LBF Strategy: Look Below and Fail

LBF is the highest-quality reversal pattern in a balanced market. Price probes below a level everyone is watching, finds no business there, and snaps back in. This page is the long-side playbook: what qualifies, where you enter, where the stop goes, and what proves you wrong.

What actually happens on an LBF

Price pokes below a reference level — prior-day low, overnight low, the bottom of the balance zone. Breakout algos and late shorts pile in expecting continuation. If real supply exists below, price accepts down there and keeps going. If it does not, the probe finds no sellers willing to do business, offers get pulled, and price snaps back inside the range. The late shorts are now trapped, and their exits fuel the move back through the level.

The failure is the signal. Not the probe. Traders lose money on this pattern by buying during the probe — trying to pick the low — instead of waiting for the market to prove the probe failed.

What qualifies as a valid LBF

A clearly defined level everyone can see: prior-day low, overnight low, or the balance-zone edge.
A probe below it lasting only a few minutes — an extended stay below is acceptance, not a probe.
Volume on the probe that does not build. Building volume below the level = real supply, no trade.
A balanced session. If the day is one-way and price is accepting at every extension, a probe below is continuation and you will be run over.
A reclaim of the level on the execution timeframe — the 2-minute close back above it.

The mechanics

Entry trigger: the first 2-minute close back above the level after the probe. Aggressive version: enter on the intrabar reclaim with a tighter stop — only if the probe's volume tell was clean.
Stop: hard disaster stop 2-3 ticks below the probe low. Probe low more than ~10 ticks away on ES means the setup is too wide — skip it and wait for the next one.
Target 1: session VWAP. Scale one third there, mechanically.
Target 2: the opposite edge of the balance zone. This is where the multi-R lives.
Risk sizing: 1% of account maximum. Stop ticks × tick value × contracts must equal that number or less. Round contracts down, never up.
Exit read: the runner comes off when supply reappears above — offers refreshing, pushes getting smaller, volume rising on up-moves. No trailing stop; the flow is the exit.
Invalidation: price returns below the level and trades there with volume building. The failure failed. Exit at market — do not wait for the disaster stop to do it for you.

Where LBF goes wrong

Buying the probe. You are guessing, not trading. The reclaim close is the confirmation; the ticks you give up are the price of evidence.
Taking it in a trend. LBF is a balance-market setup. Check the day type first — one strong direction with acceptance at every extension means probes continue.
Ignoring the volume tell. A probe on building volume is supply establishing itself below the level. That is the opposite of a failure.

The mirror image

The same pattern above the range is the LAF — Look Above and Fail, the short-side playbook. Both setups live inside the broader LBF/LAF framework and pair with the VWAP strategy, since VWAP is the first target on every LBF.

Common questions

What is the LBF (Look Below and Fail) strategy?

LBF is a reversal setup: price probes below a well-known level (prior-day low, overnight low, balance edge), finds no real supply there, and snaps back inside the range. The failure below is the signal. You enter long on the reclaim of the level, stop below the probe low, first target session VWAP, second target the opposite edge of the balance zone.

How do you know an LBF is valid and not a real breakdown?

Volume is the tell. A valid LBF probe trades below the level briefly with volume that does not build — there is no business down there. Building volume below the level means acceptance, not failure, and a probe that keeps finding sellers will become a continuation. Confirm you are in a balanced market first; LBF does not work in one-way trends.

Where is the stop on an LBF trade?

A hard disaster stop 2-3 ticks below the probe low, placed at entry and never widened. If the probe low is more than roughly 10 ticks away on ES, the setup is too wide for the risk budget and you skip it. The stop exists for account protection; the exit read usually gets you out first.

What invalidates an LBF long?

Price returning below the level and trading there with volume building. The failure failed — supply was real after all. Exit at market on that read rather than waiting for the disaster stop.

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