The MMXM Trader | Advanced ICT MMXM Lesson (Everything You Need To Know)

Summary

In this episode of T-Talks, MxM Trader, a mentor in the ICT community, explains the concept of Market Maker Models and their role in institutional trading. The discussion covers how central banks use these models to manage liquidity by building long positions as prices decline. MxM breaks down the use of Commitment of Traders (COT) data, time frame alignment, and the importance of mitigation blocks and PD arrays in identifying high-probability trades. Practical examples of the AUD/USD and other currency pairs are used to demonstrate how traders can apply these strategies to successfully navigate market trends.

Takeaways

• 😀 Market Maker models are based on the central banks' hedging programs, which aim to offer liquidity by building net long or short positions as the market moves.
• 😀 A Market Maker Buy Model occurs when central banks buy into sell-side liquidity, building blocks of price as the market declines. This process helps them profit from the lowest point of the model.
• 😀 Commitment of Traders (COT) data is crucial in identifying the positioning of central banks. By analyzing futures data like the Japanese Yen Futures, traders can see if central banks are net long or short.
• 😀 The Market Maker model works by defining key levels, such as the range high and low, and then using them to spot potential buy or sell opportunities in the market.
• 😀 The concept of a 'Mitigation Block' helps traders identify areas where central banks are absorbing liquidity and offering opportunities to trade in alignment with institutional order flow.
• 😀 Time frame alignment is key in identifying Market Maker models. Traders use specific time frame pairings (e.g., monthly with daily, weekly with 4H) to locate clear trade setups.
• 😀 The Market Maker Buy or Sell Model is formed through a range: the lowest low or highest high of the market, with accumulation and distribution phases marking key points in the process.
• 😀 Using the Silver Bullet strategy—pairing accumulation stages with Smart Money Techniques (SMT)—significantly increases the probability of successful trades.
• 😀 A lower time frame range (e.g., 15-minute or 1-hour) is often used to identify the Market Maker Model, in alignment with the institutional order flow from higher time frames.
• 😀 The market is viewed as a mechanism to balance liquidity. Central banks build positions on one side (buy or sell) while offering liquidity to institutions and retail traders, allowing the market to move.
• 😀 Pairing Market Maker models with the concept of external and internal range liquidity helps traders predict price movements more effectively by focusing on key price levels and mitigation blocks.

Q & A

What is a Market Maker model?

A Market Maker model is a hedging program used by central banks to provide liquidity to the market. It involves buying into sell-side liquidity and building net long positions as prices decline. This model helps institutions hedge and offer liquidity to retail traders and other large institutions.

Why do central banks buy on the decline in a Market Maker model?

Central banks buy on the decline to build net long positions by absorbing sell-side liquidity. This process allows them to offer liquidity to the market and hedge their positions, ultimately making a profit when they sell those positions at a higher price.

What is the role of CoT (Commitment of Traders) data in analyzing a Market Maker model?

CoT data helps identify the positioning of commercial traders, which includes central banks. By analyzing the CoT chart for a specific currency, traders can determine whether central banks are net long or net short, which aligns with the Market Maker model and helps identify potential entry points.

What is a 'net long' position, and how does it relate to a Market Maker model?

'Net long' refers to holding more long positions (buying) than short positions (selling) in the market. In a Market Maker model, central banks aim to build a net long position, which is achieved by buying into sell-side liquidity as prices decline.

How does the Market Maker model relate to institutional order flow?

The Market Maker model aligns with institutional order flow by offering liquidity on both sides of the market. Central banks absorb liquidity and build positions at key price points, ensuring that large institutions can execute their trades without disrupting the market.

What is the significance of 'mitigation blocks' in the Market Maker model?

Mitigation blocks are areas where previous institutional buying or selling activity occurred. They act as key levels for potential market reversals. By identifying these blocks, traders can anticipate areas where the market may reverse, creating buying or selling opportunities.

What does 'smart money reversal' mean in the context of a Market Maker model?

A smart money reversal occurs when the market reverses direction after a phase of accumulation or distribution by institutional investors (referred to as 'smart money'). This reversal is often seen at key levels where mitigation blocks and liquidity are present.

How do 'range high' and 'range low' relate to Market Maker buy and sell models?

In the Market Maker model, the range high and range low define the boundaries of price movement. A buy model typically occurs when the market reaches a low point (range low) and is expected to move upward, while a sell model occurs when the market reaches a high point (range high) and is expected to move downward.

What is the 'Silver Bullet' in Market Maker trading?

The 'Silver Bullet' is a high-probability trade in Market Maker models, typically resulting from a second stage of accumulation paired with Smart Money Trading (SMT) signals. This stage often leads to the most explosive moves in the market, offering the highest potential for profit.

How can time frame alignment help in trading Market Maker models?

Time frame alignment is crucial for identifying clean Market Maker models. By aligning higher and lower time frames (e.g., monthly with daily, weekly with hourly), traders can ensure they are trading in harmony with the overall market structure, enhancing the likelihood of successful trades.