Stop Waiting for Pullbacks, Use Market Maker Models Instead (ICT Concepts)

Summary

The video discusses the challenges traders face when waiting for market pullbacks, particularly in relation to premium and discount levels. The speaker shares personal experiences of overcoming these obstacles by mastering continuation trades instead of relying on pullbacks. By understanding market flows, fair value gaps, and market maker models, traders can improve their win rates and profitability. The key takeaway is to focus on trading continuations to catch more opportunities without overtrading or missing trades. The speaker emphasizes mindset and experience as crucial factors for long-term trading success.

Takeaways

• 💡 Understanding when to trade a continuation vs. waiting for a pullback is crucial for trading success.
• 📉 Many traders wait for pullbacks but miss out on profitable continuation trades, which are common in market moves.
• 🎯 Premium and discount zones are useful, but waiting for them can often lead to missed opportunities.
• 🧠 Trading reversals has its place, but relying solely on reversals can limit your trading frequency and potential profits.
• 💪 Continuation trades offer higher frequency and win rates, though they often come with a lower risk-reward ratio.
• 🚀 Confidence in the market direction allows for smoother trading and reduces overtrading or hesitance due to fear of missing out.
• 🔄 The key to profitable trading lies in understanding market flow, fair value gaps, and market maker models.
• 🛑 Overemphasizing precision, like catching exact tops and bottoms, can lead to overtrading and poor decision-making.
• 📊 Scaling into trades after identifying market direction and fair value gaps is a powerful strategy.
• 💼 Consistency and experience in reading price action help build a more confident and profitable trading mindset.

Q & A

What is one of the biggest challenges a new trader faces when starting out?

One of the biggest challenges a new trader faces is overcoming the tendency to wait for market pullbacks before entering trades, which can lead to missing out on profitable opportunities.

What is the significance of understanding premium and discount in trading?

Understanding premium and discount is significant because it helps traders identify overbought or oversold conditions in the market. However, it's crucial to use this tool in the right context to avoid misuse that could hinder profitability.

Why is waiting for pullbacks potentially detrimental to a trader's success?

Waiting for pullbacks can be detrimental because it may cause traders to miss out on continuation trades. The market does not always pull back, and waiting for it can lead to missed opportunities and overtrading.

What shift in mindset helped the speaker become profitable in trading?

The speaker became profitable by shifting their mindset to understand when to look for a pullback and when to look for a continuation. This allowed them to catch more trades and not miss out on market movements.

What are the two main types of setups in price action trading?

The two main types of setups in price action trading are reversals and continuations.

How does the speaker describe the typical number of true reversals in a trading session?

The speaker suggests that there is usually only one true reversal in most trading sessions, with the rest of the setups being continuations.

What is the value of understanding reversals in trading?

Understanding reversals is valuable because it indicates an overall change in market direction, which can help traders execute trades more fluidly without过分担心错过机会.

Why is frequency of trades considered valuable in continuation trading?

Frequency of trades is valuable in continuation trading because it allows traders to consistently evaluate the market and extract profits without risking too much capital at once.

What is the importance of not waiting for a discount when trading continuations?

The importance of not waiting for a discount when trading continuations is that the market may not pull back, and waiting could lead to missing out on the trade. Instead, traders should focus on the flow of the market and the creation of new fair value gaps.

How does the speaker suggest traders should approach taking losses?

The speaker suggests that traders should not be afraid to take losses and understand that not every trade will have a high risk-reward ratio. They should focus on the direction of the market and the overall flow rather than pinpointing exact entries.

What is the benefit of combining both reversals and continuations in trading?

Combining both reversals and continuations in trading provides peace of mind because traders gain the ability to catch trades in various market conditions, reducing the fear of missing out on opportunities.

Outlines

00:00

📈 Overcoming the Pullback Mentality

The speaker discusses the challenge of waiting for market pullbacks when trading, which often leads to missed opportunities. They recount their own experience learning to trade and how focusing on premium and discount can hinder profitability if misused. The key takeaway is understanding market dynamics and market maker models to trade continuations effectively, rather than waiting for pullbacks. The speaker shares their transformation from significant losses to profitability and financial success by shifting their trading approach.

05:00

🔄 The Power of Continuation Trades

This section delves into the benefits of trading continuations over reversals, emphasizing the higher frequency and win rate of continuation trades. The speaker explains the importance of not overtrading and understanding the market flow to make consistent trades without excessive risk. They also discuss the concept of 'fair value gaps' and how reacting to these gaps can signal the market's direction, providing multiple trading opportunities within a single market movement.

10:00

🌊 Flowing with the Market's River

The speaker continues to elaborate on the concept of trading with the market's flow, likening it to understanding which way a river flows. They discuss the value of identifying market direction and using tools like fair value gaps and order blocks to capitalize on continuation trades. The speaker stresses the importance of mindset, moving away from a scarcity mindset to an abundant one, where traders are less afraid of missing trades and more focused on the overall market direction.

15:03

🚀 Combining Reversal and Continuation Strategies

In the final paragraph, the speaker advocates for a balanced approach that combines both reversal and continuation trading strategies. They highlight the importance of not being overly reliant on any single type of trade and the psychological benefits of understanding the market's direction. The speaker also touches on the practical aspects of trading, such as entering and exiting trades at the right times and managing risk effectively. The video concludes with an offer for viewers to work directly with the speaker to become profitable traders.

Keywords

💡premium and discount

Premium and discount refer to the concept of overbought and oversold conditions in trading. When traders use these terms, they are assessing whether an asset's price is too high (premium) or too low (discount) relative to its perceived value. In the video, the speaker discusses how relying too heavily on waiting for these conditions to reverse can lead to missed opportunities, as the market may continue to move in one direction without pulling back.

💡pullbacks

A pullback in trading terms is a temporary drop in price after a significant increase. Traders often look for pullbacks as opportunities to enter a trade, expecting the price to rebound. The video emphasizes the importance of not solely relying on pullbacks, as they may not always occur, and traders can miss out on continuation trades by waiting for them.

💡continuation trades

Continuation trades are trades that aim to capitalize on the continuation of a current trend rather than a reversal. The video discusses how understanding continuation trades can lead to more profitable outcomes than waiting for market pullbacks. It illustrates the concept by explaining how to identify and trade within a market trend without waiting for a price to revert to a certain level.

💡price action

Price action is a technical analysis approach that relies on the study of price movements to make trading decisions. It involves analyzing historical price data to predict future price movements. The video script mentions price action in the context of understanding market behavior and making trading decisions based on the observed trends rather than waiting for specific price levels.

💡fair value gaps

Fair value gaps are areas on a price chart where there is a significant price difference between the current price and the next level of interest. These gaps can be seen as opportunities for traders to enter or exit trades. The video explains how to use fair value gaps to identify potential continuation trades and avoid the pitfall of waiting for pullbacks.

💡reversals

A reversal in trading signifies a change in the direction of a market trend. The video script discusses the value of identifying reversals and how they can indicate a shift in market direction. However, it also cautions against focusing solely on reversals, as this can lead to missing out on continuation trades.

💡overtrading

Overtrading refers to the act of making too many trades in a short period, often driven by impatience or a fear of missing out. The video script mentions overtrading as a behavior that can result from waiting for market pullbacks that never occur, leading to excessive trading in an attempt to catch up with the market.

💡market maker models

Market maker models refer to the strategies used by market makers to facilitate liquidity and maintain an orderly market. In the context of the video, understanding market maker models can help traders anticipate price movements and identify opportunities for continuation trades without waiting for pullbacks.

💡win rate

The win rate in trading is the percentage of trades that result in a profit. The video script contrasts continuation trades, which may have a higher win rate but lower risk-reward ratio, with reversal trades that might offer a better risk-reward but have a lower win rate.

💡frequency

Frequency in trading refers to how often a trader enters into trades. The video emphasizes the importance of trading with higher frequency when the market is moving in a clear direction, as this can lead to more opportunities to profit from continuation trades.

💡state of delivery

State of delivery refers to the overall sentiment or bias in the market, whether it is bullish or bearish. The video script uses the term to illustrate how understanding the market's overall direction can help traders make better decisions about when to enter trades, especially in the context of continuation trades.

Highlights

Understanding when to look for a pullback and when to look for a continuation is crucial for profitable trading.

Misusing premium and discount can prevent you from becoming a profitable trader.

Premium and discount are useful tools when applied in the right context.

Waiting for pullbacks can lead to missing out on trades.

Learning how to catch continuation trades is a key to profitability.

Price action and market maker models are essential to understanding market movements.

Continuation trades offer higher frequency and win rate compared to reversals.

Fear of missing trades can lead to overtrading and poor decision-making.

Understanding the market flow is more valuable than trying to catch every single move.

Fair value gaps and liquidity reactions are key indicators for continuation trades.

Continuation trades allow for scaling in and securing profits without waiting for the perfect entry.

Trading continuations can build a better mindset and reduce fear of losing or missing trades.

Reversals indicate a change in market direction and provide opportunities for continuation trades.

Combining reversals and continuations can lead to a more comprehensive trading strategy.

Breakaway gaps signal a potential continuation of the market's direction.

Not being afraid to take a loss is important for successful continuation trading.

The market's direction can be identified through various price action signatures.

Understanding the market's flow allows for multiple trading opportunities within a single move.

The video offers a direct mentorship program for becoming a profitable trader.

Transcripts

how many times have you waited for the

market to pull back you've drawn out

your premium and discount and then the

market just keeps going right to the

Target that you had in mind but you're

sidelined because you wanted to wait for

a pullback now I know whenever I first

started trading this was one of the

biggest things that I had to get over in

order to become profitable but once I

stopped waiting for pullbacks once I

understood how to catch these

continuation trades here is what

happened so whenever I first started out

learning ICT I learned the basics you

know I watched the core content that's

how I learned and one of the first

lessons I think it was actually the

second or third lesson talks about

premium in discount now premium discount

is a tool that when misused will prevent

you from becoming a profitable Trader

now premium discount is great but it's

only great when you use it in the right

context whenever I first started I would

always go to my screens and the first

step I would do is try to identify the

current range I would draw a premium and

discount tool and then I would think

okay well the market has to come back

it's going to pull back and if I don't

wait for the pullback then you know I'm

just overtrading or I'm being eager

which couldn't be further from the truth

because when you understand how price

works and you understand Market maker

models and fair value gaps you don't

really have to wait for these pullbacks

and in fact if you do wait you're going

to miss a lot of Trades so I went

through this cycle of waiting for all of

these trades to come back and then when

they didn't after a while I would just

start you know overtrading because I was

so sick and tired of the market never

pulling back but it was just because I

was looking at things in the wrong lens

now I was able to go from consistently

blowing all my accounts losing all my

money and overtrading even though at

this time I knew how to trade ICT and

I'd watch all the videos but once I made

this simple shift not only did I become

profitable but over the last couple of

years I have made millions of dollars

and I've retired my parents and done all

sorts of amazing stuff but I can tell

you with 100% confidence I would not be

even a profitable Trader much less able

to do any of this had I not taken the

time to understand when to look for a

pullback and when to look for a

continuation and many of you guys who

are watching this are just one aha

moment away from becoming profitable and

I hope that this video which is going to

teach you how to determine whether or

not to trade the reversal or if the

Market's just going to continue and not

give a pullback I hope this video is one

that helps you tremendously now I didn't

put a ton of editing work into this

video a lot of you guys who've been on

the channel for a long time will

probably really appreciate this video

because I'm not using the you know the

the the Smartboard and you know it's

just one of those videos that I know

whether people watch it or not it's

going to be one that changes many

Traders live so enough with the chitchat

let's hop on a chart trading

continuations is often times one of the

most misunderstood difficult but the

most valuable things that you can learn

as a price action Trader because

everybody when they come into you know

price action

trading which what is what ICT is okay

it's say a form of it you know you

really have two types of

setups like I mean it's pretty pretty

pretty binary right you're either

trading a reversal or continuation now

we look at NASDAQ let's just say on a

one minute chart that's where most of

you guys are

trading we'll look you know how many

times is there really a true reversal in

most days usually one time now how many

time how many trade setups do you think

there are on most days more than one or

just one there's more than one of course

there is the value of reversals you get

you know good RR right there's some pron

Pro or some cons to it which is usually

a lower win rate because you're trying

to catch a falling knife but that you

know the good R makes up for it the

hidden value that if you don't realize

this you're not going to ever become a

Trader who can execute fluidly and not

really care if you miss trades because a

lot of the times when I'm analyzing the

chat analyzing you guys like I can tell

a lot of you guys I mean you're just a

bundle of nerves and the reason

of that is because you feel as if you

are watching the charts and you're going

to get this one chance and that's just

ridiculous right and it's normal though

the reason for this cuz you guys don't

understand the most valuable thing about

reversals is that it just tells you an

overall change of Direction now I mean

this is kind of like wow thanks Jessie

what a

mindblowing you know was powerful but it

is because you don't understand that

like let's just take this random example

as soon as you have this reversal right

let's let's just clean up the whole

chart let's just say if you're going

back in time let's let's just say you

have two true reversals during a session

because usually there is going to be

more than more than just one right here

and right here are the two true

reversals

okay but how many trades happened in

this move down how many trades happened

in this move up

a ton ton of Trades happened now what is

the value when you really think about it

what is the value of these two areas

that the value is not in just being able

to say okay boom you know

ifg I caught this crazy trade you know I

caught 10r that's not the value because

that's not usually going to be um what

happens like of course I mean we did

catch a really crazy trade it wasn't 10r

but a lot of the times you're going to

be able to catch big moves like that

but it's not necessarily always going to

be that in terms of the value because

the value is just that change in

Direction let's talk a little bit about

continuations so with

continuations we have different pros and

cons usually you're not going to have

you're going to have lower RR usually

right but you're going to have a higher

win rate now the other very very very

large value in this is more frequency

why is more frequency good A lot of

people will say that frequency is bad a

lot of people will say that oh you know

you got to wait like this Jedi to trade

and you're going to wait for that one

setup and just you're going to snipe it

and you're like a you're like a

samurai who just you know cut a bullet

in the air it's just stupid okay

that's just not that's not how this

actually works the way this works is

being able to evaluate the markets

consistently and extract some money out

while not risking a ton that's really

what this game comes down to and

learning how to read price action

efficiently enough to be able to do so

on a daily BAS basis now you don't have

to trade every single day but you have

to be able to put yourself into the

market and not every day before somebody

goes and runs with what I'm saying but

you have to understand the flow of the

market you have to be able to put

yourself in the market without having to

wait for this the Stars to align so to

speak so let's take a look at this right

here if we look right here now we took

um which I think we we took a trade

right here yeah it was like right here

we put our stop up there we ended up

trading down below I think we cut it

somewhere right around here correct I

cut it like right here somewhere right

in this area but we entered the trade

right up here and I think this candle

when it engulfed okay now notice how we

didn't get the top we didn't get the

best risk reward but let's just take a

look at all the other setups that there

were because once you've identified what

way the river's flowing you identify

what we're pushing towards what we're

likely drawing to now we could just use

this low even we'll just just use this

low now there was obviously drawing

lower and price waiting helps us C

capture more of the move let's just see

how many times in this leg of

price were there

opportunities well at first there's

going to be one and we're just going to

use fair value gaps to keep this simple

we might look at some other stuff too

but look there's a fair value Gap right

here we'll just mark this out fair value

Gap okay great so once we push into a

fair value Gap what you're going to

watch for to confirm whether or not

we're really moving down in this new

direction is how does the market react

toir fair value gaps and how does the

market react to liquidity it should act

very viciously away from it so what does

that mean well if we trade into a fair

value Gap ideally you want a new fair

value Gap to be created which is what

happened here and then you want any kind

of opposing order flow or opposing logic

to be quickly invalidated so for example

we have a bullish fair value Gap okay

well if we're going to be bearish what's

going to happen very quickly it's going

to get inverted now that's a new level

and then guess what happens and gets

created out of that

level a new fair value Gap and all of

these are trade opportunities all these

you can use to frame a trade now let's

just say that this hypothetically was a

15minute because you can use the same

logic on any time frame let's just say

if this was a 15-minute well every

single time that this happened every

single time there are going to be lower

time frame trade entries often times

there's going to be all of this in some

form or fashion in each one of these

little moves so why wouldn't you scale

in well I mean are you going to scale in

a trade just to the point where no

matter what when you're wrong long

you're just going to secure that you're

going to lose all the money you made of

course not that would not be very smart

the goal is not to be able to catch

every last pip or move or tick in the

market that's not the goal the goal is

to be good enough to understand and

extract when you can to understand what

way the the Market's moving and to be

able to extract money from at least one

part of it we're not here to just take

every single you know dollar from the

market that we can at every day every

turn because what happens then is you

start to build the identity of what I

used to call the min max I don't know if

you guys like in gaming they talk about

this like Min maxing it's like every

little thing you just are trying to

optimize or or maximize and and and it's

one of those things that like it sounds

sexy but it's not realistic like most

ICT stuff because you don't need to do

that in order to make money and most of

the time the people who are infatuated

with doing things like that are usually

not even making any money but they want

to jump from not making any money to be

able to extract every last dime from the

market it's ridiculous that is the value

in understanding what way the river is

Flowing it's what I always say if you

guys ever hear me say that this is what

I'm talking about what way is the river

flowing you might just need to get in at

this Dock and get off at this dock you

don't have to get the entire overall

move there's even more like anytime the

market comes above a high you can look

at that as well so anytime the market

comes into a fair Val gap or above a

high you can also use order blocks once

you get better but I focus on just using

this right now because if not you start

to look at every single level now after

you hit into whatever you think the

Market's drawing towards then cool

activate price rating like we did you'd

move your stops here okay as soon as we

come down and we make a new low you can

move your stops up again there are a lot

of different ways you can capitalize on

more than move but the real value here

is understanding which way the the river

is Flowing because when you understand

how to trade a

continuation then you're going to have a

higher win rate you're going to have

more frequency when you have more

frequency with logic you don't overtrade

and you stop being so afraid of losing a

trade or missing trades because you

understand hey I'm comfortable in

knowing what I'm doing and I know that

there are going to be tons of

opportunities you start to operate more

from an abundant perspective more so

than like what you were talking about

earlier you know you're like sitting

there like there's vomit on his sweater

already like all that you know what I'm

saying you're over here like acting like

it's about to be the Olympics or

something to take a trade because this

is going to be the only shot you get

today and that mindset is what turns you

guys into those timid traders who make

mistakes you got to learn to

think multiple steps ahead so like

what's the IM immediate benefits okay

more frequency higher win rate great

cool that's all that's all fun but what

is the real real deep benefit here

especially if you're somebody who's

unprofitable it's just building a better

mindset and reframing the way you look

at each day AKA experience this is what

it means when you say oh you just got to

go through it you have to earn the new

one St you have to learn experience this

is that verbalized into words that's

what that means and if you are good at

identifying that and becoming aware of

that you are going to be a much more

successful Trader there's a great you

know you can trade the reversal that's

great too there's nothing wrong with it

I'm not saying there's anything wrong

with it but let's just take a look over

here what happens once you've truly

identified when the market has started

to reverse cool we've got fair value

gaps right there now here's another

really good really good example so a lot

of you guys in this example

we be looking at it like this you're

going to say and this is from under a

lack of understanding a lot of people

say cool I'm going to use discount and

premium okay well I'm going to use the

discount fair value Gap huge mistake

because you're literally saying I'm

going to use a breakaway Gap right when

there is a redelivered rebalance price

range right here the market shouldn't

trade any lower after you have that

first initial fair value Gap and then

you have that area that is shared by

these two Wicks and you create another

fair value Gap this is now a breakaway

Gap if this is Revisited the Market's

likely to go lower and then guess what

happens if that's Revisited guess what

that guess what that were to be able to

tell you like let's just say if the

market you know came down and we're just

going to you know draw a

beautiful candle here look at this look

at that art or say if it Revisited this

guess what that would have signified to

you a new change in the state of

delivery or the change in Direction now

again before an ICT cultist come after

me before ICT himself even corrects me

and says oh this isn't a I'm not saying

saying the actual original term I'm

saying the actual value you get from it

it's telling you what way the market is

Flowing CU what you know what is the

state of delivery are we bullish or

bearish once you understand and you

identify different signatures and price

that tell you that A Whole New World of

opportunity opens up you start to think

outside the box and you stop just

thinking you know based on linear and

very easy things you start to actually

draw value and be able to use it in a

different uh situation than the picture

perfect one that most people wait around

on that's why you wouldn't expect that

and whenever you're truly moving in One

Direction you're going to watch every

fair value Gap you don't have to wait

for a discount okay it's the stupidest

thing honestly it is I'm just going to

be honest everyone's going to people are

going to come after me for that you

don't have to wait for a discount if

you're trading the continuation of a

market maker model and often times it

won't happen like you just watch each

for Value Gap right here did you get a

confirmation if you look at both of

these right here what's really the

difference like this one just had Wix in

it at the end of the day you didn't just

enter the trade as soon as you tapped

this this or this you entered it as soon

as the market started pushing away from

it and creating what just like we talked

about up here if the Market's truly

flowing One Direction what should happen

from a fair value Gap we trade into a

fair value Gap right there what should

happen next a new fair value Gap created

out of it let's go down here once we

trade into a fair value Gap what should

happen next if we're likely to continue

a new fair value Gap and you don't have

to even wait for this one to be tapped

because that right there is confirming

you're moving

up anytime you want to play stop losses

you want to look for for a recent swing

low ideally one that took out an old one

so like right here we took out an old

level in price you could have entered

the market right here put it at this

redelivered rebounds price range because

you shouldn't see it go under that right

arget would have been much higher you

could have entered on the reversal right

of course the reversal is going to give

you the best restk re it's going to be

the sexiest but I'm not here to try to

show you guys that I'm here to show you

the other value you can get from

understanding how many moves there are

in one move that you can actually catch

and make money on now now look right

here where is another one right here the

key here also is not being scared to

take a loss and understanding like once

you have those days where you're really

confident in the direction like a lot of

people what they'll do is this they'll

be like okay great here's a trade oh why

didn't I get good RR and maybe that

makes you more comfortable in this

example you got two RR which is fine but

sometimes it's going to happen it's

going to be like5 RR or one RR and off

of a big move you shouldn't be looking

for those low amounts of r now I'm not

saying you can't ever trade low R you

can you just have to make sure that that

is like a last leg kind of price action

move but when you're trading a big lean

price you shouldn't look at it like that

now in this example there are tons of

different and I mean tons of different

examples of when this happens so look

again right here Breakaway Gap okay and

I look at Breakaway gaps from every

consolidation I don't look at it just at

the reversal I don't care if that's how

it was taught by it works okay so when

we look right here then what happens

what do we look to be created out of a

fair value g a new one now again what

did I just say a second ago we don't

have to tap back into that as soon as

that's created that and of itself is an

entry you see how many times you can

literally sit here and trade this Market

without having to catch the bottom

without having to be afraid that you

know and and once you realize this

you're not so afraid and so laser

focused on trying to pinpoint this you

don't chop yourself to pieces you don't

have hesitate because what happens when

you're just looking for this is every

time the market shows you the smallest

little desire to reverse you start

pushing buttons so again whenever you

can combine these two like if you can

combine continuations and reversals if

you can combine both then you get peace

of mind because you understand hey I

have the ability to be able to catch

trades in the market I don't have to

just think that I'm going to miss this

this one reversal this one opportunity

this is what happens when you just trade

the ICT

2022 or you're you know afraid of of

only playing liquidity sweeps or only

playing one type of trade when in

reality the reversal itself whether you

catch it or not gives you the Market's

Direction it's the market showing you

its

hand

okay if you found this video valuable

and you want to work directly with me

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