AT #23: $500 to $74,580 Challenge Week 7

Ruben Leija

Read time: 4 minutes

You know what’s annoying, when you have a set entry point for you trade, and the market reverses before it gets there; leaving you to miss out on a trading opportunity.

Let’s fix that, and let me share with you a concept that I use in practice every single day of trading.

In this Email

Stats for the week
The importance of market imbalances
How I made $919 with a single concept
My favorite FVG indicator

Stats of the week

Number of trades: 4
Profit: $919
PnL %: +30%
Account value: $3,919
Position size per trade: $1,000
Tickers: $SPY

Many false breakouts and long periods of price consolidation. Just look at the image below to see what I mean.

I took a few trades every now and there, manage to make a bit of profit, but that was on Monday and a little on Tuesday. However from Wednesday to Friday, there were no opportunities that I could find.

Last week loss was -$1,300 on the small account , and I managed to recover back $919.

At the moment, I’m sitting on a single put swing trade for $QQQ.

In my opinion, it seems the bulls momentum is winding down, and is due for a pullback. There’s also. a type of gap that I’m observing that makes me believe the bearish reversal (which I’ll discuss in detail next week).

With the current $QQQ trade (11/24 $378 puts), I’m looking to turn $1 contract to +$4, my ideal target is +$7 – If $QQQ price hits $373ish.

I have 10 contracts. and this would put the account value well over $6,000, at the minimum.

Another reason I like this trade is because we have a short week next week. Short weeks, historically speaking, start with a downtrend, and near the end of the week it switches to an uptrend.

Finding market imbalances

Before I share with you how I made $919 on this simple concept, I have to explain it first.

Have you ever seen 3 candle sequence where the first and third candlestick do not full overlap the body of the second candle?

This image has an empty alt attribute; its file name is bearish-fvg-no-box-1024x726.png

I’m going to share with you a secret concept that not a lot of traders know about. That gap is called the fair value gap (FVG).

Why is this important you ask?

Because FVGs are zones in market that show an inefficiency of buyers or sellers.

FVGs on a downtrend means more selling orders were injected than buying orders.

FVGs on a uptrend means more buying orders were injected than selling orders.

These are just another form of supply & demand zones.

How I made $919 with the FVG concept

Let me show you how I made $919 on Monday by using the FVG concept.

I was able to detect that market trend was in a uptrend, now I needed to find a point of entry to go long.

Depending on the size of the FVG I will determine where I enter. In this case the FVG was small, so entering when price touched the zone was an appropriate execution.

If the gap was bigger, I’d wait for price to be midway before entering.

In the image above, you can see that sellers were struggling to push down further, hence the long wicks at the bottom of the candles.

As soon, as bulls gained the strength, price went on to complete the gap that was created in the early morning session.

Read more about FVG here: Fair Value Gaps: What to Know

My Favorite FVG Indicator

Look, drawing boxes can only be so much fun. And trying to draw boxes while a live trading session… well, that’s the last thing you want to be doing.

So I’m going to share with you my favorite FVG indicator for TradingView that will auto detect FVG on the spot on any timeframe.

Find the indicator here: FVG indicator

That’s it for today. See you next week.

PS: What’s the #1 thing that made you want to check out this newsletter?

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