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ICT Mentorship 2023 - ES Market Review May 17, 2023
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ICT Mentorship 2023 - ES Market Review May 17, 2023

Short Review and Incorporation of Mentorship Lessons

In this video, the speaker reviews several concepts taught in the mentorship program for 2022 and 2023. The focus is on the weekly chart of E-mini S&P (ESMPS) delivery contract for June 2023.

Technical Analysis

  • The speaker draws attention to an area on the weekly chart where NASDAQ futures contract has delivered its respective volume and bounce.
  • There is a discount fair value gap between two candles, which suggests that ESMPS may draw up into the mentioned area.
  • Pal will speak on Friday at 10 am, which could impact market movement.

Weekly Candle Expansion

  • The opening price is used instead of the higher candle due to a short stubby little candle wick.
  • Thursday and Friday's action are expected to deliver a weekly candle expansion up into the high area.

Order Block Levels

  • Be mindful of the blue shaded area with order block levels as they will transpose into daily charts.
  • The buy-side liquidity pull-up here that daily premium if everybody got and the daily discount for Vega and weekly discount forever you got gives an ebb and flow of what the market has been doing.

Gradient Levels

  • Gradient levels of that fair value gap on the daily chart are created using midpoint, lower 25, upper 25, high, and low respectively.
  • The speaker believes we're probably going to reach up into this High here sometime this week before we close.

Reinvention of Supply and Demand

The speaker explains that supply and demand is not what they trade, but rather the rectangles on a chart highlight an area for studying. They discuss gradient levels and fair value gaps, which are used by algorithms to seek inefficiencies in the market.

Gradient Levels and Fair Value Gaps

  • Gradient levels are not quarters theory.
  • Algorithms use fair value gaps to seek inefficiencies in the market.
  • Market trades at premium fair value gap on daily chart.
  • Fed Chair Powell's speech on Friday can bring dynamite behind market moves.

Efficient Price Delivery

  • Market only offers downside delivery.
  • To efficiently rebook and balance the area, the market needs to reprice up into 4200s.
  • Efficient price delivery is a pass above and below or below and above.

Backtesting Methodology

The speaker discusses how to backtest using old data by annotating charts with detailed notes. They emphasize the importance of practicing forward testing before going into live data.

Using Old Data for Backtesting

  • Use Fibonacci retracement tool to plot high and low of any fair value gap or gap of any kind.
  • Highlight 50%, 25%, and 75% levels on FIB settings.
  • Annotate charts with detailed notes when backtesting.

Journaling Techniques

  • There are many different ways to journal, so do what makes you feel comfortable.
  • Use applications or apps that make it easy for you to go into old data study details.
  • Make it like a therapy or hobby that allows you to go into old data study details.

Retaining Information through Journaling

In this section, the speaker discusses how retaining information through journaling can help traders recognize patterns and reinforce positive behavior.

Benefits of Journaling

  • Retaining information as real experience
  • Positive reinforcement
  • Trains the mind to not be fearful of moves
  • Recognize things seen in the past

Market Respect for Consequent Approach

In this section, the speaker explains how the market respects levels and shows precision in doing so.

Market Precision

  • Midpoint of high and low daily discount for value gap
  • Conceptually showing how market respected these levels
  • Precision in respecting levels

Refining Time Frames for Imbalances or Models

In this section, the speaker discusses refining time frames to identify imbalances or models.

Refining Time Frames

  • Drop down from 50-minute chart to 5-minute chart
  • Refine time frames until imbalances or model is identified
  • Teaching ICT Silver Bullet set up using three-minute chart

Silver Bullet Long Set Up

In this section, the speaker discusses a silver bullet long set up that offers a range of potential 10 handles.

Silver Bullet Long Set Up

  • Buy sell liquidity pool
  • Shift in market structure
  • Trades into fair value gap
  • Offers range of potential 10 handles
  • Take profits at five
  • Smart money accumulates new longs while trailed stop losses get taken out

Understanding Balanced Price Range

In this section, the speaker explains how a balanced price range is formed and what it means for traders.

Formation of Balanced Price Range

  • A balanced price range is formed when the market trades down to the low and leaves the range.
  • The price has been delivered to the outside to the upside, failed to go lower, respected it, and then left the range.
  • This creates a trading range inside which acts as a balanced price range.

Trusting Your Price Data

In this section, the speaker emphasizes the importance of trusting your own price data.

Importance of Accurate Price Data

  • The candle's high precisely matches its very candle low.
  • Traders need to look at their own price data and verify that it is accurate.
  • When you see that your data is accurate, you can trust it.

Analyzing One Minute Chart

In this section, the speaker analyzes a one-minute chart and discusses how traders can use regular trading hours on Trading View to find more detail.

Using Regular Trading Hours on Trading View

  • Traders can toggle from electronic trading hours to regular trading hours on Trading View.
  • By doing so, they can see more detail in their charts.
  • The opening range gap is highlighted using regular trading hours.
  • This gap becomes an inefficiency that traders can use going forward.

Understanding Opening Range Gap

In this section, the speaker explains what an opening range gap is and how traders can use it in their analysis.

Definition of Opening Range Gap

  • An opening range gap occurs when there is a gap between the closing price of the previous session and where we open at 9:30.
  • This creates an inefficiency that traders can use to their advantage.

Using Opening Range Gap in Trading

  • If there is a gap and we gap higher and are bullish, traders expect price to trade down to it, reprice to the gap, and then go higher.
  • If we are bearish and see a gap like this, it could become a trade lower fill the gap cantality false run and then break lower.
  • Traders can take the completely repriced gap and do multiplications of that to project it higher if they are bullish.

Using Information from Regular Trading Hours

In this section, the speaker discusses how traders can use regular trading hours to find more information about opening range gaps.

Finding Information on Regular Trading Hours

  • Traders can toggle from electronic trading hours to regular trading hours on Trading View.
  • The difference between these two times is highlighted as an opening range gap.
  • Traders would like to see a gap of some kind because it creates an inefficiency that they can use going forward.

Electronic Trading Hours and Opening Range

The speaker discusses how electronic trading hours are hidden when looking at a chart, and explains the opening range at 9:30am. They describe how the market seeks to reprice to the previous session's close during this time.

Understanding the Opening Range

  • The opening bell brings in all the volatility initially.
  • The market drops down to create the low of the day, then starts to trade higher.
  • When we move meaningfully above the opening price, which is essentially swinging above it, then the market starts to run higher for a premium.

Power Three Concepts

The speaker introduces their "Power Three" concepts: open manipulation, accumulation of longs distribution into a premium, and settle a day close. They also discuss daily range as an ICT by day and Judas swing to reprice opening range gap low.

Key Factors Affecting Market Movement

  • Power three concepts include open manipulation, accumulation of longs distribution into a premium, and settle a day close.
  • Daily range is an ICT by day and Judas swing to reprice opening range gap low.
  • Confluence occurs between daily fair value gap consequent encroachment midpoint and new day opening gap.
  • Trader using retail logs would not be able to see all these confluences.

Using New Day Opening Gap as Confluence

The speaker discusses how traders can use new day opening gap as confluence. They mention that they did a video presentation about this on their YouTube channel.

Using New Day Opening Gap as Confluence

  • New day opening gap is a confluence of this low as well.
  • Traders can use new day opening gap as confluence to trade down into that additional credit if they want to go into their new day opening gap.

Algorithmic Trading and Liquidity

The speaker discusses how algorithmic trading works, including pricing, repricing, redelivering balances, and seeking new liquidity. They also mention a draw to buy side liquidity shown on Twitter on May 16th.

Understanding Algorithmic Trading

  • Algorithm itself prices, reprices, redelivers balances, and seeks new liquidity.
  • Trader using power three concepts is seeking what the algorithm is likely to do: move higher or lower.
  • If it's trying to move lower, it's going down to trade to an inefficiency or take out sales stops.
  • If it's not doing either one of those things, it's going to consolidate in range bound and frustrate traders.

Importance of Journaling and Backtesting

The speaker emphasizes the importance of journaling and backtesting for traders. They explain that this process takes time but is essential for creating a useful trading manual.

Journaling and Backtesting

  • Journaling and backtesting are essential for creating a useful trading manual.
  • Traders should fill in observations about old moves and study them in detail.
  • Including all details observed will create more detail in the journal instead of just showing charts with scribbles here and there.
  • Every profitable student did these types of things: went back and looked at old moves, studied them in detail.

Opportunities in Hindsight Trading

In this section, the speaker discusses how studying past price action can help traders make better decisions in the future.

Studying with Hindsight

  • Studying past price action can provide a rich tapestry of information for future trading.
  • Analogous to doctors and surgeons who practice on cadavers, traders can learn from case studies that have already happened.
  • Trading with hindsight and experience can be beneficial as there is no chance of harm or loss.
  • Negative affirmations should be avoided when recording annotations. Instead, traders should cheerlead themselves and focus on what they have learned.

Detailed Study

  • Traders should map out each individual day and record their findings in a journal.
  • It is recommended to focus on one market or two closely correlated markets to allow for detailed study.
  • Detailed study allows traders to identify patterns and apply them to future trades.

Overall, the speaker emphasizes the importance of studying past price action and using it to inform future trading decisions. Traders should keep detailed records of their findings and avoid negative self-talk. By focusing on one or two markets, traders can conduct more detailed studies that will ultimately lead to better trading outcomes.

Video description

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.