Table of Contents
This interview features Zach “Fair Value God” Smith on the Words of Wisdom podcast in Miami, where he explains how an “alter-ego” helped him grow into a disciplined trader. Zach walks through his journey from options to futures, why he ditched Greeks and time decay, and how ICT concepts like fair value gaps gave him clean entries, stops, and targets—all framed by a lifestyle that treats trading like a profession. If you’re curious about daily session structure, risk rules, and the mindset that keeps you from overtrading, this conversation is a gold mine.
In this piece, you’ll learn why Zach favors futures for precision (hard stops, no time decay), how he simplifies ICT ideas into a daily playbook, and the exact guardrails he uses: two trades max, ~1% risk, and a minimum 2R target. You’ll also see how routines (dress for work, gym, make the bed), community, and “living in the gray” reduce anxiety and keep execution consistent—plus candid insights on scaling capital the right way so psychology doesn’t blow up your edge.
Zach “Fair Value God” Smith Playbook & Strategy: How He Actually Trades
Market Focus & Instruments
Here’s the big picture of what he trades and why. Keeping scope tight lets you build repeatability and know exactly when your edge is present.
- Products: CME index futures (e.g., ES, NQ) during regular session; avoid thin overnight liquidity.
- Session window: First 2.5 hours after the cash open; no new trades after 11:30 a.m. ET.
- Bias anchor: Daily/4H structure sets directional bias; only take intraday setups with the higher-timeframe context.
- No FOMO rule: If the opening range is chaotic (>1.5× average first-hour range), stand down or cut size in half.
Pre-Market Routine
A short, consistent routine beats scattered prep. This block gets you aligned with structure, levels, and risk before any candle prints.
- HTF map (10–12 min): Mark prior day high/low, overnight high/low, weekly open, daily/4H swing points.
- Liquidity pools: Box obvious equal highs/lows and untested highs/lows from prior 3–5 sessions.
- Key times: Pre-tag 9:45, 10:00, 10:30, 11:00 a.m. ET; avoid entries in the first 1–3 minutes.
- News filter: If a top-tier number drops within 10 minutes, pause entries until the next 5-minute bar closes.
Core Setup: Liquidity Grab into Fair Value Gap (FVG)
This is the A-setup: price wicks into a known liquidity pool, rejects, and leaves an imbalance to lean on. It’s clean, mechanical, and easy to manage.
- Trigger context: Price takes out a pre-boxed high/low and immediately rejects (long lower/upper wick).
- FVG definition (5m): Three-candle sequence with a true body gap; wicks may overlap, bodies should not.
- Entry: Limit at the 50–66% retrace of the FVG in the direction of rejection.
- Invalidation: Stop goes beyond the liquidity wick by 0.25× the 5m ATR(14); if spread/volatility spikes, use full wick plus 1 tick.
- Confirmation add-on (optional): If the retest aligns with a 50% or 62% HTF fib of the impulse, allow one add at half size.
Secondary Setup: Opening Range Reclaim
When the first 15 minutes set a clear range, a reclaim of the range edge often begins the trend leg. Use stricter risk on this one.
- Define OR: First 15-minute candle after cash open.
- Signal: Price breaks OR high/low, fails to continue, re-enters, and closes back inside the range.
- Entry: Market/limit on close back inside; stop 0.8× 1-minute ATR(14) beyond the failed breakout extreme.
- Target: Opposite side of the OR; trail only after 1R is banked.
Risk Framework (Non-Negotiables)
These are the guardrails that keep the edge intact. Break them, and your expectancy collapses.
- Risk per trade: 0.5%–1.0% of account.
- Daily max loss: 2R or 2%, whichever comes first; platform hard stop enabled.
- Attempts per setup: Maximum 2 attempts on the same idea; if both fail, that narrative is done.
- Green-day cap: Stop trading at +3R on the day; protect emotional capital.
Entry Mechanics & Timing
Good entries are about timing into your spots, not chasing moves. This section tightens execution rules so that fills are consistent.
- No first-minute fills: Earliest entry at minute 2; prefer minute 5+ after the open.
- Candle close rule: For momentum entries, wait for a 1m close through your trigger; for FVG retests, place resting limit orders.
- Slippage control: If slippage exceeds 0.4R twice in a row, cut size by half or switch to limits only.
Managing the Trade
Simple, predefined management keeps emotions out. You’ll let the trade work or cut it fast—nothing in between.
- First scale: Take 50% at +1R, move stop to breakeven minus 0.1R (to account for re-tests).
- Runner logic: Trail under/over the last confirmed 5m swing once price prints +2R.
- Time stop: If price goes nowhere for 30 minutes post-entry, exit at market unless trade is >+1R.
Exits & Targets
Targets come from structure—not vibes. Decide before entry and manage according to plan, not P&L.
- Primary targets: Opposite side of the nearest liquidity pool or prior day’s H/L.
- Extension: If a clean HTF imbalance sits beyond your first target, hold a 25% runner until it fills or a 5m swing breaks.
- Hard exit: Any 5m close back inside your imbalance against your position = flat remainder.
Position Sizing & Scaling
Size is the throttle. These rules help you scale without torching psychology when volatility shifts.
- Unit size: Base contracts per 1R = stop distance; adjust weekly with average 5m ATR(14).
- Volatility throttle: If 5m ATR is >1.5× its 20-day median, trade half size; if <0.7×, consider skipping first hour.
- Scaling up: Increase size only after 20 trades with >55% win rate and PF>1.5; raise by +25% increments.
Psychology & Process
Process creates consistency; consistency drives expectancy. These behaviors make execution easier and losses smaller.
- Two-trade day: Max two full attempts; if +2R hit early, walk away.
- State check: If you slept <6 hours or missed pre-market mapping, trade sim, or skipped.
- Environment: Sit/stand, camera on, no phone; treat the session like a job shift.
Journal & Review
You can’t fix what you don’t measure. The journal turns anecdotes into data and data into upgrades.
- Tag every trade: Setup (FVG/OR), direction, R multiple, time of day, volatility regime.
- Screenshot protocol: Mark liquidity pools, FVG, entry/exit, and what would have invalidated the idea sooner.
- Weekly audit: Identify the top 2 mistakes and 1 keep-doing; set one micro-rule to remove a mistake next week.
Charting & Levels Template
Keep charts minimal so the same information is obvious every day. These settings reduce noise and increase the signal.
- Timeframes: 4H/D for bias, 15m for structure, 5m for entries, 1m only for precision.
- Levels on chart: Prior day H/L, overnight H/L, weekly open, session VWAP (hide if it’s distracting).
- Visual hygiene: Max two indicators (ATR and VWAP); everything else is manual levels and price action.
News & Time Filters
News doesn’t kill edges—undisciplined timing does. These rules keep you out of blender candles.
- Red-flag releases: No fresh entries for 10 minutes before and 5 minutes after top-tier numbers.
- Opening print: Skip trades in the first 60 seconds regardless of setup quality.
- End-of-window: After 11:30 a.m. ET, manage open runners only; no fresh risk.
Playbook Maintenance
Edges evolve. A monthly tune-up keeps the playbook aligned with how the market actually moves now.
- Monthly stat check: Win rate, PF, MAE/MFE by setup; retire any setup with PF<1.2 over 40 trades.
- FVG integrity: If FVG fill-to-continuation rate drops below 52%, tighten stops by 0.1R or shift to 3m confirmation.
- Add/remove levels: Keep only the levels that the price actually reacts to in the last 20 sessions.
Size Risk First: Fixed R, Hard Daily Stops, No Exceptions
Zach “Fair Value God” Smith says the only prediction that matters is how much you’re willing to lose. He fixes risk per trade in R—usually around 0.5%–1%—so size is calculated backward from the stop, not forward from confidence. A platform-enforced daily max loss (think 2R or 2%) shuts him down automatically, removing any debate after a rough open. He treats attempts per idea as capped inventory: two tries, then the narrative is done.
When volatility jumps, Zach widens stops by ATR and cuts size so R stays constant. If slippage blows past a set threshold, he halves size or switches to limits—rule first, ego last. Green days have a cap too; once he hits his daily target, he logs off to protect both P&L and psychology. The result is a game that’s won by consistency, not hero trades.
Trade the Mechanic, Not the Prediction: Liquidity, Structure, Timing
Zach “Fair Value God” Smith builds trades from mechanics he can observe, not forecasts he can’t. He starts with a higher-timeframe structure to set bias, then stalks obvious liquidity pools—equal highs/lows, prior day levels, overnight extremes—that algos love to raid. When price tags a pool and rejects, he looks for a clean fair value gap to anchor risk and execution. The point is repeatability: same map, same triggers, same invalidation.
Zach times entries only when the session is actually providing edge, usually after the opening noise fades. He lets a candle close confirm momentum breaks, and uses resting limits for retrace entries into the imbalance. If timing, structure, or liquidity alignment is missing, he skips without second-guessing. For him, the win is sticking to mechanics that pay over hundreds of samples, not “calling” the market right today.
Let Volatility Set Size: ATR-Based Stops and Position Throttle
Zach “Fair Value God” Smith sizes trades around volatility, so one R means the same emotional and dollar risk regardless of market mood. He uses ATR to define stop distance first, then backs into position size so the cash at risk stays fixed. When ATR expands, its contracts shrink; when ATR compresses, size can increase—but only within pre-set caps. This keeps losing streaks survivable and prevents a hot open from nuking the day in minutes.
Zach also ties execution windows to volatility regimes to avoid forcing trades in dead tape or blender candles. If 5-minute ATR spikes to 1.5× its median, he halves the size or skips momentum entries entirely. In quiet conditions, he prefers precise limit fills at fair value gaps rather than chasing breakouts. The throttle is mechanical, not a vibe check: volatility dictates the stop, the stop dictates size, and size protects the edge.
Diversify by Playbook: Underlying, Setup Type, Holding Duration Buckets
Zach “Fair Value God” Smith diversifies within his own edge instead of spraying tickers. He splits risk across a small basket of liquid futures (like ES and NQ), then further diversifies by setup type—his A-setup liquidity grab into FVG, and a stricter opening-range reclaim. Each setup gets its own risk, triggers, invalidation, and stats, so a cold streak in one lane doesn’t sink the day. He also separates trades by holding duration—scalps, intraday swings, and rare session holds—because time-in-market is its own kind of risk.
Zach caps the number of trades per bucket and won’t double up on highly correlated exposures at once. If the FVG lane tags +1R early, he doesn’t immediately recycle that risk back into the same lane; he looks to a different setup or stands down. He reviews performance by bucket weekly, reallocating risk to the setups and durations with current positive expectancy. The outcome is controlled exposure, smoother equity curves, and less psychological tilt when a single idea type goes ice-cold.
Ruthless Process Discipline: Pre-Market Map, Two Attempts, Walk Away
Zach “Fair Value God” Smith treats routine like a trading edge. Every mornin’, he builds the same pre-market map—prior day highs/lows, overnight extremes, liquidity pools, and key time windows—so the session starts with a plan instead of hope. He won’t place a trade until the open noise settles and his map, bias, and setup all align. If anything on the checklist is missing, he passes without debate.
Once in session, Zach hard-limits himself to two attempts per idea, then he’s done with that narrative. He caps daily risk and also caps daily wins, logging off after a set R target to protect focus for tomorrow. Reviews are surgical: screenshots, tags, and one micro-rule added each week to remove a recurring mistake. The message from Zach is simple—discipline isn’t motivational, it’s mechanical, and it’s the only way your strategy survives contact with the market.
If you strip the hype and keep only what repeats across Zach’s playbook, the signal is clear: define risk first, then let the market invite you in. He fixes R before every trade, caps the day with platform-enforced limits, and treats “two attempts per idea” as sacred. He favors liquid futures during the cash session, builds a pre-market map of prior highs/lows and obvious liquidity pools, and waits for mechanics—liquidity grab, clean fair value gap, opening-range reclaim—to do the talking. Prediction is optional; a repeatable trigger with tight invalidation is not.
Volatility sets the throttle. ATR determines stop distance, stop distance sets position size, and size keeps emotions in check when pace changes. He diversifies inside his edge—by underlying (ES/NQ), setup type (FVG vs. OR reclaim), and holding duration—so one cold lane doesn’t sink the week. Execution stays simple: no first-minute trades, let candles close for momentum entries, use resting limits for retrace fills, scale partials at +1R, trail swings only after +2R, and time-stop dead trades. The engine behind all of it is discipline: the same morning map, the same session window, the same review ritual with screenshots and tags, one micro-rule improved each week. That’s the lesson—process over bravado, mechanics over opinions, and risk management that makes your edge durable enough to survive real market weather.
