Trader Theory
@Trader_Theory
27 Tweets • 2022-09-28 • See on
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The ICT Mentorship Core Content Month 1
Summarized:
The four defining elements of a trade setup are:
1. Expansion
2. Retracement
3. Reversal
4. Consolidation
The specific reference points in institutional order flow
are:
1. Orderblocks
2. Fair Value Gaps & Liquidity Voids
3. Liquidity Pools
4. Equilibrium
Understanding these two ideas will give you a greater
understanding of the market efficiency paradigm:
The market efficiency paradigm describes how "smart
money" interprets price and influences speculative,
uninformed money.
The Interbank Price Delivery Algorithm (IPDA) also
known as the ‘algo’ is an AI that delivers prices.
It is very efficient for markets to be made this way.
The markets are not ‘free’ and are manipulated
especially in the Forex market.
The True Day Daily Range:
IPDA defines the daily range between 12:00 am New
York Time & 3:00 pm New York Time.
The period outside this specific range is referred to as
“dead time”.
The general daily range structure of how the markets
move is as follows:
Price Equilibrium
Manipulation
Expansion
Reversal
Retracement
Consolidation
Expansion:
Expansion is where price moves quickly from a level
of Equilibrium.
When price moves quickly from an area this shows a
willingness of the Market Makers to show their hand.
In this case, we look for Orderblocks at or near
Equilibrium.
Retracement:
When the price moves back inside the recently
created price range.
When price returns inside the recent price range this
indicates the Market Makers want to reprice to levels
inefficiently traded.
In this case, we look for Fair Value Gaps and Liquidity
Voids.
Reversal:
When price moves in the opposite direction that IPDA
has been allowing.
When price has a reversal it indicates that Smart
Money have ran liquidity and a large move should
unfold in a new direction.
Look for Liquidity Pools above an old high or below an
old low.
Consolidation:
Consolidation is when price moves in a range and
shows no movement higher or lower.
When price consolidates it indicates Market Makers
want to hold the price and build in orders on both
sides of the market.
Look for the impulse price swing from the Equilibrium.
What new traders should focus on right now:
Old Highs - Buy Stops or Buy Side Open Float
Old Lows - Sell Stops or Sell Side Open Float
Clean Highs - Liquidity Pool of Buy Stops
Clean Lows - Liquidity Pool of Sell Stops
Sharp Runs In Price - Liquidity Voids
Swing High - Three candle pattern. The up candle.
Swing Low - Three candle pattern. The down
candle.
Equilibrium vs. Discount:
After a market makes a run higher and begins to
retrace lower, look for a drop below 50% of the price
run.
A drop below 50% indicates a discounted price.
This frames ideal buy setups.
Equilibrium vs. Premium
After a market runs lower and begins to retrace higher,
look for a rise above the 50% level of the price run
lower.
A rise above 50% indicates that the price is now at a
premium.
Framing ideal sell setups.
Liquidity Void:
After a sharp run in price, the largest candles that form
at the last are efficiently traded.
Sudden runs in price will leave gaps in price action
that tend to fill later on.
This is described as a void of market liquidity or a
Liquidity Void.
Fair Valuation:
When the price trades back inside its current range
and returns to the levels it moved from, this is Fair
Valuation.
These are good locations to take profits on positions
and do not require moving outside the current range.
Fair Value Gap:
When price leaves a level and only has a small
section of price action in one direction, this is known
as a Fair Value Gap.
They can be objectives for profits or new setups,
depending on the market environment.
Low Resistance Liquidity Run:
When the price has little Resistance on its way
running to an area of Liquidity.
This is classically seen just under an old high or above
an old low.
Price will move quickly normally on the release of an
economic news release.
Market Protraction
At specific times of day, a sudden move happens in
the opposite to the daily range direction.
This is known as Market Protraction or “Judas Swing”.
It is a micro expansion in price-seeking liquidity before
reversing.
Conclusion:
The first month of the 12-month ICT Core Content was
designed to introduce the foundation of ICT’s price
action analysis.
Take Away:
Do not fear missing setups or trades.
They form daily for the institutional mindset trader.
Credit:
Here you can watch this month's module for free on
ICTs YouTube
Original creator @I_Am_The_ICT
Graphics @daytradingrauf
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