2022 ICT Mentorship Episode 11

Welcome and Overview Introduction to the Broadcast

Purpose of the Session

• The session is an early broadcast due to personal plans later in the day.

• The speaker aims to provide insights from their private mentorship group, inviting viewers to engage with the content.

Mentorship Accessibility

• The mentorship is conducted on YouTube, eliminating the need for payment or account setup.

• Viewers can choose to watch and learn at their convenience without any obligations.

Market Analysis: E-Mini Nasdaq Futures Understanding Market Movements

Imbalance and Trading Ranges

• Discussion focuses on the e-mini Nasdaq futures contract for March delivery, highlighting a previously identified imbalance.

• The analysis includes measuring highs and lows within trading ranges, emphasizing equilibrium points at 50%.

Price Action Insights

• A failed rally above a high led to a gap down, indicating potential selling opportunities as liquidity was targeted below previous lows.

• Consolidation periods are seen as setups for future market movements, particularly downward trends.

Detailed Trade Execution Analyzing Specific Trades

Hourly Chart Observations

• Transitioning to an hourly chart reveals key price levels and gaps that were traded into before significant sell-offs occurred.

• Live trades shared by the speaker illustrate real-time decision-making during market fluctuations.

Trade Strategy During Market Hours

• On Friday, a short-term high was taken out before a breakdown occurred; this influenced trading decisions leading into Monday's holiday market conditions.

• The speaker anticipated a gap down after observing aggressive moves lower prior to market closure on holidays.

Trade Management Techniques Strategies for Effective Exits

Closing Trades Effectively

• Emphasis on not placing limit orders during volatile conditions to avoid limiting profitable exits; instead opting for open-ended closures based on real-time observations.

• Specific entry and exit prices are provided, showcasing practical application of strategies discussed earlier in the session.

Timeframe Analysis

• Moving down into shorter timeframes (15-minute charts) allows for more granular analysis of price action and imbalances present in the market dynamics observed throughout the session.

Understanding Opening Prices Clarifying Key Concepts

Confusion Around Opening Prices

Understanding Market Structure and Trading Strategies

Distinction Between Reference Points

• The opening price at midnight is used for analyzing the entire daily range, while the 8:30 AM opening price is relevant for the morning session. This distinction is crucial for traders to understand market movements.

• A lesson on market structure is promised to further clarify these concepts, indicating a deeper dive into trading strategies will follow.

Bearish Sentiment and Market Dynamics

• At 8:30 AM, there’s an expectation of a downward movement below the previous daily low, suggesting a bearish outlook based on market behavior. The speaker anticipates that this could be a fake rally designed to mislead traders.

• Traders unfamiliar with order blocks may misinterpret down closed candles as buying opportunities, highlighting the importance of understanding market context rather than relying solely on candle patterns.

Analyzing Imbalances and Fair Value Gaps

• The speaker identifies an imbalance in the market that they plan to exploit for short positions, emphasizing that volatility can lead to unpredictable movements outside expected ranges but still supports their strategy.

• Transitioning to a four-minute chart reveals specific imbalances and fair value gaps where short positions are initiated at precise moments (10:33). This highlights the importance of timing in trading decisions.

Swing High Analysis

• The analysis includes identifying swing highs and lows within different time frames (three-minute chart), which helps establish whether the market is bullish or bearish based on liquidity draws. Understanding these structures aids in making informed trading choices.

• A detailed breakdown of swing highs shows how lower highs surrounding higher highs indicate potential reversal points, reinforcing bearish sentiment as traders look for short opportunities near these levels.

Learning from Historical Context

• The speaker reflects on learning about market structure from Larry Williams' course in the early '90s, illustrating how foundational knowledge can evolve through practical application over time. This emphasizes continuous learning in trading practices.

Understanding Market Structure and Trading Techniques

Charting Techniques for Highs and Lows

• The speaker discusses the manual process of charting open, high, low, and close prices by hand-drawing on charts. They use visual markers (circles or halos) to denote swing highs and lows.

• A single circle indicates a short-term high, double circles represent intermediate-term highs, and triple circles signify long-term swing highs. This method helps classify the significance of price levels.

Insights from Larry Williams' Work

• The speaker references Larry Williams' book "How I Made a Million Dollars Trading Commodities" as essential reading despite some content being considered fluff.

• Key concepts from the book regarding market structure remain relevant today; the speaker emphasizes their importance in understanding trading dynamics.

Importance of Backtesting and Patience

• Trust in trading models is built through backtesting historical price action to identify patterns in swing highs and lows.

• The speaker criticizes oversimplified trading strategies that reduce market behavior to basic support/resistance ideas, advocating for a deeper understanding of market movements.

Execution Strategies in Live Trading

• Emphasizing live trade execution over hindsight analysis, the speaker highlights the necessity of knowing entry points based on established market structures.

• Upcoming lessons will delve into advanced market structure concepts that challenge common misconceptions among traders.

Optimal Entry Points and Trade Management

• The discussion includes identifying optimal entry points near significant highs while avoiding waiting for breakouts below previous lows.

• After executing trades during specific sessions (e.g., post-holiday), it's crucial to take profits at strategic levels before reassessing potential re-entry opportunities later.

Lessons Learned from Experience

• The speaker shares personal experiences about managing emotions after successful trades, advising against impulsive decisions that could lead to losses.

Understanding Trading Psychology and Strategies

The Importance of Learning from Experience

• The speaker emphasizes the difference between theoretical learning and practical experience in trading, highlighting that personal experience shapes one's understanding of market behavior.

• New traders often feel an impulsive urge to re-enter the market after a winning trade, driven by the desire for immediate gratification or "dopamine hits."

Managing Trading Impulses

• Acknowledges the mental challenge of knowing when to stop trading after achieving significant profits, stressing that self-awareness is crucial in avoiding overtrading.

• Critiques social media influencers who promote aggressive trading strategies, arguing that pushing one's limits can lead to losses rather than sharpening skills.

Market Analysis Techniques

• Discusses market bias and how it remains bearish despite short-term fluctuations; emphasizes patience in waiting for proper setups before entering trades.

• Introduces concepts like fair value gaps and liquidity levels as critical elements for identifying potential selling opportunities in the market.

Tailoring Trading Styles

• Encourages students to identify their preferred trading style—day trader, scalper, swing trader—based on their personality and strengths.

• Shares personal preference for intraday trading due to its fast-paced nature, allowing quick decision-making and capitalizing on short-term moves.

Insights into Current Market Conditions

• Speculates on potential downward movements in the market, suggesting specific price levels (e.g., 13,300 or even down to 12,850).

• Plans to demonstrate live account trades while addressing critics who question his methods; aims to provide transparency about his trading results.

Trade Execution Clarification

Trading Insights and Execution Analysis

Understanding Realized Results in Trading

• The speaker discusses a transaction involving seventy-five dollars, clarifying that it does not represent an actual realized profit. It is attributed to administrative processes by the broker, emphasizing that no manipulation or "funny money business" is involved.

• The speaker reassures viewers that anyone trading with live funds may have experienced similar situations in their accounts, indicating commonality in trading experiences.

Trade Execution Review

• The speaker reflects on recent trade executions, noting an initial entry point that was too early due to ambition. This highlights the importance of timing in trading decisions.

• A second trade was executed out of curiosity regarding market direction; however, this resulted in a short position that faced some resistance but did not significantly impact overall performance.

Closing Trades and Profit Realization

• The speaker details the closing of a trade held through a gap opening at six o'clock, which culminated in a profit of four thousand nine hundred twenty dollars. This illustrates effective management of trades despite earlier setbacks.