Summary of "The Simplest Orderflow Trading Model"

Instruments / Benchmarks Mentioned

• S&P 500 (used for comparison of equity curve / drawdowns)

(No other specific tickers, ETFs, bonds, commodities, or crypto are explicitly named.)

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Core Trading Idea: Opening Range Breakout (ORB) / Initial Balance (IB)

• Opening range definition: The first 15–30 minutes of the New York cash session (the speaker also mentions using 15, 30, or 60 minutes, depending on desired holding style).

• Rationale: The New York session has the highest daily volume, creating the strongest daily buyer-vs-seller contest. Early in the session, price behavior can reveal rejection/absorption/exhaustion signals.

Base principle of ORB/IB

• The first break of the opening range (top or bottom) suggests who won the “battle” during the day’s most important early window.
• The breakout direction can predict performance “for the day” up to a high-probability target (speaker emphasizes “until certain level”).

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“On Steroids” Improvement: Two IVB Variants

The IVB model is built from:

• Directional + probabilistic targets derived from deep statistical analysis
• Orderflow confirmation (aggression/absorption/imbalance) to improve entry precision and risk/reward

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Model 1: IVB “With Volume Profile Framing”

Key structure

• Point A: the New York open
• Point B: the range top/bottom from the first 15–30 minutes

Volume profile overlay

• PC (Point of Control): the volume maximum level
• Value area high / low
• The value-area ↔ PC region is treated as a “block of orders” / sensitive area

Behavioral expectation

• When price moves from balance to out-of-balance, it may accept/reject around these volume levels.
• On retracements back into the value area / PC neighborhood, participants may reload (or sellers may absorb/reload depending on direction).

Risk framing / invalidation

• The speaker provides an example invalidation rule:
  • If a candle closes beyond the “value area low” (example given), the setup is invalidated.
• Risk-to-reward improvement: not necessarily 1:1; described as possibly around ~1:2 to 1:2.5 depending on entry/target/protection placement.

Where orderflow fits

Orderflow is used to improve:

• Entry location
• Confirmation
• Invalidation / risk control

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Model 2: IVB “Orderflow After Breakout”

Starting point

• Uses the same initial structure: range top/bottom, profile, value area, and PC.

What changes

• Adds confirmation AFTER breakout during the retracement back toward the framed levels:
  • Look for aggressive sellers failing at the level → interpreted as absorption on PC
  • Or seller exhaustion vs buyer momentum at the top/bottom

Execution logic

• Enter on momentum or absorption/exhaustion signals
• Use a tight stop-loss toward a specified protection level

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Deep Statistical / ML Layer (“Deep Charts”)

The Deep Charts team applies an algorithm to:

• Run years of historical data
• Use neural network / machine learning methods
• Determine the highest-probability excursion after an ORB/IB breakout

Outputs on the chart

• TP1: “highest probability profit target”
• TP2: “lower probability target”

Probability claim

• The speaker states 65–70% probability of reaching TP1.

Claimed benefit

• Reduces manual analyst work around direction/levels, letting the trader focus more on:
  • Orderflow confirmation
  • Best entry timing/location

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Secondary Use-Case: Mean Reversion / Fading

If price stays inside the IVB range / sensitive area, the speaker suggests:

• Fading top and bottom via mean reversion
• Based on identifying absorption and exhaustion near the range extremes

Transition rule

• If the market later confirms directional movement, shift to trend following toward the statistically derived targets.

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Step-by-Step Framework (Explicit Methodology)

1. Define ORB/IB levels
   • Wait for the first 15–30 minutes of the New York cash session
   • Record range top and range bottom
2. Frame the volume profile
   • Overlay an anchored/fixed profile to locate:
     • PC
     • Value area high / low
     • The value-area ↔ PC region (“sensitive order block”)
3. Generate statistical targets (algo)
   • After breakout of IB/ORB:
     • Algo plots TP1 (highest probability) and TP2
     • Uses learned patterns to estimate where price tends to travel
4. Execute entry with orderflow
   • Look for aggression / imbalance / absorption at the framed levels:
     • Failed push + absorption → potential long/short depending on context
     • Exhaustion of the losing side → possible continuation or bounce
5. Manage risk
   • Use invalidation at/after key profile boundaries (example: close beyond value area low)
   • Speaker emphasizes improved risk-to-reward, potentially ~1:2 to 1:2.5
6. Optional alternate mode
   • If price stays inside the range: consider mean-reversion fades
   • If directional confirmation appears: shift to trend/run toward protection level/targets

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Key Numbers / Performance Metrics Mentioned

• 65–70% probability of reaching TP1
• Potential risk-to-reward: ~1:2 to 1:2.5
• Qualitative backtest claims:
  • The underlying ORB (attributed to Toby Crabel) purportedly shows positive profit factor and a strong Sharpe ratio
  • (No numeric Sharpe/profit factor values provided in the subtitles.)

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Disclosures / Recommendations / Cautions

• The video promotes access to the model via:
  • “If you want to access the IVB model go on deeparts.com.”
• No explicit “not financial advice” disclaimer appears in the provided subtitles.

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Presenters / Sources Mentioned

• Toby Crabel (credited with the ORB/IB strategy “published in the 1990”)
• Deep Charts team (built the statistical / ML layer)
• Deeparts.com (platform referenced for the IVB model)

Category

Finance

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