"Time & Price" Explained - Day Trading Examples (ICT)

Summary

In this video, the importance of time and price in intraday price action is explored, highlighting how time impacts market movement and trading decisions. The video covers key concepts like market structure, fair value gaps, and manipulation during specific times of the day. By using examples from the 2022 ICT mentorship model, the speaker shows how to anticipate price movements based on the time of day, focusing on moments like market open, 11 AM, and 12 PM. The content emphasizes the relevance of timing in making profitable trading decisions, particularly when identifying key points like buy and sell-side liquidity.

Takeaways

• 😀 Time is a fundamental aspect of price movement, as price action always involves time in some form, whether on a linear chart or within specific timeframes.
• 😀 Price rarely moves in a straight line; fluctuations are common, and understanding these fluctuations can help in predicting market behavior.
• 😀 Higher time frame market structure is essential for exploiting price fluctuations on lower time frames, providing context for better entries and exits.
• 😀 Bullish candles typically form with an open, a low, a high, and a close, with two significant wicks—an essential concept for understanding market structure.
• 😀 A bearish candle, similarly, forms with an open, a high, a low, and a close, indicating price movement within a range, with significant wicks indicating volatility.
• 😀 Having a higher time frame bias can significantly improve your entry point on lower time frames, giving you a better opportunity to buy or sell.
• 😀 When there is a lack of a clear bias, paying attention to market structure itself can guide trading decisions based on price behavior.
• 😀 Specific times of the day, such as 11 AM and 12 PM, hold particular relevance for price action, as certain events (e.g., news, volatility) may shape price behavior during those times.
• 😀 At key times like market opens and hourly changes, new candles may trigger price manipulation that moves the market in a direction favorable to a trader's bias.
• 😀 Market makers' algorithms and manipulation often act around specific times or events, such as those mentioned (news releases, market opens), allowing traders to predict price action based on time-based patterns.

Q & A

Why is time important when analyzing intraday price action?

Time is crucial in price action analysis because price movements are always associated with a specific time element. Without considering time, price movement does not exist, and understanding timeframes allows traders to anticipate fluctuations in the market.

How do higher and lower timeframes influence price action?

Higher timeframes provide the market structure bias, which helps traders anticipate lower timeframe price movements. Knowing the overall trend or structure of a higher timeframe allows traders to make informed decisions when entering trades on smaller timeframes.

What is the significance of candle formation in price action analysis?

Candles are formed with an opening price, low, high, and closing price, with wicks indicating potential fluctuations. A bullish candle typically forms after price moves down to create a low, then up to create a high, and finally returns to close within the range. This formation helps traders predict the direction of price movement and potential reversals.

How does understanding market structure breaks help in predicting price movement?

Market structure breaks signal a shift in price action, indicating that the previous trend may be reversing. When combined with a fair value gap, a market structure break can be used to identify potential trade opportunities, as it suggests that the price may move in the direction of the new structure.

What is a fair value gap, and how does it influence intraday trading?

A fair value gap is a price area where there was no trading during a specific market period, typically formed after a market structure break. It represents an imbalance in the market. Price often returns to fill these gaps before continuing in the direction of the prevailing trend.

Why are certain times of the day critical for analyzing price action?

Certain times of the day, such as the market open (9:30 AM) and lunchtime (11:00 AM to 1:00 PM), are critical because they often coincide with high volatility and market movements triggered by news events, orders, and market maker activities. These times provide opportunities for traders to predict price direction based on expected volatility.

How can understanding the opening and closing of market hours impact trading decisions?

Understanding when the market opens and closes is vital because these times often create significant price movements. For example, at market open (9:30 AM), volatility is high, creating potential opportunities for quick trades. Similarly, at the close, market movements can be influenced by orders being filled or liquidity being taken out.

How does the 'lunch hour' period impact intraday price action?

The 'lunch hour' period, generally between 11:00 AM and 1:00 PM, is often characterized by lower trading volume and reduced volatility. However, understanding how the price moves during this period, including potential manipulations and corrections, can still provide key insights into price behavior for the remainder of the day.

How does the concept of market maker buy and sell models relate to time and price action?

Market maker buy and sell models refer to how market makers manipulate price at certain times to trigger buy or sell orders. These models can be influenced by specific times of day, as market makers tend to operate with predetermined strategies that align with market hours and news events, creating price fluctuations that traders can exploit.

What is the role of manipulation in the creation of local highs and lows in intraday trading?

Manipulation occurs when price moves in a way that temporarily misleads traders before continuing in the anticipated direction. During intraday trading, local highs and lows are often created as part of this manipulation, which can be predicted when combined with knowledge of market structure and timing, such as hourly or half-hour candles.