going to generate enough interest and it has enough liquidity to fill tons of orders. So, in order for a large player, and this is how we're trying to think, we're trying to think like a large player.

2:19 We're not trying to think like retail because, as we know, 80 to 90% of retail is consistently losing money. So, we need to think like a large player. And in order to buy or sell in size, a big player needs a large pool of orders. Now, where were you and I taught as retail traders to put our stop- losses? If we're short on a market, we were told to put those stops above an old high. And if we're long on a market, we were told to put our stops below an old low. That might be a monthly higher low, a weekly higher low, a daily higher low, or a session higher low. Now, all of those stops become the liquidity pool. Okay? So, just think about thousands of participants. They're all going to have their stops in the same area, at least if they're trading with stops. Now, if a big player comes into the market and we haven't ran out of liquidity and there's not enough liquidity on the book, what

3:05 do you think is going to happen if they try and buy 5,000 lots at the market? Well, if there's not 5,000 willing sellers, that price is going to start moving against them. And that 5,000 lot order is not all going to get filled at their desired price. So, where is the area that they're looking to participate in the market? Well, they're looking to participate below old lows because if the market trades below those old lows, all of those limit orders start becoming market orders as they're triggered. So, when that limit order gets triggered, it turns into a market order. Now, as all those market orders start flooding into the marketplace, it's giving the institutional or large player an area to participate in, right? And this is why so often you see the market take out those stop- losses and then turn and then go in the other direction. So, where does all of this liquidity rest? As I mentioned, we have previous

3:51 monthly, weekly, daily, session highs. So, we have buy stops sitting above these highs as you can see here. Now, before I go forward and talk about these other levels down here, let's talk about why these buy stops are very important. So, let's say if we got short on this candle and we put our stop above this high. Now, all of a sudden, we have pending buy stops. Okay, my limit order that's up here in the form of a stop-loss is a pending buy stop. Or I could put a pending buy stop up here if I'm not in the market anticipating a break higher. So if it breaks out higher, it's going to market enter buy me into a position and I'm going to try and anticipate that run higher. But either way, both of those types of orders are buy stops being put into the marketplace. Now, as this market trades lower, more and more participants are either shorting the market and putting

4:38 their stops above this high, right? because that's where we were all taught to put our stop losses or there's more and more buy stops anticipating that next breakout. Right? So as the market trades away from this level, more and more buy stops are flooding into the market and this is creating this pool of liquidity and then we have equal highs and lows and these are very visible on a chart and often times this tells us that the liquidity was not rated above this high and the market is possibly susceptible to trading up there later in the future. And then finally, we have previous monthly, weekly, daily, and session lows. So again, down here, just imagine this in reverse. As the market's trading away, right? And more and more traders get long on these candles, more and more pending orders in the form of sell stops are being placed in the market, right? To protect those long

5:24 orders. Or there might be people anticipating a break lower in which they want to get triggered on a sell after the market takes out this low. So, as the market trades away from that level, you can imagine that there's more and more orders being built up below this low as well as this old high. So, what are we actually looking for to find high probability trades here? Well, we're looking for a run to trigger any one of these levels either higher or lower, right? If the market is currently in a range, we want to see smart money engaging one side of that range and then reversing very quickly. We do not want to see it take out this low and kind of meander down here. And we also don't want to see it take out the high and meander here. If we're trying to ride the coattails of smart money, we're looking for strong reactions after they trigger these orders. So, what we're

6:09 looking for is a quick snap back into the range and a closure or it runs higher, takes out the highs, triggers those stops, and then snaps back into the range very quickly. And that's where we get a swing failure pattern. So, here we can note that we have this previous daily high. So, when you sit down in front of your charts, I want you to mark out your previous highs and lows. That could be a previous monthly higher low, previous weekly higher low, a previous daily higher low, or previous session higher low. Now, obviously, we want to trade in the direction with the trend. So, if you analyze your higher time frame and you're bullish, we're only looking for raids on sell stops. So, if you analyze the higher time frame charts and you come to the conclusion that you're bullish on a specific market, we're looking for a read on short-term sellside liquidity to position ourselves long. And if you're bearish, you're looking for a short-term buyside liquidity to position ourselves short.

6:56 So, in this example, we've marked out our previous daily high. Now, what we're looking for is a run on these pending buy stops. So, we have our previous daily high here. Let's say the next day opens up. It trades above the high. And again, we're not looking for this market to meander and close above here. We want to see it snap back into the range and close below that previous daily high. So, what is this actually telling us, though? It showed that smart money pushed this market above this old high triggering all of these pending buy orders and then they reclaim that level with aggressive selling. So all of these buyers up here, right, because these are buy stops, they've been absorbed and a clear sign of absorption is a very long wick with aggressive selling coming back in the market and we get this reclaim which is the closure back below this

7:42 previous old high. So, simply breaking this concept down so you can understand it is we're trying to think like the counterparty. If you're consistently getting stopped out and losing money in the markets, thinking like smart money and trying to anticipate the reactions from these levels will put you on the right side of the market. Now, some of my best trades have come from getting stopped out at a specific level, waiting for this market to reclaim, and taking the same exact position, putting my stop above this previous high. So if you have strong conviction of which direction the market's trying to go, it might take two, three, even four attempts before that idea is actually wrong. Now I want to go over a couple of examples here for you guys. So here we have a 4hour time frame. And each one of these windows here represents a full week. So at the end of the week, we have this previous

8:28 weekly high. We have this previous weekly low. And I've marked out this intermediate term previous weekly high because based on the range from this high to this low, this is sitting right at about equilibrium. So here what we're looking for is obviously a run on either one of these levels and we're looking for a quick snap back into the range. So here we get a nice sweep of the previous week's low and we get a nice closure here. Now I'm going to walk you guys through a couple of examples just to show you that when you get a swing failure pattern, sometimes they do fail. So, as we can see here, the market continued trading lower after we've taken out the previous weekly low and after we get a quick snap back into the range. But, we're going to keep watching this market just to see what happens. So, here we can see the market closed above this previous low again. And what we can notice from this specific price action is the market had a really hard

9:15 time pressing lower. We can see the market just kind of consolidated inside this range and then we reclaim this old low one more time. So, what we're going to do is place another position long because we're going to give this another attempt anticipating that we're running out this old weekly low for sellside liquidity so smart money can position themselves long. And we're just going to target this intermediate high right here. Now, as you can see, after you enter this market, we have to sit through all of this chop before it makes it to our final target. But what I want to point out is this run lower as we reclaim this level. the lowest low after reclaiming this level becomes our point of invalidation. Okay? So, after we get another swing failure pattern here, we reclaim this old low. This old low down here, they should not trade to it because they've already flushed out the

10:01 market. They've already trapped enough people short and we've seen this nice response higher, showing us that Smart Money is positioning long now, as they trade down lower again, right? Notice how we don't take out this low. It's giving them more opportunity to load up long here to then unload up here. So, we can see that smart money positioned down here, possibly over here, over here, and then unloaded up here. Now, we've hit our takerit, but what are we getting here now? Right? So, if we measured this range high to this range low, this is sitting at about equilibrium. And notice how we've taken out that high, engaged the buy stops here, and we get a strong snapback into the range. Right now, this is showing us that smart money is possibly flipping gears because they've engaged these buy stops and the market did not trade any higher. Right? We get all this absorption of buyers inside of

10:47 this wick and we get a closure back inside of the range. So, we're going to take a short position here, putting our stop above the high and targeting the low again. The context is there. They've ran out the buy stops. They've engaged the liquidity and now they're possibly setting the market in the other direction. So, here we can see eventually this market does make it down to this previous weekly low. Now, after the fact, just keep in mind, right, once we get this trigger here, we have to be able to be comfortable to sit in all of this. This takes about 2 to 3 days to make it down to its target. But if you can analyze the charts like this and understand the context of why markets are moving to liquidity and how it's trading around these liquidity levels, I guarantee you it's going to be a gamecher for your trading. Now, we've taken out the previous weekly low, right? And we get a swing failure pattern here. So, we've taken out this old low. We can see that the market takes out the low, snaps back into the

11:33 range very quickly. So, we're going to go long here, putting our stop below the lowest low that created the swing failure pattern, and we're going to see if this makes it to our target. There we can see it's taken out this previous high and engaged the buy stops here. And that's exactly where they exited the market. Now, before you ask, I know that this is on a 4hour chart and we're trading weekly ranges here. But I want to show you guys a couple of examples intraday because the context, the setup, and everything that we're looking for for a high probability trade works the same on every time frame. Now, in this example, I have our previous daily range. So, we have our previous daily high, our previous daily low, and then we have our Asian range low down here. Now, the market is creating lower lows and lower highs. So, I'm anticipating more bearishness. Now, if I'm trying to position short, where am I trying to get in? I want to see it engage buy stops first, a quick reclaim of this level,

12:20 right? So, a snapback or buyers being absorbed so I can position myself short to target this liquidity to exit. So, here we could see we've engaged the buy stops and we've snapped back into the range getting a nice closure. Again, we're waiting for closures. You do not want to enter the market as this market is trading above this high. We need to see a closure back below this previous high because that's telling us that smart money is actually interested in sending the market lower. Now, a couple candles later, we can see that we get this very strong expansion lower, targeting these levels down here. Now, you're probably also wondering, does this work on a time frame lower than 1 hour? This is a 1 hour chart, right? You would have had to have been in this trade for 2 or 3 hours before it hit your target. So, let's drop down to a lower time frame to show you the same context and framework. So, here we have our Asian range high and our Asian range

13:07 low. As I mentioned, when you're trading, you're looking for a previous monthly highs and lows, previous weekly highs and lows, previous daily highs and lows, and previous session highs and lows. And depending on which liquidity pool you're using is going to give you a different time frame to trade on. So, if you're an intraday trader, you're probably only looking for session and daily liquidity. If you're a swing trader, you might be looking for daily and weekly liquidity. If you're a position trader, you might be looking for weekly and monthly liquidity. Now, just like in the previous example, this market has shown a very strong willingness to trade lower. So, if we just look at market structure, we have this run higher and then we get a break in market structure here with a very strong displacement. So, what I'm looking for coming into this day, I'm looking for buy stops to be engaged above the Asian range high or above the previous daily high. Right? That's very far away. And then I'm looking for the

13:54 reclaim back inside the range so I can position myself short with the context that they're running out these buy stops so they can position short. Here we can see the market got very very close to the Asian range low. We didn't engage any of that liquidity yet. So we're waiting for this market to then engage the Asian range high. Now known how we get a pretty quick snapback and this is on a 5minut time frame by the way. We take out this Asian range high and we get a quick snapback into the range. And not only that but the next 5minute candle closes bearish also. So, we're going to do is go short, putting our stop loss above the high that took out the Asian range high, right? Because this is our swing failure pattern. And then we're just going to target the Asian range low. And there you have it. I do want to point out again, once we're in a trade and once we have the context of the trade, this market does not move in a straight line to our target. You have to be comfortable with this market

14:39 retracing almost 50% to your stop, holding that position because again, this high over here is our invalidation. We've already purged the buy stops here. Smart money should have no reason to go back up there and retest that high. Now, let's talk about the common mistakes when you're trading the daily sweep. So, mistake number one, entering while the wick is still forming. Please do not do this. If the market trades above a previous old high, wait for the closure back below. I promise you're not going to miss that much of the move and it's going to save you a ton of money in the future. Mistake number two, calling every break a sweep. So, if you're going to trade swing failure patterns, just know that not every swing failure pattern is worthy of trading. It depends on the timing and the context of when and where it's happening. And also, we're waiting for the reclaim and a displacement. Mistake number three is trading every minor swing. Just like I

15:25 mentioned, we're not trying to trade these small swing points that are occurring maybe overnight or during lunchtime. We're looking for large pools of liquidity. And mistake number four is putting your stop loss inside of the sweep. Meaning, you're not using the highest high or the highest low when placing your stop loss. I have already shown you guys a couple of examples where the market retraced, got very close to the stop-loss and then continued in our direction. Once I really understood how liquidity moved the markets, it became revolutionary for my trading. I stopped getting trapped on the wrong side of the trade. And even if I did, a strong reaction gave me the confidence to re-enter and capture huge moves. However, knowing how to trade these patterns and consistently executing them in the market are two entirely different things. Take Fernando for example. He'd been trading for 4 years with nothing to show for it. He knew all the concepts. He knew the

16:11 patterns. No payouts, not even a consistently green month. That's why I created the trading apprentice to help traders like Fernando break through his struggles and build a system that he could execute every time he sat down at the charts. Fast forward to today and he's consistently withdrawing from the markets. So, what changed? He got to trade live with me every day of the week where I execute the same system that allowed me to make multi-7 figures from the markets. And not only that, but he also got direct access to me to ask any question that he had to help him get him over his biggest struggles. If that level of support and mentorship is what you're looking for, I'm opening just 15 more spots to my program. And you can find the link to apply down in the description. I do want to mention that we are highly selective and we don't just accept anyone. Trading does involve real risk and we do not guarantee that you're going to get the same results. But if that's not for you, then I hope

16:57 you learned something from this video that will help you find your next breakthrough. Thanks for watching. Don't forget to like and subscribe and I'll see you guys in the next