ICT 2024 Mentorship \ How To Manage Missed Entries \ September 17, 2024

Opening Remarks and Technical Setup

Initial Setup and Audience Engagement

• The speaker greets the audience, checking if they can hear him properly as he prepares for the session.

• He mentions experiencing a migraine, indicating that his pace may be slower than usual during the discussion.

Discussion on Trading Gaps

• The topic of today's session is about missing trade entries, particularly how traders might freeze or second guess themselves when opportunities arise.

• The speaker emphasizes the importance of recognizing gaps in trading, specifically referencing an opening range gap higher than the previous day's settlement.

Understanding Market Dynamics

Analyzing Price Action

• He discusses a 70% probability that prices will move to mid-gap within the first 30 minutes after market open.

• The speaker plans to keep the session brief while focusing on specific time frames for analysis.

Time Frame Considerations

• He advises using lower time frames (like one minute and fifteen seconds charts) for more precise entry points, even if some viewers lack access to these features.

• A comparison is made between different time frames; he suggests thinking of a one-minute chart as equivalent to an hourly chart for larger-term traders.

Strategies for Entering Trades

Techniques for Late Entries

• The speaker shares strategies on how to enter trades that have already begun moving, which he considers a valuable skill set.

• He highlights key candlestick values and their significance in determining potential trade setups.

Caution Around FOMC Days

• Advice is given regarding trading before Federal Open Market Committee (FOMC) announcements; inexperienced traders should avoid trading due to high volatility and manipulation risks.

Market Dynamics and Trading Strategies

Understanding Market Movements

• The speaker discusses how market movements around 2:00 PM to 2:30 PM can often reverse previous trends, similar to non-farm payroll events but with more exaggeration.

• Emphasizes the importance of avoiding over-leveraging during volatile periods to prevent regret in trading decisions.

Opening Range Gap Analysis

• Defines the opening range gap as the difference between the opening price at 9:30 AM and yesterday's settlement price, which is crucial for lower time frame analysis.

• Notes that traders should maintain light expectations on days leading up to significant announcements (e.g., FOMC), as volatility can deter large positions.

Fair Value Gaps and Trading Techniques

• Introduces the concept of a fair value gap based on market lows and upper quadrant levels, indicating potential trading opportunities.

• Discusses a specific fair value gap created after trading down to a low, suggesting it could be an area of interest for future trades.

High-Frequency Trading Insights

• Suggests waiting until deeper into the morning session (between 9:50 AM - 10:10 AM) before making any trades, emphasizing discipline in timing.

• Explains that high-frequency trading can be executed without bias by identifying relative equal highs on short-term charts (1-minute or 5-minute).

Navigating Market Risks

• Advises caution when entering trades ahead of major announcements like FOMC meetings due to expected volatility.

Midgap Level Analysis

Overview of Midgap Levels

• Discussion on the midgap level and its significance in trading, with a target delivery time set for 10 o'clock.

• Acknowledgment of a 70% strike rate achieved today, indicating successful predictions based on previous price points.

Indicator vs. Overlay

• Clarification that overlays are not indicators; they merely report past price points without manipulating data.

• Preference for overlays to be positioned further from the price to avoid distraction during analysis.

Charting Techniques

• Emphasis on maintaining annotations consistently aligned with chart movements for better clarity.

• Mention of a short-term high and the importance of observing market behavior before making trades.

Trading Strategies and Mistakes

Live Trading Challenges

• The speaker reflects on the challenges faced while discussing live charts, leading to potential mistakes in identifying candlestick patterns.

• Acknowledgment of an error made regarding fair value gaps but reassures it did not impact trading outcomes significantly.

Entry Techniques

• Explanation of entry techniques related to specific price levels, emphasizing careful observation before executing trades.

• Suggestion to use limit orders at strategic prices while being cautious about market movements.

Market Behavior Insights

Anticipating Market Movements

• Description of how traders can anticipate market behavior by recognizing patterns similar to sports strategies (e.g., boxers or pitchers).

• Insight into allowing markets to exhibit unpredictable behaviors ("curveballs") while monitoring key price levels.

Price Action Dynamics

• Discussion on how external factors (like FOMC meetings) can affect market precision and delivery, advising caution in trading strategies during such times.

Understanding Trading Mechanics

The Importance of Fair Value Gaps

• The process of identifying fair value gaps involves pulling up a Fibonacci retracement and anchoring it to the previous day's settlement price, which helps establish a 70% bias for market movements in the first 30 minutes.

• New traders often struggle with where to start; this series is recommended as it provides consistent setups based on repeating logic in trading patterns.

Anticipating Market Movements

• An opening gap greater than 40 handles indicates a significant market movement, allowing traders to anticipate a return to the half gap with a high strike rate.

• Understanding the relationship between the opening range and fair value gaps can clarify market bias; if prices are below the first fair value gap, bearish sentiment is expected.

Simplifying Trading Strategies

• A well-defined trading model can be established by recognizing that markets tend to revert to mid-gap levels 70% of the time within the first half-hour.

• This approach can potentially replace traditional income sources, offering clarity on trade direction without ambiguity.

Navigating Market Conditions

• Traders should consider their stop-loss placements relative to candlestick formations when shorting or going long, ensuring they account for potential price wicks.

• Awareness of upcoming events like FOMC meetings can lead to more volatile trading conditions; thus, understanding these dynamics is crucial for effective strategy implementation.

Algorithmic Thinking in Trading

• Following a systematic approach akin to an algorithm allows traders to make informed decisions daily, enhancing consistency and profitability over time.

• Backtesting strategies reveals significant advantages in achieving consistent results and transitioning from demo accounts into real profit-generating scenarios.

Index Comparisons and Preferences

• Different indices (NASDAQ vs. S&P vs. Dow) have varying characteristics; NASDAQ tends to be more responsive due to its composition of fewer stocks compared to S&P's broader base.

• The Dow Jones index may present challenges due to its limited number of stocks influencing price movements significantly; hence personal preferences dictate trading choices.

Divergence Analysis

S&T Divergence: Understanding Market Movements

Analyzing Price Movements and Wicks

• The speaker discusses the concept of S&T Divergence, emphasizing not to worry about price fluctuations as they are part of a strategy. Observations on NASDAQ's animated movements compared to others are highlighted.

• A distinction is made between Wicks and bodies in price charts, noting that while Wicks may show higher values, the bodies indicate where the bulk of trading volume occurs.

• The importance of understanding market dynamics is stressed; specifically, how Wicks can indicate damage in price action. The speaker critiques mentorship programs that lack comprehensive knowledge.

Foundations for Trading Strategies

• The speaker introduces foundational concepts necessary for understanding market behavior but reassures that complete knowledge isn't required for success.

• Recommendations are given to analyze personal charts using time frames just above the intended trading timeframe to better understand market moves.

Emotional Responses and Trading Decisions

• Discusses emotional responses when missing trades—highlighting regret leading to poor decision-making like chasing or fading trades out of anger.

• Specific levels (e.g., 199.26 for September contracts) are mentioned as significant points to watch on hourly charts, indicating potential areas of buy-side liquidity.

Anticipating Market Moves

• The speaker expresses a loose expectation regarding FOMC meetings targeting specific high areas but clarifies that this is not a guaranteed outcome.

• Introduction of "gr pools" as a concept related to price delivery (PD), explaining how Wicks can be analyzed within these clusters for deeper insights into market behavior.

Algorithmic Insights and Price Clustering

• Emphasizes looking at specific prices rather than traditional support/resistance zones, focusing instead on clustering patterns formed by Wicks which often go unnoticed by traders.

• Proposes a thought experiment regarding algorithms controlling price movements and their relationship with clustered Wicks, suggesting these areas hold significant information for traders who recognize them.

Future Learning Opportunities

• Encourages viewers to consider new perspectives on market analysis beyond conventional methods, hinting at upcoming educational content aimed at enhancing trading precision through time-based strategies.

Trading Strategies and Insights

The Freedom of Trading

• Discusses the liberating feeling of being able to manage trading schedules, contrasting it with the frustration of waiting for chart signals.

High-Frequency Trading Techniques

• Explains the use of minute buy/sell sides and 15-second charts for high-frequency trading setups, noting that this approach can lead to frequent stop-outs due to chasing liquidity.

Market Conditions Awareness

• Emphasizes the importance of understanding market conditions such as time of day and seasonal tendencies when engaging in trading, especially before significant news events.

Managing Trade Frequency

• Highlights that while high-frequency trading can yield many trades (20-30 a day), it requires discipline to avoid overtrading and impulsive decisions.

Risk Management in Trading

• Warns about the dangers of overleveraging in high-frequency scenarios, stressing that without proper knowledge, traders risk significant losses.

Understanding Fair Value Gaps

Filtering High-Frequency Trades

• Suggests filtering out potential losses by focusing on short-term trades using a fair value gap entry model rather than engaging in impulsive high-frequency trades.

Statistical Probability in Trading

• Introduces a strategy involving gaps greater than 40 handles, indicating a statistical probability (70%) for price movement within the first 30 minutes after market open.

Setting Realistic Expectations

• Advises traders not to expect guaranteed outcomes but rather focus on statistically probable scenarios based on historical data and market behavior.

Building Consistency in Trading

Importance of Discipline

• Critiques common trader accuracy claims (e.g., 50% success rate), advocating for strategies with built-in advantages instead of relying on randomness or luck.

Performance Pressure Among Traders

• Discusses how live streamers may feel pressured to perform well, which can lead to subpar decision-making during trades.

Utilizing Opening Range Gaps

Identifying Opportunities

• Stresses that opening range gaps provide consistent opportunities; larger gaps indicate more potential for profitable trades.

Weekly Trade Strategy

• Encourages traders to focus on one solid setup per week rather than trying to trade every day, promoting consistency and building trust in their strategies.

Financial Impact

• Illustrates how even one successful trade per week could significantly impact financial goals (e.g., $1,000 from one mini contract).

The Millennial Trader's Dream

Simplified Trading Guidance

Understanding Trading Gaps and Fair Value

Identifying Opening Prices and Profit Potential

• The speaker emphasizes the importance of identifying the opening price as a key reference point for determining profit potential in trading.

• Once the opening price is established, traders should anchor their Fibonacci (FIB) levels to this price to define their trading range and bias.

Recognizing Fair Value Candlesticks

• The first fair value is identified through specific candlestick formations, with particular attention given to the timing of these candles post-market open.

• Entry points are discussed, highlighting aggressive strategies that involve entering trades just below certain candlestick highs or lows.

Managing Risk and Stop Losses

• The speaker discusses setting stop losses above recent candle highs when shorting, emphasizing risk management in volatile market conditions.

• A model is presented where traders can adjust their stop loss after breaking short-term lows to cover costs effectively.

Targeting Gap Closures

• When dealing with significant gaps (40 handles or more), traders should aim for 50% of the gap as a target while using fair value gaps for entry mechanisms.

• Understanding economic calendars can enhance trading strategies by predicting market movements based on scheduled events.

Long-Term Trading Strategies and Personal Insights

• The speaker encourages taking partial profits at mid-gap levels while maintaining a focus on overall trade strategy rather than individual trades.

• Emphasis is placed on algorithmic patterns in market behavior, suggesting that understanding these can lead to better trading decisions over time.

Personal Philosophy on Trading Education

• The speaker expresses a desire for traders to become self-sufficient rather than relying solely on external content creators for guidance.

Understanding Commodity Trading Dynamics

Overview of Contract Expiration and Pricing

• The discussion begins with the expiration of contracts, specifically noting that as one contract expires (December), it transitions to the next available contract (March 2025).

• In a typical carrying charge market, prices for future contracts are generally higher. For example, December corn is trading at $197.97 compared to September's lower price in the 500s.

Market Behavior and Supply-Demand Relationships

• A normal carrying charge market reflects real supply and demand dynamics, particularly in essential commodities like grains and cattle, which have tangible consumption needs.

• If current prices exceed future prices, this indicates a shift from a carrying charge market to a commercial bull market where large buyers maintain high premiums on immediate purchases.

Trading Strategies and Psychological Factors

• New traders may struggle with understanding these concepts; however, mentorship resources are available for deeper learning about commodity trading strategies.

• Emphasis is placed on maintaining discipline in trading—staying within stop-loss limits while waiting for target trades without over-leveraging or acting impulsively.

Common Pitfalls in Trading Practices

• Traders often err by over-leveraging or entering trades prematurely before fair value gaps are reached due to emotional responses rather than data-driven decisions.

• The speaker warns against trying to modify established trading models with personal interpretations that deviate from proven methods.

Importance of Mechanical Systems in Trading

• A mechanical trading system is likened to following a recipe; deviations can lead to failure. Consistency in applying parameters is crucial for success.

• Despite having effective systems, traders can still fail due to psychological factors such as fear or impatience. It's vital to approach each trade based on established criteria rather than emotional impulses.

Building Discipline Through Practice

• New traders should start small—using micro contracts—to desensitize themselves from the emotional weight of money involved in trading.

• A month-long commitment to consistent practice allows traders to gather data on their emotional responses during trades, helping them identify areas needing improvement.

Automating Trading Strategies

Introduction to Automation in Trading

• The speaker discusses their experience with automation in trading, specifically mentioning the use of TradeStation and EasyLanguage for coding trading strategies since the 1990s.

• They describe a simple automated setup that functions like an ATM, providing consistent trading opportunities without requiring belief in its efficacy; users are encouraged to test it themselves.

Key Parameters for Successful Trades

• Emphasis is placed on specific parameters: a minimum of 40 handles from the previous settlement price to the opening price is identified as a "sweet spot" for trades.

• The speaker advises caution when trading setups with over 200 handles due to potential market manipulation, suggesting traders should be aware of these conditions.

Mechanism and Timing of Trades

• The mechanism involves knowing where to place stops and targets based on time-based fair value gaps formed on one-minute charts, aiming for a high probability of success (70%).

• Traders are encouraged to accept stop-outs as part of the process, focusing on learning from experiences rather than just seeking profit.

Mindset and Approach to Trading

• The importance of self-discovery through tape reading and demo trading is highlighted; traders should focus on identifying bad habits instead of showcasing profits.

• The speaker stresses that successful trading relies on logic and specific rules rather than luck, urging traders to follow clear guidelines regarding entry points and stop placements.

Market Characteristics and Trading Strategy

• Observations about current market behavior indicate ranging patterns typical before significant events (e.g., FMC), which can affect trade decisions.

• A two-panel view is suggested for better analysis, with attention drawn to short-term buy-side opportunities amidst market fluctuations.

Practical Application and Drills

• Viewers are encouraged to practice drills regularly without financial pressure; this helps build confidence in recognizing setups.

• The speaker reassures that the strategies discussed do not require costly mentorship or materials; they provide valuable insights freely available.

Final Thoughts on Market Behavior

• Caution is advised when trading during low activity periods (e.g., afternoons before major announcements), as liquidity may be limited.

Trading Insights and Strategies

Understanding Fair Value Gaps

• The speaker aimed to identify a fair value gap for trading opportunities, acknowledging that sometimes trades occur without this setup.

• Emphasizes the importance of patience in trading; if a setup is missed, traders should remain calm and look for other opportunities.

Higher Time Frame Analysis

• Discusses the significance of identifying higher time frame draws, referencing specific levels (e.g., 926 level) as potential targets for market movement.

• Highlights the concept of relative equal highs across different contracts, indicating consistent reasoning behind expected price movements.

Practical Trading Exercises

• Encourages traders to engage in exercises that desensitize them to trade entries and exits, focusing on managing stop losses effectively.

• Suggests gaining experience through small trades without monetary pressure to understand personal responses to winning or losing trades.

Character Development in Trading

• Stresses the need for self-awareness in trading; understanding personal flaws can improve decision-making and performance.

• Warns against toxic self-defeating behaviors that may hinder progress; acknowledges common struggles among traders.

Market Dynamics and Price Action

• Observes how prices respect significant gaps from previous weeks, using one-minute charts to analyze current market behavior.

• Identifies liquidity pools based on hourly chart analysis, framing exercises around these observations rather than focusing solely on profit-making.

Trade Execution Considerations

• Discusses the importance of remaining open-minded during trade execution; emphasizes not forcing trades based on preconceived notions.

• Notes that while analyzing price action, it's crucial not to rush into monetizing every observation but rather focus on learning from each scenario.

Market Analysis and Trading Strategies

Understanding Key Levels and Breakers

• Discussion on the market's tendency to gravitate towards the 1962.75 level, noting its distance from relative equal highs at the 926 level.

• Emphasis on marking the September 13th daily high on personal charts as a significant reference point for trading decisions.

• Warning about potential downside movement if the current range is lost, indicating a possible shift in market dynamics during lunch hours.

Analyzing Market Gaps and Rallies

• Mention of new week opening gaps and their implications for price movements; caution against entering trades below certain levels.

• Acknowledgment of missed opportunities but maintaining focus on future setups; highlights importance of patience in trading strategies.

• Reflection on traders' responses to advice given, emphasizing the need for active listening and engagement with market signals.

Evaluating Market Conditions

• Identification of sell-side opportunities based on recent lows; discussion about potential retracement setups within defined ranges.

• Criteria established for entering trades, including a minimum target range of 20 handles to ensure favorable risk-reward ratios.

• Clarification that no long positions will be considered while prices remain below specific thresholds, reinforcing discipline in trading strategy.

Order Blocks and Price Dynamics

• Explanation of how order blocks influence market behavior; emphasis on understanding specific price points rather than traditional support/resistance concepts.

• Insight into how inverted aspects of price levels can affect trading decisions; importance placed on recognizing unique candle formations.

Short-Term Trading Considerations

• Strategy outlined for shorting near high points while being cautious about overall market direction leading up to significant events like FOMC meetings.

• Discussion around timing entries based on observed gaps; acknowledgment that not all setups are ideal or timely enough for execution.

Risk Management and Patience in Trading

• Recognition that some setups may appear too easy or shallow, indicating potential traps; emphasizes critical thinking before executing trades.

• Importance of analyzing fair value gaps carefully before making decisions; highlights ongoing consolidation patterns affecting trade viability.

Final Thoughts on Trade Execution

• Commentary on selling at discounts while monitoring key highs as indicators for future actions; stresses staying informed about market conditions before acting.

Market Analysis and Trading Strategies

Understanding Price Movements

• The speaker discusses the current price range on a 15-second chart, expressing a desire for prices to exceed a specific high before retracing.

• Emphasis is placed on observing market inefficiencies and potential support levels, indicating the importance of identifying key price points for trading decisions.

Breaker Blocks and Market Behavior

• The speaker notes the significance of not hitting the bottom of a breaker block, preferring to see price action that indicates upward displacement before considering trades.

• A screenshot is suggested to highlight areas where trading should be avoided due to unfavorable conditions; the speaker intends to demonstrate these challenges through personal trading attempts.

Market Dynamics and Trading Risks

• Observations are made about market behavior being slow or lethargic, which can indicate poor selling conditions after significant downward movements.

• The discussion includes insights into potential low points in daily ranges and how they may affect afternoon trading strategies.

Inefficiencies as Catalysts

• The speaker expresses interest in seeing if prices will return to an identified inefficiency without breaching it significantly, suggesting this could lead to upward movement.

• A humorous remark about longevity in trading education highlights the ongoing nature of market analysis while reinforcing the need for careful observation during price fluctuations.

Buy Programs and Market Trends

• An explanation is provided regarding buy programs that push prices higher regardless of selling pressure, illustrating how markets can behave under certain conditions.

• The concept of mean thresholds within breaker blocks is introduced, emphasizing their role in understanding price movements and liquidity targets.

Analyzing Chart Patterns

• Reference is made to historical highs from September 13th as part of ongoing analysis related to current market behavior.

• Discussion around inefficiencies anchored on shorter time frames (like 30 seconds vs. hourly charts), stressing that even small inefficiencies can impact trading decisions significantly.

Final Thoughts on Trading Strategy

• The speaker reiterates the importance of rapid movement into identified inefficiencies as a sign for potential trades.

Understanding Price Action and Trading Strategies

The Importance of Price Movement

• Higher prices indicate a strong upward trend, regardless of what liquidity indicators suggest. The speaker emphasizes the importance of recognizing this momentum rather than attempting to short the market.

• Observing price action reveals that it is consistently moving higher without any inefficiencies, making it painful for those who are positioned incorrectly in the market.

Learning to Navigate Price Action

• The speaker stresses the necessity of learning how to read and navigate price action effectively, as traditional trading books often fail to convey practical insights.

• Most trading literature is deemed ineffective because they present static images and brief descriptions that do not capture the dynamic nature of price movements.

Analyzing Market Retracements

• A recent retracement provides an opportunity to explore potential downside movement; however, patience is required until certain conditions are met.

• The analysis focuses on maintaining specific segments of price action open while avoiding returns to previous levels, which would indicate weakness in the current trend.

Capital Preservation and Risk Management

• Emphasizing capital preservation over aggressive trading strategies is crucial. Understanding when not to trade can prevent significant losses.

• Identifying balanced price ranges helps traders understand where they should enter or exit trades based on market behavior.

Execution Strategy and Trade Management

• Traders should wait for clear signals before entering positions; a well-defined entry point increases chances for success.

• Setting stop-loss orders above key candlestick formations ensures risk management while allowing room for potential gains.

Practical Application in Live Trading

• During live trading sessions, it's important to remain focused on execution without distractions from platform maintenance issues.

Understanding Trade Management and Market Dynamics

Managing Partial Exits in Trading

• The speaker discusses the strategy of taking partial exits when queuing up trades, emphasizing the importance of managing stops effectively as one approaches a target low.

• A key teaching point is to allow the market to dictate exit points rather than stressing over which partial to take, thus reducing anxiety around trade management.

• The speaker expresses disappointment about not being able to demonstrate stop management with a live contract but acknowledges that some participants may have successfully executed trades based on guidance provided.

Identifying Market Setups

• Emphasis is placed on finding setups that make sense within the context of price action, highlighting that just because prices are moving doesn't mean one must engage in trading.

• The main takeaway involves recognizing how price movements lead up to significant levels, noting that inefficiencies can be challenging to identify during rapid price changes.

Observations on Price Action

• The speaker reflects on an ideal scenario where certain price levels remain open longer, which could facilitate quicker movement towards targets without excessive fluctuations.

• Discussion includes potential outcomes if specific conditions had been met, indicating a desire for more straightforward trading scenarios.

Teaching Philosophy and Approach

• The speaker reiterates their role as an educator rather than a financial advisor, encouraging students to learn from live price action without feeling pressured to trade real money immediately.

• There’s an emphasis on providing free educational content aimed at helping others avoid common pitfalls in trading while also supporting personal growth and understanding.

Community Engagement and Feedback

• Participants are encouraged to share what they learned from the session through community posts after the stream concludes, fostering engagement and feedback.