2022 ICT Mentorship Episode 7

Summary

This mentorship-style video from ICT provides an in-depth look into advanced trading strategies, focusing on market structure, intermarket relationships, and practical trading psychology. ICT emphasizes realistic expectations, using small trades to gather market intelligence, and managing risk through disciplined approaches rather than chasing flashy gains. The video demonstrates live trading examples on NASDAQ and S&P, showing how algorithmic cues and old highs/lows guide decisions. Key lessons include understanding accumulation signals, using market feedback, correcting drawdowns, and prioritizing consistent, sustainable profits over sporadic large wins. The content offers actionable insights for both developing and experienced traders seeking a methodical, disciplined approach to the markets.

Takeaways

• 📊 Understand market structure and divergence: Look for divergences between indices to anticipate fake breakouts or reversals.
• 📈 Old highs and lows matter: Key price levels provide insight into accumulation, distribution, and algorithmic behavior.
• 🌐 Use intermarket analysis: Compare NASDAQ, S&P, and Dow to gauge broader market trends even if you don't trade all of them.
• 🎯 Small trades as feedback: Entering minimal positions helps test market reactions and gather actionable intelligence.
• ⚖️ Focus on price action over indicators: Moving averages, Fibonacci, and stochastic are not necessary for accurate trading decisions.
• 💡 Algorithms prioritize time first, then price: Understanding algorithmic behavior is key to predicting market moves.
• 🧠 Manage psychological barriers: Fear of being wrong can impede learning; embrace losses as a source of insight.
• 💰 Set realistic expectations: Sustainable profits, like $6,000/week, are achievable and preferable over chasing rare large wins.
• 🛠️ Trading is skill-building: Treat each trade as an opportunity to refine understanding and execution, not just to make money.
• 📝 Transparency matters: Observing live trades with context helps students understand reasoning behind wins and losses.
• ⚠️ Avoid hype-driven strategies: Be skeptical of flashy claims online and focus on repeatable, logical trading methods.
• 🔄 Learn from losing trades: Losses are informative and should be incorporated into future trading strategies.
• ⏱️ Timing and liquidity are critical: Pay attention to how markets react to significant levels at specific times, like market opens.

Q & A

What is ICT's primary approach to analyzing the market?

ICT focuses on reading price action in real time, prioritizing price and time over indicators. Indicators like moving averages or Fibonacci are secondary and only used for context, not as primary trading signals.

How does ICT use the relationship between different indices like the NASDAQ, S&P, and Dow?

ICT observes correlations and divergences between indices to gain insight into market behavior. For example, if the NASDAQ and S&P move below a previous low while the Dow does not, this divergence can signal an opportunity based on algorithmic behavior.

What is the 'Turtle Soup' concept mentioned in the script?

'Turtle Soup' refers to a fake breakout above an old high or below an old low. ICT uses a simplified version of this concept to identify potential trades when the market is likely to reverse after a false breakout.

Why does ICT place small trades or 'micro contracts' in the market?

Placing small trades allows ICT to gather real-time feedback on market behavior, understand algorithmic reactions, and refine his trading bias without risking significant capital.

How does ICT view losing trades in his trading strategy?

Losing trades are considered a source of information and feedback. They help him understand market behavior and adjust future trades. Losses are part of the learning and decision-making process.

What psychological barriers does ICT emphasize that new traders face?

New traders often fear being wrong and want trades without losses. ICT stresses the importance of honesty about skill and understanding, accepting losses, and focusing on logical analysis rather than emotions.

What is ICT's stance on unrealistic trading promises seen on social media?

ICT warns against flashy claims like making $60,000 in one trade or $220,000 a day. He emphasizes sustainable and consistent gains, focusing on repeatable processes rather than rare, large wins.

How does ICT use intermarket relationships to time trades?

ICT uses other indices not just for trading but as a form of market intel. For instance, observing the S&P and Dow can help him time trades in the NASDAQ by analyzing correlations and divergences that indicate algorithmic accumulation or distribution.

What is ICT's approach to stop-loss and drawdown management?

ICT uses stop-losses as protection rather than failure. Drawdowns are expected and managed strategically, allowing him to correct intraday losses and learn from them to inform future trades.

What does ICT suggest about the purpose of trading?

Trading should be focused on making money and improving financial conditions, not to impress others or seek emotional validation. The goal is realistic, incremental gains rather than chasing perfection or instant wealth.

Why does ICT emphasize learning with real money over demo accounts?

Real money trades provide immediate feedback, a connection to market risk, and a better understanding of algorithmic reactions. Demo accounts lack this feedback loop, which limits the development of practical trading intuition.

How does ICT balance the use of his live trading account for teaching?

ICT demonstrates his logic using small, manageable trades in his live account. This shows real market behavior, commissions, fees, and outcomes, giving students a realistic understanding of trading processes without exaggerating results.