Summary:

– A trader asked about using volume imbalances as profit targets and whether wicks that touch an imbalance invalidate it. Michael’s answer:
– You can use the imbalance as a take-profit target, but be pragmatic — it’s fine to exit slightly before the level rather than waiting for a perfect hit. Trust your trade decision-making while you build the skill to hold for fuller moves.
– Volume imbalances are flexible and can be traded multiple times because they are essentially common gaps with wicks passing through them. They do not become invalid simply because price wicks through.
– An imbalance becomes effectively “invalid” for trading (entries, targets, stops) only when a full candle body closes over it on the same timeframe it formed (e.g., a weekly imbalance needs a weekly body close to be considered closed). If a substantial portion of a body lies inside the imbalance, Michael will stop using it and look for other PDAs.
– By contrast, inversion fair value gaps have much stricter criteria and cannot be treated as flexibly.
– Carry levels down to lower timeframes for use, but judge validity based on the timeframe of formation.

– A second caller (Daniel) asked about trading psychology:
– He has no trouble with technicals but struggles with overconfidence after winning streaks, which leads him to stop respecting risk and eventually suffer losses.

– Key practical points: be flexible with volume imbalances, don’t insist on perfect exits, trust and train your decision-making, and stop using a PDA once its forming-timeframe candle body closes over it.