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ICT Mentorship Core Content - Month 1 - How Market Makers Condition The Market
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ICT Mentorship Core Content - Month 1 - How Market Makers Condition The Market

Understanding Market Efficiency and Smart Money

Introduction to Market Efficiency Paradigm

  • The speaker introduces the concept of market efficiency, emphasizing that new traders are part of a larger group referred to as "uninformed money."
  • There exists a contrasting group known as "smart money," which consists of experienced traders who influence market movements.

Perception vs. Reality in Trading

  • New traders often enter the market with an optimistic belief in their ability to be profitable, unaware of the complexities involved.
  • Retail traders mistakenly believe they drive market prices due to their numbers, while in reality, it is smart money that has significant control over price movements.

Misconceptions About Trading Indicators

  • The speaker reflects on past beliefs regarding trading indicators (e.g., stochastic, RSI), noting that many retail traders are misled into thinking these tools directly affect price.
  • Emphasizes the importance of understanding that following multiple momentum indicators may not be necessary; focusing on one can be more effective.

The Illusion of Retail Trader Influence

  • Social media amplifies the perception of retail trader influence, showcasing lifestyles and successes that create a false sense of power among uninformed money.
  • The speaker critiques this notion by highlighting how most retail traders do not actually impact market dynamics significantly.

Understanding Smart Money's Role

  • A paradigm shift is necessary for new traders to recognize that smart money—primarily banks—drives market prices rather than the collective actions of retail investors.
  • This small group operates quietly but effectively influences overall market behavior, contrary to popular belief about retail trader dominance.

Transitioning from Uninformed to Informed Trading

  • Traders must abandon misconceptions about their role in price movement and understand how markets operate efficiently for smart money.
  • The speaker challenges listeners to consider whether they want to be passive participants ("lamb") or active decision-makers ("lion") in trading.

Personal Journey and Insights

  • Reflecting on personal experiences, the speaker shares a desire to move away from uninformed trading practices towards strategies aligned with smart money principles.

Understanding Market Manipulation and Trading Dynamics

The Importance of Discretion in Sharing Information

  • The speaker emphasizes that the information shared is meant to be private, suggesting it should only be between close individuals.
  • There’s a warning against making this knowledge too common, as it could lead to misuse by those seeking attention or recognition.

Transitioning from Free Tutorials to Advanced Concepts

  • A shift is noted from free educational content towards more complex trading strategies as the market evolves into October.
  • The speaker reflects on traders' misconceptions about their role in the market, highlighting that they often fail to see the bigger picture.

Understanding Market Mechanics

  • Traders may feel manipulated by brokers but are actually affected by interbank feeds that control price movements.
  • It’s explained that trading today involves algorithms rather than human interactions, which can exploit emotional responses like fear and greed.

Gaining Clarity on Market Operations

  • The speaker provides insights into recognizing patterns and behaviors within the market, leading to greater understanding for traders.
  • Emphasis is placed on belonging to a small group of informed traders who understand liquidity provision rather than being part of a larger uninformed crowd.

Navigating Between Different Trading Groups

  • Traders must choose whether to remain in their current group or transition into a more knowledgeable circle focused on smart money strategies.
  • Some participants are caught between old beliefs and new insights, needing encouragement to let go of outdated tools and methods.

Key Elements of Trade Setup

  • Initial discussions cover essential characteristics of trade setups: context and framework tied back to institutional order flow.
  • Important concepts such as expansion, retracement, reversal, consolidation, order blocks, fair value gaps, liquidity voids/pools are introduced for practical application in trading.

Learning Through Intraday Study

  • The speaker encourages focusing on intraday studies for immediate feedback before transitioning into long-term trading strategies.
  • Acknowledgment that teaching long-term trading effectively requires extensive timeframes beyond typical daily charts due to data compression challenges.

Daily Trading Patterns Explained

  • An overview of daily ranges highlights how each day begins with consolidation followed by manipulation during key sessions (e.g., London swing).

Understanding Market Dynamics and Price Delivery

Daily Range Structure and Market Behavior

  • The market experiences a series of expansions followed by consolidation, particularly around the London close, indicating reversal conditions.
  • The daily range structure begins with price equilibrium during the Asian range, followed by manipulation often triggered by news events, referred to as the "Judas swing."
  • After forming a higher low, the market typically expands in either direction leading up to 5 AM New York time, influenced by the established daily trend.
  • A classic scenario unfolds at the London open where stops are run before another expansion occurs between 5 AM and 8 AM New York time.
  • Post-expansion, there is usually a retracement or reversal in the New York session that can lead into further consolidation until around 11 AM.

Interbank Price Delivery Algorithm

  • Understanding interbank price delivery involves recognizing that it starts with market consolidation where orders accumulate quietly.
  • Following consolidation, an expansion phase occurs; this is crucial as it indicates potential explosive price movements based on built-up orders.
  • The transition from consolidation to expansion does not allow for immediate retracement or reversal; rather, it leads directly into significant price movement.
  • Once in an expansion phase, prices may either retrace back to previous order blocks or reverse entirely depending on market conditions.
  • The algorithm operates systematically with limited options for movement; understanding these patterns helps traders anticipate future price actions.

Key Trading Insights

  • Recognizing relationships between different markets (e.g., Euro vs. Pound trading dynamics) enhances trading strategy effectiveness and timing decisions.
  • Practical application of these concepts is demonstrated through live sessions aimed at improving understanding of price delivery mechanisms among traders.

Understanding Price Delivery in Trading

The Concept of Price Delivery

  • Price delivery involves recognizing patterns of consolidation and expansion within specific time frames, particularly between 8:00 and 8:30 AM New York time.
  • A higher time frame directional premise aids in predicting daily price movements, with consistent accuracy observed since late August.
  • The focus is on developing consistency in trading rather than succumbing to fear and greed; patience is emphasized as a key trait for traders.
  • Learning from the initial videos will provide foundational knowledge that may not be immediately appreciated but will prove significant over time.
  • The speaker advises against marketing this information widely, suggesting it’s too valuable to share indiscriminately.

Patterns of Market Behavior

  • There exists a generic process in market behavior that remains reliable across different time frames, including daily and weekly ranges.
  • Weekly market behavior typically starts with Sunday’s open leading into consolidation, followed by expansion moves on Monday and potential reversals or retracements mid-week.
  • Understanding the distinction between consolidation, retracement, and reversal is crucial; markets move through phases of expansion before making decisions about directionality.
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.