2022 ICT Mentorship Episode 11

Summary

In this mentorship-style broadcast, the speaker provides a detailed analysis of trading the E-mini Nasdaq futures, emphasizing market structure, fair value gaps, and liquidity zones. Through multi-timeframe chart breakdowns, he demonstrates precise short-entry strategies, highlighting swing highs, intermediate-term highs, and imbalances. The lesson underscores the importance of patience, disciplined execution, and aligning trading style with personal strengths, particularly for intraday trading. Live trade examples with real account results illustrate these concepts in action. Drawing from decades of experience and lessons from Larry Williams, the video offers practical insights on reading the market, managing risk, and developing a confident, model-based approach to trading.

Takeaways

• 📈 Market structure is key: understanding swing highs, intermediate highs, and fair value gaps is essential for identifying high-probability trade setups.
• ⚖️ Fair value gaps and imbalances are used as optimal entry points for trades, rather than simply relying on support and resistance.
• 🕰️ Timing matters: differentiate between the midnight opening price for daily range and the 8:30 AM NY session for intraday trades.
• 🎯 Entry strategy: enter trades near the top of fair value gaps for shorts and near the bottom for longs, confirmed by market structure and displacement.
• 💡 Swing high/lows classification: short-term, intermediate, and long-term swing highs are nested to indicate market bias and liquidity targets.
• 🧠 Trading psychology: patience and discipline are crucial; avoid chasing trades and know when to stop after achieving your target profits.
• 💸 Avoid edge dulling: overtrading can reduce your trading effectiveness; sharpen your edge by selective, well-timed trades.
• 🧩 Demo accounts can be used to practice setups and test strategies without risking live capital, particularly after profitable trades.
• 📚 Mentorship approach: lessons are publicly shared, emphasizing understanding the reasoning behind trades rather than just execution.
• ⚡ Trade execution example: a live short entry at 13,858.25, exited at 13,612.25, demonstrates using fair value gaps, swing highs, and liquidity considerations.
• 🌐 Trading style personalization: traders should align with their strengths—intraday, scalping, swing trading—based on personality and opportunity preference.
• 📖 Historical insight: the methodology is influenced by Larry Williams’ market structure teachings, emphasizing the nesting effect of highs and lows.

Q & A

What is the main purpose of the video transcript?

The main purpose is to teach trading concepts, focusing on market structure, order flow, fair value gaps, and intraday trading strategies, while also sharing insights on trading psychology and risk management.

What trading instrument is primarily discussed in the transcript?

The primary trading instrument discussed is the E-mini Nasdaq futures contract for March delivery.

What is a fair value gap and how is it used in the trading strategy?

A fair value gap is an imbalance between buying and selling pressures that creates a gap in price. It is used to identify optimal entry points, particularly for short positions, by anticipating that the market will retrace to fill the gap.

How does the trader identify swing highs and swing lows?

Swing highs are identified as a high with lower highs on either side, and swing lows are the opposite. The trader also classifies them as short-term, intermediate-term, or long-term using nested halos or circles to mark their significance.

What is the significance of the 8:30 AM and midnight opening prices?

Midnight opening price is used to assess the daily range, while 8:30 AM opening price is used for analyzing the New York morning session specifically. Both are reference points for understanding market structure and potential entry levels.

Why does the trader emphasize not pushing your edge?

Pushing your edge can lead to overtrading, dulling your trading skills, and taking unnecessary risks. The trader emphasizes that knowing when to stop and preserve profits is essential for maintaining long-term profitability.

How does the trader handle live trading versus demo trading?

The trader demonstrates live trades but also uses demo accounts to experiment safely without risking real money. This approach allows students to learn and compare trading strategies without jeopardizing their accounts.

What role does market psychology play in the trader's methodology?

Market psychology is critical. The trader teaches patience, discipline, and emotional control, highlighting the dangers of impulsive trading and the need to manage the desire for instant gratification after winning trades.

What are some key references or influences mentioned for learning market structure?

The trader references Larry Williams and his video courses from the early 1990s, particularly his teachings on swing highs, swing lows, and market structure as foundational concepts for understanding price action.

How does the trader approach different trading styles for students?

The trader allows students to choose their preferred style, whether scalping, intraday swing trading, daily chart trading, or longer-term position trading. He emphasizes matching trading strategies to personality and strengths.

Why does the trader prefer intraday trading over position trading?

The trader prefers intraday trading because he can react quickly to market changes, capitalize on short-term moves, and maintain control over risk, aligning with his strengths and trading psychology.

How does the trader use historical data in his trading methodology?

He uses historical price action to backtest and classify swing highs and lows, understand market structure, and anticipate future price movements. This process builds trust in his trading model and entry strategies.