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ICT Mentorship Core Content - Month 04 - ICT Fair Value Gaps FVG
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ICT Mentorship Core Content - Month 04 - ICT Fair Value Gaps FVG

Reinforcing Fair Value Gaps

In this video, the speaker explains the concept of trading inside the range and specifically focuses on reinforcing fair value gaps. The speaker uses a Euro/Dollar daily chart to illustrate this concept.

What is a Fair Value Gap?

  • A fair value gap is a range in price delivery where one side of the market liquidity is offered.
  • It is typically confirmed with a liquidity void on the lower time frame charts in the same range of price.
  • Price can actually gap to create a literal vacuum of trading thus posting an actual price gap.

Identifying Fair Value Gaps

  • On a Euro/Dollar daily chart, fair value gaps are identified as blue shaded areas.
  • The fair value gap is created by two candles: one to the left and one to the right of it.
  • The low of the previous candle and high of the next candle create an exposed area that only delivered on the downside.

Understanding Buy Side Liquidity

  • Buy side liquidity has been offered on two candles: one to the left and one to the right of our fair value gap creating down candle on the daily chart.
  • We have seen price offered on buy side liquidity movement or up movement in portion of that down candle.

Trading Inside Range

  • When studying specific time frames, gaps occur on that time frame you're looking at.
  • If you break it down further into smaller time frames, you'll probably end up seeing a liquidity void where there's multiple candles that create that open space of range.

Filling in Fair Value Gaps

  • A pocket of porous price action or only delivered on downside will eventually want to trade back up into little gapped area so we expect price to fill in that area.

Trading Strategies for Fair Value Gaps

In this section, the speaker discusses how to trade fair value gaps and double tops in a range-bound market. He explains that when the market runs below an old low, it creates a turtle soup pattern, which is an indication of a range-bound consolidation type format or profile for the marketplace. The speaker also mentions that fair value gaps are reversed for buy-side liquidity runs where the market will come back and close a fair value gap that's below the marketplace to seek to fill in the sell-side liquidity.

Fair Value Gap Trading Strategy

  • When there are equal highs on a chart delineated on a four-hour basis, and right above those equal highs is our fair value gap.
  • Eventually, price does trade back up and closes the fair value gap.
  • During range-bound consolidation type format or profile for the marketplace, traders should look for stops and fair value gaps.
  • The daily chart outlines this range of price action in the form of a fair value gap that has been filled in.

Liquidity Voids and Order Blocks

  • Liquidity voids overlap with order blocks and liquidity pools.
  • A run above an old high creates both buy stops running as well as hitting that fair value gap.
  • This movement lower creates a liquidity void.
  • Price then moves lower through where cell stops were mentioned earlier.

Understanding Liquidity Voids

In this section, the speaker explains how to identify liquidity voids using charts. He shows examples of how price trades up into levels such as 104.75 level closing that fair value gap and then trades lower, creating a liquidity void.

Identifying Liquidity Voids

  • The speaker shows an example of how price trades up into levels such as 104.75 level closing that fair value gap and then trades lower, creating a liquidity void.
  • The second time it trades up into the 104.75 level, it runs out the previous high, which was at 104.77.
  • A down candle here creates a lot of movement lower but comes off that low.
  • Price ultimately trades through where cell stops were mentioned earlier.

Supplementary Teachings for Trading Techniques

In this section, the speaker mentions that supplementary teachings will be provided to help traders dial in on specific techniques and concepts for the month of December so that they are prepared and primed for the content for January 2017.

Supplementary Teachings

  • Daily video supplements will be provided to help traders dial in on specific techniques and concepts for the month of December so that they are prepared and primed for the content for January 2017.

Trading Strategy

In this section, the speaker discusses a trading strategy that involves identifying liquidity pools and voids to determine when to buy or sell.

Identifying Liquidity Pools and Voids

  • The speaker explains how to identify efficiency in price delivery by looking at the bodies and wicks of candles.
  • The speaker points out where buy side liquidity was offered on the downside movement.
  • The speaker notes where the last point at which buy side liquidity was offered on the up movement occurred.
  • The speaker suggests being a seller at 104.55 or 104.50, looking for a move down below 104.15 to 104.10.

Efficient Price Delivery

  • The speaker emphasizes that efficient price delivery is key to successful trading.
  • The speaker highlights an example of perfect delivery of price hitting it twice at 104.55.
  • The speaker notes that once we break this low here, we're all on sell-side now.

Stop Losses

  • The speaker advises setting stop losses below the low lows.

Conclusion

In this section, the speaker concludes by wishing good luck and good trading while highlighting that there will be more scenarios outlined in a PDF file for summer's content.

Playlists: 2016 ICT Private Mentorship Core Content Month 04
Video description

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