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ICT Mentorship Core Content - Month 1 - Fair Valuation
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ICT Mentorship Core Content - Month 1 - Fair Valuation

Fair Evaluation in Market Analysis

The discussion focuses on fair evaluation in market analysis, covering perspectives on fair value and valuation concerning market makers.

Fair Value vs. Market Makers' Valuation

  • Fair evaluation involves considering fair value and market makers' perspectives.
  • Buyers seek discounts in the lower third of trading ranges, while sellers target premiums in the upper third.
  • Equilibrium and fair valuation are crucial for market maker participation in price action.

Understanding Liquidity Voids and Fair Value Gaps

Exploring liquidity voids, fair value gaps, and their significance in analyzing price movements.

Liquidity Voids and Fair Value Gaps

  • Liquidity voids occur with sudden downward movements and minimal trading time at specific price levels.
  • Fair value gaps indicate areas with no up candle movement, highlighting potential retracement zones.
  • Price below fair value prompts a return to fill the gap due to limited trading activity.

Establishing Fair Value for Future Price Movements

Discussing how rapid price movements influence establishing fair value for future market behavior.

Price Movement Dynamics

  • Rapid price changes create opportunities for future upward movements towards established fair values.
  • Market makers anticipate price returning to fair value levels over time, influencing trading decisions.

Equilibrium as a Key Indicator in Market Analysis

Analyzing equilibrium as a critical indicator for understanding market dynamics and potential price directions.

Equilibrium Significance

  • Equilibrium represents a balance point between high and low ranges, guiding short-term market behavior.

Understanding Market Dynamics

In this section, the speaker delves into market dynamics, focusing on concepts like fair valuation, equilibrium, and price action to analyze potential trading opportunities.

Analyzing Market Structure

  • The market is currently in a low area, indicating oversold conditions due to being at the lower end of a defined range.
  • Breaking a swing high suggests a long position opportunity as the market moves back into fair value or equilibrium.
  • Bullish movement in the Ulti Dollar stemmed from returning to fair value, allowing market makers to accumulate long positions.

Identifying High Probability Setups

  • Buying at fair value ensures avoiding purchasing at a premium, enhancing the probability of successful trades.
  • Being in the lower end of the current range indicates more upside potential for building premium positions.

Utilizing Price Action for Directional Bias

  • Understanding order blocks and price levels aids in determining directional bias and optimal trade entries.
  • Recognizing key price points and buy stops helps anticipate market movements based on fair valuation principles.

Analyzing Trading Ranges

This segment focuses on interpreting trading ranges and their impact on pricing strategies and market behavior.

Evaluating Premium Levels

  • Premium levels are reached when prices are above equilibrium, signaling potential overvaluation in trading ranges.
  • Deep discounts occur when prices fall below equilibrium levels within trading ranges, indicating undervaluation.

Assessing Fair Valuation

  • Market positioning within a trading range influences fair valuation decisions for building long positions or seeking liquidity.

Understanding Fair Value in Market Dynamics

In this section, the speaker delves into the concept of fair value in market dynamics, particularly focusing on how market makers assess and utilize fair value to make trading decisions.

Evaluating Long Positions

  • Market makers strategically sell long positions accumulated at lower levels to capitalize on price fluctuations within a defined range.
  • After closing a range, the next concern arises above a short-term high as a potential area of interest.

Fair Value Assessment for Market Makers

  • Despite filling a void in pricing, market makers still anticipate higher prices due to their initial long positions at discounted rates.
  • Speculators trade at premium prices compared to price chasers, aligning with market maker strategies for liquidating positions at fair values.

Utilizing Candlestick Patterns for Fair Value Determination

  • Specific candlestick patterns help establish areas of fair value for market makers to liquidate long positions effectively.
  • Fairness in valuation is achieved when market makers buy at discounts and sell at premiums, ensuring equilibrium in trading ranges.

Analyzing Price Action and Equilibrium

This segment explores how price action and equilibrium play crucial roles in determining fair value and directional bias within trading scenarios.

Equilibrium and Directional Bias

  • Analyzing price ranges relative to equilibrium aids in identifying discount or premium levels for traders.
  • Traders interpreting Fibonacci retracement levels should consider actual price movements rather than relying solely on technical indicators like Fibonacci ratios.

Market Maker Strategies and Institutional Influence

  • Price movements towards areas of fair value indicate opportunities for market makers to accumulate long positions amidst institutional influences.

Understanding Market Dynamics

In this section, the speaker delves into the concept of fair value in trading and how market dynamics influence price movements.

Fair Value and Trading Ranges

  • The speaker discusses trading within the equilibrium price point relative to recent high and low ranges.
  • The market is expected to trade higher from a deep discount towards fair value.
  • Reference points are crucial for market makers to aim for, with fair value being a key target.

Price Action and Accumulation

  • Emphasis on strategic buying and selling based on price action patterns.
  • Importance of scaling out positions during accumulation or distribution phases.
  • Distinguishing between areas of accumulation and distribution for effective trading decisions.

Market Maker Strategies

  • Insights into market maker behavior and valuation strategies.
  • Analyzing liquidity voids and pools to determine fair value for long positions.
  • Identifying optimal entry and exit points based on historical market movements.

Interpreting Market Efficiency

This segment focuses on understanding institutional actions in the market through buy stops, sell stops, fair value, discounts, and premiums.

Institutional Actions

  • Explanation of how markets transition between different valuation points.
  • Markets move between discounts, premiums, and fair value based on institutional actions.
  • Observing these transitions provides insights into market maker activities like accumulation or distribution.

Price Analysis Perspectives

  • Encouragement to analyze price action from an institutional viewpoint rather than a retail perspective.
  • Highlighting the importance of recognizing fair value for buying or selling decisions by market makers.

Market Maker Strategies

Delving deeper into the concept of fair value from a market maker's perspective in terms of buying, selling, discounts, premiums, and scaling strategies.

Fair Value Considerations

  • Differentiating between fair value for buys versus sells from a market maker standpoint.
  • Understanding how discounts represent opportunities for market makers to buy or cover short positions effectively.

Understanding Market Dynamics

In this section, the speaker discusses how to identify market highs and lows by defining price within current trading ranges. Understanding consolidation periods can help anticipate market expansions.

Identifying Price Ranges

  • By defining price in current trading ranges, one can anticipate where market makers will expand prices.
  • Recognizing consolidation periods before expansions allows for forecasting future movements out of consolidation.

Anticipating Breakouts

The discussion shifts towards anticipating breakouts rather than playing the breakout game, emphasizing the importance of interpreting price action clues.

Anticipating Breakouts

  • Instead of playing the breakout game, it is crucial to anticipate breakouts based on indications from price action.
  • Commodities offer an advantage in breakout anticipation without relying on open interest, unlike Forex where institutional order flow plays a significant role.

Building Foundation for Analysis

The speaker highlights the importance of building a strong foundation for analysis by focusing on specific notes related to fair evaluation, liquidity pools, and voids.

Building Analytical Foundation

  • Detailed notes accompanying monthly summaries will provide insights into fair evaluation, liquidity pools, and liquidity gaps.
  • Future sessions will delve deeper into finding key elements beyond a single chart's perspective to enhance understanding and analysis capabilities.

Understanding Fair Value for Market Makers

Delving into market maker strategies, the discussion centers around identifying fair value levels for market makers to enter or exit positions effectively.

Fair Value Analysis

  • Market makers aim to exit long positions at fair values when prices reach certain levels.
  • Understanding fair value helps predict smart money liquidations and market movements towards higher prices driven by banks' interests.

Gaining a Smart Money Perspective

Shifting perspectives towards smart money insights emphasizes viewing markets through their lens rather than retail traders' actions.

Smart Money Insights

  • Markets move based on smart money decisions influenced by banks holding net long positions.
Playlists: 2016 ICT Private Mentorship Core Content Month 01
Video description

2016 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in September 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.