Difference Between Mitigated and Unmitigated Orderblock and Fair Value Gap

Summary

In this video, the creator explains the difference between mitigated and unmitigated points of interest in trading, focusing on order blocks and fair value gaps. Unmitigated zones are areas where price has not tested or filled orders, retaining their power to influence price movement. Once price returns to these zones and fills the orders, they become mitigated, reducing their effectiveness. The video walks traders through how these concepts play out in real trading scenarios and emphasizes how understanding these distinctions can lead to more effective trade entries and exits. Practical examples help demonstrate these key trading principles.

Takeaways

• 😀 Unmitigated POIs are price levels that have not yet been tested or filled, meaning they still have the potential to move the price.
• 😀 Mitigated POIs occur when the price has already tested or filled the gap, reducing the energy and potential for further movement in that area.
• 😀 Points of Interest (POIs) include order blocks, fair value gaps, mitigation blocks, and breaker blocks, all of which are key areas for trade entry.
• 😀 A mitigated POI has a lower chance of pushing price in the desired direction because the orders from institutions have already been filled.
• 😀 Institutions often place large orders that may not be fully filled in the first price move, creating a reason for price to return to fill the remaining orders.
• 😀 When price returns to an unmitigated POI, it has the potential to quickly push price in the intended direction, as the level has not been tested yet.
• 😀 Once a POI is mitigated, its strength diminishes, and it is less likely to produce significant price movement in the future.
• 😀 A mitigated POI may lead to stop-outs in trading, as the market has already tested that area and filled the orders, making it less likely to reverse from that level.
• 😀 In ICT trading, tools like the Fibonacci retracement are used to identify the best areas for trade execution, especially in premium zones for selling.
• 😀 Beginners in ICT concepts can use dedicated resources, such as YouTube channels for learning at different levels (beginner, intermediate, and advanced).

Q & A

What is the difference between a mitigated and unmitigated point of interest?

A mitigated point of interest is one that has been tested by price, meaning the remaining orders have been filled, reducing its potential power to move price. An unmitigated point of interest has not been tested yet, and still holds its full potential to influence price movements.

What does the term 'point of interest' refer to in trading?

A point of interest refers to a price level or zone where a trader expects price to reverse or react, such as an order block, fair value gap, mitigation block, or breaker block.

Why does price return to a mitigated zone?

Price returns to a mitigated zone to fill the remaining orders that were not filled during the initial price movement. Institutional traders may not fill all their orders initially, and a return to the zone allows for the completion of those orders.

How does the power of a mitigated zone change compared to an unmitigated zone?

The power of a mitigated zone decreases once it has been tested because the remaining orders have been filled. Unmitigated zones retain their full potential to push price in the desired direction when price first touches them.

What is the role of institutional orders in the context of mitigated and unmitigated zones?

Institutional orders play a key role in price movement. When institutions enter trades, they may not fill all their orders immediately. Price returns to fill the remaining orders, and this process is what mitigates a point of interest.

What happens when price touches a mitigated order block or fair value gap?

When price touches a mitigated order block or fair value gap, the zone no longer holds as much power to push the price in the intended direction. It may even lead to a price movement that breaks above or below the previously established level.

How do traders determine whether a point of interest is mitigated or unmitigated?

Traders can determine whether a point of interest is mitigated or unmitigated by observing whether price has tested that level before. If price has touched and moved away from the level, it is considered mitigated; if not, it is unmitigated.

Why is it important to consider whether a point of interest is mitigated or unmitigated when trading?

It is important because unmitigated zones are likely to provide stronger price reactions, as they still have the potential to fulfill unmet institutional orders. Mitigated zones, on the other hand, may result in weaker reactions due to the completion of these orders.

What role does the Fibonacci tool play in trading using ICT concepts?

The Fibonacci tool helps traders identify key levels of price retracement, particularly in premium or discount zones, which are crucial for setting up potential trades. It aids in pinpointing areas where price might reverse, such as above a fair value gap or within a bearish order block.

How can a trader use the information about mitigated and unmitigated zones in their strategy?

A trader can use the information by targeting unmitigated points of interest for potential trades, as these zones are more likely to result in strong price movements. Conversely, they should be cautious when trading from mitigated zones, as the power of those levels is diminished.