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ICT Mentorship Core Content - Month 07 - Short Term Trading Low Resistance Liquidity Runs Part 2
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ICT Mentorship Core Content - Month 07 - Short Term Trading Low Resistance Liquidity Runs Part 2

ICT Mentorship Short-Term Trading Lesson 6: Low Resistance Liquidity Runs in Trending Conditions

In this lesson, the focus is on low resistance liquidity runs in trending conditions. The market moves from a time and price theory for looking back 20, 40, and 60 trading days for referencing time and for short-term trading. The lesson will use a case study of buying during an upswing or a trending bull market.

Using PD Arrays to Trade from Discount to Premium Market

  • In training conditions, the same principle applies as in low resistance liquidity runs in consolidations.
  • Focus primarily on the last three months for the most salient institutional reference points.
  • Use PD arrays based on a premium or discount market to trade from one PD array to the next ideally from a discount to a premium range that can be easily defined.

Case Study: Liquidity Runs and Trending Conditions

  • Focus on an example of buying during an upswing or a trending bull market.
  • Look at the pound again but at a different fractal of the larger consolidation.
  • Add PD arrays from monthly, weekly, daily charts and use this information in conjunction with trending environment conditions.
  • Use this information to trade from low-end discount to high-end premium markets.

One Shot One Kill Trading Model

  • Focus specifically on the four-hour chart as it's easier to frame one-shot one kill or short-term trades with high probability trading conditions.
  • Use date dividers by holding down control and touching letter Y; every vertical dotted line represents beginning and end of new trading week when looking at price with PD arrays on chart.
  • Use gradients shown across all discount and premium ranges so we can see how the market has different levels of progressive premium and progressive discount levels.

Trading Strategies for High Probability Moves

In this section, the speaker discusses how to identify high probability movements in the market and reach opposing levels. He also talks about setting realistic pip objectives.

Identifying High Probability Movements

  • Look for a divider level or quadrant level where there is high probability movement away from that level and then reach for an opposing level.
  • When price comes down into the fair value gap, it may trade back to a breaker or fair value, which gives an ideal scenario to get long.
  • You don't need the absolute low in a bullish weekly close or up weekly range to be successful. You just need one setup that makes logical sense and gives you a realistic pip objective.

Setting Realistic Pip Objectives

  • Start by looking for 30 to 50 pips per week and then graduate into 50 to 75 pips per week.
  • Don't try to go more than 100 pips per week as it can be harder to achieve.
  • Define a perfect entry and exit strategy with flexibility on both ends.

Encapsulating Weekly Range on Four Hour Chart

  • Use four-hour charts to encapsulate the weekly range.
  • Look at logical areas of premium PD arrays where the market reaches up into them.
  • The power three teaches that if the market is bullish, the open will be near the low or range, and the close will be near the high of the range.

Using Monthly, Weekly, and Daily PD Arrays

In this section, we learn how to use monthly, weekly, and daily PD arrays when trading.

Using Monthly, Weekly, and Daily PD Arrays

  • Use monthly, weekly, and daily PD arrays when trading.
  • The algorithm works within a defined range, so look at the highest high and lowest low in the form of bodies to define that range.
  • Break down the range to get more insights to trade off of.

High Probability Levels

  • When trading, look at the trading ranges that the market is trading in.
  • Look for high probability levels such as a movement down into the midway point or equilibrium of the overall consolidation.
  • Study price reactions and how price is moving.

Introduction to Pivot Points

The speaker introduces pivot points and explains how they are calculated based on the high and low of a price swing.

Pivot Points

  • Pivot points were originally used by pit traders to calculate projected highs and lows.
  • Grading a price swing helps identify the market's highest probable support or resistance without relying on an old reference point.
  • Institutions' order flow determines new levels of support institutionally based on a discount PD array.
  • Trading from one PD array to another with the least resistance can move from premium to discount or discount to premium Market valuation.

Mile Markers for Algorithmic Trading

The speaker explains how grading a price swing can help identify mile markers for algorithmic trading.

Algorithmic Trading

  • When the market reaches for specific measures, it is like a mile marker for the algorithm, which will reach for it and give participants at banks opportunities to facilitate trade.
  • If it breaks through a level, it will most likely reach for the next level up.
  • Breaking down ranges into quadrants helps define where the market is going and anticipate what the weekly range will do in a completed sense.

Premium vs Discount Markets

The speaker explains how premium and discount markets work and how they can be anticipated using PD arrays.

Premium vs Discount Markets

  • In a premium market, prices have shown willingness to sell off before being away from its lowest levels of historical buys or where old lows have formed.
  • Looking at where PD arrays are in a four-hour chart can anticipate what the weekly range will do in a completed sense.
  • Anticipating where price may logically reach up to when it's in a discount market or where it may reach down to when it's in a premium market helps define the full weekly range.

Weekly Exercise

The speaker encourages viewers to try anticipating the weekly range every week using PD arrays.

Weekly Exercise

  • Before the market starts trading on Sunday, load up your four-hour chart with PD arrays and make notations on where you think price may logically reach up to when it's in a discount market or where it may reach down to when it's in a premium market.
  • By doing this exercise every week, you can anticipate how each week this same component or element of one shot one kill will repeat itself.

Trading in Probabilities

In this section, the speaker discusses how traders look at statistical edges and probabilities to determine market movements.

Using PD Arrays to Determine Institutional Order Flow

  • Traders use PD arrays to identify old areas of institutional order flow.
  • The PD array matrix is used to determine which PD arrays exist on a chart and what levels are most likely to be reached.
  • The goal is not just to find support levels but also old areas of institutional order flow.

Benefits of Using a Four Hour Chart

  • A four hour chart allows traders to predict where the market may go between Monday and Friday.
  • Traders do not need the highest high or lowest low; they just need to know the probable direction and key levels.
  • Using PD arrays from monthly, weekly, daily, and four hour charts provides the highest probable trade reactions.

Refining Market Analysis with Hourly Charts

  • An hourly chart provides more detail and opportunities for reducing risk.
  • If an entry is missed on a daily or weekly PD array, an hourly chart may provide another opportunity.
  • However, focusing primarily on a four hour chart is recommended for key levels.

Example of Weekly Range Formation

In this section, the speaker uses an example to illustrate how price trades within a weekly range.

Price Movement Within a Weekly Range

  • The market trades down into the fair value gap in a deep discount market for one week.
  • It then trades up into a bearish order block before trading down into the equilibrium price point of the total macro range from the daily chart shown in lesson five.
  • It also trades back down into an old bullish order block from the previous week before trading up and closing in a fair value gap.

Refining Market Analysis with 60 Minute Charts

In this section, the speaker discusses how traders can refine their market analysis using 60 minute charts.

Importance of Impulse Price Swings

  • A one hour chart provides more definition in the market.
  • Traders should look for impulse price swings to help facilitate the weekly range or complete it.
  • Anything less than a 60 minute chart is not effective for this purpose and is better suited for day trading or scalping.

Incorporating Day of Week Phenomenon

  • In trending environments, traders expect prices to trade from a discount to a premium.
  • The low of the week in bullish conditions forms between Monday, Tuesday, and Wednesday.
  • Traders can break down the market into a day by day basis when analyzing hourly charts.

Understanding Weekly Ranges

In this section, we learn about the weekly ranges and how to trade them.

Trading the Weekly Range

  • The low forms on Monday after it hits the equilibrium price point of the overall macro consolidation as defined in lesson number five.
  • Wednesday provides another opportunity to get long trading off of a breaker that's formed on that week's Monday.
  • Typically, 30 to 50 percent of the weekly range is completed between Monday to Wednesday.
  • If we miss capturing a long by Wednesday, don't expect a massive move higher or lower in the last two days of the trading week.

Importance of Flexibility

  • Be flexible and change gears if things don't go as expected.
  • Don't get PIP drunk trying to get a lion's portion of a move by Friday's close because the weekly range may end up being smaller or less volatile than anticipated.

Explosive Moves

  • Generally, if you get an explosive move, it usually happens on Tuesday or Wednesday with Thursday seeing some follow-through but Friday having either retracement or neutral close.

Week Reversals

  • Next lesson will cover how to know when there's going to be an inch or week reversal.
Playlists: 2017 ICT Private Mentorship Core Content Month 07
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