Trade Filter

To filter trades and increase the probability of success, you can apply more selective criteria
and focus on higher-quality setups that align with your strategy. Here are specific ways to do
that:

1. Use Higher Timeframe Confirmation

● How: Add a layer of higher timeframe analysis (1H, 4H, or daily) to confirm the
overall trend and bias before taking a trade on lower timeframes (e.g., 5-minute).
● Why: Trading with the higher timeframe trend generally increases the probability of
success. For example, if you see a bullish breaker block or fair value gap on the
5-minute chart, make sure the higher timeframe is also showing bullish momentum or
liquidity.

2. Trade Only After Key Liquidity Runs

● How: Filter trades by waiting for a liquidity run on higher timeframes (e.g., 1H) before
looking for an entry. For your strategy, this could be the previous day’s high/low or
previous week’s high being run.
● Why: Liquidity runs often signal reversals or strong market momentum, increasing
the chances that price will move in your favor after such events.

3. Strengthen Breaker Block Criteria

● How: Only trade when there is a strong reaction from a breaker block that aligns with
a fair value gap. You can add extra conditions like requiring that the price closes
above/below the breaker block for added confirmation.
● Why: Many false setups occur when the price only touches but doesn't fully respect
the breaker block. Waiting for a strong rejection (e.g., a large wick or close in your
direction) filters out weaker setups.

4. Wait for Candlestick Confirmation

● How: Require candlestick patterns such as bullish/bearish engulfing patterns, pin
bars, or inside bars at points of interest (e.g., a fair value gap or order block).
● Why: These candlestick patterns act as confirmation that the market is likely to move
in your desired direction, providing more reliable entry signals.

5. Refine Your Timing (Session-Based Trading)

● How: Trade only during high-volume times such as the US session open (9:30–12:00
EST) or after lunch (13:00–16:00 EST).
● Why: Higher volatility during these times increases the likelihood of strong directional
moves. Filtering out low-volume sessions (like the midday lull) can prevent false
signals.

6. Filter by Market Conditions

● How: Implement filters based on the type of market condition. For example:
 Trade Filter
○ Trending Markets: Focus on pullback entries into fair value gaps aligned with
the trend.
○ Ranging Markets: Avoid breakout trades and only trade at key
support/resistance levels.
● Why: Some strategies perform poorly in ranging markets but excel in trending
markets, and vice versa. You can use simple moving averages or indicators like ADX
to determine if the market is trending or ranging.

7. Add Volatility Filters

● How: Only trade when volatility is high, indicated by tools like the Average True
Range (ATR) or Bollinger Bands. You can also focus on times when there are news
events that may trigger larger market moves (e.g., NFP, FOMC meetings).
● Why: Low volatility often results in choppy price action, leading to false signals. By
waiting for periods of increased volatility, you can filter out low-probability trades.

8. Avoid Trading Around Major News Releases

● How: Use an economic calendar to identify major news events and avoid entering
trades shortly before big announcements (e.g., interest rate decisions, CPI reports).
● Why: Market volatility during news events can cause erratic price movements,
leading to premature stop-outs or invalid setups.

9. Refine Fair Value Gap Entries

● How: Instead of entering as soon as price enters the fair value gap, wait for price to
fill the majority of the gap or for additional confirmation, such as a small retracement
or consolidation.
● Why: Sometimes price enters a fair value gap but doesn’t immediately reverse.
Waiting for a more solid reaction inside the gap reduces the chance of false entries.

10. Multi-factor Confluence

● How: Require at least 2-3 factors of confluence before entering a trade. These
factors could include:
○ Liquidity run has occurred
○ Strong reaction at a breaker block
○ Alignment with a fair value gap
○ Candlestick confirmation
○ Trend direction on a higher timeframe
● Why: The more factors aligning in a trade, the higher the probability of success.
Avoid trades that don’t check off multiple criteria.

11. Use Volume Confirmation

● How: Only enter a trade when there is an increase in volume around your entry
signal. For example, a spike in volume after a liquidity run could indicate smart
money participation.
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● Why: Volume helps confirm the strength of a move. Low volume can indicate
indecision, while higher volume often leads to stronger trends and follow-through on
price.

12. Add a Moving Average Filter

● How: Use a moving average (e.g., 50 or 200 EMA) to confirm the trend. For
example, only take bullish trades when the price is above the 200 EMA and bearish
trades when it is below.
● Why: A simple moving average helps confirm the broader trend and can filter out
counter-trend trades, which often have a lower probability of success.

13. Limit Number of Trades

● How: Implement a rule to take only the highest-quality setups each day (e.g., 2-3
trades). If the setup isn’t perfectly aligned with your strategy, pass on it.
● Why: Overtrading often leads to low-quality trades. Limiting the number of trades
forces you to be more selective and patient, increasing the probability of each trade.

Example: How You Could Filter a Trade

1. Higher Timeframe Bias: You first check the 1H chart to ensure the overall trend is
bullish. The price just ran the previous day’s low (liquidity run).
2. Market Structure: On the 5-minute chart, you see a clear breaker block in the same
direction (bullish) that aligns with a fair value gap.
3. Candlestick Confirmation: You wait for a bullish engulfing candle after the price
reacts to the fair value gap.
4. Volume Confirmation: The volume spikes after the candlestick confirmation,
indicating market participation in your direction.
5. Moving Average Filter: The price is also above the 200 EMA on the 5-minute chart,
confirming the bullish bias.
6. Session Timing: It's 10:00 EST, within your optimal trading session.

Once all these conditions align, you enter the trade, increasing the probability of success.