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2022 ICT Mentorship Topical Study - Dealing Ranges
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2022 ICT Mentorship Topical Study - Dealing Ranges

Welcome and Introduction

The instructor apologizes for the internet outage and explains that in this lecture, they will cover index futures trading and why they are not as active in forex trading.

Importance of Understanding Index Futures Trading

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  • It is important to understand the focus on index futures trading and why it is being emphasized.
  • The instructor wants students to align themselves with the reasons behind their choice of index futures trading over forex.

Dollar Index Analysis

The instructor discusses the dollar index chart and highlights the concept of a dealing range.

Dealing Ranges

  • A dealing range refers to a range where price moves up, reverses, and then moves down.
  • The instructor asks students to create a section in their notes for dealing ranges.
  • Understanding dealing ranges is crucial for analyzing market movements.

Significance of Dealing Ranges

  • The instructor explains why dealing ranges are useful in analysis.
  • Prior to the current range, the dollar has been bullish, so higher prices were expected.
  • By analyzing the movement within a dealing range, one can anticipate future market behavior.

Accumulation of Sell Side Liquidity

  • When sell stops are triggered below a low point in a dealing range, it indicates an accumulation of sell side liquidity by smart money traders.
  • Smart money traders who are bullish on the higher time frame trend will buy these sell stops.

Anticipating Range Breakout

  • The instructor anticipates that the current range will be taken out as smart money buys sell stops and sells to buy stops.
  • Traders who want to short dollar will place their protective stop loss above the short-term high, providing buy-side liquidity.

Analysis of EUR/USD Pair

The instructor discusses the frustrating nature of the EUR/USD pair and the importance of waiting for high probability trade conditions.

High Probability Trade Conditions

  • High probability trade conditions are defined as situations where price movement strongly indicates a one-sided direction.
  • The analyst needs to determine if there is a likelihood of an opposing setup, which would lower the probability of a trade being high probability.

Importance of Patience in Trading

  • Traders need to be patient and wait for high probability trade conditions.
  • The instructor emphasizes the importance of patience in trading and encourages traders to wait for clear setups before taking action.

Timestamps have been associated with bullet points as requested.

Apprehension in Teaching

The speaker discusses their apprehension about engaging with a particular topic in teaching.

Engaging with the Topic

  • The speaker expresses their apprehension to be engaged with the topic in teaching.

Bias and Dealing Ranges

The speaker talks about bias and dealing ranges in trading.

Dealing Ranges

  • The speaker mentions entering a seasonal tenancy section for dealing ranges.
  • They explain what a dealing range is and how it can be bearish or bullish.
  • A specific range is discussed where price has taken out the sell side after reversing from a gap.
  • Opportunities within this range are highlighted, including filling gaps and potential breakaway gaps.

Dollar Analysis

  • The speaker mentions being bullish on the dollar and looking for higher prices.
  • They discuss the dollar's buy side and its likely reversion to bullishness.

Market Structure Shift

  • The importance of pausing the video when certain market structure shifts occur is emphasized.
  • Not pausing may result in missing important information about sell side liquidity and smart money accumulation.

Finding Setups Based on Trend Momentum Direction

The speaker explains how to find setups based on trend momentum direction.

Importance of Interactive Studies

  • Pausing the video during interactive studies is crucial for understanding market dynamics.
  • Failure to pause may lead to missed opportunities and complaints about sell side liquidity.

Aligning Higher Time Frame Trend

  • Aligning setups with the higher time frame trend is emphasized as an effective strategy for trading success.

Understanding Market Range and Liquidity

In this section, the speaker discusses market range and liquidity, as well as the concept of high probability conditions.

Market Range and Liquidity

  • The market has been trading within a specific range, indicating a lack of strong movement.
  • Resistance levels have not been significant in influencing price movements.
  • The market has shown bearish and bullish tendencies within the range.
  • There is no clear direction or conviction in terms of buying or selling pressure.

High Probability Conditions

  • It is challenging to determine whether the market will move above or below current levels.
  • Different traders may have varying opinions on the future direction of prices.
  • The speaker emphasizes the importance of defining high probability conditions based on personal analysis and concepts.
  • Probability trade conditions are subjective and can vary among traders.

Importance of Patience and Waiting for Setups

  • The speaker suggests waiting for setups that present high probability conditions rather than relying on patterns or indicators alone.
  • Traders should be patient and wait for one-sidedness in price action before entering trades.

Understanding Price Action

  • Analyzing price booking and delivery can provide insights into high probability setups.
  • Classic support and resistance levels can be useful in identifying potential trading opportunities with higher probabilities.

This summary provides an overview of the discussed topics related to market range, liquidity, high probability conditions, patience, waiting for setups, and understanding price action.

Most People Blow Their Account in the First 30 Days

The speaker discusses how many people lose their trading accounts within the first 30 days and why it happens.

Reasons for Account Loss

  • Many traders lose their accounts within the first 30 days.
  • Majority of traders blow their accounts by 90 days.
  • Traders are often misled into thinking that trading is easy and can be done quickly.
  • There are various books, courses, and mentors that promote unrealistic expectations.

Don't Fall for False Promises

The speaker warns against falling for false promises and unrealistic expectations in trading.

Misleading Information

  • Traders are tricked into believing that they can easily make profits by following certain strategies or patterns.
  • They are led to believe that history repeats itself in the market, leading to predictable outcomes.
  • However, this approach is flawed as markets are constantly changing and unpredictable.

Identifying High Probability Trading Opportunities

The speaker explains how to identify high probability trading opportunities within specific market ranges.

Dealing Range Opportunity

  • There is a specific range within the market that presents a high probability trading opportunity.
  • It is important to analyze price movements within this range to determine potential trades.

Analyzing British Pound vs US Dollar

The speaker analyzes the British Pound vs US Dollar currency pair to demonstrate his approach to trading analysis.

Market Analysis Example - British Pound vs US Dollar

  • The speaker examines the price movements of the British Pound vs US Dollar currency pair.
  • He looks for divergence between correlated markets as an indication of potential trade opportunities.
  • By analyzing support and resistance levels, he determines the direction of the market.

Understanding Correlated Market Movements

The speaker explains the concept of correlated market movements and how they can be used in trading analysis.

Correlated Market Movements

  • Correlated markets exhibit similar price movements, either moving together or in opposite directions.
  • Analyzing correlated markets can provide insights into potential trading opportunities.
  • The speaker focuses on recent and energetic price movements to identify divergence and potential trades.

Identifying Buy or Sell Opportunities

The speaker discusses how to identify buy or sell opportunities based on market analysis.

Buy or Sell Opportunities

  • By analyzing support and resistance levels, as well as divergence between correlated markets, buy or sell opportunities can be identified.
  • The speaker emphasizes the importance of considering the overall market trend when making trading decisions.

New Section

In this section, the speaker discusses support and resistance trading strategies and the importance of breakout levels.

Support and Resistance Trading

  • Support and resistance traders analyze price levels where the market has previously reacted.
  • Traders look for breakouts from these levels to determine potential market direction.
  • Breakouts above resistance levels indicate a potential upward movement, while breakouts below support levels suggest a downward movement.

New Section

This section focuses on the logical level in S&P trading and how it affects traders' sentiment.

Logical Level in S&P Trading

  • The logical level in S&P trading refers to a significant price level that influences traders' behavior.
  • Traders often become cautious or scared when approaching this level, leading to increased selling pressure.
  • A breakout above this logical level can result in further upward movement as shorts (bearish traders) get scared and cover their positions.

New Section

The speaker explains why they expect the price to go higher after a breakout above the logical level.

Expectations After Breakout

  • After a breakout above the logical level, traders anticipate further upward movement.
  • The speaker mentions that they are not a breakout trader but instead focus on consolidation patterns before expecting price continuation.
  • They look for bullish order blocks and target liquidity areas for their trades.

New Section

The speaker discusses their bearish perspective and targeting liquidity areas based on old highs or lows.

Bearish Perspective

  • The speaker adopts a bearish view in their trading approach.
  • They focus on identifying premium markets below old lows or above old highs.
  • By targeting bearish order blocks, they aim to take advantage of liquidity areas where sellers may be present.

New Section

The speaker explains that they do not rely on specific trading patterns or harmonic analysis for their trades.

Trading Approach

  • The speaker does not trade based on specific patterns or harmonic analysis.
  • They do not target supply and demand levels either.
  • Instead, they emphasize the importance of understanding the current market conditions and focusing on liquidity areas.

New Section

The speaker mentions their optimal trade entry strategy and encourages feedback from listeners.

Optimal Trade Entry

  • The speaker refers to their previous discussion on optimal trade entry in a YouTube video or Twitter space.
  • They mention using retracement levels (such as 62% retracement) for identifying potential trade entries.
  • Listeners are encouraged to provide feedback if they found the insights helpful.

New Section

The speaker discusses targeting approaches using Fibonacci levels and provides an example with the AUD/USD pair.

Targeting Approaches with Fibonacci Levels

  • The speaker mentions using Fibonacci levels for targeting in their trading approach.
  • They suggest placing Fibonaccis on the bodies of candles to identify strong support or resistance areas.
  • An example is given with the AUD/USD pair, where projections can be made based on the highest and lowest open or close prices.

New Section

The speaker briefly mentions studying and analyzing a fair value gap in the USD/CAD pair.

Fair Value Gap Analysis

  • The speaker mentions studying a fair value gap in the USD/CAD pair but does not provide further details.
  • They refer to previous discussions about short-term sell-side changes and defining dealing ranges in a Twitter space conversation.

New Section

The speaker discusses the current market conditions and the potential for a downward movement.

Market Conditions and Downward Movement

  • The speaker mentions that the market is currently showing heaviness and may drop lower.
  • They suggest that traders might want to consider trading down into a gap.
  • The speaker acknowledges the uncertainty of market movements and emphasizes the importance of understanding liquidity areas.

New Section

The speaker explains their approach to trading based on buy-side and sell-side liquidity.

Buy-Side and Sell-Side Liquidity

  • The speaker focuses on buy-side and sell-side liquidity in their trading decisions.
  • They mention using forex as a high probability tool for analyzing liquidity areas.
  • Their goal is to absorb uncertainty by aligning with smart money traders' positions.

New Section

The speaker discusses changes in buy-side and sell-side positions, indicating potential market movements.

Changes in Buy-Side and Sell-Side Positions

  • The speaker mentions that buy-side positions were taken at one point, but they will not stay like that indefinitely.
  • They explain that sell-side positions have been taken recently, indicating a shift in market sentiment.
  • The speaker refers to previous discussions about defining dealing ranges during a Twitter space conversation.

Sitting on Your Hands

The speaker advises the audience to refrain from taking action in the current market situation.

Taking a Passive Approach

  • It is recommended to "sit on your hands" and avoid making any buy-side moves.
  • The speaker suggests exercising patience and waiting for the right moment.

Market Movement Expectations

The speaker discusses their expectations regarding market movements.

Unlikely Sharp Movements

  • The speaker believes that there won't be a significant downward movement that would cause panic.
  • They state that it is unlikely for the market to take out the sell side due to previous consolidation and financial losses.
  • Personal experiences and financial losses have already been factored into the current consolidation phase.

Teaching Style

  • The speaker acknowledges that their teaching style may be viewed as boring by some, especially younger individuals.
  • They emphasize avoiding unnecessary excitement or chasing after breakaway gaps.

Lack of Retracements

  • The speaker indicates that retracements of any magnitude are not expected in the current market conditions.
  • They mention that revisiting previous levels is unlikely, as they aim to teach lessons based on this understanding.

Consolidation in Crude Oil

The speaker discusses recent movements and issues related to crude oil.

Movement in Crude Oil

  • There has been a recent movement in crude oil, particularly a decline in prices.
  • Refineries were paying people to pick up oil due to an oversupply issue.

Incorrect Expectations

  • Initially, the speaker had anticipated a run-up followed by a drop in oil prices. However, they were proven wrong when oil collapsed unexpectedly.

Negative Prices

  • The speaker mentions that they had previously covered the possibility of oil prices going below zero.
  • They highlight the significant drop in oil prices, reaching negative forty dollars per barrel.

Energy Prices

  • The speaker explains that they were looking for a level to be taken out before expecting higher energy prices.
  • However, due to the recent collapse in oil, significant losses have been incurred.

Expectations and Collapse in Oil

The speaker reflects on their expectations and predictions regarding oil prices.

Bearish Outlook

  • The speaker had a bearish outlook on oil prices and predicted a run-up followed by a decline.
  • They mentioned a potential price range of 15 to 13 dollars per barrel.

Unexpected Collapse

  • Despite their predictions, the collapse in oil occurred sooner than expected.
  • The speaker acknowledges that no one could have foreseen this event prior to their video discussion.

Losses Incurred

  • Although the speaker's trade did not result in a loss, they admit to being incorrect in their expectations.
  • They emphasize that even though they were not personally affected financially, many others suffered significant losses.

New Section

The speaker discusses the concept of low-hanging fruit and how it can be profitable in trading.

Low-Hanging Fruit Objective

  • The speaker mentions that low-hanging fruit is an easy objective in trading.
  • They explain that it involves putting a couple of indicators on a chart and taking advantage of certain price movements.
  • The speaker emphasizes that this is how they teach their students to trade.
  • They mention the importance of identifying specific levels, such as $38.80, as potential entry points for trades.
  • The speaker highlights the need to define risk and determine when it is appropriate to enter a trade.

New Section

The speaker explains their approach to using $38.80 as a level for trading decisions.

Using $38.80 as an Entry Point

  • The speaker shares their reasoning behind using $38.80 as an entry point for trades.
  • They mention that this level is not random but based on logical analysis and principles.
  • The speaker emphasizes the importance of determining risk before entering a trade.
  • They discuss how market dynamics during the New York session can influence trading decisions.
  • The speaker suggests looking for buying opportunities when price drops into the fair value gap during erratic price action.

New Section

The speaker discusses the challenges of defining risk in time-crunched trading situations.

Defining Risk in Time-Crunched Trading

  • The speaker acknowledges that defining risk becomes challenging in fast-paced trading scenarios like Friday's session.
  • They highlight the difficulty of waiting for price confirmation before entering a trade due to limited time availability.
  • The speaker mentions that relying on old resistance turned support levels may not always work effectively.
  • They caution against expecting price to retrace or having a defined risk level in such situations.
  • The speaker emphasizes the need for patience and waiting for price to show a willingness to move higher before entering a trade.

New Section

The speaker discusses the manipulated nature of market data and the challenges it presents.

Manipulated Market Data

  • The speaker expresses skepticism about the accuracy and reliability of market data, particularly inflation numbers.
  • They suggest that market data is manipulated and contrived, making it challenging to make informed trading decisions.
  • The speaker highlights the importance of being aware of this manipulation when analyzing market trends.
  • They mention that relying on weekly objectives can help navigate through manipulated market conditions.

New Section

The speaker mentions grocery shopping as an example related to accurate inflation numbers.

Example of Inflation Numbers

  • The speaker uses grocery shopping as an example related to accurate inflation numbers.
  • They imply that there may be discrepancies between official inflation figures and real-world experiences.
  • The speaker suggests considering personal observations and experiences when evaluating economic indicators like inflation.

New Section

This section discusses the importance of realistic expectations in trading and the market's lack of obligation to traders.

Unrealistic Expectations

  • Traders often have unrealistic expectations and believe in quick and easy profits.
  • Many courses and videos promote unrealistic results, but the market doesn't work that way.
  • The market doesn't owe traders anything, despite what some may claim.
  • It is important to understand that there are consequences and challenges in trading.

Market Realities

  • Traders need to align themselves with the reality of the market.
  • The market can be unpredictable and may try to challenge traders.
  • Traders should be prepared for ups and downs, as well as opportunities for profit.

Knowing When to Engage or Retreat

  • Traders must learn when to engage or retreat in different market situations.
  • Understanding chart patterns and indicators can help identify optimal entry and exit points.
  • Cutting losses short is crucial for risk management.
  • Sometimes standing down or not engaging is a wise decision in certain market conditions.

Long Consolidation Period

  • The current market has been experiencing a long consolidation period with sideways movement.
  • This prolonged phase may raise questions for traders, but answers will come over time through mentorship or personal analysis.

New Section

This section focuses on analyzing price movements within a consolidation range.

Analyzing Price Movements

  • The market has been trading within a consolidation range.
  • Understanding the significance of price levels and patterns is crucial for analysis.
  • Traders should observe equal highs and lows to identify potential breakouts or breakdowns.

Importance of Range Breakouts

  • A breakout above or below the consolidation range can indicate significant market movements.
  • Traders need to be prepared to take action when the market breaks out of the range.

Patience in Sideways Markets

  • Sideways markets require patience and careful observation.
  • Traders should keep track of their questions and seek answers through analysis or mentorship.

New Section

This section emphasizes the importance of sustained price moves and addresses questions that arise during sideways markets.

Sustained Price Moves

  • Sustained price moves are essential for traders' profitability.
  • Identifying trends and understanding market dynamics can help capture sustained price moves.

Addressing Questions

  • Traders may have numerous questions during sideways markets, but answers will come over time through analysis or mentorship.
  • Keeping a journal to note down questions and observations can be helpful in addressing them later on.

Seasonal Tendencies

  • The first part of the year often brings new opportunities and trends in the market, which traders should watch closely.

New Section

The speaker mentions that you will get the answer to a question.

Subtopic Title

  • You will get that answer.

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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.