2022 ICT Mentorship Episode 25

Summary

In this 25th episode of the ICT mentorship series, the instructor provides an in-depth guide to understanding market behavior through liquidity, price action, and algorithmic patterns. Emphasizing a step-by-step approach, he explains concepts like fair value gaps, relative highs and lows, and market rebalancing, highlighting the importance of time and price analysis. The session discourages chasing tops and bottoms, focusing instead on strategic setups, proper stop placement, and patience. With multiple time frame examples—from daily to two-minute charts—he teaches viewers to read markets like smart money, encouraging disciplined study, backtesting, and forward testing to build a simple, effective trading model.

Takeaways

• 📈 Always align your trades with the market bias (bullish or bearish) and avoid trying to pick tops or bottoms.
• 💡 Focus on understanding market mechanics, liquidity, and algorithmic behavior rather than relying on indicators or guesswork.
• 🔍 Multi-timeframe analysis is crucial: daily → hourly → 15-minute → 5-minute → 2-minute charts to identify structure and fair value gaps.
• ⚖️ Fair Value Gaps (FVGs) are key trade entry points; place stops above the candle forming the gap or above swing highs for larger moves.
• 💰 Proper capitalization is essential; use micro accounts if necessary to manage risk and avoid being underfunded.
• 🎯 Look for liquidity targets: buy-side liquidity above highs and sell-side liquidity below lows to align with smart money moves.
• 🕒 Timing matters: New York session (midnight start) is the primary focus; algorithmic movements follow time and price, not retail buying pressure.
• 🌀 Watch for 'Judas swings' or fake rallies that lure retail traders, as these provide high-probability setups for aligned trades.
• 📚 Simplify your approach: pick one setup, master it, and consistently apply it with disciplined backtesting and forward testing over months.
• 🧠 Accept losses as part of trading; manage trades according to structure shifts and avoid emotional reactions or overly tight stop losses.
• 🖼️ Visualizing price action as smart money sees it—focusing on liquidity and order flow—provides clarity and reduces confusion from indecisive candles.
• 🚫 Avoid distractions from extraneous indicators, other educators' systems, or courses; focus on mastering the simplified ICT methodology.

Q & A

What is the main focus of the ICT mentorship video series?

The main focus is to teach algorithmic trading logic using time and price principles, with a particular emphasis on liquidity, fair value gaps, market structure, and understanding smart money behavior rather than traditional indicators or retail trading strategies.

Why does the mentor stress not using live funds while learning?

Because learners are still developing their understanding and skills. Using live funds too early can lead to emotional trading, mistakes, and financial loss. The mentorship emphasizes learning, observation, and practice before risking real money.

How does the video explain the concept of 'fair value gaps'?

Fair value gaps are small areas in price action where the market is likely to move to fill the imbalance created by rapid price swings. The mentor highlights them as one of the easiest concepts for new traders to understand and utilize effectively.

What role does 'liquidity' play in the trading model taught?

Liquidity represents resting orders in the market, such as buy stops above highs or sell stops below lows. Smart money interacts with these pools to execute trades, and understanding liquidity helps predict price movements without relying on standard indicators.

Why does the mentor emphasize studying prior daily ranges?

Studying previous daily highs, lows, opens, and closes helps traders understand market context, identify key liquidity levels, and anticipate algorithmic price movements in alignment with the mentorship’s model.

What is the significance of using multiple timeframes in this trading approach?

Multiple timeframes allow traders to visualize patterns and market behavior in detail. Daily charts show context, while hourly, 15-minute, 5-minute, and even 2-minute charts reveal finer price action, fair value gaps, and displacement legs for precise entries and exits.

How does the mentor suggest handling stop-loss placement?

Stop-loss should be placed above the candle that creates the fair value gap or a logical swing high, allowing room for normal price fluctuation. The mentor emphasizes proper risk management and scaling positions to avoid account destruction.

What is the rationale for trading primarily during the New York session?

The New York session provides the advantage of market activity after the London session, with clear algorithmic patterns and liquidity flows. The mentor notes that Asia is generally less liquid, making it harder to trade this method effectively there.

Why does the mentor discourage using other indicators or trading courses?

He believes that traditional indicators, retail trading concepts, and additional courses add noise and confusion. His simplified model focuses on a single setup using time, price, and algorithmic behavior, which is sufficient for consistent learning and application.

How long does the mentor suggest practicing the model before expecting proficiency?

He recommends three months of diligent backtesting and study, followed by two to three months of forward testing. Six months of consistent practice should allow a trader to develop confidence and understand the model fully.

What is the 'Judas swing' and its role in this trading method?

The Judas swing refers to a temporary price rally designed to lure retail traders into the market before smart money reverses the move. Identifying this swing helps traders align with the algorithmic bias and capture profitable short positions.

How does the mentorship approach help prevent emotional trading mistakes?

By emphasizing rules-based setups, clear identification of liquidity zones, and structured stop placement, traders can avoid panic exits or chasing trades. The model teaches understanding market logic over impulsive decisions.

What is the importance of seasonal tendencies in the model?

Certain times of the year, like May, historically show bearish tendencies in index futures. When combined with smart money liquidity logic, these tendencies help traders anticipate likely price movements and improve the probability of success.