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ICT Mentorship Core Content - Month 1 - What To Focus On Right Now
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ICT Mentorship Core Content - Month 1 - What To Focus On Right Now

Understanding the Mindset for Trading

Introduction to the Series

  • The session is part of an eight-part mentorship series focused on understanding trading mindsets, particularly from a market perspective that contrasts with traditional retail views.

Advantages of Being New to Trading

  • New traders have an advantage as they are less likely to have developed bad habits or misconceptions about trading compared to those who have been in the market longer.

Importance of Market Psychology

  • A key teaching tool involves understanding how traders should view market data and psychology, emphasizing reverse psychology in trading strategies.

Differentiating Smart Money from Uninformed Money

  • There exists a dichotomy between informed (smart money) and uninformed (speculative) traders; smart money operates with knowledge while uninformed traders often lack awareness of this dynamic.
  • Uninformed traders typically do not recognize the presence of smart money and mistakenly believe that indicators alone dictate price movements.

Misconceptions About Indicators

  • Many new traders may initially subscribe to the belief that indicators are essential for predicting price movements, which can hinder their development as informed traders.
  • Those who rely heavily on indicators may struggle during this mentorship, as it encourages moving away from such tools towards a more nuanced understanding of market dynamics.

The Role of Liquidity in Trading

Understanding Market Dynamics

  • The focus is on recognizing that there is a constant influx of liquidity into the marketplace despite high failure rates among individual traders; 90% reportedly lose money.

Smart Money's Perspective

  • Informed traders must adopt a liquidity provider's perspective, acknowledging that smart money plays a crucial role in maintaining market efficiency by providing liquidity at premium prices.

Contrast Between Perspectives

  • Smart money understands how uninformed participants behave and uses this knowledge to gain an edge in trading decisions, contrasting sharply with uninformed beliefs about market control.

Market Efficiency Paradigm

Price Control by Smart Money

  • The concept emphasizes that smart money controls price delivery through their actions, akin to how businesses set prices based on supply and demand dynamics.

Conclusion: Adopting a Smart Money Viewpoint

Understanding Central Bank Control and Market Dynamics

The Role of Central Banks in Currency Valuation

  • Central banks control the value of currency, determining the price of bank notes or digital currency displayed on screens.
  • The pervasive corruption and deceit in the current world make it unsurprising that central banks have significant control over currency pricing.
  • Historical examples, such as the Swiss franc's de-pegging from the euro, illustrate how central banks can drastically alter currency values.

Perspectives on Market Participants

  • A balanced view of market participants is essential; rather than seeing them as victims or aggressors, focus on market efficiency.
  • Smart money has advantages in pricing and understanding market reactions based on chart patterns and news events.

Key Concepts for Price Delivery

  • The mentorship will emphasize four primary drivers: retracement, expansion, reversal, and consolidation.
  • A foundational understanding is crucial before delving into specific contexts or topics related to these principles.

Importance of a Strong Foundation

  • Exposure leads to experience; understanding individual components helps grasp how they fit into broader concepts.
  • Suppressing the urge to seek intricate techniques is vital; a solid framework must be established first.

Starting Fresh as a New Student

  • New students should approach learning with minimal preconceived notions about trading strategies or techniques.
  • Previous successes outside institutional order flow may lead to misconceptions; reliance on luck can hinder future development.

Daily Practice for Skill Development

  • Creating a daily price action log with charts is essential for skill enhancement; this practice lays the groundwork for effective trading strategies.

Understanding Chart Analysis

Core Principles of Charting

  • The focus will be on developing core principles over the next 12 months, emphasizing the importance of chart analysis.
  • A daily chart should display a minimum of 9 to 12 months of data for adequate perspective; avoid excessive historical data.
  • For a four-hour chart, three months of price action is necessary; a one-hour chart requires at least three weeks, and a 15-minute chart needs three to four days.

Avoiding Forecasting Pitfalls

  • Beginners should resist the urge to forecast price movements prematurely, as this can lead to frustration and hinder development.
  • Focus on identifying significant price movements from specific levels rather than predicting future trends.

Noteworthy Price Levels

  • Mark recent highs and lows that have not been retested; these levels are likely to influence future market behavior.
  • Identify areas with clean highs and lows (e.g., equal highs); these are potential targets for buy stops or sell stops in future trades.

Analyzing Market Behavior

  • Recognize that markets often return to previously established clean highs or lows, indicating liquidity zones where trading activity may increase.
  • Understand conditions under which prices test these liquidity areas; practice noting them on charts for better forecasting.

Daily Observations and Chart Setup

  • Track daily high and low formations along with their respective times; this information aids in understanding market patterns.
  • Start with one currency pair for analysis while avoiding commonly used pairs like British Pound or Euro during mentorship sessions for unique insights.
  • Document recent highs and lows as they help identify order blocks and liquidity voids essential for effective trading strategies.

Transitioning Between Time Frames

  • Move from daily charts to four-hour charts while maintaining noted levels; this helps visualize additional highs and lows.

Understanding Charting Techniques for Day Trading

Importance of Hourly Charts

  • The hourly chart serves as a crucial tool for short-term and day traders, acting as a bellwether to determine buying or selling opportunities.
  • Traders are encouraged to transpose levels identified on daily and four-hour charts onto the hourly chart for better analysis.

Managing Multiple Charts

  • It is recommended to create separate charts for different time frames (e.g., two independent USD/CHF charts) to avoid clutter and confusion.
  • A 15-minute chart will also be utilized, which initially appears noisy without reference points.

Analyzing Recent Price Action

  • Focus should be on the last three to four days when analyzing the 15-minute chart, using daily highs and lows as reference points.
  • Daily highs and lows are documented consistently; this practice will be demonstrated in real-time during mentorship sessions.

Record Keeping Practices

  • Maintaining logs and journals is emphasized as essential for understanding market behavior, even after years of trading experience.
  • Noting previous day's highs and lows helps in tracking price movements effectively; specific examples from recent trading days illustrate this point.

Weekly Market Behavior Insights

  • Observations from Wednesday's data show how prices interact with previous highs/lows, providing insights into market trends.
  • Thursday's trading behavior reflects consolidation patterns that can inform future trades based on prior price action.

Continuous Learning and Adaptation

  • Traders are encouraged to document price actions daily while building their understanding over time through structured learning.

Market Probabilities and Price Action

Understanding Market Movements

  • The speaker emphasizes uncertainty in market direction, stating that while prices may rise or fall, the exact movement is unpredictable.
  • Instead of certainty, the focus is on understanding probabilities associated with market trends and price actions.
  • The speaker suggests a systematic approach to analyzing the marketplace, looking for recurring patterns in price movements.
  • Identifying these repeating occurrences can enhance trading strategies and decision-making processes over time.
Playlists: 2016 ICT Private Mentorship Core Content Month 01
Video description

2016 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in September 2016. 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.