Elements Of A Trade Setup

Definition

"when we refer to elements to a trade setup there's really just two primary concerns and one is obviously context or framework surrounding the idea in other words what makes the idea favorable for a trade"

"it's not just simply well my indicator tells me this or my support and resistance level tells me that there has to be something that builds a reason to want to do this trade"

Framework & Context

Two Primary Characteristics

"understanding these two characteristics together will give you a greater understanding of market efficiency Paradigm how the smart money interprets price and how they influence the general populace or the speculative uninformed money"

Four Specific Principles (Market Conditions)

Four ICT Tools (Reference Points)

Market Reading Process

"it only takes a second or two to look at the marketplace determine okay what characteristic are we trading in so that way you can build a context or framework on how you're going to approach the marketplace"

"sometimes you'll have right away an issue where you can say I'm not going to do anything because the Market's consolidating I am going to be waiting the other three conditions are going to be providing you an opportunity to take action"

Interbank Price Delivery Algorithm

"the interbank price delivery algorithm or what I always refer to as the algo or interbank algo is the actual basically artificial intelligence it's a price engine that when we receive our price for our currencies it's actually 90% done by electronic algorithms so it's all computer-based now"

"it used to be open outcry in the pits but there's no longer an auction Market it's all AI and it's based on the principles I've been teaching for about seven years now"

Market Flow Pattern

"all Market start from a consolidation and move into an expansion that means there's an Impulse move or an Impulse price swing after that impulse swing okay either it goes back to a consolidation again or it goes to a retracement when the retracement happens it goes back down into another level of expansion or after the expansion it can go to a reversal pattern after the reversal pattern it'll see another retracement then back to potentially consolidation"

"these four conditions they interchange throughout the ups and downs and ebbs and flow of the marketplace you're only going to get one of these four conditions"

Starting Point

"the consolidation begins with everything all the moves that take place in the marketplace start from a measure of consolidation because that's where the markets are building orders"

"the market maker keeps Market in a tight range or a defined range until there's enough money on both sides of the upper and lower end of the range that's being defined by the consolidation whichever one has the highest amount of money to be absorbed that's the direction it's going to move in"

Expansion

Definition

"expansion is when price moves quickly from a level of equilibrium"

Coupled ICT Tool

"expansion couples directly with the tool of an order block"

Importance

"when price leaves a level quickly this indicates a willingness on the part of the market makers to reveal their intended repricing model"

Trading Logic

"if we're in a consolidation okay or a point of equilibrium if price were to move up quickly that would give us an indication of looking for a bullish order block we don't want to chase price we're going to wait for price to come back down into the order block"

"where is that going to occur well what do we look for in price the order block that the market makers leave near or at the equilibrium price point"

Visual Example

Pattern Description

"as you can see here there's a consolidation and the blue shaded area very clear defined consolidation it's got a clear discernable high and low and the equilibrium price point is directly in the middle of the high and the low end of that range"

"you can simply take the Fibonacci tool that you have in all your platforms lay the Fib from the high and the low in the general consolidation find that midpoint"

"eventually the market will move outside of the consolidation you can see that impulse move in that tan shaded box it moves away from the equilibrium price point and then all we have to do is go back to the down candle right before that up move that down candle or Black Candle I'm drawing a small little segment off of that's the bullish order block"

Entry & Result

"when the price comes back down into that and hits it that's where we would be buying and then obviously you can see it hits that level and expands to the upside over 100 Pips just by using that simple principle"

"it repeats itself all the time it's in price action all the time"

Retracement

Definition

"retracement is when price moves back inside the recently created price range"

Coupled ICT Tool

"when we're thinking retracement the goto is for ICT tools we're looking for liquidity gaps and liquidity voids"

Importance

"when price returns inside a recent price range this indicates a willingness on the part of the market makers to reprice to levels not efficiently traded for fair value"

Trading Logic

"when we look for price when we see run ups real quick and run downs in price in other words real quick rises up or real quick rallies down in price many times that range that's created will want to come back in and close that in"

Visual Example

Pattern Description

"as the market drops aggressively like that there's going to be Pockets where the price wasn't actually delivered on every available price level at that in that range it moved too quickly it skipped or it created gaps"

Trading Strategy

"what we'll do is is we'll wait as a Trader we won't chase price we'll wait and say okay there's going to be either an indication that get long and try to fill in that range or we can wait for it to come all way back up to it and fill in the liquidity void once it hits it then it'll probably resume going lower and that's what we're looking for in terms of liquidity void"

Reversal

Definition

"the reversal is when price moves the opposite direction current Direction has taken in"

Coupled ICT Tool

"if we are looking for reversals we're directly coupling that with an ICT tool of liquidity pools"

Importance

"when the price reverses Direction it indicates the market makers have ran level of stops and a significant move should unfold in the New Direction"

What To Look For

"what do we look for in price the liquidity pools just above an old high and just below an old low"

Visual Example

Pattern Description

"every X indicates where stops would be and the market goes just above those levels and rejects and goes the other way or goes just below those levels where there's an X and rejects and goes the other way"

Consolidation

Definition

"consolidation is when price moves inside a clear trading range and shows no willingness to move significantly higher or lower"

Coupled ICT Tool

"whenever we're referring to consolidation we're directly relating that to an ICT tool of equilibrium"

Importance

"when price consolidates it indicates the market makers are allowing orders to build on both sides of the market expect a new expansion near term"

What To Look For

"we're waiting for the impulse move or impulse swing in price away from the equilibrium price level that is found exactly in the halfway point of the consolidation range"

Visual Example

Pattern Description

"we see here where we've identified a range defined specifically by the bodies of the candles not the Wicks as you can see price moves out in an expansive Manner and then comes right back down to the equilibrium price point and then expands to the outside"

Study & Review

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