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ICT Charter Price Action Model 6 - Amplified Lesson
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ICT Charter Price Action Model 6 - Amplified Lesson

Price Action Model Number Six: Universal Trading Model 6.1

Overview of the Session

  • The session is a continuation and enhancement of the initial lesson on price action model number six, referred to as 6.1.
  • Focus will be on identifying fractals within larger market structures and how to effectively pair time frames for low resistance liquidity runs.

Key Concepts in Liquidity Runs

  • The concept of buy-side low resistance liquidity runs is introduced, emphasizing the importance of understanding where price is likely headed.
  • The speaker shares personal trading background, highlighting a preference for buying over short selling due to early experiences in commodity markets.

Understanding Market Dynamics

  • Markets are generally inclined to rally due to demand; this perspective shapes the approach towards identifying profitable setups.
  • Short selling remains an alien concept for many; however, it’s a common transaction in daily life that traders need to understand.

Fractal Analysis and Setup

  • Emphasis on recognizing current market action and potential targets rather than needing the lowest entry point for maximum reward.
  • Traders should identify where prices currently are and where they may reach next, focusing on targeted premium arrays relative to higher time frames.

Time Frame Breakdown

  • A structured approach involves analyzing weekly charts for liquidity draws while setting up trades on daily charts with entries identified on 4-hour charts.
  • The setup revolves around buy-side liquidity draws classified under a generic market maker profile applicable universally across different trading models.

Fair Value Patterns

  • Fair value patterns can manifest as gaps filling in liquidity void or running sell stops; these are crucial indicators for traders.
  • Traders must assess chart setups carefully since not all price actions will provide clear fair value gaps or void opportunities.

Understanding Market Maker Sell Models

Introduction to High Probability Conditions

  • The teaching approach emphasizes seeking high probability conditions rather than absolute certainty in market movements.
  • Understanding market behavior is crucial, particularly how it interacts with bearish order blocks and potential consolidation phases.

Identifying Premium Arrays

  • Focus on identifying the next likely high probable premium array, which could be a bearish order block or a fair value gap above current prices.
  • It’s essential to determine if the current market price presents a discount array that can propel prices towards the identified premium.

Market Maker Sell Model Dynamics

  • The initial focus is on the market maker sell model, where trading occurs between discount arrays and targeted premium arrays.
  • Higher time frames often present two buying opportunities before reaching the premium array, while lower time frames may only show one.

Fractal Analysis of Price Swings

  • In higher time frames (weekly/daily), traders can expect two opportunities for buying; lower time frames typically yield just one before reversal.
  • The overall strategy involves gauging price swings to identify selling opportunities after an anticipated rally.

Engaging with Price Action

  • Traders should look for long positions below future resistance levels that indicate potential selling points later on.
  • A modular approach is encouraged; focusing on one aspect at a time will lead to better understanding without overwhelming confusion about subsequent steps.

Visualizing Price Swings

  • A bell curve analogy illustrates price swings: anticipating rallies leading to sell-offs while concentrating solely on buy-side opportunities.

Understanding Market Dynamics and Trading Strategies

Initial Setup for Trading Opportunities

  • The focus is on identifying consolidation patterns in the market, which can lead to potential trading opportunities. The goal is to find a reaccumulation price point that initiates an impulse leg towards a liquidity pool or premium array.
  • Not all price swings will have a clear bullish order block; some may originate from old lows, referred to as "turtle soup," indicating diverse setups for different trading scenarios.

Identifying Key Price Points

  • Accumulation occurs within a consolidation phase, with significant buying opportunities expected when prices move between 20% and 30% of the initial swing range.
  • Traders should look for initial buying opportunities after the market begins to rise, ideally within the specified percentage range of anticipated price movements.

Understanding Price Swings and Projections

  • Price swings can be divided into quadrants (25%, 50%, 75%, and 100%), but traders must remain flexible as the final target (Terminus) may change based on evolving market conditions.
  • Acknowledging uncertainty in price action allows traders to adapt their strategies. If prices fall short of expectations, they can reassess projections using Fibonacci retracement levels during secondary reaccumulation phases.

Utilizing Market Maker Models

  • In a market maker sell model, breaking below stage one reaccumulation could present buying opportunities as it often leads to targeting sell stops beneath this level.
  • This strategy emphasizes looking across the curve for low points that indicate potential upward movement once sell stops are triggered.

Short-Term Trading Strategies

  • For those uncomfortable with long-term positions, short-term trades can be executed by identifying specific days (Monday-Wednesday) where prices align with weekly trends for optimal entry points.
  • A pyramiding strategy is suggested: buy two standard lots at lower levels, take profits at higher levels before retracement, then reinvest upon correction to maximize gains while maintaining a high time frame perspective.

Conclusion on Position Trading Framework

Market Dynamics and Reaccumulation Strategies

Understanding Market Breakdowns and Reaccumulation

  • The model suggests that if the market breaks down, it will seek stops below for offset distribution. This is framed within a daily chart context, focusing on potential price moves towards buy-side liquidity or premium arrays.
  • Stage two of reaccumulation occurs at similar price points, indicating that breaking below stage one could present long-term buying opportunities, potentially leading to swing trades or significant position entries.

Timeframe Analysis for Trading Opportunities

  • When analyzing timeframes, if the daily chart indicates a target price point, short-term trades can be anticipated based on movements from Tuesday to Thursday.
  • A reversal market profile may form by Thursday, with distribution occurring as the week progresses into Friday or Monday, setting up future buying opportunities.

Fractal Analysis in Trading Models

  • Traders should consider internal dialogues beyond just candle patterns; understanding how various elements interconnect is crucial for effective trading strategies using ICT Market Maker models.
  • Transitioning to a 4-hour timeframe allows traders to identify potential quadrants for reaccumulation stages and incorporate precise stop sweeps into their strategies.

Anticipating Price Movements Based on Weekly Patterns

  • By observing weekly patterns (e.g., Tuesday's low anticipating Wednesday's high), traders can plan their entries and exits more effectively.
  • If initial expectations are not met during London sessions, New York sessions may provide continuation opportunities toward anticipated targets.

Institutional Order Flow Considerations

  • Analyzing institutional order flow on the 4-hour chart helps determine bullish or bearish trends. Key indicators include closed candles' behavior and new highs being established without breakdowns.
  • While aiming for longs in a bullish environment is ideal, traders must remain cautious of unexpected market shifts and utilize stop losses effectively.

Fair Value Gaps and Market Retracements

  • During retracements, markets often look for fair value gaps; absence of these may lead to short-term lows being targeted before upward expansions occur.
  • In consolidation phases after initial swings, identifying liquidity voids becomes essential; lack of these signals might indicate sell stops instead.

Final Thoughts on Trading Ranges

Market Dynamics and Trading Strategies

Understanding Fair Value Gaps and Market Reversals

  • The concept of fair value gaps is introduced, suggesting that setups should recalibrate to run for these gaps or sell stops before moving to another area. Timing and price alignment are crucial, potentially aligning with trading sessions or days.
  • Specific times like the London close or FOMC Thursdays can influence market behavior, creating potential reversal points in the market. These events may lead to significant price movements.
  • The importance of identifying fair value gaps within consolidation areas is emphasized; if absent, the market may target sell stops instead.

Analyzing Price Movements on Different Time Frames

  • A rally observed on a 60-minute time frame could indicate a short-term high if it reaches specific pip levels (10-30 pips). This suggests a strong likelihood of avoiding sell stop runs.
  • Price swings are discussed in terms of their acceleration; the last push in a price move often occurs more rapidly than earlier stages, indicating potential shifts in market dynamics.

Stages of Accumulation and Market Structure

  • Traders should focus on predetermined targets (terminus); if prices consolidate after a rally leaving minimal pips (30 or less), it indicates that trades should be executed at that entry point without expecting further opportunities.
  • The discussion transitions to looking for discount arrays as buying opportunities while targeting liquidity pools above equal highs.

Fractal Nature of Price Movements

  • The fractal nature of price movements is highlighted; smaller consolidations can represent larger buy models. Recognizing where price stands relative to time frames is essential for effective trading strategies.
  • Identifying discount areas where reversals might occur does not require precise predictions but rather waiting for confirmation from price action before entering trades.

Practical Application and Mentorship Insights

  • Emphasis is placed on studying charts independently first before seeking mentorship examples. This practice helps traders recognize setups more intuitively over time.
  • The model may only exhibit one stage of reaccumulation instead of two; understanding this distinction relies heavily on observing market structure breaks and subsequent rallies within specified pip ranges (10, 20, 30).

Market Maker Sell Model Analysis

Understanding the Market Maker Sell Model

  • The discussion begins with an overview of a market maker sell model, highlighting its role in creating sell-offs followed by distribution and redistribution phases.
  • The speaker emphasizes the importance of identifying sell-side liquidity pools, suggesting that when prices drop to these levels, there may be potential buying opportunities.
  • A focus on determining key price points for trading is introduced, specifically targeting initial consolidation highs as profit objectives.

Trading Strategies and Market Structure

  • The first stage of reaccumulation is discussed within the context of a market maker buy model, where traders should identify previous redistribution areas on the sell side.
  • The concept of a reversal point at the low is explained; everything left of this point represents selling activity that can inform future buying opportunities.

Identifying Optimal Trade Entries

  • Key patterns for optimal trade entry are outlined: fair value gaps, bullish order blocks, and liquidity voids. These elements are crucial for understanding market dynamics.
  • The speaker notes that if imbalances exist on the buy side without needing to rebalance with sell-side delivery, it could lead to further price expansion.

Practical Application and Visualization

  • Listeners are encouraged to draw out their interpretations of market models in their notebooks across various time frames (weekly, daily, 4-hour).
  • Emphasis is placed on reviewing historical data across different asset classes (stocks, commodities, indices, Forex pairs), reinforcing the application of learned models.

Conclusion: Mastering Market Models

Playlists: ICT MMXM Lectures, ICT Charter Content
Video description

Government Required Risk Disclaimer and Disclosure Statement CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.