2022 ICT Mentorship Episode 16
Multiple Setups in Trading Sessions
In this section, the speaker discusses the concept of multiple setups within trading sessions and how to identify them.
Morning and PM Sessions
- There are two trading sessions: morning and pm.
- The morning session is from 8:30 am to noon, while the pm session is from noon to market close.
- Multiple setups can occur within each session.
Identifying Setups
- Viewers have asked for examples of multiple setups.
- The speaker uses the S&P Futures Mini Contract for June 2022 as an example.
- When the market trades above relative equal highs and then has a swing high, there is an opportunity to go short.
- Look for opportunities using power three (accumulation manipulation distribution) and understanding whether we're in a premium or discount market.
Finding Opportunities in Trading
In this section, the speaker discusses how to find opportunities in trading by analyzing price action.
Analyzing Price Action
- Look for expansion moves in either direction (higher or lower).
- Identify bullish order blocks on daily charts.
- Liquidity resting below relatively equal lows increases likelihood of sell-side liquidity being probed.
- Opening price plays a role in identifying opportunities.
Understanding Market Movement
In this section, the speaker discusses how to understand market movement by analyzing price action.
Fulcrum Point Analysis
- Use fulcrum point analysis to determine how far down the market can go if it breaks certain levels.
- Identify opening prices as part of your analysis.
Trading Analysis and Strategies
In this section, the speaker discusses trading analysis and strategies. He talks about how to note the opening price of a market, how to anticipate market movements, and how to use Fibonacci retracements for swing trading.
Noting the Opening Price
- Note the opening price of a market at 8:30 am when a new candle begins.
- If you're bearish, ideally you want to see the market trade above that opening price.
- Going below the low is the initial target.
Anticipating Market Movements
- When everything starts to show a willingness to go lower, we know it's going to go lower.
- We have a bullish order block on the daily chart that draws on probabilities but not absolute guarantees.
- The reaction at that level is nice.
Using Fibonacci Retracements for Swing Trading
- Use Fibonacci retracements for swing trading by anchoring them to the highest body in a swing up and lowest body in a swing low.
- Measure distance in terms of range with bodies of candles rather than wicks or tails.
- This method can be applied across different markets.
Anticipating Trading Levels
In this section, the speaker discusses how to anticipate trading levels and how to pick the right one.
Picking the Right Trading Level
- Putting a thousand lines on your chart will eventually lead to someone seeing one of those levels get hit.
- The 4504 and a quarter level is just below the daily bullish order block at 4504.
- The low of the candle in June contract for 2022 E-mini S&P is exactly at that level.
- The algorithm measures relative equal lows and knows there's liquidity down there.
Understanding Market Analysis
In this section, the speaker explains how to analyze market trends and make predictions based on them.
Analyzing Market Trends
- Targets are more meaningful when you apply other things in analysis like running to liquidity below those relatively equal lows into a discount array which is the bullish daily order block.
- When you bring everything together, you get these types of results which are perfection.
Framing Your Daily Chart Bias
In this section, the speaker talks about framing your daily chart bias and where price expansion is likely to take place.
Framing Your Daily Chart Bias
- The majority of your analysis should be framed on your daily chart where it's likely for price expansion to take place.
- Price is likely going to draw down this daily bullish order block because it's also below those relative equal lows mentioned earlier.
- All of this builds up into the premium before the market breaks aggressively.
Identifying Entry Points
In this section, the speaker discusses how to identify entry points in price action and explains that it is taught in a mentorship program on YouTube. He emphasizes the importance of looking at higher time frames to provide context for lower time frame trades.
Key Points:
- The speaker explains that an entry point can be found by looking at price action that sells off into a short-term low below a daily bullish order block.
- The speaker emphasizes the importance of looking at higher time frames to provide context for lower time frame trades. He uses the example of a fair value gap on a 15-minute chart coupled with a run at 9:30 am as an indication of potential bullish order blocks.
- The speaker mentions his "real money real results" series and addresses questions about having no more than four trades per day. He encourages viewers to participate actively in learning rather than just casually watching.
- The speaker explains that there are typically two to three setups in the morning session due to volatility coming in at the opening. He advises students to look for initial moves to qualify expected lower prices.
- The speaker shows how a small imbalance above a short-term high on a one-minute chart can be used as an entry point when combined with higher time frame analysis.
Managing Volatility
In this section, the speaker discusses managing volatility during trading and provides tips for avoiding getting caught up in initial volatility.
Key Points:
- The speaker warns that volatility during opening hours can be tricky and cause traders to get offside quickly if they are not sure what they are doing.
- The speaker advises viewers to look for initial moves to qualify expected lower prices and have multiple setups available. He shows how a small imbalance above a short-term high on a one-minute chart can be used as an entry point when combined with higher time frame analysis.
Active Learning
In this section, the speaker emphasizes the importance of active learning and encourages viewers to pause the video and focus undisturbed in order to pull out key insights.
Key Points:
- The speaker emphasizes that active participation is the best way of learning and encourages viewers to pause the video and focus undisturbed in order to pull out key insights.
- The speaker warns that if viewers waste these opportunities, they will not learn effectively. He explains that these opportunities repeat every single day.
The Logic of Trading
In this section, the speaker emphasizes the importance of being able to feed oneself and one's family without relying on a job. He shares his trading logic and encourages viewers to look for similar setups.
Shorting Opportunities
- Look for shorting opportunities based on the speaker's suggested bias.
- First fair value gap: short when market returns back up into it and aim for liquidity at the fulcrum point.
- Second fair value gap: short when market trades back up into it and take profits if partial or move stop to break even.
- Third fair value gap: short after aggressive move lower and retrace back up.
Risk Management
- Take one contract off below first objective to balance risk.
- Markets are more precise than forex, but be aware of quarter-point stops.
Forex vs. Professional Markets
In this section, the speaker discusses the differences between forex markets and professional markets.
Differences Between Forex and Professional Markets
- Professional markets are more precise and uniform in delivery compared to forex markets where brokers can open spreads on traders.
Following the Markets
The speaker discusses following the index features and transitioning to forex when they loosen up. They also discuss taking advantage of retracements in the market.
Retracements in the Market
- Getting short during a shallow run below an old low.
- Anticipating a deeper run and taking profits below that low as a partial.
- Understanding where it is likely to go and reach for, making it easy to know what you are looking for.
- Trades repeat like buses on a schedule, so there is no right to be angry about missing one.
Liquidity Resting
The speaker discusses liquidity resting and how it can affect trading decisions.
PM Session By Side Liquidity Pool
- The pink rectangle represents the PM session by side liquidity pool.
- This area is where liquidity could be drawn on Fridays because it's likely to pull back up into a premium.
- The market moves from discount to premium seeking buy stops, sell stops, imbalances or fair value gaps.
Reaching for Liquidity
- On Fridays, anticipate liquidity drawing people who want to hold onto their trades over the weekend.
- The market seeks out liquidity in the form of buy stops and sell stops or imbalances or fair value gaps.
Trading Strategies and Market Logic
In this section, the speaker discusses his trading strategies and market logic. He explains why he does not use the DOM (Depth of Market) and shares his opinion on its usefulness. He also talks about how smart money operates in the market and how to identify their moves.
Why I Don't Use the DOM
- The speaker does not trade with the DOM.
- The DOM may not be useful because there is spoofing that goes on, and those orders may not be there when the price goes there.
Smart Money's Moves
- Smart money sells short at relative equal lows.
- When they cover a short, they are no longer bearish but bullish.
- They engineer buy-side liquidity by selling to waiting buyers at buy stops.
- They create more liquidity for buying by selling to retail crowds who think support has been broken.
PM Session Buy Side Liquidity
In this section, the speaker talks about a PM session by celebrity pool that could likely reach up into an opposing move. He explains why position squaring is expected on Fridays and how smart money engineers buy-side liquidity.
PM Session Buy Side Liquidity
- On Fridays, position squaring is expected as traders take profits before the weekend.
- Smart money engineers buy-side liquidity by buying down here or using an imbalance if it trades down into that area.
- If they're going to buy it, they will target the buy stops up here and sell right to those buy stops.
- They aim for these areas because it creates more liquidity for buying.
Moving from Discount to Premium Intraday
In this section, the speaker talks about moving from a discount to a premium intraday. He explains how old highs become support when they are broken and why analysis is not always consistent.
Moving from Discount to Premium Intraday
- The market moves from a discount to a premium intraday.
- Old highs are a discount array, but if we trade above an old high, that old high becomes a discount array.
- Sometimes old highs being broken become support, but this is not always consistent.
- Analysis may be right about specific key highs and lows, but it's not always consistent.
English Understanding Intraday Volatility and Liquidity
The speaker discusses how to work within intraday volatility using liquidity, time of day, and day of the week. He emphasizes the importance of annotating charts and backtesting to discover repeating patterns.
Using Old Highs as Support
- When the market comes back down and touches an old high, it could act as support.
- An old high that has been broken will act as support.
- Timestamp:
Fulfilling Liquidity
- Once we get up into a shaded pink area, we have fulfilled by side liquidity in that area.
- Timestamp:
Shift in Market Structure
- If the market breaks below swing low, market structure shifts.
- There is an imbalance at this point.
- A fair value gap shift occurs when retracing back up into the fair value gap.
- Timestamp:
Anticipating Trading Up Into Fair Value Gap
- If there is a fair value gap with a small one right above it, anticipate trading up into it but use it as your entry to go short.
- Aim for the order block.
- Timestamp:
Building Strength in Income Ability
- This skill set can fortify any weak links in your financial chain and build strength in your ability to make income and build legacy wealth.
- Spend time learning this skill set by going through old charts and annotating them.
- Backtesting is a mode of discovery that proves efficacy if you can see things repeating.
- Do not be afraid of doing it wrong; everyone does it wrong in the beginning.
- Make it a practice to annotate charts even when trading with live funds.
-Timestamp:
Retaining Knowledge Through Positive Reinforcement
In this section, the speaker explains how to retain knowledge through positive reinforcement and annotations.
Creating Creases in Your Brain
- Annotations trick your brain into believing you've seen something all along.
- Over time, this creates creases in your brain where that knowledge is retained.
- The brain remembers it as a real experience that you endured.
Positive Reinforcement
- Record with positive reinforcement in your commentary.
- Never put negative comments in your annotation.
Liquidity Imbalances and Time of Day
In this section, the speaker discusses what makes markets move and emphasizes liquidity imbalances and time of day.
Algorithmic Trading
- The algorithm is based on where the money is and who's the most easy prey right now.
- It has nothing to do with ratios or harmonic patterns.
- All you're looking for is liquidity imbalances and time of day.
Stripping Away Preconceived Notions
- Strip everything you think you know about the markets away.
- Give me a couple of months, stay with me for a couple of months here.
- You will put everything else down and see it like this because this is the truth.
Algorithmic Trading vs. Traditional Methods
In this section, the speaker explains how algorithmic trading works compared to traditional methods.
Algorithmic Trading Explained
- These markets are algorithmic-based; they have absolutely nothing to do with ratios or harmonic patterns.
- The buying and selling pressure is a myth because these markets are going to go higher regardless of how many contracts come in.
The Candle Creation Process
In this section, the speaker explains how candles are created and emphasizes that only two transactions are needed.
Two Transactions to Create a Candle
- How many contracts does it take for this candle to move from that opening price to that closing price? It only needs two transactions.
- One transaction when it gaps up here and reprices to that price point, and another when someone comes in with a market order.
Results Matter
In this section, the speaker emphasizes the importance of putting in effort and seeing results.
Putting in Effort
- Put everything you think you understand aside for a moment.
- Do the things I'm telling you to do.
- You will find what you're looking for but you got to put the work into it.
Seeing Results
- When students see results, they fall in love with consistency.
- This community is getting bigger because it's infectious; results matter.
Finding Your Unique Trading Model
In this section, the speaker discusses how traders can find their unique trading model by identifying a setup that is similar every time they take it.
Identifying Your Unique Model
- A unique model is a setup that is so similar every time you take it, it repeats the same general idea just in a different chart on a different day in a different time frame.
- Each trader can have their own unique model based on where they look for setups and what narrative they are looking for.
- There are many setups available, and everything is fractal. Traders can do high-frequency trading with second charts if they want to.
Building Equity Through Position Pyramiding
In this section, the speaker explains how traders can build equity through position pyramiding.
Position Pyramiding
- Position pyramiding involves buying multiple positions at different levels and rolling them up into your objective.
- This method helps build equity and velocity in equity growth compared to reckless buying of one position after another.
Backtesting and Incorporating Different Arrays
In this section, the speaker talks about backtesting and incorporating different arrays into trading strategies.
Backtesting and Incorporating Different Arrays
- Traders should study the things being taught at their own pace to understand multiple trade setups.
- With time and effort, traders will be able to see things in price action that they don't identify right now even in hindsight.
- The speaker has stripped down the trading process and made it as streamlined as possible to help traders learn.