2022 ICT Mentorship Episode 5

Summary

This video focuses on a methodical approach to intraday trading, emphasizing market structure, liquidity, and the importance of trading the morning and afternoon sessions based on clear price action patterns. The speaker outlines how to identify key market levels, understand algorithm-driven movements, and use swing highs and lows to guide trades. The lesson stresses risk management, advises against over-leveraging, and encourages practicing with demo accounts to build confidence. Overall, the content provides a strategic framework for trading with the flow of the market rather than chasing small, volatile moves.

Takeaways

• 😀 Focus on understanding the **daily market structure**: Morning, lunchtime, and afternoon sessions have distinct price action patterns.
• 😀 🕒 **Avoid trading during lunchtime** (around 12 PM - 1 PM) due to lower volatility and potential choppy price movements.
• 😀 💡 The **high of the day** often indicates liquidity resting above it, and a potential target for stop hunts.
• 😀 📉 **Swing lows** that form after 1:30 PM in the afternoon are critical indicators for setting up trades in the New York session.
• 😀 📊 **Consolidation in the morning** can lead to a breakout or trend continuation in the afternoon, with possible measured moves.
• 😀 💼 **Buy side liquidity** is important to watch; traders tend to frame trades as short entries at retail resistance, making it a prime target for manipulation.
• 😀 🛑 Understanding the **mechanics of stop hunts** is key; when prices move to clear out sell stops, it often signals a move higher.
• 😀 💻 **Algorithmic trading** and automated programs play a large role in market movements, particularly around 1:30 PM and 4:00 PM, driving price action.
• 😀 🧠 The importance of knowing your **daily bias**: Recognize whether the market is more likely to expand higher or lower for more informed trades.
• 😀 🔄 **Risk management** is emphasized—avoid overleveraging and focus on **quality trades** rather than frequent, small scalps.

Q & A

What is the primary strategy taught in the video?

The primary strategy involves identifying market trends and trading based on liquidity pools and price action, with a focus on the afternoon session after 1:30 PM. The speaker encourages traders to look for swing highs and lows and to use buy or sell stop hunts for trade entries.

Why is the lunch hour not ideal for trading?

The lunch hour is generally not ideal for trading because of low volatility and unclear price action. The market tends to be in consolidation during this time, making it harder to predict direction and trade effectively.

What is a 'buy program' and how does it affect price movement?

A buy program occurs when algorithms continuously offer higher prices, pushing the market up regardless of volume. This action can cause aggressive price movement, often leading to rapid and predictable runs in the market.

How does the market behavior at 1:30 PM differ from other times of the day?

At 1:30 PM, there is a unique market behavior driven by algorithmic actions. This time tends to trigger price moves, and traders should focus on identifying swing highs and lows, which can lead to significant movements into the close of the market.

What is meant by 'buying the sell stops'?

'Buying the sell stops' refers to a strategy where traders target the stop-loss orders of those who are betting on a price drop. When these stop-losses are triggered, the market often reverses, providing an opportunity to enter a long position as the price rebounds.

What is the significance of the 'swing low' in market analysis?

The swing low represents a point where the market has made a temporary low before reversing direction. Identifying a swing low can signal a potential buying opportunity, especially if it aligns with other technical indicators or price action patterns.

Why does the speaker recommend focusing on swing highs and lows?

The speaker recommends focusing on swing highs and lows because these points serve as key reference levels for market direction. Identifying these levels helps traders understand where price action may reverse or continue, making them essential for entry points.

What is the daily bias, and why is it important for trading?

The daily bias refers to the overall market trend or direction expected for the day. Understanding this bias helps traders align their trades with the prevailing trend, increasing the likelihood of successful trades and better risk management.

How does the speaker differentiate their trading strategy from others on platforms like YouTube?

The speaker differentiates their strategy by focusing on larger market moves rather than small, high-risk trades. Unlike other traders who may over-leverage with many contracts for small gains, the speaker emphasizes more logical, longer-term trades based on market structure and liquidity.

What role does liquidity play in the strategy discussed in the video?

Liquidity plays a critical role in the strategy as the market tends to move toward liquidity pools, such as buy-side and sell-side orders. Understanding where these pools are located helps traders anticipate price action and plan their trades accordingly, particularly in the afternoon session.