2022 ICT Mentorship Episode 14

Summary

In this trading walkthrough, the presenter demonstrates their strategy for trading micro Nasdaq futures during a market structure shift to the upside. They focus on identifying fair value gaps, planning entries and exits, and monitoring price action rather than profit numbers. Key techniques include using limit orders, scaling out of positions, and observing consolidation patterns for potential reaccumulation. The trader also cross-checks other micro futures, like the E-mini S&P, to gauge market momentum. Throughout, they share real-time decision-making, from setting target levels to adjusting stops, providing an insightful, practical example of disciplined short-term trading strategies.

Takeaways

• 📈 The trader identified a market structure shift to the upside and used it as a signal to enter a long position.
• 🟢 The trade focused on Micro NASDAQ futures, specifically using 12 contracts.
• 🔍 Entry was based on price dropping into a fair value gap from Friday's close.
• 🎯 Key target levels were 14,160 for initial interest, 14,180 for partial profit-taking, and 14,220 for full exit.
• 🕵️‍♂️ The trader emphasized watching candle behavior and price action rather than account profit numbers.
• ⚡ The trade anticipated short-term consolidation and potential reaccumulation in a 'bowl flag' formation between 14,122 and 14,138.
• 💡 The trader considered retail resistance at 14,160 but expected upside continuation.
• ✂️ Partial profits were taken at intermediate targets while stops were moved to break-even.
• ✅ Correlated instruments like the e-mini S&P Micro were monitored for confirmation and confidence in the trade direction.
• 📝 The trade execution demonstrated patience, strategic planning, and reliance on technical levels such as fair value gaps and order blocks.

Q & A

What is the main strategy the speaker is using in this trade?

The speaker is using a market structure shift strategy, looking for a gap fill from Friday’s close. They are targeting a price movement to the upside, specifically focusing on fair value gaps and price expansion to reach a target of 14,220 on the micro Nasdaq futures contracts.

What role does the fair value gap play in the speaker’s trading strategy?

The fair value gap is an area where the price has previously left a void. The speaker looks for price to drop into this gap, expecting a reversal or continuation towards higher levels. They use this gap as a key reference point for entry and target levels.

What is the significance of the price levels mentioned, like 14,160 and 14,180?

The price levels like 14,160 and 14,180 are important resistance and support levels based on prior price action. The speaker anticipates consolidation and potential breakouts around these levels, where retail traders might look to short, but the speaker expects the price to continue moving upwards.

How does the speaker determine when to take profits?

The speaker plans to take profits when the price reaches certain targets, such as 14,180 or 14,220. Specifically, they aim to take off six contracts once the price approaches 14,160, to fund the position and adjust stops to break-even, allowing them to let the remaining position run towards the final target.

What does the speaker mean by ‘pausing’ or ‘consolidating’ around a level like 14,120 to 14,138?

When the price pauses or consolidates, the speaker expects price to move sideways within a narrow range, possibly forming a pattern like a bull flag. This provides an opportunity for new longs to accumulate, setting up a potential breakout to higher prices.

Why does the speaker mention retail traders and their potential behavior?

The speaker refers to retail traders to highlight how they might react to price movements at key levels, such as 14,160. Retail traders may see this level as resistance and attempt to short, but the speaker anticipates the price will push through this resistance, catching those traders off guard and continuing the trend upwards.

What is the significance of the ‘limit order’ in the speaker's strategy?

A limit order is used by the speaker to enter the market at a predefined price, in this case at 14,180 or 14,220. The limit order ensures that they don’t chase price but enter at a price they believe is favorable for the continuation of the move.

How does the speaker adjust their strategy during the trade?

The speaker adjusts their strategy based on price action and market behavior. They planned to take off six contracts at a certain level (14,160), but then decided to close the position earlier because the gap was closing, showing flexibility in responding to market conditions.

What does the speaker mean by ‘busting through the door’ in the context of price action?

‘Busting through the door’ refers to the idea of price breaking through a resistance level decisively, without significant hesitation or retracement. The speaker expects the price to move upward strongly once it overcomes short-term resistance.

What is the speaker's reasoning for considering the E-mini S&P as part of their analysis?

The speaker references the E-mini S&P to gain additional confidence and context for the Nasdaq trade. They look for a similar bullish movement in the S&P to confirm that the overall market sentiment aligns with their Nasdaq position, providing further conviction in the trade setup.