Summary
Highlights
The seventh episode of the ICT mentorship for 2022 focuses on daily bias and consolidation hurdles. The presenter explains how to analyze daily charts, using the NASDAQ as an example, to identify liquidity runs and market structure shifts. He emphasizes that even he, as an experienced trader, sometimes faces difficulty in determining bias during consolidation.
The presenter details how to establish a bearish daily bias by observing market structure shifts and fair value gaps. He discusses appropriate leverage based on confidence in the bias, recommending lower risk for developing traders. He also stresses the importance of not seeking perfection in trading and embracing imperfection.
When a market consolidates around equilibrium, daily bias becomes difficult to determine. In such cases, traders should focus on smaller time frame intraday charts, looking for liquidity pools and trading intraday volatility, aiming for quick profits rather than prolonged positions.
Using a 15-minute chart of the NASDAQ, the presenter demonstrates identifying liquidity in the form of old highs and lows. He explains how retail traders might misinterpret resistance levels, which are actually liquidity pools. He then discusses a specific trade where he took a long position after a dip, aiming for a defined target.
The presenter highlights the importance of intermarket relationships, showing how the S&P’s price action, specifically a fair value gap and market structure shift, influenced his NASDAQ trade, even though NASDAQ itself didn't show the same clear signals. He also introduces the concept of using the Dow as an 'indicator' to confirm market sentiment, noting its unwillingness to go lower alongside the other indices as a bullish signal for going long. This demonstrates how observing correlations and divergences between related markets can provide crucial insights, especially in confirming 'fake breaks' (turtle soup patterns) and anticipating reversals.
The presenter shares his live trading experience, explaining how he uses small 'leader' trades at the market open to gauge price action and gain 'Intel,' even if these initial trades result in a small loss. He justifies this as an investment in understanding market delivery, crucial for larger, more confident positions later in the day. He also contrasts this approach with the unrealistic expectations often portrayed online, emphasizing the importance of realistic goals and continuous learning.
The presenter addresses common misconceptions about trading, such as needing to be perfect or the lure of unrealistic quick riches. He emphasizes that the primary goal of trading is simply to make money, not to impress others. He highlights his consistent weekly profit of $6,000, showcasing that a steady, manageable income is more sustainable than chasing large, infrequent gains. He also transparently discusses his 'loser' trades from previous videos, explaining that not all negative outcomes are errors, but rather part of the learning process or strategic information gathering.
He reinforces his commitment to transparency by promising to show future losing days when they occur, stating his personal refusal to end a trading day with a negative balance if he has the capability to correct it. He also explains why he uses PowerPoint in his videos (to maintain user anonymity) and addresses viewer comments regarding the unchanging nature of algorithms and his continued focus on indices alongside Forex.