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

Summary

The speaker discusses trading concepts like equilibrium, premium, discount, impulse price swings, Fibonacci retracements, optimal trade entries, turtle soup buys/sells, trading ranges, and identifying swing highs and lows. He explains how to identify premium and discounted markets using fib levels and price action, set up turtle soup buys/sells, sell at premium prices, define ranges to trade inside consolidation, and take profits below swing lows/above swing highs. The goal is providing actionable setups to trade profitably without needing a directional bias.

Takeaways

• 😊 The topics covered are premium vs equilibrium markets, identifying price swings, using Fibonacci retracements.
• 👍 Premium markets are above the 50% equilibrium level of a price range.
• 🌟 Optimal entries to go short are between the 62-79% Fibonacci retracement levels when in a premium market.
• 😎 Take profits at below recent swing lows after entering at premium areas.
• 📈 Impulse price swings make up larger price swings. Compare different swing timeframes.
• 🔍 Wait for 4 candles to confirm a swing low before considering buy limits below it.
• 🤔 Consolidation trading favors using turtle soup and premium/equilibrium concepts.
• 💡 The same concepts work on higher timeframe charts like daily and hourly.
• 🎯 Sell high buy low. Selling at premium prices and buying at discounts makes sense.
• ☝️ Focus on trading ranges rather than needing a bias of the overall trend direction.

Q & A

What is meant by a market being at a premium price?

A market is at a premium price when it is trading above the midpoint or 50% level of the current price range, defined by the most recent swing high and swing low. This indicates the market is at an overbought area.

Why is it advantageous to sell at a premium price?

Selling at a premium price allows you to sell into market strength and overbought conditions. This means there is an increased chance of the market reversing and moving lower after hitting your entry.

What defines an equilibrium price?

Equilibrium price refers to the midpoint or 50% retracement level of a price swing, as measured from the swing high down to the swing low. It is the balancing point between bullish and bearish control.

How can you trade profitably inside a consolidation range?

You can sell at premium levels when price goes above equilibrium and buy at discount levels when price goes below equilibrium. Taking profits near previous swing points.

Why is selling above an old high with stops such a high probability setup?

Old highs often have buy stops clustered above them from previous longs trying to get break even. Running through these stops adds fuel to drive price lower.

What defines a proper price swing?

A proper price swing consists of a visually obvious and structurally sound impulse move, typically consisting of a series of 3 pushes creating new highs or lows. The more clean the swing looks, the better.

Where should you anchor your Fibonacci levels?

The Fibonacci levels should be anchored from the most recent discernible swing high down to the most recent swing low. Using the most recent swings gives the most relevant levels.

Why not use the Williams Fractal indicator?

The Williams Fractal requires 5 candles to form a swing high or low. Price action trading only needs 3 candles, allowing you to define ranges faster and with less lag.

What is the optimal trade entry sweet spot referred to?

The optimal trade entry (OTE) sweet spot is the 62-78.6% Fibonacci retracement zone. This aligns price with previous swing points to offer high probability entries.

Where should your initial profit targets be placed?

Initial profit targets should be placed just below the most recent swing low when selling, or just above the most recent swing high when buying. Then trail stops to exit.