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ICT 2024 Mentorship \ Lecture #12 August 19, 2024
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ICT 2024 Mentorship \ Lecture #12 August 19, 2024

Live Stream Overview and Market Analysis

Introduction to the Live Stream

  • The speaker introduces the live stream, noting it will be shorter than usual, lasting only an hour.
  • The purpose is to review market actions from today and highlight key points for future reference.

Market Review and Technical Analysis

  • A daily chart is referenced, with a focus on previous discussions about market trends from August 13th.
  • The speaker emphasizes a long-term bullish outlook, indicating that they are not trying to predict market tops but rather looking for upward movement.
  • Discussion of liquidity levels above current prices; today's high was noted at 19871.7, surpassing previous resistance levels.

Candlestick Patterns and Trading Bias

  • The speaker highlights a specific candlestick pattern where the low of one candle aligns with the high of another, suggesting potential price movements.
  • Emphasis on understanding volume imbalances in candlestick patterns as critical for trading decisions.

Trading Strategies and Learning Opportunities

  • The speaker shares insights on teaching trading concepts to their son, focusing on developing skills in reading market dynamics.
  • Discussion includes identifying liquidity zones and how they influence buying/selling opportunities in trading sessions.

Challenges in Trade Management

  • Transitioning into a 15-minute time frame to analyze today's market action; mentions challenges faced during longer streams.
  • Insights shared about maintaining trades longer and recognizing problematic conditions that can arise while trading or demoing strategies.

Language Use During Streams

  • Acknowledgment of using strong language during streams; the speaker expresses intent to remain authentic despite some audience discomfort with certain words.

Importance of Intraday vs. Longer-Term Trading

Understanding Trading Psychology and Strategies

The Importance of Holding Trades

  • Discusses the psychological aspect of holding onto trades without getting nervous or stopped out, emphasizing a structured approach to trading.
  • Introduces the concept of a foundational starting point for traders, particularly aimed at teaching his son, suggesting that if it's suitable for him, it can benefit others as well.

Market Analysis Framework

  • Explains the necessity of understanding market dynamics by framing buy-side and sell-side perspectives.
  • Shares personal success in mentorship through higher time frame analysis, achieving high accuracy rates in predicting market movements.

Retracement vs. Long-Term Bias

  • Warns against limiting trading opportunities to only long-term trends; highlights the importance of recognizing intraday retracements.
  • Emphasizes that retracements do not alter the overall long-term market direction, providing comfort to traders during short-term fluctuations.

Engaging with Other Traders

  • Mentions interactions with other live streamers and how these relationships are meant to be light-hearted rather than hostile.
  • Expresses intent to encourage improvement among peers while maintaining a fun rapport within the trading community.

The Power Three Strategy

  • Introduces "The Power Three," a systematic approach developed from insights gained from Larry Williams' past challenges in trading below opening prices.
  • Outlines practical applications of this strategy during live sessions, detailing specific entry points and expected market behavior throughout the day.

Closing Strategies and Market Dynamics

  • Advises on taking profits before significant market shifts occur towards closing times, highlighting key price levels for decision-making.

Understanding Price Action and Liquidity

Engaging with Market Dynamics

  • The discussion revolves around engaging with price action, focusing on liquidity dynamics that can impact trading decisions.
  • A diagram is introduced to illustrate the daily range of price movements, emphasizing the importance of anticipating market behavior from 9:30 AM to market close.
  • The speaker highlights the significance of the opening tick at 9:30 AM, advising traders to disregard prior data and focus solely on current price action.

Analyzing Market Movements

  • Observations are made about relative equal lows being taken out during a downward movement, indicating potential buy-side liquidity above recent highs.
  • The speaker stresses the advantage of entering trades at or below opening prices when bullish, which can yield greater returns in terms of points or pips.

Institutional Insights

  • Discussion includes how institutional strategies influence market movements, particularly referencing an "institutional drill" as a key entry point for traders.
  • Acknowledgment is given to community feedback regarding charting tools and their application in trading strategies.

Debate on Trading Strategies

Critique from Other Traders

  • The speaker addresses criticism received from another trader who labeled their teachings as a scam while promoting alternative methods like order flow analysis.
  • An anecdote is shared about contrasting approaches during live trading sessions where the speaker successfully executed long positions despite opposing views.

Understanding Market Algorithms

  • Emphasis is placed on understanding market algorithms that dictate price movements rather than relying solely on depth-of-market ladders for insights.
  • The concept of retail traders receiving "scraps" from larger institutional players is discussed, highlighting disparities in access to information and execution speed.

Execution Timing and Strategy

Importance of Execution Speed

  • The argument against perceived advantages in execution timing by algorithms is presented; it’s noted that not all orders can be filled instantaneously within short time frames.
  • A detailed explanation follows regarding how market dynamics operate independently of individual trader perceptions, reinforcing the need for strategic planning based on broader trends.

Understanding Live Streaming Latency and Trading Insights

The Importance of Real-Time Data in Trading

  • Emphasizes the significance of watching live streams for real-time data, which is crucial for making timely trading decisions.
  • Discusses latency options available on YouTube during live streams, highlighting that ultra-low latency isn't feasible with closed captions enabled.
  • Notes that current market conditions (e.g., time of day) affect the relevance of latency; during off-hours, lower latency can be utilized without urgency.

Analyzing Market Movements

  • Suggests viewers should pause the video if they haven't watched the live stream to fully grasp the context before continuing.
  • Describes a one-minute chart analysis where price movements are observed, particularly focusing on new day opening gaps and significant price drops.
  • Introduces an "institutional order flow entry drill," indicating how traders can hold onto trades effectively after extensive practice over months.

Higher Time Frame Analysis and Economic Events

  • References previous live streams to provide context for current expectations regarding market movements based on higher time frame levels.
  • Stresses the importance of tracking daily and weekly objectives in trading to align with institutional order flow dynamics.
  • Mentions upcoming economic events like the Jackson Hole Symposium, advising traders to treat this week similarly to non-farm payroll weeks for better preparation.

Institutional Order Flow Dynamics

  • Explains how higher time frame targets act as magnets for institutional order flow, providing more opportunities on smaller time frames while maintaining similar expectations as larger ones.
  • Defines a "low-risk buy" scenario using new week opening gaps as support, emphasizing that prices should not fall below certain thresholds once established.

Managing Trades During Market Hours

  • Advises against constantly adjusting stop losses when entering positions; instead, focus on maintaining a stable approach until key times like 11:30 AM when market behavior may shift.

Understanding Market Dynamics and Trading Strategies

The Role of Time in Trading

  • The discussion begins with the importance of identifying the initial low after 10:00 AM, which is crucial for understanding market movements.
  • A specific low at 11:17 AM is highlighted as significant, marking a point where traders should focus their attention.
  • At 11:30 AM, an algorithm seeks liquidity based on prior profitable trades from the morning session, indicating a strategic approach to trading.
  • The speaker emphasizes that market dynamics can align perfectly, leading to successful trades when certain conditions are met.

Algorithmic Trading Insights

  • Algorithms do not need to track dynamic contract volumes; they operate based on time and price levels instead.
  • Large investment firms often engage in practices like spoofing orders, which can mislead retail traders into making poor decisions.
  • The speaker stresses that understanding time-based strategies is more critical than focusing solely on order depth or ladder analysis.

Lunch Macro Strategy

  • The lunch macro strategy starts at 11:30 AM and can extend until 1:30 PM. Traders should monitor for sell-offs during this period.
  • Identifying the first low after 10:00 AM helps traders understand potential price action and stop-loss placements effectively.

Trade Execution and Community Engagement

  • After consolidating during lunch hours, the market may shift direction towards early session lows, creating opportunities for traders who hold positions strategically.
  • The speaker encourages community members to apply learned strategies actively and highlights success stories from students who have benefited from these insights.

Final Thoughts on Trading Psychology

  • Emphasizing patience in trading, the speaker suggests that even small contracts can lead to significant gains if managed correctly over time.
  • As the day progresses into late afternoon macros starting at 3:15 PM, traders are advised to remain vigilant for potential profit-taking opportunities as markets rally post-lunch.

Market Analysis and Trading Strategies

Understanding Daily Chart Dynamics

  • The speaker presents a crude diagram of the daily chart, illustrating market highs and lows. They emphasize that after reaching a high, the market typically settles lower, indicating a low-risk buying opportunity.
  • To engage in longer trades, one must adjust their mindset to align with timeframes. The speaker references "Power Three" concepts while discussing trading strategies as the market opens.
  • For effective long-term trading, understanding the formation and closure of daily candlesticks is crucial. The speaker stresses maintaining a bullish perspective based on previous analysis.

Intraday Trading Insights

  • Holding positions into the last hour of trading is essential for maximizing potential gains. The algorithmic nature of trading means it will refer back to various levels across different timeframes.
  • The speaker critiques common misconceptions about buying and selling pressure in trading, asserting that many traders misunderstand how algorithms operate within the market.

Algorithmic Trading Mechanics

  • A personal anecdote illustrates how using algorithmic principles led to successful trades despite others' incorrect predictions. This highlights the importance of understanding underlying mechanisms rather than following popular sentiment.
  • The analogy of fishing is used to explain targeting liquidity levels in the market. Traders should aim for areas where liquidity exists, as indicated by prior analysis.

Timing and Market Movements

  • Previous analyses provided insights into expected price movements based on higher timeframe perspectives. However, short-selling opportunities still exist if approached correctly.
  • Consistency in learning and patience are emphasized as key components for success in trading. Over time, traders will develop clarity through experience with charts.

Volatility Influences

  • The discussion shifts to macro influences on volatility during specific times (e.g., 3:15 PM - 3:45 PM). These periods can lead to significant price movements due to algorithmic activity.
  • Reference is made to external events like the Jackson Hole Symposium that can create volatility in markets. Understanding these events helps traders anticipate potential price fluctuations effectively.

Market Analysis and Trading Strategy

Understanding Market Fluctuations

  • The speaker emphasizes the importance of not worrying about minor fluctuations in the market, suggesting that these movements are part of a larger trend expected to unfold over time.

Daily Chart Insights

  • A reference is made to the daily chart, highlighting key levels such as the candle's low and sell balance efficiency, which are crucial for understanding market behavior.

Anticipated Market Movements

  • The discussion includes various market thresholds and liquidity points, indicating potential areas where price action may occur based on previous trading patterns.

Cautious Trading Approach

  • The speaker expresses a preference for cautious trading, opting for smaller position sizes due to recent market movements being largely fulfilled.

Market Sentiment and External Factors

  • There is an acknowledgment of unsustainable trends in the market, with speculation that geopolitical tensions could significantly impact future price actions.

Geopolitical Influences on Trading

Potential Conflict Impact

  • The speaker warns that if tensions escalate between Iran and Israel, it could lead to significant downward pressure on markets, affecting overall sentiment.

Long vs. Short Positions

  • A strategy is outlined where long positions will be favored within bullish order flow while short positions will be approached with caution due to potential volatility from geopolitical events.

Learning and Development in Trading

Sharing Knowledge

  • The speaker emphasizes their commitment to providing high-quality information derived from reliable sources, aiming to educate others effectively.

Importance of Comprehensive Learning

  • It’s highlighted that there are no shortcuts in mastering trading strategies; thorough understanding requires dedication and effort beyond simple step-by-step guides.

Future Sessions Overview

Upcoming Session Structure

Channel: The Inner Circle Trader · Playlists: ICT 2024 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.