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Price Action Chronicles \ February 07, 2023
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Price Action Chronicles \ February 07, 2023

Introduction

The speaker introduces himself and explains the purpose of the video.

Speaker's Introduction

  • The speaker introduces himself.
  • He explains that he will be discussing his analysis for the E30 and 9 30 expectations.

Dollar Index Analysis

The speaker discusses how he uses the dollar index as a risk on/risk off barometer to determine whether to buy foreign currencies or stocks.

Using Dollar Index as Risk On/Risk Off Barometer

  • The speaker uses the dollar index to determine if it is likely to see continued upside going long in ES or continued weakness in ES.
  • He explains that all of his analysis starts with this instrument because it helps him frame the logic of whether he should be a trader assuming risk, buying foreign currencies or buying stock.
  • He counsels viewers not to take his word for it but rather look at his previous analysis videos on YouTube and Twitter.
  • He emphasizes that everything he talks about was discussed beforehand, so viewers can use it as a benchmark for where they were, where they are now, and where they're likely to go next.

Fair Value Gap Analysis

The speaker discusses fair value gap analysis using order blocks and balance outside inefficiency.

Fair Value Gap Analysis

  • The speaker discusses how half of the gap between two candles represents a buy side balance outside inefficiency with an order block.
  • He explains that if price retrades back into this candle, there will be some kind of reaction but it doesn't mean it's the ultimate low and the dollar never sees any lower prices.
  • He emphasizes that while many people may say ICT complicates things, he is just giving viewers a deep understanding about what is available in terms of trading price.

Understanding Liquidity Imbalances

In this section, the speaker discusses how to identify liquidity imbalances and their significance in trading.

Identifying Liquidity Imbalances

  • A liquidity imbalance occurs when there is an unequal distribution of buyers and sellers at a particular price level.
  • If the market is bullish, a liquidity imbalance would be identified by a sell signal below the single swing low or relative equal lows.
  • If the market is bearish, a liquidity imbalance would be identified by a buy signal above the single swing high or relative equal highs.

Importance of Liquidity Imbalances

  • Liquidity imbalances are important because they indicate areas where there is potential for significant price movement.
  • The speaker identifies three levels of importance:
  • The high of the gap
  • The midpoint of the gap
  • The low of the gap (less likely price objective)

Framing Shorts on S&P

  • Trading down into an area with a liquidity imbalance can provide opportunities for short positions.
  • When looking for shorting opportunities, focus on areas with low resistance liquidity runs.

Analyzing Dollar Rally

In this section, the speaker analyzes recent movements in dollar trading and provides insights into what it means for other markets.

Market Analysis

  • The market has already posted a risk-off scenario where dollar is going higher. This means foreign currencies are likely to go lower and equities like stock indices and stocks individually will see temporary weakness against this rally in dollar.
  • Shorting opportunities may arise in SP if charts communicate potential low resistance liquidity runs.

Waiting for Confirmation

  • It's important to wait until after 9:30 AM to see how markets react before making any predictions about future movements.
  • The speaker emphasizes the importance of following a model and not getting discouraged by missed opportunities.

Building a Foundation for Trading

In this section, the speaker discusses the importance of building a strong foundation for trading and provides insights into how to do so.

Importance of Building a Strong Foundation

  • Before beginning to trade, it's important to build a strong foundation by learning how to read the tape.
  • This involves identifying liquidity imbalances and understanding their significance in trading.

Focus on Procedure

  • The speaker emphasizes the importance of focusing on procedure rather than getting caught up in exciting but ultimately irrelevant price movements.
  • As traders become more experienced, they will be able to identify setups that work best for them.

Dollar and URL Analysis

In this section, the speaker discusses their analysis of the dollar and URL.

Dollar Analysis

  • The speaker is interested in seeing if the market will trade through the mean threshold.
  • If it does, there is potential for lower prices in Forex stocks and stock averages.
  • The speaker is watching to see if there are indications that the market wants to press up into a specific area.
  • There is potential for a draw for a dollar to get up to a certain level.
  • The speaker expects either one potentially drawn level or another.
  • There is buy sell liquidity with a small gap between two candles' highs and lows.
  • The market can trade down as far as around 102.30 to 102.55-ish.

URL Analysis

  • At the beginning of the year, the speaker mentioned that they expected to draw up into relative equal highs for buy side.
  • If it gets above that, we can trade up into this very fair value Gap again.
  • After running up into that city, it's a fair value Gap by classification but specifically it's a sell-side imbalanced by side efficiency meaning that it only delivered price on the downside.
  • We traded down into a buy side imbalance outside efficiency here so this is also a fair Bay Gap too.

Introduction

In this section, the speaker explains that he will not be interacting with his followers on Twitter and will only use it to alert them if something catches his attention. He also mentions that he will be focusing on the markets until the second Friday of November.

Speaker's Twitter Usage

  • The speaker will no longer reply, heart or like any posts on Twitter.
  • The speaker will only use Twitter to alert his followers if something catches his attention.
  • The speaker does not care about responses or likes from his followers.

Focus on Markets

  • The speaker will focus solely on the markets until the second Friday of November.
  • There will be no play, only work during this period.

Forex Analysis

In this section, the speaker analyzes two currency pairs - Euro and Cable - and discusses their potential movements in relation to each other.

Euro vs. Cable

  • Euro has been posting higher highs up into its Fair Bay gap while Cable has been weak.
  • If there is acceleration on the upside for dollar again, we could see Cable draw down into an imbalance area.
  • A higher dollar means lower prices for foreign currencies and likely lower stock indices equities and index futures.

Technical Analysis

In this section, the speaker discusses technical analysis tools used in trading and how they can be applied to different time frames.

Trading Tools

  • The upper left-hand corner chart shows hourly data while the lower left-hand corner chart shows 15-minute data.
  • The one-minute chart changes throughout live sessions depending on market activity.
  • Speaker uses eight monitors with one screen dedicated to a one minute two minute three minute four minute for Nasdaq and ES charts.

Chart Comparison

  • To compare charts, click on plus symbol and type in the front month code for the index you want to compare.
  • If comparing highs, click on toggle box and select high for both charts.

Plotting Relationships Between Market Highs

In this section, the speaker discusses how they plot the relationships between market highs in different markets to study the difference in relationships.

Studying Market Highs

  • The speaker plots the relationship of all of the highs to comparatively study the difference in relationships between all the price highs of ES.
  • They look at the relationships between highs in one market versus another, specifically relative to the Dow, which is their only real use as a trader.
  • The speaker uses Dow Theory to confirm market breath and determine if there is a likelihood of continued price move higher or lower.

New Week Opening Gap

In this section, the speaker explains what a new week opening gap is and how it can act as support and resistance.

Understanding New Week Opening Gap

  • The new week opening gap is annotated by taking note of the opening price on Sunday and closing price on Friday. This range acts as a strong price magnet that attracts prices back to it if not trending.
  • If you extend it through all the way through Friday, many times, prices will gravitate back to it. It'll act as real support and resistance that works like classic support and resistance seen in books.
  • The midpoint level would be 4140 and a quarter foreign. This range is extremely sensitive, especially with low, high, and midpoint levels.

Drawing Distinctions Between Levels

In this section, the speaker talks about drawing distinctions between levels using annotations.

Drawing Distinctions Between Levels

  • The speaker shows one way of differentiating levels by making them bold and using a black color to make them stand out in the chart.
  • This way, it's drawing a heavy distinction between what a level might be on a lower time frame.

Introduction

The speaker discusses the market and how it is manipulated and engineered. They explain that they look for areas where manipulation is obvious or expected, and then look for setups that repeat using phenomenon based on markets trading to liquidity buy side liquidity.

Synthetic Markets

  • The speaker views markets like this as synthetic because they don't have the same measure of supply and demand.
  • Interest in these markets is constantly manipulated, so the speaker looks for areas where manipulation is obvious or expected.

Trading Strategies

  • The speaker looks for setups that repeat using phenomenon based on markets trading to liquidity buy side liquidity which can be an entry to a new trade or a closing target for an existing trade.
  • The speaker encourages students to broaden their horizons in terms of price action beyond the 2022 model taught last year.

Technical Analysis

The speaker discusses technical analysis and how they use it to identify inefficiencies in the market.

Inefficiencies in Price Action

  • Classical technical analysis teaches putting stop loss rates at lows, resulting in sell-side liquidity.
  • When a price leg has been broken, enter with the expectation of inefficiency.

Understanding Price Action

In this section, the speaker discusses how to read price action and volume in any market.

Reading Price Action

  • When the market is dropping, look for where short sellers would place their stop loss.
  • Look for smooth edges in price action that will become jagged when the market moves.
  • When a low has been taken out, look for an inefficiency or fair value gap as an entry point.

Managing Risk

  • Desensitize yourself to lower prices by practicing entering shorts when the market is going up.
  • Don't make one trade paramount; focus on managing risk and being profitable over time.
  • There is no way to never take a losing trade; focus on probabilities and repeatable patterns.

Analyzing Market Movements

  • Look for relative equal highs followed by a drop in the market before making any trades.

Framing High Probability Trades

In this section, the speaker explains how to frame high probability trades by waiting for a displacement in the market and identifying fair value gaps.

Identifying Fair Value Gaps

  • Wait for a displacement in the market where it drops sharply lower and takes out a specific low.
  • Look for inefficiencies that indicate a specific fair value gap.

Analyzing Price Legs

  • Identify the price leg from high to low that shows a shift in market structure.
  • Consider any level at or above this price leg as a potential fair value gap.

Algorithmic Trading Strategies

  • Sell long positions as partials or enter short positions during premium markets when prices are rallying.
  • Avoid chasing prices during down candles and instead use algorithmic trading strategies like the PD array matrix to frame price legs accurately.

Understanding Equilibrium Prices

In this section, the speaker explains how to identify equilibrium prices and trade accordingly.

Identifying Equilibrium Prices

  • Wait for price to make a turn and start going back up after breaking through an entire run on a candlestick chart.
  • Look for levels that trade meaningfully above the 50 level on an oscillator chart or trade to fair value inside of identified price legs.

Trading Strategies Based on Equilibrium Prices

  • Enter long positions when prices are below equilibrium levels and sell short when they are above them.
  • Use algorithmic trading strategies like pyramiding into positions by selling short in up candles and adding more as the candles go up.

Understanding Market Structure

In this section, the speaker discusses market structure and how to identify premium and discount markets.

Identifying Premium and Discount Markets

  • The current market is in a premium range, meaning it is overbought.
  • A discount range is identified as soon as we leave the premium range.
  • The red shaded area above the premium level or at that level are ideal short positions.
  • Once we cross the midpoint of the discount level, there are high probability short entries.

Pyramiding Entries

In this section, the speaker discusses pyramiding entries and when to stop taking partials.

Building Positions with Pyramiding Entries

  • The highest form of profitable shorts are pyramid entries in the red shaded area above the premium level.
  • Partial profits should be taken while building pyramid entries until we get through a certain threshold.

When to Stop Taking Partials for Pyramiding

  • There's a threshold at which you will no longer add new positions while building existing ones.
  • Once you break through that threshold, you should focus on taking off some positions as it moves in your favor.

Fair Value Gap

In this section, the speaker discusses fair value gaps and how to look for them.

Identifying Fair Value Gaps

  • Once the market starts to draw back up into this premium area, we have to go through our time frames and look for fair value gaps.
  • A fair value gap is identified as a low to high range above equilibrium.

Understanding Volume Imbalance and Fair Value Gap

In this section, the speaker explains the concept of volume imbalance and fair value gap in trading.

Volume Imbalance and Fair Value Gap

  • Volume imbalance is a situation where there is no body between two close or opening prices. It can be a volume of balance between a higher close and a lower opening or it could be a difference between a close with a higher opening.
  • A small Wick on price charts indicates an inefficiency in the market that traders can take advantage of.
  • When retracing back up after a drop, price is reaching for an imbalance in volume. Traders should look for bearish order blocks, fair value gaps, or volume imbalances to identify potential entry points.
  • Traders should use fair value gaps as resistance levels. If there are multiple fair value gaps, traders should look for bearish order blocks to determine which one to trade.

Identifying Consequent Encroachment Midpoints

In this section, the speaker explains how to identify consequent encroachment midpoints in trading.

Consequent Encroachment Midpoints

  • The midpoint of an up-close candle represents the half of an order block.
  • The low-to-high range of an up-close candle represents mean threshold.
  • Traders can use consequent encroachment midpoints as stop loss levels when entering trades within fair value gaps or bearish order blocks.

Learning from Hindsight

In this section, the speaker emphasizes the importance of studying hindsight in trading.

Studying Hindsight

  • Traders must study hindsight to understand the concepts of trading and identify potential entry points.
  • Profitable traders learn from studying hindsight and understanding the logic behind successful trades.

The Importance of Studying Real-Time Data

In this section, the speaker emphasizes the importance of studying real-time data and avoiding emotional and psychological influences when trading.

Studying Real-Time Data

  • It is important to study real-time data after understanding the basics of trading patterns and setups.
  • Studying with a demo or live account does not provide accurate learning.
  • Profitable traders take their time to be systematic and avoid emotional and psychological influences.

Managing Risk vs. Managing Trade

  • Traders should focus on managing risk and trade rather than worrying about profit or loss.
  • Profitable traders do not rush to adjust stop losses to break even as soon as they put a trade on.
  • Losing trades do not unsettle profitable traders because they know it does not undo the efficacy of their model or approach.

Finding Fair Value Gap

In this section, the speaker explains how to find fair value gaps in trading.

Finding Fair Value Gap

  • To find fair value gap, look for volume imbalance or fair value gap above equilibrium.
  • If there is no volume imbalance, use the first fair value gap above equilibrium.
  • When building a large pyramid position, use the run-up before it drops down and takes a shift in market structure as displacement leg.

Identifying Volume Imbalance

In this section, the speaker explains how to identify volume imbalances in trading.

Identifying Volume Imbalance

  • Look for separation between candle's close and opening to identify volume imbalance.
  • Volume imbalances are glitches in the matrix that are coded for a reason.
  • When looking at price, eyes should jump to fair value gaps, swing highs/lows, and volume imbalances.

Introduction to Trading

In this section, the speaker introduces the concept of trading and explains how to use a five-handle run as a starting point for beginners.

Five Handle Run

  • The speaker explains that traders can use the same logic to do trades with 100 handles or more.
  • The objective is to get someone who has never traded before an easy-to-reach goal. A five-handle price move is a low-hanging fruit objective.
  • If you're looking for that number (five handles), and that's all you ever get consistent with, it's enough. You can take that same approach and put money management behind it.
  • The heavy lifting is done by money management, not bigger positions coming in.

Risk Management

In this section, the speaker discusses risk management and how it relates to trading.

Percentage-wise Risk

  • Your risk isn't any larger percentage-wise when you first start trading versus five years into trading. It's a fixed rate of percentage risk that increases monetarily but never percentage-wise.
  • The heavy lifting is done by money management, not bigger positions coming in.

Learning How to Read Price

In this section, the speaker talks about learning how to read price and why it's important.

Reading Price

  • It would not be efficient for the mentor to try to waste time building up students to do big heavy-handed trades in the beginning when they don't even know how to read price.
  • By framing the logic like this, you learn how to read price and feel rewarded because it's more frequent that you'll see a five-handle move than a hundred-handle move.
  • Algorithmically, the market will remember and refer back to certain levels. Smart money traders will use that liquidity as a counter to their shorting against the buy stops up here.

Volume and Bounce

In this section, the speaker talks about volume and bounce.

Volume and Bounce

  • The speaker mentions "volume and bounce" but does not provide any further information.

Stop Management

In this section, the speaker discusses stop management and how to manage an open position.

Managing a Core Position

  • Once we break through the midpoint of discount, I cannot take another new entry.
  • I am managing my core position. That's it. It's over.
  • This becomes a point of interest where I'm going to see the trade being managed with it.
  • If I see that volume amount as mentioned real-time, my stop could be above this high or at the middle of this upload scan threshold because it shouldn't go there.

Volume Imbalance

  • The range between the low and high has already been delivered to this low so 41 18.
  • We opened, dropped down, and rolled right back over top of 4118 so we had one two times between this candle's high and this candle is low this entire range.
  • Inside that range is now balanced because we've had delivery to the downside; we came off of it, went down through it again, and then left what a volume imbalance.

Trading in Afternoon Session

In this section, the speaker talks about trading in afternoon sessions.

Demand from Price Action

  • Because we've hit that and we're going into what the opening in New York at 9:30 AM EST., we have to demand a whole lot from price action because it's already delivered enough to cause us to go into its consolidation.
  • We don't know with any great degree of certainty now if it's going to rally higher or if it's going to decline lower.

Trading Strategy

  • On a day like today, I would probably trade specifically in the afternoon session.
  • I would let street money wrestle with strong money smart money in the morning session.
  • It doesn't mean I'm going to turn off the live stream; it just means that I'm not likely to see a setup because of this condition here.
  • We've arrived at a level that would be likely possible, but it doesn't really give us much.

Repricing

In this section, the speaker discusses repricing and fair value gaps.

Fair Value Sell Side Imbalance

  • See how we went into this area here. That small little portion of price went right up into it there.
  • Now because we've hit that and we're going into what the opening in New York at 9:30 AM EST., we have to demand a whole lot from price action because it's already delivered enough to cause us to go into its consolidation.
  • This sibi which is a fair Vega sell-side imbalance beside inefficiency offered the range on the downside.
  • To reprice that is going to be delivery on the upside which is what we have here.

Understanding Market Bias and Risk On/Risk Off

In this section, the speaker explains how to determine market bias and identify risk on/risk off conditions.

Market Bias and Risk On/Risk Off

  • Risk on is when the dollar is dropping, which means foreign currency, stocks, and index futures are likely to go higher.
  • If the dollar is going up or likely to go up, it's risk off. This means that all other assets are likely to go lower or have difficulty going higher.
  • A drop in the dollar makes it easy for buy signals in S&P, Futures, and Forex to go higher.
  • The speaker looks at the Euro's five-minute chart as an example of analyzing market bias.
  • Gold dropped due to a rise in the dollar. The speaker advises watching a level on a water block for potential sell signs.

Importance of Macro Analysis

In this section, the speaker emphasizes the importance of macro analysis in trading.

Macro Analysis

  • It's essential to revisit macro analysis because it provides a means of measuring progress and helps frame experience.
  • Trading against core macro analysis can be done but should not be attempted by beginners.
  • Jumping from method to method or educator to educator is insanity.

Analyzing Price Action

In this section, the speaker analyzes price action before market open.

Analyzing Price Action

  • The Fairway Gap here would not be taken because we've already tapped into sell sign.
  • The speaker advises watching the only exposed area in price, which is the volume that bounds this here.

Understanding Fair Value Gap and Electronic Trading

In this section, the speaker explains the concept of fair value gap and electronic trading. He also talks about how to observe and analyze market movements during electronic trading hours.

Fair Value Gap

  • The speaker explains that not every fair value gap is an entry point for a trade.
  • He mentions that just because there is a fair value gap, it does not mean it's a tradable entry point.
  • The speaker says he wants to see the price take out the low before making any trades.

Electronic Trading

  • The speaker mentions that liquidity is important ahead of 9:30 AM.
  • He notes that the chart looks different during regular trading hours compared to electronic trading hours.
  • The speaker explains how market perception can affect trading during electronic trading hours.
  • He warns against chasing prices lower during electronic trading hours.

Observing Market Movements During Trading Hours

In this section, the speaker discusses how to observe and analyze market movements during regular trading hours.

Market Movements

  • The speaker explains why he is watching for a rally above the low and finding support before making any trades.
  • He notes that if we continuously drop below 4106.50, it could be significant.
  • The speaker shows a visual aid explaining why he believes this range will likely be traded back up into.

Importance of Studying Candle Formations

In this section, the speaker emphasizes the importance of studying candle formations and understanding market logic before making trades.

Studying Candle Formations

  • The speaker stresses that it's important to study candle formations and understand market logic before making trades.
  • He notes that this process may feel unproductive, but it is extremely productive in the long run.

Importance of Independence in Trading

In this section, the speaker discusses the importance of independence in trading and how following successful traders can lead to codependency.

Developing Independence

  • The speaker believes that independence is a stronger trait than depending on someone else to show you their cards.
  • There is a market for following successful traders, but those who are interested in learning how to trade should focus on developing independence.

Analyzing Market Structure

In this section, the speaker analyzes the market structure and explains why it's important to wait for more information before taking trades.

Analyzing Market Structure

  • The speaker analyzes the market structure from 7:00 onwards and notes that there was a low resistance liquidity run.
  • The better the morning session framework, the better it is for your journal.
  • If there hasn't been a drop yet at 9:30 am, it's an obvious easy opening session trade. However, since everything has already transpired by then, it's best to sit still and wait for more information.
  • It's never a bad thing to demand more information before taking trades because trades always repeat themselves.

Avoiding Low Probability Trades

  • It's asinine to take trades during low probability uncertainty times just because you're seeing something on the charts.
  • The speaker outlines a trade he wouldn't take (trading in fair value gap), but emphasizes that everyone has their own criteria and shouldn't be influenced by others.

Trading Strategies

In this section, the speaker discusses potential trading strategies and how to manage risk.

Potential Trading Strategies

  • The speaker notes that they have traded up through the fair value gap and there are potentially bullish shoulder blocks.
  • If it's a trading day, the speaker would not use full leverage because the market is likely to see a higher dollar if it continues.
  • The maximum threshold for risk should not be utilized on a trade like this.

Overall, the speaker emphasizes the importance of independence in trading and waiting for more information before taking trades. They also discuss potential trading strategies and managing risk.

The Importance of Managing Risk and Preserving Capital

In this section, the speaker emphasizes the importance of managing risk and preserving capital as a trader's primary role.

Key Points:

  • As a trader, it is crucial to measure out fair value and manage risk to preserve capital.
  • Trading without managing risk and preserving capital will lead to losses.
  • The speaker teaches high probability trading by identifying high resistance liquidity runs that are difficult to defend or present both sides of the equation.
  • New traders should avoid floundering around watching candles and chasing hot trends.

Analyzing Volume and Balance

In this section, the speaker discusses analyzing volume and balance in trading.

Key Points:

  • The speaker wants to see if price can trade through volume and balance with speed and no respect for it.
  • If price stops short of a box, finds support, then goes up to it again, it is not desirable.
  • The dollar index has been bullish, which can prevent price from going higher later in the morning.
  • Traders should identify high resistance liquidity runs to avoid trading them or pair back their risks when they get into such trades.

Identifying Favorable Price Action

In this section, the speaker talks about identifying favorable price action in trading.

Key Points:

  • When discovering that one is in a high resistance liquidity run during a trade setup, one should look for favorable price action in the next two or three minutes.
  • Favorable price action means seeing prices start to trade higher, take out short-term highs, at least touch volume imbalance markers on lower time frames.
  • There is likely to be choppy trading within gaps established from yesterday's trading to today's opening.

Anticipating Market Chop

In this section, the speaker discusses how to anticipate market chop and build bias even in the presence of high resistance liquidity around the header volume of balance traded.

Reading Market Conditions

  • The speaker observes relative equal highs that are very clean and suggests waiting for it to run one more time below that low hit that 410 650 maybe even Pierce 410650.
  • The delivery of an objective on a setup creates conditions that lead to morning chop at the opening.
  • Going short has already happened from over here and went to target, so now there is uncertainty in the market.
  • The markets will chop around until it can establish more sentiment.

Establishing Bias

  • The speaker suggests that they are trying to force the narrative that it's going lower by presenting relative equal highs like this so that it looks like what stopped here is resistance right.
  • If it rips above those highs, then my side by stops so ripping above that and the volume and balance how far can it go above into this gap which now is refined with this candle here.
  • It needs to get into that volume and balance in the next two-three minutes; otherwise, it won't be met with threshold.
  • The down closed candle should not close below the midpoint of its range.

Learning from Market Chop

  • Those who are not pushing buttons are actually learning today about fear, greed, and buyer's remorse.
  • Finding trades with low resistance liquidity run signatures is ideal, and the speaker is teaching how to find them.
  • Trading in high resistance liquidity runs can be very stressful, and it's more likely to fail when trading in choppy market conditions.

Market Analysis

  • The speaker suggests watching the fair bay gap now because it might want to act as resistance and tag that 41.0650 level.

Tug of War Today

In this section, the speaker talks about the current market conditions and how difficult it is to read the price action.

Reading Price Action in Choppy Markets

  • The speaker reflects on his younger self insisting that there must be a trade opportunity in choppy markets.
  • The speaker advises to watch the 4121 level foreign and pay attention to how price reacts.
  • The speaker emphasizes that he is looking at the body of the candle, not just the wick.
  • The speaker advises traders to close their trades when they realize they are in a difficult environment like this one.

Clean vs. Dirty Markets

  • The speaker explains that it's better to wait for cleaner markets with more efficient price movements rather than forcing trades in choppy markets.
  • The speaker notes that pre-market moves can often deliver a lot of volatility but can also lead to choppy market conditions during regular trading hours.

Skill vs. Luck

  • The speaker hopes he gets it wrong so he can demonstrate why traders should be fearful of these types of market conditions.
  • The speaker warns against attributing luck to skill and emphasizes that experience and wisdom come from pain and mistakes.

Trading Strategy

  • The speaker notes that either scenario (410 650 or 4121) could happen, but neither is a factor for traders right now.
  • Traders should focus on finding cleaner setups with easier entry-to-target transport rather than trying to catch every move.
  • The speaker notes that the current candle just touched the fair bay gap as resistance and is showing a willingness to stay below the original five-minute favorite.
  • Traders should focus on finding cleaner, easier setups rather than trying to predict which way the market will move.

Trading Strategies for New Traders

In this section, the speaker discusses how to approach trading when you are late to get into the charts and emphasizes the importance of avoiding impulsive decisions.

Approaching Trading When You're Late

  • When you turn on your charts and see a market condition that does not align with any opportunity you have learned about, do not enter a trade.
  • Gambling in such conditions is a 50/50 proposition.
  • Avoid putting yourself out there in front of other people as it can make you impulsive instead of using sound logic and good risk management.
  • Sharing your opinion while live streaming can force something that may not be profitable.

Market Analysis

In this section, the speaker analyzes market conditions and provides insights on potential resistance levels.

Resistance Levels

  • Sellers interested in chasing markets lower today at the open haven't seen much delivery on the downside since we went down below that old low at 4113.
  • The level to focus on for sell side is likely rounded out by now at 4121.
  • Use a two-to-three-minute filter to determine if a high resistance liquidity run signature is present. If it doesn't deliver as expected, close the trade regardless of where it's at.
  • Holding onto trades that could potentially turn worse or stay stagnant will lead to regret.

Final Thoughts

In this section, the speaker summarizes key takeaways from previous sections and encourages traders to remain disciplined.

Key Takeaways

  • Expect choppiness and uncertainty in the market.
  • Do not enter trades that do not align with your trading strategy.
  • Avoid impulsive decisions and use sound logic and good risk management.
  • Sharing your opinion while live streaming can force something that may not be profitable.
  • Use a two-to-three-minute filter to determine if a high resistance liquidity run signature is present. If it doesn't deliver as expected, close the trade regardless of where it's at.
  • Holding onto trades that could potentially turn worse or stay stagnant will lead to regret.

Overall, traders should remain disciplined and avoid making impulsive decisions based on market conditions that do not align with their trading strategies. Using filters to determine potential resistance levels can help traders make informed decisions about when to enter or exit trades.

Ranger and Dell

In this section, the speaker discusses his approach to trading and when he would close a position.

When to Cut Bait

  • The speaker would not hold a position if it did not deliver where he wanted it to.
  • He would cut bait and move to the sidelines if the time filter parameter kicked in.
  • Experience has taught him that it's better to avoid problematic situations than wish he had gotten out earlier.
  • It's better to move to the sidelines during crummy conditions.

Piercing of Daily Low

In this section, the speaker analyzes market trends and discusses potential price action.

Market Trends

  • There was one more piercing of the daily low.
  • The speaker would have liked to see the 410 650 level get tagged.
  • A breaker occurred.

Price Action

  • The lows were compared between NASDAQ and ES.
  • The market hit consequent corrosion at 4106.50.
  • The opportunity still lies with finding a low set up for a run in the afternoon session.

Range from Yesterday's Trading

In this section, the speaker discusses important ranges and levels on charts.

Chart Analysis

  • The range from yesterday's trading is important.
  • If the market can find a low set up for an afternoon run, that is favorable based on what the speaker is seeing.
  • The range from yesterday's day session close and 9:30 opening today is represented by a blue shaded area.

Chart Representation

  • The chart has a lot of lipstick on it, but the representation of the gap from yesterday's trading to this morning's opening is important.

Conclusion

In this section, the speaker concludes his analysis for the morning.

Final Thoughts

  • The speaker concludes his analysis for the morning.

Understanding Market Conditions

In this section, the speaker discusses how market conditions can impact trading decisions and why it's important to be aware of them.

Market Predisposition

  • The market needs to be predisposed to go higher or lower with low resistance liquidity runs.
  • Trading during choppy markets can lead to needless trades and compound losses into larger ones.

Trading Strategies

  • Focus on trading at 9:30 am when the US equities market opens.
  • If a setup forms before 9:30 am, you can trade between 7:00 am and 9:00 am.
  • Avoid reckless trading during choppy markets as it can lead to account churn and drawdown.

Importance of Experience in Trading

In this section, the speaker emphasizes the importance of experience in understanding market conditions and making informed trading decisions.

Learning from Experience

  • You have to live through different market conditions to understand where they are likely to form.
  • No educator or trainer can teach you how to navigate these types of conditions; it's only guided by experience.
  • The speaker shares his addiction for price movement and highlights how he has learned from past experiences.

Analyzing Price Movement

In this section, the speaker analyzes price movement and discusses potential trading opportunities based on his observations.

Price Analysis

  • The speaker observes that NASDAQ did not make a lower low at the 410.650 level.
  • The speaker is more interested in being long and would like to see a trade down to the Fairway Gap before entering a position.

Technical Difficulties

In this section, the speaker experiences technical difficulties with his equipment.

Technical Issues

  • The speaker's equipment dies unexpectedly, and he is unsure why.

Trading in a High Resistance Liquidity Run Environment

The speaker discusses the challenges of trading in a high resistance liquidity run environment and warns against taking trades in such conditions.

Key Points

  • Picking a level below the middle point of a down closed candle is a good threshold for stop loss.
  • It's not advisable to take trades in an iffy 50/50 condition, especially in high resistance liquidity runs.
  • High resistance creates deeper retracements and ultimately failure.
  • In low resistance liquidity runs, the market would have already moved higher by now.

Avoiding Painful Trades

The speaker advises traders to avoid painful trades that can lead to heavy losses.

Key Points

  • Trading sideways with no clear direction is frustrating and difficult to trade.
  • New traders should avoid trading with real money until they understand how to navigate challenging environments like high resistance liquidity runs.
  • Taking trades in problematic environments often leads to heavy losses and chopping up accounts.
  • Feeling heavy chested, breathing heavily, or experiencing heart palpitations are signs that it's time to stop out of a trade.

Recognizing Ugly Market Conditions

The speaker emphasizes the importance of recognizing ugly market conditions and avoiding trading during such times.

Key Points

  • It's important to recognize when the market is ugly and avoid taking trades during such times.
  • Trying to fix losing streaks by taking risky trades only leads to bigger drawdowns.
  • Recognizing the distinction between low resistance liquidity runs and high resistance liquidity runs is crucial for successful trading.

Market Analysis

The speaker provides an analysis of the market and potential opportunities.

Key Points

  • The NASDAQ has made a lower low, but the S&P has not confirmed it yet.
  • A large gap still remains unfulfilled above us, which could provide an opportunity for the market to run up in the 4121-4123 level during the PM session.

Trading Lessons Learned

In this section, the speaker discusses the importance of accepting losing trades and not forcing trades in unfavorable market conditions.

Importance of Accepting Losing Trades

  • Everyone has losing trades.
  • Forcing trades on days with unfavorable market conditions can lead to blowing an account.

Market Conditions and Trading Strategies

  • On a day with high resistance liquidity run, it's important to observe price action and not force trades.
  • Candlesticks are about psychology more than anything else. They can be interpreted in different ways depending on what the trader wants to see.
  • Don't actively seek trading in unfavorable market conditions as it makes trading harder than it has to be.

Observing Frustrations and Elation While Trading

  • Listening to traders' experiences while observing price action is fascinating because candlesticks are really about psychology.
  • It's important for traders to understand that a high resistance liquidity run doesn't mean that price action will deliver as expected.

Avoiding Emotional Trading

  • Frustration can cause traders to feel reckless and remove stop losses.
  • The desire to make money can become a powerful drug that causes traders to force narratives or ideas.

Technical Hypothetical Stop Out

In this section, the speaker discusses how hitting a technical hypothetical stop out would communicate what was taught earlier about avoiding forcing trades in unfavorable market conditions.

Hitting Technical Hypothetical Stop Out

  • Hitting the red line and being a technical hypothetical stop out would communicate what was taught earlier about avoiding forcing trades in unfavorable market conditions.
  • Traders should avoid forcing trades in unfavorable market conditions and not assume that price action will deliver as expected.

Trading in Choppy Markets

In this section, the speaker discusses how to trade in choppy markets and avoid losses.

Avoiding Choppy Market Conditions

  • The speaker explains that when trading in choppy market conditions, it is important to have experience and avoid forcing trades.
  • Even experienced traders can struggle in choppy markets, so new traders should focus on avoiding these conditions altogether.
  • Traders who try to force trades during choppy market conditions risk losing money and damaging their equity.
  • It is important for traders to understand where the problem areas are in the marketplace and avoid them.

The Importance of Patience and Sound Logic

  • New traders often lack patience and do not appreciate good wisdom or sound logic when presented with it.
  • Trading is more than just pushing a button to make money; it requires experience, knowledge, and skill.
  • Luck can play a role in trading success, but relying solely on luck is not sustainable or profitable.

Lessons Learned from Experience

  • The speaker shares a personal experience of attributing his early trading success to skill when it was actually blind luck.
  • When analyzing market gaps, the speaker emphasizes the importance of acceleration through relative equal highs rather than returning back into them.

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Playlists: 2023 ICT Mentorship
Video description

Government Required Risk Disclaimer and Disclosure Statement CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.