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March 21, 2023 Live Tape Reading - Conquering Your Fear Of Entries
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March 21, 2023 Live Tape Reading - Conquering Your Fear Of Entries

Introduction and Audio Check

Initial Setup

  • The speaker greets the audience and checks audio quality, indicating a casual start to the session.

Anticipation of FOMC Meeting

Market Sentiment Before FOMC

  • The discussion centers around the upcoming Federal Open Market Committee (FOMC) meeting, which is expected to slow down trading as traders await decisions from the Fed.
  • The speaker emphasizes that predicting Fed actions is futile, suggesting that traders should focus on market signals instead.

Trading Strategy Overview

Low Threshold Objectives

  • The speaker advocates for setting low threshold objectives in trading, specifically aiming for small gains (five handles in ES). This approach contrasts with larger targets typically pursued later in the year.
  • Emphasis is placed on patience and comfort in finding repeatable opportunities rather than seeking quick wealth through trading.

Time Commitment and Expectations

Session Duration

  • The speaker plans to extend their session beyond the usual hour until a suitable trading opportunity arises that meets their criteria. They clarify this is not a signal service but an educational experience.
  • A disclaimer reiterates that participants should not use live accounts based on today's discussions; instead, they are encouraged to practice with demo accounts.

Teaching Approach and Personal Experience

Guidance for New Traders

  • The speaker shares personal anecdotes about teaching their son who is new to trading, highlighting common fears among beginners regarding market entry and strategy selection. They aim to demystify these concerns through structured learning approaches.
  • Different strategies will be presented today, focusing on fair value gaps as a straightforward method for identifying trade opportunities within price charts. This aims to simplify decision-making for novice traders.

Focused Trading Perspective

Limiting Chart Analysis

Understanding Trading Gaps and Overcoming Fear

The Role of Time Frames in Trading

  • The speaker discusses how specific time frames can influence audience perception, leading them to believe that these are the only viable options for trading.
  • A five-minute chart is introduced to illustrate the significance of the Monday closing price at 39.84, highlighting a premium opening due to a gap from the previous day's close.
  • The speaker emphasizes the importance of recognizing significant gaps and suggests that they often lead to initial upward movement, enticing public participation before a potential reversal.
  • A range is defined between the regular session close price and today's opening price, indicating where traders might expect price action to revert back into this range.
  • The focus shifts towards identifying short-term directional bias without attempting to predict extreme market movements.

Conquering Anxiety in Trading

  • The discussion transitions into addressing common fears associated with entering trades, particularly for those who have recently acquired funded accounts.
  • Personal anecdotes reveal how fear can paralyze new traders, especially when faced with their first trade after opening an account.
  • The speaker reflects on their own early experiences in trading, noting feelings of anxiety and paranoia about making mistakes or incurring losses.
  • Concerns about being undercapitalized contribute to overthinking trades; new traders often feel pressured to be correct on both entry and exit points immediately.
  • Emphasis is placed on teaching strategies for overcoming fear rather than simply providing signals or instructions.

Strategies for Managing Fear

  • New traders are encouraged not to place excessive emphasis on achieving perfect outcomes right away; instead, they should focus on practice and drills.
  • The goal is not just about following along but learning how to navigate trading independently while managing emotional responses effectively.
  • Insights are shared regarding common struggles faced by novice traders, including difficulties even in demo accounts due to overwhelming anxiety about performance.
  • Acknowledgment that many individuals experience frustration when unable to execute trades confidently highlights the need for supportive learning environments.

Understanding Trading Psychology and Strategy

The Importance of Conceptualizing Entry Points

  • The speaker emphasizes the need for traders to conceptualize what they see on charts, questioning whether certain indicators make sense as entry points.
  • It is highlighted that learning to trade effectively takes time; one cannot expect immediate success when using real money in trading.

Learning Through Simulation

  • The speaker argues against the notion that individuals should learn trading with real money, advocating instead for practice through demo accounts to understand risk management.
  • A mixed market environment is described, referencing previous calls made on Twitter regarding market movements.

Market Analysis and Indicators

  • Discussion about the Dollar Index indicates a desire for it to rise above 103.13, which could signal potential opportunities in other markets like ES (E-mini S&P 500).
  • Emphasis on starting with minimal risk by practicing with one contract during entry drills in demo accounts to build confidence without overwhelming fear.

Managing Leverage and Risk

  • The speaker warns against excessive leverage, suggesting that new traders should not feel pressured to trade large volumes immediately after receiving a funded account.
  • New traders are encouraged to gradually increase their contract size as they gain experience and become desensitized to price fluctuations.

Emotional Control in Trading

  • It's crucial for traders to detach emotions from trading decisions; excitement or anxiety can lead to poor decision-making.
  • The speaker stresses that many new traders approach trading like gambling rather than strategically managing risks over time.

Current Market Conditions

  • Observations indicate that while some indices like NASDAQ are stagnant, others such as Dow show weakness after an initial rally.

Trading Strategies and Mindset

Importance of the First 30 Minutes

  • The initial 30 minutes of trading is crucial; traders should be cautious and not rush into trades during this period.
  • Reports may influence market movements around 9:45 AM, making it risky to trade immediately after opening.
  • Initial moves can often be misleading (e.g., "Judah swing"), so patience is essential to avoid unnecessary risks.

Managing Trading Anxiety

  • Traders often feel pressured to make quick trades, which can lead to a negative mindset towards trading.
  • This anxiety stems from a desire to quickly profit, but it conditions traders to fear the process rather than embrace it.
  • Developing multiple execution models helps mitigate fear and provides various opportunities for entering trades.

Learning from Mistakes

  • It's vital for traders to acknowledge their mistakes instead of ignoring them; understanding errors prevents repetition in live trading.
  • Ignoring past mistakes can lead to significant losses in both equity and mental capital over time.

Capital Preservation

  • Preserving capital is paramount in speculation, whether through paper trading or live funds.
  • A specific level (103.13 for the dollar index) is highlighted as a key point of interest for potential market movement.

Analyzing Market Conditions

  • Observing clean lows indicates sell-side liquidity; understanding these levels aids in making informed decisions.
  • The current market conditions present an opportunity for small gains ("five handles") if approached correctly.

Risk Management Strategy

  • The strategy discussed involves risking five handles to gain five handles, emphasizing that profitability doesn't require high multiples if strike rates are favorable.
  • While training, focusing on one-to-one risk-reward ratios helps build confidence without overwhelming pressure.

Focus During Trading Sessions

  • Maintaining focus on price action and market indicators is critical during the first 30 minutes of trading.

Overcoming Entry Fear in Trading

Understanding Fair Value Gaps

  • The speaker discusses the concept of fair value gaps, emphasizing the importance of using the top of a shaded area and the midpoint of a wick for potential entry points.
  • The focus is on overcoming fear when entering trades, highlighting that patience is crucial for new traders to wait for favorable conditions.
  • The speaker stresses not entering trades without clear signals; they prefer waiting for specific chart patterns before making decisions.

Market Analysis and Observations

  • Discussion on the Dollar Index's behavior, noting it did not respect expected fair value levels but showed potential with wicks indicating possible upward movement.
  • A comparison between different markets (ES, NASDAQ, Dow), pointing out that while some show promise, others like Dow are underperforming.

Trading Psychology and Discipline

  • The speaker describes the emotional turmoil inexperienced traders face when eager to act but unsure about their decisions.
  • Emphasizes recalling lessons learned from demo trading to avoid impulsive actions driven by impatience or external distractions.

Anticipating Market Movements

  • Focus remains on utilizing fair value as a guide for trading decisions rather than following trends seen on social media platforms.
  • Highlights market dynamics leading up to significant events (like FOMC), advising traders to be nimble and adjust expectations accordingly.

Inter-Market Relationships

  • Analyzes how movements in one market can affect others; specifically mentions how dollar index fluctuations impact ES trading strategies.
  • Discusses monitoring price action closely to anticipate potential reversals or continuations based on inter-market analysis.

Market Analysis and Trading Strategies

Current Market Conditions

  • The dollar index has been consolidating since around 7:30, with a focus on breaking the level of 103.13 to the upside.
  • The dollar index has not dropped below its previous low at 9:50, indicating potential strength as it trades below recent highs.

Anticipating Price Movements

  • A fair value gap is anticipated between the established low and high within the current price range.
  • The speaker discusses protraction in price movement, suggesting that if a fair value gap forms, it could be used for trading opportunities.

Trading Strategy Insights

  • Mention of "Turtle Soup" strategy indicates a potential shorting opportunity based on divergence between indices like Dow and NASDAQ.
  • Emphasis on waiting for specific candle formations to create a fair value gap before making trading decisions.

Entry Points and Risk Management

  • Two options are presented for entering trades: setting limit orders or waiting for market movements; both involve managing risk effectively.
  • Acknowledgment of missed opportunities in trading but emphasizes learning from each experience.

Breaker Concept in Trading

  • Introduction of the "breaker" concept where price action creates significant highs and lows; this can indicate potential entry points.
  • Discussion about identifying bearish breakers within specific ranges to inform shorting strategies.

Liquidity Considerations

  • Noted liquidity levels just below 4014.25, highlighting where sell stops may rest and how smart money might operate around these levels.
  • Importance of considering risk when entering trades near liquidity zones; confidence must be balanced with caution.

Effective Trading Practices

  • Advocates for selling short during up-close candles while buying during down-close candles to gain an advantage over other traders.
  • Reflection on trade execution timing—how quickly positions move in favor or against after entry is crucial for assessing performance.

Market Analysis and Trading Strategies

Understanding Market Conditions

  • The speaker emphasizes the importance of a five-to-five risk-to-gain ratio, indicating a desire for immediate market rebalancing and observing price movements in relation to specific levels.
  • It is noted that trading ahead of the FOMC (Federal Open Market Committee) meeting creates an environment unsuitable for high precision trades, highlighting the need for practice under such conditions to prepare for more favorable market scenarios.

Identifying Trade Opportunities

  • The speaker discusses looking for signature trades characterized by sudden market movements rather than simply reacting to daily fluctuations, advocating for a strategic approach to trading.
  • A focus on aggressive price movement towards key levels is mentioned, with an emphasis on removing risk once new sell-side opportunities are identified.

Journaling and Reflection

  • The importance of journaling trades is highlighted; traders should document their entries and observations without seeking validation or complaining on social media after being stopped out.
  • Emphasis is placed on reflecting positively on trade decisions made during the process, regardless of outcomes, as part of continuous learning.

Emotional Control in Trading

  • The speaker reflects on their experience in trading over 30 years, asserting that markets are not random but influenced by emotional impulses when traders lack knowledge or strategy.
  • A clear distinction between having a target versus aimlessly trading is made; consistency in identifying repeatable patterns is crucial for success.

Technical Analysis Insights

  • The speaker encourages viewers to analyze charts calmly without anxiety or emotional interference, attributing this ability to extensive experience in the field.
  • Specific technical details about price action are shared, including how certain candles relate to breakpoints and potential trade setups based on historical data.

Price Action Dynamics

  • Discussion includes how precise price movements can trigger limit orders at critical points within established ranges.
  • An explanation of opening range gaps highlights their significance in determining market direction following openings compared to previous closing prices.

Market Analysis and Trading Strategies

Understanding Market Movements

  • The speaker expresses skepticism about the market continuing to rally, suggesting that recent movements are a trap for traders who missed earlier opportunities.
  • A personal trading decision is discussed; the speaker refrained from shorting due to using the dollar index as a filter, indicating a cautious approach based on market structure.
  • Observations on NASDAQ suggest it may aim for higher highs, emphasizing that analysis is grounded in logical reasoning rather than random speculation.

Divergence and Market Sentiment

  • The speaker notes divergence in the Dow, reinforcing their belief that further upward movement is unlikely, which serves as a critical indicator of market sentiment.
  • A series of down closed candles are highlighted as context for potential price movements, illustrating how algorithms exploit trader psychology by targeting stop losses.

Smart Money Dynamics

  • Discussion on "smart money" strategies reveals that they sell short at higher prices with plans to buy back at lower prices, showcasing an understanding of market manipulation tactics.
  • The concept of support levels is explored; smart money targets those who went long at these levels to maximize profit when buying back.

Market Efficiency Paradigm

  • The speaker emphasizes that smart money operates not by patterns but through exploiting inefficiencies in the market, focusing on where orders are resting.
  • An explanation of how traders can get stopped out reinforces the importance of understanding market dynamics and timing trades effectively.

Trading Models and Strategies

  • The speaker reflects on their own trading rules and models while encouraging viewers to develop their own strategies based on established principles from previous teachings.
  • Emphasis is placed on selling at premium prices within specific ranges while waiting for favorable conditions before entering trades.

Conclusion: Navigating Market Trends

  • Insights into algorithmic behavior indicate that current rallies may be deceptive; traders should remain vigilant about underlying trends rather than getting caught up in momentary spikes.

Understanding Fair Value Gaps and Market Dynamics

Anticipating Fair Value Gaps

  • The speaker discusses the importance of anticipating fair value gaps, emphasizing that if two gaps exist, price should ideally trade up into the second one due to market behavior.

Breaker Influence on Price Action

  • The presence of a breaker is highlighted as a significant factor; the speaker expresses no concern about price exceeding a specific candle's high, indicating a bullish outlook if it occurs.

Market Sentiment and Trading Bias

  • The discussion includes how being stopped out can provide insights into trading bias. If certain conditions are met, it suggests a shift towards being net long for the day.

Experience in Trading Decisions

  • The speaker reflects on their experience, asserting that their outlined strategies were not reactive but rather premeditated based on market analysis.

Equilibrium and Liquidity Pools

  • A detailed explanation of finding equilibrium levels is provided. The speaker identifies key lows below the 50% level as likely liquidity pools, reinforcing the concept of trading within discounts.

Market Movements and Emotional Responses

Managing Trade Expectations

  • The speaker encourages traders to manage expectations by considering emotional responses when prices create new candles against their positions.

Teaching Methodology: Breakers Explained

  • A classic teaching moment regarding breakers is shared. The speaker emphasizes that foundational lessons are essential for students to grasp advanced concepts effectively.

The Role of Mentorship in Trading

Sharing Knowledge and Viral Learning

  • The speaker acknowledges that sharing core content widely serves as viral advertising for mentorship while ensuring students understand deeper concepts beyond introductory lessons.

Confidence in Learning Process

  • Emphasis is placed on building confidence among students through real-time examples that align with teachings, showcasing effective learning without unnecessary embellishments.

Algorithmic Trading Insights

Understanding Smart Money Dynamics

  • Clarification is made regarding 'smart money'—the entities involved are algorithmic rather than traditional market makers, challenging common perceptions about market control.

Algorithmic Precision in Market Predictions

Playlists: 2023 ICT Mentorship
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.