This content outlines a high-probability trading model focused on algorithmic price action, emphasizing the strategic use of session liquidity, fair value gaps, and dealing range theory to identify profitable setups.
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Hello, my name is Ali Khan and I've been
trading for around 10 years and nine of
those years I have specialized in
algorithmic price action. In today's
video, I'm going to go over my favorite
model and what I believe to be the best
model that you can trade in 2026. It's a
relatively straightforward and simple
model with very few moving parts. But
today I'm going to cover some of those
things and give you the real nuts and
bolts of what makes a really high
probability model. So one of the things
that we're going to need when it comes
to any model is understanding liquidity.
For this specific model, we're going to
be using session liquidity. So session
highs and session lows. We're also going
to be using fair value gap. or areas of
inefficient price action. And thirdly,
we are going to be using dealing range
theory or I call DRT that we will use as
a framework to find where high
probability setups will occur. Now,
before we move any further, without
understanding higher time frame
narrative, i.e. where the market wants
to move to and why, it's very difficult
to determine where high probability
setups are going to form. And that's
simply because when we are trading in
the direction of higher time frame order
flow, for example, if we're bearish,
then ideally we want to see a buy side
liquidity pool rated before we look for
an entry. And obviously vice versa, if
we are bullish, we're looking for a
sellside liquidity rate. Now, we don't
want to look at just any random old high
and low. We want to ideally look at the
liquidity relative to the previous
session. The algorithm is always going
to repric to near-term liquidity first.
And without over complicating this, I'm
going to quickly run through a few
charts here. And at the end, I'm going
to give you an actual real trade example
based on the information I'm going to
teach you in this video. So, we of
course have a chart here on gold. this
dotted line here, I'm delineating the
12:00 a.m. New York Eastern Standard
Time on a 5minut time frame. Now, the
reason 12:00 a.m. is important is
because it's the start of a new day.
It's the start of a new delivery cycle.
So, at this time, the algorithm is going
to look back and is going to reference
liquidity pools above the market and
below the market. The opening price at
12:00 a.m. is a specific price point.
It's a specific data point that the
algorithm is going to utilize when
referencing previous price action. Now,
what do I mean by that? Well,
essentially, we can use it as a filter.
Now, for the sake of argument, let's say
that we have a bearish higher time
frame. We've seen a massive expansion on
gold and now the market is retracing
lower. So, the first thing we want to
see is the market reprice
above the 12:00 a.m. opening price. As
we can see here, above the market, we
have all of these relative equal highs.
Now, above those highs, there's going to
be buy side liquidity in the form of buy
stops. So, breakout traders are going to
be going long once price obviously
breaks towards the highs. Now, Smart
Money anticipate this and what they're
doing is they're pairing that liquidity
in the form of buy stops with short
positions of their own and they're going
to offset those positions to opposing
liquidity down here. Right now, I'll get
on to that in a second, but firstly, we
can see here a few things. We can see
that at 12:00 a.m. the market has gone
higher collecting all of those buy stops
and then we quickly see it repric lower
when this candle over here. This is a
sellside imbalance and something that we
call a fair value gap. Now what's
important here is a few things. This
displacement lower has traded through
the opening price of these three
consecutive sorry four consecutive uplo
candles. What this signals to the
algorithm is a change in state of
delivery which basically means that the
algorithm is finished offering buyside
delivery and now it's going to repric
lower by offering sellside delivery.
That's the first clue that the markets
turned around. Number one, we have seen
a liquidity raid.
raid.
Number two, we have seen a break and a
close below this swing low. So, we have
seen a break in market structure.
Thirdly, we have seen from this candle's
low to this candle's high, we have a
fair value gap. This will be our third
thing that we are looking for to sell a
high probability entry short. Notice
that the liquidity pool that we raided
was the previous
Asian session. Now this is where the
algorithm will repric to generally if we
have low or medium impact news. If we
have high impact news however then it
can often repric to the previous London
and or New York session on the previous
day. That's why it's important to
obviously look at the economic calendar
to determine how far that price can
raid. But let's say for example here
that we didn't manage to get up here cuz
again this is going to be a very
difficult entry and you need quite a bit
of experience to trade that high. What
is better is to wait for the
displacement and then what you want to
do is you want to grade the entire
dealing range. Now what do I mean by
that? Well, if we have our lowest low
down here and our highest high up here,
what the algorithm is going to do is
it's going to ignore the candles, the
first thing it will reference is the
highest price, which we can refer to as
the dealing range high or the DRH. the
lowest price which is the dealing range
low, the mid price which we call our 50
DRT level and then the prices in between
each of those price points. So we have
the 25 DRT here with this orange line
and the 75 DRT here. Now this is
important because the algorithm is going
to print arrays around these price
points. Now, if you look closely here
inside of the fair value gap, we have
that 75 DRT level that overlaps, which
is also in close proximity with the 12
a.m. opening price. So, this is a
fantastic area to go short. It's also
worth noting that nested at that 75
level, we also have a reclaimed fair
value gap here. You can see how the
bodies here are failing to close above
that fair value gap. They're also
failing to close above the 75 level and
also failing to close above the
consequent encroachment or the midpoint
of that sellside imbalance. Not to
mention we also have this down close
candle which is a breaker. We have a
high, a low, a higher high, and we also
have those four consecutive up close
candles, the bearish order block that I
spoke about earlier. So, what's
happening here is that we're pairing
timebased liquidity in the form of the
Asian highs, the 12 a.m. opening price
as a filter, seeing price sweep by side
liquidity. We're pairing the 75 DRT
level with one, two, three, four
different PD arrays also with that 12
a.m. opening price. So, this is what
constitutes a really, really high
probability setup and is one of my
favorite models that has made me and my
students a lot of money over the years.
When we're trading this, we would set a
limit order at the 75 DRT level. Our
stop would go above the dealing range
high and our takerit would go at the
dealing range low. Notice that we have a
higher low to the right. This
constitutes a low resistance liquidity
run signature. Smart money are going to
pair sell orders with the buy stops
above the Asian range high and they're
going to offset those positions to the
sell stops below the Asian range low.
Now, when you apply higher time frame
narrative, directional bias, economic
calendar, and the time of day to
everything that I've just outlined over
here, this can very quickly retire you.
Now, let me go through another example
just to give you a little bit more
detail here. So, we have here the Euro
dollar. Now, this is on the 4hour time
frame. Here we can see that inside of
this range here we have the highest high
which is our dealing range high and we
have our lowest low or our dealing range
low. Once we have these levels of course
we can grade again here we are looking
for a continuation lower since this
higher time frame is trending lower. In
this scenario, we have the market
repric higher after raiding some lows or
balancing an inefficiency to the left.
The market has repriced above the 50 DRT
level or the equilibrium price point
which is the fair price between the
highest price and the lowest price.
Ideally, we want to look for shorts
above the 50 DRT level. Now just like
anything when it comes to price
everything's fractal. We can also divide
each of these quadrants in half also
where we can find the midpoint of this
premium quadrant. Now overlapping that
quadrant is this balanced price range.
So we have sellside delivery going lower
here. We have buy side delivery going
through that range. And then we have
sellside delivery back through that
range. Now this is something known as a
balanced price range. A balanced price
range generally happens in three stages.
We repric lower, we redeliver higher and
then we rebalance back through that
range. Now notice all of the candles here,
here,
they're really struggling to get back
above that range because it's been
sufficiently balanced. And we see the
rejection from that lower. Now below the
market, we also have this buy side this
buyside imbalance between this candle's
high and this candle's low. Notice that
it also overlaps with the 25 DRT level.
So this could be a potential target
lower. We do not need for price to drop
below the dealing range low.
At the time of this recording, I
currently have some positions on that I
have left as runners and I'm managing
that position to see if we want to reach
that dealing range low. But I'll show
you that on the next couple of slides.
So, let's drop down into the 15minute
time frame and let me talk you through
the actual trade. I was using that
balanced price range inside of that
premium area as the framework for this
current trade. Right now notice here in
London we create a high. So from the
times of 2:00 in the morning till 5:00
in the morning we have our London
session. This is our London high, right?
This is a key liquidity pool because
it's inside of a key time window which
is our London session. In New York, what
happens? We run our London session high.
But notice that we fail to close above
it, right? We also fail to close above
the consequent encroachment or the
midpoint of that balanced price range.
And then look at the bodies here. They
close well below. This indicates that
the market is heavy and is likely to
repric low. Obviously, not everything in
trading is 100%. Right? So, we're
assessing probability when we see this.
And if we couple this with an SMT, which
you can do your homework on, this gives
us a solid trade idea. Now, watch what
happens here. Again, we see the market
repriced lower.
It closes below this low here. This leg
is a leg that raids the London high.
Then inside of the leg that breaks
structure, we leave a fair value gap.
That's super important. Notice the
overlap of the consequent encroachment
with that fair value gap. Also overlaps
with the 50 DRT level. This is how you
know you have the right dealing range
when you start seeing a confluence from
a higher time frame down to a lower time
frame. Once all of this was set up, I
was able to take a few entries. So, I
had an early entry. I'm not sure if you
can see this clearly, but I had a sell
entry up here. Now, that's an early
entry. It's beyond the scope of this
presentation at least, but I want to
draw your attention to two more entries
that I got down here, which was inside
of this fair value gap, which is over
here. Now, it's a Tuesday. We have CPI
later. So you want to be cautious when
you're placing your stop. Now my stop
was above the balance price range above
the market. Now we have to account for
the fact that we have a fair value gap
above the market still. So it can easily
repric into that as we see overhead. But
notice where the bodies are. That fair
value gap is preventing it from going
any higher. Again another strong
indication that the market here is
heavy. And then we see the market
reprice lower again leaving a fair value
cap. When we are bearish and we're
assessing algorithmic order flow, these
are the exact signatures that we want to
see in price. Now, if you take the
initial dealing range of this leg and
you grade it, you'll also note the
overlap with the 75 DRT, but I'll leave
that for your homework. The point here
is when you are trading in line with the
algorithm and you're constantly
assessing order flow, which is the whole
point of algorithmic price action, fair
value gaps and PDAs are always going to
overlap with dealing range levels. When
we're looking for session highs and
session lows as liquidity reference
points, and we wait for that liquidity
to be engaged, every single one of your
high probability cells will occur after
that scenario. So, I hope this has been
insightful. It's not exactly beginner
friendly. Of course, you need to have
some sort of understanding with
algorithmic price delivery, but when you
really have a solid understanding and
you compare this model, there's very few
moving parts. And again, I can get
incredibly detailed with this, but this
is a more foundational lesson. The hard
part is knowing where the market of
course is going to go, and that's the
first thing that you should focus on.
So, I always suggest spending more time
on the higher time frames. If you want
more of these type of videos and trade
breakdowns, then please comment below.
Make sure you like and subscribe and
I'll continue making more videos like
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