2022 ICT Mentorship Episode 6

The Inner Circle Trader
4 Feb 202248:19

Summary

TLDRThis video teaches a powerful trading strategy based on fair value gaps (FVG) and market structure shifts. The approach involves identifying liquidity zones and using precise candle formations to guide entries and exits. Traders start by analyzing higher timeframes (like 15-minute charts) to spot key market shifts and then zoom into lower timeframes (down to 1-minute) for more accurate trade setups. The strategy emphasizes patience, risk management, and using demo trading to practice. The focus is on identifying market moves with a clear entry and exit plan, ensuring traders can engage with the market confidently.

Takeaways

  • 😀 Identify fair value gaps (FVG) between price actions for trade opportunities. A FVG forms when a price runs higher and then retraces, leaving a gap in price.
  • 😀 Understand the importance of market structure shifts. A bullish shift is signaled when the market breaks above short-term highs after running into sell stops.
  • 😀 Trade only when a clear market structure shift has occurred, and a fair value gap is present in the range between the displacement high and low.
  • 😀 Use a multi-timeframe approach for precise entries. Start with a higher timeframe like 15 minutes, then refine your entry using lower timeframes (e.g., 5, 3, 1 minute).
  • 😀 Recognize the concept of 'internal' and 'external' range liquidity. Internal range liquidity is within a range, while external is beyond the range, such as below significant lows.
  • 😀 Place stops above swing highs or lows depending on the chosen entry point, and be prepared to absorb risk in micro contracts for more flexibility.
  • 😀 Ensure your risk-reward ratio aligns with the market conditions. The method encourages a conservative approach to managing risk while targeting reasonable profit levels.
  • 😀 When trading on shorter timeframes, expect some price noise. Focus on the bigger picture and don’t get distracted by small pullbacks or reversals.
  • 😀 The strategy involves observing price action carefully and waiting for specific setups, rather than reacting impulsively. Trust the patterns as they develop.
  • 😀 Always backtest and practice the strategy on demo accounts before trading live. The instructor stresses the importance of mastering the model first before risking real money.

Q & A

  • What is the primary concept being taught in the video?

    -The video focuses on a trading strategy based on price action, specifically using fair value gaps (FVG) and market structure shifts to identify trade opportunities.

  • How does the market structure shift in a bullish scenario?

    -In a bullish market structure shift, the market first trades below a recent low to induce a sell stop run, then breaks a short-term high with energetic displacement to signal a potential upward move.

  • What is a fair value gap, and why is it important in this strategy?

    -A fair value gap is the price range between a displacement high and low, formed when the market breaks structure. It's important because it indicates areas of price inefficiency where the market is likely to revisit, providing entry points for trades.

  • What time frame should traders start analyzing price action on, according to the instructor?

    -Traders should start analyzing price action on a 15-minute time frame to identify the key market structure and key levels before refining entries on lower time frames.

  • What role do lower time frames play in this trading approach?

    -Lower time frames (such as 1-minute, 2-minute, etc.) are used to refine entries and find smaller fair value gaps, allowing for precise trade execution after confirming the structure on higher time frames.

  • How should traders handle their stop losses when entering a trade?

    -Traders should place stop losses above the high of the candle where the fair value gap formed or the swing high, depending on their risk tolerance and the trade setup.

  • What is the significance of using multiple time frames in the strategy?

    -Using multiple time frames helps confirm trade setups and refine entry and exit points. It ensures the trader is aligning with the broader market structure on higher time frames while executing precise entries on lower time frames.

  • What is the 'external range liquidity,' and how does it affect trade exits?

    -External range liquidity refers to sell stops or lows below the current market price. It's used as a target for profit-taking, as the market is likely to target these levels after breaking the internal range liquidity (mid-range of a price move).

  • What is the purpose of the TradingView market replay feature in the video?

    -The TradingView market replay feature is used to demonstrate real-time trade setups and execution, allowing viewers to backtest the strategy and see how it plays out in different market conditions.

  • How can traders use Fibonacci retracements in conjunction with this strategy?

    -Fibonacci retracements are used to identify equilibrium levels (50%) within a price range. Traders can look for fair value gaps around these levels, with a focus on discounts (below 50%) for potential entries and exits.

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Transcripts

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Связанные теги
Trading StrategyMarket StructureFair Value GapsLiquidity RunsMulti-TimeframeEntry PointsExit StrategyForex TradingScalpingTechnical AnalysisPrice Action
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