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ICT Mentorship Core Content - Month 04 - Liquidity Voids
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ICT Mentorship Core Content - Month 04 - Liquidity Voids

Reinforcing Liquidity Voids

In this section, the speaker discusses liquidity voids and how to anticipate ranges to fill in.

Understanding Liquidity Voids

  • A liquidity void is a range in price delivery where one side of the market liquidity is shown in wide or long one-sided ranges or candles.
  • Price typically will want to revisit this porous range or void of contrarian liquidity.
  • When prices are in a small consolidation or trading range, we call this price in balance. At some point, price will eventually move out of the consolidation when there's participation from smart money.

Smart Money and Displacement

  • Smart money is the only one that has deep enough pockets to cause price to move out of consolidations or move at all really in any significant manner.
  • This causes a price imbalance or as we call it displacement.
  • Price can stay away from that drop down aggressively where there was only two or three candles that moved away from that consolidation. That range can stay open for a while.

Timeframe for Liquidity Voids

  • There's no specific time limit on how long it's going to take for these voids to close in.
  • It's all going to be germane to what you're seeing in the Market at the time you see the voids. They can stay open for months; they can stay open just for a brief session intraday and they can close it in.

Identifying Liquidity Voids

In this section, the speaker explains what he means by "liquidity void" and how it looks like on charts.

What is a Liquidity Void?

  • A liquidity void refers to a small area of price action where it was only delivered on the downside.
  • We have long-bodied candles where price has only been delivered on the downside and has a small little gap in between the two biggest down candles.
  • This is what we framed as a liquidity void.

Example of Liquidity Void

  • The speaker shows an example of a liquidity void on a one-minute chart.
  • When we see this, it indicates that there are smart money in the marketplace and they believe that price is wanting to go lower.

Filling in Liquidity Voids

  • The nature of a liquidity void is that we'll probably see with a great deal probability I'll move back up into that level which would cap or fill in the entire liquidity void.
  • We expect price to come back up and trade right back over those same price levels.

Liquidity Voids on Charts

In this section, the speaker explains how to identify liquidity voids on charts.

Identifying Liquidity Voids

  • A five-minute chart can show pockets in these big runs.
  • The shaded area represents consolidation, and price moves aggressively away from that when there's participation from smart money.
  • A liquidity void refers to a range where there's no buy-side liquidity. It causes downward ranges like this which is what we call a liquidity void.

Conclusion

Liquidity voids are important for traders to understand because they can provide insight into market movements. By identifying them on charts, traders can anticipate potential price movements and make informed trading decisions.

Understanding Liquidity Voids

In this section, the speaker explains how to identify liquidity voids and how they can be used to anticipate price movements.

Identifying Liquidity Voids

  • A short-term support level indicates that sell stops are building up below the lows.
  • A liquidity void is identified by a big single bearish candlestick in a range where price has shown short-term support.
  • The entire range of the down candle will be covered back over at some future time with bullish price action, closing the liquidity void.

Price Action Balancing Out

  • When a bullish candle or price wing covers the entire range of the liquidity void, it means that price action has been balanced out.
  • Sell stops below those lows get ran and price runs up.

Closing Liquidity Void

  • Sometimes, after running up to close the liquidity void, it comes right back down and runs into an area of liquidity again.
  • The last low before driving up to that 104.76 level was necessary for facilitating new logs so that if they're going to take out 104.76, they're going to make it worth their while.

Trading Around Liquidity Voids

In this section, the speaker explains how traders can use information about liquidity voids to make profitable trades.

Trading Opportunities

  • There were several trades that could have been taken on both sides of the marketplace.
  • The ultimate draw on price was to get up to that 104.76 level closing in that liquidity void.

Buying Opportunity

  • That low would be the buying opportunity.
  • Buy stops would be below 104.10 on the initial short-term low right above that bold arrow denoting for the last low before it drives up to that 104.76 level.

Gap Analysis

  • If we know that they gapped down or made that liquidity void away from that consolidation around that 10480 institutional level, we can use this information to trade.
  • When price gaps in, it creates a price gap.

Second Run

  • The second time the price ran up into the 104.76 level, it just pokes its head above the previous time it went above 104.76.
  • There are two Down Candles immediately after the run into 104.76, one has a little bit longer wick and then the next candle gaps down at the opening and creates a bearish candle.

Conclusion

In this section, the speaker concludes by summarizing how traders can use liquidity voids to make profitable trades.

Using Liquidity Voids

  • Liquidity voids can be used to anticipate future price movements.
  • Traders can use information about liquidity voids to make profitable trades by identifying buying opportunities and using gap analysis.
  • It is important to pay attention to sell stops building up below short-term support levels and to look for bullish candlesticks covering entire ranges of liquidity voids.

Understanding Price Movement

In this section, the speaker explains how price moves in a market and how to identify opportunities for trading.

Price Movement

  • Price moves away from a level before gradually moving up or down towards it.
  • Bearish candles indicate an aggressive move downwards, while gaps in price show liquidity voids.
  • Common gaps can be used as an opportunity to sell at a specific price level.
  • Sell stop orders can be paired with buys to cover short positions.

Liquidity Voids and Order Blocks

  • The speaker mentions that there will be more information on these topics in supplementary teachings.
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.