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Can Trading Standard Deviations Make You Money? | COFYT

Can Trading Standard Deviations Make You Money?

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Can Trading Standard Deviations Make You Money?

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Yo yo yo. What is good everybody? Welcome back to Crabs Trades. Today we're going to be doing a review of standard deviations. How I use them, why I use them, where to place the fib, and we're going to be going over the different ways to use standard deviations in your trading, as well as we're going to be reviewing some live market examples, as well as we're going to be going over some live market trades that I actually took using standard deviations. So, yeah, let's get into it. Overall, make sure to watch this video all the way until the end because I will be dropping a ton of gems in between. So, all that aside, let's get into it. So, first of all, here are my fib settings if anybody wants to screenshot. What I'm looking for is some accumulation, right? And I'll place my fib at the low to the high of that accumulation. And then I'll get my -2 to -2.5 standard deviation. This is my reversal fib, I call it. And as you can see right here, price oftent times consolidates at this level. And this isn't just like BS. We're about to go over the live market examples in just a second. You can see how it kind of top ticks just like that in the live market. We'll review these in just one second, but I'm just showing you guys that this actually does happen in the market. It's not just BS that I'm drawing up. But yeah, you can see right there. We're going to review those in just a second. But let me get back to this. So, pretty much what I'm looking for is accumulation. I'll place my fib from the low to the high of the move that started the run higher, right? And then you can see you get standard deviations projected. My ideal levels where I like reactions off of are -2.5 to -2 standard deviations. You can see I got them marked out as red here in my fib. And that's just because it's a very very good reversal level from the accumulation. So you guys know that I trade the ABS model and oftent times that is based off of AMD type of framework. So accumulation manipulation manipulation into our standard deviation levels and then oftent times we're going to have that run lower. By the way, this is also vice versa for a bullish scenario. Just same exact thing just opposite. And you can actually see here I actually got two fibs drawn up. So what is the second fib? Let's go over that. That is the ABS rejection. And what I look for there is the 1.5 to two standard deviation. So if we look right here, 1.5 to two standard deviation is oftent times a zone that we're going to get rejected before we put in the ABS, the anticipatory breaker block, which a breaker block is right here. high low higher high took out liquidity 1.5 standard deviation run lower breaker blocks validated and you can see we had the run lower but overall the way that I place this ABS rejection fib is basically the same way on the consolidation right you can place it on the consolidation from high to the low or you can place it on the leg that started this run higher oftent times it is also the accumul ation. So, it's kind of vice versa for that. But yeah, you can see from this level, we're about to dive into the live market examples in a second, but you can see from this zone as well, we oftent times will retrace, have that accumulation here, manipulation higher into 1.5 standard deviation and then dump. So, let's actually take a closer look at this in a different scenario. See right here. So yeah, this is just how to place the fib. Basically from the low to the high. This is for the manipulation fib right here or the reversal fib, sorry, right there. You can see we tap into standard deviation levels -2 -2.5 and we have the reversal. If we take a look at this, this is a example of how to take a setup off of the standard deviation. So yes, you can just enter right off the standard deviation like I did right here. Right here you can see this is a live market example from -2.25 standard deviation. This is like the ideal like entry point. But you can see you can top tick just like this as well. Also here the executions um that I'm not capping but you can just top tick it. But it's always safer to wait on that SMT to get put in which we're actually going to look at examples in just one second. But this is my ideal setup overall with the standard deviations. So we're going to have that negative -2 -2.5 standard deviation rejection. You see we have that accumulation below, right? And you can see how we place the fib just like this. Whatever started this run higher, we're going to place it on this leg here, right there. And oftent times that leg will also be accumulation. And you can see that after we hit the standard deviations, I always wait SMT and inverse IFG or I kebab for entry, stop at the SMT high for shorts or you can top ticket. It is a bit riskier to trade it like this when you just limit order the level, but it does play out here and there. You just need a bit more discretion to do that. But I would definitely recommend to just wait on that SMT and that extra confirmation just like this. But yeah, let's see. Also for this scenario what you can use is that ABS rejection. So ABS rejection is 1.5 to two standard deviation. If we take a look right here you can see that oftent times we're going to do the same thing right accumulate a bit and then we're going to tap into 1.5 to two standard deviation just like this. You can see the reaction out that we had, right? And then you can get a setup off of that, whether it's SMT and then IFG or whatever for shorts back down. But let's actually take a look at the live market example of this because it's going to simplify everything. So, let's actually take a look here first. We're going to look at the reversal fibs right here. Also, in this example, there wasn't a clear like accumulation. It was too high up to place the fib all the way here. So, what you can do, I actually highlighted it right here, is you can place the fib on the candle that took out liquidity and started the run higher. So, as you can see right here, standard deviations -2, -2.5 right there. And you can see I placed my fib just on that candle that started that run higher that also took out liquidity just like this. And you can see a standard deviations hit there and reversal, right? Let's take a look at another example right here. Right here you can see we have some accumulation below. Not the most obvious accumulation ever. Um but you can also place the fib on just whatever started to run higher. And this is a bit of discretion needed. But you can do that through back testing. You can build up all that discretion. But you can see here how -2 -2.5 here is supporting price right reaction reaction reaction reaction ended up pumping. So drawn liquid drawn liquidity was higher but you get the point right let's take a look here this is a better example more clear example we have the reversal fib once again you can see we have this accumulation right when I see accumulation I always like putting my fibs on accumulation because it just gives a very clear levels you can see also here 1.5 had a reaction but the main level that I'm looking at is that -2 to -2.5 5 standard deviation. You can see it bottom ticked right there, then ended up having that run higher after. So, let's actually take a look at another setup. One more of these actually. You can see same thing again, right? This happens every single day. Accumulation right here. Pretty obvious accumulation. These are the best types of ranges to put your fib on. Just like that. High to the low. What are we looking for? -2 to -2.5 standard deviation. You can see bottom ticked run higher. Right. Let's take a look at another example. Here is a more ABS style type of rejection. You can see we had accumulation manipulation higher. And this literally looks exactly like what we drew up, right? If we take a look here, see accumulation manipulation higher into our standard deviations as well as our ABS fib here. 1.5 to two standard deviation. Get a setup for short. Get a SMT or whatever. Let's see. Right there you can see SMT's in. And for this APS fib, you can basically put it on accumulation or you can put it on the leg before the SMT pretty much just like this 1.5 standard deviation hit and dump. Right? So you can get in here off of a IFG if you want some more confirmation just like this. Close below, stop at the SMT high, target accumulation lows or just target a one and two risk-to-reward. Also, you can target these standard deviation levels as well, the negative -2. Um, but accumulation lows are a great target as well. But yeah, overall that is basically how I use standard deviations in my trading. Placing the fib, yes, it is a little bit discretionary, but once you start to see it in the live market, that's when you can really um place your fib consistently. But the easiest way to do it if you're struggling struggling to place your fib is just place it on accumulation. You can also see that sometimes these key levels won't get hit, right? But you can see right here we did have that negative 1.5 standard deviation. So what can really help you is waiting on the SMT as well to take trades off of the standard deviations. But if you want to top tick it, I would say ideally just wait on that negative -2 standard deviation, negative -2 to negative -2.5 standard deviation because that's how you can really get like those top tick type of trades. They are a bit riskier, but as long as you have very high confidence in the drawn liquidity and you placed your fib correctly, then there's nothing to worry about. Uh yeah, overall safest way to take trades off the standard deviation is to wait on that SMT and then some more confirmation, which is what I usually do on my funded accounts or any live capital. But yeah, I mean that's basically how I use standard deviations on my trading. Very very simple. The only thing for beginners is they struggle with placing the fibs. So just keep it simple. We'll just place it on the accumulation and you can see how precise the -2 to -2.5 standard deviation is just like that. Let's see here. Once again, boom. Beautiful. Once again, this example is a bit more discretionary of the fib placement, but when you just put it on that last candle that sponsored the move higher, you can see standard deviation still played out. But yeah, that's overall how I use standard deviations in my trading. I don't want to keep this video too long. It's a very very simple concept and it's very very powerful when you align it with other things. So align it with other confluences as well. You know, add a PRA as well. Boom, even better. A+. Now, if you have a PRA here as well, if you have OT of the higher time frame range, boom, even better. And there you go. A+ setup. A+ as ABS setup. But yeah, I'm not going to keep you guys too long. Just wanted to do a quick little video on standing deviation since I kept getting a ton of questions in my DMs about this. So yeah, hope this helped. And if you guys are still not yet funded, if you're still a trader that's struggling, you're not yet getting consistent prop firm payouts. I just launched my program where I guarantee to work with you oneon-one until you're funded over six figures with prop firms and until you start to receive your first ever prop firm payouts. if you work with me for four months and you don't get results, I will literally send you $1,000 back. So, it's literally risk- free and it's a win-win for you. But yeah, if that's something you're interested in, link for that is the first link in the description below. All that aside, thank you guys for watching. Make sure to like, comment, subscribe, comment any questions you have. If you actually made it all the way till the end of the video, comment the letter W in the comments. Hope you guys learned something today. If not, then a good refresher for you. But yeah, standard deviation super powerful. One of my favorite confluences to use when aligned with everything else. Super powerful levels and you can basically top tick with them as well if you use them properly. But yeah, till next time. Catch you guys. Love you all. Peace out.

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what's up boys today we are going to talk about how to top tick how to bottom tick because I know I often send out levels and these levels work out and I'm sure a lot of you guys are just wondering how I'm able to do it and there's a lot of people gatekeeping out there so I figured I'm going to just show you guys one of the various different ways that we use to top tick and bottom tick so without further Ado let's get into the video so the first tool that I want you guys to know and get comfortable with is called the FIB also known as OT um these are the settings that I have you can find the FIB in the top left in forecasting and measurement tools and um no sorry you can't it's right above that it says Fibonacci and you have all of these different fibs that you can use FIB retracement that's what we use that's what I favorite when you're on the FIB you're going to right click you're going to go to settings you're going to put all of this in and you're going to save it as a template all of these numbers pause the video make sure you have all of these levels um then just save as and then fib and then every single time you make a fib well it's going to look like that that um and today we're going to be talking about standard deviations using the Fib so if you take a look right here we have the normal FIB range and you can see we got 786 705 618 and 0.5 these are the ones that you boys are most likely used to and probably what you use so far today I'm going to introduce these to you -2 -2.25 -2 and A2 -33 and A4 -3 and A2 and -4 all of these are extremely important and I think every single Trader should have them in their Arsenal so how do we use it well I'm going to show you some examples of Trades that we have taken and levels that we have gotten based off of the FIB and OT the way I like to use it and this isn't the only way to use it but this is the way that I use it um I like taking the Fib from the low to the high right and I like knowing that this FIB is valid what I mean by that is in this FIB we came up we came back down we rebalanced the leg and we continued up that's why this FIB retracement is valid this FIB retracement would not be valid if we just came up retraced came up dumped if this low gets taken FIB retracement is no good that didn't happen here so let's look you got all of these levels up here and don't mind these but if you mark out every single level here and we take a look at what price does at all of them you're going to come and see if we go all the way to the right boom 848 to the tick that's today by the way um and yes some of them work some of them don't work how do you know which ones work and which ones don't work well you have to combine different confluences with it you can't just blindly take a fib level you have to look you have to make sure liquidity is being swept you have to make sure there's an smt we're tapping into a high time frame PD any of that right and this is just one example I'm going to show you guys some more examples and I do this every single morning before Market open be based on my bias if I'm bullish on the day I'm taking it from the high to the low and it's going to give me the sorry from the low to the high if I'm bullish on the day I'm taking it from the low to the high and that's going to give me the extensions at the top potential spots where I can take profit or even go short from for a mechanical setup um gives me my takeprofit levels areas to watch out for very good I like it and if I'm bearish I do the opposite I take the high to the low and then it gives me the extension legs down here now if we take a look 3.25 right here to the tick well why is this one better Ivan I'm glad you asked five minute well number one for starters we are in a five minute fair value Gap right there okay number two we have an smt at the low that formed right after you take a look at es don't mind this trade um if you take a look at es you'll see that es took this low then buyers stepped in and Es pumped and then what did we do well after this got hit which is3 .25 of this range I take this range and I mark it out from well the low to the high why because I'm bullish today this is today by the way um I'm bullish today so low to the high I don't believe price is going to go lower than this but if we take a look we get our levels and if we play it out and we just take a look at what price does here number one Taps this first level at 765 rejects it a few times goes up even higher comes up to negative -2.5 rejects it and honestly it holds it for for a good time then obviously we've got market right whatever blah blah blah and that was today now I'm going to show you guys a few more setups that happened today today the market dumped right and after it dumped take a look at this we have the low to the high right price rebalanced the leg so boom boom I need this to happen I need us to tap 05 of the range if it doesn't tap0 five of the range not valid and maybe that's just one of my rules but that's what I found to work the best other people may say other things but this is what I find to work for me so Taps 05 this is valid next what are we looking for -2 -2.25 -2 and a half zoom out look at this doesn't look crazy right to the tick this is literally an hour and 20 minutes ago these extension zones they work they are so helpful and everybody's got to be using them but it all comes with trial and error and if you guys don't believe that you can make profits off of this I'm about to show you oh these boys filled it up I'm not going to lie to you these boys filled it up nice I'm going show you today's trading profits all right boys so this is my Discord this is today's gains you take a look you got bully bully banked we've got axe one loss one win my winner outweighed my loser we got no leads pass St funded account we got puran with two payouts today we've got Benji with the top tick we've got icy with the two wins we got cck now cck C's crazy with it look at this [Music] you can't say these levels don't work because they do and this is a perfect representation of that this is the exact setup that I was just talking about look at this dump and look at this you can't tell me these levels do not work but this all comes with trial and error you guys need to go out onto the chart you guys need to go to FX replay and you need to practice you need to practice finding the right range you need to see how price reacts and the more that you do it the better you're going to get at it I send out the levels in the morning and I'm confidence in my levels because I went into FX replay and I back tested for months with standard deviations and only then was I able to G build up the confidence to send out the levels in the Discord and I'm about to show you guys some of the levels that I sent out in the Discord and how it all works check this out keep in mind these uh keep these in mind coming into the week if price rejects any of these they are super solid to take shorts off of first level 21 51.75 rejected come up to here bearish I send out my levels every single morning and the levels play out we take a look at this take a look first level up here 21972 21 97250 literally the bottom tick I come here look at this I took a I took profits at 974 look at what happened after what if you took a buy at that level well you would have bottom tick this and been able to ride it up I almost got stopped out here by the way this is by no means to brag that I held this whole trade I almost got stopped out here I was a few points away from just taking home 140 bucks but instead I held it to all of my levels and I took profits at all of my levels and you can see at the spots where I take profits price usually bounces and this brings me into my next point when price Taps these standard deviation levels you're most of the time going to see some sort of retracement I'm going to pull up an example from a few days ago take a look at this these are levels that I sent out in the morning right this is all off of the standard deviation price came up to the first level what did it do rejected it boom price came up to the second level ran through hit the third level pulled back came up hit the fourth level pulled back then came up to the fifth level tapped it to the tick right there pulled back came up here could have top ticked this boom pulled back and eventually our final Target was hit so to sum this all up number one find OT two make sure OT hits 50% it can go lower than that it just cannot invalidate the actual FIB leg it has to tap point five and it has to continue if it breaks it it's not the right FIB it's not the right leg you got to wait and then you're going to just be using -2 -2.25 -2.5 -3 -3.25 -3.5 and4 and that guys is the rules for standard deviations at least my rules I don't know about anybody else's rules but this is how I use it if you guys have any questions at all feel free to comment them down below or join my free Discord Community where you can just tag me and I'll get back to you as soon as I can thank you boys for watching and as always trade smart and I'll see you boys tomorrow All For you

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what is up guys it is Justin back with another video a highly highly requested video um I've been getting like spammed comments about uh smts how do I use SMGs how do I spot smts so that's what we're going to be going over today in this video so let's just kind of Jump Right In so what is an smt well first thing is an smt is a Divergence now it can be a difference between indices it could be a Divergence between you know pairs the way I like to use a Divergence is it is the Divergence between es and NQ so I trade normally es and NQ Futures I use them to differentiate each eight so this is what a Divergence in ICT smt Divergence would look like notice we have two sort of uh charts here right this on the left would be yes this on the right let's say would be NQ notice we have es making a high higher high lower low or sorry higher low higher high notice on NQ though we put in a higher high a a higher low higher high ER low and then we put in a lower high so the Divergence that we're forming here is what this is It's a Divergence at the highs now if we have by Dave virgins at the highs this is bearish right so this is what a bearish smt looks like we can see es puts in a higher high and Q puts in a lower high and then a sell-off afterwards right so this is what a basic smt Divergence is it is just es and NQ one of them puts in a higher high one of them puts in a lower high that is a bearish smt now a bullish smt is the opposite and I'll show you that as well this is what a bearish or a bullish SMP would look like right so same thing going down going down put in that low and then from there we then bounce so what would NQ look like right putting that low put in that low bounce don't put in a new low and then bounce right so this would be now our bullish smt notice es puts in a lower low and Q puts in a higher low so now what would be what would we be looking for right well most of the time what a turtle soup model is for an ICT is once you get an smt and you have a clear draw in liquidity you could take an entry for whatever the break of structure is or whatever the fair value Gap is so in this case if I was trading this this would be my break of structure make Market structure shift whatever you want to do and then you could trade the pullback to a fair value gap or whatever it is so this is what a basic smt looks like let's jump into some charts and take a look at some more examples so here is an example of an smt Divergence on the 15 minute chart if we look at the left side here we can see we have es the right side we have NQ notice we had a low here on ES we had two little equal lows down here Market sold off swept this low informed and smt notice if we look at NQ the same low on NQ was never taken out so we can see es is forming a lower low and Q is forming a higher low right this is a bullish smt Divergence notice right after es sweeps this low what do you think a lot of retail Traders are doing a lot of retail Traders are shorting this breakdown is trying to catch you know a move to the downside when in reality what you should be trading is this sweep of this low again what's the next Target once we sweep the slope well if we have an smt at the lowest here which we do and we sweep this low with big displacement notice sweep this low and then instantly have buying pressure back up the next buy side level would be that previous High put in notice right when we form that smt and Es sweeps are slow We instantly bounce back up have huge volume to Target that racing high on ES and NQ right so if I was going to take a trade here what would I look for well let's zoom in right because we want to sort of combine the model that we trade so this is what the s p would look like on a 15 minute so if I zoom in what would I look to trade well let's go to the five minute now looking at the five minute here on ES we can see we had big displacement back up now one thing that I like to take into account is when I have an smt I don't necessarily need to see a market structure shift or a breakup structure after I see an smt and I have a clear draw on liquidity I can take the next fair value Gap so this is what my long entry would be if I was to take a trade here wait for that displacement back to the upside here we go you can see this big move up fair value Gap created wait for the pullback into that fair value Gap stop again the stop could be dependent on what your risk tolerance is you can put out the low you put out at the wick it doesn't really matter targeting that previous High so this would have been a beautiful setup again all formed from that smt on a bigger time frame so let's look at another example so here's another example of an smt if you look at the left side we can see es never swept this low and Q did sweep this low so on NQ we're forming lower low es still forming higher low we have a bullish smt Divergence notice right after we put this low end right after NQ sweeps this low we instantly get bought back up targeting that previous buy side level which would be that that high that was put in notice instant buying pressure back up right so let's Zoom back in and see again if there's an entry looking at es and NQ you'd want to take whatever that first fair value Gap is if we're looking at es have that fair value Gap right here pull back into this and then gets bought up targeting that buy side level same thing with NQ get a fair value Gap right here pull back big push to the upside let's look at another example so here is another so here's another example of an smt looking at es again this is now a bearish SMG we've been looking at only bullish s p so far let's say bearish notice we look at es forming a lower high but NQ ends up sweeping this previous High forming a higher high notice what happens after this well we get that nice rejection we get internal liquidity being swept on both es and NQ and then right after that we flush to take out that previous low right so smts are very very powerful if you use them correctly these are bigger time frame smts I also like to use smts on smaller time frames if I have a strong bias because a lot of the things it could do is if I have a model it can form an smt inside of that model that gives me even more confidence so for example let me draw it out so so this is another example of how we could use smt's inside of a model that we trade so notice this is a normal buy model of what we'd look for external liquidity being swept internal liquidity being swept Market structure shift or predictive structure with big displacement pull back into this fair value yeah but notice in the fair value Gap when we get that original bounce right when we get that original Bounce from here right normally this would be our entry we'd enter long first Target would be that previous high and then we'd you know let it run stop would be at you know I put at the recent low now notice most of the time when we enter something like this as a trade we push down and then instantly get bought back up and the first Target most likely gets hit now there's some times where we don't end up taking that high and we actually come back down and sweeping this low a lot of times when we come back down and sweep that previous low we actually form an smt inside of that model so this is what NQ would look like so this is what the two would look like notice yes we have we're both forming bullish models which is really nice if we're looking for that entry notice yes pulls back into this fair value Gap sweeps that previous low right here and then look at NQ we never ended up sweeping that previous low and we end up forming a bullish smt inside of our favorite value gap which gives us even more confidence right so here's another example it's actually happening right now a live example but notice if we're looking at the lows on ES we can see yes put in a lower low and if we're looking at NQ and Q is still forming a higher low notice what happens after we put in that low on ES well we get that initial bounce and we target that previous buy side level which was that previous high on NQ look see put in that low get that buying pressure beautiful push back up to whatever that previous high is so smts are very very strong the more that you start to use them and the more experience you gain with them the more you're going to add it to your Arsenal and be comfortable with trading it I recommend starting to just draw them on your charts throughout the day if you see them use it on all time frames my favorite time frames I like to use with smts are the 15 minute and the five minute sometimes if you're looking at the one minute smtm it might fake you out a little bit so do be aware of that I also do draw it on the one minute but just be more aware of that um and just you know draw them on yourself start to build confidence with it and the more that you use them the more that you can start to build a model behind it and learn how to trade with them so I plan to make more smt videos in the future more in depth on specific trade models I use with it but I'm hoping this video gave you a basic understanding of what an smt is how to trade it you know and how to just you know spot it on the chart so hope this video helped you guys in some way if it did leave a like make sure to subscribe and I'll be posting some more educational content for you guys this week so look be on the lookout have a good rest your day peace All

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About this video

Video Title: Can Trading Standard Deviations Make You Money?
Channel: krabstrades
Speakers: krabstrades
Duration: 00:13:07

Overview

This video explains how the speaker uses standard deviations in trading. It covers specific strategies for placing Fibonacci retracements with standard deviation levels, identifying reversal points, and confirming entries using concepts like SMT (Smart Money Tools) and inverse fair value gaps (IFG). The speaker also provides live market examples and discusses the importance of combining standard deviations with other trading confluences for better results.

Key takeaways

Standard Deviation Levels for Reversals: The speaker primarily uses -2 to -2.5 standard deviations as key reversal levels after a period of accumulation, placing the Fibonacci from the low to the high of that accumulation or the leg that started the move higher.
ABS Rejection Strategy: A secondary strategy involves using 1.5 to 2 standard deviations for ABS (Accumulation, Breakout, Sell-off) rejection, often acting as a zone for rejection before an anticipated breaker block.
Fibonacci Placement: The Fibonacci tool is placed from the low to the high of an accumulation phase or the specific candle that took out liquidity and initiated a move higher.
Entry Confirmation: While direct entries at standard deviation levels are possible (top-ticking), the speaker emphasizes waiting for confirmation like SMT (Smart Money Tape/Divergence) or inverse IFG (Inverse Fair Value Gap) for safer trades.
Combining Confluences: Standard deviations are most powerful when aligned with other trading concepts such as Price Range Analysis (PRA) and Optimal Trade Entry (OTE) on higher timeframes.

Ask me anything about this video

What are the speaker's preferred standard deviation levels for identifying potential reversals?
How does the speaker recommend placing the Fibonacci tool when using standard deviations?
What additional confirmations does the speaker suggest before entering a trade based on standard deviation levels?
How can beginners simplify the process of placing Fibonacci levels when using standard deviations?
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About this video

Video Title: How To Top Tick and Bottom Tick Using STANDARD DEVIATIONS
Channel: krabstrades
Speakers: krabstrades
Duration: 00:12:01

Overview

This video explains a specific strategy for "top-ticking" and "bottom-ticking" in trading using standard deviations with Fibonacci retracement tools. The speaker details their custom Fibonacci settings, including standard deviation levels beyond the typical retracement percentages. They demonstrate how to apply these tools to identify precise entry and exit points in live market examples, emphasizing the importance of confluence with other trading concepts like liquidity sweeps and SMT (Smart Money Tape) for validation.

Key takeaways

Custom Fibonacci Settings: The speaker uses a customized Fibonacci tool that includes standard deviation levels such as -2, -2.25, -2.5, -3, -3.25, -3.5, and -4, in addition to the standard 0.5, 0.618, 0.705, and 0.786 levels.
Validating the Fibonacci Leg: A key rule for using the Fibonacci tool is that the price must rebalance the leg by tapping at least the 0.5 level before continuing in the original direction. If the 0.5 level is broken, the Fibonacci leg is considered invalid.
Application for Top/Bottom Ticking: The standard deviation levels, particularly the negative ones (-2 to -4), are used to identify potential reversal points for precise entries (top ticks for shorts, bottom ticks for longs).
Confluence is Crucial: Blindly taking trades at Fibonacci or standard deviation levels is discouraged. The speaker stresses the need to combine these levels with other confluences, such as liquidity sweeps, SMT (Smart Money Tape/Divergence), high timeframe PD arrays (Premium/Discount), or fair value gaps.
Practice and Backtesting: The speaker highlights that mastering this strategy requires significant practice and backtesting using tools like "FX Replay" to build confidence and consistency in identifying valid ranges and price reactions.

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About this video

Video Title: How To Spot SMT Divergence (SMT Explained)
Channel: krabstrades
Speakers: Justin (krabstrades)
Duration: 00:11:30

Overview

This video provides a comprehensive explanation of Smart Money Tape (SMT) divergence, a concept used in trading, primarily focusing on the divergence between the ES (S&P 500 futures) and NQ (Nasdaq 100 futures) indices. The speaker explains what SMT is, how to identify both bearish and bullish divergences, and how these divergences can signal potential trading opportunities, often in conjunction with other ICT (Inner Circle Trader) concepts like liquidity sweeps and fair value gaps.

Key takeaways

SMT Definition: SMT (Smart Money Tape) divergence refers to a discrepancy between two correlated assets, most commonly ES and NQ futures. It occurs when one asset makes a higher high (or lower low) while the other makes a lower high (or higher low).
Bearish SMT: A bearish SMT occurs when ES makes a higher high, but NQ makes a lower high. This signals a potential reversal to the downside.
Bullish SMT: A bullish SMT occurs when ES makes a lower low, but NQ makes a higher low. This signals a potential reversal to the upside.
Trading Applications: SMT divergences can be used as a confirmation tool. After an SMT is formed and there's a clear draw on liquidity (e.g., a sweep of previous highs or lows), traders can look for entries such as a break of structure, market structure shift, or a pullback into a fair value gap (FVG).
SMT within Models: The speaker also explains how SMT can occur within a trading model (like a buy model with an FVG), providing additional confirmation and increasing confidence in a trade setup.
Timeframe Considerations: While SMT can be observed on various timeframes, the speaker favors the 15-minute and 5-minute charts, cautioning that 1-minute SMTs can sometimes be misleading.

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