Using Standard Deviation Projections - ICT Concepts

Summary

In this video, the presenter explains how to use Standard Deviation Projections for predicting price movements and identifying reversal or continuation points in trading. By measuring price swings and applying key settings (-2, 2, A2), traders can project price targets and analyze price action across different timeframes. The video walks through various examples on higher and lower timeframes, showing how these projections align with market behavior. Concepts like equilibrium, manipulation legs, and using midnight open for projections are covered to help traders make informed decisions based on real-time price action.

Takeaways

• 😀 Standard deviation projections are useful for identifying potential reversals and price targets in trading.
• 😀 The script outlines how to set up standard deviation projections using specific settings, such as -2, -2, and A2.
• 😀 Higher time frame standard deviations (e.g., 15-minute chart) are used for long-term price projections, while lower time frames (e.g., 1-minute, 5-minute) are for intraday analysis.
• 😀 The key concept is that price can either respect or ignore standard deviation levels, with movements either reversing or continuing.
• 😀 The projection method involves measuring from a low to a high, using standard deviation levels like -2, 2, and A2 as key reference points.
• 😀 Price can return to equilibrium after respecting a standard deviation level or continue toward further levels (e.g., -4, -3.5) for maximum expansion.
• 😀 Intraday analysis involves identifying key manipulation legs, such as breaking old lows or highs, and then measuring price moves based on standard deviation projections.
• 😀 The video highlights examples of price actions, such as turtle soups and displacements, to show how standard deviation projections work in real-time market conditions.
• 😀 The midnight opening manipulation is a crucial reference point for projecting price movements, especially when analyzing the initial price action of a trading day.
• 😀 Standard deviations can be applied across multiple time frames and days, but it's recommended to use them for a single day's price action for accuracy and relevance.

Q & A

What is the main purpose of using standard deviation projections in trading?

Standard deviation projections are used to frame price reversals and set price targets. They help traders identify potential reversal points by projecting price levels where the market could reverse or continue, depending on the manipulation and bias for the day.

What are the key settings for standard deviation projections?

The key settings for standard deviation projections are -2, -2, and A2. These numbers can be adjusted according to the trader's preferences, but these values are commonly used for alignment.

How are higher time frame and intraday standard deviations different in use?

Higher time frame standard deviations are typically used on charts like the 15-minute chart to identify broader market trends. Intraday standard deviations, on the other hand, are used on smaller time frames like the 1-minute or 5-minute charts to track short-term price movements and reversals.

What does the 'manipulation leg' refer to in standard deviation analysis?

The 'manipulation leg' refers to the initial price movement that sets the stage for standard deviation projections. It is the swing or leg from a significant high to low (or vice versa) from which the standard deviation projections are measured.

What happens when the price reaches the -2 standard deviation level?

When the price reaches the -2 standard deviation level, there are two possible outcomes: the price may either continue moving through the level without respecting it, or it may respect it and reverse back toward equilibrium. This behavior is crucial for predicting market movements.

How does one use standard deviation projections to predict price targets?

By measuring from a significant price high to low (or vice versa), you can project potential price targets such as -2, 2, A2, -3, -4, etc. These targets help identify key levels where price may reverse or extend, aiding traders in making informed decisions.

What does 'equilibrium of the dealing range' refer to in this context?

Equilibrium of the dealing range refers to a price level where the market tends to balance after a significant price move. It is the midpoint or neutral zone between extreme price points and often serves as a key level for price action.

What role does 'turtle soup' play in reversals?

'Turtle soup' refers to a price action pattern where the market initially breaks a key level, such as a low or high, and then quickly reverses. This often signals a potential reversal, where the manipulation leg is followed by a sharp price move in the opposite direction.

What are the benefits of using standard deviation projections on lower time frames?

Using standard deviation projections on lower time frames (like 1-minute or 5-minute charts) allows traders to fine-tune their entry and exit points, taking advantage of short-term price movements and reversals that might not be visible on higher time frames.

Can standard deviation projections be used over multiple trading days?

While standard deviation projections are most effective within a single trading day, they can be used across multiple days, especially when the price levels align with higher time frame key levels. However, it is recommended to focus on projections for the current trading day to maintain accuracy.