2022 ICT Mentorship Episode 5

Summary

This 2022 ICT mentorship video on YouTube focuses on intraday trading strategies for index futures like S&P, NASDAQ, and the Dow. The instructor provides a detailed guide on setting up daily ranges and intraday layouts, emphasizing the importance of trading during specific New York time frames for optimal liquidity and market predictability. Key concepts include identifying swing highs and lows, recognizing fair value gaps, and understanding market profile patterns. The lesson aims to equip traders with a systematic approach to capture significant market moves, while cautioning against over-trading and the pitfalls of micro-scalping.

Takeaways

• 📈 The lesson focuses on intraday order flow and understanding the daily range, specifically for index futures like S&P, Nasdaq, and the Dow, rather than other markets.
• 🎓 The platform TradingView.com is recommended for chart analysis, offering free access with additional benefits through a paid membership.
• 📆 Index futures trade with specific expiration dates, and the most active contracts are for the months of March, June, September, and December.
• 🔍 Traders should monitor open interest to identify the most liquid contract to trade, typically shifting focus to the next month's contract around the first or second trading day before expiration.
• ⏰ The importance of trading during New York local time is emphasized for consistency in analysis and trading decisions.
• 🚫 A 'no trade' period is advised during the New York lunch hour from noon to 1 PM, as it's typically not a productive time for trading.
• 📊 The script introduces the concept of market profiles and the significance of identifying key highs and lows, as well as 'fair value gaps' for trading decisions.
• 📉 The 'three drives' pattern is highlighted as a potential indicator for a stop hunt, where the market may reverse after repeatedly making higher highs.
• 📈 Emphasis is placed on the predictability and systematic nature of index futures markets, which can offer more structured trading opportunities compared to other markets.
• 🛑 The concept of 'displacement' in price action is used to identify significant breaks in trend that can signal entry points for trades.
• 📝 The importance of studying past charts and price action is stressed for developing an understanding of market behavior and identifying potential trading opportunities.

Q & A

What is the main focus of the 2022 ICT mentorship lesson on YouTube?

The main focus of the lesson is on intraday order flow and understanding the daily range, specifically teaching elements of the e-mini, setting up daily ranges, intraday layouts, and discussing daily profiles in the context of index futures trading.

Which trading platform is recommended in the mentorship for chart analysis?

TradingView is the recommended platform for chart analysis, as it provides the means of looking at the charts shown in the mentorship.

What are the benefits of having a membership on TradingView?

A membership on TradingView offers additional benefits such as access to more advanced charting tools and features that can enhance the analysis shown in the mentorship.

What are the markets primarily targeted in this mentorship?

The markets primarily targeted are index futures like S&P, NASDAQ, and the Dow, as well as the Russell 2000.

Why are the concepts of trading the Asian range not applicable to the markets taught in this mentorship?

The concepts of trading the Asian range are not applicable to these markets because the mentor does not teach that to students and wants them to focus on the strategies shown specifically for index futures.

What is the significance of the delivery month codes H, M, U, Z in index futures trading?

The delivery month codes H, M, U, Z represent March, June, September, and December, respectively. These are the only four months that index futures trade, and they are important for traders to know which contract is the front month or nearby contract for trading purposes.

Why is it important for traders not to trade after the expiration of index futures contracts?

It is important to avoid trading after expiration because the value of the contract drops to zero, and trading in expired contracts can lead to unnecessary risks and losses.

What is the recommended time frame for identifying key highs and lows for trading decisions in the mentorship?

The recommended time frame for identifying key highs and lows is the 15-minute time frame, which is considered the bellwether time frame for spotting imbalances and significant price movements.

Why should traders avoid trading during the New York lunch hour according to the mentor?

Traders should avoid trading during the New York lunch hour from noon to 1 PM because it is typically a no-trade time period where price action can be unpredictable, and trading during this time may not be as clean or profitable.

What is the concept of 'displacement' in the context of price action as taught in the mentorship?

The concept of 'displacement' refers to an obvious and significant movement in price that breaks through a previous high or low, similar to water displacement when an object is submerged. It indicates a strong momentum and potential for a stop hunt or a significant price movement.

What is the significance of the three drives pattern in understanding market behavior?

The three drives pattern, which consists of three consecutive higher swing highs, indicates that the market is pressing up against resistance. This pattern can signal that informed investors or 'smart money' may be establishing short positions, anticipating a stop hunt or a significant price drop.

How does the mentor suggest traders determine their daily bias for trading?

The mentor suggests traders determine their daily bias by analyzing the daily chart to understand if the market is likely to expand higher or lower. This involves looking at the formation of relative equal highs or lows and considering the overall market sentiment and previous price action.

What is a 'fair value gap' and why is it important for traders?

A 'fair value gap' is a price area where there is a significant amount of liquidity or resting orders, often formed after a period of consolidation. It is important for traders because it can indicate potential support or resistance levels and provide opportunities for entry or exit points in trades.

Why does the mentor emphasize the importance of trading with the understanding of market manipulation?

The mentor emphasizes this because understanding market manipulation can help traders identify patterns and predict price movements more accurately. It allows traders to make more informed decisions and potentially profit from the market's behavior.

What is the 'buy program' mentioned by the mentor?

A 'buy program' is a trading scenario where algorithms continuously offer higher prices, indicating a strong buying pressure. It usually occurs when a market has violated a significant swing low, signaling a potential rally.

How does the mentor describe the difference between trading index futures and forex?

The mentor describes index futures as being more systematic and predictable compared to forex, especially during certain times of the year. He mentions that forex can be more volatile and subject to rapid changes due to factors like news events, making it 'funky' at times.

What is the mentor's view on trading with high leverage?

The mentor warns against trading with high leverage, especially for those who do not fully understand the market. He states that cheap leverage can be dangerous and lead to significant losses in fast-moving markets.

How does the mentor suggest traders approach the learning process?

The mentor suggests that traders should take the lessons at the pace provided, engage with the content thoroughly, and use the homework assignments to build and ingrain their understanding of the market.