The ULTIMATE ICT Market Maker Model Guide! (How Banks Manipulate Traders)

Summary

This trading strategy video walks viewers through a market maker model, focusing on the use of market structure shifts, order blocks, and fair value gaps to execute profitable trades. The speaker demonstrates how to identify consolidation areas, enter on inverse fair value gaps, and manage risk effectively. Emphasizing patience and trade management, the video showcases how small losses can be overcome by larger, well-executed trades. The overall goal is to build a statistically advantageous approach to trading, even with the occasional loss, ensuring long-term profitability.

Takeaways

• 😀 A market structure shift occurs when price closes below a key swing low or three consecutive up-close candles, signaling a change in the market's delivery.
• 😀 Order blocks are key price zones where institutional orders are placed, marking potential reversal points in the market.
• 😀 The market maker sell model plays out when price enters a fair value gap (FVG) on a higher timeframe, like the 4-hour chart, and a reversal is expected.
• 😀 Traders should switch to a lower timeframe (e.g., 15-minute) after identifying a FVG to wait for the market to inverse a bullish FVG before taking action.
• 😀 Entry is taken when price closes below a fair value gap, and the stop-loss is placed above the high of the recent price action.
• 😀 The first target is typically set at a lower price level, such as a consolidation low, with a longer-term target at the original consolidation low.
• 😀 Trading involves losses; the key is to maintain a statistical advantage over time by sticking to a consistent strategy, despite occasional losses.
• 😀 A loss in one trade does not mean the overall market bias or strategy is wrong. Trading is about managing risk and having a long-term view of profitability.
• 😀 Partial profits should be secured at key levels, such as when price hits certain targets like consolidation lows, to lock in gains while letting other positions run.
• 😀 The key to successful trading is not avoiding losses but ensuring that the strategy is built around a statistically profitable edge, leading to overall gains despite occasional setbacks.

Q & A

What is the main focus of the trading strategy discussed in the video?

The main focus of the trading strategy is to identify market maker models, particularly using fair value gaps and consolidation areas to make trading decisions. The strategy involves understanding price action, waiting for key structural shifts, and managing risk through stop-loss adjustments and targeting consolidation lows.

How is a market structure shift identified in this strategy?

A market structure shift is identified when price closes below a swing low or when there is a change in the state of delivery, such as closing below three consecutive up-close candles, signaling a shift in market sentiment.

What role do fair value gaps play in the strategy?

Fair value gaps are crucial to the strategy. They represent imbalances in price action, and the trader looks for these gaps to trade into. The strategy involves waiting for the market to either trade into these gaps or for gaps to get inverted (in the case of a bearish market). These gaps guide entry points for trades.

What is the significance of the consolidation zones mentioned in the video?

Consolidation zones represent areas where price has previously paused or consolidated. These are key levels for identifying potential reversal points or continuation patterns. The strategy involves marking out these levels and using them as targets or stop-loss zones for trades.

Why does the trader switch between different timeframes, and what timeframes are used?

The trader switches between the 4-hour and 15-minute timeframes to align longer-term and shorter-term price movements. The 4-hour chart helps identify market maker models, while the 15-minute chart is used to pinpoint specific entry points and track price action in more detail.

What is the process for entering a trade based on the fair value gap?

To enter a trade based on the fair value gap, the trader waits for price action to close below a bullish fair value gap (in a bearish market), signaling an inversion of the gap. Once this occurs, the trader enters the position with a stop-loss above the recent high, and targets the low of the smaller timeframe model for the first target.

How does the trader manage risk and profits during a trade?

Risk is managed by placing stop-loss orders above key highs (for short positions) and by securing partial profits when certain price targets are reached. The trader also keeps an eye on larger, longer-term targets, adjusting stop-loss orders as price progresses, and aims for a positive risk-to-reward ratio.

What does the trader mean by 'inversing' a fair value gap?

Inversing a fair value gap means that price has moved in the opposite direction to fill the gap. In the case of a bearish market, this would be a bullish fair value gap being closed, which signals an opportunity to enter a trade after the gap is inverted.

Why does the trader consider a losing trade as part of the process?

The trader views losing trades as part of the overall trading strategy because they understand that not every trade will be a winner. What matters is having a statistical edge over time. A losing trade doesn’t invalidate the market bias; it’s about recovering from losses with subsequent profitable trades.

How is the overall success of the strategy measured?

The success of the strategy is measured by the cumulative risk-to-reward ratio (R), where the trader aims to accumulate more R from profitable trades than the losses incurred. Even with a loss, the trader expects to be profitable in the long term due to the structure of the strategy and proper risk management.