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0:00 David Paul once shared three powerful trading rules that summarize decades of professional experience. The good trade is a hard trade. Fade the short term trend in the direction of the long term trend. Place your entries where the masses put their stops. In this video, we take those three principles and break them down using Smart Money and ICT concepts to reveal the structural logic behind them. You will see how liquidity sweeps create discomfort, how market structure defines direction, and how premium and discount zones frame high probability locations. Here on the ComLucro channel, our mission is to connect classical trading wisdom with modern institutional logic. Instead of treating liquidity, price action, and execution models as isolated techniques, we organize them into one clear framework.
0:49 By the end of this video, you will not only understand where to enter, but why those entries work and how they align with smart money behavior in real market conditions. If you enjoy this kind of content, make sure to like the video, subscribe, and turn on notifications, so you do not miss what comes next. And let us know in the comments what topics you want us to cover next. You will also find links to our trusted partners in the description. When you use those links, you help support the channel and keep this content moving forward. Before we break down charts, indicators, or specific entry models, let us start with something deeper. Over the years, experienced traders have distilled their knowledge into
1:34 simple principles that sound almost too basic to matter. Yet behind those principles lies a level of structural understanding that most traders never fully develop. David Paul summarized this wisdom into three rules, and the first one sets the tone for everything that follows. Rule number one, the good trade is a hard trade. You know, he taught me that. A delightful old man. He was one of the first market wizards, Michael Steinhart. Do you know him, Larry? I know him so well. He's 90 these days. 91. He’s still trading, my word. He’s made of hemp. He thrashed those indices for 25 years. And he was the inspiration for me, in fact, buying oil right at the lows. That was a classic Michael Steinhart tread. And please Google. Michael Steinhart,
2:23 he was one of the original market wizards. He has got cast iron you-know-what. In his day. He was something, I guess the good trades are hard to it. I'm not saying it's intellectually difficult. Okay. In fact, as I said on Friday, the thicker you are, the better, but it's just difficult to do. The market's roaring down. Three big red bars. Puts the fear of God into you. I know somebody idiot tells you you must step in and buy it. Is really, really difficult. Okay. Very difficult to do. So that's a characteristic of a good trade. If the trade seems easy, there's a good chance you're just about to be sexually violated. And that's fine if you like that sort of thing. What makes a trade feel hard is not randomness. It is not bad luck. And it is not because the
3:13 strategy does not work. It feels hard because price is doing something very specific before the real move begins. In most cases, that discomfort comes from liquidity being engineered in the market. So before we go any further, we need to understand how liquidity actually works and why price must sweep it before moving with momentum. Looking at this schematic figure, it shows a rally wave moving upward, sweeping the external liquidity gathered above the previous high. After this, the price shifts toward internal liquidity, indicated by this fair value gap, to fill the gaps left behind from internal liquidity. The price then transitions back to the external phase. Essentially, the price moves from the fair value gap to external liquidity, by sweeping the liquidity above this high.
4:03 With the external liquidity swept, the price then aims to balance by targeting internal liquidity. This causes the price to drop and fill the most recent fair value gaps. Shifting our focus, let's examine the details of static liquidity. Static liquidity refers to specific zones in the market where a large pool of money is resting, such as stop losses or buy and sell orders. When a trader gets stopped out of a position, the market absorbs the funds associated with that stop loss. Recognizing a liquidity sweep pattern before the price reaches our point of interest is crucial. This pattern confirms the strength of our supply or demand area. We use liquidity sweeps
4:50 as a confirmation factor. The idea is simple: the market requires liquidity for momentum. If the price doesn't sweep liquidity before a key level, it often uses that zone as liquidity to fuel its momentum. Understanding that price seeks liquidity explains the movement. But there is another layer that makes this even more deceptive. Sometimes price does not just sweep liquidity and move. It creates the illusion of continuation first, encouraging traders to commit before the real move unfolds. This is where many traders get trapped, not because liquidity was invisible, but because the structure appeared valid. Let’s continue... At its core, inducement means creating liquidity before the real move. It is the last liquidity
5:39 created to fuel the real move, and it shows up in different forms. Structural inducement, liquidity based inducement, and time based inducement. Now let’s start with the structural inducement. Among all types, structural inducement is the most important because it happens directly inside market structure and forms patterns you see every single day. A structural inducement occurs when price creates a fake structure shift, like a false CHoCH or a misleading BOS, that tricks traders into entering early or in the wrong direction. In this example, price is trending higher and continues to print bullish breaks of structure to the upside. However, when you focus on the most recent break of structure,
6:30 it initially appears completely valid. Price breaks and closes above the swing high. Naturally, this leads you to expect buy setups at the demand zone or order block that caused that break. Then the outcome becomes clear. You enter the buy, and price takes you out almost immediately. This is exactly how structural inducement traps the majority of traders. The reason behind this becomes clear when you look deeper. This so called BOS was never a real break in the first place. The entire move was driven by resting buy orders sitting below, inside the discount zone of the main bullish leg. If you draw your Fibonacci tool from the swing high down to the swing low, you will notice that price did not even retrace into
7:19 the 38.2 percent level, let alone the 50 percent level of the previous impulse. This is critical. For us at ComLucro, a retracement that does not reach at least the 38.2 percent level cannot be considered a valid retracement. And even when price retraces only to the 38.2 percent level, these very shallow pullbacks tend to create inducements and liquidity hunts rather than clean entries. Because of that, traders must always be cautious with shallow retracements. The ideal scenario in a bullish trend is to wait for price to retrace into the 50 percent level or deeper, where price enters the discount zone. This is where real institutional buying is more
8:07 likely to occur, and where you avoid becoming liquidity for inducement moves. Understanding this helps you avoid fake structure breaks, recognize liquidity driven pullbacks, and stay aligned with the real direction of the market. Once you understand how structural inducement traps traders, the next logical step is to identify where the real opportunity forms after that failure. When a valid looking break turns out to be false and liquidity has been collected, the market often leaves behind a very specific footprint. That footprint is what allows us to define a high probability reaction zone instead of reacting emotionally to the trap itself. Let us start with the breaker block. A breaker block forms when a valid order block fails and
8:54 flips into a new supply or demand zone on the chart. In basic price action, we already know this behavior well. When price breaks through support, that same level often acts as resistance later, simply because of how traders react to it. The same principle applies to order blocks. An order block can fail due to a shift in market structure, an overextended price, or price tapping into an important higher time frame level. When a demand order block fails to hold and price breaks through it, that area flips into supply. This flipped zone is what we call a breaker block, and it becomes an area where we expect price to react and reject. Now let us talk about fair value gaps. Fair value gaps are also treated as supply or demand
9:44 zones because they represent imbalance in the market. When a bearish fair value gap appears, it shows that selling pressure has clearly outweighed buying pressure, often driven by institutional activity. This creates market inefficiency, and price usually returns to that area to rebalance. When price revisits the fair value gap and there are still unfilled orders inside the zone, it creates an opportunity to trade in the direction of the existing momentum. That is when we often see price reject from the fair value gap and continue moving with strength in the same direction. It is important to keep one thing in mind. Fair value gaps must be unmitigated to remain valid.
10:30 When a breaker block overlaps with an unmitigated fair value gap, this alignment creates a high quality trading zone. When price returns to this area, the probability increases that it will behave as a strong supply zone and push price lower. In this situation, the entry is taken at the start of the zone, the stop loss is placed above it, and targets are set at the next key area ahead of price. The same logic applies in bullish scenarios, just in the opposite direction. Now let us look at a practical example using the euro dollar on the five minute chart. We focus on the top of a recent impulsive move where a fair value gap has formed. The candle that created this
11:16 gap can also be seen as an order block, marking a demand zone that would normally support price and push it higher. If price retraces into this zone, the expectation is usually a bullish rejection and continuation. But when price returns and breaks through the zone without holding, that demand area fails and flips its role. At that point, it becomes a breaker block. The bearish move that breaks below this former demand zone also creates a bearish fair value gap, signaling strong downside momentum. On their own, both the breaker block and the bearish fair value gap are meaningful areas. But when these two zones overlap,
12:03 they create a high confluence trading zone. This overlap significantly increases the importance of the level and makes it a key area to watch for a strong market reaction. High confluence areas are zones where multiple price action signals come together, which naturally makes them more reliable. When different concepts align in the same area, more traders pay attention to that level. Because of this shared focus, these zones often trigger stronger and cleaner market reactions. That is why they become key areas where traders prepare, anticipate, and execute their trades. For the entry, the approach is straightforward. Place your sell limit order at the beginning of
12:49 the high confluence zone and position your stop loss above the zone to protect against unexpected moves. When defining targets, aim for a healthy risk to reward ratio, such as one to two or one to three, always based on the next important market structure levels ahead of price. To manage the trade more efficiently, one simple technique is to reduce risk once price reaches a one to one target. At that point, you can close half of the position and move the stop loss to break even. This way, even if price reverses and hits your stop, the trade does not result in a loss. At the same time, the remaining position is free to run in profit, allowing you to stay calm and focused while the market does the work.
13:40 What we just saw is a precise example of how structure fails, liquidity is taken, and a high quality zone forms for execution. But this type of setup does not exist in isolation. It only makes sense when it aligns with the broader market direction. That brings us to the second rule, which shifts the focus from individual setups to the relationship between short term movement and long term trend. Rule number two, I want to fade the short-term trend in the direction of the long-term trend. So, fade the short-term trend in the direction of the long-term trend. What I'm saying is that I've got a long-term trend in place, and I want to buy a pullback and let it go again. Guess what that is — A, B + C, D. Okay. So, I wonder where I got that from.
14:31 What he is describing is simple in theory but powerful in practice. When the higher time frame shows a clear trend, you do not chase price at the extremes. Instead, you wait for a temporary pullback, a short term move against the dominant direction, and then position yourself in alignment with the larger trend. In other words, you trade the correction, not the impulse, while staying aligned with the overall market bias. Now, let's get started with the market structure... The behavior of market movements can fundamentally be attributed to two main factors that consistently dictate the direction of prices: trends, which encompass both uptrends and downtrends, and the consolidation phase, characterized by choppy or ranging markets. Picture this as a
15:19 perpetual cycle where prices continuously oscillate between downtrends, uptrends, and consolidation periods, each gathering liquidity and institutional orders. Typically, prices need to consolidate following uptrends and downtrends. A vital initial step when analyzing your charts is determining whether the market is currently experiencing an uptrend, a downtrend, or is in a consolidation phase. To build a robust understanding, let's start with a straightforward overview of market structures before exploring the intricate details of advanced market dynamics. Consider an idealized version of a market structure reflecting a perfect uptrend. I term this as ideal because it's rare to encounter an uptrend in real markets
16:06 that follows this pattern precisely—markets don't usually move with such predictability. Nevertheless, to enhance our understanding of uptrends, let's examine this ideal model before shifting our focus to the more realistic uptrend structures that are more commonly observed. In a typical uptrend, prices will consistently create higher highs and higher lows. The pattern generally sees prices surpassing previous highs while sustaining the lows. An uptrend concludes when there is a break below one of the significant lows. To preserve the continuity of an uptrend, it is essential that these major lows remain unbroken. Additionally, when a price exceeds a major high, it results in a structural break and forms a demand zone, indicative of a break of structure, or BOS. Accurately
16:55 identifying major highs and lows is crucial because it allows us to recognize signals for potential trend reversals or continuations. Without correctly pinpointing these key points, traders are at risk of misinterpreting market signals and potentially entering trades on the wrong side of the market. These principles are equally applicable in bearish scenarios. During downtrends, prices consistently form a sequence of lower lows and lower highs. In such scenarios, prices tend to break below previous lows while still respecting the previous highs. Let's explore the details of a realistic market structure, focusing on the more commonly observed uptrend patterns in the market. Consider a scenario where the price surpasses previous highs, breaking upward. At this juncture, a key question emerges: how do we pinpoint valid major highs and
17:46 lows? To address this, let's examine the left side of the market structure. It is evident that the price underwent an upward trajectory until it began to retrace. The peak reached before this retracement is deemed the major high. Conversely, the lowest point during the bullish wave that triggered this upward movement and led to a break of structure and a new high is recognized as the major low. These two points are the critical external structures of the market, and any structure that develops between them is considered an internal structure. When the price surpasses the major high, marking a break of structure (BOS), it indicates a continuation of the upward trend. On the other hand, if the price drops below the major low, this should be interpreted as a signal of a trend reversal. The internal price actions
18:35 within these external structures are secondary, provided the price stays above the most recent major low. Maintaining this condition signals that the market remains in a bullish phase. Once direction is clearly defined through structure, the next question becomes location. Knowing that the market is bullish or bearish is not enough. We also need to understand where price is trading within its current range, because not every level inside a trend offers the same opportunity. This is where the concepts of premium and discount help refine timing and improve risk to reward. When analyzing price within the ICT framework, one important concept quickly becomes clear. Price does not offer the same opportunity at all levels of a range, and context always matters. This observation naturally leads us to
19:24 the idea of Discount and Premium as a way to frame price location more effectively. To understand how these zones work in practice, we must first understand the idea of a range. A range is simply the space between a swing low and a swing high, or between a swing high and a swing low. This range defines the boundaries within which price is currently moving. Let us take the example of a range that forms from a swing low to a swing high. To define the premium and discount zones, we divide this range into two equal parts. The upper half of the range is always called the premium zone, while the lower half of the range is always called the discount zone. So, when using the Fibonacci retracement to define discount and premium zones, it is essential to draw it in the correct direction. In a bullish scenario,
20:14 where the range is measured from a swing low to a swing high, the Fibonacci should be drawn with the zero level placed at the swing high and the one level placed at the swing low. When we look for long trade opportunities, we want price to trade in the discount zone, assuming there are other elements supporting the trade idea. The deeper price trades into the discount zone, the greater the potential risk reward ratio. This is especially true when the stop loss is placed below the swing low and the target is set near the swing high. For downward price movements, we measure the range from a swing high to a swing low. So, in bearish scenarios, the Fibonacci retracement should be drawn in the opposite direction. The zero level is placed at the swing low, and the one level is placed at the swing high.
20:59 In this case, we want to look for short trade opportunities in the premium zone. The higher price trades into the premium zone, the better the potential risk reward ratio, assuming the stop loss is placed above the swing high and the target is set near the swing low. This concept of Discount and Premium is very simple, but it is essential to keep it in mind at all times when analyzing price. It provides a clear framework for evaluating where price is located within a range and helps define where higher probability trade opportunities are more likely to form, especially when combined with proper structure and confirmation. So far, we have defined direction through structure and refined location through premium and discount. But even when trend and location align,
21:47 many traders still struggle with execution. They enter too early, place stops in obvious areas, and become the liquidity that fuels the next move. That leads us directly to the third rule, which addresses not just where to trade, but where most traders are wrong. The third rule: I want to put my entries where the masses put their stops. So, on your way home, I want you to pass a building site, and on the building site, you pick up a brick. Okay, you take that brick home, and tomorrow, when you're about to put on your first trade, you decide where you get in. Just before you press the button, you pick the brick up and you go smack it against your head. That puts you into the present moment. And here's what I want you to do:
22:34 rather than buying the market at where you thought you were going to buy the market, put an order in at where you were going to put your stop and see how often the damn thing goes to your stop. Okay, so place your entries where the masses place their stops. And this is another thing I learned from Larry — the best trades occur when the masses have been stopped and trapped. So even if you don't get in at the cusp of the turn, if you can look back and see, it's just obvious on the chart that lots of people would've bought there, and then the bloody thing went down again, nailed down and then reversed. If you get in after those people have been nailed, then you're in a much better place, okay? And of course, that's difficult because we're scared of missing out — at least I am. What he is describing is not just psychology. It is mechanics. When traders are stopped out, their
23:23 exits become fuel for the next move. Those stops are not random. They cluster around very specific areas on the chart, areas that are visible and predictable. To apply this rule properly, we must first understand where that liquidity sits and why price is naturally drawn toward it. Static liquidity can be identified in various areas on the price chart, such as below equal lows and above equal highs, above swing highs and below swing lows, below or above dynamic trend lines and channels, and inside order blocks, below or above. Support and resistance levels, Fibonacci retracement levels, and near the daily candle's body and wick. Having a solid grasp of static liquidity zones reveals their profound impact
24:11 on market price direction. Neglecting them can lead to substantial losses. Some of these zones and patterns are especially important, as they are widely recognized by traders, attracting more stop loss and pending orders, increasing the likelihood of price moving toward them to absorb liquidity. Now that we know where liquidity is clustered and why price is drawn toward those areas, the final step is execution. Identifying stop zones is not enough. We need a structured way to enter after liquidity has been taken, with clear rules for timing, stop placement, and targets. This is where execution becomes mechanical instead of emotional. So, during the analysis phase, we focus on three things. Market direction, the latest impulsive
25:01 wave, and the available room before price interacts with a higher time frame key level. The next step is trade execution. Here, we wait for price to pull back and then apply the Fibonacci retracement tool from the beginning of the impulsive move to its end. We place a buy limit exactly at the midpoint between the 61.8 percent and 78.6 percent levels, which is the 70.5 percent retracement. Our stop loss is placed a few pips below the swing low. The final step is trade management and target selection. We know that when price reaches this higher time frame area, it is likely to act as resistance and push price lower. Because of that,
25:49 our first target is set just before this level, often near the close of the highest candle. The same logic applies when trading a bearish scenario. So, as you can see, this model relies entirely on basic price swings and retracement levels. At this point, some of you may think that trading cannot be this simple and still remain profitable. However, simplicity plays a crucial role in forex trading. Your trading plan must be clear and straightforward, with mechanical rules that precisely define where your entry, stop loss, and targets are placed. By trading this way, you can rely on your backtesting results with confidence, knowing that emotions are removed from your decision making process and
26:38 that your tested results closely reflect real market conditions. Now, this was the core version of the model. We have expanded it further by combining it with multiple smart money concepts, including fair value gaps, market structure shifts, and multi time frame entries, which we will explain next. So, we begin with the first type of entry by combining the optimal trade entry model with fair value gaps. Here we have a well defined uptrend. Our objective is to wait for a pullback and enter a long position at a more favorable price. If price breaks below this level, the entire bullish scenario comes into question, as it signals strong bearish momentum. This defines our correction
27:24 range, and by applying the retracement tool, we can clearly identify the optimal trading zone. Now, if we look to the left side of the chart, we can see that the most recent impulsive move has formed several fair value gap areas, one of which aligns directly with the optimal trading zone. When price retraces into these zones, they can act as support and potentially drive price higher. A more conservative approach, however, is to wait for price to retrace deeper into the third fair value gap and enter the long position there. This is because price may use the first fair value gap as a liquidity grab, trapping early long positions. In summary, combining the optimal trading zone with fair value gap
28:12 areas creates strong supply and demand zones and offers a high quality trading opportunity. So, we move on to the second type of entry by combining the optimal trade entry model with market structure shifts. Here, we had a long term downtrend until price failed to form a new lower low, signaling a loss of bearish momentum. Shortly after, price broke through the supply level to the upside. This change of character indicates that sellers are no longer in control and suggests a potential bullish reversal. Once price breaks structure above the previous high, it confirms that buyers have taken full control, marking a complete market structure shift from a downtrend into an uptrend.
29:04 At this point, we can begin looking for long opportunities to benefit from the emerging bull market. This leads to an important question. When should we enter a long position. Even though price has a strong probability of continuing higher, entering at a poor level could still result in a stop out. This is where price swings and ICT’s optimal trade entry come into play. Our directional bias is bullish, and there is sufficient room for price to move before reaching the next significant higher time frame level, located above. We can now apply the retracement tool to the most recent impulsive move and place a buy limit at the 70.5 percent retracement level. Our stop loss is set a few pips below the swing low,
29:52 and our targets are defined according to the trading plan. This is how we combine optimal trade entry with market structure shift concepts to execute a high quality trade. However, it is crucial to remember that no matter how strong a setup may appear, the market can always behave differently. Risking an excessive amount on a single trade simply because the probability seems high is a poor decision. Trading involves anticipating future price movement, and the future is inherently uncertain. After a 50 percent loss, a trader must gain 100 percent on the remaining capital just to break even. In forex trading, survival always matters more than short term gains.
30:41 Now, we move on to the third type of entry, using a two time frame entry approach. In this trading setup, we use two different time frames to execute the trade. Most of our analysis is done on a higher time frame, such as the 1 hour chart, and then we zoom into a lower time frame, like the 15 minute or 5 minute chart, to find confirmation and execute the entry. Let me walk you through the process. On the 30 minute chart, we can clearly identify an uptrend. We apply the retracement tool and define the optimal trading zone. As discussed earlier, once price pulls back into the optimal trading zone, we shift our focus to a lower time frame to look for an entry trigger and execute the long position. However,
31:30 on the lower time frame, this same pullback may appear as a short term downtrend. Our objective, then, is to identify signals that show this lower time frame downtrend is coming to an end, allowing us to enter a long trade in alignment with the dominant bullish direction of the higher time frame. When we observe a clear change of character, it provides a valid signal to consider a long entry. In this example, we know the higher time frame trend remains bullish and price is trading within the optimal demand area. As a result, we have combined multiple price action concepts and confirmations to justify this trade. What you have seen in this video is not a collection of random strategies. It is
32:20 a structured way to connect timeless trading principles with Smart Money logic. The good trade feels hard because liquidity is being engineered. Pullbacks work because they align with structure and location. And the best entries form where stops are clustered and liquidity has already been taken. When direction, location, and liquidity align, execution becomes clear and mechanical. That is where confidence comes from, not from prediction, but from understanding how price moves and positioning yourself with discipline inside that framework. Please also remember that the mission of the ComLucro Channel is simple. We focus on giving traders clarity, confidence, and structure, so market decisions are made with discipline and intention.
33:08 On this channel, you will find complete courses built as a true trading masterclass. We teach market structure, higher time frame trading, and supply and demand, always focused on understanding price behavior and executing with a professional mindset. We also go deep into trading psychology, risk management, and consistency, because trading is not just about charts. It is about mindset, discipline, and structured execution over time. There are no shortcuts. Real progress comes from continuous learning and practice. Our main courses include Smart Money Concepts, Technical Analysis for Day Traders, Trading Psychology, and the Wyckoff Method Course.
33:56 Alongside our courses, we share lessons and insights from some of the most respected names in trading, including professionals like David Paul, Alexander Elder, Tom Hougaard, Mark Douglas, Al Brooks, and Larry Williams, whose experience has shaped how traders understand markets today. So, if this video helped you gain more clarity, leave a like. It helps this content reach other traders who are on the same journey. Make sure to subscribe and turn on notifications so you do not miss our latest lessons and insights. Now I would really like to hear from you. Which concept in this video made the biggest difference for you, or what topic would you like us to cover next? Leave a comment below and let us know.
34:42 If you want to go deeper, with exclusive content, early access to videos, and additional tools to support your development, consider joining the ComLucro Trader Community right here on YouTube. It is a simple way to support the channel and a smart investment in your own growth as a trader. Thanks for watching, and I will see you in the next video.
