ICT Change Of Character (ChoCh) And Market Structure Shift (MSS) YOURE DOING IT WRONG

Summary

In this video, Ethan from Garland Trader introduces a mechanical approach to identifying changes of character (CHoC) in the market, a crucial concept in ICT trading. He explains the concept of fractal market structure, guiding viewers through the process of spotting CHoC by observing specific candle patterns. Ethan emphasizes that practice is key, as traders need to familiarize themselves with this method to improve accuracy. Additionally, he discusses the importance of confluence and trading gaps, as well as his favorite prop firm, Blue Guardian, highlighting its favorable trading conditions and equity protection features.

Takeaways

• 😀 Change of Character (Chalk) is a crucial concept in ICT (Inner Circle Trader) trading, referring to the market grabbing liquidity and then reversing.
• 😀 A mechanical approach to spotting changes of character is introduced, which can be complex but effective with practice.
• 😀 Fractal Market Structure is key to identifying changes of character in the market.
• 😀 Fractal structure involves analyzing candles and their highs and lows to determine when momentum changes.
• 😀 A change of character is confirmed when a market fails to break a previous high or low, signaling a reversal in momentum.
• 😀 The method involves waiting for a break in the previous high/low to identify the true change of character.
• 😀 The fractal structure can help traders avoid trading in ranges by mapping out the market's true trend direction.
• 😀 Fractal highs and lows are used to mark points of reversal and confirm the change of character.
• 😀 In the process, price movements are mapped out to identify changes of character and potential trade opportunities.
• 😀 The use of confluences, like fair value gaps, enhances the ability to trade changes of character more effectively.
• 😀 Practice with bar replay and chart analysis is recommended for mastering this method of identifying changes of character.

Q & A

What is the concept of 'Change of Character' in trading?

Change of Character (COC) refers to a shift in market momentum where the market grabs liquidity and reverses direction. It happens when the market takes out a previous high or low, signaling a possible trend reversal.

Why do traders struggle to identify a Change of Character?

Traders struggle to identify COC because it can sometimes appear vague or unclear. Identifying it requires a deep understanding of market structure and price movements, which can take time to master.

What is 'Fractal Market Structure' and why is it important?

Fractal Market Structure refers to the analysis of price movements at different time scales to identify key points of market reversal. It is important because it helps traders identify precise moments when a Change of Character occurs, making it easier to predict market direction.

How can traders use fractal structure to identify a Change of Character?

Traders can use fractal structure by observing price action and looking for moments when a candle does not break the high or low of the previous candle. This signals the loss of momentum and potential Change of Character, marking the start of a reversal.

What does a 'fractally broken high' or 'low' signify in market structure?

A fractally broken high or low signifies the breaking of a key price level, indicating a shift in momentum. When the market takes out these levels, it often signals a potential trend reversal or Change of Character.

What is the role of wicks in identifying a Change of Character?

Wicks can help confirm whether a price move has broken a previous high or low. A wick that extends beyond the previous high or low can indicate a temporary shift in market direction. If a candle does not break the previous high or low, it could signal a potential reversal.

Why is it important to wait for confirmation after identifying a potential Change of Character?

Waiting for confirmation is crucial because not all changes in price action lead to a reversal. Traders need to confirm the shift by observing further price behavior, such as breaking previous highs or lows, to ensure the Change of Character is legitimate.

What should traders do once they confirm a Change of Character?

Once a Change of Character is confirmed, traders can look for entry opportunities, such as trading gaps or other confluences, which indicate a potential continuation of the trend in the opposite direction.

How can 'Fair Value Gaps' be used in conjunction with Change of Character?

Fair Value Gaps represent areas where the market might return to fill a price gap. After confirming a Change of Character, traders can use these gaps as areas to enter trades, potentially capturing profits as the market fills the gap.

What are some challenges traders face when practicing this mechanical method?

The mechanical method requires a lot of practice and patience. Traders must familiarize themselves with identifying fractal structure and the nuances of price action, as well as develop the skill to differentiate between actual market reversals and false signals.