Lesson 3 MMSM Buyside

Category: Trading Strategies

Tags: analysisfinancemarketstrategytrading

Entities: buy programFibonacciliquiditymarket maker sell modelsell program

Transcript

00:00

So let's talk about the market maker

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sell model and we're going to specifically be focusing on the buy side. So essentially this is the buy program inside of the market maker sell model.

Now the market maker sell model we look for in higher time frame bearish

00:34

conditions. So if the higher time frame is trending lower the market maker sell model will be a retracement higher and will generally either run stops or rebalance.

Once the buy program ends of the market maker sell model. The sell

00:51

program will commence to take price back below the initial consolidation. So it's very important for us to know what the higher time frame draw is likely to be.

Generally the best trades using the market maker sell model in a higher time

01:06

frame bearish environment will be on the sell side within the sell program. However, we can still counter trend trade to the higher time frame within the buy program of the market maker sell model.

So let's use this as an example.

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So this is the daily time frame and price is down here and above the market we have this sellside imbalance buy side inefficiency right. We are anticipating price to run higher to close this inefficiency and then potentially

01:39

continue lower since we are in a higher time frame bearish trend. So we anticipate a buy program as the retracement leg of a market maker sell model.

the algorithm will rerice to the sell side imbalance

01:56

and this whole retracement higher looks like this on a 1 hour time frame. So this is the buy side delivery in a smaller fractal of this retracement on the daily time frame prior to price reaching the higher time frame premium level of this sellside

02:13

imbalance buyside inefficiency. So to put it into layman's terms, this move higher on the daily time frame is the buy program on the buy side of the curve of a market make a cell model.

So we're going to focus on the buy program

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initially and see how we can capitalize on the movement higher during this retracement into this sellside imbalance on the daily time frame. So here we have our initial consolidation and this is our higher time frame level.

02:47

Now this can be any higher time frame level again it could be say a value gap it can be an order block a breaker mitigation block it could be any of the number of arrays that we can see in price. It's all dependent on what we can

03:02

currently see in price at the time. Sometimes we are going to just have a run on liquidity where we have an old high to the left and we are repricing higher in our buy program to urge the liquidity above the old high.

Right? So

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there'll be buy stops resting above that old high. Smart money will pair short positions with the buy stops and then distribute their positions below the initial consolidation.

If we see a higher time frame level which sits just above an old high where

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there are buy stops and buy side liquidity resting above this is higher in probability that we are likely to see a market reversal and the end of the buy program because the algorithm is so efficient. It will always look to kill two birds with one stone.

So the two

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main parameters that the algorithm is going to look to do is to seek liquidity and to rebalance inefficiencies. What you're often going to find is an old high that rests below an inefficiency.

And the algorithm will often draw to this area and it will serve you very

04:07

well if you keep this analogy whenever you're looking for setups in the market. Now let's focus on the left side of the curve.

So from the initial consolidation low to the higher time frame level where we expect price to reach for this is

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known as the BDR. So our buy side delivery range, this is our range of opportunity per hunt for setups before we reach the higher time frame objective and essentially the completion of the buy program.

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So the initial consolidation down here will be our point of origin and we're anticipating price to go up to this higher time frame level. We should then expect a reversal and the initiation of a sell program to run the engineered

04:55

sellside liquidity below the initial consolidation. Once we have identified our point of origin and we have identified our potential draw on liquidity on the higher time frame, we can then grade our buyside delivery range in 25% quadrants.

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This is what our fib settings would look like. and we would anchor the fib from the high to the low of the buy side delivery range.

The initial consolidation will generally form in the lower 25% quadrant. Between the 25 and 50% quadrant, we will

05:31

generally see our first stage of accumulation or a return to the consolidation. We're generally looking for price to do one of two things.

Number one, it will either drop lower to rebalance an inefficiency left in the expansion leg

05:50

that moved away from the consolidation or two, it will look to run sell stops or sellside liquidity. At the 50% level, we will generally see a measuring gap.

The measuring gap will not be fully

06:06

filled and is normally a reflection of the halfway point between the origin and the terminus. If we take a fib from our point of origin to the measuring gap and project one deviation higher, we should get the high of the BDR.

If this

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overlaps with a higher time frame level and or buy side liquidity, this gives us a good indication that this is in fact a measuring gap and gives us extra confirmation that we are sat around equilibrium 50% the buy side delivery range. This will make more sense as we

06:41

get into future lessons. Between 50% and 75% we normally expect our second stage of reaccumulation again.

We are looking to either rebalance an inefficiency below the

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market in the form of a buyside imbalance sellside inefficiency or we are looking to seek sellside liquidity in the form of sell stops below an old low or relative equal lows. We will see an explosive move higher from the final

07:12

stage of accumulation and into permanence which would be our buy side objective or higher time frame level. The reason the final leg is usually so explosive.

This would prevent traders from entering the market on a retracement and it also reduces the time

07:28

for traders to close positions that are underwater. Let's look at the initial consolidation again and we'll get into a little bit more detail of how we can use the initial consolidation to give us measurements on how high the buy program

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can reach. So this is our initial consolidation.

We have our initial consolidation high and we have our initial consolidation low. Now this is known as the consolidation range.

If we take the consolidation

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range high and the consolidation range low and we take a fib and anchor it to the high and the low, we want to get the midway point between the consolidation range and project half a standard deviation above the consolidation range

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high. These are the fib levels that we would use.

Zero would be the anchor low and 1.0 would be the anchor high. We would then see.5 deviations of the consolidation range projected higher on our charts.

Here's an example. We have

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our buy side delivery range. We've got our point of origin and our terminus already established.

And we have already graded our swing in 25% increments. Now if we take our consolidation range and we project deviations using our fib tool

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higher we will get seven deviations. This is again a crude example.

It will not always look like this in real life but for this example we have seven deviations higher which comes quite close to our terminus. The midway points

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are the.5 levels that we have added to our fib tool. Now how do we use this information?

Swing points will often form around these deviations. So, we can use these deviations to anticipate highs and lows inside of the buy side delivery range

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within the buy program. Now, as a bonus, we can also project these deviations out.

And often you're going to find high probability fair value gaps that will overlap with these deviations in price. If these deviations overlap with the

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grades of our byside delivery range, this is where we are likely to see our highest probability setups form. If we see a deviation that is above buyside liquidity, so say we have an old high to the left and it's in close proximity to

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this higher time frame level, we have a strong probability of a buy program high. So from the initial consolidation before anything has printed to the right, we can already reference using

10:12

these deviations to project a theoretical terminus which we can then use to grade our buyside delivery range. So we can identify the highest probability areas of where setups will form before price even prints.

I will

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show you how this is put into practice in the final lesson of this series. We want to reverse all of this for the sell side of the market maker buy model.

So I'm only going to concentrate on the market maker sell model from this point onwards because this series will then

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get incredibly long and incredibly repetitive. So your homework is to go through your charts and look for market maker by models and mark up your charts for your own studies.

Thank you for watching and I will catch you again in the next lesson.