Propulsion gaps (that’s what I call them anyway!) are also known as 1-2-3 gaps, wide range bars, fair value gaps and all sorts of things. Basically they are a large move in the market caused by institutional buying or selling and traders need to pay attention to them. The original concept was defined by M.A. Perry, the owner of thestrategylab.com website, and his original concept has been used by many other traders over the years. This is the official definition of what a WRB (Wide Range Bar) actually is, according to him. Every trader should be aware of these awesome magnets that attract and repel price.

👉 Get the indicator in this video here: https://www.mql5.com/en/market/product/97246

👉 Market Reversal Alerts EA To Automate Your Trading: https://www.mql5.com/en/market/product/65383

👉 All Indicators Used On My Charts Are Available Here: https://themarketstructuretrader.com/the-indicators/

👉 The FREE Position Trading Bootcamp Course is Here: https://themarketstructuretrader.com/category/the-position-trading-bootcamp/

👉 Join Me & Position Trade Daily For Free In The Live Room Twice a Day: https://themarketstructuretrader.com/the-live-room/

👉 Join The Community Chat on Telegram Here: https://t.me/market_structure_trader_chat

Video Transcript

So the official definition of a 1-2-3 gap or wide range bar is that this candle, yeah, let’s find one that’s a bit easier to see. Let’s use this one here. That’s not a very good example. Hang on. Let me find a better one. That’s better. So using this candle here as the example, yeah? So it has to be a big, strong candle, obviously. The candle here, this candle, the height of that candle has to be larger than the three preceding candles so this has to be a big propulsion move yeah big strong push and so it has to be larger than the previous three some people say use two and if you go into the wide range bar indicator you will find a look back bar count, yeah, and that’s set to three.

So basically what that is doing is looking back three bars and saying am I bigger than those three? The highest point of the candle before it and the lowest point of the candle after it, okay, have to be a part which which creates the gap. So the gap is the difference between the low of that candle and the high of that candle. Yeah, that causes your propulsion gap. So that’s basically how they are created. So this one here, for example, yeah, candle is wider than that one, that one and that one. There’s the high of that candle, there’s the low of that candle, there’s your propulsion gap, there’s your retest of the propulsion gap again. Yeah, so you’ll find some Yeah. So you’ll find some wide range bars, some big candles. So there’s one forming right now, look, here.

There’s the gap at the moment. But this candle at the moment, obviously, it doesn’t form until this candle. We’ve got to have the candle after the wide range bar, after the propulsion candle. It’s got to completely close, because we need to know that the low of this candle is not going to be below the high of that candle. Otherwise, the gap can’t be there. But you’ll find some where you will see. We had one actually yesterday, didn’t we, on the. Here we go. Perfect. Look at this, for example. Absolutely perfect.

on the NASDAQ, I drew this in manually, look, because this handle is not a wide range bar, technically. Now this is the difference, right? So this indicator that I use, uses M.A. Perry’s calculations who invented this theory perfectly, yeah? So this candle, the high of that candle and the low of that candle leaves a propulsion gap. So in theory, I would say that is a propulsion gap. But because this candle here, the size of that candle is smaller than that candle, it’s not a propulsion gap.

So if I come into here and change the look back to 1, ta-da, you see, we now have a propulsion gap. So if you want to use the WRB indicator to draw in every propulsion gap, regardless of M.A. Perry’s actual rules for what a propulsion gap could be, if you change that to one, all we’re saying is, is that this move has to be bigger than the one before it, which is very rare. That is not going to be the case because this is the propulsion candle.

The idea is we move so fast and hard that the next candle doesn’t have chance to pull back and be efficient when it trades up and down. So it leaves it behind. So there’s people trapped in here. And this is the key to wide range bar theory. There is banks and institutions trapped in there, in positions. They need to get back into those positions to sort them out. That’s why propulsion theory or wide range bar theory works.

So there you go, so that’s the rules. I leave it as it is because I think his theory is actually good. You can see this one is retested. Yeah. So whether that is going to get retested or not, I don’t know. I’ve never tested it without the standard settings, but that’s the way that I look at it anyway. So there you go. Perfect explanation of WRB theory.