If I Could Go Back & Tell Myself What I Know Now... Part 2 of 4

Introduction and Purpose

The speaker introduces the video as part two of a series where they hypothetically coach their 20-year-old self. They mention that this lesson is crucial for understanding the market algorithm and its repetitive nature.

Coaching Younger Self

• The speaker addresses their younger self, providing guidance on understanding the market algorithm.

• Emphasizes the importance of focusing on a specific phenomenon that occurs every week in the markets.

• Mentions that this lesson will change the perspective on classic support and resistance levels.

Changing Perspective on Support and Resistance

The speaker explains how they abandoned the idea of classic support and resistance by gaining a deeper understanding of what was really happening in the market.

Realizing the Narrative

• The speaker encourages viewers to pay close attention to understand how support and resistance levels work differently than traditionally taught.

• Claims that once viewers grasp this concept, it will reveal a new perspective on market dynamics.

• Acknowledges that some viewers may not fully appreciate this video upon first viewing but recommends revisiting it after studying charts.

Revealing Hidden Insights

The speaker emphasizes that certain insights presented in this video have eluded many traders' perception but are essential for understanding order flow at a higher level.

Unveiling Algorithmic Order Flow

• States that what is about to be shown has not been taught elsewhere or discussed in books.

• Highlights the simplicity of these insights while acknowledging their elusive nature.

• Urges viewers to study and understand these concepts to truly comprehend how price is delivered in the market.

Importance of Perception Shift

The speaker acknowledges that some viewers may initially dismiss or undervalue the content presented but stresses the significance of embracing a new perspective.

Challenging Preconceived Notions

• Expresses that if viewers perceive the content as mere hindsight or lacking value, they may not be ready to learn about the highest degree of order flow.

• Asserts that understanding the algorithm from a central bank level is crucial and surpasses conventional views on order flow.

• Encourages viewers to focus on price and its key elements rather than getting caught up in traditional indicators and patterns.

Identifying Steady Setups

The speaker introduces the concept of steady setups and explains their importance in identifying potential wealth-making opportunities.

Seeking Volatility and Movement

• Advises traders to look for steady setups that repeatedly form in the market.

• Discourages excessive worry about losing trades, emphasizing the need to focus on managing money, risk, and recognizing recurring setups.

• States that classic chart patterns, trend lines, moving average crossovers, overbought/oversold conditions, and divergence are distractions from understanding price dynamics.

Analyzing Price Flows

The speaker guides viewers on what to look for when analyzing charts and understanding price flows.

Key Intervals for Analysis

• Highlights the importance of monthly highs/lows, weekly highs/lows, daily highs/lows, and session highs/lows.

• Suggests studying reactions around these levels to gain insights into price flows.

• Dismisses traditional indicators found in books as ineffective compared to focusing on open, high, low, close prices within specific intervals.

Focus on Price Elements

The speaker reiterates the significance of prioritizing key price elements over traditional indicators or patterns.

Ignoring Distractions

• Emphasizes that open, high, low, and close prices within intervals are the essential elements to focus on.

• Discourages spending time trying to fine-tune traditional indicators or patterns, as it leads to wasted effort and potential losses.

• Encourages traders to shift their attention from distractions and concentrate on understanding price dynamics.

Monthly Highs and Lows

The speaker explains how studying monthly highs and lows can provide valuable insights into future market reactions.

Marking Out Monthly Levels

• Advises marking out the high and low of the last three months on a chart.

• Suggests extending these levels into the future for further study of price reactions.

• Indicates that understanding price flows around monthly highs and lows can provide a steady supply of potential setups.

The transcript ends here.

Understanding the Misinformation in Trading Books

The speaker discusses how trading books can misinform traders and emphasizes the importance of questioning why not everyone is rich if the strategies in these books are so effective.

Misinformation in Trading Books

• Many trading books may mislead traders by presenting strategies that do not work for everyone.

• Traders should question why, if these strategies are so effective, not everyone is successful and wealthy.

The Fallacy of Support and Resistance

The speaker explains that support and resistance levels do not always hold true in the markets, and trying to trade based solely on these levels can lead to losses.

Support and Resistance Fallacy

• Markets do not always follow the traditional support and resistance patterns described in trading books.

• Relying solely on support and resistance levels can result in losing money and wasting time.

• Traders should focus on identifying whether price is approaching old monthly highs or lows instead.

Monthly Highs and Lows as Key Levels

The speaker highlights the importance of observing price movement towards old monthly highs or lows as potential key levels for trading opportunities.

Observing Monthly Highs and Lows

• Price drawing towards an old monthly high indicates potential momentum towards higher levels.

• Even if price does not reach the monthly high, there may still be opportunities for profitable trades.

• Traders should avoid seeking perfection in their trades but rather focus on aligning with order flow.

Pursuing Alignment with Order Flow

The speaker advises traders to prioritize alignment with market algorithms rather than pursuing perfection. Being aligned with order flow increases profitability.

Alignment with Order Flow

• Traders should aim to be in sync with the market algorithm rather than trying to predict its movements.

• Pursuing perfection can lead to losses and multiple blown accounts.

• Understanding that markets are rigged and not everyone with the right indicators is profitable is crucial.

Monthly and Weekly Levels as Support and Resistance

The speaker introduces the concept of monthly and weekly levels, explaining how they differ from traditional support and resistance levels.

Monthly and Weekly Levels

• Old monthly highs or lows should not be seen as strict support or resistance levels.

• Price often goes slightly above or below these levels, seeking liquidity.

• Identifying weekly highs and lows can provide additional key levels for trading analysis.

Importance of Color Coding Highs and Lows

The speaker emphasizes the importance of using specific colors to differentiate between highs and lows on charts for better understanding.

Color Coding Highs and Lows

• Using different colors for highs (blue) and lows (red) on charts helps distinguish their significance.

• Breaking above blue levels indicates underlying bullish sentiment, while breaking below red levels suggests relative weakness.

• Multiple breaks of blue or red levels indicate a stronger trend towards higher time frame liquidity.

Seeking Higher Time Frame Liquidity

The speaker explains how breaking multiple monthly or weekly lows indicates a search for higher time frame liquidity.

Seeking Higher Time Frame Liquidity

• Breaking multiple monthly or weekly lows suggests a market's intention to reach for higher time frame liquidity.

• This behavior indicates relative weakness in the market's direction.

• Traders should pay attention to these breaks as potential trading opportunities.

Understanding Profitability and Trading Days

The speaker discusses the importance of being content with profitability early in the week and taking new setups later in the week, specifically on Thursday or Friday. This approach is considered ideal to avoid potential problems.

Ideal Approach for Profitability

• Being content with profitability early in the week is recommended.

• Taking new setups late in the week, particularly on Thursday or Friday, after being profitable can be problematic.

Falling in Love with Winning vs. Process Orientation

The speaker emphasizes the importance of falling in love with being process-oriented rather than just winning. They highlight how falling into the trap of thinking you have to win every day can hinder progress.

Misunderstanding Winning and Process Orientation

• Falling in love with winning instead of being process-oriented is a common misunderstanding.

• Thinking that you have to win every single day can be a trap.

• It's important to focus on developing a process-oriented mindset rather than solely seeking victories.

Comfort and Risks in Trading

The speaker addresses the discomfort traders may feel when not actively trading every day. They emphasize understanding potential risks and not fixating solely on making money.

Finding Comfort and Understanding Risks

• Feeling uncomfortable when not actively trading is common but should be addressed.

• Not every day provides opportunities for trades due to market conditions like consolidation or lack of movement.

• Traders need to understand potential risks involved beyond just focusing on making money.

Daily Highs, Lows, and Liquidity

The speaker explains how daily highs and lows impact liquidity and market behavior. They discuss different types of market days and the significance of understanding them.

Understanding Daily Highs, Lows, and Liquidity

• Daily highs and lows offer potential for liquidity draws in the market.

• Market behavior can vary, with some days showing consolidation or not trading to previous day's high or low.

• Different types of market days include inside days (consolidation), outside days (trading above previous day's high and below previous day's low).

• There are significant factors to consider when analyzing individual days, but it is beyond the scope of this discussion.

Analyzing Chart Patterns

The speaker introduces a chart with vertical lines representing daily ranges. They explain how the market reacts when trading through these lines and highlight the importance of observing price movements.

Observing Price Movements on Charts

• Vertical lines on the chart represent daily ranges.

• Trading through multiple blue lines indicates strength to break old daily highs.

• Trading below red lines shows willingness to go lower and bearishness.

• The focus is not on obvious patterns but rather how the market reacts after trading below red or above blue lines.

Algorithmic State Changes Based on Price Movements

The speaker discusses how algorithmic states change based on price movements. They explain the shift from bullish to bearish states and its impact on seeking liquidity.

Algorithmic State Changes Based on Price Movements

• If bullish, want to see little time spent under red lines before going back above them and breaking through a blue line.

• This state change indicates a shift in seeking liquidity from downside to upside.

• If trading above blue lines (old highs), want minimal time spent there before breaking down below a red line (old low).

• This state change indicates a shift in seeking sell-side liquidity.

• Understanding these state changes is crucial but may require further study.

Distractions and the Importance of Studying

The speaker highlights common distractions in trading, such as focusing on technical indicators. They emphasize the importance of studying and avoiding relying on luck.

Avoiding Distractions and Relying on Luck

• Spending time tweaking technical indicator settings is a distraction.

• Technical indicators alone will not guarantee success.

• Early successes may be attributed to luck rather than skill.

• Relying on luck can lead to failure and trading without stops, resulting in faster losses.

• Studying and listening to advice can help avoid frustration and depression in the long run.

Importance of Listening and Observing Price Grids

The speaker emphasizes the importance of listening to their advice to avoid frustration. They discuss how price movements create a grid that algorithmic systems analyze for liquidity.

Importance of Listening and Observing Price Grids

• Following the speaker's advice can help avoid frustration and internal struggles.

• Price movements create a grid that algorithmic systems analyze for liquidity opportunities.

• Sell-side liquidity is sought below old lows, while buy-side liquidity is sought above them.

Timestamps are provided where available to facilitate studying the transcript.

New Section

This section discusses how the algorithm changes its delivery state and seeks opposing liquidity. It clarifies that the algorithm cannot see individual stops and emphasizes that it trades based on smart money at a high level.

Algorithm Behavior and Liquidity Seeking

• The algorithm changes its delivery state when certain conditions are met.

• It seeks opposing liquidity after taking out cell side liquidity.

• The algorithm does not have visibility of individual stops in the market.

• Traders should focus on understanding how the algorithm will seek the next level of liquidity when the market changes its delivery state.

New Section

This section explains the importance of waiting for specific price levels to be broken before making trading decisions. It also highlights that different lines may be relevant depending on the current market situation.

Waiting for Price Levels to Be Broken

• Sweeping below a red line and going back above it indicates a stop run, but it does not necessarily mean it is a buy signal. Wait for a blue line (old high) to be taken out as well.

• The choice of which lines to use depends on the current market situation and relevant price levels.

• Trading decisions should be based on whether an old high (blue line) has been broken or not.

New Section

This section discusses how identifying specific criteria can lead to ideal setups for trading.

Identifying Ideal Setups

• Once the initial stage is confirmed (breaking an old high), traders can start looking for more specific criteria to identify setups.

• Ideal setups can be found by focusing on the market's state of delivery and how it seeks liquidity.

New Section

This section emphasizes the importance of session highs and lows in conjunction with the previously discussed concepts.

Session Highs and Lows

• Session highs and lows are important indicators when combined with the understanding of the market's delivery state.

• The market's behavior during specific time periods, such as the London and New York sessions, can provide valuable insights for trading decisions.

New Section

This section explains how to interpret market movements based on changes in liquidity and time of day.

Interpreting Market Movements

• When the market drops below a blue line (old high), it does not indicate a false breakdown but rather a change in delivery state.

• Impulse legs indicate a willingness to move higher, while retracements occur during specific time periods, such as between 2:00 AM and 5:00 AM EST for London session or between 7:00 AM and 9:00 AM EST for New York session.

• Trading primarily during the New York session is recommended for beginners due to its relative ease compared to other sessions.

Impulse Leg Retracement and Optimal Trade Entry

This section discusses the concept of impulse leg retracement and optimal trade entry. It emphasizes the importance of considering factors such as time of day, day of week, and changes in price delivery when identifying trade opportunities.

Impulse Leg Retracement

• An impulse leg retraces back into the New York session.

• This retracement is known as the Optimal Trade Entry (OTE).

• Price runs aggressively higher after the OTE.

Factors to Consider

• Time of day, day of week, and changes in price delivery are important factors to consider.

• After price runs below a key level of sell-side liquidity, wait for a specific signature in price.

• The signature involves taking out sell-side liquidity and starting to rally.

• To confirm a valid setup, price must break an old high; otherwise, it will remain in consolidation.

Universal Application

• The concepts discussed can be applied to various markets such as stocks, futures, or other forex pairs.

• The principles are universal and not limited to specific assets.

Identifying High Probability Setups

This section focuses on how to identify high probability setups using examples from the British Pound. It highlights the importance of selecting setups with precision for consistent trading success.

One Shot One Kill Setup

• The goal is to identify a "one shot one kill" setup every single week.

• By analyzing charts without relying on specific form-fitted highs and lows, you can find these setups consistently.

Anticipating Questions

• People often wonder how ICT (the speaker) knows which setup will occur each week.

• Many individuals seek guidance on identifying these high probability setups.

The transcript does not provide further content beyond this point.