ICT Mentorship Core Content - Month 03 - Institutional Sponsorship

Summary

This video focuses on advanced trading strategies based on price action and institutional market behavior. The speaker explains key concepts like order blocks, liquidity voids, and buy stop liquidity, teaching how to identify market structure shifts. By examining price movements, the speaker demonstrates how to anticipate institutional activity, such as large buy and sell orders, and how to capture price movements for profitable trades. The focus is on understanding fractal patterns and leveraging these insights for precise entry and exit points in the market.

Takeaways

• 😀 The key concept of the script revolves around price action analysis, particularly focusing on institutional order flow and liquidity.
• 😀 A primary focus is understanding how institutional sponsorship impacts price movement, specifically in terms of buy stop liquidity above old highs.
• 😀 Price moves in 'grades', where each stage of a price swing has its own logical level and institutional support, helping traders predict future price direction.
• 😀 Institutional sponsorship is identified when price does not retrace past certain levels, especially after hitting equilibrium or midway points in price swings.
• 😀 The 'Power Three' concept is introduced, suggesting buying near the daily open price on an up day and aiming for a higher close.
• 😀 Buy stop liquidity above old highs is a key target for institutional players, which is used to push prices higher for their own profit.
• 😀 A bullish order block occurs when price reacts at a key level, particularly after breaking through old lows, indicating institutional buying pressure.
• 😀 Price actions like down candles prior to an up move and up candles prior to a down move are important signals to identify institutional order blocks.
• 😀 The importance of time frames (like the London or New York sessions) is highlighted, with specific order blocks forming during these sessions providing actionable opportunities.
• 😀 Traders are advised to focus on identifying liquidity voids, old lows and highs, as well as using these levels to predict price movements and capitalize on institutional sponsorship.

Q & A

What is the significance of understanding institutional sponsorship in price action trading?

Institutional sponsorship is key in identifying price movements that are backed by large market participants, such as banks or hedge funds. By recognizing areas where institutional orders are likely to be placed, traders can align their strategies with the market's larger trends, improving the probability of success in their trades.

How can buy stop liquidity be used in price action analysis?

Buy stop liquidity refers to the buy orders placed above certain price levels, often just above previous highs. Traders look for price to break these levels and run through the buy stops, which can cause a sharp price surge. Identifying these levels helps traders anticipate where price might move next.

What role do 'old highs' and 'old lows' play in price action trading?

Old highs and old lows are critical in identifying key price levels that can act as support or resistance. Price action traders use these levels to spot potential areas for price reversals or breakouts. When price violates an old high or low, it often leads to a strong directional move.

What is an order block, and how does it influence trading decisions?

An order block is a price zone where institutional orders are accumulated, often marked by a series of down candles before a move up, or up candles before a move down. These blocks are seen as areas of institutional sponsorship and can provide strong support or resistance, guiding traders to potential entry points.

Why is it important to focus on the opening price in New York or London sessions?

The opening price in the New York or London sessions is significant because it often sets the tone for the day’s price action. Traders look for price to either consolidate or react to these opening prices, identifying opportunities to buy or sell based on how the market reacts to these key levels.

How does the concept of 'equilibrium' play a role in identifying trading opportunities?

Equilibrium refers to a price point where the market is balanced between buying and selling pressure. Traders use this as a reference point to determine potential breakouts. If price is trading near equilibrium, they may wait for a bullish or bearish order block to form before entering a trade, signaling that the market will move away from this point.

What is the difference between 'bullish' and 'bearish' order blocks?

A bullish order block is formed when down candles occur at an area of support, indicating that institutional buying interest is likely to push price higher. A bearish order block, on the other hand, occurs when up candles form at a resistance level, suggesting that institutional selling will push price lower.

What is the 'Power 3' concept, and how does it help in day trading?

'Power 3' is a strategy that involves identifying the opening, high, and low of a daily candle. The idea is to buy near the opening on an up day and sell near the close, capturing the bulk of the daily price range. This strategy helps traders focus on high-probability moves within the daily range.

What does it mean when price fails to return to a previous high after a breakout?

When price fails to return to a previous high after a breakout, it indicates a lack of selling pressure and a continuation of the upward trend. This is a sign that institutional sponsorship is likely at play, supporting the price to move higher towards the next target, which could be a further old high or liquidity pool.

How does the concept of liquidity voids affect price movements?

Liquidity voids are areas where there is a lack of orders or low trading volume. Price tends to move through these voids quickly because there are fewer orders to absorb it. Recognizing liquidity voids helps traders predict rapid price movements and potential breakout opportunities.