The Only OTE Model You Need — Transcript

Learn the correct way to use the Optimal Trade Entry (OTE) model for high probability trading setups with liquidity and displacement confirmation.

Key Takeaways

OTE is a tool for finding optimal entry points, not a standalone trade signal.
Liquidity sweep and displacement are essential to validate an OTE setup.
Higher timeframe confluences significantly increase the reliability of OTE trades.
Scaling through multiple timeframes is critical to identify strong trade zones.
Avoid taking trades solely based on price entering an OTE zone.

Summary

OTE stands for Optimal Trade Entry and is often misunderstood and misused by traders.
OTE is designed to find the best entry point after price shows its intended direction, using retracements to enter trades at discounted or premium levels.
Simply entering a trade when price hits an OTE zone leads to frequent failures; additional criteria must be met.
Key prerequisites before drawing an OTE include observing liquidity being taken, such as swing highs/lows and liquidity pools.
Displacement, a strong and aggressive price move away from liquidity, confirms the validity of the setup.
Higher timeframe confluences like order blocks, fair value gaps, and rejection blocks should align with the OTE zone to increase trade probability.
Scaling through multiple timeframes (1-minute to 1-hour) helps identify premium and discount arrays that support the OTE level.
Higher timeframe levels carry more significance than lower timeframe levels when confirming OTE zones.
Trades are taken only when OTE zones align with these higher timeframe confluences, not just because price entered an OTE.
Examples illustrate bullish and bearish setups, showing how liquidity, displacement, and confluence come together to form high probability trade entries.

Chapters

Full Transcript — Download SRT & Markdown

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OTE is one of the most misunderstood concepts in trading. Over the months, it's become incredibly popular, but with the popularity came a lot of misinformation. I've seen a lot of traders throw OTE on random moves, use it as a standalone setup, and then

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wonder why it keeps failing. And because of that, a lot of newer traders end up learning OTE completely wrong. The truth is, OTE is actually one of the simplest concepts to understand. The problem isn't the tool, the problem is how

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people use it. In this video, I'm going to show you what OTE actually [music] is, how it's meant to be used, and the exact model I use to find high probability entries. Before we start, what is OTE? OTE stands for Optimal

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Trade Entry. The goal of OTE is simple. You're trying to find the most [music] optimal area to enter after price has already shown its intended direction.

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For a bullish example, you want to mark out your OTE from a low to a high, and wait for a retracing back into your OTE zone to catch your longs.

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And for a bearish setup, you want to mark out your OTE from a high to a low, [music] and wait for a retracing back into your OTE zone to catch your shorts.

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If price is bullish, why would you want to buy at the very top of the move when you can wait for a pullback and get a better entry? That's essentially what OTE is.

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A discounted entry in a bullish move and a premium entry in a bearish [music] move. Simple. But, this is where most traders get it wrong. They think because price entered an OTE, they should automatically take a trade. And that is

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exactly why so many OTE setups fail. So, the real question becomes, how do you know when an OTE is actually worth taking? Well, before I even think about drawing an OTE, there are a few things [music] I will need to see first.

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The first thing I want to see is liquidity being taken. [music] We want some form of liquidity to fuel the setup. This can be swing highs and lows, equal highs and lows, liquidity [music] pools, and session highs and lows. The

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goal is simple. I want to see liquidity get swept into a meaningful area where price has a reason to react. Now, let's look at a few examples. In this case, we can see that price has moved up very

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[music] significantly bullish after tapping into this 30-minute order block. We also took out Asia high.

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These candles with long wicks tell me that price no longer wants to go higher.

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It's rejecting to go above this high right here. If price is rejecting to go above a high, then this could mean [music] one thing.

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We're going to continue going lower until we take out some form of liquidity. And in this case, we have this low resting right here.

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Now, I want to see how price reacts off this low [music] inside of this 30-minute order block.

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After we swept this low and created this rejection candle, [music] price had a big impulse move higher. Now, we want to go on to the second part of the model.

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Once liquidity has been taken, the next thing we want to see is displacement. What is displacement?

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It's one of the most important parts of the [music] model. I don't want to see price barely react from the liquidity. I want to see a strong aggressive move away from it. This lets me know that price is actually respecting the

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liquidity that was just taken. Without displacement, there are no reason for me to continue [music] looking for a trade.

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Liquidity seen by itself means nothing. Displacement is what confirms the reaction. After taking out this low, price has moved significantly very bullish, breaking above this high, and offering us this bullish displacement upwards. We can now use our OTE for longs from this

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low all the way till this high. What we're expecting is a retracement back into your OTE zone to catch your longs.

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But, how do you know which OTE level to take your trade off? Well, simple. You want to scale into the higher time frame and find premium and discount arrays that align with your OTE zone. In this case, we have this 1-hour order block

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that aligns perfectly with the 0.62 of your OTE level. This is ideally where I want to take my trade.

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[music] It doesn't matter what time frame you're drawing your OTE on. You can draw it on the 1-minute, you can draw it on the 5-minutes, you can even draw it on the 15. What matters is finding a higher

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time frame confluences that align with your [music] OTE. Once I have marked out my OTE, I'll start scaling up through the higher time frames. Typically, I want to look at the 5-minute, 15, 30, and 1-hour. What I'm looking for is

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simple. I want to see higher time frame premium and discount arrays sitting inside of my OTE. This can be [music] fair value gap, order blocks, rejection blocks, and change of state of deliveries. The more confluences around the area, the more interest that I

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become. For example, if my OTE aligns with a 5-minute order block, that's good. But, [music] if that same OTE aligns with a 50-minute order block, I'm going to pay more attention to the 50-minute level. [music] Why? Because higher time frame levels generally carry

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more weight than lower time frame levels. A 50-minute order block is usually more significant than a 5-minute order block. And when a fair value gap is significantly more significant than a 5-minute fair value gap. So, when multiple concepts start aligning

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together inside your OTE, that's where the setup becomes much stronger. Remember, we're not [music] taking trades because price entered an OTE.

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We're taking trades because price entered an OTE that aligns with a higher time frame confluence. That's a [music] huge difference. Now, let's look at a few examples. In this example here, price tapped into this 1-hour order block [music] displacing lower and

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breaking above this low right here. Since this is a bearish setup and price gave us a clear bearish displacement lower, we're going to mark out our OTE for shorts. From this high [music] to this low.

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Now, all I'm expecting is a retracement back into my OTE zone. But, to know which level will hold, we need to scale to a higher time frame and find premium and discount arrays that align with our OTE levels. [music] Scaling onto the

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3-minute time frame, we have this 30-minute order block. In this case here, the 0.79 aligns perfectly with the opening of this order block. Scaling even more higher onto the 1-hour time frame, we can see we have another 1-hour order block.

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And the CE aligns perfectly with the 0.79 as well. Now, seeing how perfectly these confluences align perfectly with the 0.79 of my OTE level, this is exactly where I want to limit my trade.

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Topics:Optimal Trade EntryOTEtrading setupliquiditydisplacementorder blocksfair value gaphigher timeframe confluenceprice actionscaling timeframes

Frequently Asked Questions

What does OTE stand for and what is its purpose?

OTE stands for Optimal Trade Entry. Its purpose is to identify the most optimal area to enter a trade after price has shown its intended direction, allowing traders to enter at discounted or premium levels.

Why do many traders fail when using OTE setups?

Many traders fail because they use OTE as a standalone setup and take trades immediately when price enters the OTE zone without confirming liquidity has been taken or displacement has occurred.

How do higher timeframes influence OTE trade decisions?

Higher timeframes provide premium and discount arrays such as order blocks and fair value gaps that align with OTE zones. These confluences increase the probability of a successful trade, as higher timeframe levels carry more significance.

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