Easiest ICT 2022 Mentorship Checklist - ICT Concepts

Summary

In this video, the presenter walks viewers through a checklist for the ICT 2022 mentorship, emphasizing the key elements of trading strategies. The process begins with identifying liquidity runs, followed by market structure shifts that create fair value gaps. The presenter demonstrates how to use these concepts on various charts, explaining how to enter trades, set targets, and manage risk. By applying this checklist to examples like Euro USD, US30, and GBP USD, viewers learn how to spot trade opportunities, targeting buy or sell side liquidity or fair value gaps. Key strategies include choosing entries based on market shifts and using lower time frames for better risk-reward ratios.

Takeaways

• 😀 Run on buy-side or sell-side liquidity is essential for the trade setup, marked by equal highs or previous daily highs.
• 😀 A market structure shift that creates a fair value gap (displacement) is crucial for identifying potential entries.
• 😀 The fair value gap should be in the premium or discount zone of the displacement leg to determine the best entry point.
• 😀 After identifying the run on liquidity and market structure shift, drop to a lower time frame for better risk-to-reward entries.
• 😀 Entries should be placed inside the fair value gap that has been created by the market structure shift.
• 😀 Targets should be set at buy-side or sell-side liquidity or within other fair value gaps in the direction of the trade.
• 😀 Risk-to-reward ratios should be carefully considered, with one example targeting a 1:5 risk-to-reward ratio for better profitability.
• 😀 In the Euro USD example, the trade was entered in the premium area of the fair value gap after the market structure shift.
• 😀 For US30, the fair value gap was found in the discount area of the displacement leg, making it a valid long entry setup.
• 😀 Always ensure trades are taken within the active session times (London or New York Killzone) to avoid entering trades during low liquidity periods.

Q & A

What is the primary focus of the trading checklist mentioned in the video?

The primary focus of the trading checklist is to identify a run on liquidity (either buy or sell side), detect a market structure shift that creates a fair value gap, and then enter a trade within that gap, targeting either buy side or sell side liquidity.

What does a 'run on liquidity' mean in the context of this checklist?

A 'run on liquidity' refers to the market moving in a way that triggers stop orders or orders placed at specific price levels, such as previous highs (buy side liquidity) or lows (sell side liquidity). These runs can indicate potential entry points for trades.

What is a market structure shift and why is it important for the trade checklist?

A market structure shift refers to a change in the trend or pattern in the market, often seen as a break of support or resistance. It is important because it indicates a potential change in market direction, which, when combined with a fair value gap, creates an opportunity for a trade.

What is a fair value gap, and how is it related to a market structure shift?

A fair value gap occurs when there is a sudden price movement that leaves an empty space or imbalance in the chart. This typically happens after a market structure shift, and the gap can be used to enter trades as price tends to fill such gaps during its movement.

How do you identify whether a fair value gap is in a premium or discount?

To determine whether a fair value gap is in a premium or discount, you draw a Fibonacci retracement from the low to the high (for a buy trade) or from high to low (for a sell trade). A gap is in premium if it's above the 50% level and in discount if it's below it.

What is the purpose of targeting buy side or sell side liquidity?

Targeting buy side or sell side liquidity helps traders identify logical exit points for their trades. These areas often coincide with previous highs or lows, where the market may reverse or continue its trend, providing potential profit-taking opportunities.

Why is it important to drop to a lower time frame when entering a trade?

Dropping to a lower time frame allows traders to fine-tune their entry points and manage their risk-to-reward ratio more effectively. It helps them spot smaller patterns and gaps that are not visible on higher time frames.

What does the term 'fair value gap' refer to in terms of trade entry?

A fair value gap refers to the area between the displacement leg and the market's current price that is expected to be filled. Traders enter the trade inside this gap, as price is likely to return and fill the gap before continuing in the desired direction.

Why is a risk-to-reward ratio important when planning a trade?

A risk-to-reward ratio is important because it helps traders assess the potential profit relative to the risk of loss. A favorable risk-to-reward ratio ensures that the potential rewards outweigh the risks, increasing the likelihood of profitable trades over time.

What role does the 'London or New York Killzone' play in trade timing?

The 'London or New York Killzone' refers to the specific times when the London or New York trading sessions are active. These periods are considered optimal for high volatility and liquidity, and trades are often timed to take advantage of price movements during these hours.