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ICT Mentorship Core Content - Month 07 - Short Term Trading Low Resistance Liquidity Runs Part 1
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ICT Mentorship Core Content - Month 07 - Short Term Trading Low Resistance Liquidity Runs Part 1

Short-Term Trading: Understanding Low Resistance Liquidity Runs

Introduction to Short-Term Trading Concepts

  • The lesson focuses on short-term trading, specifically discussing low resistance liquidity runs and consolidations.

Time and Price Framework

  • Every trading setup is based on the relationship between time and price, particularly referencing the last 60, 40, and 20 days of data.
  • The focus for short-term trading will be within a three-month range, utilizing a look-back period of 60 days to frame trades effectively.

Defining Market Conditions

  • A case study using the British Pound (GBP/USD) daily chart illustrates how to identify whether a market is trending or in consolidation.
  • The analysis indicates that the GBP has been in a consolidation phase rather than trending.

Establishing Range Boundaries

  • To define the market's range, traders should identify the highest and lowest candlestick bodies over the last 60 days, ignoring wicks.
  • This defined range serves as a framework for all subsequent analysis related to "one shot one kill" strategies.

Utilizing Fibonacci Tools

  • Traders can use Fibonacci tools to determine key levels within their defined ranges by measuring from the highest body candle to the lowest body candle.
  • Identifying levels above and below the midpoint helps establish areas for potential sell scenarios or long positions.

Premium and Discount Identification

  • By defining consolidation ranges with Fibonacci levels, traders can distinguish between premium (above midpoint) and discount (below midpoint).

Analyzing PD Arrays

  • Each premium and discount array provides setups within an overall PD array matrix; understanding this aids in identifying high-probability trades.
  • Ideal sell scenarios occur when price moves into premium ranges coupled with corresponding PD arrays.

Example Scenarios

Understanding Premium and Discount Trading Ranges

Defining Quadrants in Trading

  • The discussion begins with the breakdown of market quadrants into premium and discount ranges, emphasizing the need for a closer examination of these segments.
  • The lower quadrant can also be divided into equal halves, allowing for a more nuanced view of premium and discount formats.

High Probability Trading Strategies

  • Elements forming a discount PD array indicate high probability short covering objectives or new long positions; first profits should ideally be taken once entering the premium range.
  • Ideal long entries are suggested at discount levels, with first profit exits recommended in the premium range of the PD array matrix.

Time Frame Considerations

  • A daily chart perspective is provided, noting that lower time frames (four-hour or one-hour charts) will reveal additional premium PD arrays for setting targets.
  • Each path within the trading structure can be further divided algorithmically to define premium and discount areas effectively.

Market Dynamics and Entry Points

  • Even when above the midpoint of consolidation, long positions can still be viable if defined correctly within the overall market context.
  • Buying at bullish order block mean thresholds in a discounted area is discussed as a potential strategy despite being in an overall premium market.

Algorithmic Perspective on Overbought/Oversold Conditions

  • The speaker argues against traditional indicators by framing overbought/oversold conditions algorithmically through price ranges rather than relying on mathematical calculations.
  • An example illustrates buying at daily bullish order block mean thresholds while looking for exits in higher time frame premium ranges.

Blending Time and Price Analysis

  • New matrices for defining discounts and premiums are introduced, integrating various elements like fair value gaps and order blocks from historical data (20, 40, 60 trading days).
  • The approach emphasizes blending time with price analysis to better understand market dynamics without conventional indicators.

Anticipating Price Movements Within Consolidation

  • The focus shifts to anticipating price oscillations within consolidations while recognizing smaller consolidations that allow for strategic entry points.
  • Highest probable entries for longs are identified as those occurring in discount ranges coupled with corresponding premium PD arrays.

Market Dynamics and Trading Strategies

Understanding Market Conditions

  • The discussion begins with the concept of an "oversold condition" in a premium market, indicating that despite being overall premium, there are still opportunities for upward movement.
  • Emphasis is placed on identifying discount PD arrays, which include bullish order blocks and fair value gaps, to frame long positions effectively.

Identifying Key Price Levels

  • The speaker notes that while buying at the top of larger consolidations is possible, the probability of success decreases significantly as one approaches bearish areas like old highs and bearish mitigation blocks.
  • Historical price action from March 2017 is referenced to illustrate how dynamic price movements occur around significant bearish structures.

Analyzing Price Reactions

  • A strong rejection was observed when prices reached a premium PD array, highlighting the importance of understanding consolidation segments in trading strategies.
  • The analysis includes a notable sell-off after reaching a daily bullish order block mean threshold, demonstrating how traders can anticipate price reactions based on previous levels.

Importance of Historical Context

  • Traders are encouraged to conduct their own research by analyzing past trading data over various time frames (20, 40, 60 days), which helps identify potential entry and exit points within the PD array Matrix.
  • The necessity for personal study and chart breakdown is emphasized; traders must actively seek out opportunities rather than relying solely on external guidance.

Strategic Entry Points

  • Low resistance liquidity runs between discount and premium areas are highlighted as key targets for trades. This strategy focuses on recent trading history to inform decisions.
  • Ideal buying conditions are identified in the lower half of overall consolidations (discount matrix), while selling short or exiting longs should be targeted in the upper portion (premium range).

Navigating Market Ranges

  • Caution is advised when entering trades within established ranges; understanding whether a down candle represents a valid opportunity requires careful consideration of prior price actions.
  • The concept of "one shot one kill" trading emphasizes short-term strategies that may span from one day up to a week rather than strict weekly cycles.

Understanding Market Dynamics and Liquidity

The Role of Algorithms in Price Movement

  • Algorithms are designed to recognize previous price levels, prompting them to seek new liquidity. This allows banks to participate in market movements, whether upward or downward.
  • Traders operating within a range without a strong directional bias may experience significant volatility. Recognizing where buy and sell stops exist is crucial for effective trading strategies.

Trading Ranges: Premium and Discount Insights

  • In a premium market, achieving higher positions within the consolidation phase enhances the potential for profitable short positions. Conversely, lower positions facilitate better long entries at discounts.
Playlists: 2017 ICT Private Mentorship Core Content Month 07
Video description

2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in March 2017. 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.