2022 ICT Mentorship [No Rant] ep. 11 - Reinforcing Past Lessons & Trading Executions

Summary

In this detailed trading strategy session, the speaker breaks down the analysis of E-mini NASDAQ futures for March delivery, focusing on market imbalances, fair value gaps, and liquidity targets. He illustrates how specific market structures, such as swing highs and lows, are used to predict price movements and make entry decisions. The session discusses optimal short entry points, the significance of timing, and the importance of understanding daily and session opening prices. The speaker also highlights the risk management strategies and tactics for closing trades effectively, culminating in a successful trade that balances both risk and reward.

Takeaways

• 😀 The E-mini NASDAQ futures contract is being analyzed, with a focus on price imbalances, high/low levels, and market structure.
• 😀 The concept of premium and discount is explained, with the price moving from discount to premium, then back down to fill gaps in the market.
• 😀 Liquidity resting below price levels is a key factor in the market's directional movement, often attracting price action to fill these gaps.
• 😀 The speaker emphasizes the importance of understanding market structure, such as identifying swing highs and lows, to forecast price action.
• 😀 A bearish bias is maintained throughout the analysis, with the speaker predicting a move to lower levels, based on liquidity below the market.
• 😀 The speaker uses multiple timeframes (hourly, 15-minute, 5-minute, 3-minute charts) to analyze price action and identify key trade setups.
• 😀 Fair value gaps (FVG) and imbalances in the market are key concepts for determining optimal entry points for trades.
• 😀 The speaker demonstrates how to recognize market manipulation, such as fake rallies, and how these affect trader psychology.
• 😀 Swing highs and lows are classified using halos (one, two, or three) to indicate short-term, intermediate, and long-term market structure.
• 😀 Entry strategies are based on optimal price levels, such as shorting near highs, and waiting for displacement before executing trades.
• 😀 The speaker emphasizes patience and avoiding hasty trades, particularly after significant market moves, and managing risk accordingly.

Q & A

What is the main focus of the video?

The video focuses on analyzing the E-mini NASDAQ futures contract for the March delivery, highlighting market imbalances, fair value gaps, and trade strategies based on price action and liquidity zones.

What is the significance of the 50% level mentioned in the analysis?

The 50% level acts as a key equilibrium point within a price range, helping traders identify if the market is in a 'premium' (above 50%) or 'discount' (below 50%) area. The video suggests that movements above and below this level can offer potential trade opportunities.

How does the concept of 'gap filling' work in this analysis?

The gap filling refers to the market's tendency to revisit and fill imbalances or price gaps that are created when there is a sudden price move. The trader anticipates that after an imbalance, the market will come back to 'rebalance' and fill the gap, providing a trading opportunity.

What role do swing highs and lows play in the strategy?

Swing highs and lows are used to identify potential reversal points. The trader looks for 'swing highs' (higher highs surrounded by lower highs) to enter short positions, using these levels to gauge market structure and predict potential market moves.

What is meant by 'liquidity resting below' certain levels?

'Liquidity resting below' refers to the idea that there are pending sell orders or stop losses below a particular price level. Traders believe that the market will move toward these levels, triggering these orders and causing price movement.

Why does the trader focus on market structure rather than just price action?

The trader emphasizes market structure because it provides context for understanding price action. Instead of simply reacting to price movement, understanding the underlying structure of higher highs, lower lows, and swings helps to identify more reliable trade setups.

What does the trader mean by the term 'fake rally'?

A 'fake rally' refers to a short-term upward move that may mislead traders into thinking the market will continue higher. However, the trader sees it as a trap for those who do not understand the underlying imbalance, and expects the market to turn and move lower.

How does the trader handle trades during market holidays?

During market holidays, the trader anticipates less volatility and trades earlier in the session. For example, they close positions early (before 1:00 p.m. local time) to avoid the reduced liquidity and potential market movement at the holiday close.

What is the significance of the 8:30 a.m. opening price?

The 8:30 a.m. opening price is critical because it marks the start of the New York trading session. The trader uses this price level to set the bias for the day and make decisions based on whether the market is expected to move higher or lower.

Why does the trader avoid using limit orders in certain situations?

The trader avoids using limit orders during fast-moving markets because they don't want to limit their potential profits if the market moves quickly past their target price. Instead, they leave the order open-ended, allowing the market to reach their desired exit point without restricting its movement.