2022 ICT Mentorship Episode 2

Summary

This video teaches a strategic approach to day trading, focusing on liquidity runs, market structure breaks, and risk management. The mentor highlights the importance of identifying price imbalances, using smaller risk (micros), and backtesting setups to ensure consistent, repeatable trades. The core of the method involves recognizing market behavior patterns, particularly around liquidity pools and structure shifts, and executing trades with manageable targets. With an emphasis on practical application, the instructor encourages students to build their skills step-by-step, aiming for long-term profitability while managing risk carefully.

Takeaways

• 😀 Focus on liquidity runs and market structure breaks for high-probability setups.
• 😀 Identify and act on breakouts, especially when they occur near swing highs or lows.
• 😀 Use micro-positioning to minimize risk and trade smaller amounts for easier control.
• 😀 Study historical charts (intraday timeframes like 1-minute, 5-minute) to recognize recurring setups.
• 😀 Breaks in market structure after liquidity pools can signal opportunities for trades.
• 😀 Always target easy, achievable exit points (low-hanging fruit) rather than trying to catch every move.
• 😀 The goal of the mentorship is to teach practical trading skills, not promise instant riches.
• 😀 Backtest setups and log data to identify patterns in past trades and refine your strategy.
• 😀 Proper money management and risk control are crucial to long-term profitability.
• 😀 Economic uncertainty and job scarcity make learning skills like trading a valuable income stream.
• 😀 Pay attention to price imbalances and liquidity gaps when executing trades for better timing and profit potential.

Q & A

What is the primary focus of the video script?

The video focuses on teaching viewers a trading strategy, specifically targeting liquidity runs, market structure breaks, and how to apply these concepts to real-world trading scenarios using e-mini futures contracts.

What does the speaker mean by 'liquidity run'?

A 'liquidity run' refers to a market move where liquidity is captured by triggering buy or sell stops, either in the direction of a trend or against it, to create a profitable opportunity for traders.

How does the speaker suggest using market structure breaks in trading?

The speaker recommends looking for breaks in market structure, such as when a short-term low is broken after a liquidity run. This break signals a potential price movement in the opposite direction, which can be used to enter trades.

What is meant by 'imbalances' in the context of trading?

Imbalances refer to areas where price has moved too quickly, creating a gap or void in the order flow. These imbalances can be potential entry points for traders when price returns to fill the gap.

How does the speaker recommend determining a target for trades?

The speaker advises traders to focus on the 'low hanging fruit' for targets, meaning closer, easily achievable price levels, rather than aiming for the farthest possible target which may not materialize.

Why does the speaker emphasize the importance of risk management in trading?

The speaker emphasizes risk management because while traders can find highly profitable setups, without proper risk control, even the best strategies can lead to significant losses. Risk management ensures sustainability in trading.

What is the purpose of using a demo account according to the speaker?

The demo account is used as a learning tool to practice strategies without real financial risk. The speaker highlights that while demo accounts offer valuable practice, they don't reflect the real emotions and stakes of live trading.

What timeframes does the speaker recommend focusing on for intraday trading?

The speaker recommends using intraday timeframes such as the one-minute, three-minute, five-minute, and one-hour charts to look for setups, breaks in market structure, and imbalances during the trading day.

What role does the weekly expected range play in this strategy?

The weekly expected range is used to set the overall direction of price movement. Traders should focus on opposing highs and lows within this range, using it to frame their trading strategy for the week.

How should a trader approach logging and backtesting their trades?

Traders are encouraged to log and backtest their trades by reviewing historical chart data, identifying the breaks in market structure, and measuring the number of handles offered during those breaks. This helps improve the consistency of the strategy over time.