ICT 2024 Mentorship \ September 09, 2024

Name: ICT 2024 Mentorship \ September 09, 2024
Uploaded: 2024-09-09T15:14:25.000Z
Duration: 3 h 10 min 43 s

Economic Overview and Market Analysis

Initial Thoughts on the Week

The speaker discusses the lack of significant events on Monday and Tuesday, noting an upcoming focus on PPI and CPI numbers later in the week.

Mentions a premium gap opening in the market, indicating potential volatility as traders react to economic indicators.

Technical Analysis Insights

The speaker references a "weekly inversion fair value gap," suggesting it may influence market movements. They express hope for price action to reach this level before any sell-off occurs.

Emphasizes the importance of annotating charts with key levels, particularly focusing on candle patterns that indicate market behavior.

Trading Strategy Considerations

Discusses avoiding cluttered charts while identifying critical gaps in shorter time frames (e.g., 15 seconds).

Shares personal experience regarding fraudulent bank activity, advising viewers to monitor their statements closely for unusual transactions.

Market Behavior Observations

Describes the opening range between 9:30 and 10:00 AM Eastern Time, highlighting its significance in trading decisions.

Suggests that traders should be cautious during early trading sessions due to anticipated volatility from upcoming economic reports.

Current Market Conditions

Notes a reaction at the bottom of the inversion fair value gap but expresses skepticism about its sustainability without further upward movement.

Trading Psychology and Market Navigation

Understanding Market Conditions

Emphasizes the importance of conserving mental energy and resources when trading, especially in less than optimal market conditions. Wasting these can hinder performance during more favorable market opportunities.

Chart Analysis Techniques

Discusses the use of 15-second and one-minute charts for trading analysis. The speaker mentions teaching their son about chart annotation, highlighting that while some find it tedious, it is essential for those who are not yet profitable.

Importance of Journaling in Trading

Argues that traders who do not journal may lack precision and consistency. Journaling helps improve execution skills by allowing traders to reflect on their actions and decisions.

Managing Impulsivity in Trading

Advises traders to recognize feelings of anxiety or impulsiveness, comparing it to a dog reacting to food sounds. This analogy illustrates how FOMO (Fear of Missing Out) can lead to hasty decisions without proper setups.

Exercises for Emotional Control

Suggests sitting still for the first 30 minutes after market open, even if ideal setups are identified. This practice helps traders observe their emotional responses before engaging with real money.

Recognizing Emotional Triggers

Highlights the significance of understanding personal emotions like impulsivity or recklessness before trading with real capital. These traits can undermine success if not addressed early on.

Trade Psychology Insights

Mentions Mark Douglas's work on trade psychology, emphasizing the need for skill development to prevent regretful trading behaviors caused by emotional triggers.

Practical Steps for Self-Awareness

Recommends taking screenshots during moments of anxiety or impulsivity while trading. Annotating these moments allows traders to analyze their fears against actual market movements later.

Conditioning Against FOMO

Explains that repeated self-observation reduces the urgency felt during trades, helping traders realize that many perceived opportunities may not be valid setups at all.

Market Setup Strategies

Analyzing Price Movements

Describes a preference for observing price action between specific lows rather than chasing immediate upward movements after significant gaps in opening prices.

Identifying Fair Value Gaps

Discusses looking for U-shaped moves lower within defined ranges as potential setups, indicating a methodical approach rather than reactive trading based on initial price movements.

Caution Against High Premium Openings

Warned against entering long positions after large gap openings due to high premiums; suggests waiting until prices stabilize before making trades.

Weekly Objectives Awareness

Trading Insights and Strategies

Understanding Price Action and Market Dynamics

The speaker emphasizes the importance of price sensitivity in trading, stating that if a price is too high compared to potential future prices, they are unwilling to buy. This reflects a broader principle of waiting for better opportunities.

Discussion on market events highlights how current trading is influenced by previous price movements, particularly referencing "breakers" and "Wicks," which indicate potential market reversals or continuations.

The speaker analyzes a one-minute chart, noting the significance of candlestick patterns within an inversion fair value gap. Observing these patterns can provide insights into future price movements.

A focus on specific candlestick behaviors at swing lows indicates areas of interest for traders. The analysis suggests that understanding these points can help frame potential setups.

The speaker notes indecisive candle bodies near key levels, suggesting that this could signal a drop in prices. Identifying gaps and their implications is crucial for anticipating market behavior.

Framing Trade Setups Based on Market Conditions

Questions about setup framing reveal that the opening price relative to the previous day's settlement is critical for determining trade strategies during morning sessions.

In afternoon trading, different factors come into play; the speaker mentions focusing less on morning session indicators and more on overall market trends.

Emphasizing statistical probabilities, the speaker states that 70% of time frames see half-gap levels traded within the first 30 minutes. This insight aids traders in setting realistic expectations for trades.

Economic calendar events influence trading decisions significantly; with fewer impactful events early in the week, traders should be cautious about entering positions without clear signals.

Anticipating market reactions based on prior drops helps traders identify logical levels where prices may stabilize or reverse, particularly around weekly inversion fair value gaps.

Navigating Volatility and Clean Price Action

The absence of significant economic news requires traders to seek clean price action rather than engaging with erratic movements often seen during volatile periods driven by news releases.

Traders are advised to maintain discipline when faced with unclear market conditions; recognizing when not to trade can prevent unnecessary losses and emotional decision-making.

Drawing parallels between cooking safety and trading caution illustrates the need for protective measures against impulsive actions that could lead to significant financial loss.

Emphasizing patience in trading aligns with adult decision-making—waiting for clarity before acting can safeguard against reckless trades driven by fear of missing out (FOMO).

Market Analysis and Trading Insights

Overview of Market Conditions

The speaker reflects on the current market situation, expressing frustration over a colleague's choice of water bottle despite sending a Yeti. This sets a casual tone before diving into serious analysis.

Discussion begins with the concept of short-term highs in price action, indicating potential liquidity engineering by market participants.

The speaker emphasizes that gaps in trading can have a magnetic effect on price but warns that they do not always fill immediately or predictably.

Understanding Price Action Dynamics

Observations are made about how prices create short-term highs without aggressive movements, suggesting cautious trading strategies.

The speaker anticipates that after taking out recent swing highs, there should be an observable speed in price movement if their analysis is correct.

Economic Data and Volatility

Caution is advised against selling into high points due to potential for further upward movement; the absence of economic data early in the week could lead to volatility later.

Acknowledgment of upcoming PPI and CPI reports which may cause significant market shifts; trading these events requires careful timing to avoid losses.

Liquidity Considerations

The speaker believes current retracements are against Friday's market behavior and does not expect the entire range from Friday to be overtaken soon.

Mention of election year volatility suggests increased unpredictability as October progresses, impacting trading strategies.

Technical Analysis Insights

Explanation of fair value gaps within candlestick patterns indicates areas where traders might anticipate retracement opportunities.

Emphasis on caution when approaching large range gap openings; traders should assess whether price action supports their strategies before acting impulsively.

Managing Trading Psychology

The importance of patience is highlighted; traders should avoid rushing decisions based on fear of missing out (FOMO).

Personal anecdote shared about learning to remain still during trades, reinforcing that less aggressive trading often leads to better long-term results.

Conclusion: Learning from Experience

Understanding Market Replay and Trading Psychology

The Importance of Live Price Feeds

Emphasizes the value of maintaining a personal log of charts to observe candlestick movements, especially when unable to watch live streams.

Highlights that market replay can misrepresent price fluctuations, akin to seeing a distorted reflection in a mirror, leading traders to misunderstand market dynamics.

Critiques market replay for its static nature, which fails to capture the real-time volatility and nuances of price movements essential for effective trading.

Warns that relying solely on market replay can create a false sense of security, preventing traders from recognizing critical price action patterns.

Advocates for recording charts with live feeds as an investment necessary for successful trading; without it, one may not be adequately prepared.

Financial Preparedness and Trading Success

Stresses that if one cannot afford essential resources for trading education and tools, they should reconsider their approach to trading altogether.

Discusses the pitfalls of entering trades while financially strained or relying on hope rather than strategy, which sets up unrealistic expectations.

Points out that feeling rushed or experiencing FOMO (fear of missing out) often stems from financial insecurity in trading contexts.

Acknowledges the challenges faced by students who lack access to resources but emphasizes the importance of being realistic about one's capabilities and limitations in trading.

Analyzing Market Conditions

Returns focus to analyzing specific candlestick formations on a one-minute chart, noting missed opportunities based on previous highs and lows.

Cautions against impulsive selling decisions driven by perceived stop losses being triggered without proper analysis of market gaps needing fulfillment.

Expresses reluctance to buy at high prices during manipulated environments influenced by significant news events like PPI (Producer Price Index).

Filtering Trade Opportunities

Trading Philosophy and Emotional Management in Day Trading

The Importance of Precision in Trading

The speaker emphasizes the significance of waiting for precise trading opportunities, specifically targeting high-value trades that can yield substantial profits, such as $100,000 from short selling.

Teaching focuses on self-management and managing expectations rather than showcasing intelligence or skills; the goal is to cultivate a disciplined approach to trading.

There is no need to fear missing out on trades if they do not make sense; logical decision-making should guide buying and selling actions.

Managing Expectations and Anxiety

The speaker reflects on the difference between their successful trades and those of others, highlighting that many traders may not achieve similar results despite claims.

Acknowledges moments when it’s appropriate to refrain from trading based on market conditions; patience is crucial when indicators are unclear.

Technical Analysis Insights

Discusses specific technical levels (like fair value gaps) that inform trading decisions; understanding these levels helps identify potential entry points.

Emphasizes the importance of monitoring price action closely, particularly focusing on candle patterns and ranges during trading sessions.

Stress Management Techniques

Stresses the necessity of maintaining a calm demeanor while trading; anxiety can lead to poor decision-making.

Suggests physical techniques like yawning or stretching to reset one’s nervous system during stressful moments in trading.

Understanding Physiological Responses

Compares human stress responses with natural behaviors observed in dogs, illustrating how instinctual actions help reset emotional states.

Understanding Anxiety and Its Management

Personal Experience with Anxiety and Health

The speaker shares a personal experience of dealing with high blood pressure linked to anxiety, particularly during a vertigo attack. This led to fears of serious health issues due to family history.

Despite having perfect blood work and athletic heart rate, the speaker experienced dangerously high blood pressure levels during stressful times, highlighting the impact of mental state on physical health.

A visit to the emergency room revealed no underlying health issues, which alleviated some anxiety but also led to an understanding that anxiety can manifest physically in various ways.

Managing Anxiety Through Breathing Techniques

The speaker learned how to manage potential future episodes by avoiding triggers like inversion therapy, which may have caused calcium deposits in the ear leading to vertigo.

Emphasizes the importance of recognizing stressors from past experiences and their long-term effects on health; stresses that awareness is crucial for managing anxiety.

Discusses techniques for resetting the nervous system through controlled breathing exercises, which can help lower blood pressure significantly.

The Physiology of Stress Responses

Describes a specific breathing technique: slow inhales followed by longer exhales. This method activates relaxation responses in the body.

Explains how adrenaline triggers fight or flight responses, making it easy for individuals to remain in a constant state of stress if not managed properly.

Consequences of Chronic Stress

Highlights that living in a perpetual state of emergency leads to chronic stress symptoms such as increased pulse rates and heightened adrenaline levels.

Warns against conditioning oneself into a constant fight or flight mode due to lack of discipline or preparation for challenges.

Importance of Awareness and Control

Stresses that controlling breath can regulate pulse rates and cortisol levels; uncontrolled cortisol release can lead to severe health issues over time.

Understanding Trading Mindset and Control

The Importance of Being in Control

The speaker emphasizes that the goal is not to be right but to maintain control over oneself while trading.

Understanding one's trading model is crucial; it should be documented and visualized, as this aids recognition during price action.

Negative self-talk can lead to panic; traders must manage their thoughts and emotions effectively.

Managing Stress and Anxiety

Panic attacks can occur due to stress; recognizing them as non-medical emergencies helps in managing them.

Techniques like controlled breathing (e.g., box breathing) are recommended for calming down during stressful moments.

The speaker shares a personal method involving slow inhalation and holding breath, which helps regain composure.

Trading Psychology Insights

There is a lack of comprehensive resources linking trading psychology with practical strategies, highlighting a gap in available literature.

While some books on trade psychology exist, they may not fully address individual trader needs or experiences.

Overcoming Fear and Self-Doubt

Traders often feel pressured by external expectations, leading to self-doubt and fear of failure.

It's essential for traders to remind themselves that there’s no urgency to make trades; patience is key.

Personal Experiences with Panic

The speaker reflects on the fear associated with making trades without full understanding, compounded by societal pressures regarding gender roles in trading.

A personal anecdote about experiencing panic during significant market events illustrates how stress can impact decision-making.

Dealing with Anxiety in Trading

Understanding Anxiety and Its Impact

The speaker discusses personal experiences with anxiety, emphasizing that financial mistakes are not life-threatening. They suggest recognizing the situation as manageable rather than an emergency.

The level of fear and anxiety is linked to self-expectations; high output demands can exacerbate feelings of panic if one lacks a solid trading model.

Without a well-rounded model for anticipating market behavior, traders may experience heightened anxiety, which can be compounded by social media portrayals of success.

Coping Strategies for Anxiety

The speaker offers to create a video on managing anxiety while trading, highlighting the lack of accessible resources on this topic.

They reference learning from Lucenda Basset's course on anxiety management, noting that coping skills gained from her work provided valuable insights into overcoming anxiety.

Recognizing and Managing Stressful Situations

Trading can induce overwhelming feelings that may not initially be recognized as anxiety; the first experiences can feel life-threatening.

Personal struggles with severe anxiety led to agoraphobia, affecting relationships and daily life significantly.

Developing a Healthy Trading Mindset

The speaker emphasizes the importance of understanding repetitive patterns in trading to reduce dependency on being right all the time.

Traders should focus on whether market conditions support their trades instead of fixating solely on reaching profit targets.

Embracing Uncertainty in Trading

Accepting uncertainty is crucial; traders must learn to relax and allow trades to unfold without forcing outcomes based on hopes or fears.

Understanding Trader Psychology and Strategy

The Impact of Distractions on Trading

Traders often experience distractions that lead to anxiety, focusing on irrelevant worries instead of monitoring price behavior and underlying narratives.

The Consequences of Impulsive Trading

Starting without a defined trading model can result in impulsive decisions, leading to discomfort and uncertainty during trades due to lack of preparation.

Emotional Turmoil in Trading

Experiencing significant losses can trigger panic responses, akin to "gambler's numbness," where traders lose rational thinking and continue trading recklessly despite adverse outcomes.

Learning from Past Experiences

Reflecting on past mistakes is crucial; the speaker shares personal experiences of losing money without the skills needed for effective trading, emphasizing the importance of developing a solid foundation.

Building a Reliable Trading Model

A well-defined trading model is essential for identifying viable trade setups. Without it, traders struggle with intrusive thoughts and uncertainty about market movements.

Observational Learning in Trading

Engaging in end-of-day observations helps traders collect data from past price movements, which aids in understanding market behavior and improving decision-making skills.

Finding Personal Insights in Trading Patterns

Each trader may discover unique patterns or setups that resonate with them through observation, leading to moments of clarity or "aha" moments that enhance their trading strategy.

The Importance of Control Over Emotions

Gaining control over one's emotions through a reliable model allows traders to avoid chasing prices and making impulsive decisions based on fear or excitement.

Avoiding Retail Trader Pitfalls

Many retail traders fall into the trap of buying at inflated prices. Experienced traders understand the value of waiting for better opportunities rather than succumbing to market hype.

Historical Context of Trading Tools

The evolution from manual charting methods to modern tools has significantly changed how traders analyze markets. Early traders relied heavily on handwritten charts before digital solutions emerged.

Practicing Through Simulation

Engaging in demo trading was an essential practice method for developing skills without financial risk. This approach allowed for experimentation with strategies before committing real capital.

Analyzing Market Gaps

Understanding Trading Mindset and Strategy

The Importance of Patience in Trading

The speaker emphasizes that once traders understand their strategies, they should not feel anxious about missing opportunities. They should allow the market to unfold naturally.

The speaker reflects on the difficulty of conveying certain trading lessons through written material, highlighting the necessity of observing real-time market movements.

Observing inefficiencies in price action is crucial; the speaker notes a specific instance where they were not inclined to take long positions due to market conditions.

Self-Control and Maturity in Trading

Successful trading requires maturity and self-control, which many traders lack. The speaker stresses that trading should not be done impulsively or just for the thrill.

There’s a comparison made between successful traders and hunters; some may trade excessively out of an impulsive desire rather than necessity.

Understanding Motivation Behind Trading

The speaker discusses how personal motivations can influence trading behavior, emphasizing that even if one does not need money from trading, passion drives them to continue.

Skepticism is encouraged; traders should critically evaluate information rather than blindly follow others' advice without understanding or testing it themselves.

Learning Through Observation

It’s important for new traders to engage with live streams and understand the reasoning behind trades instead of merely seeking signals from experienced traders.

The focus is on teaching rather than just executing trades; understanding market dynamics is essential for developing one's own strategy.

Navigating Market Emotions

Traders must learn to control their emotions and responses to market fluctuations. Allowing external factors to dictate behavior leads to instability in trading performance.

A contrast is drawn between waiting for ideal setups versus acting on impulse. This discipline is vital for consistent success in trading environments.

Adjusting Content Delivery Based on Feedback

The speaker acknowledges feedback regarding video length and aims to keep future content concise while still informative, recognizing viewers’ time constraints.

Understanding Trading Limitations and Strategies

Addressing Technical Issues

The speaker expresses regret for not knowing that the closed caption feature was affected by the video length, indicating a willingness to adapt future streams to avoid similar issues.

Acknowledges limitations in trading sessions and emphasizes the importance of regular trading hours (RTH) for understanding market movements.

Insights on Market Behavior

The speaker reflects on the value of today's session, highlighting unique insights that were not widely available elsewhere, emphasizing their commitment to sharing knowledge.

Critiques entitlement among viewers who demand quicker information delivery while acknowledging the significant financial success some have achieved through shared strategies.

Analyzing Market Gaps

Discusses the concept of opening range gaps and advises against trying to pick highs without sufficient evidence from market behavior.

Describes a specific setup involving premium arrays and inversion fair value gaps, stressing patience in waiting for market confirmation before acting.

Learning Opportunities During Live Streams

Encourages viewers to take screenshots during live streams when key moments are highlighted, as these represent valuable learning opportunities.

Suggests analyzing price behavior within specific ranges to understand potential market movements better.

Managing Trading Stress

Offers insights into managing stress while trading, mentioning techniques like breathing exercises that can help reset one's nervous system effectively.

Coping Skills and Trading Psychology

Importance of Coping Skills in Trading

The speaker emphasizes the necessity of coping skills for efficient trading, warning that a lack of these skills can hinder progress.

A suggestion is made for viewers to comment if they want more information on coping strategies, indicating a willingness to engage with the audience's needs.

The speaker plans to create an audio session discussing anxiety management in trading, hinting at a future YouTube content piece.

Exploring Trade Psychology

The speaker contemplates writing five books, including three technical ones and a fiction novel about a trader, showcasing creativity in addressing trading themes.

A potential fifth book focused on trade psychology is mentioned, highlighting its importance as foundational knowledge for traders.

Realities of Trading Stress

The speaker reflects on common issues faced by traders such as FOMO (Fear of Missing Out), price chasing, and anxiety attacks.