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ICT 2024 Mentorship \ September 12, 2024
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ICT 2024 Mentorship \ September 12, 2024

Market Opening Analysis

Overview of Market Conditions

  • The speaker welcomes viewers and confirms audio functionality, setting the stage for a market analysis.
  • A 15-second chart is introduced, highlighting the previous settlement price at 414.4 from the prior trading day.

Opening Range Gap Insights

  • The first 30 minutes are critical for observing gap filling; the current gap is nearly filled but lacks expected volatility.
  • Today's opening range gap is described as small and premium, indicating limited movement compared to typical expectations.

Market Dynamics and Trading Strategy

  • Attention shifts to market respect within the new day's opening gap, emphasizing its significance on September 12th.
  • An hourly chart indicates potential buy-side activity that could lead to exploring higher price levels within the opening range gap.

Market Behavior and Liquidity

Market Making Dynamics

  • The speaker notes that lower trading prices punish those who chased yesterday's rally, reflecting classic market-making behavior.
  • Minor buy-side liquidity is identified near previous settlement prices, suggesting potential upward movement in response to this liquidity.

Inefficiencies and Trading Opportunities

  • Discussion on inefficiencies highlights that traders should not expect complete overlap of candlesticks but rather sensitivity in upper halves for bullish setups.
  • Observations indicate a drop into an area of efficiency which may provide opportunities for bullish trades if conditions align.

Future Market Projections

Price Movement Expectations

  • The focus returns to exploring higher price levels within the opening range gap while monitoring small inefficiencies present.
  • A model suggests aiming for high targets within the opening range gap as a low-risk opportunity for long positions.

Long-Term Outlook

  • Emphasis on maintaining clean charts reflects professional standards; discussions about significant price levels suggest ongoing volatility through fall and year-end.

Understanding the Opening Range Gap in Trading

The Concept of Opening Range

  • The opening range is defined as the period between 9:30 AM and 10:00 AM, where traders observe price movements around the previous settlement price.
  • During this time, a "fair gap" is established, which serves as a reference for potential trading strategies based on initial market behavior.

Identifying Buy and Sell Sides

  • Traders look for initial buy-side and sell-side activity to gauge market sentiment. Significant breaks or imbalances can indicate potential trading opportunities.
  • A small opening range gap (e.g., 15 handles) suggests limited volatility, making it less attractive for aggressive trading strategies.

Pre-Market Observations

  • Pre-market analysis focuses on whether the opening range gap is maintained or reduced in size. A reduction may signal a choppy morning session ahead.
  • Patience is emphasized; traders should wait for clearer signals rather than impulsively entering trades during uncertain conditions.

Market Sentiment and Reactions

  • Market participants often react to previous day's movements, leading to potential overreactions that could affect current trading decisions.
  • The first 30 minutes are crucial but not definitive; waiting for more data can lead to better-informed decisions later in the day.

Utilizing Algorithmic Insights

  • Traders can apply algorithmic techniques by projecting highs and lows from the opening range to identify intermediate-term targets.
  • Understanding these projections helps traders navigate through daily fluctuations effectively while recognizing underlying market algorithms at play.

Liquidity Considerations

  • Observing liquidity levels below recent lows can provide insights into potential price movements. Many traders will place stop losses near these levels.
  • Awareness of broader market sentiment—shaped by news and prior performance—can influence individual trading decisions significantly.

Trading Strategy Recommendations

  • New traders are advised against engaging in morning sessions due to inherent volatility; patience can yield better opportunities later in the day.

Market Dynamics and Trading Strategies

Understanding Market Behavior

  • The speaker discusses the importance of exploring lower price levels not for expansion but to encourage buying opportunities, emphasizing caution in trading decisions.
  • Caution is advised during morning sessions on range days; traders should refrain from acting impulsively based on previous day's ranges to avoid losses.
  • The speaker highlights that maintaining a disciplined approach can prevent frustration and potential account blowouts, especially when market conditions are unfavorable.

Analyzing Price Movements

  • A significant bullish candle from the previous day can create excitement among novice traders, leading them to take long positions prematurely.
  • The anticipation of reaching specific price levels (e.g., 19,695) may lead traders to expect immediate upward movement, which could be misleading.
  • Novice traders often react to bullish signals without understanding market traps set by algorithms designed to exploit their enthusiasm.

Recognizing Trading Traps

  • Early buyers may be misled by initial upward movements that appear promising but are likely part of a larger strategy to push prices lower before reversing.
  • Algorithms may create "landmine fields" where early buyers are trapped as prices drop below key support levels established by retail trading strategies.
  • Various trading strategies (e.g., Fibonacci retracements, moving averages) can contribute to false confidence among retail traders who believe they have identified profitable entry points.

Strategic Insights for Traders

  • Traders should remain skeptical of short-term lows formed during large range days; these lows often serve as traps rather than genuine support levels.
  • It’s crucial for traders not to overcommit during volatile periods; waiting for clearer signals can help mitigate risks associated with false breakouts or reversals.

Final Thoughts on Market Analysis

  • Observing how price interacts with established ranges and gaps provides valuable insights into potential future movements and helps inform trading decisions.
  • Traders must exercise patience within the first 30 minutes of trading; aggressive strategies can lead to unnecessary losses in unpredictable environments.

Understanding Market Dynamics and Trading Strategies

Overview of Trading Setup

  • The speaker describes their trading environment, including multiple monitors and devices used for live streaming while not in a traditional office setting.
  • They utilize various time frames (daily, 4-hour, 1-hour, etc.) to analyze market movements and price action continuously.

Analyzing Time Frames

  • Emphasis is placed on understanding how different traders operate across various time frames, which influences buying or selling decisions.
  • The speaker aims to identify high-probability setups by observing trader behavior and potential stop-loss placements relative to specific time frames.

Psychological Patterns in Trading

  • Discussion on the tendency of traders to see patterns (like double or triple touches) that may not hold significant value; likened to seeing faces in clouds.
  • The phenomenon of pattern recognition is explored as a cognitive bias where traders project familiar shapes onto market data.

Market Behavior Insights

  • The importance of recognizing what drives market movements—primarily buyers seeking higher prices at discounted rates—is highlighted.
  • Observations are made about the current state of the market during the opening range gap after a large range day.

Trading Strategy Considerations

  • The speaker notes that morning sessions following large range days often lack excitement and can lead to indecisive price action.
  • A focus on identifying key levels (e.g., liquidity above certain price points), with an emphasis on waiting for better trading opportunities later in the day.

Timing and Market Conditions

  • Recommendations are given for trading strategies post-large range days, suggesting that afternoon sessions yield cleaner price runs compared to morning sessions.
  • Caution is advised against aggressive trading during low volatility periods; patience is emphasized as crucial for successful trading outcomes.

Lessons from Experience

  • Personal anecdotes illustrate the learning curve involved in understanding market dynamics and avoiding premature trades after large range days.
  • The speaker reflects on past mistakes related to misapplying strategies without considering daily range characteristics.

Market Analysis and Trading Strategies

Initial Trade Setup

  • Caleb expresses interest in trading, focusing on the first fair value gap formed on the one-minute chart at the 9:33 candle. The market initially trades down into this gap before moving above a short-term high.

Market Behavior and Trader Psychology

  • The market targets traders who chased prices from a previous large up-close day, indicating that it uses initial lows to take out these positions. This behavior respects the balance efficiency of the hourly chart.
  • Emphasis is placed on patience during trading sessions; traders should observe how others are being affected rather than impulsively making trades.

Price Action Observations

  • The speaker notes that retracements are used to take out short-term lows without allowing the market to rise significantly, highlighting a pattern of manipulation.
  • A swing low forms within a specific blue shaded area representing buy-side and sell-side efficiency on an hourly chart, which is crucial for understanding price movements.

Liquidity and Market Dynamics

  • Discussion about measuring inefficiencies between candlestick highs and lows reveals insights into liquidity levels below swing lows, which can be targeted by traders.
  • The market sweeps sell-side liquidity before attacking buy-side areas, indicating strategic movements around opening range gaps.

Anticipating Market Movements

  • If price remains within certain ranges throughout the morning session, there may be potential for upward movement later in the day as traders become more inclined to explore higher prices.
  • Understanding why short-term lows are swept can indicate accumulation by larger players in anticipation of future moves.

Analyzing Short-Term Highs and Lows

  • The speaker emphasizes that buying and selling pressure isn't as important as identifying where liquidity exists in order to exploit market narratives effectively.

Market Dynamics and Smart Money Strategies

Understanding Market Movements

  • The speaker discusses the importance of accumulating cell stops to influence price movements, suggesting that smart money must enter before prices rise.
  • Retail traders often react impulsively, leading to sell stops being triggered, which allows smart money to accumulate positions while retail traders buy and sell erratically.
  • A metaphor is used comparing market participants to predators at a watering hole, emphasizing how smart money waits for optimal moments to act rather than rushing in.

Smart Money vs. Retail Traders

  • Smart money takes advantage of market sentiment by waiting for retail traders to make decisions based on initial price movements.
  • The speaker notes that when the market rallies after taking out short-term lows, it creates patterns like bull flags that can mislead retail traders into thinking they should go long.

Engineering Sentiment

  • The strategy involves engineering trader sentiment by pushing prices lower initially, causing uncertainty among those looking to go long.
  • This tactic leads retail traders to switch their positions from long to short as they perceive further declines in price.

Insights on Trading Patterns

  • The speaker claims that their insights are unique compared to traditional trading literature and emphasizes the need for real-time analysis over theoretical knowledge found in books.
  • They argue that understanding live chart dynamics is crucial for effective trading mentorship and decision-making.

Short-Term Trading Strategies

  • For intraday trading, identifying catalysts for market movement is essential; patterns alone do not dictate direction.
  • Traders should be cautious during the first 30 minutes after a large range day due to potential adversities and time distortion affecting price action.

Market Behavior After Large Range Days

  • Expect sideways movement (termed "barcoding") during initial trading sessions following significant price changes from previous days.

Market Analysis and Trading Strategies

Understanding Market Levels

  • The speaker discusses several high levels that were not reached last week, indicating a lack of interest in those price points. They suggest that traders may have forgotten about these levels.
  • Emphasizes the importance of zooming out on charts to identify potential trading opportunities at higher levels, which could still be relevant for the current week.
  • Highlights a specific level (19695) as significant due to its smoothness and design, suggesting it is ripe for trading despite needing to navigate through some range first.

Analyzing Price Action

  • The speaker reflects on their confidence regarding market behavior, particularly around the 288.5 level, predicting a possible rollover and testing of initial lows.
  • Discusses the concept of inefficiencies in trading, arguing against the common belief that prices must fill gaps completely. Instead, they advocate for leaving some portion open during trades.

Trading Logic and Inefficiencies

  • Clarifies their approach to market inefficiencies by stating they did not invent them but rather developed a logical method for trading them effectively.
  • Mentions learning from Chris Lori's teachings but emphasizes that his methods do not include filling liquidity voids entirely in trades.

Smart Money Dynamics

  • Explains how smart money operates by looking for lower quadrants or halfway points without fully touching certain price levels, which indicates where traders expect price action to occur.
  • Describes using Fibonacci retracement levels (25%, 50%, 75%) within defined ranges to predict algorithmic behavior in price movements.

Critique and Market Behavior

  • Contrasts their unique approach with mainstream strategies while welcoming skepticism and criticism as part of their teaching methodology.
  • Shares insights into market maker tactics like creating "Judah swings" to manipulate trader expectations before moving prices significantly.

Trader Psychology

  • Reflects on past experiences as a trader in the '90s, acknowledging early successes were often mistaken for skill rather than luck or market conditions.

Market Dynamics and Trading Strategies

Understanding Stop Loss Placement

  • Traders are advised to identify logical stop loss placements during market breakouts, specifically at the initial low of a day expected to rise.
  • The speaker emphasizes that this analysis is not hindsight but rather a real-time observation of market behavior.

Predator Metaphor in Trading

  • A metaphor comparing traders to predators illustrates how they wait for less informed traders (prey) to enter the market before executing their strategies.
  • The concept of "hunting zones" is introduced, where more experienced traders capitalize on the mistakes of less informed ones.

Market Behavior and Liquidity Engineering

  • The speaker discusses how liquidity is engineered in the market, with specific price levels being crucial for trading decisions.
  • A comparison is made between lions hunting prey and skilled traders demonstrating their prowess against uninformed participants.

Price Levels and Smart Money Accumulation

  • Distinction between retail trading and smart money strategies is highlighted; smart money waits for algorithms to create favorable conditions for accumulating long positions.
  • Key price levels such as "bu balance sign efficiency" are discussed, indicating areas where traders should focus their attention.

Entry Strategies Based on Price Action

  • Traders are encouraged to scale into positions based on specific price actions within defined quadrants of efficiency.
  • Emphasis on setting appropriate stop losses below significant price points to manage risk effectively while entering trades.

Behavioral Analysis Before Entering Trades

  • The importance of observing price behavior after it reaches key levels before making buying decisions is stressed; simply trading at lower prices isn't sufficient.
  • Traders should look for confirmation through price action rather than just relying on low prices as indicators for entry.

Market Analysis and Trading Strategies

Understanding Price Points and Market Weakness

  • The speaker discusses the importance of monitoring price points, indicating that they are expected to remain in the lower half of a specified range, suggesting market weakness.
  • Emphasizes the need for traders to identify significant candlestick levels for immediate rebalancing opportunities, advising viewers to take screenshots for reference.

Candlestick Patterns and Rebalancing

  • Highlights the concept of "immediate rebalance" when prices drop below certain levels, urging traders to recognize patterns that indicate potential market movements.
  • Introduces "consequent encroachment," explaining its relevance in assessing market efficiency and price behavior as it approaches lower quadrants.

Trading Dynamics and Market Behavior

  • The speaker expresses enthusiasm about trading dynamics, noting how understanding these concepts can enhance trading experiences.
  • Discusses how specific candlesticks hitting lower quadrants can lead to upward market movement, emphasizing volume imbalances as critical indicators.

Order Block Theory and Price Delivery

  • Introduces order block theory as a framework for understanding price action after reaching key levels, hinting at an upcoming chapter on this topic.
  • Explains the significance of gaps between candlesticks in identifying "vacuum blocks," which can signal immediate rebalancing opportunities.

Market Conditions and Trading Strategy Considerations

  • Describes how price action following a gap can lead to higher trades within established order blocks, illustrating effective trading strategies.
  • Advises against trading during volatile initial sessions unless conditions are favorable; highlights characteristics of morning sessions post-large range days.

Educational Insights on Trading Mentorship

  • Reflects on past mentorship experiences, stressing that comprehensive learning requires time and cannot be condensed into short sessions.

Understanding Market Conditions and Trading Strategies

The Importance of Recognizing Market Conditions

  • In high resistance conditions, traders must understand the implications on both sides of the market spectrum. Awareness of these conditions is crucial for effective trading.
  • After a large range day, caution is advised during the morning session. The speaker emphasizes that students should not assume they have everything figured out immediately.
  • New traders often overestimate their knowledge and experience levels, leading to potential pitfalls in their trading strategies.

Navigating Risks in Trading

  • Understanding when there are more "predators" (risks) around a trading opportunity can help traders make better decisions about entering or avoiding trades.
  • It’s essential to recognize conditions where losing money is more likely, as this knowledge can inform better trading choices.

Learning Through Experience

  • The speaker compares learning to trade with navigating difficult paths; experiencing challenges helps identify smoother pathways later on.
  • By facing tough situations in trading, one gains appreciation for easier opportunities that may arise in the future.

The Reality of Trading Challenges

  • Traders will encounter periods where market conditions are unfavorable. It's important to acknowledge these times rather than expect consistent success without setbacks.
  • Live streaming can create pressure for traders to perform, which may detract from focusing on sound low-risk strategies.

Teaching and Learning Dynamics

  • The speaker's goal is not entertainment but education; he aims to teach his son how to navigate market complexities effectively despite having advantages like access to advanced tools.
  • New traders often misinterpret market signals due to limited experience. Continuous reminders about market behavior after significant events are vital for developing sound judgment.

Managing Fear of Missing Out (FOMO)

  • To combat FOMO, it's crucial for traders to focus on well-planned inactivity rather than feeling pressured to act during every market fluctuation.
  • Successful traders prioritize waiting for high-probability setups instead of trying to capitalize on every movement in the market.

Conclusion: Patience and Strategy Over Impulsiveness

Understanding Trading After Large Range Days

The Importance of Timing in Trading

  • Emphasizes that traders should avoid trading during the morning session after a large range day if they lack experience or confidence, as it can lead to poor decision-making.
  • Highlights the difficulty some students face in understanding this concept, often leading to frustration and complaints about their trading performance.
  • Points out that many traders fail to study their trades properly, neglecting journaling and self-reflection, which are crucial for improvement.

Recognizing Market Conditions

  • Discusses the necessity of recognizing when market conditions are unfavorable and advises traders to step back rather than force trades.
  • Suggests turning off charts during uncertain market conditions and returning later to assess key price levels such as the day's high and low.

Analyzing Price Levels

  • Instructs on identifying significant price points within the morning session, including highs and lows that will guide afternoon trading strategies.
  • Encourages traders to predict potential movements towards buy-side or sell-side liquidity based on previous price action before entering the PM session.

Developing Trading Protocols

  • Advises maintaining a journal to track predictions made prior to 1:30 PM regarding market behavior, reinforcing disciplined trading practices.
  • Stresses using previous sessions' highs and lows as reference points for making informed decisions without needing real-time monitoring throughout the night.

Understanding Market Psychology

  • Explains how understanding market protocols helps determine when to aggressively trade versus when to hold back or refrain from trading altogether.
  • Uses an analogy comparing risky trading environments to dangerous social situations, urging traders not to engage in markets where they might be "slaughtered."

The Role of Education in Trading Success

  • Concludes with a reminder that novice traders must recognize their current limitations and focus on learning rather than impulsively executing trades without proper knowledge.

Understanding Market Behavior and Trading Strategies

Avoiding Common Trading Pitfalls

  • Emphasizes the importance of avoiding unfavorable trading decisions by not engaging in them initially, which can prevent future regret.

Analyzing Market Trends

  • The speaker reflects on the need to ensure understanding of key points before concluding a session, indicating a focus on clarity in communication.

Time Frame Analysis

  • Suggests switching to a 15-minute time frame for better market analysis, highlighting the significance of adjusting perspectives based on time frames.

Afternoon Session Expectations

  • Notes that starting the day with deeper lows and minor buy-side movements is positive; advises traders to relax during lunch and return around 1:15 PM to analyze market highs and lows.

Detailed Chart Observations

  • Recommends observing both high and low points on a 15-minute chart, then transitioning to a 5-minute chart for more granular insights into short-term price movements.

Identifying Key Levels

  • Discusses noting significant highs and lows at specific times (e.g., 1:30 PM), emphasizing the importance of identifying layers of buy-side and sell-side opportunities as trading unfolds.

Anticipating Market Movements

  • Describes how market structure will reveal itself as trading progresses towards 2 PM, suggesting an inclination towards reaching specific price levels (e.g., 19695).

Dynamic Learning Approach

  • Encourages learning through live trading experiences rather than waiting for books; stresses that real-time analysis provides immediate insights into market behavior.

Consistency in Trading Strategy

  • Reinforces that successful afternoon trading relies on recognizing liquidity patterns related to daily highs and lows, maintaining consistency in approach across sessions.

Last Hour Trading Dynamics

  • Highlights that the last hour often sets new daily highs or lows; discusses how this period is crucial for understanding market pricing dynamics leading into settlement.

Simplified Afternoon Trading

  • Asserts that afternoon sessions are generally easier for index futures due to established daily ranges; encourages focusing efforts during this time for optimal results.

Conclusion on Daily Trading Insights

Understanding Trading Challenges

The Importance of Journaling in Trading

  • Emphasizes the necessity of logging events and characteristics in a trading journal to retain insights and experiences.
  • Highlights the potential pitfalls of FOMO (Fear of Missing Out) when traders get distracted by social media or other external influences.
  • Suggests that observing others' trades can lead to inspiration but warns against letting it dictate personal trading decisions.
  • Points out that without proper documentation, traders may struggle to learn from past mistakes or successes.
Channel: The Inner Circle Trader
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.