ICT Concepts: Understanding How To Trade ICT Market Maker Models!

Summary

This video explores Market Maker Models and how to trade them effectively. It explains both Sell and Buy models, focusing on the concepts of liquidity engineering, Smart Money Reversals (SMR), and Fair Value Gaps (FVG). The speaker outlines how to enter trades with low risk by observing market structure shifts, accumulation, and distribution phases. Using real-world examples, the video provides insights on trading strategies across different timeframes, emphasizing the importance of identifying stop runs and manipulation legs to capture profitable entry points. It’s a comprehensive guide for traders looking to understand and apply these market-making principles.

Takeaways

• 😀 The concept of Market Maker Models involves analyzing price movement from sell side to buy side or vice versa, with the goal of engineering liquidity to offload positions.
• 😀 Smart Money Reversals (SMR) occur when price reverses inside a higher time frame PD array (e.g., order blocks, fair value gaps), signaling an opposing side of liquidity.
• 😀 Low-risk entries are achieved using the ICT 2022 model, where a market structure shift is followed by a bearish fair value gap for a sell or a bullish fair value gap for a buy.
• 😀 In a Market Maker Sell Model, the market offloads short positions in multiple distribution phases after an initial consolidation and smart money reversal.
• 😀 Market Maker Buy Models involve a similar approach but focus on liquidity accumulation and offloading on the buy side of the curve.
• 😀 Fair value gaps are crucial entry points for trades, and each distribution phase trades into these gaps as they act as zones of support or resistance.
• 😀 Standard deviation lines are used after taking out liquidity, helping to target specific price levels that align with the original consolidation.
• 😀 Always look for a stop run (manipulation leg) before entering a trade. A stop run ensures liquidity has been cleared, signaling a stronger trend.
• 😀 Patience is essential when trading Market Maker Models—don't enter trades without clear confirmation from displacement and stop runs.
• 😀 Use multiple timeframes (e.g., 15-minute to 1-minute charts) to frame entries and exits, ensuring accuracy and reducing risk in intraday trading.

Q & A

What is the primary concept behind Market Maker Models?

The primary concept behind Market Maker Models is the idea of moving from sell side to buy side of the curve or vice versa. This involves engineering liquidity on one side to facilitate price movement to the opposing side. The models help traders identify entry and exit points based on price action and liquidity.

What is a Smart Money Reversal (SMR)?

A Smart Money Reversal (SMR) occurs when smart money (institutional investors) reverses the price direction inside a higher timeframe PD array, such as an order block or an old high. This reversal is a key signal for entering trades.

What is a Low-Risk Sell (LRS) in Market Maker Sell Models?

A Low-Risk Sell (LRS) involves waiting for a market structure shift, followed by a bearish fair value gap (FVG). Traders short the FVG after this shift and target the original consolidation zone for profit.

How do distribution phases work in the Market Maker Sell Model?

In the Market Maker Sell Model, the distribution phases involve price trading into bearish fair value gaps. The market undergoes multiple distribution stages, with each phase targeting lower liquidity levels and eventually taking out the original consolidation.

Why is the concept of liquidity important in Market Maker Models?

Liquidity is essential in Market Maker Models because it drives the movement of price. Market makers engineer liquidity on one side of the market (buy or sell) to facilitate price movement to the other side. Understanding liquidity points helps traders identify entry and exit opportunities.

What role do PD arrays play in Market Maker Models?

PD arrays (Premium Discount Arrays) are key zones where price is likely to reverse. These include areas like old highs, order blocks, and imbalance zones. Market makers use these areas to engineer liquidity and trigger reversals or continuation in the price action.

How do you apply a Market Maker Buy Model?

In a Market Maker Buy Model, the process begins with an original consolidation, followed by failure swings and a Smart Money Reversal (SMR). After the reversal, traders enter long positions using low-risk buy entries, targeting the original consolidation as the final goal.

What is the significance of stop runs and manipulation legs in trading Market Maker Models?

Stop runs and manipulation legs are essential in identifying trade setups. A stop run occurs when price breaks a key level, triggering a false move, followed by a manipulation leg where smart money moves price in the opposite direction. These events signal opportunities for entering high-probability trades.

What timeframes are most useful for trading Market Maker Models?

Market Maker Models can be traded across multiple timeframes. Key timeframes include 4-hour (4H) for larger market structures, 1-hour (1H) to 15-minute (15M) for intraday setups, and even down to the 1-minute (1M) chart for short-term price action and fast trades.

How can Standard Deviation be used in Market Maker Models?

Standard Deviation can be used to measure the extent of price manipulation and determine potential targets. By drawing standard deviation lines from the high and low of a manipulation leg, traders can spot alignment with key liquidity levels, enhancing the accuracy of their entry points.