PDA Flashcards
Market Structure which defines Fair Value Areas (21 cards)
What does PD stand for in PD Arrays?
Premium and Discount Array
What is the main purpose of PD Arrays in trading?
To understand the direction of price movement
What is a Premium Array (PR) characterized as?
A bearish PD Ray that attracts price to continue lower
What is a Discount Array (DR) characterized as?
A bullish PD Ray that attracts price to continue higher
What are the components of PD Arrays that provide better confirmation in direction?
- Fair Value Gap (FVG) - Fair Value Area (FVA) - Swing Points (SP)
What is the function of a Fair Value Gap (FVG)?
Acts like a magnet to trade towards it
What is a Fair Value Area (FVA) primarily used for?
To trade from, not towards
What is the significance of Swing Points (SP) in trading?
They indicate liquidity and can be traded towards and from
What is the structure of a Fair Value Gap (FVG)?
A three candle pattern with specific characteristics
What are the three candles in a Fair Value Gap (FVG) diagram as?
- 1st: Can do anything * 2nd: Closes above the first candle high * 3rd: Does not trade back into the first candle high
What happens to an FVG that has already been traded into?
its useless
How many times can a Fair Value Gap (FVG) be traded into?
Once
What is the relationship between Market Structure and trading direction?
Market Structure is not needed to determine direction but is important for trading from
What is the significance of liquidity in trading?
It allows bigger entities to place large orders by finding willing sellers
What role do Stop-Loss (SL) orders play in liquidity?
SL orders create selling opportunities when price trades below a swing low
What do Swing Highs and Swing Lows represent?
They are swing points indicating where liquidity exists in the market
What is the confirmation process for a swing high or swing low?
It is confirmed when the third candle is confirmed
What is the acronym PCL/PCH stand for?
Previous Candle Low / Previous Candle High
What is the significance of marking previous swing highs and lows?
They serve as targets similar to Fair Value Gaps
Price is ALWAYS moving towards _______?
PD ARRAY
Price is always moving towards a PD Array, what is OUR job?
Find out the next PD Array before it even happens.
