ICT 2024 Mentorship \ Lecture #11 August 19, 2024 Begins 9:15am ET

Name: ICT 2024 Mentorship \ Lecture #11 August 19, 2024 Begins 9:15am ET
Uploaded: 2024-08-19T17:49:09.000Z
Duration: 7 h 46 min 34 s

Audio Check and Introduction

Initial Setup

The speaker conducts an audio check, indicating a latency test.

The speaker acknowledges a three-second latency and greets the audience, wishing them a good morning.

Market Analysis and Tools

NASDAQ Insights

The speaker introduces the NASDAQ market analysis, hinting at undisclosed indicators that have raised curiosity among viewers.

Mentions receiving tips from students about useful tools or shortcuts in TradingView, emphasizing openness to learning from others.

Indicator Discussion

The speaker discusses testing various indicators for effectiveness but expresses dissatisfaction with their size, preferring more prominent visuals.

Clarifies that they are not on social media platforms soliciting money for mentorship, reinforcing their commitment to free education.

Teaching Methodology

Student Engagement

Addresses questions from long-term students regarding practical applications of trading models being taught.

Introduces concepts of entry patterns and overcoming fear associated with trading decisions.

Learning Progression

Discusses the importance of understanding price action before transitioning to live trading scenarios.

Reassures students that it's normal to take time mastering concepts like liquidity draw determination.

Upcoming Events Impacting Markets

Jackson Hole Symposium

Prepares students for upcoming market volatility due to events like the Jackson Hole Symposium featuring Fed Chair Powell's speeches.

Emphasizes awareness of market reactions during these speeches rather than taking statements at face value.

Market Opening Analysis

New Week Opening Gap

Analyzes the new week opening gap using one-minute charts to calibrate levels effectively.

Explains how to annotate settlement prices and opening gaps while addressing student inquiries about gap behavior.

Practical Application

Understanding the Opening Range and Gap Dynamics

The Concept of Opening Range and Gaps

The opening range gap is defined as the difference between the closing price of the previous trading session and the opening price of the current session. This gap is crucial for understanding market dynamics.

Observations indicate that prices often retrace towards this gap, with a focus on measuring from the previous session's close to assess potential movements in the current session.

Analyzing Market Structure

It's important to identify swing lows when analyzing market structure; these points serve as critical markers for potential support or resistance levels.

The new week opening gap low has been tested, indicating a response from traders at this level, which can signal future price movements.

Trading Strategies and Mindset

Traders are encouraged to annotate their charts actively rather than merely following along with live streams. This practice fosters deeper understanding rather than passive observation.

A warning against copycat trading emphasizes that without comprehension of strategies, traders may experience anxiety and uncertainty in their decision-making processes.

Liquidity Considerations

Both buy-side and sell-side liquidity must be respected within the context of an opening range; failure to do so could lead to significant market moves.

Anticipating potential technical formations such as short-term breakers or shifts in market structure can provide insights into future price actions.

Learning Through Practice

Engaging with charts independently allows traders to develop their own models based on historical data, enhancing learning outcomes over time.

Understanding the Opening Range Gap

Definition and Importance of the Opening Range Gap

The opening range gap is defined as the difference between the settlement price at 4:15 PM Eastern Time and where trading begins at 9:30 AM.

Regular trading hours conclude at 4:15 PM, while electronic trading continues until 5:00 PM, resuming again on Sunday at 6 PM. Understanding these timeframes is crucial for traders.

Trading Dynamics Within the Opening Range

Traders should observe whether prices attempt to find stability within the wicks of previous trades, indicating potential market behavior. This can lead to a return into the new day opening gap high or low.

The speaker emphasizes that they are not predicting outcomes but rather looking for setups based on observed market behavior and liquidity levels.

Initial Trading Strategy Insights

The initial opening range lasts for 30 minutes (from 9:30 to 10 AM), contrary to common misconceptions about a shorter duration; this period is critical for establishing market direction.

New traders are advised against making entries during this first half-hour due to lack of experience, which can lead to impulsive decisions and chasing false setups. Patience is key in developing discipline in trading practices.

Teaching Approach for New Traders

The speaker shares their method of teaching newcomers by providing structured frameworks rather than overwhelming them with extensive video content; this includes practical exercises focused on observing price action effectively.

Emphasis is placed on guiding learners through specific observations in price movements, helping them build foundational skills without intimidation from complex theories or jargon.

Market Behavior Analysis

Observations indicate that many traders may be misled by popular strategies like supply and demand zones; understanding true market dynamics requires deeper analysis beyond surface-level indicators.

Understanding Trading Concepts and Challenges

Engaging with Critics

The speaker challenges critics on YouTube, inviting them to engage in a live discussion to demonstrate their knowledge.

There is an emphasis on the overwhelming amount of information available, particularly for beginners who may feel lost when starting to learn about trading.

Starting Points in Trading

The speaker encourages newcomers to dive into price action analysis without fear of wasting time; practical engagement will build foundational understanding.

Acknowledges that many potential learners hesitate due to negative perceptions or confusion about where to start, which can hinder their progress.

Analyzing Market Movements

Discussion on market behavior around specific price levels, emphasizing the importance of closing prices and gaps in trading strategies.

The speaker plans to analyze lower time frames (15-minute charts) for better execution insights based on previous trades.

Critique of Technical Analysis Tools

Criticism directed at traders who focus too much on technical indicators rather than actual price movements; highlights a disconnect between appearance and substance in trading strategies.

Emphasizes that complex technical jargon does not necessarily correlate with effective trading practices.

Observations on Price Action Dynamics

The speaker notes specific price points that attract attention during analysis, indicating areas where market participants might react.

Reflecting on community feedback, the speaker prioritizes content creation for supporters while also addressing detractors humorously.

Market Behavior During Events

Discusses how certain market conditions can lead to erratic price movements, particularly during significant events like the Jackson Hole Symposium.

Insights on Market Sentiment and Trading Strategies

Understanding Market Dynamics

The speaker expresses a disdain for certain elite individuals who manipulate market dynamics, indicating that their influence can create an environment where others are left waiting for guidance.

There is a discussion about the need for traders to stay informed about current market trends and "hot buttons," emphasizing the importance of being aware of market directions.

The speaker highlights that information from newswires or other sources may aim to influence market sentiment, but stresses that price action is the ultimate indicator of market behavior.

Trading During Key Events

The speaker advises against overthinking market movements, suggesting that traders should focus on reacting to price changes rather than speculating on them.

A specific trading strategy is discussed regarding maintaining positions above key price levels, particularly during significant events like Jackson Hole Symposium.

Risk Management and Profit Taking

Emphasis is placed on avoiding trades that close below critical support levels, as this could indicate potential losses.

Traders are encouraged to identify initial profit-taking points early in their trades instead of holding out for larger gains which may lead to missed opportunities or losses.

Observations on Price Behavior

The speaker notes a tendency for overlapping price actions during specific periods, such as the week surrounding Jackson Hole, which can complicate trading strategies.

A recommendation is made to review past charts during these times to understand typical price behaviors better before making trading decisions.

Technical Considerations

There’s a request for assistance with chart visibility issues, highlighting the importance of clear visual data in trading analysis.

Understanding Market Behavior During Jackson Hole

The Nature of Price Movements

The speaker discusses how market movements often overlap with previous price actions, indicating a cyclical nature in trading patterns.

Emphasizes that expecting one-directional price runs during significant events like Jackson Hole can lead to frustration; such occurrences are not guaranteed every week but are common.

Highlights the tendency for trades to revert back, suggesting traders should be cautious about stop losses as they may get hit due to market volatility.

Trading Strategies and Considerations

Advises traders to look for inefficiencies in pricing, particularly when prices clear short-term highs; taking profits is crucial at these points.

Warns against overtrading during volatile weeks like Jackson Hole, stressing the importance of having clear objectives and recognizing low-hanging fruit opportunities.

Analyzing Price Action

Discusses the significance of observing opening range gaps and their implications on future price movements; emphasizes the need for careful analysis when prices retrace.

Points out the importance of understanding volume profiles and candle formations, noting that wicks can indicate potential reversals or continuations in trends.

Observational Learning in Trading

Questions whether traders feel secure with their stop losses based on their entry points, highlighting psychological aspects of trading decisions.

Engages with viewers by asking them about their habits while watching price action, emphasizing the human element in trading psychology.

Importance of Real-Time Analysis

Stresses that real-time observation of price action provides insights that static charts cannot replicate; live analysis allows for immediate reactions to market changes.

Explains how dynamic charting can illustrate fluctuations better than traditional methods, underscoring the value of live trading sessions for learning purposes.

Market Analysis and Price Action Insights

Opening Range and Gap Levels

The discussion emphasizes the importance of not breaching the midpoint of the opening range gap high, as repeated touches can indicate weakness in price action.

A focus on maintaining a position above the new week opening gap low is crucial; any close below this level could signal potential bearish movement.

The speaker warns against trying to predict perfect market behavior, noting that such attempts can lead to frustration and loss of trust in reading price action.

Wick Formation and Market Behavior

Observations are made about wick formations indicating market reactions; a need for speed in price movement is highlighted after touching key levels.

The analysis includes potential trading down into previous day gaps, stressing the importance of understanding how far prices can move based on historical lows.

Trading Through Inefficiencies

It’s noted that while markets may trade through old gaps, traders should observe behavior post-trade rather than expecting immediate reversals.

Emphasis is placed on allowing markets to deliver inefficiencies before making trading decisions, particularly when determining market bias early in sessions.

Liquidity and Price Levels

Discussion around clearing liquidity from lower price levels indicates a strategy for identifying potential reversal points or continuation patterns.

The analysis highlights specific price levels where liquidity was cleared, suggesting these areas are critical for future movements.

Observations on Candlestick Patterns

Attention is drawn to how certain candlestick patterns interact with key price levels without reaching midpoints, which can signify strong rejection or support zones.

Traders are encouraged to annotate observations regarding how lows interact with upper quadrants of wicks, as this can provide insights into future price actions.

Understanding Trading Hours Dynamics

A distinction between regular trading hours and electronic trading hours is made; understanding this difference is essential for accurate market analysis.

The transition from Friday's settlement to Monday's opening illustrates how overlapping periods affect market dynamics and trader expectations.

Understanding Trading Psychology and Market Behavior

The Impact of Human Error in Trading

The speaker reflects on personal experiences with trading mistakes, emphasizing the importance of being mindful during electronic trading hours to avoid errors.

Discusses the overlapping price movements during significant market events, illustrating how previous runs can influence current trading decisions.

Teaching and Communication in Trading

The speaker expresses a commitment to educating their children through trading presentations, highlighting the importance of sharing knowledge for future success.

Critiques those who disregard valuable insights in trading, asserting that effective communication is essential for understanding market dynamics.

Analyzing Market Movements

Observations on price wicks and their significance in determining potential market reversals or continuations.

Emphasizes the complexity of trading strategies beyond simple buy/sell signals, stressing the need for understanding market behavior and nuances.

FOMC Events and Their Effects

Differentiates between FOMC minutes and rate announcements, explaining how each impacts market reactions differently.

Describes typical market behavior following an FOMC announcement, noting a tendency for prices to reverse direction shortly after initial movements.

Timing Strategies Around Market Announcements

Highlights a 70% likelihood that markets will move against initial trends observed post-FOMC announcements within specific time frames.

Comments on Federal Reserve Chairman Powell's communication style during press conferences and its implications for traders' strategies.

Key Levels and Price Action Analysis

Advises traders to be cautious around key levels post-announcement, suggesting that significant moves often occur shortly after major news releases.

Discusses the importance of timing trades effectively within specific hourly windows to maximize profit potential while minimizing risk.

Monitoring Price Gaps and Strength Indicators

Focuses on observing price gaps as indicators of strength or weakness in the market, advising vigilance when approaching these levels.

Trading Strategies and Stop Loss Placement

Understanding Stop Loss Placement

The speaker discusses the importance of placing stop losses below significant price levels, particularly near relative lows, to manage risk effectively.

Emphasizes that while he wouldn't take a long position, understanding where to place stop losses is crucial for traders. Observing price movements helps in determining these levels.

Analyzing Price Movements

The speaker highlights the significance of recognizing patterns in price movements, especially when prices make multiple passes through certain levels.

Mentions the concept of "relative equal lows" and how liquidity can be affected by these movements, indicating potential market behavior.

Fair Value Gaps and Market Dynamics

Introduces the idea of fair value gaps as indicators for potential market entries or exits. These gaps can signal institutional order activity.

Discusses the necessity for some inefficiency to remain open within fair value gaps to support upward price movement.

Confidence in Trade Execution

Explains how maintaining confidence during trades involves understanding market dynamics and recognizing when to hold positions despite volatility.

Acknowledges that even with strategies in place, traders will still experience stop-outs; there are no guaranteed outcomes in trading.

Institutional Order Entry Drills

The speaker stresses that observing how prices interact with fair value gaps can provide insights into future movements and trade decisions.

Market Analysis and Trading Strategies

Understanding Price Movements and Thresholds

The current low is 78.5, with a significant movement noted as it jumped to 80.5, indicating a potential trading opportunity based on the new week opening gap.

The low of the week serves as a critical threshold; traders should measure halfway points to assess market speed towards upper quadrants for potential gains.

If the price reaches the upper quadrant, it may pierce through the high of the new week opening gap due to stop-loss orders from other traders.

Analyzing Market Reactions

Observations show that traders are reacting to old reference points like the opening range gap, which has been passed multiple times during trading sessions.

The market's behavior around these gaps indicates that many traders are unaware of deeper analytical layers in trading strategies.

Institutional Order Flow Insights

Emphasis is placed on understanding institutional order flow and its implications for entry strategies; this knowledge is crucial for effective trading.

A call for better mentorship in trading education highlights that if mentors cannot provide clear logic behind market behaviors, they may not be effective guides.

Critique of Current Trading Education

There’s frustration expressed over inadequate teaching methods in trading education; true understanding requires more than surface-level knowledge.

A challenge is posed to find credible sources or literature predating 1996 that supports current concepts being taught in trading circles.

Personal Reflections on Trading Philosophy

The speaker expresses disappointment over lack of acknowledgment from peers regarding original ideas and concepts presented in their teachings.

Despite challenges faced from critics, there’s confidence in having unique insights into market dynamics that others have yet to recognize or validate.

Future Market Predictions

Anticipation builds around whether prices will wick below certain thresholds before making upward movements again; this reflects ongoing analysis of market behavior patterns.

Market Analysis and Entry Strategies

Understanding Candle Patterns and Fair Value Gaps

The speaker discusses the significance of candle patterns, particularly focusing on a fair value gap that forms as the next candle opens. They emphasize the importance of observing market behavior during this time.

The expectation is set for the market to return to a specific area without closing in, highlighting a methodical approach rather than random speculation.

A reference is made to an entry model called "institutional order for entry drill," which was demonstrated earlier. The speaker notes their prediction about price movement relative to a candle's wick.

Analyzing Market Movements

The speaker humorously addresses potential criticisms regarding their predictions, asserting that they were technically wrong by one tick but still within an acceptable range of analysis.

Emphasis is placed on anticipating market movements while candles are forming, suggesting traders should be proactive in identifying fair value gaps.

Practical Trading Techniques

Traders are encouraged to utilize limit orders strategically below candle lows when expecting significant price movements, allowing for better positioning in volatile markets.

A specific example of a 10-point fair value gap is provided, illustrating how disruptions can create trading opportunities if approached correctly.

Confidence in Trading Decisions

The speaker expresses confidence based on years of experience, indicating that understanding market dynamics allows for accurate predictions even amidst uncertainty.

Despite minor inaccuracies in predictions (e.g., two ticks instead of one), the focus remains on maintaining an open gap and not closing it entirely, which reflects broader trading strategies.

Risk Management and Acceptance of Losses

Acknowledgment is made regarding inevitable drawdowns in trading; losses are part of the process. Traders must trust their learning and adapt risk management strategies accordingly.

Trading Discipline and Margin Management

Importance of Margin in Trading

Emphasizes the necessity of trading with one and a half times the margin for each new contract added, which helps prevent over-leveraging.

Highlights that stopping trading after a losing day is crucial to avoid over-trading, as the margin requirement inherently limits leverage.

Developing Trading Discipline

Discusses the importance of closing charts after a winning trade to avoid temptation and distractions from price action.

Stresses that following established rules leads to success in trading, allowing traders to utilize tools effectively for consistent wins.

Understanding Market Dynamics

States that beating the market is impossible; instead, traders should aim to align with market movements.

Uses an analogy comparing market behavior to "knocking on heaven's door," indicating anticipation before significant price movements.

Entry Techniques and Market Structure

Introduces fair value gaps as essential tools for measuring market structure strength or weakness during mentorship sessions.

Explains how gaps can indicate potential price movements and stresses the importance of observing candle formations for effective entries.

Managing Trade Precision

Shares personal experiences with entry precision challenges while trading real accounts, emphasizing that errors can occur even with careful planning.

Understanding Market Dynamics and Trading Strategies

The Importance of Fair Value Gaps

Discussion on the significance of fair value gaps in trading, emphasizing that traders do not need to wait for prices to reach the low end of these gaps.

Highlights the importance of understanding market direction and liquidity draws, which are crucial for effective trading strategies.

Session Bias and Liquidity Draws

Explanation of session bias and how it influences market movements; emphasizes that understanding this is essential before determining daily biases.

Introduces a high precision entry model based on institutional order flow, stressing that traders should be aware of potential drawdowns when entering trades.

Prop Trading Firms vs. Real Brokers

Clarification on trading through prop firms like TOP Step, noting they may not involve traditional commission structures as they operate similarly to demo accounts.

Discusses the strategy of using prop firms as a stepping stone to trade with real money at reputable brokers like AMP Global.

Broker Selection Considerations

Personal insights into broker selection; expresses preference for AMP Global due to their reliability compared to other brokers.

Cautions against funded account challenges due to potential risks associated with sharing personal information with less regulated entities.

Execution Quality and Costs

Emphasizes the importance of execution quality in trading; mentions experiences with slippage but notes overall satisfaction with AMP Global's performance.

Trading Mindset and Work Ethic

The Reality of Trading Futures

The speaker shares their experience with trading, noting that slippage can be significant, especially in futures trading. They express a reasonable view of the platform they use compared to others.

Critique of Funded Account Challenges

The speaker warns against participating in funded account challenges, suggesting that many companies create fake accounts to troll traders. They emphasize the importance of hard work over quick gains.

Work Ethic and Financial Responsibility

Reflecting on their youth, the speaker recounts working multiple jobs to fund their trading account after losses. They criticize a "TikTok mindset" among younger generations that seeks instant gratification without effort.

Teaching Hard Work to the Next Generation

The speaker discusses instilling a strong work ethic in their children by making them commute for work, emphasizing that hard work leads to financial independence rather than relying on traditional employment.

Personal Philosophy on Employment and Freedom

The speaker expresses disdain for traditional jobs, claiming they are "unemployable" due to their desire for freedom and flexibility in how they earn money. They argue that true happiness comes from self-determination rather than high salaries tied to stressful jobs.

Understanding Market Dynamics

Stress vs. Financial Gain in High-Paying Jobs

A comparison is made between high-stress professions like surgery and trading; while surgeons may earn substantial salaries, they face immense stress and lack personal freedom.

Questioning Career Choices

The speaker questions why individuals would continue in high-stress careers when alternative paths could yield greater financial rewards without sacrificing personal time or freedom.

Observing Market Behavior

Emphasizing patience in trading, the speaker advises waiting for market movements during specific time windows (e.g., 10 o'clock), highlighting the importance of understanding liquidity dynamics.

Analyzing Price Action

Discussion revolves around observing price action within opening ranges and identifying key levels where liquidity exists—both above and below current prices—to inform trading decisions.

Importance of Market Timing

The initial 30 minutes post-market open are crucial for determining market direction; traders should focus on identifying initial legs of liquidity during this period for better decision-making.

Market Patterns and Trading Strategies

Recognizing Key Levels

The discussion includes recognizing buy-side and sell-side levels as critical points for potential trades based on market behavior observed during opening range gaps.

Understanding Rejection Blocks

Insights into rejection blocks are shared; these areas indicate where price has struggled previously, providing valuable information about potential future movements within those zones.

Understanding Market Liquidity and Trading Strategies

The Role of Algorithms in Trading

Discussion on how algorithms operate within trading parameters, emphasizing that minor deviations from expected performance are acceptable as they aim to achieve higher price points.

Explanation of liquidity management, highlighting how market movements can create a false sense of security for traders, particularly those shorting the market.

Observations on Price Movements

Analysis of specific price action around key levels, noting the importance of observing Wicks and their implications for future trades.

Insight into institutional order entry strategies and the necessity for traders to pay attention to market signals rather than waiting for explicit instructions.

Challenges Faced by Students

Acknowledgment of difficulties faced by students in applying learned methodologies effectively despite having access to profitable strategies.

Emphasis on understanding range formations during significant trading sessions (e.g., London session), which is crucial for effective trading decisions.

Timing and Market Analysis

Instruction on when to analyze market conditions, specifically advising against early trading before 7:00 AM while focusing on relative highs and lows.

Clarification on using previous hours' data (from 7:00 AM onwards) to identify liquidity zones that inform trading strategies.

Advanced Understanding and Application

Encouragement for advanced students to revisit prior teachings about relative equal highs/lows as they relate to current market conditions.

Discussion about finding responsiveness at midpoints within opening ranges, indicating potential future price movements based on historical data analysis.

Mentorship Insights

Reference to past mentorship content that provides foundational knowledge necessary for understanding current discussions about market behavior.

Call-to-action for students who have previously engaged with mentorship materials to reassess their approach based on new insights shared in recent lectures.

Understanding Market Dynamics and Trading Psychology

The Role of Outcomes in Learning

Emphasizes that positive outcomes indicate correct actions, while negative outcomes suggest a need for further exploration and learning.

The speaker downplays their celebrity status, urging students to focus on the teachings rather than seeking personal interaction.

Analyzing Market Behavior

Discusses market behavior post-9:30 opening, highlighting the initial focus on sell-side liquidity rather than buy-side.

Observations about price action forming relative equal lows and highs during the first 30 minutes of trading are noted as critical for understanding market dynamics.

Candle Patterns and Price Action

Highlights the importance of candle patterns, particularly symmetrical candles that may indicate a need for repricing in the market.

Mentions that if certain price levels are breached in the desired direction, it can be disregarded; otherwise, they require further analysis.

Institutional Order Flow Insights

Describes how observing specific price movements can inform traders about potential institutional order flow entries.

Points out that retail traders often get positioned incorrectly at market openings, leading them to chase moves that may not be sustainable.

Psychological Aspects of Trading

Uses an anecdote about a family member to illustrate how traders often find comfort in being on the wrong side of trades due to initial profits.

Discusses how stop-loss placements affect trader psychology and market movement, emphasizing awareness of where stops are located.

Fair Value Gaps and Market Expectations

Introduces the concept of fair value gaps as indicators for potential future price movements based on previous lows.

Stresses that recognizing unfilled gaps is crucial for anticipating market behavior and understanding algorithmic trading signals.

Midpoint Analysis and Chart Interpretation

Explains expectations around new week opening gaps and their significance in determining future price action.

The Journey of Becoming a Trader

Early Beginnings and Learning Process

The speaker reflects on their journey starting from November 5, 1992, when they began learning to trade while renting a room in Bird River, Maryland for $50 a week.

By 1996, the speaker felt they had achieved their trading goals after years of tinkering and refining their approach to trading.

A pivotal moment occurred in April 1996 when the speaker realized they had "cracked" the code of trading while listening to audiobooks at Gunpowder State Park.

Understanding Price Action

The speaker emphasizes the importance of recognizing repeating patterns in price action and guiding others through this understanding without hand-holding.

They express that many people seek direct instructions (like buy/sell signals), but true learning comes from observation and understanding market behavior.

Trading Logic and Strategy

The discussion highlights the significance of waiting for specific market conditions before making trades, focusing on sell-side and buy-side definitions.

The speaker explains how traders should react when prices dip below certain levels, emphasizing learning from both successful and unsuccessful trades.

Analyzing Market Movements

The concept of new day opening gaps is introduced; traders should monitor these gaps closely as they can indicate future price movements.

The importance of respecting previous lows is discussed; these levels can serve as critical points for decision-making in trading strategies.

Practical Application and Observations

As trades develop, observing how prices interact with established gaps can provide insights into potential market direction.

The speaker shares an example where a fair value gap was identified before it formed, illustrating the predictive nature of informed trading decisions.

Learning Through Observation

Emphasizing hindsight analysis, the speaker encourages viewers to study past trades to enhance their predictive abilities in future scenarios.

Motivation Behind Teaching Trading Skills

The Purpose of Teaching

The speaker emphasizes that their motivation for teaching trading is not financial gain but rather to empower their son with skills that could replace his job, even if he only learns a fraction of what they know.

Learning Approach

The speaker warns against the mindset of seeking quick money in trading, stressing the importance of humility and absorbing information instead.

Observational Learning

The son observes the speaker's trading practices closely, witnessing significant trades and learning through direct experience rather than just theoretical knowledge.

Importance of Listening

The speaker highlights that if the son does not pay attention to the lessons being taught, it will hinder his growth and understanding in trading.

Daily Engagement with Market Dynamics

Continuous engagement with live price action allows learners to recognize patterns and fluctuations, which are crucial for making informed trading decisions.

Understanding Market Behavior

Identifying Trade Opportunities

The speaker discusses how recognizing specific market behaviors can lead to identifying potential trade opportunities amidst price fluctuations.

Institutional Entries Explained

There is a focus on institutional entries as critical points where traders should be aware of market movements and gaps that may indicate profitable trades.

Confidence in Trading Knowledge

Students who learn effectively will develop confidence in their abilities, leading them to dismiss skepticism from others about their trading strategies.

Market Analysis Techniques

Understanding Price Behavior Over Time

The speaker explains that understanding how price behaves over different time frames (daily, weekly, monthly) is essential for effective market analysis.

Liquidity Concepts

A key takeaway involves outlining liquidity above and below market levels; this helps predict future price movements based on historical behavior.

Engagement with Content

Encouraging Interaction

Viewers are encouraged to engage by liking the video if they find value in the content presented; this feedback loop supports continued teaching efforts.

Visualizing Market Data

Analyzing Daily Charts

The discussion includes visual representations of daily charts to help understand high-low ranges within a given day’s trading activity.

Efficient Use of Time

Trading Strategies and Market Dynamics

Understanding Session Trading

The speaker discusses the importance of not distracting a trader during work hours, emphasizing the need for focus while trading.

A daily range is defined using an open-high-low-close bar, illustrating how to identify key price points in trading sessions.

Price Action Analysis

Observing price action at 9:30 AM helps traders determine market direction, with specific reference to buy and sell sides based on previous day’s gaps.

The initial drop after opening represents a "fake move," where smart money typically enters the market.

Trading Expectations

The speaker expresses that it may be unrealistic to expect novice traders (like his son) to buy at low points without sufficient experience or understanding.

Personal experiences are shared regarding live account executions, reinforcing credibility in discussing trading strategies.

Identifying Opportunities

Traders should focus on ranges between opening prices and lows rather than trying to catch exact low ticks; this approach fosters confidence in holding trades longer.

Emphasis is placed on learning how to enter trades when bullish trends are anticipated, highlighting that intraday trading can lead to larger profits over time.

Fractal Nature of Trading

The speaker explains that understanding intraday fluctuations is crucial for recognizing patterns applicable across different time frames (weekly, monthly).

Criticism from students about classic buy days prompts a discussion on the complexities of market movements and retracements during such days.

Clarifying Misconceptions

The Challenges of Trading and Learning from Mistakes

Overleveraging and Misguided Strategies

The speaker reflects on their biggest challenge in trading, highlighting how they followed Larry Williams' advice to buy strength above the opening price, which often led to losses due to market retracements.

They admit to focusing on incorrect strategies while ignoring potential adversities, believing that luck would favor them despite repeated failures.

The speaker emphasizes the toxicity of only seeing winning potential without acknowledging risks, leading to over-leveraged trades and significant losses.

Influences and Realizations

The speaker recounts being inspired by Larry Williams, who famously turned $10,000 into $2.2 million before facing setbacks; this experience shaped their understanding of trading realities.

They caution against idolizing figures in trading, suggesting that heroes may not be as infallible as they seem once more information is revealed about them.

Discovering Effective Strategies

The speaker took Williams' admission about price action as a challenge to find solutions themselves, ultimately developing a method called "power three."

They explain the importance of knowing the opening price as a fixed reference point for making informed trading decisions based on liquidity and inefficiencies.

Practical Application of Concepts

The discussion includes practical insights on recognizing market gaps and using them for entry points in trades without closing those gaps entirely.

The speaker stresses that understanding these concepts can lead traders to anticipate market movements effectively.

Long-Term Growth and Mindset

Emphasizing patience in trading, the speaker encourages traders to hold onto positions even through challenging conditions for substantial long-term gains.

Understanding Trading Psychology and Strategy

The Importance of Criteria in Trading

Emphasizes the necessity of meeting specific criteria before making trading decisions, highlighting that successful trades should be based on sound logic rather than hindsight.

Discusses the significance of having a long-term bias derived from monthly and weekly charts to guide trade focus, particularly when bullish.

Analyzing Market Conditions

Explains how daily candle formations can indicate market trends, stressing the importance of understanding opening prices in relation to closing prices for bullish signals.

Advises traders to enter positions at or below the open price to minimize risk, noting that markets rarely retrace after an upward movement.

Managing Fear and Anxiety in Trading

Addresses common emotional responses during trading, such as fear and anxiety about potential losses, especially for inexperienced traders.

Highlights the psychological challenges faced when experiencing significant profits for the first time, including panic and uncertainty about decision-making.

Learning Through Experience

Encourages traders to embrace their experiences as learning opportunities, acknowledging that unexpected reactions can reveal personal insights about handling money.

Describes the intense physical sensations associated with profitable trading moments, emphasizing that these feelings are part of the journey toward becoming a successful trader.

Strategies for Successful Trading

Suggests entering trades based on market liquidity dynamics while framing strategies around relative highs and lows observed during trading sessions.

Introduces concepts like "Judas swings," explaining how misleading market movements can trick traders into making poor decisions.

Critique of External Opinions

Criticizes those who misinterpret his teachings without fully engaging with his content or methodology, urging listeners to understand his framework before forming opinions.

Understanding Market Dynamics

The Importance of Witnessing Market Behavior

Observing market behavior over time helps traders understand the relationship between sell and buy sides, leading to better decision-making.

Traders should aim to close their trades by 1:30 PM if in profit, reinforcing discipline and consistency in trading practices.

Recognizing Patterns in Market Closing

Successful traders notice that markets often close near their daily highs but just below them, indicating potential reversal points.

Understanding these patterns requires effort and time; it’s not a quick process but rather a gradual accumulation of knowledge.

Building Confidence as a Trader

Gaining confidence in trading comes from deep understanding and experience, which cannot be easily taken away or diminished by others.

Respect for the market is essential, but fear should not dictate trading decisions; informed traders operate with assurance.

Critique of Trading Indicators

Many indicators are criticized for being ineffective; they only reflect past data without providing advanced insights into future movements.

Using indicators can lead to poor decision-making if they are relied upon without understanding underlying market dynamics.

The Value of Advanced Knowledge

A trader's ability to anticipate market movements before they occur is invaluable; this foresight cannot be achieved through standard indicators alone.

Serious students of trading who engage deeply with the material become significantly more knowledgeable than those relying on superficial methods.

Dismissing Irrelevant Opinions

Traders must learn to disregard unhelpful opinions from less experienced individuals who do not grasp the complexities of the market.

Maintaining focus on personal growth and understanding allows traders to dismiss distractions effectively.

Embracing a Gradual Learning Process

Mastery in trading involves a long-term commitment to learning and adapting strategies based on repeated experiences and observations.

Understanding the Journey of Learning and Trading

Embracing Failure as a Learning Tool

The process of learning is incremental, building understanding piece by piece. Emphasizing that failure is a normal part of this journey can help individuals highlight opportunities for growth.

Each failure presents an opportunity to gain deeper insights, potentially unlocking new questions and understandings that were previously unconsidered.

The Mindset for Success in Trading

A resilient mindset is crucial; those who give up at the first sign of adversity are unlikely to succeed. Persistence is likened to a "Pit Bull" that holds on until it achieves its goal.

Flexibility in trading schedules is encouraged; taking breaks does not hinder progress, as market dynamics remain consistent regardless of individual participation.

Market Dynamics and Liquidity

Markets are always active, with constant movement driven by liquidity needs. Understanding this can help traders navigate market fluctuations effectively.

The analogy of casinos illustrates how markets attract participants (traders), often leading them to lose while enticing them back with new strategies or indicators.

Recognizing Patterns and Building Confidence

New traders often fall for gimmicks or trends without realizing that many concepts are recycled over time. Awareness of these patterns can build confidence in one's trading approach.

Identifying where significant trades occur (liquidity points) empowers traders, reinforcing their ability to predict market movements based on established behaviors.

The Importance of Consistent Study and Practice

Continuous observation and study lead to mastery; recognizing repetitive patterns enhances understanding and excitement about trading.

Mastery brings freedom—being able to trade without financial stress allows individuals to enjoy life more fully, emphasizing the importance of acquiring trading skills.

Long-Term Commitment Over Instant Gratification

Achieving success requires patience; results may not be immediate but will come through sustained effort akin to maintaining a diet or workout routine.

Understanding Trading Psychology and Strategy

The Simplicity of Trading Strategies

The speaker emphasizes a straightforward approach to trading, akin to maintaining a caloric deficit in fitness—focusing on specific time frames and market behaviors.

He critiques retail traders for following the herd mentality, buying when prices rise and selling short when they fall, which leads to poor decision-making.

Common Pitfalls in Trading

Many traders mistakenly attribute luck or continuous price movement as skill, reinforcing bad habits rather than learning effective strategies.

The speaker reflects on his early trading experiences in 1992, where he failed to understand short-selling and compounded losses by buying more as prices fell.

Emotional Responses in Trading

Acknowledges that seeking to "get even" after losses is toxic; it shifts focus from profit-making to recovering lost capital.

Emphasizes the importance of experience and knowledge in avoiding emotional traps during trading.

Learning Through Observation

Live streams provide real-time insights into market behavior, allowing viewers to learn from experienced traders' perspectives.

The speaker plans to analyze specific market movements using different chart timeframes for deeper understanding.

Chart Analysis Techniques

Discusses the importance of analyzing price action across various timeframes (e.g., one minute vs. fifteen seconds), noting how patterns can differ significantly.

Understanding Market Structure and Gaps

Analyzing the One Minute Chart

The speaker introduces the one-minute chart, highlighting the new week opening gap, which is divided into high and low segments.

The lowest quadrant level is identified as a target for long positions, emphasizing the importance of trading off this breaker.

A bullish breaker is discussed, indicating that any retracement breaking to the upside within this range signifies potential upward movement.

Shifts in Market Structure

The speaker notes a significant shift in market structure on a one-minute chart, suggesting an impending paradigm shift in price action.

Institutional entry points are highlighted; traders should avoid filling gaps prematurely and focus on maintaining open positions for upward displacement.

Price Action Continuum

Emphasizes monitoring multiple time frames (from weekly to sub-one minute charts) to read price action effectively.

Discusses how algorithms cycle through time frames, influencing market movements towards new week opening gaps.

Liquidity and Relative Equal Highs

The concept of relative equal highs is introduced as critical liquidity points where price may gravitate.

Validating relative equal highs involves observing slight variations in high levels; understanding wick behavior can indicate future price actions.

Observing Price Behavior Post-Movement

The speaker stresses watching wicks during downward movements post-market opening to gauge potential reversals or continuations toward buy-side liquidity.

Understanding Price Action and Liquidity

The Importance of Live Streaming Price Action

Emphasizes the necessity of observing live price action through streaming to grasp market dynamics effectively.

Highlights buy stops as indicators of buy-side liquidity, setting the stage for entry points in trading strategies.

Analyzing Time Frames and Consequent Encroachment

Discusses the concept of consequent encroachment, questioning whether price movements touch significant levels on various time frames.

Stresses the importance of monitoring higher time frames while executing trades on lower ones to gauge overall market sentiment.

Confidence in Trade Execution

Explains how failing to reach a midpoint in bullish trades can affect confidence, indicating potential weaknesses in trade setups.

Asserts that all necessary information is available within price action itself, dismissing reliance on external indicators like volume or market profiles.

Managing Expectations Across Time Frames

Encourages traders to focus on lower time frames while maintaining awareness of higher time frame trends for better decision-making.

Illustrates how understanding price action across different charts (e.g., 15-minute vs. 1-minute) influences trading strategy and confidence.

Paradigm Shift in Trading Logic

Challenges traditional notions of support and resistance by suggesting that true strength lies in levels that do not get touched during retracements.

Understanding Market Dynamics and Trading Strategies

The Importance of Learning and Growth in Trading

Emphasizes the value of continuous learning in trading, suggesting that it incurs no financial cost and can lead to significant income growth.

Highlights the importance of making informed decisions rather than relying solely on others' opinions.

Analyzing Market Gaps and Order Placement

Discusses the significance of identifying new week opening gap lows, which are crucial for understanding market dynamics.

Explains how traders protect short positions by placing buy stops above certain levels to mitigate unlimited risk.

Understanding Price Action Without Complex Tools

Argues that while tools like book maps can be helpful, they are not essential for reading price action effectively.

Stresses that knowing where orders are located does not guarantee market movement; understanding price action is more critical.

Real-Time Data and Chart Analysis

Asserts that all necessary information for trading success is available through real-time data on charts without needing additional gimmicks.

Shares personal experience with multiple monitors but reassures that effective trading can be achieved with minimal setups.

Unlocking Perceptions of Price Action

Encourages traders to explore different time frames (e.g., 50-minute, 5-minute, 1-minute), emphasizing the importance of managing these perspectives effectively.

Clarifies that understanding liquidity and inefficiency is key to interpreting price movements rather than traditional support/resistance concepts.

Identifying Key Levels in Trading

Discusses how relative equal highs/lows guide traders in determining potential price targets beyond established levels.

Understanding Chart Timeframes in Trading

The 15-Second Chart Perspective

The speaker discusses the use of a 15-second chart, emphasizing that it may initially seem too fast for new users. However, it operates at a similar pace to longer timeframes like one minute and fifteen minutes.

Anchoring to Higher Time Frames

By comparing the 15-second chart with higher time frames (hourly, daily), traders can better understand price movements. This anchoring helps mitigate the perception of speed when observing candlestick formations.

Execution Across Multiple Time Frames

The speaker explains how they utilize various charts (45 seconds, 30 seconds, etc.) while maintaining precision akin to that on a one-minute chart. They highlight their expectations for price movement towards specific levels.

Setting Realistic Objectives

Emphasizing simplicity in trading strategies, the speaker aims to teach their son achievable objectives rather than pursuing perfection. They reflect on past experiences where striving for perfection led to frustration.

Strategies for Profitability

The speaker shares insights into their strategy for identifying turning points and profitable exit barriers. They stress the importance of understanding market dynamics and recognizing patterns that indicate potential price movements.

Identifying Key Levels and Gaps

Discussion revolves around determining thresholds for profitable exits based on market gaps and order blocks. The speaker highlights how these elements guide decision-making during trades.

Importance of Market Behavior Analysis

A strong emphasis is placed on analyzing market behavior through visual representations. The speaker notes that understanding whether prices are supported or facing resistance is crucial for making informed trading decisions.

Monitoring Price Movements Effectively

As prices fluctuate, the speaker monitors key levels closely to ensure they do not breach critical thresholds. This vigilance aids in confirming trade strength and potential upward momentum.

Market Insights and Trading Strategies

Understanding Market Movements

The speaker discusses the importance of being prepared for market movements, emphasizing comfort and confidence in trading decisions.

A specific entry point is highlighted at an order block, showcasing a real-time example of market behavior and the significance of timing in trades.

The speaker reflects on potential improvements to trade execution, indicating that even minor adjustments can enhance outcomes significantly.

Reiterating key concepts during live streams helps reinforce learning; familiarity with patterns makes complex strategies easier over time.

Identifying price movement towards relative equal highs is crucial; understanding gaps and ranges aids in making informed trading decisions.

Advanced Trading Techniques

The discussion includes methods for determining optimal entry points based on market structure and inefficiencies within price ranges.

The speaker addresses skepticism regarding their approach, asserting that they are demonstrating effective strategies live rather than retroactively fitting data to past events.

Confidence in one's trading methodology is emphasized; continuous practice leads to improvement, even if it's just incremental progress each week.

Analyzing Chart Dynamics

Transitioning into a new segment focused on chart analysis, the speaker prepares to simplify complex information for better understanding.

Observations about opening range gaps illustrate how slight overshoots can provide insights into market behavior on shorter time frames like 15 seconds.

Time Frame Considerations

Clarification on misconceptions about speed in trading charts; all time frames reflect similar market dynamics despite perceived differences in pace.

Emphasizes that fluctuations occur at consistent rates across various time frames; traders should focus on opportunities rather than speed perceptions.

Understanding Market Structure and Trading Strategies

Analyzing Price Action and Rebalancing

The discussion begins with a focus on inefficiencies in the market, particularly during the opening range where prices are fluctuating.

A significant drop occurs after reaching a lower quadrant, indicating an institutional order flow that leads to an immediate rebalance.

Observing immediate rebounds is crucial; they signal potential trading opportunities when a down candle is followed by an upward movement.

Execution and Real-Time Analysis

The speaker addresses criticism regarding real-time execution of trades, emphasizing the importance of personal strategy over mimicking others.

A box is drawn on the chart to represent the range between the opening price and the lowest low of the day, highlighting key reference points for traders.

Market Structure Shifts

The speaker illustrates how shifts in market structure can be identified through different time frames, such as one-minute and fifteen-second charts.

Key concepts like "breakers" and "gaps" are introduced, which indicate areas of buying or selling pressure that traders should monitor closely.

Anticipating Price Movements

The analysis includes expectations for price movements based on previous lows and gaps from earlier trading sessions.

Traders are advised to watch for fair value gaps that may indicate future price rallies or drops.

Understanding Inefficiencies in Trading Ranges

Discussion highlights how buying and selling pressures create respect for certain levels within trading ranges, suggesting deeper insights into market behavior.

Understanding Balanced Price Ranges in Trading

The Concept of Balanced Price Ranges

A balanced price range acts like a "brick wall," indicating strong resistance or support levels where liquidity is sought.

Candlestick patterns define trading ranges, with traders often waiting for breakouts; however, the speaker does not focus on breakout trading.

Significant market movements require substantial changes to breach established high and low points within a defined range.

Analyzing Market Efficiency

Efficient markets should exhibit balanced movement across price ranges; any inefficiency indicates potential issues in market delivery.

The speaker emphasizes that only one candle's movement downwards suggests inefficiency, as it limits trading opportunities within that timeframe.

Visual representation of balance price ranges helps identify areas where buying pressure may be lacking.

Recognizing Changes in Market Dynamics

A failure of a balanced price range signals significant changes, potentially due to manual intervention by market makers.

The analogy of "The Matrix" illustrates how repeated patterns can indicate underlying shifts in market behavior when observed closely.

Observing breaks in balanced price ranges alerts traders to possible disruptions caused by external factors beyond typical algorithmic behavior.

Implications for Trading Strategies

When observing consistent candlestick patterns within a range, traders can maintain confidence in their strategies without fearing downward breaches.

The speaker notes that despite fluctuations, the integrity of the balance remains intact unless significant changes occur.

Understanding these dynamics allows traders to anticipate movements and adjust their strategies accordingly.

Conclusion: Importance of Pattern Recognition

Continuous observation and analysis are crucial for recognizing balance price ranges and making informed trading decisions based on historical data.

Understanding Market Dynamics and Trading Strategies

The Role of Opening Range Gaps

The live stream demonstrates how the market finds support at the middle of the opening range gap, emphasizing its significance in trading strategies.

Relying on indicators or retail patterns can mislead traders; instead, focusing on algorithmic reference points is crucial for understanding market behavior.

Price Action and Market Sentiment

Observations reveal that price movements often align with predictions, causing frustration among skeptics who wish to see failure.

Old relative equal highs are identified as discount arrays when prices retrace, highlighting a nuanced understanding of premium and discount concepts in trading.

Analyzing Market Structures

Traders should map out PD (Price Delivery) arrays to understand market direction; missing these can indicate being on the right side of trades.

A discussion about holding onto trades emphasizes trust in trading strategies and recognizing significant price movements.

Timing and Market Behavior

During lunch hours, market behavior tends to retrace against prevailing trends, seeking sell stops from upward moves or buy stops from downward moves.

Keeping new week opening gaps visible on charts is essential for understanding market actions; neglecting them leads to blind trading.

Learning Trading as a Language

Mastery in reading price action is likened to learning a language; it requires time and practice but yields rewarding results.

The speaker shares personal experiences with language learning to illustrate the challenges faced when mastering trading concepts.

Overcoming Challenges in Learning

Learning complex languages like English or Arabic parallels the difficulty of grasping trading principles; patience and consistent practice are key.

Learning Arabic Through Real-World Experience and Trading Insights

Personal Journey of Learning Arabic

The speaker shares their experience working in a restaurant with an Arab family, where they learned Arabic by hearing phrases spoken in both Arabic and English.

They emphasize the importance of real-world experiences in learning, paralleling this with their approach to teaching trading concepts through live price action.

Teaching Methodology

The speaker discusses how they guide learners through critical decision-making moments in trading, highlighting whether prices are likely to continue or reverse.

They reflect on past struggles with trading losses and the lack of support from friends and family, contrasting it with the opportunity for viewers to learn from their experiences.

Importance of Live Interaction

The speaker encourages viewers to pay attention during live streams, suggesting that observing price movements can lead to unexpected insights that may protect them from losses.

They stress the significance of being aware of market levels during trades, warning that those who ignore these insights might face significant financial setbacks.

Commitment to Teaching

The speaker expresses a deep commitment to teaching their son about trading correctly, emphasizing the value of documenting lessons through recorded live charts.

They assert that regardless of viewer engagement (likes or dislikes), they will continue sharing knowledge for the benefit of their son and others interested in learning.

Understanding Fair Value Gaps

Acknowledging potential misunderstandings about fair value gaps, the speaker warns against assuming all gaps are identical due to varying market conditions.

They highlight specific dates when algorithms reference fair value gaps, indicating a systematic approach within trading strategies based on historical data.

Conclusion on Market Behavior

Understanding Market Dynamics and Trading Strategies

Insights on Market Maker Buy Models

The speaker discusses the common misunderstanding among live streamers regarding market maker buy models, emphasizing that experienced audience members should recognize these concepts.

A distinction is made between distribution and reaccumulation in market trends, with the latter being described as an "innocent type thing" that can be easily identified during trading.

The Concept of Reapers in Trading

The term "Reaper" is introduced, likening it to a Scythe that simplifies trading by making opportunities more apparent when aligned with specific times of day.

The importance of anchoring fair value gaps to significant days (like the first day of the month or week) is highlighted as crucial for effective trading strategies.

Mentorship and Knowledge Sharing

The speaker humorously reflects on the challenge of sharing valuable insights without compromising their own financial stability, hinting at potential mentorship opportunities.

Session Structure and Focus

Plans are shared for future sessions to focus on a one-hour timeframe from 9:30 to 10:30 AM, aiming to maintain engagement while managing personal commitments.