2022 ICT Mentorship Episode 9

Summary

In this video, the speaker shares advanced trading strategies, focusing on market structures like fair value gaps, order blocks, and liquidity hunting. The core lesson revolves around patience and understanding the market's phases: accumulation, manipulation, and distribution. The speaker advises against chasing price after overnight runs, suggesting traders wait for ideal setups based on market imbalances and liquidity zones. Risk management is emphasized, encouraging traders to trust their setups and use stop-loss orders wisely. By combining technical tools and market sentiment, the video guides traders to refine their approach and avoid common pitfalls.

Takeaways

• 😀 The 'Power Three' concept is crucial in trading: accumulation, manipulation, and distribution phases.
• 😀 Fair value gaps help traders assess price imbalances and potential market turning points.
• 😀 During volatile market conditions, greater levels of imperfection in price action can be allowed, but always consider the fair value gap for decision-making.
• 😀 Avoid chasing market movements—this often leads to losing trades, especially when the market consolidates or becomes choppy.
• 😀 If you miss a large market move, it doesn’t matter; there are always opportunities later as long as you stick to your trading plan.
• 😀 The morning session may be less favorable for trading, especially after a big overnight move, as many traders are likely to chase prices.
• 😀 Trust your setups and stop levels. If a trade doesn’t work out, it's just one trade gone wrong—look for the next opportunity.
• 😀 A short-term trading strategy based on fair value gaps can help you enter and exit trades at optimal points in time.
• 😀 Using the logic of price action and liquidity helps make more informed trade decisions and avoid knee-jerk reactions.
• 😀 The YouTube channel contains detailed strategies on how to identify and act on key market patterns like the ones mentioned in the video.
• 😀 Being disciplined in your trading approach, especially when using short timeframes, is essential for consistent success.

Q & A

What is the primary concept being taught in the video?

The video focuses on trading strategies using fair value gaps, market liquidity, and order blocks to make high-probability short-term trading decisions, especially in volatile markets like NASDAQ e-mini futures.

What does the term 'fair value gap' refer to in trading?

A fair value gap refers to an area in the price chart where there is a significant imbalance in market orders, indicating potential price reversals or continuations. It serves as a reference for traders to base their entries and exits.

Why is it important not to chase trades in volatile markets?

Chasing trades often leads to poor decision-making and can result in losses, especially in volatile markets. Many traders get caught in the 'chasing' cycle, where they attempt to enter a trade after seeing a large move, leading to higher risk and poor entry points.

How do liquidity levels impact the strategy mentioned in the video?

Liquidity levels help identify areas where buy or sell orders are stacked. When price approaches these levels, it can trigger large moves in the market. The video emphasizes understanding where liquidity is resting to capitalize on price action and avoid false breakouts.

What role does understanding market sentiment play in the strategy?

Market sentiment, or the underlying mood of traders, is crucial because it informs the bias for the trading session. Recognizing the sentiment helps traders avoid getting caught in large price movements and informs when to stay out of the market entirely.

What is the significance of using 'stop-premise' in the strategy?

The stop-premise is a critical part of managing risk in short-term trades. It involves placing stops based on key levels like swing highs or lows, allowing traders to limit losses if the market moves against their position.

What does it mean when the script says 'trading below' a level indicates where sell stops are?

When the market trades below a certain level, it often triggers stop-loss orders that were placed below key support levels. These sell stops can drive the market lower, creating an opportunity for traders to enter short positions.

Can a fair value gap still be valid even if the price moves outside its range?

Yes, a fair value gap can still be valid even if the price temporarily moves outside its range. The concept of the gap is to serve as a reference, and in volatile markets, imperfections are allowed, but the overall idea remains intact.

Why is it important to trust the setups and let stops do their job?

Trusting the setups and allowing stops to do their job helps traders avoid emotional decision-making. While it might be tempting to adjust stops or exit a position prematurely, sticking to the plan ensures that losses are controlled and the overall trading strategy remains consistent.

How does the video integrate concepts from both free and paid content?

The video integrates concepts from the free lessons on the YouTube channel with the more advanced strategies from the mentorship series. This combination provides viewers with a comprehensive understanding of short-term trading setups, from basic to more advanced techniques.