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ICT 2024 Mentorship \ Micro Vs. Mini \ September 19, 2024
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ICT 2024 Mentorship \ Micro Vs. Mini \ September 19, 2024

Opening Remarks and Market Overview

Introduction to the Session

  • The speaker welcomes the audience and prepares for the market opening, indicating a casual yet professional tone.
  • A midgap of 19843 is noted, with an emphasis on trading micro contracts for those with limited capital.

Trading Micro vs. Mini Contracts

  • The speaker compares micro December contracts (15-second chart) with mini December contracts, highlighting their respective charts.
  • A significant opening range gap is discussed, suggesting that such gaps can entice traders to chase market movements.

Execution Plans and Market Gaps

Execution Strategy

  • The speaker plans to execute trades using one-minute charts but may resort to 15-second charts if necessary due to time constraints.
  • There’s a commitment to live stream the afternoon session if no morning execution occurs, emphasizing transparency in trading activities.

Analysis of Opening Gaps

  • The large gap observed in both micro and mini contracts is analyzed; it indicates potential volatility in market behavior.
  • Discussion about the Freedom of Information Act highlights concerns over privacy during live streams.

Market Behavior Insights

Understanding Market Dynamics

  • The speaker notes a close range between micro and mini contract openings, which could influence trading decisions.
  • Due to the substantial gap, initial positions are withheld until clearer market signals emerge.

Retail Trader Psychology

  • Retail traders often chase breakouts without considering risk management; this behavior can lead to poor entry points.
  • Emphasis on waiting for confirmation before entering trades suggests a more strategic approach rather than impulsive buying at highs.

Understanding Market Dynamics and Trading Strategies

The Importance of Patience in Trading

  • Emphasizes the significance of not rushing into trades, especially when observing market movements. Understanding market structure can provide peace of mind.
  • Discusses the integration of volume analysis in trading decisions, highlighting the importance of clarity in chart interpretation.
  • Notes that after a significant gap opening, traders should remain calm and wait for reliable price scenarios before making moves.

Analyzing Breakout Trades

  • Mentions a specific price level (19926) that was beneficial for breakout traders, indicating successful strategies shared with a private group.
  • Questions the comfort level of traders who bought on breakouts within an initial fair value gap, suggesting they may feel uncertain about their positions.

Fair Value Gaps and Market Behavior

  • Explains potential market behaviors regarding fair value gaps, including possible retracements or rallies based on previous trading patterns.
  • Identifies retail buying as a factor influencing market dynamics during breakout scenarios.

Risk Management and Trade Execution

  • Advises caution regarding mid-gap levels and highlights the importance of understanding risk management when trading.
  • Suggests using micro contracts to reduce risk exposure while learning to trade effectively without needing precision.

Setting Realistic Trading Goals

  • Encourages new traders to set achievable daily profit goals (e.g., $75-$100), emphasizing the psychological aspect of holding onto trades versus taking profits.

Understanding Trading Psychology and Strategy

The Importance of Journaling in Trading

  • Traders often experience regret when prices move back towards their stop loss or entry point, highlighting the need for journaling these feelings to improve decision-making.
  • Recording emotions during trades, especially in open market conditions, is crucial. This includes noting feelings when achieving small profits (e.g., $75 to $100) with minimal contracts.

Patience and Trade Management

  • Holding onto trades requires patience; traders must learn to disregard short-term price fluctuations that may trigger stop losses without resulting in actual losses.
  • Many traders avoid learning experiences by seeking quick profits and fearing stop-outs, which can hinder long-term trading success.

Learning Through Experience

  • Effective trading involves measured approaches akin to laboratory experiments, where traders set realistic expectations for their performance within specific time frames.
  • Emotions such as excitement, fear, anxiety, and uncertainty should be recorded during trades to understand personal responses better over time.

Execution and Market Dynamics

  • Traders must reflect on their execution quality; even poor entries can yield profits if they follow a structured approach.
  • Understanding market dynamics is essential; recognizing potential profit zones (like mid-gap levels on charts) helps inform trading decisions.

Engaging with Price Action

  • Active engagement with price action rather than passive observation is necessary for improving trading skills.
  • Traders should apply learned rules consistently while experimenting with different strategies based on market conditions.

Framework for Decision Making

  • Establishing a framework for analyzing price movements is vital. This includes understanding the time of day and characteristics influencing price behavior.
  • Blindly following others or chasing prices without a strategy will not lead to improvement in trading skills or confidence in decision-making.

Analyzing Market Levels

  • Focus on key market levels like fair value gaps and upper quadrant levels helps identify potential trade setups effectively.
  • Aiming for specific target ranges (e.g., 20 handles movement potential from certain setups), allows traders to experiment with their strategies meaningfully.

Directional Bias and Risk Management

  • Having a directional bias aids in making informed decisions throughout the trading session rather than relying solely on immediate reactions.

Emotional Responses in Trading

Managing Emotions and Expectations

  • Traders should avoid emotional responses to price movements. It's important to acknowledge mistakes without self-criticism, focusing instead on learning and improvement.
  • Attempting large trades for quick profits can be detrimental; a more sustainable approach is to aim for consistent small gains, such as $100 a day with minimal risk.

Risk Management Strategies

  • Keeping risks low (e.g., risking $50 or less per trade) allows traders to remain calm and make decisions without fear, facilitating better trading outcomes.
  • Gradually increasing trade size after gaining confidence through smaller trades can lead to more significant profits over time.

Trading Techniques and Market Analysis

Simplifying the Trading Process

  • The speaker emphasizes using a minimalist approach during live streams, focusing on one screen to replicate the experience of new traders who may not have access to advanced tools.
  • New traders are encouraged to use market orders rather than limit orders initially, allowing them to experience real-time market dynamics and develop their instincts.

Understanding Market Movements

  • Observing price action within specific fair value gaps helps traders identify potential entry points while managing expectations about timing.
  • The speaker discusses the importance of measuring price movements accurately and understanding how retail traders can be misled by market traps.

Technical Analysis Insights

Fair Value Gaps and Price Action

  • The discussion includes analyzing buy stops that indicate potential upward movement before a sell-off occurs, highlighting the significance of recognizing these patterns in advance.
  • The concept of inversion fair value gaps is introduced as a tool for predicting price behavior based on previous market actions.

Candlestick Patterns and Timing

  • Rapid candlestick formations require quick analysis; understanding individual candlesticks' implications is crucial for effective trading strategies.
  • Traders must maintain awareness of their expectations regarding price movements within short time frames (like 15 seconds), ensuring they adapt quickly to changing conditions.

Market Dynamics and Strategy Development

Analyzing Market Ranges

  • Identifying ranges within which trades can occur helps in strategizing potential moves based on upper, mid, or lower quadrants of fair value gaps.

Understanding Price Action and Trading Discipline

Key Concepts in Price Action Trading

  • The speaker emphasizes the importance of having a clear expectation or filter to identify potential trades, focusing on price action setups that build confidence for entering trades.
  • A specific scenario is described where the trader looks for a fair value gap to form after leaving an inversion, indicating a potential short sell opportunity if certain conditions are met.
  • The necessity of setting a minimum threshold for trade viability is discussed; specifically, the trader must aim for at least 20 handles in profit to justify taking the trade.
  • The speaker highlights the importance of discipline in trading, suggesting that even if a missed opportunity pans out, it’s crucial to feel good about exercising restraint rather than impulsively entering trades.

Approaching Trading with Professionalism

  • The concept of treating trading with a "white glove approach" is introduced, advocating for professionalism and emotional control during trading activities.
  • Minor sell-side opportunities are acknowledged as still potentially yielding intended goals while allowing wider stops without significant risk.
  • The speaker stresses the need for candlestick patterns to confirm setups; if they close incorrectly after touching key levels, it invalidates those setups.

Managing Fear and Impulsivity

  • A calm mindset is emphasized; traders should not panic about missing moves but instead follow their outlined strategies methodically without fear or impulsiveness.
  • The speaker addresses concerns about performance pressure when trading publicly, reinforcing that understanding one's strategy and engagement process is more critical than merely making money.

Learning Through Incremental Progress

  • Emphasis is placed on avoiding impulsive actions in trading. Instead of seeking immediate results, traders should focus on learning through structured lessons that promote gradual improvement.
  • A discussion on recognizing fair value gaps illustrates how traders should wait for proper confirmations before entering trades to avoid unnecessary losses.

Setting Realistic Expectations

  • The importance of understanding common pitfalls in trading is highlighted; new traders often face challenges due to unrealistic expectations and lack of experience.
  • Building resilience against mistakes by allowing room for imperfection helps maintain motivation and progress without self-blame or discouragement.

Market Analysis and Trading Strategies

Understanding Market Gaps and Opportunities

  • The daily chart indicates potential bullish movements, but the speaker seeks another opportunity to approach a mid-gap without needing immediate fulfillment.
  • Traders should frame their charts with a 20-handle box to analyze market movements after they occur, allowing for better decision-making.
  • Identifying fair value areas can yield profitable entries; even partial targets like filling gaps can be reasonable without needing to reach full inversion levels.

Learning from Trading Setups

  • Some setups are easier to spot but may not be worth taking; recognizing this is crucial for progress in trading skills.
  • Many traders desire quick profits without investing time in learning, leading to unrealistic expectations and unnecessary drawdowns.

Profit Taking and Realistic Goals

  • The speaker emphasizes the importance of setting initial profit targets ($75-$100), especially for beginners still learning the trade dynamics.
  • Closing trades at set profit levels helps build confidence and understanding of market behavior over time.

Consistency Over Perfection

  • Achieving consistent small profits (e.g., $100 daily) is more beneficial than aiming for large payouts initially; building skills gradually is key.
  • Developing a comfortable trading style involves recognizing price action patterns that align with personal trading strategies.

Self-Control and Measured Objectives

  • Emphasizing self-control in trading helps avoid poor entries and losses; realistic objectives lead to sustainable growth in trading performance.

Understanding Market Dynamics and Liquidity

The Role of Sell-Side Liquidity

  • Discussion on the sell-side liquidity in the market, emphasizing that it is not random but based on real buy orders. This creates a balanced price range where smart money operates.
  • Explanation of how retail traders can become trapped when they go long after a breakout, leading to potential losses as the market seeks opposing liquidity.

Measuring Price Movements

  • Introduction to using Fibonacci measurements to assess external liquidity by measuring ranges from swing highs to lows, providing insights into potential price movements.
  • Clarification on standard deviations in price movement; specifically, how negative 0.25 and negative 0.5 levels are used to gauge expected trading behavior.

Trading Strategies and Setups

  • Insights into handling large opening gaps in the market; traders should expect initial drops followed by retracements within established ranges for better setups.
  • Emphasis on taking partial profits during trades and understanding the psychological benefits of realizing gains consistently over time.

Building Confidence Through Consistency

  • Importance of recording daily trading experiences and profits to build confidence without falling into overconfidence traps; focusing on small consistent gains is key.
  • Transitioning from small contracts to larger ones can significantly impact earnings, allowing traders to be more selective with their setups while still gaining experience.

Understanding Support and Resistance Levels

  • Critique of traditional support and resistance concepts; emphasizes that true levels are often subjective and not effectively communicated in existing literature.
  • Discussion about algorithmic principles guiding market behavior; it's unreasonable for markets to revert directly back to previous highs without first accumulating orders above those levels.

Targeting Retail Mindset

Understanding Market Movements and Trading Strategies

The Importance of Counter-Moves in Trading

  • Traders often avoid entering the market during downturns due to fear and lack of knowledge, missing opportunities for profit.
  • Successful trading requires embracing resistance, akin to hang gliding or flying, where one must face oncoming challenges to gain altitude.
  • Chasing market trends without understanding can lead to losses; retail logic often results in drawdowns due to misplaced emphasis on unreliable indicators.

Misconceptions About Support and Resistance

  • High price points may not act as true resistance but rather absorb buy stops, creating a balance price range that can mislead traders.
  • Traditional support and resistance concepts are often flawed; understanding when these levels will hold is crucial for effective trading strategies.

Learning from Experience

  • Many traders rely on borrowed logic without understanding its application; successful trading requires personal insight into market behavior.
  • Effective mentorship involves teaching foundational principles while encouraging students to explore their discomfort zones for growth.

The Value of Incremental Progress

  • Adopting a "slow is smooth, smooth is fast" approach helps traders minimize mistakes and build confidence over time.
  • Rushing towards profits can hinder learning; mastering basic skills before advancing leads to sustainable success in trading.

Utilizing Fair Value Gaps

  • Identifying fair value gaps is essential for making informed trades; starting with the first gap presented on a one-minute chart simplifies decision-making.

Trading Mindset and Strategy Insights

Understanding Price Action and Initial Focus

  • The initial focus in trading should be on the price action, particularly looking for the midpoint of the gap. This binary approach simplifies decision-making: if certain conditions are met, take action; if not, remain inactive.

Programming Logic in Trading

  • Trading can be likened to programming logic where decisions are made based on specific conditions (if-then statements). A trader must define their desired outcomes clearly, similar to how a programmer outlines project specifications.

Data Points and Setup Formation

  • In trading, identifying data points is crucial. The first setup typically forms during the morning session, specifically within the first 30 minutes after market open. This is analogous to gathering source information in programming.

Analyzing Market Open Dynamics

  • Traders should analyze the opening price at 9:30 AM relative to previous day’s settlement prices. This analysis helps determine whether they are above or below key price levels which influences their bias for potential trades.

Establishing Bias Based on Price Levels

  • If the market opens higher than yesterday's settlement price, traders should anticipate a downward bias towards the midpoint gap. They wait for confirmation through candlestick patterns before making any trades.

Predictive Trading vs. Reactive Strategies

  • Successful trading involves predicting future movements rather than reacting to them. Anticipation allows traders to position themselves advantageously against others who may be less informed or reactive.

The Competitive Nature of Trading

  • Viewing other traders as competition is essential; they represent liquidity that can be exploited. A trader must adopt a predatory mindset—seeing others as 'food' rather than feeling sympathy for their losses.

Embracing Market Realities

  • Acknowledging that mistakes will happen in trading is vital; those who cannot recover from losses may not belong in this competitive environment. Survival of the fittest applies here—traders must adapt or face consequences.

War Metaphor in Trading Psychology

  • The speaker emphasizes viewing trading as a war-like scenario where one must either dominate or be dominated by market forces. This mindset fosters resilience and determination among successful traders.

Common Mistakes Among Traders

  • Many traders fall into predictable traps due to limited perspectives and reliance on outdated theories like geometric shapes or trend lines instead of focusing on time-based strategies that yield consistent setups.

Time-Based Strategy Implementation

  • The speaker advocates for a time-based strategy where setups are anticipated at regular intervals throughout each hour, contrasting with traditional methods that lack such precision and predictability.

How to Understand Market Dynamics?

The Disparity in Knowledge and Experience

  • The speaker expresses a sense of superiority over others in the trading community, emphasizing that they are operating at a much higher level than their peers.
  • They highlight the unfair advantages they possess, suggesting that many do not recognize these disparities, which adds humor to the situation.
  • An open invitation is extended for others to livestream their trading attempts, indicating a desire to demonstrate why their methods are superior.

Understanding Order Blocks

  • The speaker clarifies that identifying specific price ranges known as order blocks does not equate to being a trend line trader or relying on traditional support and resistance levels.
  • They assert that many people misunderstand what constitutes an order block, which involves two specific price levels for smart money entry points.

Execution and Market Behavior

  • The speaker emphasizes the importance of precise execution in trading and how market behavior aligns with their predictions based on lower time frames.
  • They express confidence in their ability to predict market movements accurately, noting that deviations from expected behavior provide insights into liquidity or inefficiencies.

Critique of Retail Trading Strategies

  • A critique is made regarding common retail trading strategies, asserting that those who fail to understand these concepts are simply "clowns" in the market.
  • The speaker boasts about having millionaire students who have successfully applied their teachings, contrasting this success with those who criticize them without understanding.

Tools and Techniques for Success

  • There’s an emphasis on using specific measurements rather than vague zones or trend lines; precision is key in identifying profitable trades.
  • Fibonacci tools are discussed as merely providing range measurements; successful trading requires additional confirmation from other price dynamics (PD arrays).

Combining Techniques for Better Outcomes

  • The speaker explains how combining Fibonacci retracement levels with macro timing can create high-probability setups for trades.

Understanding Bullish Divergences and Trading Strategies

The Importance of Indicators in Trading

  • The speaker emphasizes the significance of using indicators like Stochastics, RSI, or MACD to identify bullish divergences within a trading strategy that incorporates order blocks and inefficiencies.
  • The speaker asserts their unique value in trading education, claiming that without their insights (referred to as ICT), traders will struggle to achieve success.
  • A challenge is posed to viewers: analyze losing trades against the teachings provided, suggesting that misalignment with these principles leads to losses.
  • The speaker expresses confidence in their ability to critique other trading styles while focusing on teaching effective strategies for achieving financial success.

Practical Trading Advice

  • Recommendations are made for low-risk trading experiments, suggesting daily targets of $75-$100 by focusing on specific price levels and liquidity draws.
  • Traders are encouraged to observe market movements over a few weeks before actively engaging in trades, allowing them to familiarize themselves with setups.
  • Emphasis is placed on desensitizing oneself from the fear of loss or pressure to make money; this mindset shift is crucial for successful trading practices.
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.