Episode 8: Finding Market Makers Models (MMXM's) - ICT Concepts

Summary

This trading tutorial delves into market maker models, explaining how to identify and understand MMX and MMBM patterns. It emphasizes the importance of original consolidation, accumulation, and distribution phases, and the significance of time frame alignment. The presenter illustrates concepts with chart examples, highlighting the difference between buy and sell models and the impact of smart money reversals on price movement. The goal is to recognize market maker strategies to make informed trading decisions.

Takeaways

• 📈 Market Maker Models (MMX and MMBM/MMSM) are strategies to identify buy or sell patterns based on price action and time frame analysis.
• 🔍 Original consolidation is a prerequisite for identifying a market maker model; without it, the pattern is merely a regular draw on liquidity.
• 💡 In a Market Maker Buy Model (MMBM), down-closed candles should almost always support higher prices, indicating accumulation.
• 📉 Conversely, in a Market Maker Sell Model (MMSM), up-closed candles should support lower prices, indicating distribution.
• 🕰 Time frame alignments are crucial; reversals on lower time frames are retracements on higher time frames, and vice versa.
• 📊 Market Maker Buy Models involve accumulation phases on the buy side of the curve and distribution phases on the sell side.
• 📝 The script emphasizes the importance of understanding the difference between accumulation and distribution phases within market maker models.
• 🌐 Examples provided in the script illustrate how to identify market maker models using chart patterns and price action in various financial instruments like S&P 500 ES Futures.
• 📌 Fair value gaps and order blocks are significant in market maker models, indicating potential reversals and accumulation or distribution phases.
• 🔑 The script highlights the importance of trading on higher time frames to avoid confusion and to identify true market maker models effectively.
• 🚀 The final takeaway emphasizes the fractal nature of price, where understanding the relationship between different time frames can lead to better trading decisions.

Q & A

What is the primary focus of the 'Market Maker Models' module?

The primary focus of the 'Market Maker Models' module is to provide an in-depth understanding of how to identify market maker models and explain what they are in the context of trading.

What does 'MMX' stand for in the context of the trading module?

'MMX' stands for Market Maker X model, which is a specific type of market maker model that involves a retracement on a higher time frame and a reversal on a lower time frame.

What are the two main types of market maker models mentioned in the script?

The two main types of market maker models mentioned are the Market Maker Buy Model (MMBM) and the Market Maker Sell Model (MMSM).

Why is the original consolidation important in identifying a market maker model?

The original consolidation is important because all market maker models start with it. Without an original consolidation, the pattern is not identified as a market maker model but rather as a regular draw on liquidity or just a buy or sell side of the curve.

How do down closed candles behave in a Market Maker Buy Model?

In a Market Maker Buy Model, down closed candles should almost always support the price higher, indicating an accumulation phase on the buy side of the curve.

What is the significance of time frame alignments in market maker models?

Time frame alignments are significant because they help in understanding the relationship between different time frames and how reversals and retracements occur between them. Higher time frame reversals are retracements on lower time frames, and vice versa.

Can you explain the concept of 'order blocks' in the context of market maker models?

Order blocks refer to areas where significant buying or selling pressure is observed, leading to price movements. In market maker models, these blocks can indicate accumulation or distribution phases and are crucial for understanding the market structure and potential future price movements.

What is the difference between an accumulation phase and a distribution phase in market maker models?

An accumulation phase in a market maker model is when there is buying pressure, often occurring after a run on stops, preparing for an upward price movement. A distribution phase, on the other hand, is when selling pressure is present, often after a significant price increase, leading to a potential price decrease.

How does the concept of 'fair value gap' relate to market maker models?

A 'fair value gap' is a price area that represents a significant change in the market structure. It can act as a draw for liquidity in market maker models, where the price is expected to move towards this gap after an internal or external liquidity event.

What is the importance of understanding higher time frames when trading market maker models?

Understanding higher time frames is crucial when trading market maker models because it helps traders identify retracements and reversals that may not be apparent on lower time frames. This understanding can lead to better entry points and risk management in trading.

How can traders apply the knowledge of market maker models in real trading scenarios?

Traders can apply the knowledge of market maker models to identify potential accumulation and distribution phases, understand the market structure, and make informed decisions about entry and exit points, as well as risk management strategies.

Outlines

00:00

📈 Introduction to Market Maker Models

This paragraph introduces the concept of market maker models (MMX) in trading. It explains that MMX stands for Market Maker X model and involves a retracement on a higher time frame leading to a reversal on a lower time frame. The paragraph distinguishes between Market Maker Buy Model (MMBM) and Market Maker Sell Model (MMSM), emphasizing the importance of original consolidation as a starting point for these models. It also clarifies misconceptions about market maker models on social media and outlines the characteristics of down-closed and up-closed candles in MMBM and MMSM respectively. The paragraph concludes with a discussion on order blocks and time frame alignments, providing a foundation for understanding market maker models.

05:00

📉 Market Maker Sell Model Analysis

The second paragraph delves into the specifics of a market maker sell model, beginning with an original consolidation followed by an accumulation phase. It discusses the smart money reversal (SMR), which is characterized by a run on stops and the creation of high resistance liquidity. The paragraph explains the displacement lower and the subsequent support for lower prices by up-closed candles. It also provides an example using the S&P 500 ES Futures, illustrating how to identify market maker models through price action and time frame analysis. The summary includes a detailed walk-through of the trading chart, highlighting key phases such as distribution, order pairing, and accumulation beneath market lows.

10:01

📊 Market Maker Buy Model and Time Frame Alignments

This paragraph focuses on the market maker buy model and its relation to time frame alignments. It describes the process of identifying accumulation and distribution phases, and how they lead to market structure shifts. The paragraph uses the example of the NASDAQ chart to illustrate the setup for a market maker sell model due to the absence of distribution phases after a consolidation. It also explains how to trade using the five and fifteen-minute charts for better execution and risk-reward ratio, emphasizing the importance of understanding higher time frame retracements when trading on lower time frames.

15:03

📝 Conclusion and Further Discussion on Market Maker Models

The final paragraph wraps up the discussion on market maker models, inviting viewers to ask questions on Discord for further clarification. It reiterates the importance of staying on higher time frames to avoid confusion and to identify true market maker models. The paragraph also touches on the concept of price being fractal, where reversals on lower time frames are retracements on higher ones. It concludes with a note on the importance of recognizing original consolidations and displacement as key elements in trading strategies involving market maker models.

Keywords

💡Market Maker Models

Market Maker Models (MMX) are a concept used in trading to identify patterns that represent the actions of market makers, who are firms or individuals that stand ready to buy and sell securities at any time, thus providing liquidity to the market. In the video, the presenter discusses how to identify these models and their importance in understanding market dynamics. The script mentions both MMX and MMBM (Market Maker Buy Model) and MMSM (Market Maker Sell Model), illustrating how these models are used to predict price movements based on the behavior of market makers.

💡Retracement

A retracement in trading refers to a temporary price movement in the opposite direction of the dominant trend. In the context of the video, retracements are used to identify potential reversal points in the market. The script explains that a retracement on a higher time frame can indicate a reversal on a lower time frame, which is a key aspect of understanding market maker models.

💡Consolidation

Consolidation in the financial markets is a period of price movement where the price of a security or index remains within a certain range, typically following a significant price movement. In the script, the presenter emphasizes that all market maker models start with an original consolidation, which is a critical starting point for identifying market maker patterns.

💡Accumulation Phase

The accumulation phase is a period during which investors, often institutional or 'smart money,' are believed to be buying a security in anticipation of a future price increase. In the video, the presenter describes how in a market maker buy model, the accumulation phase occurs during a consolidation, indicating a potential future upward price movement.

💡Distribution Phase

The distribution phase is the opposite of the accumulation phase and occurs when sellers are actively unloading their positions, often leading to a decrease in the price of a security. In the script, the presenter explains that in a market maker sell model, the distribution phase signifies a potential downward price movement following a consolidation.

💡Fair Value Gap

A fair value gap in trading refers to a price level that is considered to be the 'fair' or intrinsic value of a security, often based on fundamental analysis. In the video, the presenter discusses how fair value gaps can act as resistance or support levels and are integral to understanding market maker models, as they can indicate potential reversals or continuations of trends.

💡Order Blocks

Order blocks in trading are areas on a price chart where significant buying or selling orders are placed, often leading to changes in the market structure. The script mentions order blocks in the context of market maker models, explaining how they can indicate potential reversals or continuations of market trends based on the behavior of accumulated orders.

💡Smart Money Reversal (SMR)

Smart Money Reversal refers to a change in the market trend that is believed to be driven by large institutional investors or 'smart money.' In the video, the presenter describes SMR as a critical moment in market maker models where significant price movements can occur, often following a run on stops and leading to a high resistance liquidity run.

💡Time Frame Alignments

Time frame alignments in trading refer to the relationship between different time scales on a price chart, such as daily, hourly, or minute-based charts. The script explains the importance of understanding these alignments for identifying market maker models, as they can help traders recognize retracements and reversals across different time frames.

💡Liquidity Run

A liquidity run in trading is a rapid price movement driven by a surge in trading volume, often as a result of significant buying or selling pressure. In the video, the presenter discusses how liquidity runs can occur in market maker models, particularly following a smart money reversal or a run on stops, indicating a potential shift in market sentiment.

💡Parabolic Move

A parabolic move in trading describes a rapid and sharp price increase or decrease that follows a curved pattern, resembling a parabola. The script uses the term to describe a strong price movement that occurs after a smart money reversal in a market maker model, indicating a significant shift in the market's direction.

Highlights

Market Maker Models (MMX and MMBM/MMSM) are introduced as key concepts for understanding market dynamics.

MMX stands for Market Maker eXecution, and MMBM/MMSM refers to Market Maker Buy/Sell Models.

Market Maker Models always start with an original consolidation, which is essential for their identification.

In a Market Maker Buy Model, down-closed candles should almost always support higher prices.

In a Market Maker Sell Model, up-closed candles should support lower prices.

Order blocks and time frame alignments are critical for understanding market maker models.

Retracements on higher time frames and reversals on lower time frames are key to identifying market maker models.

Examples of Market Maker Sell Models are provided, illustrating accumulation and distribution phases.

The importance of recognizing original consolidation and the subsequent phases in market maker models is emphasized.

Charts of S&P 500 ES Futures are used to demonstrate the application of market maker models.

The concept of fair value gaps and their role in market maker models is explained.

A detailed walk-through of a 5-minute chart illustrates the intricacies of market maker buy models.

The video clarifies common misconceptions about market maker models and their misinterpretation on social media.

The NASDAQ chart is used to show how choppy price action can set up for future market maker models.

The importance of trading on higher time frames to avoid confusion from lower time frame reversals is highlighted.

The video concludes with an invitation for viewers to ask questions on Discord for further clarification.

Transcripts

welcome back to the trading Den in

today's module we will be going over the

market maker models we are going to be

doing a deep dive into how to identify

the market maker models and what they

are so mm XM it stands for Market maker

X model A retracement on the higher time

frame is a reversal on the lower time

frame remember that so MMX mmbm is a

market maker buy model so you just

replace the X with whichever side of the

curve we are on a market maker model is

a idea of buy side and sell side of the

curve so Market maker models are

abbreviated mm BM Market maker buy model

and mm SM Market maker cell model all

all and I want you to remember all

because there is a lot of people on

social media that just say everything's

a market maker model which is completely

wrong all Market maker models start with

an original consolidation all of them if

it if it does not have an original

consolidation it is just buy side or

sell side of the curve that is all it is

it is just a regular draw on liquidity

if it does not have an original

consolidation it is not identified as a

market maker model so with that out of

the way that just frustrates me sorry

anyways in a market maker buy model all

down closed candles should support price

higher obviously you have your losses

that is the reason I said almost always

almost is the key word there almost

always in a market maker buy model the

down closed candles should support price

higher in a market maker sell model all

upclose candles should support price

lower so back to the order blocks that's

what these are so Market maker buy

models whenever we have a little cons

consolidation phase it is an

accumulation phase on a market maker buy

model on the buy side of the curve now

Vice Versa Market maker cell model on

the cell side of the curve is a

distribution phase now remember remember

the time frame alignments and remember

reversals are only retracements on the

higher time frames reversals on the

lower time frames are retracements on

the higher time frames also external to

internal so the time frame alignments

just to refresh your mind if you did not

take your notes unbelievable but monthly

PD arrays into a daily Market maker

model weekly to 4H hour Market maker

model yeah right there they are just

read them so let's get into the charts

and show you some Market maker model

examples so here is a depiction of what

a market maker sell model would look

like we start off with our original

consolidation we have an accumulation

phase second stage accum accumulation we

have a smart money reversal that is when

we have a run on stops for order pairing

and to create a high resistance

liquidity run at this high and then we

get displacement lower we have a run on

stops and then from here on down or up

Clos candles should support price to go

lower first stage distribution Happening

Here second stage here until we hit that

overall original consolidation now for a

market maker buy model you would just

flip this to the other side this is

always buy side of the curve is always

accumulation phases sell side is always

distribution phases let's head into the

charts so here we are on the S&P 500 ES

Futures right here we see internal

liquidity daily fair value Gap so what

comes after internal liquidity whenever

we close back inside the range or above

this bullish fair value Gap external

range liquidity becomes the draw so with

a daily PD aray 1eh hour Market maker

buy model let's head into the 1 hour so

here we are on the hourly es chart you

can see that we have an original

consolidation right here on the S&P 500

right here when we get this down move

with a break of structure now we have a

market structure shift we have a run on

stops what is that creating it is

creating a high resistance liquidity run

until we reach that draw in liquidity so

right here is your distribution phase

one you have a run on stops displacement

lower

consolidation get that move back down

right before we take internal we have

another distribution phase so right here

is your second distribution phase and

then you could even call this fair value

Gap right here third stage distribution

so then we have a run on stops this is

called your smart money reversal

whenever we have a low in this case

since it is a uh bearish example turning

into a market maker buy model this right

here this run on stops what is that

remember the turtle soups this is order

pairing we are pairing orders beneath

this low and this low over here so we

are pairing orders down here for smart

money to accumulate their position so we

have SMR right here accumulation beneath

lows and then we start the buy side of

the curve for that external draw on

liquidity so right here would be your

accumulation phase

one right here we label this as

accumulation phase one now if we head

down to the 5 minute this retracement

right here is a 5 minute Market maker

buy model to this High because we have

an hourly fair value Gap

internal to external this move right

here looks to be a reversal on the lower

time frames it is a retracement to turn

into a market maker buy model let's head

down to the five minute and look at this

price action so right here this line is

representing that hourly fair value Gap

right here we have an original

consolidation on the 5 minute chart

right here is that hourly external level

right here what do we get a run on stops

High Resistance High we have a high

resistance liquidity run right here

notice we come up this is first stage

distribution in this fair value Gap

right here let's mark out right there

fair value Gap here distribution phase

one we have a second stage distribution

before what before the order pairing so

we have order pairing happening right

here and that is why you get this

parabolic move notice we go straight to

this High there is no hesitation there

there is no pullbacks this candle right

here when this forms this is now going

to break away all of these gaps the only

entry would have been CE of this Wick

this is a timebase liquidity Wick

because we come up test the fair value

Gap now this Wick right here is going to

act as support whenever we go on to buy

side of the curve so this right here

even though it is a straight up

parabolic move this turtle soup this

accumulation here would have been your

only entry and then CE and then when

this candle forms and this candle closes

above you're not getting an entry down

here this is going straight to this

external level because market makers

have already done their job think of it

why would the market makers okay think

logically why would the market makers

bring this this price action back down

here whenever they have already

accumulated here and down here beneath

all these retail lows and right here you

offload more of your position right here

they are accumulating right here they

run your stops boom second stage uh

first first stage second stage the smart

money reversal is the accumulation to

send us straight up that is why you do

not get your entry the market makers

have done their job think we are already

in that hourly imbalance we have just

had a run on stops now we get

displacement higher Market structure

shift as soon as we close above this

candle here changing the state of

delivery we are off to the race races

volume imbalance that's the only these

are the only entries you don't get your

fair value Gap nothing but as you see

that hourly pullback looks like a a

reversal on the 5 minute that is why

people get confused and ICT Traders get

confused on why they get stopped out so

much because they are stuck here and not

paying attention to those higher time

frames so right here is that first stage

accumulation on the hourly right here is

that second stage and then we have the

run on buy side so let's head into

another example so here we are on the

4our NASDAQ chart right here we see

internal liquidity also we have an old

low right here New York session doesn't

start until right here so right here we

see that we are in this 4H hour PD array

what time frame alignment aligns with

the 4H hour the 15 minute so we just

drew into

internal external becomes the draw so

let's head down to the 15 so dropping

down to the 15minute you can see an

original consolidation up here and then

we have all of this choppy price action

throughout the overnight session now I

want you to realize whenever we have

something like this this right here is

setting up for a market maker model in

the future whenever we have this

consolid and don't have any distribution

phases so right here you could call this

distribution because we do accumulate

here but we also accumulate all

throughout here this right here would be

the only accumulation phase when we run

through here this High pair orders to

drop down to pair orders for the market

maker buy model so this right here is

setting up for a market maker sell model

in the near future well I shouldn't say

near because we are in the most bullish

market and I don't know why I'm on paper

trading right now but anyways this would

be your only distribution phase in this

example so we just had order pairing

beneath this low now we are ready to go

to buy side liquidity so whenever we get

this Market structure shift right here

this is your first stage accumulation in

this fair value Gap so first stage

accumulation then we have our second

stage right here within this fair value

Gap

right there now this pullback right here

is a market maker buy model to Target

external on the uh one minute chart so

let's head down to the one minute so

right here on the one minute chart you

can see this 15minute fair value Gap

let's get rid of that now up here is

that external level you can see that we

had accumulation up here now we have an

original consolidation on the one minute

chart you can see we dropped down first

stage distribution second stage now

we're having order pairing now

throughout here this choppy price action

is doing

what tell me now answer

it low resistance liquidity run failure

swing failure swing failure failure

failure notice as soon as we run this

first High here's your first stage

distribution then we're off so right

here this order block when this is

formed and this candle closes above here

we're not coming back down here we're

going straight to this external level on

the 15 15 minute chart that is how the

reversals on the lower time frame are

just retracements on the higher time

frame that is why I am trading the five

and 15 minute charts for executions I'm

not looking at this price action I would

have just longed the 15minute fair value

Gap I know what's going on on these

charts because I have looked at those

charts for so long and then as you see

we eventually does it hit the same day

yeah the 20 third eventually get up

there at night time actually so this

hits at night at about 8:00 we hit that

external draw on liquidity up

here so here we are on the hourly chart

you can see this hourly fair value

Gap what happens after internal is

processed external becomes the draw so

this high is now becoming the draw and

what time frame aligns with the hourly

the 5 minute let's head down there so

here's the 5 minute chart you you can

see we have an original consolidation

not a lot but this is an original

consolidation right here so throughout

here we finally get our run on

stops when these candles are coming

up notice what is here an inverse fair

value Gap notice bodies respect it so

here first stage

distribution with these up closed

candles right here is your second stage

inside this fair value Gap order pairing

is happening beneath these lows right

here is your first stage accumulation in

this fair value Gap let me get rid of

the let me clean this up so high taken

distribution phase one in this inverse

fair value Gap distribution phase two in

this fair value Gap right here with this

Wick order pairing is going on beneath

these lows and we have just hit that

hourly fair value Gap right here is

first stage accumulation in this fair

value Gap and notice oh we went over

this example in the order Block video I

didn't even notice that I just randomly

found this on my chart so so right here

notice respect the order block all up

closed C or down Clos candles in a

market maker buy model this is now a

propulsion block because this candle got

support from previous order block so dis

or accumulation phase two and then that

right here we have another stage of

accumulation this candle comes down

tests and then we run this high and then

this candle obviously holds it as well

to push us higher and then we hit that

external draw on liquidity which was

that hourly high so this this right here

we are on the 5 minute chart I don't

know if I'm going to be able to go down

this low but this is a market maker buy

model to Target this

high on the 30C

chart so here we are on the 302nd chart

you can see we have an original

consolidation right here this is what I

am talking about when I say reversals

are just higher time frame retracements

and you won't get as many entries

whenever you're trading something like

this so right here you can see that we

are pairing orders beneath a low right

here we have an original consolidation

we have displacement higher off of a

higher time frame fair value got the 5

minute right here is your entry for that

original consolidation so

boom stop these are going to be like one

to ones so this is why I trade the five

and 15 minute you get way better risk to

reward but this is what I mean when

price is fractal so reversals on the

lower time frame are just retracements

on the higher so this looks like a

reversal on the 302nd if this was a 1

minute chart and this was a 15-minute

fair value Gap this would also look like

a reversal so

stay on the higher time frames so that

is going to be all for the market maker

models video if you have any questions

please ask me in the Discord I can go

over any questions you may have whatever

it may be I am not saying I know

everything but what I do know about the

things I know I know a lot about so any

questions just shoot a message at me in

the Discord and let's move on to the

next module