THE VAGA METHOD

CONTENTS

01 MARKET STRUCTURE
Understanding the flow of the market
02 CONCEPTS
Key characteristics of price action

03 TRADE SETUPS
How we get involved
04 EXCEPTIONS
Underlying parameters
01 MARKET STRUCTURE
Understanding the flow of the market
 MAJOR STRUCTURE

MAJOR HIGH

MAJOR HIGH
MAJOR HIGH

MAJOR HIGH

MAJOR LOW
MAJOR LOW
MAJOR LOW

MAJOR LOW
 MAJOR STRUCTURE
Major structure are highs and lows on the current time HH
frame and they determine medium term orderflow
HH

LH

BE
HH

W
AR

FLO
W

IS
O
FL

HM

R
ER

RDE
AJ
RD
LH

OR
O

OR O
R
JO

OR
A

MAJ
M

DER
SH
I

LISH
LL

FL
U

OW
B

BUL
HL
HL LL

LL New major highs/lows are formed every time the

market breaks a previous major high/low.

LL
LL
 MAJOR ORDERFLOW
BULLISH MAJOR ORDERFLOW HH
BEARISH MAJOR ORDERFLOW

HH

HH
LH

LH HL HH

HH

LL LH
HH
LH

HH LH
HL

LL

LH

LH
LL HL
LL HL

HL HL
LL

LL LL
 SWING STRUCTURE
Swing structure are highs and lows on the higher time SWING HIGH
frame and they determine long term orderflow

SWING STRUCTURE DEFINES OUR BIAS

Swing points occur

whenever there is a major
SWING LOW
order flow reversal SWING LOW
 SWING ORDERFLOW
POSITIVE MOMENTUM

PRINTING HIGHER SWING HIGHS AND SWING LOWS

SWING HIGH BOS

SWING HIGH

BOS BOS
BOS

BOS
SWING LOW

SWING LOW

SWING LOW BULLISH BIAS

 SWING ORDERFLOW
SWING HIGH
NEGATIVE MOMENTUM

PRINTING LOWER SWING HIGHS AND SWING LOWS

BOS SWING HIGH

BOS

(BOS means break of structure)

SWING LOW

BEARISH BIAS
 MINOR STRUCTURE
Minor structure are highs and lows on sub time MAJOR HIGH
frame and they determine short term orderflow
MAJOR HIGH

MINOR HIGH

MINOR LOW

MAJOR LOW
MAJOR LOW

MINOR STRUCTURE APPEARS INTERNAL OF

MAJOR STRUCTURE RANGES
 MINOR STRUCTURE
MAJOR HIGH

MAJOR HIGH

MAJOR LOW
MINOR HIGH

MINOR LOW

MAJOR LOW
MINOR SWING STRUCTURE

MINOR SWING

Minor swing structure occurs

whenever there is a reversal of minor
structure
MINOR SWING STRUCTURE
MAJOR

MINOR SWING

MINOR

MINOR

MAJOR
 ALL TOGETHER
SWING HIGH = SWH SWING HIGH
SWING LOW = SWL
MINOR SWING HIGH = mSWH
MINOR SWING LOW = mSWL MAJOR HIGH

MAJOR HIGH
MINOR HIGH
MAJOR HIGH

MAJOR HIGH

MINOR LOW

MINOR SWING
MAJOR LOW
MAJOR LOW

MAJOR LOW
SWING LOW
SWING LOW
02 CONCEPTS
Key characteristics of price action
02.1 IMBALANCE
 IMBALANCE
Imbalances appear as “gaps” in price where
the wicks don’t cover the range of the body.

IMBALANCE

EURUSD
USDJPY
Efficient markets often pull USDCHF
back into these areas to are amongst the most
efficient pairs in the
rebalance the market. foreign exchange market
MITIGATED IMBALANCE

FILLED

MITIGATED

MITIGATED

Imbalance becomes mitigated when price comes back into FILLED

it and fills the entire range of the imbalance

BACK
UNMITIGATED IMBALANCE
Unmitigated imbalance is
imbalance that has yet to
be filled by the market

UNMITIGATED

UNMITIGATED

UNMITIGATED

BACK
02.2 ORDER BLOCKS
 ORDER BLOCKS

Whenever the market makes an impulsive move, a

significant amount of orders are left at the source of the
move which often causes the market to draw back to that
level before continuing the current order flow.

UNFULFILLED ORDERS
 ORDERBLOCKS
ORDERBLOCKS DRAWN AT THE LAST
COUNTER-TREND CANDLE BEFORE THE
UNMITIGATED IMBALANCE OF AN IMPULSIVE
MOVE

ORDERBLOCK

IMBALANCE
ORDER BLOCKS

UNFULFILLED ORDERS
 BULLISH STANDARD ORDER BLOCKS
Standard orderblocks occur at major
highs and lows
MAJOR HIGH

MAJOR HIGH

MINOR HIGH

MINOR HIGH
IMBALANCE

STANDARD
IMBALANCE

STANDARD

MODERATE VOLUME
WORKS BETTER ON HIGHER TIMEFRAMES
BEARISH STANDARD ORDER BLOCKS
MODERATE VOLUME
WORKS BETTER ON HIGHER
TIMEFRAMES

STANDARD
IMBALANCE

STANDARD

IMBALANCE
MINOR LOW

MINOR LOW

MAJOR LOW

MAJOR LOW
STANDARD ORDER BLOCKS

STANDARD

STANDARD

STANDARD
 BULLISH EXTREME ORDER BLOCKS
Extreme orderblocks occur at swing highs and
lows. These type of orderblocks are the only kind
we trade from.

SWH

HIGHER VOLUME
GOOD ON ALL TIMEFRAMES
IMBALANCE ESPECIALLY LOWER TIMEFRAMES

EXTREME
SWL
BEARISH EXTREME ORDER BLOCKS
SWH

EXTREME
IMBALANCE HIGHER VOLUME
GOOD ON ALL TIMEFRAMES
ESPECIALLY LOWER TIMEFRAMES

SWL
EXTREME ORDER BLOCKS
EXTREME
02.3 LIQUIDITY
 WHAT IS LIQUIDITY?
Liquidity is the ability for the market to transact orders without
changing price

Banks and institutions have great amounts of capital. They can't just
transact all of their orders at one level as it would be way too much
volume for the market.

Banks need liquidity so they can get as many orders fulfilled as

possible to create larger positions without influencing the market
too much

Liquidity can be seen on the chart as certain price structures that

entice retail traders such as us to place orders around those levels

Since the banks are out to fulfill as much orders as possible, these
price structures often attract the market and can be used to help us
create our directional bias

The following slides show what the different types of liquidity look
like and how to draw them on the charts
 EQUAL LIQUIDITY

SUPPLY

BUY-SIDE LIQUIDITY

SELL-SIDE LIQUIDITY

Price will often sweep through

liquidity into a supply/demand
zone to continue the order flow
or use liquidity to reverse the
order flow entirely.
EQUAL LIQUIDITY

SELL-SIDE LIQUIDITY

BACK
EQUAL LIQUIDITY

BUY-SIDE LIQUIDITY

BACK
DIAGONAL LIQUIDITY

SUPPLY E LI
QUID
ITY

BUY L-SID
-SID
E SEL
LIQ
UID
ITY

DEMAND

THE MARKET OFTEN TARGETS LIQUIDITY SO

IT CAN BE USED AS A CONFLUENCE FOR OUR
SETUPS AND OUR DIRECTIONAL BIAS

BACK
DIAGONAL LIQUIDITY

Y
E L IQUIDIT
ID
S ELL-S

BACK
DIAGONAL LIQUIDITY

BUY-SIDE LIQUIDITY

BACK
 DYNAMIC LIQUIDITY

BU
Y-
SID
EL
IQ
UI
DI
TY

Y
IT
D
UI
Q
LI
E
ID
-S
LL
SE
BACK
DYNAMIC LIQUIDITY

BU
Y-S
IDE
LIQ
UID
ITY
DYNAMIC LIQUIDITY

Y
L I Q UIDIT
SIDE
SELL-
03 TRADE SETUPS
How we get involved
03.1 V-SWING
 V-SWING LONG (MAJOR SWING RETEST)
STEP 1: IDENTIFY SWING STRUCTURE
STEP 2: IDENTIFY MARKET MOMENTUM

V-SWINGS ALIGN WITH SWING

ORDER FLOW

IN ORDER TO LONG, THE MARKET

SWH
MUST HAVE BULLISH MOMENTUM
SWH

SWL

SWL

RECAP
 V-SWING LONG (MAJOR SWING RETEST)
STEP 3: IDENTIFY ORDERBLOCK BEFORE
UNMITIGATED IMBALANCE

SWH

SWH
SWH

IMBALANCE

SWL

SWL

RECAP
V-SWING LONG CASE STUDY

IMBALANCE

SWING LOW

SWING LOW

RECAP
 V-SWING SHORT (MAJOR SWING RETEST)
SWH

SWH

V-SWINGS ALWAYS ALIGN WITH

SWING ORDER FLOW

IN ORDER TO SHORT, THE MARKET

MUST HAVE BEARISH MOMENTUM

SWL
SWL

STEP 1: IDENTIFY SWING STRUCTURE

STEP 2: IDENTIFY MARKET MOMENTUM

RECAP
 V-SWING SHORT (MAJOR SWING RETEST)
SWH

SWH

IMBALANCE

SWL
SWL

SWL

STEP 3: IDENTIFY ORDERBLOCK BEFORE

UNMITIGATED IMBALANCE

RECAP
V-SWING SHORT CASE STUDY

RECAP
03.2 X-SWING
X-SWING LONG (MINOR SWING REVERSAL)
SWH

BU ● COUNTER MOMENTUM
Y- ● WEAKENING ORDER FLOW
SI
DE ● MINOR SWING BREAK
LI
QU ○ MINOR SWING MUST BE
ID FORMED IN THE DISCOUNTED
IT HALF OF THE RANGE
Y
SWL
MINOR SWING MUST BE DISCOUNTED

mSWH

SWL
WEAKENING ORDER FLOW

RECAP
X-SWING LONG (MINOR SWING REVERSAL)

SUPPLY

PARTIAL

IMBALANCE

RECAP
X-SWING LONG CASE STUDY

RECAP
X-SWING SHORT (MINOR SWING REVERSAL)

WEAKENING ORDER FLOW SWH

MINOR SWING MUST BE PREMIUM

mSWL

SWH
TY ● COUNTER MOMENTUM
I DI WEAKENING ORDER FLOW
QU
●
LI ● MINOR SWING BREAK
E
SID ○ MINOR SWING MUST BE
L- FORMED IN THE PREMIUM
SEL HALF OF THE RANGE

SWL

RECAP
X-SWING SHORT (MINOR SWING REVERSAL)

IMBALANCE

PARTIAL

DEMAND

RECAP
X-SWING SHORT CASE STUDY

DEMAND

RECAP
03.3 Z-SWING
Z-SWING LONG (DISCOUNT CONFIRMATION)

● PRO MOMENTUM
● MINOR/MAJOR SWING
CONFIRMATION
○ MINOR SWING FORMED IN THE
DISCOUNTED HALF OF THE
RANGE

SWH

mSWL

*NOTE TO SELF*
Minor swing in first half = Z swing
SWL Minor swing in second half = X swing

RECAP
Z-SWING LONG (DISCOUNT CONFIRMATION)
SWH

SWH

Z-SWING

mSWL

IMBALANCE

Z-SWING
V-SWING

SWL

RECAP
Z-SWING LONG CASE STUDY

Z-SWING
V-SWING
SWING LOW

RECAP
Z-SWING SHORT (DISCOUNT CONFIRMATION)
SWH

mSWL

SWL
● PRO MOMENTUM
● MINOR/MAJOR SWING
CONFIRMATION
○ MINOR SWING FORMED IN THE
PREMIUM HALF OF THE RANGE

RECAP
Z-SWING SHORT (DISCOUNT CONFIRMATION)
SWH
V-SWING
IMBALANCE Z-SWING

Z-SWING

SWL

SWL

RECAP
Z-SWING SHORT CASE STUDY

RECAP
03.4 RECAP
 LONG TRADE SETUPS

V X Z
 SHORT TRADE SETUPS

V X Z
04 EXCEPTIONS
Underlying parameters
 INTERNAL SWING TRADING
SWH When the market forms large swings,
we can look to get involved internally
through the minor swing points

After 3+ days of trading inside of a

major swing range, we completely
disregard the major swing orderblock
and instead trade internal swing points
as if they were major

INTERNAL SWING = iSWL/iSWH

SWL
 INTERNAL SWING TRADING
SWH

iSWH
iSWH

iSWL

iSWL

iSWL

SWL
 VOLUME

INVALID ORDERBLOCK
Volume is a key confluence that can
either validate or invalidate a setup.

Avoid trading orderblocks with low

volume as they tend to get swept.

LOW Instead, trade these orderblocks with

VOL confirmation entries (Z - SWING)

UME
 VOLUME EX. 2
VALID ORDERBLOCK

Orderblocks that cause

spikes of high volume have
an increased probability of
rejecting the market

These orderblocks can be

traded aggressively

HIGH
VOLU
ME
 SESSIONS
SPREAD HOURS: 9PM - 11PM GMT
SWH ASIA SESSION: 11PM - 8AM GMT

ASIA SESSION

URS
EA D HO iSWH
SPR

VALID Since the Asia session usually has low volume and
INVALID often gets swept by the subsequent sessions, we
wait until London open to place orders which is
iSWL iSWL directly after Asia close (8AM GMT)
The foreign exchange market consists of 3 key daily sessions: First Asia, then London, and last comes New York
Also avoid entering trades during spread hours as
The Asia session typically has low volume and its main purpose is to build liquidity the banks are inactive during this time

The London and New York sessions typically have high volume and they usually sweep through liquidity that has been This filters out low quality setups and gets us
built by the Asia session. The large and most profitable market moves happen during these times involved higher volume trades
 SESSIONS
SPREAD HOURS: 9PM - 11PM GMT
SWH ASIA SESSION: 11PM - 8AM GMT

ASIA SESSION

RS
OU
ADH
RE
SP iSWH

mSWL
mSWL
 HISTORIC ORDERBLOCKS

An extreme orderblock becomes historical after going 8 hours or more without being
mitigated

Normally limits should be set at the start of unmitigated imbalance, but on historical
orderblocks, they should be set at the beginning of all imbalance unmitigated and mitigated.

For mitigated imbalance to be valid, it must be mitigated only one time. If it has been
mitigated more than once, we disregard it even after 8 hours
LOCALIZED LIQUIDITY

DIAGONAL LQ

Localized liquidity is liquidity resting on the orderblock that has been built in under the last 8
hours of price action in the form of equal or diagonal highs/lows.

When there is localized liquidity on an orderblock, shift your entry directly behind the
orderblock to reduce your exposure to the market and avoid getting swept

To avoid discretion, we do not regard dynamic liquidity as localized liquidity

 LOCALIZED LIQUIDITY EX. 2

EQUAL LQ
 HISTORICAL LIQUIDITY

Historical liquidity is liquidity in the form of equal or diagonal highs/lows resting on

the orderblock that has been built up by the last 8 hours or more of price action

LQ Avoid trading zones with historical liquidity. Instead, wait for a reversal or a
L confirmation entry as seen above
NA
O
AG
DI
 2 CANDLE BOS
VALID BOS INVALID BOS

To ensure that a high or low has been fully broken, we use the 2
candle bos rule, meaning there must be 2 candles that close past a CANDLE NEVER
previous high or a low for it to be considered broken. CLOSED PAST
THE PREVIOUS
HIGH TWICE IN
A ROW

2 CONSECUTIVE
CLOSED CANDLES
PAST THE
PREVIOUS HIGH
 2 CANDLE BOS
VALID BOS INVALID BOS

CANDLE NEVER
CLOSED PAST
THE PREVIOUS
HIGH TWICE IN A
ROW
 MARKET AVOIDANCE
DYN
AM IC B
UY-S
IDE
LIQU
IDIT
Y BU
ILD U
P

SWH

DI
AG
ON
AL
BU
Y-
SID
EL
IQ
UID
ITY
BU
ILD
UP

SWL

We avoid getting involved at certain swing points when it produces

unfavorable price action. Unfavorable price action to us would be large
build ups of liquidity that oppose our directional bias.

SWL
BONUS

05 RISK MANAGEMENT
Protecting our capital
 RISK MANAGEMENT
Baseline Risk Factor
1 Risk no more than 1% of your capital per trade
If in drawdown, decrease your baseline risk factor
accordingly, ½% or ¼%

Daily drawdown limit

2
Limit daily loss to 2% / 2x loss

3 Weekly drawdown limit

Limit weekly loss to 5% / 5x loss

News events
Avoid trading FOMC, NFP, CPI, 4
and interest rate news events