How to Find Price Targets - Standard Deviation Projections

Summary

This video explores the use of standard deviation as a tool for setting trade targets in the ICT framework. It demonstrates how standard deviation helps predict price movements after a manipulation move by projecting potential targets, often aligning with key market structures like liquidity levels and fair value gaps. With real-world examples, the video emphasizes using standard deviation in conjunction with other tools for more accurate trade setups and target predictions, ensuring that traders can better anticipate price action and manage trades effectively.

Takeaways

• 😀 Standard deviation is an ICT concept used to project trade targets and add confluence, but should not be used as the sole basis for taking trades.
• 😀 The key purpose of standard deviation is to assist in setting trade targets, often aligned with higher time frame PD (Price Delivery) arrays.
• 😀 Standard deviation projections are made by drawing from the last manipulation move before a market structure shift.
• 😀 The main target for standard deviation projections is typically between the 2 to 2.5 range, with the 4 range serving as an extended target.
• 😀 When using standard deviation, it's important to align targets with existing liquidity levels or larger time frame PD arrays, such as equal lows or fair value gaps.
• 😀 Standard deviation should be used to project price targets and validate trade setups, not as a standalone tool for entering trades.
• 😀 Confluence is key when using standard deviation, meaning traders should combine it with other tools and models to confirm their trade decisions.
• 😀 Prices often react to the 2 to 2.5 standard deviation levels as areas of support or resistance, leading to possible reversals or continuation of trends.
• 😀 Understanding manipulation moves and market structure shifts is crucial in accurately applying standard deviation for projection purposes.
• 😀 The strategy involves waiting for manipulation moves to confirm the market's direction before drawing in standard deviation projections for targeted price levels.

Q & A

What is standard deviation in the context of ICT concepts?

In ICT trading concepts, standard deviation is used as a tool to project potential price targets for trades. It’s typically drawn using a Fibonacci retracement technique, offering insights into where price may move based on market manipulation and structure shifts.

Can standard deviation be used as the sole basis for taking trades?

No, standard deviation should not be used as the sole basis for entering trades. It’s intended to add confluence to existing trade setups and help define potential price targets, not to initiate trades by itself.

How is standard deviation used in trade setups?

Standard deviation is used to project price targets after identifying a manipulation move (e.g., a market structure shift or liquidity sweep). It provides potential zones for where price may reverse or target, helping traders refine their entry and exit strategies.

What role does a higher time frame PD array play when using standard deviation?

A higher time frame PD array (e.g., buy-side or sell-side liquidity levels, fair value gaps) serves as a context for applying standard deviation. Traders use these higher time frame levels to align their targets with broader market structure before drawing in the standard deviation for finer projections.

What is the significance of the 2 to 2.5 and 4 levels in standard deviation?

The 2 to 2.5 level is considered the main target range when using standard deviation for price projections. Traders often look for price to reach this level, as it aligns with key liquidity zones. The 4 level is a secondary target that traders aim for once the primary 2 to 2.5 target is met.

How do standard deviation projections align with support and resistance levels?

Standard deviation projections, particularly the 2 to 2.5 and 4 levels, can act as dynamic support or resistance zones. When price reaches these levels, it may either reverse or consolidate, depending on the broader market context and the strength of the manipulation move.

What is meant by 'manipulation move' in the context of standard deviation?

A manipulation move refers to a market action that sweeps liquidity (either buy-side or sell-side) and leads to a structure shift in the market. This move is used as the reference point for drawing standard deviation and projecting future price movements.

How does internal liquidity relate to the use of standard deviation?

Internal liquidity refers to smaller liquidity levels within the market that are swept before a larger market structure shift occurs. When internal liquidity is swept, it signals the start of a manipulation move, which is then used to draw the standard deviation for projecting price targets.

What should traders focus on after the price reaches the 2.5 level?

After the price reaches the 2.5 level, traders should observe whether the price shows signs of rejection or continuation. If the 2 to 2.5 level holds as resistance or support, it can lead to further price movement toward the 4 level or back to a discount range, depending on the market behavior.

What is the advantage of using standard deviation in confluence with other ICT concepts?

Using standard deviation in conjunction with other ICT concepts, such as liquidity sweeps and fair value gaps, provides additional validation for trade setups. This combination helps traders refine their strategies and improve the accuracy of their projections and entries.