2022 Mentorship Episode 02 - newsqlguru/ict-index GitHub Wiki

Top Down Approach, review price action starting on the higher time frame of our preferred trading style, we are building a narrative that helps us determine bias. The goal is to determine which way will price move based on our understanding of market conditions.

• e.g.
  • If we are targeting long term trades, we would develop a narrative for bias on the Yearly, Quarterly, and Monthly charts.
  • If we are targeting swing trades, we would develop a narrative for bias on the Monthly, Weekly, and Daily charts.
  • If we are targeting intraday trades, we would develop a narrative for bias on the Weekly, Daily, and 4 Hour charts.

Before the next time frame begins, we observe price action on the time price going to go higher or lower?

• It is important that we do not try to predict the close of the time frame, only the direction.

Transpose higher time frame points of interest to lower time frames.

• Highs, Lows, Imbalances.

When a significant price move lower is expected always anticipate some measure of stop hunt on short term highs, taking out Buy Side Liquidity (BSL).

When a significant price move higher is expected always anticipate some measure of stop hunt on short term lows, taking out Sell Side Liquidity (SSL).

Run on liquidity, buy stops or sell stops at old highs/lows are run and taken.

Larger liquidity pools exist at equal highs/lows and relatively equal highs/lows.

• i.e. ES has $0.25 ticks per dollar or 4 ticks per handle. ES is priced at $12.50 per tick or $50.00 per handle.

• Premium Market, above 50%
• Equilibrium 50%
• Discount Market, below 50%

Bullish

• Is price in a Discount Market?
• Have Sell Stops been attacked with a run on SSL?
• Is there a Break of Structure (BOS), in the form of a Swing High for a bullish BOS?
• Is there a Displacement of Price, a large dynamic energetic candle that breaks higher than the prior Swing High?
• Has a Fair Value Gap (FVG) been created by displacement, an imbalance in price delivery to one side, in this case buy side.
• Possible Trade Entry on retracement into FVG, when price trades into the FVG a long trade can be entered.
  • Alternative trade entry if FVG retracement is missed, after retracement and before price breaks above the displacement high, a buy order can be placed at the top of the displacement candle with a stop loss at the top (high) of the FVG.
• Take Profit Exit, target the Premium Market for trade exit, when price moves above 50% consider an exit or partial exit.

Bearish

• Is price in a Premium Market?
• Have Buy Stops been attacked with a run on BSL?
• Is there a Break of Structure (BOS), in the form of a Swing Low for a bearish BOS?
• Is there a Displacement of Price, a large dynamic energetic candle that breaks lower than the prior Swing Low?
• Has a Fair Value Gap been created by displacement, an imbalance in price delivery to one side, in this case sell side.
• Possible Trade Entry on retracement into FVG, when price trades into the FVG a short trade can be entered.
  • Alternative trade entry if FVG retracement is missed, after retracement and before price breaks below the displacement low, a sell stop can be placed at the bottom of the displacement candle with a stop loss at the bottom (low) of the FVG.
• Take Profit Exit, target the Discount Market for trade exit, when price moves below 50% consider an exit or partial exit.