2022 ICT Mentorship Episode 4

Summary

In this trading lesson, the instructor analyzes the EM mini S&P March delivery contract for 2022, focusing on Wednesday and Thursday's trading. They discuss identifying market structure shifts and fair value gaps using Fibonacci levels and equilibrium price points. The instructor emphasizes the importance of recognizing patterns and waiting for specific setups, encouraging students to practice and document their findings in a study journal.

Takeaways

• 📈 **Use Charts**: Always check your own charts and platforms for trading data, not just rely on others' charts.
• 📅 **Key Dates**: Pay attention to specific dates like January 26th and January 27th, 2022, for trading examples.
• 📊 **Range Identification**: Identify the range by looking at the low and high prices of a stock or index.
• 🎯 **Fibonacci Tool**: Use the Fibonacci tool to find the equilibrium price point within a price range.
• 📉 **Fair Value Gap**: Look for a price break below the old high to identify a fair value gap for potential trading opportunities.
• 🔍 **Market Structure**: Recognize market structure shifts to spot entry and exit points in the market.
• 📌 **Entry and Target**: Use the high of a specific candle as an entry point and a previous low as a target for trades.
• 📚 **Study Journal**: Keep a study journal to log your trades, observations, and the time it takes for the market to move from entry to target.
• ⏱️ **Time Analysis**: Analyze the time it takes for the market to move from a market structure shift to reaching the fair value cap.
• 🔎 **Pattern Recognition**: Train your eye to recognize recurring patterns in the market to effectively spot trading opportunities.
• 📉 **Intraday Analysis**: Focus on intraday charts, such as 5-minute charts, to identify short-term trading opportunities based on liquidity and market structure shifts.

Q & A

What is the primary focus of the lesson in the provided script?

The primary focus of the lesson is to review trading examples from Wednesday and Thursday, focusing on market structure shifts, fair value gaps, and equilibrium points using the EMini S&P and Nasdaq futures charts.

Why does the speaker emphasize using your own charts rather than just following the provided examples?

The speaker emphasizes using your own charts to reinforce the learning process and ensure you're familiar with your platform's data feed and the market behavior you are trading. It's about training your eye to recognize patterns independently.

What is the significance of the low and high points on Wednesday, January 26th in the E-mini S&P example?

The low and high points are used to define the range for applying a Fibonacci retracement, with the equilibrium (50% level) being a key area to identify potential reversals or trade setups.

What is the 'equilibrium price point' mentioned in the lesson, and why is it important?

The equilibrium price point is the 50% level of a defined price range (between a high and low). It is important because it helps traders determine when the market is overbought (premium) or oversold (discount), aiding in trade decision-making.

What is a 'fair value gap' as discussed in the script?

A fair value gap occurs when there is a break in market structure, creating an imbalance between buying and selling pressure. It represents an area where price can potentially return to, offering a good entry point for trades.

What does the speaker mean by 'break in market structure,' and how does it signal trading opportunities?

A 'break in market structure' refers to a shift in the market trend, where price action violates a key swing high or low. This shift signals a potential change in market direction, providing opportunities to enter trades, especially when combined with a fair value gap.

What is the significance of the candle marked as a 'bearish market structure shift' in the E-mini S&P example?

The marked candle indicates a point where the market breaks lower, signaling a bearish trend shift. This sets the stage for short trade opportunities, as the price trades into a fair value gap before moving downward.

Why does the speaker recommend logging examples into a study journal?

The speaker recommends logging examples into a study journal to track patterns, understand the timing of market structure shifts, and improve decision-making by reviewing how trades played out over time.

What are some factors to consider when evaluating a trade setup according to the speaker?

Key factors to evaluate include how long it takes for the market structure shift to occur, the time to reach the target, the amount of potential drawdown or risk, and whether the setup follows the specific rules taught in the lessons.

What is the purpose of identifying 'internal range liquidity' in this context?

Identifying 'internal range liquidity' helps traders locate areas of liquidity within a defined range where price is likely to react. This aids in anticipating market movements and targeting areas for entry or exit in trades.