ICT STANDARD DEVIATIONS PROJECTIONS ULTIMATE GUIDE

Summary

This video focuses on advanced trading strategies, highlighting how to interpret market structure, price manipulation, and key technical indicators like fair value gaps and time distortion. The speaker emphasizes using standard deviation levels and liquidity gaps for pinpointing entry and exit points, with particular attention to market maker models. Real-life examples using Bitcoin and gold are provided, demonstrating how to apply these techniques in actual trading scenarios. Risk management and institutional order flow are crucial aspects, as they guide the development of accurate trade projections and ensure optimal trade execution.

Takeaways

• 😀 Price manipulation in the market often involves periods of distortion, where price consolidates between 2.25 and 2.5 standard deviations, signaling potential moves by market makers.
• 😀 Time distortion is crucial for anticipating price movements, especially when the market breaks above or below distortion highs or lows, offering potential entry points for trades.
• 😀 Value gaps (FVGs) are important tools for identifying trade opportunities, especially when an inversion occurs after a price break through a distortion level.
• 😀 When setting stop-loss orders, they should be placed at key liquidity levels, typically near market distortion lows or highs, to limit potential losses and safeguard trades.
• 😀 The concept of institutional order flow is central, particularly focusing on price not reaching the 50% level of a fair value gap, which can signal a more predictable price movement.
• 😀 Impulse legs can be used for projecting market moves when large manipulations occur. The first leg after a reversal is crucial for estimating future price action, though this is less common in regular trades.
• 😀 The use of measuring gaps involves identifying fair value gaps at 50% of the implied range, which helps in determining the expected price target in the market maker model.
• 😀 Successful trades are based on identifying breaks in key distortion levels, entering positions after an inversion in a fair value gap, and targeting projected movements based on standard deviations.
• 😀 Risk management is vital in trading, and using a structured approach like aiming for 2 or 4 standard deviations helps ensure more predictable and controlled outcomes.
• 😀 The approach of analyzing market structure using time distortion, value gaps, and liquidity levels helps traders predict potential reversals and trends more accurately, improving the accuracy of trades.

Q & A

What is the core principle behind the Market Maker Model discussed in the script?

The Market Maker Model is based on identifying price movements and structural shifts in the market. It focuses on spotting distortions in price action, such as breaks of key highs or lows, which can indicate potential reversals or continuation patterns. Traders use these distortions to predict market moves and structure their trades accordingly.

What is a 'distortion low' and how does it impact the trading strategy?

A 'distortion low' is a point where the price breaks below a key low but is often followed by a reversal, indicating manipulation. This low represents a liquidity level that traders use to set their stop losses and entries. A break below this level often signals that the market is reversing and can offer a potential entry point for trades.

How does the concept of 'fair value gaps' (F-W gaps) play into the trade setup?

Fair value gaps (F-W gaps) are areas where the market moves away from equilibrium, creating an imbalance between buy and sell orders. These gaps are used to identify potential entry points for trades. Traders enter at these gaps, expecting the market to return to these levels as part of a reversal or continuation pattern.

What role do standard deviations play in the strategy described?

Standard deviations are used to measure price movement in relation to a given 'distortion' point. The strategy looks for price action within the 2.25 to 2.5 standard deviation range, which is considered the manipulation range. Price moves outside this range are used to identify breakouts or reversals, and the 1-1.5 standard deviation range is often a target for retracement after manipulation.

What is the significance of 'time distortion' in this trading strategy?

Time distortion refers to price movements occurring within specific time frames that align with market manipulation. It helps traders predict when price may experience a reversal or significant change. Time distortion often aligns with price movements within the 2.25 to 2.5 standard deviation range, indicating potential market shifts or reversals.

What is an 'impulse leg' and when is it used in the trading strategy?

An impulse leg is a strong price movement, often following a smart money reversal. Traders use this leg to project future price movements, especially when there is a significant manipulation leg. The impulse leg helps set conservative targets, particularly when the manipulation leg is too large to use for the same-day trade.

How does the trader manage risk using the strategies outlined in the script?

The trader uses proper risk management by ensuring a solid reward-to-risk ratio, aiming for trades with at least a 3:1 ratio. The stop loss is placed near key liquidity levels, such as distortion lows or highs, to limit potential losses. Additionally, the trader risks only a small percentage (e.g., 2%) of their account balance per trade.

How does the trader determine entry and exit points based on the distortions and gaps?

The trader determines entry points by identifying distortions in price action, such as breaks of key levels. When these distortions occur, they look for fair value gaps or inversions in those gaps to enter the trade. Exit points are often based on projected moves, such as aiming for 2-4 standard deviations from the manipulation leg or targeting high time-frame levels.

Why is the trader willing to enter a trade before a full test of the fair value gap?

The trader enters the trade before the full test of the fair value gap because they are anticipating a reversal or continuation at the gap level. They rely on the strength of the gap and the surrounding market conditions, like time distortion and liquidity levels, to confirm the potential for price to move in their favor.

What is the 'measuring gap' and how is it used in the strategy?

The measuring gap is a large fair value gap that forms around the midpoint of an implied price range. It represents a liquidity void in the market. The trader uses this gap to project potential price moves, typically targeting the full range from the low to the high of the gap. This gap often forms during the second stage of reaccumulation or redistribution in the market.