SIMPLIFIED ICT PO3/AMD. HOW TO TRADE REAL DISTRIBUTION

Summary

This video script focuses on advanced trading strategies using the Market Maker model, emphasizing the identification and execution of trades based on short-term and intermediate highs/lows, value gaps, and price action. The speaker demonstrates how to utilize various timeframes (5-minute, 15-minute, and 1-hour charts) to spot opportunities, manage stop-losses, and adjust targets for maximum profit. By applying techniques like backtesting and analyzing price behavior, the speaker offers insights into consistently profitable trading setups, particularly during key market sessions. The approach combines high-probability trades with careful risk management.

Takeaways

• 😀 Enter trades based on the formation of key price levels like intermediate highs/lows and short-term highs/lows.
• 😀 Use a stop-loss strategy where the stop is placed just below or above intermediate or short-term levels depending on the trade direction.
• 😀 Partial profit-taking is important at consolidation highs, and the final target is often set based on liquidity or fair value gaps.
• 😀 Trade setups can be applied to various asset classes (e.g., stocks like Tesla, crypto), confirming the universality of the method.
• 😀 Timing matters: specific times like 2:30 a.m. or market open often have higher probability of favorable setups due to liquidity movements.
• 😀 The strategy works across different timeframes, including 5-minute, 15-minute, and 1-hour charts, for higher probability trades.
• 😀 Focus on the larger trend using higher timeframes (e.g., 15-minute or 1-hour) to confirm the market direction before executing trades.
• 😀 Changes in the state of delivery (market behavior) on smaller timeframes can be used to refine entry points for trades.
• 😀 A backtesting approach is encouraged to validate the strategy across different market conditions, with one example demonstrating the process.
• 😀 Using consolidation zones and liquidity points helps identify optimal trade entry and exit levels, improving the risk-to-reward ratio.

Q & A

What is the main concept behind the market maker model discussed in the video?

The main concept of the market maker model discussed in the video is to identify value gaps and price imbalances that occur between different price levels such as intermediate highs, lows, and short-term highs, lows. These gaps help traders enter and exit trades at high-probability levels based on market manipulation and distribution patterns.

How does the trader use value gaps in their trading strategy?

The trader uses value gaps to identify potential entry points. After an intermediate high or low is formed, the first value gap created is seen as a key level for entering trades. These gaps often indicate the start of a price move or a reversal, depending on the market's current trend.

What is the importance of intermediate highs and lows in this strategy?

Intermediate highs and lows serve as reference points for stop-loss placements and trade entries. The trader places stop-loss orders above intermediate highs or below intermediate lows, depending on whether the trade is long or short, to protect against price reversals or breakouts.

What role do consolidation zones play in this strategy?

Consolidation zones are seen as periods of price balance where the market is not trending. The trader uses these zones to spot potential entry points after a value gap has formed, often waiting for price to break out of consolidation to take trades in the direction of the breakout.

How does the trader determine the target for a trade?

The target for a trade is determined by the size of the value gap, liquidity levels, and consolidation zones. For example, the trader might set a target at an equal low or high, or a previously identified liquidity level where price is expected to reach during the distribution phase.

What is meant by 'change in the state of delivery'?

A 'change in the state of delivery' refers to a shift in market sentiment or price action. It indicates a reversal or continuation in price movement, which the trader uses as a signal to enter or exit a trade, typically following the formation of a value gap.

Why does the trader use higher time frames (like the 15-minute or 1-hour charts) for their analysis?

Higher time frames are used to identify the broader market context and trends. By analyzing larger time frames, the trader can confirm the direction of the market and establish key support and resistance levels before drilling down into lower time frames to find specific entry points.

How does the trader manage risk in their trades?

The trader manages risk by placing stop-loss orders below intermediate lows or above intermediate highs, depending on the trade direction. They also adjust their stop-loss to break-even or a profitable level once the trade moves in their favor, to lock in profits and minimize potential losses.

What is the significance of the 'first value gap' after a short-term high or low?

The first value gap after a short-term high or low is significant because it often indicates the start of a price movement or a trend. This gap is used as an entry point for trades, with the trader aiming to capitalize on the price action that follows.

How does the trader incorporate backtesting into their strategy?

The trader uses backtesting to evaluate how their strategy would have performed in past market conditions. By analyzing past price action on different timeframes, they can refine their approach, validate entry and exit points, and improve overall strategy effectiveness.