NEVER be wrong about the direction of the market again - ICT Concepts (Orderflow)

Summary

In this video, the concept of institutional order flow and institutional sponsorship within trades is explained. The video defines order flow, teaches how to spot changes in it, and shows how to use institutional sponsorship to improve trade probabilities. Through detailed examples on various time frames (daily and 15-minute), the video illustrates how to spot a change in the state of delivery, the significance of order blocks, and how they are used to predict market direction. The presenter also shares insights on identifying liquidity zones and market maker models, offering valuable trading strategies and techniques.

Takeaways

• 😀 Order flow refers to the movement of price within certain market structures, such as PD arrays, and is guided by institutional sponsorship.
• 😀 Identifying institutional order flow helps increase the probability of successful trades by recognizing the direction of market pressure.
• 😀 A 'change in the state of delivery' happens when market sentiment shifts from selling to buying or vice versa, often represented by order blocks.
• 😀 An order block represents a change in the state of delivery and can act as support or resistance during market retracements.
• 😀 Bullish order flow is confirmed when an order block is respected as support, leading to a continuation of upward price movement.
• 😀 Bearish order flow can be identified by the formation of a market structure that shows a shift in direction, such as breaking lower lows or rejecting certain levels.
• 😀 Fair value gaps are areas on a price chart where liquidity is missing, and they often get filled or respected in future price movements.
• 😀 Recognizing price action in a lower time frame, such as the 15-minute chart, can further confirm changes in market direction and order flow.
• 😀 The combination of institutional sponsorship, fair value gaps, and order block analysis can predict future price movement and direct trading decisions.
• 😀 Trading with the anticipated direction of order flow increases the likelihood of targeting liquidity areas, such as sell-side or buy-side liquidity, for optimal trades.

Q & A

What is institutional order flow?

Institutional order flow refers to the pattern of orders placed by large institutions or entities in the market, reflecting their buying or selling activity. It can be identified through price action, such as the holding of specific price levels or the behavior of certain market structures like order blocks.

How does order flow impact trade decisions?

Order flow impacts trade decisions by helping traders identify the direction of the market. By understanding institutional buying or selling, traders can position themselves in alignment with the institutional flow, increasing the probability of successful trades.

What is an order block, and how does it indicate a change in market structure?

An order block is a key price zone where significant institutional activity has occurred. It marks a shift in market structure from one direction to another. A change in market structure occurs when price moves past certain key levels (such as a low or high), indicating a shift in buying and selling pressure.

What is the significance of a fair value gap in market analysis?

A fair value gap occurs when price moves rapidly through an area, leaving behind an imbalance in supply and demand. Traders look for these gaps as they often represent areas where the market will return to balance. They are used to predict price retracements and possible continuation of the trend.

How can you spot a bullish order flow?

Bullish order flow can be spotted when price action shows a consistent series of higher highs and higher lows, with order blocks being respected as support levels. If price retraces into these support zones and continues higher, it suggests that institutions are buying, creating a bullish order flow.

What role do equal highs play in analyzing order flow?

Equal highs are significant because they represent a liquidity pool where orders may accumulate. When price reaches these equal highs and gets run out, it often signifies that the previous resistance has been overcome, potentially leading to a new price movement in the direction of the order flow.

What is a change in the state of delivery?

A change in the state of delivery refers to a shift from one type of market behavior to another, often indicated by a reversal in price action. It is typically marked by the formation of an order block, where price moves past a significant level, signaling a shift from selling to buying or vice versa.

How does the concept of market maker models apply to the script?

The market maker model described in the script refers to the process where price moves towards sell-side or buy-side liquidity, often through institutional order flow. These models show how price action tends to seek out areas of liquidity (like equal lows or highs) before making significant moves in the market.

What is the role of news events in determining market flow?

News events can disrupt or confirm the market flow. Traders should be cautious around news as it can lead to volatility. In the script, the example shows how a news embargo can either lead to a price move above key levels or a reversal, depending on how the market has already formed its order blocks and structure.

Why is it important to focus on higher time frame PD arrays?

Higher time frame PD (premium discount) arrays are crucial because they provide a broader context for the market structure. These higher time frame levels are where key institutional orders are likely to be placed, and they help traders make more accurate predictions about price action on lower time frames.