VIDEO
HIGHLIGHT
Log InSign up
ICT 2024 Mentorship \ How To Avoid Seek & Destroy \ Tape Reading \ September 23, 2024
SummaryTranscriptChat

ICT 2024 Mentorship \ How To Avoid Seek & Destroy \ Tape Reading \ September 23, 2024

Market Analysis and Trading Strategies

Introduction and Setup

  • The speaker greets the audience, indicating a casual yet focused atmosphere for the session.
  • The audio levels are confirmed to be appropriate; however, the speaker expresses uncertainty about adjusting volume complaints.
  • The analysis will focus on stale data from last Thursday, excluding any updates from Friday or the current morning.

Price Action Observations

  • The speaker aims to observe price action moving into a designated "purple box" area as a potential premium zone for trading.
  • A gray box represents Thursday's fair value gap; the speaker shares insights on their experience with price theory via a video posted on Twitter.

Trading Strategy Insights

  • Focus is placed on one-minute and 15-second charts for tape reading; interest in candlestick formations and volume imbalances is highlighted.
  • The ideal scenario involves observing market behavior after breaking below certain levels, aiming for trades that close gaps created by previous candlesticks.

Liquidity Runs and High-Frequency Trading

  • Emphasis is placed on liquidity runs as part of high-frequency trading setups; these setups can be practiced through demo trading.
  • Discussion includes studying inefficiencies from last week’s price action, particularly around specific levels or PD arrays (Price Delivery Arrays).

Fair Value Gaps and Market Dynamics

  • A displacement off key levels is essential for confirming trade setups; simply reaching these levels isn't sufficient without additional signals.
  • Regular trading hours reveal an existing premium gap that has returned to mid-gap; unfilled portions of opening range gaps are identified as potential areas of interest.

Future Plans and Content Creation

  • The speaker plans to create YouTube shorts showcasing individual PD arrays in action, enhancing understanding beyond static images or descriptions.

Market Analysis and Trading Strategies

Current Market Conditions

  • The market is experiencing uncertainty, with the potential to explore lower ends of an unfinished opening range gap.
  • Probabilities are skewed this morning; the speaker plans to use a limit order instead of market orders for better control over entry points.

Trading Strategy Insights

  • Emphasis on waiting until 10:00 AM for more favorable trading conditions, referred to as "silver bullet" time when probabilities shift in favor of traders.
  • Discussion on Caleb's model focusing on short-term highs and lows, aiming for trades that capture fair value gaps effectively.

Entry and Exit Techniques

  • The speaker reflects on missed opportunities due to timing issues but emphasizes the importance of capturing moves without needing to hit exact highs or lows.
  • A metaphor comparing trade entries to a chicken leg illustrates that traders should focus on capturing significant portions of price movements rather than perfect entries.

Risk Management and Patience

  • The speaker advises against entering trades prematurely, highlighting the importance of waiting for proper setups to avoid losses.
  • Observations about current market behavior indicate it’s not yet time for entry; patience is crucial in maintaining trading discipline.

Future Market Projections

  • Anticipation of reaching specific buy-side liquidity levels (e.g., 2251), which could influence future trading decisions.
  • Concerns about relying solely on small inefficiencies in pricing; caution is advised as markets may revert back into previous fair value gaps before making significant moves.

Conclusion and Learning Experience

  • Acknowledgment that today’s market conditions are challenging; the speaker intends to demonstrate a trade despite unfavorable circumstances for educational purposes.

Market Analysis and Trading Strategies

Current Market Conditions

  • The speaker discusses the challenges of executing trades in a volatile market, noting that while there has been no deeper pullback on the opening range gap, prices are consolidating at higher levels.
  • Emphasizes the importance of patience in trading, stating that waiting for clearer setups is preferable to forcing trades during messy price action.
  • Expresses a willingness to accept losses but stresses that they should not be taken unnecessarily; the focus is on making informed decisions rather than impulsive ones.

Impact of Economic Data

  • Mentions the influence of economic data, specifically referencing the Flash Manufacturing PMI number, which caused recent market fluctuations.
  • Indicates interest in observing how prices interact with fair value gaps and whether these will act as support or resistance.

Price Action Observations

  • Discusses how price displacement affects trading opportunities and warns against getting "chopped up" by erratic movements during trading sessions.
  • Suggests monitoring one-minute candles for potential buy signals if certain conditions are met regarding candle lows.

Trading Strategy Considerations

  • Questions whether traders would feel confident going long or short based on current price action, highlighting concerns about mid-gap levels and their implications for future movement.
  • Notes that half of a previous gap has been filled but acknowledges ongoing volatility within established ranges.

Anticipation of Future Movements

  • Predicts cleaner price action in the afternoon session due to current holding patterns; believes this will lead to more sustainable moves once released from consolidation.
  • Reflecting on past experiences with similar market conditions, emphasizes caution before entering trades due to potential quick stop-outs.

Recognizing Market Patterns

  • Describes an ideal scenario where upper portions of price ranges remain untraded while lower portions are tested; highlights risk management strategies involving stop placements.
  • Discusses volume balance around fair value gaps and its significance for confirming upward momentum in prices.

Understanding Market Inefficiencies

  • Explains how recognizing time distortion within inefficiencies can inform trading decisions; cautions against premature entries when markets appear held back.
  • Stresses that understanding when markets are being held can significantly improve trading outcomes; notes that initial appearances may be misleading.

Final Thoughts on Trading Environment

  • Concludes with reflections on market behavior concerning inefficiencies and gaps, emphasizing patience until clear directional movement is observed.

Understanding Trading Conditions

Importance of Chart Cleanliness

  • The speaker emphasizes the significance of maintaining clean charts by regularly noting down levels and labeling them, indicating that there is no secret formula involved in their trading approach.

Challenges in Current Market Conditions

  • The speaker describes the current market as very challenging, suggesting that any profits made today are likely due to luck rather than skill, highlighting the unpredictable nature of trading at this moment.

Impact of News on Market Movement

  • A medium impact news event at 9:45 was expected to create significant market movement; however, the results were underwhelming, leading to frustration over missed opportunities for clearer price action.

Recognizing When Not to Trade

  • The speaker discusses the difficulty in identifying when not to trade, stressing that this skill is crucial but challenging to convey without real-time chart observation.

Experience Over Static Analysis

  • Emphasizes the necessity of experiencing live market conditions rather than relying solely on static charts for understanding price movements and trading decisions.

Analyzing Fair Value Gaps

Observing Price Reactions

  • The speaker notes a specific fair value gap observed on a 9-minute chart and expresses caution about entering trades until more confidence in market direction is established.

Inefficiencies in Price Action

  • Discusses how price should not linger within inefficiencies such as gaps or wicks; prolonged stays can indicate potential issues with future price movements.

Teaching Through Live Commentary

  • Highlights the challenges of teaching trading concepts through books versus live commentary, asserting that real-time explanations provide better context for understanding market behavior.

Navigating Uncertain Trading Environments

Consequent Encroachment Concept

  • Introduces the idea of consequent encroachment and its importance in maintaining certain price levels during trading sessions; violations could signal problematic conditions ahead.

High Probability Trading Scenarios

  • Questions whether current market conditions present high probability scenarios for trading, acknowledging personal difficulties in finding clear opportunities amidst uncertainty.

Acceptance of Losses

Understanding Capital Preservation in Trading

Importance of Capital Preservation

  • The speaker emphasizes that before learning to trade effectively, one must first understand the importance of capital preservation. This is crucial for long-term success in trading.

Technical Analysis and Market Behavior

  • The discussion highlights the ease of trading when technical indicators align favorably, but stresses the need for strategic order placement (e.g., limit orders).
  • A gap in market behavior is noted, indicating a potential opportunity; however, caution is advised regarding impulsive trades.

Current Market Conditions

  • The speaker notes that after clearing an initial high, there needs to be sustained upward movement for bullish sentiment; otherwise, a downturn could occur.
  • Traders are advised to manage their stop losses wisely and avoid straining price movements during volatile conditions.

Risk Management Strategies

  • It’s highlighted that just because prices fluctuate does not mean it’s a good time to enter trades; sound money management principles should guide decisions.
  • The speaker differentiates between disciplined trading and gambling behavior, advocating for adherence to established rules rather than chasing every market move.

The Role of Patience in Trading

Recognizing Trade Setups

  • Patience is underscored as a vital skill; traders should wait for clear setups rather than forcing trades out of frustration or pressure.

Analyzing Market Trends

  • The speaker reflects on past experiences where impatience led to poor trading decisions and emphasizes the importance of understanding market dynamics before acting.

Learning from Mistakes

  • Acknowledging previous mistakes helps traders refine their strategies. Understanding why certain setups fail can prevent future errors.

Market Challenges and Observations

Navigating Difficult Markets

  • The current market environment is described as challenging. Observing other traders' commentary can provide insights into different perspectives on market behavior.

Anticipating Price Movements

Understanding High Probability Trading Setups

Key Concepts of High Probability Setups

  • A high probability trading setup must be obvious and one-sided, indicating a strong market direction where traders cannot envision a significant drop or rise in price.
  • Beginners may struggle to grasp the concept of high probability setups due to lack of experience; however, those with prior trading knowledge can relate to the idea of framing trades based on market logic.
  • New traders often do not recognize what constitutes a high probability setup. The distinction becomes clearer through learning about price action and its implications for trade decisions.

Market Dynamics and Distortion

  • Current market conditions are described as challenging due to distortion, where buying and selling pressures exist but result in minimal price movement, creating a tight range that is artificially maintained.
  • The speaker emphasizes the importance of waiting for this range to release, which could lead to favorable trading opportunities during the afternoon session.

Upcoming Trading Session

Channel: The Inner Circle Trader
Video description

Government Required Risk Disclaimer and Disclosure Statement 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.