# How To Trade OTE (Optimal Trade Entry)

https://www.youtube.com/watch?v=iLPfp8kbkY0

[00:00] Yo, what's up, guys?
[00:01] In this video, I'm going to break down what OTE is and how to actually use it properly both for entries and for understanding where price may be likely to move next.
[00:08] Rather than just giving you the basic definition, I'll go through how I personally approach it in the market, how I mark it out on the charts, and what I look for when price reaches the area.
[00:16] I'll show you how I use it alongside deviation to make entries a lot more precise.
[00:19] I'll also show you how I use it alongside standard deviations to make entries a little more precise and to better understand whether price is likely to continue or react.
[00:28] If you heard people talk about OTE but still aren't sure how to apply it in a practical way, this should help clear that up.
[00:33] Let's get into it.
[00:35] All right, so these are going to be the OTE settings you're going to be using.
[00:38] Once you pull up your Fibonacci retracement tool on TradingView, it's going to look nothing like this.
[00:41] All you need to do is change your settings to these levels right here alongside the colors, and you should get something like this.
[00:47] Now, looking at your OTE, the 0.5 is your equilibrium.
[00:51] The rest of these zones here are your OTE levels.
[00:53] Now, I'll show you how to mark out your OTE.
[00:55] One of the main questions I get asked is, how do you mark out your OTE?
[00:58] It's pretty simple.
[00:59] You mark it out from any swing
[01:01] low to any swing high or any swing high to any swing low.
[01:05] In this situation, we tapped into this 1-hour fair value gap and made this big impulse move higher.
[01:08] This just tells me that price wants to continue moving higher after breaking structure above this high right here.
[01:13] Now, all you want to do is mark out your OTE from this low all the way to this high right here.
[01:21] Once you marked out your OTE from this low to this high right here, you basically want price to reject back into your OTE levels.
[01:28] You typically don't want to enter any of your trades at the 0.5 level mainly because this is your premium and discounted area.
[01:33] I personally do not use the 0.5 area as an entry.
[01:37] Your main focus shouldn't be on the 0.5 as this is the equilibrium area.
[01:40] Now, all you're expecting is price to retrace lower into your OTE for you to catch a trade.
[01:45] After we tapped into the 706 of the OTE range, we had a big rejection and started moving higher.
[01:49] But, how do you know which OTE levels to take your trade off?
[01:52] And that would be stacking confluences.
[01:54] By stacking confluences, what I mean is going on the higher time frame and looking for PD arrays such as fair value gaps, order blocks, highs and lows, and other form
[02:02] of PD arrays that can be used as liquidity.
[02:05] In this case, we had this 1-hour order block here and the 50% aligned perfectly with the 706 of the OTE.
[02:11] This could have been a higher time frame confluences alongside your OTE to take your trade off this level right here.
[02:14] What is OTE?
[02:17] OTE or optimal trade entry is a retracement concept.
[02:20] After a strong move in one direction, the market usually pulls back before continuing in that same move.
[02:24] What OTE does is it focuses on that pullback and gives you a specific and it gives you a very specific zone where price is most likely to retrace into before it keeps going in the original direction.
[02:34] Uh hey guys, it's Nico.
[02:37] Now, I'm going to take over this video and explain more of OTE alongside with standard deviation and how I use it to catch my trades.
[02:43] OTE is overall, it's basically called the optimal trade entry.
[02:47] It's a tool or a technique or what most people like to say.
[02:50] It's It's when you can find a reversal point for entries.
[02:54] So, you would use this tool to find a potential reversal for your entry.
[03:00] So, we have our ranges in our OTE.
[03:02] you see right here, we have our 0.5 range.
[03:04] Oops. 0.5 range.
[03:07] I like to call these equilibrium.
[03:07] Uh this can sometimes help you with your bias or just understanding what market's doing.
[03:13] And then we have our 0.705 and 0.79 ranges.
[03:17] This is what I like to call our golden range, right?
[03:20] The 0.705 and 0.79.
[03:24] That's where we ideally would want to look for an entry on our trade because we are in discount.
[03:30] So,
[03:32] let me just show you guys a trade I took today real quick.
[03:36] And again, I did use OTE standard deviation on this trade.
[03:38] So, as you see, top tick New York.
[03:44] So, let's just use our tool to go back to New York.
[03:48] Let me just do this.
[03:51] So, if you come to the 3-minute or 5-minute, I was already Oh, my bias was overall bullish.
[03:54] Come on, all-time highs.
[03:56] Are you really going to try to short this?
[03:58] I was automatically bullish.
[04:00] I never married my bias though, but I was bullish.
[04:03] Now, mind you guys, we are coming into New York session.
[04:06] I'm looking at pre-market, right?
[04:08] At the moment, my range is pre-market.
[04:11] So, I would mark that range.
[04:13] And I want price to come down here if I want to long.
[04:15] So, we wait.
[04:16] Oh, we see that Oh, this was perfect.
[04:18] Nice.
[04:18] So, we see that we put in this range, and then we want price to come either tap 0.5 or come to our golden range.
[04:25] If it were to tap 0.5, right?
[04:26] Good.
[04:28] We missed the trade.
[04:28] Okay, our bias was right.
[04:30] Good.
[04:30] We didn't We followed our rules.
[04:33] Green day.
[04:33] But, if if it's a good day, we come down to our golden range.
[04:35] Let's see if we do.
[04:38] Okay, never mind.
[04:39] We put in our new high.
[04:42] Another high.
[04:45] There we go.
[04:45] We make our SMT now.
[04:47] Okay, this is bread and butter.
[04:50] So, I love using SMT for my standard deviation legs.
[04:55] That's just what's textbook is.
[04:55] So, we like these areas.
[04:58] And I see that -4 aligns with my golden range.
[05:00] So, now I'm paying attention.
[05:02] I have my chair up and I'm I'm watching
[05:03] The charts.
[05:08] Boom.
[05:08] Tapped the 0.5.
[05:08] Respected a little bit, but no, we want to go lower.
[05:11] Boom.
[05:16] There we go.
[05:16] So, we make this wick on the 5-minute as you guys see, the 5-minute rejection block.
[05:23] Right?
[05:23] The 5-minute OB.
[05:23] On the lower time frame, the 5-minute RB would start right here.
[05:30] Right?
[05:30] So, then we would want price to come tap this range again.
[05:35] Now, OTE aligns with the golden range, which is a perfect optimal trade entry, OTE.
[05:41] With perfect standard deviation alignment that we respected, so we shouldn't go lower from this.
[05:45] According to the textbook, again, it's trading.
[05:47] So, we we look on ES again.
[05:49] I would still wouldn't take this trade, right?
[05:54] Cuz you have to use ES.
[05:56] So, if we go on ES, ES pumps, right?
[06:04] Boom.
[06:06] You see how on NQ, we didn't sweep this low, but we swept this low?
[06:13] That was the SMT created, and I mean, we're already pumping, so let me just move it back.
[06:19] We're already pumping, so let it just play out.
[06:22] There we go.
[06:24] And then you would You can enter on this OB that just printed as well.
[06:32] Boom.
[06:34] I mean, I'm not even going to try to do that anymore.
[06:35] But, put your stop right here.
[06:38] Target this high cuz that's the obvious draw.
[06:40] Put your stop loss.
[06:42] What I do is seven points, and then bang.
[06:46] Again, what I did was just mark out this OTE range right here from pre-market to pre-market high because I'm looking for a trade in New York, and this is the range that I like.
[06:57] And then SMT, that means we can use a valid standard deviation leg.
[07:03] We find out what's the final destination
[07:05] For price.
[07:07] Let price respect that area.
[07:09] Look for a PD array.
[07:12] Put our stop loss either at the wick low or a seven-point stop loss.
[07:14] And target it obvious high, which could be this high or this high.
[07:18] I hope this video helps.
[07:19] If you guys have any questions, feel free to let us know in the Discord server.