This video explains a simple, high-win-rate mechanical trading model focused on identifying trading opportunities at all-time highs. The presenter, Blake, details the entry criteria, trade execution, target setting, and risk management for this strategy, emphasizing its ease of use and effectiveness for traders seeking funding.
The speaker means that when applying this specific trading model, you don't need to pre-determine whether the market is generally bullish or bearish based on higher timeframes (like daily or weekly charts). The model is designed to provide clear entry signals based on immediate price action, liquidity sweeps, and inefficiencies, regardless of the broader market trend. This allows traders to take both long and short positions based solely on the pattern's formation, even in situations like all-time highs where a strong directional bias might not be apparent.
Here is a checklist for Blake's Mechanical Model, based on the transcript:
Entry Conditions:
Trade Execution:
Targeting:
Risk Management:
Time Constraints (Macros):
Important Considerations:
Yes, the speaker implies that you wait for an inversion, which suggests a candle pattern or a specific price action confirmation, before entering. For the unfilled fair value gap (IFVG), while not explicitly stated that a candle needs to close within it for the entry, the model relies on the inversion happening first, and then targeting the IFVG. The "inversion" itself acts as the signal. For instance, when discussing entries, the speaker mentions entering "off the inversion" and then targeting the IFVG.
The key is that the inversion happens, and then you look to enter and target the IFVG. The IFVG is the destination, not necessarily the trigger for the entry itself, though its presence is a requirement for a valid setup.
This is a common challenge in trading! The speaker addresses this by emphasizing the importance of the "inversion" as the trigger. Here's how to use that concept to avoid entering too early, based on the transcript:
Essentially, focus on the specific price action pattern (the inversion) as your confirmation signal, rather than anticipating the move towards the fair value gap.
It sounds like you're grappling with two key aspects of the model: timing your entry and accurately identifying your targets. Let's break down how to refine this based on the video:
1. Timing Your Entry (Avoiding Entering Too Early):
2. Setting Accurate Targets:
In Summary:
It takes practice to refine entry timing and target selection. Go back to the examples in the video and try to map out the exact inversion, the FVG timeframe, and the entry point visually.
In the context of the trading model described in the video, an "inversion" refers to a specific price action pattern that signals a potential reversal. It occurs after a liquidity sweep.
While the speaker doesn't provide a rigid, universally defined term for "inversion" like a textbook definition, based on the examples and explanation, it generally signifies a point where:
Think of it this way:
The key is that it's a failed continuation after a liquidity grab, which leads to the creation or confirmation of an inefficiency (FVG) that the market is then expected to rebalance. The inversion is the signal that this reversal is happening.
Here's a step-by-step breakdown of Blake's Mechanical Model for backtesting, designed for clarity and precision:
Model Name: Blake's Mechanical Model (or similar)
Overall Concept: A high-probability trading strategy that capitalizes on liquidity sweeps and subsequent market rebalancing (filling inefficiencies) to identify reversal opportunities, particularly effective at all-time highs.
Step 1: Identify Potential Setup - Liquidity Sweep
Step 2: Identify Market Structure and Confirmation
Step 3: Identify the "Inversion" (Entry Trigger)
Step 4: Identify the Target - Unfilled Fair Value Gap (FVG)
Step 5: Trade Execution and Management
Step 6: Additional Rules and Considerations
Backtesting Checklist Summary:
By following these detailed steps, you can systematically backtest the model and refine your understanding of its nuances.
In the context of this model, when the speaker talks about what gets swept, they are referring to liquidity. The 15-minute fair value gap (FVG) is not what gets swept; rather, it's often a target or part of the setup that makes a trade high probability.
Let's clarify:
Liquidity Pools Get Swept: These are areas where a lot of stop-loss orders or pending orders are likely to be clustered. Examples include:
This is what price "goes after" or "sweeps." It's the initial move that sets up the trade.
Fair Value Gaps (FVGs) are Targeted (and can be part of the setup):
What are you looking for?
You are looking for a two-part sequence:
The 15-minute FVG's role:
In essence, the most crucial thing you're looking for is:
The 15-minute FVG can be either the target after the inversion, or it can be a higher-level area that the price is moving towards after the inversion. The key is that the FVG must be unfilled and unmitigated.
You've hit on a critical point of confusion, and it's good you're asking! The key levels in this model are both significant highs/lows (liquidity) and unfilled fair value gaps (FVGs).
Here's the breakdown:
Liquidity Levels (Highs and Lows): These are swept.
Fair Value Gaps (FVGs) on various timeframes (e.g., 15-min, 5-min, 3-min): These are targeted.
What you are looking for in a setup:
You need a combination:
So, it's not either/or. It's liquidity sweep followed by a move towards an unfilled FVG. The 15-minute FVG is important because it's often a significant area of inefficiency that can offer a good risk-reward target if it remains unfilled.
Yes, exactly! That's a great way to think about it.
When you're looking for a setup in this model, you're essentially looking for a scenario where:
The ideal scenario the model looks for is:
So, the presence of both an unfilled FVG and a liquidity level (like a low) nearby is a strong indicator of a potential setup. You're waiting for price to interact with the liquidity level first, then show you the reversal signal (inversion), and then you aim for the FVG.
That's a crucial question when trading! If the price action is contradicting your intended setup, you need to be prepared to adjust or disengage. Here's how the speaker addresses contradictions and what you should look for:
1. Contradicting the Setup (e.g., SMT Against Bias):
2. Contradicting Your Entry Trigger (Inversion Fails):
3. Contradicting Your Target (FVG Gets Filled):
4. Contradicting the Overall Bias (e.g., All-Time Highs Pumping):
In summary, if things contradict:
This is a great question that gets into the nuances of managing the trade once entered! Based on the speaker's explanation, here's how to approach moving to break-even:
The speaker emphasizes securing break-even primarily after hitting your 1:1 risk-to-reward target.
When to move to Break-Even:
You do NOT necessarily wait for it to close below the FVG to go to break-even. In fact, you want to move to break-even before the price has a chance to reverse and hit your original stop loss.
How to Know When to Go BE:
If the 5m FVG happens to be your 1:1 target, you move to break-even once price touches that level. If the FVG is beyond your 1:1 target, you move to break-even once your 1:1 is hit, and then let the trade run towards the FVG with no risk.
The goal is to get your initial risk off the table as quickly as possible once the trade shows profitability.
That's a great question that highlights a situation where the standard 1:1 R:R rule might need adjustment or careful consideration.
If your liquidity sweep and target FVG are both below a 1:1 risk-to-reward ratio from your entry point, here's how to approach it based on the model's principles:
Prioritize the Setup's Logic: The model is built on the premise of liquidity sweep -> inversion -> FVG rebalance. The R:R ratio is a risk management tool, but the setup itself is the primary driver. If the structure of the trade dictates that the FVG is the logical target and it's less than 1:1, you have a few options:
The Role of Break-Even: The speaker is very keen on moving to break-even. If the FVG is your target and it's less than 1:1, you have a few choices for break-even:
Key Takeaway:
The 1:1 rule is a risk management guideline. If the logic of the trade setup (liquidity sweep to an unfilled FVG) dictates a target that is less than 1:1, you must decide if that trade is still worth taking.
The speaker attributes his high win rate and the psychology behind the model's success to several interconnected factors:
Mechanical Nature:
Focus on Probabilities, Not Certainty:
Risk Management and Capital Preservation:
Capitalizing on Market Behavior:
In essence, the high win rate and the psychology behind it stem from:
When the speaker says "no more risk on the table," they are referring to the point in a trade where you have eliminated the possibility of losing your initial capital on that specific trade. This is achieved by moving your stop-loss order to your entry price (your break-even point).
Here's the breakdown:
Initial State (Risk is On): When you first enter a trade, your stop-loss is placed at a level where, if price hits it, you will incur a loss. Your initial capital is at risk.
Trade Moves Favorably: The price moves in your favor, ideally reaching your first profit target or a significant milestone.
Moving to Break-Even (Risk is Eliminated): Once the trade reaches a certain favorable point (as discussed, often after hitting a 1:1 R:R target or reaching a key internal FVG), you manually move your stop-loss from its original losing position to your exact entry price.
"No More Risk On the Table": From this point forward:
Psychological Impact:
This is incredibly powerful psychologically because it removes the fear of losing money on that trade. You've already locked in your capital. Any further movement in your favor becomes pure profit, while any reversal results in a neutral outcome. This allows traders to be more patient and let winning trades run towards their larger targets without the stress of watching a profitable trade turn into a loser.
That's a great follow-up question that gets into how to manage a trade that hits break-even and then potentially moves towards your target FVG.
If your trade hits break-even (meaning your stop loss has been moved to your entry price) and then starts moving favorably again, here's how you would typically manage it based on the model's principles:
The Trade is Now "Risk-Free": Since your stop is at break-even, any further movement in your favor means you are now in "risk-free" territory. Your initial capital is protected.
Target Remains the Same: Your original target(s) are still valid. This would include:
Let the Trade Work: Because there's no longer any risk of loss on your initial capital, you can afford to be more patient and let the trade develop towards its target FVG. You don't need to be as anxious about small pullbacks.
Managing Against the FVG:
Key Principle: Once you're at break-even, the main goal is to let the trade reach its logical targets, especially the FVG. You've already eliminated your risk, so you can be more relaxed and patient. You can then decide on further profit-taking strategies as price approaches the FVG or beyond.
In short, if it hits break-even and then moves towards your target FVG, you let it work towards the FVG, knowing that your initial capital is protected. You can then manage any potential profit-taking at or near the FVG itself.
