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ICT Mentorship Core Content - Month 05 - Open Float
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ICT Mentorship Core Content - Month 05 - Open Float

Lesson 1.2 Overview

In this lesson, we will be discussing the implementation of macro analysis quarterly shifts and open float.

Open Float

  • Open float is the current open interest above and below the current market price.
  • It includes pending buy orders (buy stops) resting above old highs or above market price, as well as sell orders (sell stops) resting below significant lows.
  • Buy stops are used to get long and protect short positions, while sell stops are used for entry orders and collapsing long positions.
  • The total open interest of players in the market equates to open float.

Determining Buy Side Liquidity

  • When determining buy side liquidity, protective buy stops should be placed above the last bearish shift.
  • Buy stops can be placed above short-term highs such as weekly or monthly highs, highest high in the last three months, current six-month high, or current 12-month high.
  • The focus is primarily on buy stops above the highest high in the last three months when looking at quarterly shifts.

Determining Sell Side Liquidity

  • When determining sell side liquidity, protective cell stops should be placed under the last bullish shift.
  • Sell stops can be placed below short-term lows such as weekly or monthly lows, lowest low in the last three months, current six-month low, or current 12-month low.

Running Stops

  • To determine if a market will stop just right above an old high or below a low and then reverse or keep going requires conviction and confidence based on certain ideas.
  • These ideas will help build confidence that it's just going to punch above an old high and probably not reverse.

Chart Analysis

The speaker presents a chart outlining the same levels as the quarterly shifts. The intervals are shown every three months, and there are significant price highs and lows.

Significant Price Highs and Lows

  • Focus on the chart for a minute and note significant price highs and lows.
  • There is one significant high and one low.
  • A short-term low was created when price traded below that low, which was a break in market structure.
  • When there is a bearish shift lower in price, your eyes need to go right to the high it just came from because on a daily chart that's going to have a lot of liquidity above it that liquidity is in the form of a liquidity pool for buy stops.

Open Float Impact on Future Price Movements

The speaker discusses how open float has an impact on where future price movements are going to take you.

Market Structure Shifts

  • After creating a low of 1.0534 market does in fact have one more market structure shift and sends price higher pay attention to the quarterly shift markers that we have here every three months there is a significant run on liquidity.
  • That market structure break there bullishly is the catalyst that sends the market higher to make the stops above 115 big figure targeted.

Sell Side Liquidity Pool

  • Below that low, there's going to be sell-side liquidity or sell stops in the form of a liquidity pool below that low you see price did in fact sweep down there and grab that liquidity neutralizing all the cell stops.

Understanding Market Movements

  • The speaker explains how we can use open float to help answer some of the confusion about why the market should be expected to go a certain level and then retrace or reverse.

Understanding Liquidity and Market Movement

In this section, the speaker discusses how liquidity affects market movement and how to identify when the market will reach for one side of the liquidity or the other.

Identifying Liquidity

  • While driving price up to take out liquidity at 115 big figure, there wasn't any significant move on sell stops.
  • Violation of a short-term low cancels trailing cell stops resting below it.
  • Every time a short-term low is violated, it gathers more momentum and distance between the range of 115 big figure and 105.34.
  • Every rally fails to make a new high even if it takes a short-term high out.

Working Sell Side of Liquidity

  • The first clue that we are probably going to work the sell side of the liquidity is when there is a run on cell stops right below that low.
  • The chances of creating a higher high relative to 115 big figure are not likely because every time it drops, it drops a little bit more but every time it rallies, it fails to make a new high.
  • Movement below every short-term low indicates gaining more ground on the downside.

Tug of War Between Buy Stops and Sell Stops

  • You're watching for clues that indicate gaining more momentum on one side of the market or the other by referencing where buy stops are available highs and where sell stops are below old lows.
  • What you're watching for is the tug of war that takes place between each new run on stops below the market and above the market.

Understanding Price Action

In this section, the speaker discusses how studying price action across multiple pairs and asset classes can help traders determine daily chart directional bias. This knowledge can be applied to various trading disciplines.

Daily Chart Directional Bias

  • Studying price action across many pairs and asset classes helps determine daily chart directional bias.
  • If the daily chart indicates a lower run, every rally has a failure to make new ground and cannot make a higher high.
  • Every time this happens, it solidifies an intermediate-term high that is now lower than the previous intermediate-term high.
  • Multiple intermediate-term highs and long-term highs signal that the market wants to go lower.

Liquidity Void and Open Float

  • There was a liquidity void around the 106.80 level to 106.35 in one example.
  • Open float is the study of how the market reaches for buys and sells above market price.

Trend Daily Bias

  • Knowing where orders will be building above old highs and below old lows gives traders insight into which side of the marketplace smart money is seeking to make a run on.
  • Determining this on a daily chart provides trend daily bias, long-term bias, and institutional vantage point with all trades.
Playlists: 2017 ICT Private Mentorship Core Content Month 05
Video description

2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in January 2017. 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.