2022 ICT Mentorship Episode 17

Introduction to Forex Trading

The instructor introduces the topic of forex trading and how it can be applied to the FX market. He mentions that some of the concepts he will discuss may be familiar to long-time students, but newer students can find answers in the free lessons on his YouTube channel.

Applying Model to Euro Dollar Daily Chart

• The instructor shows a daily chart for the euro dollar and points out how price moved above relative equal highs before taking buy stops out of the marketplace.

• He explains that this move would likely cause sell stops or sell side liquidity to rest below this level.

• The instructor notes that there is unfinished business below these levels and anticipates bearishness going forward.

• He provides an annotated chart with highlighted levels for teaching purposes, but advises students to eventually train themselves to see these levels without annotations.

Institutional Price Levels

• The instructor discusses institutional price levels, which include big figure numbers (e.g. 0.00, 20.00, etc.), 50 levels, and 80 levels.

• He refers to these as "institutional" because they are influential due to the amount of liquidity used around those levels.

Swing Trading Idea

• The instructor revisits a swing trading idea he previously taught involving highest up close or opening in a retracement up and lowest open or close.

• He highlights candles on a chart so students can match them up on their own charts.

• He notes that if price goes below an old low, it could potentially reach down to 1.09.

Overall, this lesson provides an introduction to forex trading and applies its concepts specifically to the euro dollar daily chart. The instructor emphasizes the importance of identifying key levels and institutional price levels, as well as revisiting a swing trading idea.

English Understanding Market Manipulation

In this video, the speaker explains how to identify market manipulation and use it to make profitable trades. The speaker discusses key concepts such as fulcrum points, liquidity pools, and order blocks.

Identifying Fulcrum Points

• A fulcrum point is a level where the market is likely to change direction.

• To identify a fulcrum point, look for areas of consolidation or relative equal lows.

• These levels are only true if the previous low is broken.

Using Liquidity Pools

• Liquidity pools are areas where there are a lot of buy or sell orders.

• To use liquidity pools in trading, wait for the market to trade up into that area and absorb all of that liquidity before breaking down.

• This creates an opportunity to attack the liquidity below that level.

Understanding Market Manipulation

• The speaker's concept of power three involves accumulation, manipulation, and distribution.

• To manipulate the market, smart money will offer price above opening price constantly.

• This creates a Judas swing where the market rallies up before beginning its descent into lower prices.

Trading During New York Open Kill Zone

• The New York open kill zone is between 7:00 AM and 10:00 AM local time.

• During this time frame, smart money will operate on specific elements of time in Forex trading.

• Look for bearish order blocks during this time frame as opportunities to sell short.

Understanding Market Volatility and News Drivers

In this section, the speaker discusses how traders can use market volatility to facilitate trades. They explain that high impact news drivers can create volatility in the marketplace, which traders can use to their advantage.

Using Opening Prices and Recalibration

• Traders should refer to the opening price at midnight if they are New York session traders.

• At 8:30, traders should recalibrate.

• The algorithm uses injections of volatility to facilitate trades.

Understanding Imbalance and Fair Value Gap

• Traders look for specific elements of time on a five-minute chart.

• If going short, traders want to be above the midnight opening price.

• Swing highs and lows have an imbalance or fair value gap associated with them.

• This is an intermediate-term high because it has an imbalance and because the narrative is expecting lower prices.

High Impact News Drivers

• High impact news drivers can scare you out of a trade or stop you out.

• Traders protect their trade by putting a buy stop above recent swing highs.

Applying the Model in FX

In this section, the speaker explains how to apply a model in FX trading.

Identifying Fair Value Gap

• Look for any fair value gap on the chart.

• Identify the low and high of a candle to locate the fair value gap.

• The market starts to aggressively run below the short-term low after closing in on the fair value gap.

Using Opening Prices

• Use 8:30 am opening price for New York session trades.

• Refer to New York open at midnight as well if the opening price is lower at 8:30 than that of the opening price at midnight.

• Set minimum threshold for due to swing or market protraction to upside when bearish.

Trading Above Opening Price

• Market protraction due to swing rallies up and then breaks down.

• Look for a fair value gap above opening price.

• Trades up into it, hammers it beautifully, and then displacement trades lower down.

Setting Exit Strategy

• Fluff up your exits with three to five pips or more if you're new.

• Incorporate spread while setting exit strategy.

• Be forgiving when trading and avoid overzealous targeting.

Understanding Nuances of FX Trading

In this section, the speaker explains some nuances of FX trading that traders should be aware of.

Incorporating Spread

• Incorporate spread while setting exit strategy.

• Brokers have the ability to open that spread up on you; they'll work it in their behalf not yours.

Fluffing Up Exits

• Fluff up your exits with three to five pips or more if you're new.

Forex and Index Trading Model

In this section, the speaker discusses a trading model that works in both forex and index trading. He explains how to adjust the model for different asset classes and highlights some important rules to follow.

Adjusting the Model for Different Asset Classes

• The speaker recommends adjusting the model based on the asset class being traded.

• For index futures, he suggests focusing on the 8:30 AM to 11:00 AM window, while for forex pairs, he recommends trading from 7:00 AM to 10:00 AM.

• High impact news drivers can extend these windows, so traders need to make allowances for them.

Rules to Follow

• Traders need to follow certain rules when it comes to index trading and forex.

• For example, in forex, traders should avoid taking new trades after 10:00 AM unless there is a news driver like ISM or PMI numbers.

• The risk-to-reward ratio should be better than eight-to-one.

• Traders should also be aware of high impact news drivers like crude oil inventory numbers that can affect their trades.

Using a Hypothetical Account

• The speaker uses a hypothetical $100,000 demo account as an example of how this model works in practice.

• He notes that this trade gives traders what they are looking for in one trade.

Overall, this section provides valuable insights into how traders can adjust their strategies based on different asset classes and follow important rules when it comes to index trading and forex.