ICT Mentorship Core Content - Month 1 - Equilibrium Vs. Discount

Summary

The speaker introduces the concept of equilibrium versus discount to explain optimal trade entry timing. Equilibrium represents the midpoint of a price swing, while discount refers to prices below equilibrium. The speaker advises waiting for the market to reach equilibrium or dip below into 'discount' territory before entering long trades, as this indicates the market is at a favorable valuation to buy. Specific techniques like tracking impulse price swings and swing highs are detailed to identify equilibrium points and prime discount entry areas that precede explosive upside moves, especially when combined with order flow analysis.

Takeaways

• 😀 Understanding equilibrium vs discount is key for discerning optimal trade entry points
• 😯 Impulsive price swings indicate market willingness to move price higher
• 🔍 Wait for 4 candles after high forms to start watching for retracement to equilibrium
• 👌 Equilibrium = midway point between swing high and low, around 50% fib level
• 💡 Below equilibrium = discount area where banks will buy - optimal entries here
• 📈 If bullish, expect explosive moves up from discount area back to equilibrium and beyond
• ❗ Lows taken out below equilibrium may signal stops being run - anticipate bounce
• 😎 Taking trades at equilibrium provides flexibility for swing, day, position trading
• 🤓 Blend order flow concepts like order blocks and turtle soups with equilibrium ideas
• 🧠 Understanding foundations of price action critical for indicators or systems to work

Q & A

What is equilibrium in relation to price action?

Equilibrium is the midway point between the high and low of a price range or price swing. It represents fair market value where price is not overbought or oversold.

When is price considered to be at a discount relative to equilibrium?

Price is considered to be at a discount when it moves below the 50% equilibrium level, with the optimal discount area typically between the 62-79% Fibonacci retracement levels.

How can you identify an impulsive price swing?

An impulsive price swing consists of a strong directional move over 3-4 candles, followed by a pullback. It indicates conviction behind the price action.

What should you anticipate when price breaks below a previous swing low in a bull market?

Typically this indicates a stop run designed to take out resting sell stops. This injects new buyers as those stops are triggered. Expect bullish rejection back above the low.

Where are optimal areas to take profit on long trades?

Areas of previous structure resistance like swing highs or order blocks offer optimal areas to take profits on bullish trades.

How can you use the daily time frame while still day trading?

Use the daily chart to map overall bullish/bearish context and key levels. Then drop to lower time frames when price reaches daily support/resistance for entry triggers.

What precedes explosive moves higher from areas of discount?

The market will often break below a swing low to run stops before rejecting strongly back above it when coming from an area of discount.

How do institutions distribute long positions?

Institutions will let price rise to areas of liquidity above previous swing highs where buy stops congregate. They distribute as those stops are run.

What dictates whether indicators or signals will be effective?

The underlying price action context is what determines if indicators or other tools will work reliably. They must align with the market structure.

Why is patience important for this style of trading?

It takes patience to properly identify shifts in structure and areas of discount/equilibrium. Chasing often leads to forcing low probability trades.

Outlines

00:00

😄 Introducing the concepts of equilibrium and discount

The paragraph introduces the concepts of equilibrium, which is the midway point of a price range, and discount, which refers to prices below the equilibrium level. It explains that prices below equilibrium indicate good buying opportunities in a bullish market, as prices are unlikely to stay discounted for long.

05:00

😃 Illustrating equilibrium and discount on a price chart

The paragraph demonstrates equilibrium and discount on a price chart, using the Fibonacci tool. It shows an impulsive price swing, then waiting for a retracement to the 50% equilibrium level before considering buys. Below 50% is the discount area offering the best entries.

10:02

😊 Identifying impulse swings and waiting for discount levels

The paragraph explains the process of identifying impulse price swings to the upside, waiting for a pullback, then looking to buy when the price reaches equilibrium or discounts below that. This offers good risk/reward ratio trades with stops below recent swing lows.

15:03

🙂 Buying rules - wait for discount levels after impulse moves

The paragraph summarizes the buying rules - after an impulsive upside price swing, wait for a retracement back to at least the equilibrium level before considering buys. The best buy levels are in the discount zone below equilibrium, especially the 62-79% Fibonacci levels.

20:05

😉 Taking profits by distribution above old highs

The paragraph explains taking profits on buys made in discount zones - distribute/exit positions when the price rallies up through old highs levels. This is where the institutions place buy stops to exit positions.

25:05

🤩 Multiple examples illustrating the concepts

The paragraph provides several annotated chart examples that demonstrate the concepts of identifying impulse moves, waiting for retracements to discount levels, entering buys, and taking profits at areas of liquidity above like old highs.

30:08

😍 Current market levels and discount areas

The paragraph examines the current market price levels, equilibrium point and shaded discount areas to work with. It emphasizes buying within these discounted areas per the principles outlined earlier.

35:10

🥰 Anticipating moves from discount levels

The paragraph discusses anticipating upcoming market moves from various discount levels, like sweeping recent swing lows and reacting higher. It emphasizes combining these concepts with order flow tools taught elsewhere.

40:10

😘 Summary of key equilibrium vs. discount concepts

The paragraph provides a helpful summary recap of the core concepts covered - identifying equilibrium on impulse swings higher, waiting for 4 candles to turn down, then buying discount levels below equilibrium with stops below recent swing lows.

45:13

🤓 Applying to lower timeframe charts

The closing paragraph examines how these equilibrium/discount principles can be applied effectively to lower timeframe charts like hourly, while blending in order flow concepts like order blocks and algorithm expansion points.

Keywords

💡equilibrium

Equilibrium refers to the midpoint or fair market value within a price range. It is calculated by taking the 50% retracement level using fibonacci between a swing high and low. Understanding equilibrium allows traders to identify when markets are at fair value or discounted for buying opportunities.

💡discount

Discount refers to when price goes below the equilibrium level, which indicates the market is undervalued. According to the speaker, markets do not stay at discount prices long in bullish conditions, so it presents buying opportunities.

💡impulse price swing

An impulse price swing is a strong directional price movement with at least 4 candles from swing low to swing high. Identifying impulse swings allows traders to measure new equilibrium levels and watch for retracements.

💡optimal trade entry

Optimal trade entry refers to the best area for entering long trades in bullish conditions, which is when price reaches the 62-79% fibonacci retracement levels below equilibrium. This zone has the highest probability of an explosive move up.

💡order blocks

Order blocks refer to areas on a chart where significant buying or selling interest exists. The speaker mentions them in reference to possible buy entry signals when price reaches the discount area.

💡turtle soup

A turtle soup long setup occurs when price breaks below a swing low to run stops, then quickly reverses back up to take out trapped sellers. Useful signal for entries in bullish discount areas.

💡high probability

High probability refers to trade setups or signals that have a higher likelihood of success. According to the speaker, trades taken when the market is below equilibrium have higher probability due to the discounted prices.

💡explosive price action

Explosive price action refers to strong directional moves with expanding range and volatility. The speaker links it to market activity after price reaches discount levels below equilibrium in bullish conditions.

💡liquidity

Liquidity refers to the amount of buy and sell orders in a market. The speaker discusses how banks engineer liquidity at areas of former swing highs to distribute positions.

💡distribution

Distribution happens as banks and institutions unload their long positions accumulated earlier, which often occurs near previous swing highs where buy stops for short positions may exist.

Highlights

To be a buyer, there has to be a willingness of somebody with bigger pockets than you - the banks - to move price higher

Banks will let price go higher when it suits their purpose - to make money

To identify buying opportunities, first look for impulsive price swings on the daily chart to frame higher timeframe ideas

Equilibrium is the midway point of a price move, measured using the 50% Fibonacci level between a swing high and low

The market is permitted to be bought at fair market value when price reaches equilibrium, but not above that level

Below equilibrium is a discount market which doesn't stay there long in bullish conditions, leading to explosive moves

If price breaks below a previous swing low in a bull market, anticipate a stop run leading to a strong move up

Optimal trade entry for buys is between the 62-79% Fibonacci levels below equilibrium, in discount markets

Markets move from equilibrium/consolidation to expansion, reaching for liquidity above old highs and key levels

Take profits on longs near bearish order blocks like the bottom of bullish candles, below key highs

False breaks below swing lows in bull markets anticipate stop runs, injecting sellers to pair with buyer demand

You need the price going to discount for buys to get explosive signals - not just entry techniques

Wait for impulses to equilibrium or below for high-probability trades, don't chase - have patience

Apply order flow concepts like blocks and stop runs to optimize trades in discount zones

Indicators only work if aligned with the foundations of price action and market conditions

Transcripts

welcome back folks this is the fourth

of eight

installments for the first month of the

ict mentorship

we are

covering

equilibrium versus discount

now

again

just as a forewarning uh for some some

of you were actually uh

pupils of mine

prior to me starting this mentorship

this is going to seem a little bit

elementary initially but i promise i'll

add something to it that

may

bring a little bit more

depth the understanding of what optimal

trade entry is

a long time ago

back in 2010 i introduced a

simple idea of

looking at swing projections

retracements and identifying what would

be deemed as optimal trade entry

and everyone knew that saw it obviously

fell in love with they liked it it was

easy for them to see they would apply it

really quick to the chart and i think

the reason why is because it had a

indicator applied to it

and that being the fibonacci now

fibonacci doesn't have any magic doesn't

have any uh you know significance by

itself and yet to understand

where the market may want to reach for

so there's going to be a certain measure

of prognostication on your part the fib

doesn't do everything for you so

i want to draw your attention to

looking at where

markets are most likely to create

by conditions now this is not by signal

entries this is just framing a context

initially as a new trader someone new to

technical analysis someone new to my

principles it's going to give you a

foundation so that we can go into the

charts and start looking at these things

and measure them and then study them

okay

so

all this is meant is to give you a

framework to work within in your demo

account

everyone should be working inside the

forex ltd demo account as i established

um at the beginning of this mentorship

so

we have multiple price swings in here

on this daily chart we're looking at

primarily a daily chart uh initially for

our setups

if you're a new trader okay and you

seemed overwhelmed you probably heard me

talk about certain things already in

this mentorship

maybe you've watched some of my videos

on youtube or on my website's tutorial

section

and

you heard terms that went right over

your head

some of the terms are created by me some

of them are industry standards uh some

are going to require a little bit more

uh description about what they mean

later on in the mentorship so if you

hear something even in this

presentation just make a note of it in

your notes and then obviously you know

you'll pick up the understanding as we

go deeper every month or something new

but for now i want you to focus on

a simple question

if a trader believes that the market's

going to go higher

what would frame that context what would

give the the trader that

a conclusion to trust

buying a specific market like what goes

in what goes into making that decision

well the first thing i want you to

understand is this is going to be like

the very first baby step to

understanding institutional order flow

the first thing you need is movement you

have to understand that to be a buyer

there has to be a willingness of

somebody with bigger

uh bigger pockets than you more money

than you and they are the ones that move

price around and they are the banks okay

uh they're they're only going to let

price go higher when it suits their

purpose

okay so it's not going to be a supply

and demand factor it's going to be a

greed factor they want money okay

they're in the business of making money

after all that's their nature their

business that's a bank

so

if we are looking for buying

opportunities okay

many retail traders look for

all of these patterns and indicator

based ideas

and i want you to focus primarily on

price price alone will give you

everything you'll ever need in terms of

indicating higher or lower price and

it'll actually give you the actual

specific entries and your exits you

don't need anything else outside of a

price chart okay the open high low

enclosed does everything for you

i want you to look at this low down here

and i want you to look at this high up

here

okay do you see how that is the biggest

price swing

on this entire

chart

so between

august 14th all the way to the present

time in september

there is only been one major price swing

higher and lower

so if we take a fibonacci level

okay and i'm only going to use fibonacci

to illustrate equilibrium okay because i

first have to establish what equilibrium

is

this is the largest price range okay or

the market range that's presently being

traded in now what do i mean by

present market range this is the highest

range we've seen

okay

in the last month or so

so if we look at this range and i'm

going to scroll back here so you can see

there's nothing

more significant than that except for

this one back here but we're going to

primarily use this because it has a very

strong reaction we can use these back

here

okay and i'll do it for completeness

sake later on in the video but for now i

want you to see we have very strong

impulsive move away

then it comes back retraces and then

have another strong impulsive move away

and comes all the way up here to the

high

okay when we say impulsive price move or

what we refer to as

impulsive price swing going forward

throughout this mentorship

that is the indication that there has

been displacement now displacement is

where

someone with a lot of money okay comes

in the marketplace and they have a

strong conviction to move price higher

we already know that price is going to

be set by central bank so if they're

letting price run this high they're

offering at a higher price as long as

there's buyers coming in

they're going to keep offering that

price there

as long as they keep finding buyers as

they keep raising price up they'll keep

expanding price higher higher until

there is no longer any interest for them

to pair up orders with participants

okay other open interest in the

marketplace so they'll allow price to

retrace a little bit

until they can get more

buy stops above the marketplace it is

not

a

buyer buyer buyer buy a buyer market and

they keep um

stretching price they have already

bought down here and then they're

allowing price to be

uh offered to the marketplace at higher

prices

okay and as that happens

there all they're doing is is selling

off their positions they establish at a

lower low okay

from here the banks are assume long

positions in here they accumulate long

positions once they accumulate a

position they allow price to go higher

okay once that price goes higher higher

higher it keeps going higher

until

their position

is funded and they no longer want any

more

position held

so they're going to be looking for

liquidation areas where they know that

they're going to be willing participants

to buy that's going to be above this old

high back here why would they want to

take price above that oh high here

because there's going to be buy stops on

a fund level that means big money

managed funds will have stop loss orders

right above that high and i'm going to

go into details in this mentorship

about where stops are how to how to pick

out institutional funds

levels where their stops are at where

high

target big money moves are going to

occur all those things will be taught to

you but for now i just want to start you

very small because then there's a lot of

folks that just started with this

mentorship and they've never really been

through the complete library of my uh

concepts or they haven't really exposed

themselves to technical analysis so all

this seems greek to them

and i don't mean that to offend anybody

that may be greek but it's an expression

in the states it means it's alien to

them

but

the first thing i want you to look for

in price is you want to see impulsive

price swings

okay and since we're primarily looking

for discount markets okay and relative

terms to equilibrium

we first have to understand what an

impulse price swing is so let me take

the fib off real quick and go back to

that

price leg right here let me take all

this stuff off over here

okay so we have one big strong impulsive

price swing right here comes off

this low and rallies up

we don't need to know what caused the

buy down here it's not interesting at

all to me i don't care okay

we don't know this price link is gonna

start until

i'm sorry we don't know this price leg

is here okay until it forms so i'm

giving you a perspective

studying in hindsight

the low

to this high in here

okay that rally up or that impulsive

price swing

we only require price to start

coming down off of that and it takes at

least four candles no matter what time

frame you're on you need four candles

okay from when the market makes a low

and starts rallying up

what you're going to look for is once

you see a high form let me zoom in

once you see a high form you need four

candles why four candles you need to

have one candle to the left one candle

in the center of the most highest one

then a lower candle to the right that's

a swing high and then you've got to see

price go lower

when that happens you start waiting for

price to retrace back to equilibrium

now what is equilibrium

equilibrium is a midway point of a price

move

okay so we're measuring the high

from this low you take your fib you draw

it up to

the low and you drop it

equilibrium is over here let me scrunch

this up a little bit more

okay so we have this price leg up

so impulsive price swing goes higher

as soon as we get three candles then and

only then

will we start watching

for price to come down to the

equilibrium price point and that is

basically the fibonacci level 50

okay

we're looking for price to come down to

that level and soon as it comes back to

that level and we're on a daily chart we

go down into a lower time frame and we

hunt buying opportunities now i'm not

teaching you buying entry signals okay

i'm giving you context of how to discern

when the market goes to discount and

when it's at a premium and we're not

trading at premiums okay well i'll teach

you how to use premiums uh the first

video of next week okay so

we're only focusing primarily on

equilibrium versus discount

we have a price swing

that moves from a low aggressively up

we don't do anything

until we start seeing

a down move and it has to happen after

three candles basically making a swing

high

now swing high looks like this

okay you can see it has a high

and a candle to the left that's lower

and a candle to the right that's lower

that's a swing high

and once that swing high forms we're

waiting for the fourth candle

okay to start coming lower in other

words we're looking for four candles to

start turning around when that happens

okay it gives you now you're allowed to

start looking for the market to come

down into equilibrium that means the 50

level okay once you're on a 50 level and

you're in a higher time frame and we

start everything at a daily chart at the

daily chart we know we know now that

between the low here

and the high here

the market now has gone back to

equilibrium so it's at fair value

or at fair market value

if you get something at fair market

value obviously you're not paying a

premium but you're not really getting a

discount either but it's still a neutral

to bullish condition that means you're

not buying at an inflated price

so

this time period right here the market

is offering an opportunity to be long

i'm not going down the lower time frames

today i'm not going to teach you that

today only thing i'm giving you right

now is developing context

around the daily institutional price

levels that are derived at on the daily

chart and all you're looking for is

impulsive price swings first

letting price settle back down into

equilibrium

and then we discern what we're going to

do once we when we get to that level

as you can see without going into lower

time frames the price does rally again

where does it rally back up to its old

institutional order flow reference point

which is an old high back here so it

goes right above that previous high

see that

now the market trades off again and goes

lower so

we have now a new

new range we have to now put the

fibonacci on this high keeping it off

the same low now why did i do that

because this price low has not been

violated

it only retraced down to here and

rallied up again

then we wait for three candles

the high candle to the left there's a

lower one to the right there's a lower

one this is probably a sunday and even

still this is one here

either way you don't want to count

sundays by the way mt4

one else forex ltd does give you the

sunday candle so you gotta factor that

out don't don't count on these candles

because it's a non-event

so that's probably going to end up

becoming

this candle here once you get the down

candle here that the market has

in fact turned it's starting to go lower

notice what's happening here we're not

rushing we don't need to catch the high

okay it gives us all kinds of time to

wait and plan and build an idea about

what it is specifically we're going to

do when price gets to equilibrium

price drops down a little bit more then

it goes up what do we do the whole time

this is happening nothing we're not

doing anything this is a higher time

frame principle most of you are all

begging for a higher time frame

principle to trade with this is the

beginning building blocks to that okay

market trades lower lower what do we do

here nothing

we're not doing anything here yet okay

nothing trading lower lower lower lower

all of a sudden boom it hits equilibrium

over here now we can start studying

price we want to study price

on the lower time frames we'll look for

entries but i'm not teaching you entry

signals here i'm giving you context as

soon as we get to equilibrium we are now

at fair market value so the market is

permitted

to be bought

okay at the banking level they will be

able to buy at these levels because

they're not at a premium

based market

the levels that are trading at this

level here

are at fair market value

now banks are just like anyone else if

you go to the grocery store and you see

steaks for ten dollars of uh i don't

even know what they cost because my wife

does all the shopping the uh if a state

costs ten dollars at the market

and it drops down to eight dollars and

fifty cents a steak that's probably you

know a discount and it may not be that

price i don't know but for the sake of

analogy we're using it

that means that we are now at a discount

anything below equilibrium is now a

discount market

when markets go below equilibrium

they do not spend much time below

equilibrium and there's usually a very

dynamic price move away from that

especially if the context behind the

marketplace is bullish

now

looking at this framework we have here

we had an impulsive price swing here

a little tiny little tracing came back

to equilibrium rallied one more time

took out the high over here and then

sold off

okay went back down into equilibrium

again and went to a discount

below 50

of the impulse price swing

that is now at a discount

so the market on

the banking perspective is that this now

is now at a discount

it is allowed to be bought now you just

don't go indiscriminately in there

trying to buy it just because it goes

back to 50

or less that's not enough you got to

have more information

but for now i just want to give you

when we have a bullish scenario for a

marketplace okay if we think it pairs

bullish

we look for impulsive price swings on

the daily chart the frame higher time

frame ideas there's other trades that

you can take in lower time frames in

between these but for now i want you

primarily focused on just this

because it'll give you all the things

that you've probably been lacking with

higher time frame ideas and

the beginning blocks of directional bias

because it's daily

it gives you a lot of time too you don't

have to be sitting in front of an

intraday chart

you don't have to worry about the boss

catching you doing something and

stealing time at the job

this gives you a lot of flexibility and

time to prepare for an idea to trade on

so

when we get the equilibrium we know that

we are at fair market value it's a

market that could be bought if we are

bullish but we can't buy it

we can't buy above this level up to here

okay that's that's the point what i'm

saying

the best buys come at equilibrium

or less

anything below equilibrium or 50 level

is viewed as a discount

now

the wonderful thing about understanding

this is

when a market's at discount and its

underlying

uh basis is bullish discount prices

don't stay

in the market very long the market's

going to want to run away from that

really quick

because this is a daily chart this isn't

that bad in terms of how much time it's

spent down here

below equilibrium but you can see

finally it

explosively moved away from that and

rallied up through what i asked you guys

to do

in the third

tutorial which was to on your charts

mark out areas of where equal highs

would be

and where old highs would be

the market rallies from that price point

and goes right back up and clears out

these equal highs

when these equal highs are taken out if

you were a trader that only took a long

in this area and it don't have to be an

exact science as far as where it was

we're going to speak in general terms if

you went along somewhere in this small

little consolidation before the

expansion

okay

between buying the 95 big figure roughly

up to

these equal highs that's about 98.50

yeah about 98.50 and you bought around

95.50

sets 300 pips move

on a signal that would have formed it

took a little bit a while

to

come to fruition but based on

equilibrium

and discounting okay you can frame the

ideas in which the market should react

it should be

viewed as a discount across the board

and if it is in fact bullish the banks

will dog pile on this and send the price

higher and it should be with quick

dynamic price action

understanding where it should be

reaching for

above old highs above equal highs

okay above

um

closing a range

okay which we don't really have in here

but i'm just showing you just in one

example here already the first one it's

300 pips

okay

then we have another price move

all the way up here this there's no real

retracements in here because lots we

have a high

equal a little bit lower here and then

here's one here

if we were to measure the low

to this high it doesn't come down to 50

it's nowhere near i can eyeball that you

can probably do that too

but i probably might

let's just do it because i'm probably

going to have

so you folks that are from different

countries have a hard time understanding

my english let alone

4x if we would have measured just this

impulsive price swing right here

notice that even though we had

the the candle here lower on the fourth

one it kind of up close but it was still

lower

nothing came back down the equilibrium

it stayed at a high price

and it just kept going higher and higher

and higher and higher higher

so if we go back to adding the fib to

that initial

price low

here

and we stretch it because now we we bro

we broke this high

we're going to keep drawing the fib up

on swings that move up

dynamically so we have this big parent

price swing

so now we're going to wait until price

gets back down to equilibrium when do we

start waiting for that when the market

shows a swing high which it does here

then we start counting to the fourth

candle where it drops so the fourth

candle has to move

lower or be lower

than the highest candle that makes the

swing high it's all it's a very simple

thing and then from there we just start

waiting and we count down every time it

goes down to a newer low low lower low

lower low and finally what's a hit right

here

equilibrium that's that 50 mark since it

does that the market is at a fair market

value so that it can be bought on the

banking level it cannot be bought until

it gets to that level or below

it they won't come in they won't do it

it's not based on fibonacci i'm just

showing you in terms of

equilibrium between old highs and old

lows assists evaluation marker that's

all it is okay so the algo will kick

into a buy mode in here especially if

they have orders

at that level or just a little bit below

it and if they are there you'll know

because the price will react immediately

like it does here it hits it one time it

doesn't have another camera touch it

this one gets close to it but it still

rallies away

okay so now watch what happens we have

another impulse swing here

price moves away from an area where we

expect it to rally why do we expect it

to rally there because between this low

and this high

price should be sensitive here on the

upside and it rallies now watch what

happens this is a big big step i'm going

to keep this fibonacci just like it is

i'm going to add another one

right on the low that starts here and it

runs up

here

see that so between this low

up to this high why are we counting this

swing why are we using this fibonacci

price swing michael and not something

else because this one showed reaction to

want to move away

from an area we would expect it to move

and now watch we have a swing high

here's a high lower high lower high and

this candle is lower than the one on the

highest portion of the swing high so now

we start counting down until price gets

to what equilibrium or less

the next candle doesn't do it this

candle does it goes right down through

equilibrium

down into what we call optimal trade

entry

so when we get below equilibrium

all this time in here look how much time

it gives you opportunities to get in at

62 to 70 and a half percent which is the

optimal trade entry sweet spot

if you look at that

price

gathers up more orders

and rallies away aggressively

watch it happens again now we have

another reference point

this is where we expected price to react

and it did it gives us another price leg

we pull it all the way up here

from this low to this high

we get a high a low a lower low on this

one and we're already below equilibrium

look at the buys of the candle we wick

through it

i'm not going to talk about order blocks

here as much as i want to right now

it's for some of you guys that do know

and block you probably know what i'm

talking about before i would say it

but in here we expect price to be

sensitive in here

okay because we're below 50 percent or

equilibrium we're at a discount price

should not spend much time there at all

it quickly rallies away

okay and it comes back down

i could draw a fib on this low to this

hot matter of fact let me just do it

after all that's the context of what

we're teaching here today right

pulling the fib on all these levels

where there should be reaction

okay market rallies up

here's the swing high the next candle

the fourth candle has got to be lower it

does it trades through equilibrium right

into optimal trade entry does it stay

there long no it rallies up comes back

it doesn't break the high comes back one

more time to equilibrium and then

aggressively moves away

and expands expands expands expands

expands and then finally it gives us a

reversal but nonetheless that right

there from buying in here

to here let's look at that in terms of

range

300 pips again

okay you're not it's not every

not every

day setups okay but it's giving you

significant setups if we look at the

moves that we called in here using what

i'm showing you

if you bought down in here

just to this level here's 140 pips

to here it's 272 pips if you held on to

it

it's 400 pips

this price move in here

price should be sensitive right here

i'll throw it in here order blocks right

here you'll learn about those but the

fibonacci we just showed you it's still

there and watch this

we had a price swing here that reacted

off of a level that should be bullish

here's our new price leg here

we have a high and a higher high so we

have a

higher

magnitude price swing that's going

higher

we wait for the swing high to form down

candles right here equilibrium is right

here into the optimal trade entry which

is discount it's got to be below

equilibrium

if the market is below equilibrium we

are in a discount market and it should

not

go below the old blow it forms

in other words wherever the impulse

price swing is

that low it starts from

it can't go below that so think about

what it's already giving you it's giving

you a framework to work within okay i

don't need to know exactly where i'm

buying at i just know a general area i

can fine tune that down into lower time

frames when we do top-down analysis i'll

teach that but for now

if we understand this is the low we draw

our fit from that that a stop loss has

to be below there

on this time frame

so we can buy in this area here put a

stop loss down here define the risk

between that and then how much of a risk

the reward will we get based on how far

should reach up

every time

every time that price

makes an impulse price swing higher

we just wait for it to come back down

and there's no rush we just wait it

takes three candles on the third candle

it can hit equilibrium and go below it

but we need to just simply wait for the

swing high to form and then you watch it

drop down

once it drops down you know what you're

going to be expecting

the price move should be explosive to

the upside because the market goes back

to a discount

below equilibrium it can be as sensitive

at equilibrium but here's what we're

supposed to be focusing primarily on you

want high odds trades you want high

probability explosive price action moves

in your favor

that happens when it goes below

equilibrium because the market will go

to a very

very suppressed levels and when they go

below equilibrium to a discount level

markets will not sustain discount prices

very long if the underlying pinnings of

the marketplace is bullish so it gives

you two things it gives you a context to

work within when you

for buys and it gives you also

a relative strength study that's built

in it should be sensitive it should be

dynamic price action moves away from

that equilibrium or less

more specifically below equilibrium so

that's where the optimal trade entry

idea came from when i was using the 62

percent of 79 tracement levels that you

see on my fibonaccis

well it's this area 62

70.5

and 79 percent okay and

those levels are very very sensitive not

because of fibonacci sake but because

it's really just measuring how far the

per the current price range has been

the algo had a low down here and it had

a high here this is the total range that

we're trading inside of right now

okay right now

this is

this is right now current as of today um

friday's close of september 16th

okay

so right now we are in the range that's

been defined by the high and the low

here

so that level of equilibrium still

exists which is here

so any by condition that occurs below

this level here

is high probability

what does that mean that means you just

measure every single impulsive price leg

higher

when it moves up

actually let's do this let's shade this

area

and that way we'll understand

that anything below

anything below here

that's in a high probability

or

discount market

okay

so now when we when we understand that

we can define every single price leg

that moves up which is an impulsive

price swing

when it moves higher

all we have to do is measure the new

equilibrium point that which it's

created

and here i'm going to start right here

there's the impulse price leg right

there so we have the low up to the high

swing high

fourth count is going to be down it does

hit equilibrium should it respond yes it

should be dynamic does it go higher yes

it does

makes a new high

where does it go to michael

above a previous high over here and then

it trades back down now here we have

equilibrium again it trades the

equilibrium and then aggressively trades

through it you're probably thinking oh

it failed it does

that's what's going to happen sometimes

you're going to lose money i want you to

understand that it's not going to be

perfect but it's going to give you more

context than you have right now

especially if you're new if you have

been looking at price action before you

probably have never looked at it like

this in terms of valuation between

equilibrium and discount and we're going

to teach the the importance of that the

rest of this month and the remaining

teachings but for now i want to

introduce you the idea of viewing price

in this context

below equilibrium here no discount we

come all the way back down and take out

a stop stop runs is what's going to be a

different profile and if you take a loss

that's what you expect you expect this

occurrence to happen where the market

takes the low out well if it does take

that low out what is it probably really

doing it's taking stops out so that it

should be a turtle soup turtle soup's a

false breakout pattern it went below

that low we should see a responsiveness

that's aggressive that moves higher we

see that here okay

market trades up makes an impulsive

price leg

from that low

all the way up to

here

now watch here's the cool part about

this we have a swing high you have the

high the lower high the lower high and

the fourth candle is down does it ever

get down to equilibrium no so we have no

trade we don't catch anything that keeps

going up no problem i'm worried about

you ain't worried about it

next price leg we look for

okay we have this price leg here

we're only focusing on inside the yellow

area that's the shaded discount

portion of this market the dollar swissy

this current market is a discount below

below

this

line here this this is equilibrium the

top of the yellow shaded area and below

is discount

so the market should be responsive

at levels of discount

after we after we see this high form we

look for the high the swing higher form

and the fourth kilo has got to show

willingness to be lower it does and then

we simply just wait we get wait wait

wait wait wait wait wait wait until it

hits the equilibrium and then we go down

to lower time frames and we look for

trading signals

there may or may not been

they may or may not have rather been one

here okay

i'm gonna say maybe you took one there

and maybe it took and you took a loss

great no problem you took a loss here's

a here's a losing trade here and here's

a losing trade here no problem

we had a winner here the market's gone

down into a deeper discount

look at this swing low over here okay

this is the building blocks of

understanding how institutional overflow

will incorporate

bullish order blocks

when market comes down into a discount

and a deep retracement of this impulsive

price swing

you're looking at the down candles right

at the low

okay if you have two of them

consecutively it begins at the top of

this candle right here

so draw that out in time the market goes

into that area this is a buying

opportunity you would go down to a lower

time frame again the daily chart

is very high it's it's high time frame

so you're going to be able to break that

down into four hours 60 minute 15 minute

and five minutes

look for buying opportunities in that

that area for discounting market

immediately aggressively

moves away

when we get that we get another price

leg and we can take our fibonacci and

measure it to

come up with another

equilibrium

doesn't come back down to discount or

equilibrium in here so we don't have any

trade here the market rallies again

from that level we put our low on our

fibonacci

and here's our

high here

so we have a high a lower high and a

down candle

it hits equilibrium we get a response

rallies up

trades right back up to an old low

rejection

i'm not looking for sell signals we're

not teaching that here

now we have a higher

magnitude price swing

all this impulsive price swing even

though it's broken up into three legs

you still have to measure that because

that's the end

there it's the parent price swing that's

currently being traded in right there

okay so

this movement here when price gets down

to equilibrium we would study and see if

there's a reason to be a buyer there's

an order block over here so it may be in

something to look at in a lower time

frame

maybe there was a loss maybe you didn't

take a trade i don't know but price goes

down into a deeper discount trades right

into

bullish overblock

price hits it does it spend much time

there no it rallies aggressively and it

fills in an area where price had already

moved in rather quickly

and i'll just toss this in there from

for

teasing purposes it goes right up to the

bottom

of this bullish candle which is a

bearish order block and that's an area

where you would look to take profits on

a long position

if you did something like that

buy and say you bought it right here in

the middle less range here and you got

out there

that's 175 pips

factoring sped by 170 pips

how can anyone be upset with something

like that when you're waiting around

you're not getting a million trades okay

there's not a lot of this is the daily

chart so you're getting about one per

week

really good high odds opportunities so

when you see moves like this okay you

can see uh there's a willingness to to

recapitalize these levels based on the

fact that market goes to a discount

uh we have the same price swing back

here you always use the same ranges that

we're

currently in

this range is still in effect

mark comes back down into the 79 certain

channel level which is still a deep

discount market

and also it blows out an old low so

there may be some stops down here that

the market takes out now think if the

market's going to go higher generally

now think if the market's going to go

higher

and it's bullish and it comes down below

an old low

that's generally going to be a stop loss

run that was the first thing i taught in

2010 to look for dynamic price moves if

you understand what a bullish market is

okay you want to define every time the

market creates a low and then violates

that low if it does that generally that

means that the market makers or the

institutional banking algo will go down

below the lows and gather up any orders

that will be resting below those orders

i'm below that low this low here it's

violated here immediately rejects and

goes higher this low here

it goes below here rejects immediately

and goes higher

this low here it goes down below it

rejects immediately goes higher so now

think about what i've just given you

i've given you framework to map out what

equilibrium is okay what is that

and then i told you what the benefit of

knowing what below equilibrium is it's

discount

so when you're looking for a market when

you're looking at a range in the

marketplace and the market goes below an

old low that gives you context to look

for what stop raids below the lows and

there should be a reaction going higher

if the market's bullish

if the market's underlying tone is

bullish then we're going to frame all

that stuff but for now i want you to

study go in your charts and you'll see a

plethora of these things occurring all

the time

and it gives you the building blocks of

knowing what trading setups form how the

market should react and you'll start

seeing these things before they happen

you want to study them in the past first

but then start looking for them to

anticipate

future moves based on what i'm teaching

here

so again in summary we understand that

equilibrium is the midway point of a

range we need an impulsive price leg

higher

once we identify that an individual

impulse price swing

we

run our fibonacci from the low up to the

high and then we wait for four candles

once this fourth candle is lower than

the highest one we start waiting for

price to come down into equilibrium when

it does that

we can go in and hunt for buying

opportunities on the lower time frames

we blend in institutional order flow

ideas like the order blocks mitigation

blocks breakers turtle soups

okay and optimal trade entries all those

things either one of them any one of

them can be applied for a buying

scenario but if you ever see the

conditions that's bullish and a low is

swept out

that's when you anticipate a turtle suit

the question i get all the time is how

do i know if the market's going to keep

going lower or if it's going to just go

below an old low and then rally up this

is the beginning basis point of knowing

when that occurs and when not to expect

it to uh to turn around

so

we have the market reacting off of this

it rallies up now we have another price

leg right in here it took out an old

high so

we can go over here draw our fibonacci

on that low

up to this high

price comes down to equilibrium we start

hunting for buying opportunities right

in here in a lower time frame i don't

know if there's anything there yet

you'll have to go and look in your

charts yourself but we go down into 62

percentation level which is now discount

okay so

when we identify equilibrium that's the

50 level

when price goes below 50 percent it it's

at a discount when is it the highest

probable

degree of bullishness at a discount

price

that's when you have this

the 62 to 79 tracement level

in that area right there that's the deep

discount that we look for

in bullish conditions and why fibonacci

62 to 79 transfer levels work

any other time fibonacci is going to

fail you all the time it's the

foundations behind price action that

cause these indicators to work sometimes

even overbought sold indicators will

work if you apply these ideas to them

bullish divergence uh trend following

hidden diversions okay or type 2 trend

following which is uh really what it is

developed and discovered by nick van

nice and not george lane by the way

the

the ideas have to come by way of

sound

price action understanding if it's not

there based on what the foundations of

price action are implying then it's not

going to work it doesn't matter what in

here you slap on your chart you need to

have the underpinnings of the market

being dictated by price action not by

mathematically derived or crunching of

past price to give you some

prognostication it doesn't work like

that the market will not respond to an

indicator the indicator is only

reflecting a mathematical historical

reference of something that price has

already done

that has no basis on what the market's

going to do going forward so when we

look at markets we have to number one

define what these price ranges are that

means number one if we're bullish all

we're doing is waiting around what are

we waiting around for michael we're

waiting for a price move well i'm

missing all that yeah you probably are

and that's patience

traders that make money professionally

or manage funds are not chasing

everything that goes on in the

marketplace they know exactly what

they're looking for

once you get a price run like this it's

an impulsive price swing then you wait

what are you waiting for four candles up

here when the fourth one comes then you

simply wait for it to come back down the

equilibrium once it gets to equilibrium

you can look for a signal

but i'm stressing the difference between

equilibrium versus discount is you want

it to now go below equilibrium into

62

minimum

down into 79 tracement when it does that

that's when you have the highest

probable degree of bullishness while the

markets in a discount

then you should see

explosive price acting to the upside

if you're using a daily chart you'll be

able to use this as a day trader as a

short-term trader a position trader a

swing trader

nothing has been changed in the delivery

of what i look for

relative to bullish order blocks

turtle soups all that business here's

the cool thing

if we understand that we're bullish in

the discount zone like we've had here

defined by this fibonacci level okay

down in this area here

we're looking for specific things to

happen we're not just looking at um well

i just use the term

zone but not like zone like supply and

demand zone in this

section or or well let's say here it's

not because it's not really defined in

the sense that it's supplying demand

zones but

it's a total area of valuation

where between equilibrium and less

then it's in a discount

so

if you're going to have this as a range

to work with them what inside of the

range are you really specifically

looking for okay well you're looking for

specific reference points in terms of

institutional order flow that means a

stop run like we defined here

and here

where the market went lower than a

previous low in here and then you

anticipate what the market to expand to

the upside

if we understand that that's the

occurrence that should take place

when we're down here and we're looking

for bison areas so if it goes below

equilibrium and blows out a fibonacci

level and you take a loss just find the

low that it just blew out and then

expect the buy signal there

then and then you're buying at a really

deep discount then you're going to get

it explosive move the upside so now if

we're using

false breaks below previous lows down

here what can you do to get out

of a profitable position the same thing

you look for a high

if you're buying down here after stops

been run you take your profit once this

market goes above a previous high

over here

the market makes a lower low it rallies

okay it rallies up

starts to retrace where you want to get

out at when it gets above

old high here's an ohio you take your

profits right there but wait a minute

michael wait a minute it didn't go above

this one here what if i would have held

on to that one then you would have been

greedy

he gave you two chances to do it the

market made a new high here

turn back a little around and then one

more time punched above it

get out above an old high

markets will distribute or let me say it

this way market makers and

smart money will distribute long

positions above old highs it doesn't

have to be the oldest high

it didn't go over above this one either

you didn't go above this one you don't

need it to once it creates a high they

they only allow price to retrace to

allow stops to build up above an old

high that's how they engineer liquidity

so when engineered liquidity comes in

the marketplace in the form of a buy

stop protecting a short position that

somebody out there

you know foolishly put in there then the

run price above it hitting those buy

stops those buy stocks become market

orders to buy the market and they sell

to those buy stops their long positions

they accumulated back here that's all

institutional order flow is

understanding the storyline between what

the highs and the lows are giving you

if you frame the ranges

based on your understanding of what the

market should be bullish or bearish and

that's easy don't worry about that

we'll get to that but for now i'm trying

to trying to institute

a

foundation for looking at price on a

higher time frame and then

managing your expectations based on what

you see on this time frame and and also

building the beginning basis to your

anticipatory skills for looking for

future moves

wait a minute michael

this is this is it you just form-fitted

this one

this is probably just only working on

this chart here

what happens if you go into

um

what happens if you go into a hourly

chart

suddenly it's all going gonna be

different right

it's gonna be different

it's all gonna be different well

here we have a price leg here okay

impulsive price swing

you map that out okay

swing high fourth candle doesn't get

back down to equilibrium no problem we

wait for it to uh do it it doesn't do it

makes another leg higher what happened

we missed it don't worry about it don't

chase it

you know exactly what you're waiting for

price makes the new higher high so we

have the low to the high what are we

waiting for price to get down to

equilibrium okay great but what happens

when it gets below that we're in a

discount market it has to go into the

what 62 retracement level minimum right

here it does does it stay there long no

way it doesn't stay that long what

happens the price moves away from it

and then what does it do

it comes back down into equilibrium

again and it expands again

it consolidates a little bit makes a

short-term high

where do you take your profits at

michael above old time uh short-term

high

boom it rallies above it knocks that

high out and even comes back and clears

this one out too just by a little bit

and then look what happens it retraces

all the way back down to equilibrium

again does it spend time much there no

rallies back up where does it go back to

the bottom of this bullish

uh candle which is a bearish order block

fills it right to the right to the pip

and i'm gonna tell you something i hate

this pair i literally hate this pair

with a passion because it's just a

sneaky pair like the japanese yen and

you swiss folks and uh japanese folks

please don't take offense to that i'm

just i don't like your currencies put

that way

the uh the open online candle is 97.68

and the high on this candle comes in at

exactly 97.68 so you take your profits

right there not at that high you exit

before you get to that remember we

always want to get out before we get to

the actual price leg now we have another

higher high

right here see that so we're going to

wait for price to get down to

equilibrium and less it does it here

again 62 percent

62 retracement level should it stay

there long no does it no it doesn't it

rallies away retraces it back to

equilibrium again and then what do we

expect at equilibrium what did i teach

you about the algo it goes from

consolidation which is always going to

be at equilibrium

to expansion what's it expanding to

to liquidity where's the liquidity at

right here before it takes off going

vertical where is the liquidity at it's

above this high and above this high here

what is it buy stops somebody wants to

protect a short position so if they're

going to buy down here as smart money

they're going to sell it to who somebody

that wants to buy at a higher price the

buy stops here and the buy stops here

look what happens it goes up a little

bit small little retracement and then

expands aggressively what's it going for

it stops right here and then right here

then once we go above look what happens

this movement here what did i teach you

i teach

that markets move in intraday price

action

in

grades of

10

which is 10

10 and

20 pip ranges above a high that's how

far they'll reach for a stop

boom

there you go there's your stop run on

equal highs remember i told you on your

charts mark out areas where there's

equal highs they're too clean

the market's going to want to run there

so anything below 50 is discount

but it can go back to equilibrium and

consolidate and then expand

so i'm blending

two components

giving you introduction to the uh

the interbank algo where you'll know

what the

what the price engines were gonna do

before they do it they're going to offer

the price higher when it's time to do so

but they're going to have to capitalize

discounted markets

before it goes higher it won't just go

straight up for no reason it doesn't it

doesn't operate like that the market has

to come back down to a discount and

below equilibrium

then you get explosive moves then it may

come back to equilibrium

to consolidate and wait for an expansion

then the expansion comes and you look

for the locality above the marketplace

so the difference between equilibrium is

yes it's fair market value at

equilibrium

we as traders we want to trade at

discounts we have to get below

equilibrium when it gets into 62

retracement level or down into 70.5 or

even 79 traditional levels you really

need to be considering being interested

in being long on those markets when your

underlying bullishness is there

waiting for expansion

blending in all the tools that you'll

learn

look at the low here

okay we're below equilibrium here's a

low it comes all the way down hits those

right there what would you expect even

if you didn't see the fibonacci what

would you expect

that this is a turtle suit

it's a run on stops it quickly rejects

comes back down what if it's going to go

lower michael it shouldn't why because

it already took the stops out

so it's only retracing a little bit if

you took another fibonacci

and you put it on this range because

we're looking at an hourly chart here

this would be a smaller price leg in a

lower time frame look what it does it

goes right back down into optimal trade

entry again below equilibrium

optimal trade entry and does it spend

much time down there no it rallies up

hits the 62

62 retracement level again and then

expands boom takes off

there's no magic in fibonacci none

the only thing it helps you do is

visually see what equilibrium is in

price

and then

below equilibrium where is a good price

to enter at a discount and here's the

benefit

if it goes lower than the optimal trade

entry between 62 and seven times chasing

labels and your online bullishness is

there wait for the turtles to buy

boom it's that easy it's that easy

and you don't believe me i know you

don't believe me that's the beautiful

part about this and that's why i want

you to go into your charts and look for

it

if we have a bullish market

okay and we know that markets are

retracing you won't need to see the

fibonacci you can just eyeball it

between this low and this high midway

points about right here

this market move below that is below

equilibrium it's at a discount and guess

what it cleared out stops over here

what's it going to do rally

it rallies up

equal lows in here too clean market

drops down what's it doing coming down

the equilibrium fibonacci levels

optimal trade entry i'm not going to put

the fib on it you can do it from this

low to this high

goes right down into optimal trade entry

explodes why because it cleared out the

equal lows down here boom explodes up to

the outside

what about this low over here michael

sure comes down cleans it out what

should happen it should expand it's

bullish we're in a discount market

they're only coming down to take the

stops below the marketplace out these

are sell stops why would the market

makers want to take the market down to

take out sell stops because it injects

people that want to sell to them that

want to buy

they get counter parties to their buy

orders by having the sell stops tripped

below that low boom explodes

this low right here

violated right here not by much it

doesn't need to be much once it hits

that level then the orders go hot bang

it explodes up the upside

well it doesn't make a new high michael

it doesn't have to you get exited right

here at your old order blocks

you don't need to have

everything out there to come in

alignment the stars don't have to align

to give you a profitable trade you just

need a couple things that make sense

they have to start with

equilibrium to discount for buys it has

to happen if you don't get that

you're not going to have these explosive

buy signals it's going to fall on your

lap it's not just knowing give me a buy

signal michael tell me when to get in

get out this stuff this is why i told

you you have to understand things

before just looking for bullish order

blocks before turtle suit longs before

optimal training entry longs before

stochastic divergence bullishly

none of those things work outside of

understanding the central tenant to what

a market is at equilibrium or below it

at discount that's a favorable buying

market anything apart from that

you stay away from it you wait

or look for the opposite side of the

market which is what we'll talk about

next week when we look at equilibrium

versus premium