ICT On Institutional Price Levels & New Science Of Fib Use

Challenging Preconceived Notions about Technical Analysis

In this section, Michael discusses how he aims to challenge preconceived notions about classical analysis concepts in technical analysis. He encourages viewers to explore their charts and evaluate the effectiveness of traditional teachings.

The Advantage of Algorithmic Thinking

• Michael's background in computer science and information systems has given him a unique perspective on trading.

• He believes that algorithmic thinking can provide valuable insights into market behavior.

• While understanding computer programming is not necessary, it can help in comprehending his approach.

Price is Not Random

• Contrary to popular belief, price movements are not random or solely driven by supply and demand.

• Traditional technical analysis concepts such as trend lines, indicators, and support/resistance levels do not hold true for Michael.

• He emphasizes that everything he teaches is based on his personal beliefs and experiences.

Transitioning from Traditional Approaches

In this section, Michael shares his journey of starting with traditional teachings but eventually realizing their lack of profitability. He explains how he shifted his perspective to think like someone trying to disrupt conventional trading strategies.

Viewing the Market as a System

• Michael started looking at the market from a systems analyst perspective.

• He aimed to understand how collective thought processes could influence price direction or specific levels of interest.

• By treating the market as a system, he discovered patterns and predictability that challenged traditional notions.

Price Manipulation and Automation

Here, Michael delves into the mechanics of price manipulation and its evolution from floor trading to electronic trading. He highlights the role of individuals or entities controlling price fluctuations.

The Transition from Floor Trading to Electronic Trading

• The illusion of floor traders influencing price movements was debunked by a floor trader named George and Jo.

• George revealed that certain days resulted in significant losses, indicating manipulation rather than genuine market forces.

• Michael believes that someone is always pulling the strings behind price fluctuations, even in today's algorithm-driven trading environment.

The Mechanics of Price Manipulation

In this section, Michael discusses the mechanics of price manipulation and challenges the notion of market safeguards. He acknowledges that his perspective may be seen as conspiratorial but promises rewarding insights for those who continue watching.

Market Control and Illusions

• Price manipulation has existed since the beginning of markets to prevent crashes and maintain control.

• Market safeguards, such as circuit breakers, are designed to create an illusion of protection for investors.

• Michael asserts that there is a clear order to price action, indicating the absence of randomness.

Support and Resistance Levels

Here, Michael questions the effectiveness of traditional support and resistance levels taught in books. He highlights their limitations and asks viewers to consider how often these levels fail.

Placing Support and Resistance Levels

• Traditional teachings suggest placing support and resistance levels based on old highs or lows where price bounced or repelled.

• However, this approach often fails to provide consistent results.

• Michael prompts viewers to question which support or resistance level should be used and how one can determine if they will hold.

These notes cover key points from the transcript using timestamps when available.

Understanding the Frustration and Determination in Trading

The speaker discusses the frustration encountered when starting out in trading and the determination to figure things out. They emphasize the need for analytical thinking and putting in extensive hours of study.

Frustration and Determination

• Starting out in trading can be frustrating, with problems arising when implementing ideas.

• The speaker experienced frustration after encountering adversity in their own trading.

• They had to think analytically and put in long hours of study to overcome these challenges.

• Despite initial lack of confidence, they were determined to figure it out and dedicated more time than a full-time job would require.

Abandoning Traditional Approaches for a Clearer Focus

The speaker explains their decision to abandon traditional approaches such as support/resistance and indicators. They emphasize the importance of focusing on what makes sense based on price behavior.

Abandoning Traditional Approaches

• The speaker abandoned traditional approaches like support/resistance and indicators due to their lack of effectiveness.

• They chose to focus only on things that made sense based on price behavior.

• Generic characteristics of price behavior that repeat became their main focus.

• Indicators, trend lines, and other methodologies are flawed as they promote randomness rather than understanding market control.

Understanding Order Flow and Market Control

The speaker introduces the concept of order flow as a key factor in understanding market movements. They highlight the limitations of books, indicators, and proprietary systems.

Order Flow and Market Control

• Price movement is driven by order flow, which indicates where the money is flowing.

• Books often fail to teach about order flow because authors are indoctrinated into believing their own systems or indicators are the key to profitability.

• The speaker emphasizes that price action is not random, but the interpretation of indicators and methodologies is.

• Promoters of proprietary systems should be approached with caution, as they overlook the generic and simple approach of focusing on price.

Market Moves Where the Money Is

The speaker emphasizes that market movements are determined by where the money is flowing. They encourage suspending belief in indicators and methodologies for a moment to understand this concept.

Market Movements Based on Money Flow

• The market moves based on where the money is flowing, often referred to as a stop run.

• Risk management and money management are crucial due to price randomness.

• Wealthy traders who consistently make profits understand what's going on in the market and repeat successful strategies.

• Price action itself is controlled, while interpretations of indicators and methodologies introduce randomness.

Understanding Zero Levels in Price Movement

The speaker introduces zero levels (big figures) and 50 levels in price movement. They explain how understanding these levels can provide insights into algorithmic price movement.

Zero Levels in Price Movement

• Zero levels (big figures) and 50 levels play a significant role in price movement.

• These levels can be observed at specific prices such as 120, 121, etc., or at increments like 120.50 or 120.15.

• Understanding how price moves above and below these levels helps grasp algorithmic price movement.

New Section

In this section, the speaker discusses how to use key levels in charts to identify turning points and find setups using institutional pricing.

Using Key Levels for Price Action Analysis

• By identifying key levels in a chart, one can determine the most likely or salient levels for current price action.

• Institutional pricing such as 5000 levels, 20s, and 80s can be used to find these key levels.

• Reactions around the 50 levels and zero-zero levels are important to observe. For example, if price moves down to a certain level but does not stop there, it indicates that the level may not act as strong support or resistance.

• Double bottoms or double tops can provide opportunities for trading. When price reaches equal levels on a chart, it often probes that area before anticipating a rejection and moving in the opposite direction.

New Section

In this section, the speaker explains how market structure shifts can affect price action analysis and highlights the importance of understanding daily bias.

Market Structure Shifts and Daily Bias

• Market structure shifts occur when there is a change in the behavior of price within a specific area on a chart.

• The algorithmic trading system (algo) plays an important role in determining market structure shifts. For example, if price repeatedly fails to go below a certain level despite attempts, it suggests that algo is accumulating long positions at that level.

• Zero-zero levels and 50 levels are significant milestones on charts. Understanding the daily bias helps determine whether price is likely to continue in its current direction or potentially reverse at these key levels.

• Analyzing hourly charts can help identify potential turning points based on market structure shifts.

New Section

In this section, the speaker addresses the misconception that certain setups or techniques are cherry-picked to look good and demonstrates how to find similar setups consistently.

Avoiding Cherry-Picking and Finding Consistent Setups

• The speaker presents an example of a setup on the euro-dollar hourly chart.

• Instead of relying on swing lows and swing highs, the focus is on actual price points and candle bodies.

• Brokers' prices may slightly differ from interbank levels due to their own internal processes. Understanding this can help remove ambiguity in placing Fibonacci retracement levels.

• The speaker emphasizes that finding consistent setups is not about cherry-picking but rather understanding market structure shifts and using specific techniques consistently.

New Section

In this section, the speaker discusses resistance levels, market structure shifts, and the importance of focusing on actual price points rather than relying solely on indicators like Fibonacci retracements.

Understanding Resistance Levels and Market Structure Shifts

• A key swing high that breaks previous swing highs indicates a shift in market structure.

• Retail traders often see these swing highs as resistance, but there has been a change in market dynamics.

• Placing Fibonacci retracements based solely on swing lows and swing highs may not accurately reflect actual price points due to broker variations.

• It is important to focus on candle bodies and understand how brokers deliver prices to platforms.

• By considering actual price points, one can identify significant events in price action and make more informed trading decisions.

The transcript provided does not cover the entire video.

Using Price Points for Bullish or Bearish Signals

The speaker discusses the need to find a way to reference specific price points in order to determine bullish or bearish signals. They express skepticism towards using moving averages and emphasize the importance of finding a generic method that can be applied programmatically.

Incorporating Specific Price Points

• The speaker wanted to incorporate a specific observation in price action that could be seen and measured over long periods of time.

• They stripped down their charts, disregarded indicators, and focused on studying price action alone.

• This observation was not taught in any books or educational materials they had come across.

Importance of Referencing Price Points

• As a computer programmer, the speaker needed to be able to reference specific price points.

• Brokers' high and low prices may vary slightly due to manipulation for their own benefit.

• The speaker advises using the body of the candle as it represents the bulk of the volume.

Understanding Fibonacci Placement

The speaker explains their approach to Fibonacci placement and highlights its effectiveness when used with specific swing highs and swing lows. They also discuss how prices gravitate towards these levels.

Placing Fibonacci Levels

• Some suggest placing Fibonacci levels from very low to very high, but this approach may not always work effectively.

• The speaker recommends placing Fibonacci levels from the body's lowest open or close at a swing low up to the highest open or close at a swing high.

• Prices tend to gravitate towards these four levels, providing support and resistance.

Science Behind Support/Resistance and Fib Levels

• The speaker provides a scientific approach for finding support/resistance by anchoring Fibonacci levels based on institutional mindset rather than retail thinking.

• By analyzing price movements, they demonstrate how prices react at different Fibonacci levels.

Analyzing Price Movements and Fibonacci Levels

The speaker analyzes price movements and demonstrates the effectiveness of Fibonacci levels in predicting price behavior. They emphasize the importance of thinking with an institutional mindset.

Analyzing Price Movements

• The speaker examines a specific price movement from 17 big figure to the 1820 institutional price level.

• They anchor the Fibonacci level at the starting point (17 big figure) and observe how prices react at different levels.

Institutional Mindset for Fib Placement

• The speaker advises placing Fibonacci levels based on actual price levels rather than swing highs and lows.

• By calibrating Fibonacci levels to specific price points, they demonstrate how prices gravitate towards these levels.

Alternative Approach to Fibonacci Placement

The speaker presents an alternative approach to Fibonacci placement, focusing on using actual price levels instead of swing highs and lows. They explain how this method can provide effective results.

Alternative Approach to Fib Placement

• Instead of using swing highs and lows, the speaker suggests placing Fibonacci levels directly on actual price levels.

• By analyzing price movements, they demonstrate how prices react at different Fibonacci levels placed using this alternative approach.

Importance of Institutional Mindset

• Thinking with an institutional mindset is crucial for accurate Fib placement.

• Retail thinking may lead to incorrect placement of Fib levels, while an institutional mindset considers where algorithms deliver prices.

This summary covers key points from the transcript but does not include all details mentioned in the video.

Proper Way of Using Fibonacci Levels

The speaker explains the proper way of using Fibonacci levels in trading.

Understanding Price Levels

• Price moves based on four price levels, not just the swing high or low.

• Anchor points should be set at these price levels for accurate Fibonacci analysis.

Importance of Reference Points

• When placing a Fibonacci on a swing low, determine the level it corresponds to (e.g., 50%, 80%, double zero).

• Use that specific level as the anchor point for Fibonacci analysis.

Defending Levels vs. Reaching for Stops

• Price action at erroneous levels does not mean it was unnecessary or aimed at triggering stops.

• Traders defend levels and sweep through them to account for potential orders.

Computer Program Analogy

• Imagine if price were controlled by a computer program that couldn't see all orders.

• When price reaches and sweeps through certain levels, it is sufficient for market dynamics.

Clarification on Trading Approaches

The speaker clarifies his stance on trading approaches and addresses support for Tom Dante's methodology.

Not a Pissing Match

• The speaker emphasizes that he is not disrespecting anyone but correcting misconceptions when necessary.

• His intention is not to engage in a competition or argument with other traders.

Fibonaccis Based on Price Levels

• Fibonacci analysis should focus on key price levels rather than specific swing highs or lows.

• Optimal trade entries are determined by anchoring Fibonaccis to relevant price levels.

Calibrating Fibonacci Retracements

The speaker explains how to calibrate Fibonacci retracements based on specific price levels.

Finding Optimal Trade Entry

• To find an optimal trade entry, start with the 80% level and adjust it to the 50% level.

• This calibration provides a shortened range for potential trade setups.

Understanding Price Behavior

The speaker discusses how price behavior relates to Fibonacci levels and stop losses.

Stop Losses and Price Levels

• Commonly, stop losses are placed just below or at the old low.

• Price may sweep through these levels without specifically targeting individual orders.

Logical Price Points

• Consider that price may not know where specific orders are but can anticipate their likely locations.

• Exiting trades at logical price points close to key price levels is advantageous.

Analyzing Buy Point with Fibonacci Retracement

The speaker analyzes a buy point using Fibonacci retracement and explains the process.

Standard Technical Analysis Approach

• Using standard technical analysis, anchor the Fibonacci from the swing low to the swing high.

• Evaluate if the retracement reaches key Fibonacci levels (e.g., 62%, 70.5%, 79%).

Missed Opportunities with Traditional Approach

• Traders who solely rely on traditional Fibonacci methods might miss out on profitable trade entries.

• Calibrating Fibonaccis based on relevant price levels can provide better insights.

Adjusting Fibonacci Levels for Optimal Trade Entry

The speaker demonstrates adjusting Fibonacci levels for optimal trade entry in a bullish scenario.

Calibration for Better Trade Entry

• If traditional Fibonaccis do not retrace deep enough, adjust them to align with relevant price levels.

• In this example, calibrating Fibonaccis from the 80% level down to the 50% level provides an optimal trade entry.

Considering Mile Markers in Price Movements

The speaker explains how mile markers in price movements can indicate potential retests or reversals.

Key Price Levels as Mile Markers

• When price surpasses a key big figure or mid-figure, it may retest or stay above that level.

• Three conditions determine the outcome: come back down to it, not come back down to it, or reverse through it.

Algorithmic Decision-Making

• The speaker references computer programming logic (if-then syntax) behind algorithmic decision-making.

• Energy required for price movements indicates potential retests or reversals at specific levels.

Exiting Trades at Logical Price Points

The speaker emphasizes the importance of exiting trades at logical price points based on valuation and energy in price movements.

Exiting Early for Optimal Prices

• Exiting trades at logical price points close to key levels is crucial.

• Consider the energy required for price movements and anticipate potential retests or reversals.

Consistency of Fibonacci Analysis

The speaker addresses concerns about cherry-picking examples and highlights the consistency of Fibonacci analysis.

Experience with Fibonacci Analysis

• The speaker assures viewers that his approach to Fibonacci analysis is not limited to cherry-picked examples.

• He encourages traders to review their own charts and observe how Fibonacci levels align with bullish market conditions.

Exit Strategies Based on Logical Price Points

The speaker explains why exit strategies should be based on logical price points near key levels.

Getting Out at Logical Price Points

• To optimize exit strategies, aim for logical price points close to key levels.

• Delivery of price movement provides insights into reaching these levels easily.

Understanding Valuation in Trading

The speaker emphasizes the importance of understanding valuation in trading decisions.

Focus on Valuation

• Valuation is crucial in determining whether to be a buyer or seller.

• Entry patterns are relatively easy, but determining the correct bias (bullish or bearish) is the hardest part.

Applying Fibonacci Analysis in Bearish Scenarios

The speaker demonstrates applying Fibonacci analysis in bearish scenarios.

Analyzing Bearish Price Movement

• When analyzing bearish price movement, look for potential setups at key levels.

• Apply Fibonacci retracement from relevant price points to identify optimal trade entries.

Conclusion

The transcript provides insights into the proper way of using Fibonacci levels in trading. It emphasizes anchoring Fibonaccis to specific price levels rather than swing highs or lows. The speaker clarifies his stance on trading approaches and highlights the importance of calibrating Fibonaccis based on relevant price levels. Understanding price behavior and mile markers can help anticipate potential retests or reversals. Exiting trades at logical price points near key levels is crucial for optimizing trade outcomes. The consistency of Fibonacci analysis is demonstrated, and the importance of understanding valuation in trading decisions is emphasized.

New Section

The speaker discusses the importance of understanding price action and using Fibonacci levels to identify optimal trade entries.

Placing Fibonacci Levels (0:41:53 - 0:42:26)

• Fibonacci levels should be placed based on key price points, such as swing highs and lows.

• Understanding the bias of the market (bullish or bearish) is crucial when applying Fibonacci levels.

• The speaker emphasizes the use of institutional price levels rather than swing highs and lows.

Analyzing Price Movement (0:42:50 - 0:43:42)

• The speaker shares their approach to analyzing price movement by looking at how price moves between key levels.

• Even if price does not touch a specific level but shows a willingness to go through a short-term high or low, it can still be considered as a reference point.

• Examples are provided to illustrate how price reacts around different levels.

Using Fibonaccis for Trade Entries (0:44:06 - 0:45:55)

• The speaker explains their process for determining trade entries using Fibonacci levels.

• They consider whether the level is being worked up and down, as well as whether there is a willingness to reach that level.

• Even if price doesn't hit a specific level but reverses from a nearby swing high or low, it can still be used as a buying or selling opportunity.

• Institutional price levels are emphasized over swing highs and lows for setting targets.

Understanding Order Flow (0:46:28 - 0:47:52)

• The speaker highlights the importance of understanding order flow in analyzing market dynamics.

• They criticize certain popular approaches like supply and demand theory for having limitations in providing context within the market.

• Cutting through candles and considering multiple factors beyond specific price points is necessary for accurate analysis.

New Section

The speaker continues to discuss the effectiveness of using Fibonacci levels and institutional price levels for trade analysis.

Applying Fibonacci Levels (0:45:16 - 0:46:48)

• The speaker demonstrates how to apply Fibonacci levels based on institutional price levels rather than swing highs and lows.

• They emphasize the importance of observing price reactions at these levels to identify buying or selling opportunities.

Benefits of Using Institutional Price Levels (0:47:04 - 0:47:52)

• The speaker asserts that using institutional price levels provides a more accurate understanding of market dynamics compared to other retail approaches.

• By incorporating Fibonacci analysis with institutional price levels, traders can gain unique insights and make profitable trades.

This summary is based solely on the provided transcript.

New Section

In this section, the speaker discusses using Fibonacci and institutional price swings to predict market movements.

Using Fibonacci and Institutional Price Swings

• The speaker explains that they use Fibonacci to grade institutional price swings in order to predict market movements. They do not rely on trend lines, moving averages, or stochastics.

• Understanding the direction of the market (bullish or bearish) is crucial before entering a trade.

• The speaker emphasizes the importance of knowing the draw (buy stops) on price at certain levels.

• An example is given where price reacts at a level and sweeps through it, indicating a buying opportunity.

• Another example is provided where price reacts at a level and fails to reach a higher level, suggesting a bearish context.

• The speaker mentions that their personal trades are framed with reasons that may not be apparent to others but are based on analysis of price action.

New Section

In this section, the speaker provides another example of using Fibonacci and institutional order flow for optimal trade entry.

Example of Optimal Trade Entry

• A swing high and swing low are identified in the market.

• The Fibonacci tool is used from the swing high to the swing low level.

• Price reacts by going higher but fails to reach a certain level, indicating institutional order flow defending that level.

• The context of the market being bearish is considered when determining an optimal trade entry point.

• The consolidation of price action and volume are analyzed to identify opportunities for short positions.

New Section

In this section, the speaker addresses misconceptions about their methodology and highlights examples from the transcript.

Addressing Misconceptions

• The speaker acknowledges receiving opinions expressed about them and their methodology but emphasizes that many times these opinions are based on ignorance.

• The speaker mentions that there are numerous examples in the transcript that demonstrate their approach to trading.

• An additional example is provided where a swing high and swing low are used to analyze market context and determine trade entry points.

New Section

In this section, the speaker discusses the importance of understanding market context and shares insights into their personal trading approach.

Understanding Market Context

• The speaker emphasizes the need to understand whether the market is bullish or bearish by analyzing price action and reversals.

• A personal trading approach is mentioned, where trade entries are framed based on analysis of price action and time spent at certain levels.

• The speaker highlights the significance of volume and institutional opportunities for short positions.

This summary provides an overview of the main topics discussed in the transcript. For a more detailed understanding, it is recommended to refer to the specific timestamps provided.

New Section

The speaker discusses the use of Fibonacci levels in trading and explains that they should not be solely relied upon for identifying swing highs and lows. Instead, Fibonacci levels can be used as a reference point for overbought and oversold conditions.

Understanding Fibonacci Levels

• The speaker mentions that every time they have given an idea, it is based on the concept they started exploring on July 10th, 1994.

• Fibonacci levels provide an opportunity to identify evidence but should not be seen as the sole indicator for swing highs and lows.

• The magic behind Fibonacci levels lies in using them as a reference point for overbought and oversold conditions.

• The speaker emphasizes that they do not rely on Fibonacci levels for anything other than identifying overbought and oversold conditions.

New Section

The speaker further explains why Fibonacci levels should not be forced onto swing highs and lows. They clarify that the profitability of using Fibonacci levels comes from their reference to overbought and oversold conditions.

Profitability of Using Fibonacci Levels

• The speaker states that the profitability of using Fibonacci levels does not come from their association with swing highs and lows.

• Instead, Fibonacci levels are useful because they act as a reference point for identifying overbought and oversold conditions.

• Detailed explanations about this concept are provided in the mentorship program offered by the speaker.

• Subscribers who trust in the power of Fibonacci levels can still benefit from daily buy signals while using them solely as a reference point.

New Section

The speaker acknowledges that some viewers may want to learn all there is to know about these concepts. They mention that detailed teachings about these topics are available exclusively in their mentorship program.

Mentorship Program Benefits

• The speaker acknowledges that some viewers are eager to learn all the concepts and details.

• They mention that these types of concepts and teachings are exclusively available in their mentorship program.

• Subscribing to the mentorship program provides opportunities to learn in-depth concepts and identify trading opportunities that may otherwise be missed.

New Section

The speaker concludes by mentioning that further information and opportunities can be found in the mentorship program.

Final Thoughts

• The speaker reiterates that valuable information and opportunities are exclusively shared within the mentorship program.

• Viewers who are interested in gaining a comprehensive understanding of these concepts should consider joining the mentorship program.

• The speaker signs off, indicating that more will be shared in future sessions.

Timestamps have been associated with each bullet point as requested.