ICT Mentorship Core Content - Month 04 - Reclaimed ICT Orderblock

Summary

This video delves into the market maker buy and sell models, focusing on how market makers hedge their positions during price movements. It explains the concept of reclaimed order blocks, where old bullish and bearish order blocks are reused for new buying and selling opportunities. The script outlines the mechanics of price swings, highlighting how smart money accumulates positions, causing temporary price displacements. By observing price action during these phases, traders can identify potential entry points. The video emphasizes understanding these patterns to better navigate market dynamics and enhance trading strategies.

Takeaways

• 😀 Understanding the Market Maker Buy Model: The market drops to a support level (old highs, lows, order blocks, voids, or fair value gaps) and then rallies higher. This process involves smart money (market makers) building positions as prices drop.
• 😀 Support Levels: The market moves lower to test support levels, which can include previous highs, lows, or other key market structures, before moving higher after accumulation.
• 😀 Smart Money Accumulation: Market makers buy positions as prices move lower. These positions are built gradually through small transactions that cause short-term lows in the market.
• 😀 Minor Displacement: Short-term price movements higher during the drop indicate minor displacement, confirming that market makers are accumulating long positions.
• 😀 Reclaimed Order Blocks: A bullish order block is created when a price swing down shows a short-term rally before the market maker buys. These reclaimed blocks act as new buying opportunities once the market shifts to the buy side of the curve.
• 😀 Market Maker Sell Model: In the sell model, the market first moves higher to then drop lower. Market makers sell into rallies, positioning themselves to profit from a subsequent market decline.
• 😀 Identifying Bearish Reclaimed Blocks: A bearish order block is a price level where market makers sold before a decline. After the high is formed, the price retraces to these levels, presenting opportunities to short the market.
• 😀 Hedge Positions: Market makers use hedging techniques to accumulate larger positions over time, allowing them to move the market more effectively than retail traders can.
• 😀 Displacement Confirmation: Displacement in price (either up or down) serves as confirmation of market maker activity, such as buying or selling in anticipation of future price movements.
• 😀 Using the Buy and Sell Models Together: Traders should use both market maker buy and sell models to identify reclaimed order blocks on both sides of the market curve, taking advantage of price retracements to enter trades at optimal points.

Q & A

What is the primary concept of the Market Maker Buy Model discussed in the video?

The primary concept of the Market Maker Buy Model is that the market drops down to a support level, often reaching areas like old highs or lows, bullish order blocks, or fair value gaps. The market maker builds positions through small transactions and then anticipates a price reversal and higher prices once the support level is reached.

What role do market makers play in the price movement during the buy model?

Market makers play the role of accumulating long positions as the price drops to a support level. Since their orders are larger than retail traders, they need to scale in gradually, causing small price bounces (displacements) as they hedge their positions. These movements are often seen as minor short-term lows in the market.

What is meant by 'bullish order blocks' in the context of this script?

'Bullish order blocks' refer to down candles that occur right before a small rally during the sell side of the market. These down candles indicate that market makers were hedging and building long positions, and these levels are revisited or reclaimed when the market starts moving higher.

What does the term 'reclaimed order blocks' mean?

'Reclaimed order blocks' refer to previous price levels, specifically down candles, that were used to accumulate positions on the sell side. When price revisits these levels during the buy side of the curve, they are 'reclaimed' for new long positions, signaling that the market has completed its support phase and is now moving higher.

How does the Market Maker Sell Model differ from the Buy Model?

The Market Maker Sell Model is essentially the inverse of the Buy Model. Instead of the market dropping to a support level, the Sell Model involves the market moving higher to reach a point of resistance before reversing. Market makers sell short as the price rises, creating bearish order blocks that are then reclaimed for short positions during the sell side of the market.

What is a bearish order block, and how is it used in the Market Maker Sell Model?

A bearish order block is an up candle that shows evidence of hedging by market makers before a price decline. In the Market Maker Sell Model, these order blocks are reclaimed when the market revisits them after a rally. Traders then enter short positions based on these reclaimed levels, anticipating a market reversal to the downside.

Why is it important to understand both the buy and sell profiles of market maker models?

Understanding both the buy and sell profiles is crucial because it helps traders identify potential price reversal points and market structure. By recognizing order blocks and their corresponding displacements, traders can anticipate market moves and enter positions at optimal levels for higher probability trades.

What is the significance of 'displacement' in this strategy?

Displacement refers to short-term price movements away from a support or resistance level, confirming that market makers are either accumulating long positions during a decline (buy side) or short positions during a rally (sell side). These displacements signal the presence of smart money and offer opportunities for traders to enter the market.

How can traders use reclaimed order blocks to identify trading opportunities?

Traders can use reclaimed order blocks as key entry points for new positions. When the market revisits a previously formed bullish or bearish order block and shows signs of continuation in the direction of the market maker's actions, it indicates a high-probability trade setup, either for long or short positions.

What should traders look for when identifying bullish or bearish order blocks on a chart?

Traders should look for down candles before a rally (for bullish order blocks) and up candles before a decline (for bearish order blocks). These candles represent price levels where market makers were either accumulating long or short positions. When price revisits these levels, they should confirm whether the market will continue in the direction of the order block.