1. Overview of the 2026 Trading Strategy [0]

The updated trading strategy for 2026 is a four-step process that combines higher timeframe bias, valid key levels, IFVG confirmation, and precise execution to achieve a 70% win rate.

1.1. Strategy Benefits and Core Steps [0]

  1. The new four-step trading strategy aims for profitable days and a 70% win rate, improving upon an older strategy that missed setups and opportunities [0].
  2. The updated strategy provides the same win rate but with more setups and opportunities, making it suitable for trading the 2026 markets profitably [4].
  3. The four steps of the strategy are:
    1. Defining the bias and higher timeframe draw on liquidity [7].
    2. Identifying a valid key level [62].
    3. Waiting for Inversion Fair Value Gap (IFVG) confirmation [145].
    4. Executing with proper risk management [222].

2. Step 1: Defining Bias and Higher Timeframe Draw on Liquidity [7]

This step focuses on determining the market's direction for the day by analyzing fair value gaps and swing highs/lows on higher timeframes.

2.1. Importance and Timeframes for Defining Bias [7]

  1. Defining the market's bias and higher timeframe draw on liquidity is crucial before executing any trades [7].
    1. This step significantly improves the win rate by preventing immediate losses often seen when traders jump to lower timeframes without a clear direction [9].
    2. Trading alongside the higher timeframe candle provides the best risk-reward ratio and price delivery [13].
  2. The timeframes used to define bias are the daily, 4-hour, 1-hour, and 15-minute charts [21].
    1. The daily, 4-hour, and 1-hour timeframes generally offer the clearest picture [22].
    2. The 15-minute chart is used closer to market open to double-check for potential shifts in bias, such as perfect equal lows that could indicate a different direction [24].

2.2. Two Questions for Defining Bias [16]

  1. To define bias, two questions must be asked:
    1. "What fair value gaps are we respecting versus disrespecting?" [17]
      1. For a bearish bias, the market respects bearish fair value gaps and disrespects bullish ones [17].
      2. For a bullish bias, the market respects bullish fair value gaps and disrespects bearish ones [19].
    2. "What swing high or low are we going towards?" [17]
      1. If the market is pushing towards a high, that high becomes the draw on liquidity for the day [28].
      2. This process should not be overcomplicated; traders should "trade with the trend" [33].

2.3. Example of Defining Bullish Bias [36]

  1. An example from Wednesday, May 13th, demonstrated a bullish bias leading to an $11,000 profit [37].
  2. On the daily chart, the market was at all-time highs, indicating an extremely bullish trend [40].
    1. Trading with this higher timeframe trend, primarily taking long positions, contributes to a high win rate at all-time highs [43].
  3. On the 4-hour timeframe, a bullish 4-hour fair value gap was being respected [46].
  4. On the hourly timeframe, bearish fair value gaps were being disrespected (price closed through them), while bullish fair value gaps were being held, pushing price higher [47].
  5. The ES (E-mini S&P 500 futures) also showed similar bullish behavior, and the presence of relative equal highs indicated the market's target [51].
  6. The overall bias was bullish, with the next obvious swing high marked as the draw on liquidity [54].

3. Step 2: Identifying Valid Key Levels [59]

This step focuses on identifying specific, high-quality price points where the market is likely to reverse or confirm a bias, moving beyond relying solely on fair value gaps.

3.1. Importance of Valid Key Levels [59]

  1. Identifying valid key levels is crucial because they are the points from which the market will bounce, and all trades will revolve around them [60].
  2. Many traders use too many random lines and indicators, leading to excessive trades and poor results [63].
  3. The solution is to identify only two to three high-quality points where price will either reverse or indicate that the bias is incorrect [65].
  4. The updated strategy incorporates new key levels beyond just fair value gaps, which previously limited entry opportunities even when bias and draw on liquidity were correct [68].
  5. The timeframes used for identifying key levels are the 3-minute, 5-minute, 15-minute, 30-minute, 1-hour, and 4-hour, all considered within the higher timeframe narrative established in Step 1 [75].

3.2. Types of Key Levels: Fair Value Gaps [77]

  1. Fair value gaps are the first type of key level, which can be either unmitigated or contain an intermediate high or low [77].
    1. An unmitigated fair value gap (e.g., 5-minute or 15-minute) can serve as a valid key level where price might reject [79].
    2. If price has already traded into a fair value gap (e.g., during pre-market), that specific gap cannot be used as a key level [82].
    3. Instead, for a bullish scenario, traders must wait for the low inside that gap to be swept; this then becomes a valid key level for price to reject and bounce off [84].

3.3. Types of Key Levels: Change in State of Delivery (CISD) [87]

  1. A Change in State of Delivery (CISD) is a new key level implemented in the strategy [87].
    1. For a bullish CISD, it occurs when there is a body close above a candle or series of down-closed candles that have hit a fair value gap or an intermediate low within a fair value gap [88].
    2. For a bearish CISD, it occurs when there is a body close below a candle or series of up-closed candles that have hit a fair value gap or an intermediate high within a fair value gap [89].
  2. An example of a bullish CISD on a 15-minute timeframe:
    1. Price traded down and hit a sell-side liquidity pool, forming a bullish SMT (Smart Money Technique) because ES swept the low while NASDAQ did not [91].
    2. A series of down-close candles traded into this key level and swept liquidity [94].
    3. The opening price of these down-close candles is marked, and a body close above this mark confirms the CISD, which then acts as a key level for price rejection and upward movement [95].
  3. An example of a bearish CISD:
    1. Price traded into a bearish fair value gap or intermediate high, rejecting off this key level [104].
    2. A series of up-close candles traded into this key level [106].
    3. A body closure below the opening price of these up-close candles confirms the CISD, which then acts as a key level to send price lower [107].
    4. This concept applies across multiple timeframes; for instance, a 5-minute candle trading into an hourly bearish fair value gap can create a 5-minute CISD, and if an hourly close also occurs, it indicates a high-probability setup [113].
  4. CISDs are most effective when combined with fair value gaps, making them much stronger, though they can sometimes be used on their own [123].

3.4. Types of Key Levels: Rejection Blocks [125]

  1. Rejection blocks are the final type of key level used [125].
    1. A bullish rejection block is a bullish wick that traded into a fair value gap or an intermediate low within a fair value gap [126].
    2. A bearish rejection block is a bearish wick that traded into a fair value gap or an intermediate high within a fair value gap [127].
  2. An example of a bullish rejection block on a 1-hour chart:
    1. A bullish wick traded into a bullish fair value gap, forming a bullish rejection block [129].
    2. While ES might sweep the low, NQ (Nasdaq) could trade into this wick, respect it, and move higher [132].
    3. It is important to draw out the CE (Central Equilibrium) of the range for potential bottom-tick entries, though these levels are primarily for identifying key areas, not immediate entries [133].
  3. An example of a bearish rejection block on a 1-hour chart:
    1. Price trades into a bearish 1-hour fair value gap, forming a bearish wick and a strong reaction [136].
    2. Drawing a box around this wick identifies it as a bearish 1-hour rejection wick [138].
    3. Price trading into and tapping this wick confirms it as a key level for bearish trade ideas [139].
  4. Implementing these new key levels makes the strategy significantly more powerful by providing precise entries and higher-quality trading opportunities, especially when fair value gaps are not present or intermediate highs/lows are protected [141].

4. Step 3: IFVG Confirmation [144]

This step explains how to use an Inversion Fair Value Gap (IFVG) to confirm that order flow has shifted and that a chosen key level is valid, significantly increasing the win rate.

4.1. Importance of IFVG Confirmation [144]

  1. After identifying a key level, confirmation is needed to ensure that order flow has flipped and the key level is valid [144].
  2. Many traders immediately take a trade when price taps into a key level, which can lead to a low win rate [146].
  3. Waiting for an IFVG to confirm the narrative will significantly increase the win rate [147].

4.2. Timeframes and Identifying the Highest Timeframe IFVG [149]

  1. The timeframes for IFVG confirmation are the 1-minute, 2-minute, 3-minute, 4-minute, and 5-minute charts [150].
  2. The goal is to wait for the highest timeframe IFVG within the manipulation leg [151].
    1. The manipulation leg is defined as the swing high to the swing low that hit the key level [157].
    2. A common mistake for beginners is taking a lower timeframe IFVG in the manipulation leg, which often fails because the entire leg hasn't distributed or inverted the highest timeframe [155].
  3. For example, if a bullish bias and key level are established, an IFVG out of that key level confirms a switch in order flow [152].
    1. If the highest timeframe IFVG in a specific manipulation leg is a 2-minute IFVG (with no 3-minute or higher), then the trade is taken when price closes through this 2-minute gap on the 2-minute timeframe [161].
  4. While experienced traders might use discretion, beginners should always wait for the highest timeframe IFVG for the best win rate, even if it means a slightly worse risk-reward ratio [166].
  5. For a bearish scenario, if a bearish bias and key level are established, and the highest timeframe IFVG in the manipulation leg (swing low to swing high) is a 30-second IFVG (with no 1-minute or higher), a short trade can be taken [169].
    1. The 30-second chart can be used by intermediate traders after backtesting, but beginners should stick to minute charts [172].

4.3. Live Chart Examples of IFVG Confirmation [176]

  1. Bullish IFVG Example:
    1. With a bullish bias and a bullish fair value gap as the key level, the manipulation leg is marked from the swing high to the swing low that traded into this key level [177].
    2. Within this manipulation leg, if a 1-minute IFVG (bearish fair value gap that should invert) is present, but no 2-minute, 3-minute, 4-minute, or 5-minute gaps exist within that specific leg, then the 1-minute IFVG is the highest timeframe [180].
    3. After a body closure above this 1-minute IFVG, a long setup can be taken [189].
  2. Bearish IFVG Example:
    1. With a bearish bias and a 15-minute bearish intermediate high as the key level, a swing low and swing high are identified within the manipulation leg that hits this key level [191].
    2. If the highest timeframe IFVG in this manipulation leg is a 30-second IFVG (with no 1-minute or higher), an entry can be taken if there is strong conviction [196].
    3. Alternatively, for more confirmation, the entire manipulation leg from an external 5-minute swing low to an external swing high can be considered [200].
    4. If the highest timeframe IFVG in this larger leg is a 5-minute fair value gap (even if 1, 2, and 3-minute gaps also exist), then waiting for price to close below this 5-minute gap provides stronger confirmation for a short trade [202].

5. Step 4: Execution and Risk Management [215]

This step outlines the precise execution methods, risk management rules, and trading schedule to maintain consistency and achieve the target win rate.

5.1. Execution and Target Selection [215]

  1. Flawless execution and proper risk management are essential to maintain the 70% win rate [216].
    1. The strategy aims to remove decision-making at the time of execution, emphasizing repetition over prediction [219].
  2. Entries are typically made on the body closure of the IFVG [223].
    1. If the risk-reward is poor due to a high candle close, a limit order can be set at the IFVG or the CISD (Change in State of Delivery) [224].
  3. The target risk-reward ratio is typically between 1:1 and 1:3 [229].
    1. Traders should aim for "low-hanging fruit," which means targeting the most obvious high or low in the market that the price is drawing towards [230].
    2. This involves identifying the most obvious higher timeframe high from Step 1 and then targeting a closer, more achievable low-hanging fruit on the lower timeframe [232].
    3. This approach helps psychology, improves win rate, and is particularly beneficial for prop firm trading, which often has consistency rules that discourage very large 1:10 risk-reward trades [236].

5.2. Stop Loss Placement and Trade Frequency [241]

  1. Stop loss placement varies but can be at the swing low or high, the body, a fair value gap, or an order block [241].
    1. For beginners, the safest stop loss is typically at the swing low [244].
    2. Experienced traders can backtest different placements to find what works best [245].
  2. The strategy limits trading to a maximum of one to two trades per day [246].
    1. One win means the trading day is over [247].
    2. One loss usually means the day is over, but a second trade might be taken if it's an A+ setup and aligns with a new key level [247].
    3. Two losses in a day means trading stops for the day [247].

5.3. Trading Hours [248]

  1. Trading is primarily conducted from 9:30 a.m. to 11:00 a.m. Eastern time [248].
    1. This period is considered the "golden hour" for trading, especially for futures and Nasdaq [250].
  2. Executing trades past 11:00 a.m. is rare, typically only if the earlier session was poor and significant liquidity has been generated [252].

6. Live Trade Examples [258]

This section provides three live trade examples to illustrate the application of the four-step strategy in real-market scenarios.

6.1. Trade Example 1: Bullish SMT and 4-Minute IFVG [258]

  1. Bias: Very bullish, respecting a bullish 4-hour gap and disrespecting bearish gaps, with the most obvious swing high as the target [260].
  2. Key Level: An intermediate low inside a gap, resting around the equilibrium of the range, and a rejection wick [263].
    1. Price traded lower into this intermediate low, forming a bullish SMT (ES swept the low, NASDAQ did not) [267].
  3. IFVG Confirmation: The highest timeframe inversion in the manipulation leg (swing high to swing low that hit the key level) was a 4-minute IFVG [270].
    1. A good close above the 4-minute IFVG (no 5-minute gap present) provided a valid entry [278].
    2. The stop loss was placed at the low, and the target was around a 1:1.6 risk-reward [284].
  4. Execution: The trader personally waited for more confirmation due to a large 124-point stop loss [292].
    1. Price went higher, creating a 5-minute bullish fair value gap with higher timeframe sponsorship from an hourly intermediate low [299].
    2. The trade was taken after price traded into this 5-minute gap, with an unfilled 1-hour gap as the draw on liquidity [303].
    3. The highest timeframe IFVG in this manipulation leg was a 30-second IFVG (no 1-minute) [309].
    4. An entry was made on a market order after a close above the 30-second IFVG, with a stop loss at the low and TP at the unfilled 1-hour gap [312].
    5. This first trade stopped at break-even [323].
    6. Price then returned to the internal low of the 5-minute gap, showing a strong bullish reaction [324].
    7. A second setup emerged, with the highest timeframe IFVG being a 1-minute IFVG (no 2-minute) [327].
    8. A long position was entered with a stop loss at the low and a TP targeting an unfilled 15-minute gap, aiming for all-time highs [331].
    9. The trade eventually hit a 1:1 risk-reward profit, with the stop loss trailed to break-even once a high was hit [333].

6.2. Trade Example 2: Bearish CISD and Rejection Block [341]

  1. Bias: Bearish, respecting bearish PD arrays and disrespecting bullish ones, targeting a specific low as the draw on liquidity [343].
  2. Key Levels:
    1. A 1-hour bearish fair value gap combined with a 1-hour bearish rejection block [347].
    2. A 15-minute Change in State of Delivery (CISD), identified as a series of up-close candles that traded into the 1-hour bearish fair value gap [349].
    3. These two key levels were very strong [351].
  3. IFVG Confirmation: Price traded up and perfectly tapped into the bearish rejection wick [352].
    1. The highest timeframe IFVG in the manipulation leg (swing low to swing high that hit the key level) was a 1-minute fair value gap [355].
  4. Execution: A short trade was taken, with a stop loss at the swing high and a TP at the low-hanging fruit for a 1:3 risk-reward [357].
    1. Price dumped, and the trade went to break-even when an internal low was hit [358].
    2. This example highlighted the validity of key levels even without a traditional fair value gap, thanks to CISDs and rejection blocks [359].

6.3. Trade Example 3: Unfilled 15-Minute Fair Value Gap [361]

  1. Bias: Very bullish, at all-time highs [361].
  2. Key Level: An unfilled 15-minute bullish fair value gap (unmitigated) was used as the key level to send price higher, with an external swing high as the target [363].
  3. IFVG Confirmation: Price accumulated, went lower, and then traded into the 15-minute bullish gap, getting a strong rejection [367].
    1. The highest timeframe inversion of this manipulation leg was a 1-minute IFVG (no 2-minute) [379].
  4. Execution: A long position was taken with a stop loss around the swing low and a TP for a 1:1 risk-reward [368].
    1. The trader was confident in the accumulation range but not 100% confident in the high (due to a previous new week opening gap), so profit was taken at the low-hanging fruit [372].
    2. The trade eventually sent price back to break-even after hitting the high and forming a bearish SMT [376].
    3. This example emphasized the importance of taking profit at a comfortable point, even if it's a 1:1 risk-reward, rather than holding for larger gains if confidence isn't absolute [378].

7. Strategy Recap and Next Steps [382]

This section summarizes the four steps of the strategy and provides guidance on how to practice and master it.

7.1. Strategy Recap [382]

  1. Step 1: Define the higher timeframe bias and higher timeframe draw on liquidity [383].
  2. Step 2: Identify a valid key level, which can be a fair value gap, an intermediate high or low within a fair value gap, a CISD, or a rejection wick/block [384].
  3. Step 3: Wait for IFVG confirmation through the highest timeframe inversion [386].
  4. Step 4: Execute flawlessly and apply proper risk management to maintain the 70% win rate [387].

7.2. Homework and Mentorship [388]

  1. Traders are encouraged to backtest the strategy themselves using software like TradeZella [389].
    1. Backtest one week's worth of data every day to gather statistics [391].
    2. Journal all trades taken [392].
  2. Following all steps consistently can lead to becoming a consistently profitable trader [393].
  3. For one-on-one support, live trade reviews, and mentorship, the "1% mentorship" program is available [395].
    1. The mentorship includes calls six times a week and has helped traders achieve payouts and consistency [398].