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ICT 2024 Mentorship \ Lecture #9 August 15, 2024
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ICT 2024 Mentorship \ Lecture #9 August 15, 2024

Trading Insights for Thursday Session

Morning Overview

  • The speaker greets the audience and mentions technical difficulties with OBS before starting the stream.
  • Focus is on the NASDAQ indices, displaying a 1-minute chart reacting to opening gaps for the new trading day.

Market Opening Analysis

  • Discussion of a significant gap at market open; plans to annotate this gap for clarity.
  • Current trading price noted at 348, with an expectation of a large premium opening compared to previous session close.

Trading Strategy and Observations

  • Emphasis on observing the opening range from 9:30 to 10:00 AM New York time, crucial for setting up trades.
  • The opening price is confirmed at 352; anticipation builds around potential movements above this level.

Liquidity and Market Dynamics

  • A small gap has been traded into, raising questions about liquidity engagement in that area.
  • Initial run observed after unexpected volume imbalance; highlights importance of recognizing such patterns in trading setups.

Key Levels and Price Action

  • Speaker discusses relative equal highs and lows, indicating potential points of entry based on market behavior.
  • Analyzes recent price runs and their implications for stop-loss placements among traders currently holding long positions.

Trading Insights and Strategies for Tuesday

Market Analysis and Price Action

  • The speaker decides against buying premium assets today, citing their high cost. They express confidence that the market will move without their immediate involvement.
  • A detailed analysis of price levels is presented, highlighting a low-high-low pattern within the new day's opening gap, indicating potential consolidation before a drop.
  • Observations on market behavior show jagged movements upwards after a significant gap opening, suggesting volatility and uncertainty in price direction.

Understanding Market Psychology

  • The speaker notes that many traders are waiting for discounted prices rather than buying at inflated rates. This reflects a broader understanding of market psychology where "dumb money" chases momentum.
  • Emphasizes the importance of maintaining trading discipline by avoiding overpaying for assets and not succumbing to FOMO (Fear of Missing Out).

Trading Discipline and Strategy Development

  • The speaker advises keeping a trading journal to document rules and strategies, which helps prevent emotional decision-making during trades.
  • Cautions against chasing prices as it often leads to losses; instead, traders should look for clear signals before entering positions.

Analyzing Patterns and Formations

  • Discussion on identifying patterns such as three drives within liquidity zones. The focus is on observing price action rather than forcing trades based on predictions.
  • Highlights the importance of patience in trading; traders should take one step at a time rather than trying to predict tops or bottoms.

Preparing for Future Trades

  • Encourages watching market developments closely without rushing into trades. Traders should be relaxed and open-minded about outcomes.
  • Reiterates the need for logical frameworks in trading decisions while remaining flexible to changing market conditions.

Managing Expectations

  • Stresses that not every fluctuation needs immediate action; sometimes it's best to wait for clearer signals before making moves.

Market Analysis and Trading Strategies

Understanding Market Behavior

  • The speaker emphasizes the importance of studying market behavior, particularly how price levels are maintained or broken. Observing these patterns can provide insights into potential trading setups.
  • A potential market trap is discussed, where traders may be misled into believing that prices will continue to rise after a significant run-up, creating false hope for further gains.
  • The speaker notes a small decline followed by a recovery in price, indicating caution in trading early as it may lead to unexpected losses.

Caution in Trading Decisions

  • The speaker prefers to wait for more information before making trades, suggesting that gaps should be treated carefully and liquidity below certain levels must be considered.
  • There’s an emphasis on avoiding breakout trades due to the risk of being trapped at higher prices. Pain points for traders who bought breakouts are highlighted as a concern.

Historical Context and Current Trends

  • Reference is made to previous lectures discussing personal trading criteria and the importance of not entering trades without clear signals from the market.
  • The discussion includes observations about market euphoria following significant price movements and the reluctance to buy into what appears overextended.

Liquidity Considerations

  • The concept of liquidity is explored, with mention of stop-loss placements just below recent lows as traders seek protection against rapid price changes.
  • A brief analysis of ES (E-mini S&P 500 futures), noting its lagging performance compared to NASDAQ and implications for future movements.

Election Year Dynamics

  • The speaker discusses how election years tend to influence stock market trends positively, often leading to upward pressure on prices regardless of economic indicators.
  • It’s noted that trying to short during such periods can lead to losses due to prevailing bullish sentiment driven by political factors.

Strategic Trading Approaches

  • Emphasis is placed on waiting for specific trade setups rather than impulsively reacting to market fluctuations. This disciplined approach aims at reducing emotional ties in trading decisions.
  • The necessity of adhering strictly to established trading rules is reiterated; deviating from these can result in gambling rather than informed decision-making.

Market Strategies and Trading Psychology

Understanding Market Entry Points

  • Traders often prefer to wait for market pullbacks into liquidity pools with deeper discounts rather than entering during initial rallies.
  • The mindset of chasing upward momentum can lead to impulsive decisions; traders should focus on setups that are logically framed rather than speculative entries.

The Importance of Logic in Trading

  • Successful trading requires a logical framework; entering trades without a clear rationale is akin to gambling, which is discouraged.
  • Criticism from others about market predictions highlights the importance of having a well-defined strategy instead of relying on external opinions.

Analyzing Market Trends

  • Observing weekly charts helps identify potential resistance levels, such as 44450, which could act as inversion points if the price retraces.
  • The opening range high often serves as a significant level where prices may return before continuing higher, emphasizing the need for patience in trading strategies.

Navigating Market Volatility

  • New or novice traders may feel pressured to chase price movements but should recognize that sustainable trends require retracement phases.
  • Acknowledging personal trading philosophy is crucial; not every price run needs to be chased, especially when it lacks logical backing.

Recognizing Market Dynamics

  • Unsustainable price runs typically precede corrections; traders must be cautious and avoid emotional reactions to minor fluctuations.
  • Holding positions during volatile markets can induce anxiety; it's essential to maintain a strategic approach rather than succumbing to fear.

Identifying Liquidity Opportunities

  • Attempting to predict market highs while shorting can inadvertently provide liquidity for upward moves, highlighting the importance of understanding market mechanics.

Market Analysis and Trading Strategies

Trading Decisions and Market Sentiment

  • The speaker discusses the challenges of trading against popular sentiment, particularly when trying to fade a well-known trader's advice. They emphasize the need for more than just superficial indicators before making a trade.
  • A personal anecdote about technical issues with their Samsung Galaxy Note 20 is shared, illustrating how technology can impact trading efficiency.
  • The speaker expresses frustration with planned obsolescence in technology, indicating a reluctance to purchase new devices despite current issues.

Understanding Gaps and Price Movements

  • The concept of an "inversion fair value gap" is introduced, where price movements above certain levels are acceptable as long as they do not close below key support areas.
  • The importance of maintaining open gaps in price action is highlighted; if prices return too high into these gaps, it may indicate market exhaustion.

Analyzing Market Behavior

  • Observations on market behavior during upward trends are discussed. The speaker notes that while prices may rise sharply, there’s hesitation among traders to buy due to previous volatility.
  • A focus on inefficiencies within the market is presented. The speaker wants to see specific price actions that would validate their trading strategy and signal potential reversals.

Patience in Trading

  • Reflecting on past experiences, the speaker appreciates having developed patience over time—a trait they lacked earlier in their trading career. This patience has been crucial for learning from mistakes rather than relying on luck.
  • Emphasizing skill over luck in trading decisions, the speaker warns against becoming overly confident based solely on fortunate trades without understanding underlying strategies.

Future Trading Plans

  • If certain conditions are met regarding price movements through established gaps, the speaker indicates they will refrain from trading until later in the day when clearer opportunities arise.

Market Analysis and Trading Insights

Current Market Conditions

  • The speaker notes a lack of participation in the market, indicating mixed conditions where not all three averages are aligned. This situation raises concerns about buying opportunities.
  • The absence of agreement among major indices (like the S&P) is highlighted as potentially problematic for buyers, emphasizing the importance of consensus in market trends.

Price Action Observations

  • A potential retracement is anticipated, with speculation that the market may attempt to reach a previous high before correcting again. The speaker suggests this could be a strategic move if they were influencing the market.
  • An analysis of price gaps reveals exhaustion signals; the speaker expresses interest in how prices behave around these gaps, particularly when trading below them.

Trading Strategy Considerations

  • The speaker expresses frustration with trading Dow due to its volatility and limited stock representation, describing it as "ugly" and "sloppy."
  • Discussion on stop-loss placements for short positions indicates that if a higher high is reached, it could trigger further movements in price action.

Anticipated Market Movements

  • There’s an expectation that reaching a certain high will lead to breakdown opportunities. The speaker emphasizes waiting for clear signals before making trades.
  • A strategy involving liquidity pools is discussed; raising stop losses can create new levels of support or resistance which traders should monitor closely.

Future Trading Plans

  • The possibility of live streaming later in the day is mentioned, aimed at providing real-time insights into market movements and educational content for viewers.
  • Emphasis on patience and observation over impulsive trading decisions; learning from past price actions is encouraged rather than forcing trades under time constraints.

Closing Thoughts on Market Dynamics

  • Future streams will focus more on observing price action with less commentary to enhance learning experiences.
  • Expectations are set for specific price levels to be tested throughout the day; if these levels aren’t reached by early afternoon, they may still be relevant later.

Market Trading Insights

Trading Strategy Overview

  • The speaker emphasizes the importance of observing market behavior, particularly when prices drop below a certain level. They suggest keeping the upper half of the trading range open while focusing on trades in the lower half.
  • There is a mention of wanting to see significant price movement (large candles) below a specific point, indicating potential for further downward momentum and trading back into previous ranges.
  • The speaker notes that while today's market conditions may not be particularly exciting, patience is crucial when trading personal funds. Traders should avoid forcing trades and wait for optimal conditions.

Future Engagement Plans

  • The speaker expresses intent to reconnect later in the afternoon if possible, contingent upon personal circumstances. If not feasible, they plan to meet again before the next trading session at 9:30 AM Eastern Time.
Channel: The Inner Circle Trader · Playlists: ICT 2024 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.