ICT Daily Bias (How It Actually Works)

Summary

In this video, the speaker demystifies the concept of daily bias in trading, emphasizing that 99% of online information is misleading. Using ICT's teachings, the speaker explains how to identify high-probability setups based on liquidity and imbalances. Key elements include monitoring news events for volatility, understanding the market's draw towards liquidity or imbalances, and recognizing the importance of patience. The video covers specific scenarios like liquidity to liquidity, imbalance to liquidity, and more, illustrating when daily bias is effective and how to avoid common trading misconceptions.

Takeaways

• 😀 ICT bias revolves around understanding the market's primary drivers: liquidity and imbalances.
• 😀 The economic calendar is crucial in predicting high volatility days for trading, specifically around medium to high-impact news events.
• 😀 Daily bias is only effective when price is clearly moving toward liquidity or an imbalance, and these movements must be one-sided.
• 😀 Four key scenarios to watch for in daily bias: liquidity to liquidity, liquidity to imbalance, imbalance to liquidity, and imbalance to imbalance.
• 😀 Liquidity is the driving force behind market movement, where price targets old highs or lows (liquidity pools) or fills imbalances.
• 😀 Imbalances (or fair value gaps) are areas where there was inefficient price delivery, and they play a major role in daily bias formation.
• 😀 Price can run from liquidity to an imbalance, and traders must look for displacement (clear movement away from liquidity) to signal when to act.
• 😀 Once price runs out liquidity, especially at all-time highs, it is more likely to consolidate or retrace, making it difficult to predict daily bias.
• 😀 When price is at all-time highs, there is no clear daily bias, and the best strategy is to target previous highs until a reversal or consolidation occurs.
• 😀 When the market doesn’t provide a clear bias on the daily timeframe, traders can shift to lower timeframes (e.g., 60-minute or 4-hour) to find clearer setups.

Q & A

What is ICT bias and why is it misunderstood?

ICT bias refers to the market's tendency to move towards liquidity or imbalances. It is often misunderstood because many traders misrepresent its true nature, especially in daily bias scenarios. The script explains that ICT bias is about understanding these movements and applying them correctly, especially through time and economic events.

What role does time play in ICT bias?

Time is crucial in ICT bias because price moves are often aligned with specific periods of volatility, which are influenced by economic events. By using tools like the economic calendar, traders can anticipate when volatility is likely to increase and plan accordingly for liquidity runs or imbalance corrections.

How can economic events influence ICT bias?

Economic events, such as those listed on sites like ForexFactory, indicate when volatility is likely to increase. By focusing on high or medium impact news, traders can predict moments when price may move aggressively towards liquidity or imbalances, aligning their trades with potential market shifts.

What is a fair value gap and why is it important in ICT bias?

A fair value gap, also known as an imbalance, refers to areas where price delivery is inefficient. These gaps are important because they indicate potential areas where the market may retrace or expand as it seeks to balance out the price delivery, thus offering trading opportunities in the context of ICT bias.

What is meant by a 'clear run from liquidity to liquidity'?

A 'clear run from liquidity to liquidity' refers to a price movement that takes out a clear liquidity pool (e.g., previous highs or lows) and then continues to another liquidity pool. This is a straightforward scenario where the market is moving towards levels of liquidity, indicating a strong, predictable bias.

How can traders identify when price is likely to move from liquidity to imbalance?

Traders can identify this scenario by looking for moments when the market has run out of liquidity and is then expected to fill an imbalance, which is a fair value gap. Once the market has exhausted liquidity, it will likely move to an area where price delivery was inefficient, providing a trading opportunity.

What is the significance of the 'previous day high/low' in ICT bias?

The 'previous day high/low' is significant because it serves as a reference point for identifying liquidity pools. These levels can act as targets for price movement, and once they are breached, it can indicate a strong bias towards either continuation or reversal, helping traders frame their daily bias.

What happens when price reaches a liquidity pool and there's no further displacement?

When price reaches a liquidity pool and fails to displace further, the market may enter consolidation or reverse direction. In these cases, there is no clear daily bias, and traders are advised to wait for more definitive price action or to use lower time frames to determine the next move.

Why is patience important in framing a daily bias?

Patience is crucial because the market doesn't always present clear and predictable scenarios every day. High-probability setups take time to materialize, and forcing trades without clear alignment with ICT bias can lead to low-probability outcomes. It's essential to wait for clear signs of liquidity or imbalance runs.

What should traders do if they cannot frame a daily bias?

If a trader cannot frame a daily bias, they should rely on lower time frames, such as the 60-minute or 4-hour chart, to establish a higher time frame bias. This approach helps adapt when the daily bias isn't clear and still provides an opportunity to trade with a clearer narrative.