2022 ICT Mentorship Episode 3 . Internal Range Liquidity & Market Structure Shift [No Rant] — Transcript

Full transcript

1. 0:04All right. So, here is that chart again.  15-minute time frame on the E- mini NASDAQ
2. 0:11100 futures contract for March delivery 2022. And  take your attention over here. Okay, this old low
3. 0:23and these relative equal highs. See  that old low below that is sell stops.
4. 0:30and relative equal highs. Above that is buy  stops. Now, you could have used this high
5. 0:35here. There's nothing inherently wrong about  that. But whenever I see equal highs like this,
6. 0:39my and if it's higher than an old high over here,  I'm going to use that. So, that way there's a
7. 0:44little bit of insight for you for your study  journal. The sellside liquidity, you can see
8. 0:50that the market trades down, hits that, runs  through it, then rallies all the way back up,
9. 0:56clearing equal highs. So the buy stops have been  taken here. Okay. So at both of these price points
10. 1:03here and here, that's the I guess the point at  which you'll look for or anticipate a market
11. 1:13structure shift. You don't force it. Okay? I see a  lot of people try to teach my concepts. It'll talk
12. 1:19about market structure breaks or shifts and we'll  use that term interchangeably. But for intraday, I
13. 1:27want you to think about intraday market structure  shifts because it's not necessarily a break in
14. 1:32market structure that leads to prolonged multi-day  movement. Okay, what do I mean by that? If you see
15. 1:43a market structure that's bearish and it's broken  to the downside intraday that may just lead to an
16. 1:50intraday price leg that may eventually see that  high be taken out in the same day. So that's why
17. 1:57I'm using the term market structure shift, not  market structure break for our conversation here
18. 2:04on this mentorship. know that when I'm going  to lean on that term market structure break,
19. 2:10it means a little bit more in context versus an  intraday shift in market structure just means
20. 2:16that there's likely a downside draw or an upside  draw intraday by saying the term shift. Okay,
21. 2:23so there's a little bit of semantics there. All  right. So, we have both of these areas here and
22. 2:31here where there would be a likelihood of a market  structure shift up here. We'd look for a fake run
23. 2:39above here. So, that fake run above, how do we  know it's going to be a market structure shift
24. 2:44that's bearish? I get that question a lot,  even from mentorship students. What you're
25. 2:49looking for is the evidence I'm going to show  you here tonight. Okay? Forget everything else
26. 2:53everybody else says about market structure breaks  and shifts and all that stuff. This is it. Okay,
27. 2:58this is the brass tax. There's absolutely nothing  else that you need to know about it. I promise you
28. 3:04if they add anything to it, it's just because they  want to sound and look different. But this is the
29. 3:08algorithmic perspective of a market structure  shift in today. If you look at this short-term
30. 3:15high here, right before this low formed, when  this high is taken out right there on that candle,
31. 3:22that's significant. Only only if this run  down here has traded into sell stops, okay,
32. 3:33below an old low of some kind. It could be  a a double bottom. It could be a single low.
33. 3:38Okay. But it's got to be trading under some  retail idea that would be viewed as support
34. 3:48up here. The same thing we're trading above  highs. So we know that above old highs. A
35. 3:57neophyes perspective will be these are unknown  orders. So therefore, that's a flawed perspective
36. 4:03on price action. How do you know there's liquidity  up there? How do you know there's buy stops up
37. 4:07there? It's just logic. It's simple. Look at the  chart. Everybody's trying to do something based
38. 4:12on some kind of theory, logic, whatever, some  system. There's buyers and sellers coming in at
39. 4:20all times. They're buying and selling quote  unquote strength or pressure has absolutely
40. 4:26no bearing on where these prices are going to go.  And when that run above these relative equal highs
41. 4:34happens right there, you're anticipating a market  structure shift. You're not forcing it. You're not
42. 4:42trying to get ahead of it. Okay? I don't think  any of you are going to have the skill set to do
43. 4:47that. There are ways to know when to sell a short  rate right above that and not even wait for the
44. 4:51shift in market structure. Just like there's  ways to know to be a buyer down here without
45. 4:56seeing that short-term high broken, then looking  for a buy over here. The opposite. See this swing
46. 5:04low? Let me go back to this for a second. We have  this high on this candle. Then we have the candle
47. 5:11right after that here, the highest one, and then  the lower high of this candle here. So that's a
48. 5:16swing high. Very simple little pattern, but it  means a lot when it's in the proper context.
49. 5:24When this high is broken with this particular  candle right there, that is significant only
50. 5:30on the basis that we have taken liquidity  out of the marketplace. That's it. So when
51. 5:35it broke this short-term high, this is more  meaningful and then the market will start to
52. 5:40seek buy stops, okay? Or buy side liquidity  that would rest above here, here, and here.
53. 5:51All I'm going to do is add a few annotations.  And this is about as extensive of lipstick we
54. 5:57put on our chart. I know it's shocking, right?  Can you still see the candles? Cuz it might be a
55. 6:05little obstructive. I'm being facitious. You see  these guys out there with these charts that have
56. 6:10graffiti all over it. You can't even see the price  candle. Nothing. You can't you can't even see any
57. 6:14of it. But there's all kinds of overlays of all  kinds of nonsense, which means absolutely nothing
58. 6:19because algorithms could care less about any of  that stuff. Triangles, harmonic this, crabs. It's
59. 6:26crazy, I know, but hey, everybody's got to have  a religion. So, here's those sell stops. So, this
60. 6:34little area here shaded in, that's a area where  sell stops would be residing below that 14600
61. 6:42level. Okay, on that 15-minute time frame. So,  the market dove into that liquidity and you may
62. 6:49or may not know that is a buy. You don't need to.  You anticipate a shift in market structure. When
63. 6:56the market rallies above, when does that happen?  On this candle right here, see that little light
64. 7:00bulb? That's when you're thinking, "Okay, now I  have a condition in the marketplace that I might
65. 7:07see an opportunity intraday. Let's see if there's  further evidence to that. Short-term high is taken
66. 7:15here. We traded above it. It does not need to  close above that. Okay, real important. Once
67. 7:23that candle closes and this candle opens, you're  going to monitor this candle and you want to see
68. 7:29as soon as this candle closes, does it create that  fair value gap? If it creates a fair value gap,
69. 7:36again, that's a candle at a high, one single pass  up. Next candle has a low that doesn't completely
70. 7:42overlap all this. That's a fair value gap. Real  simple. Okay. This candle is where you would look
71. 7:47to potentially trade at the earliest because now  there's a gap there. The market trades down into
72. 7:52that. Boom. Takes off. Here is insight that  everybody needs to understand because they're
73. 7:59out here running around on YouTube trying to  teach order block theory. Order blocks. Okay,
74. 8:05I invented it. It's mine. No one talked about  it before me and I first mentioned it in 2010
75. 8:11on baby pips. Prior to that, 1996, I was only  teaching it to people one-on-one in teachings.
76. 8:17That's it. Okay? You can't find it in books prior  to that. It's mine. No one else taught it before
77. 8:23me. It is mine. So, I'm going to correct all of  you today so that way you can teach your people
78. 8:28correctly and not hurt them. See these down closed  candles? See that? That's all one continuous order
79. 8:37block. What's it doing? It's inside that pool of  liquidity. Sell stops. Where's the open on that
80. 8:47series of down close candles right here? That's  the price level extended out in time. Boom. So,
81. 8:54inside this fair value gap, this opening  price on the order block, that's your buy
82. 8:59plus three pips or whatever for spread. And  that's what you would use for a limit order.
83. 9:06That's pretty neat, isn't it? Well, price  starts to run where? Above the highs where
84. 9:13buy stops would be here, above this high  here, and above this high here. Now,
85. 9:20let's go into a one minute chart and see  how that looks a little bit different,
86. 9:23but still has the same characteristics. Here's  that same price structure just on a one minute
87. 9:30chart. The same logic still there, right? swing  high taken after liquidity has been traded into
88. 9:38this short-term high gets violated.  Right? When this trades down in here,
89. 9:43what's actually occurring? Okay, put this  in your notes. Highfrequency algorithms are
90. 9:48hammering. They're just throwing orders  in. By buy, buy by by that is not Okay,
91. 9:55here's an important thing. That is not causing  Okay, it's not causing the market to go higher.
92. 10:05It's just volume that's coming in the algorithms  that deliver price, that offer price, they're
93. 10:14constantly offering the price in the marketplace,  that's what's beginning to spool and go higher.
94. 10:21Okay? And regardless of where you want to  trade at, your limit orders, they may not get
95. 10:25filled. where you're trying to buy with a market  order. You may think you're getting in at 14662,
96. 10:33but by the time your order is executed and  confirmed, you're in 14664. That's slippage. Okay,
97. 10:41that's negative slippage. If you were trying  to buy it at 14662 and it filled you at 14661,
98. 10:47that's positive slippage. That's better than what  you were expecting. So when price starts to rally,
99. 10:54all this is is a default to the algorithm  constantly offering price at a higher price.
100. 11:01Okay? And the logic and argument for anybody  that wants to say, "Oh, what's the buy and
101. 11:05selling pressure? This guy has no idea what he's  talking about. I know somebody that used to trade
102. 11:08on the floor and he's laughing at ICT right now."  Okay? Go into your charts. Forget that. I'll I'll
103. 11:14let you have that perspective for a moment for  the argument, but go into the charts and see
104. 11:19if what I'm not suggesting to you is the truth.  Okay? I could sit here and do a complete series
105. 11:26on all the things that lead to what I'm saying  is true, but none of you will still believe it.
106. 11:31I'm I'm showing a live account and entries and  executions and they're still doubting it. So,
107. 11:36no matter what I do, there's going to be people  out there, but you didn't do it wearing orange.
108. 11:41You didn't do it in your Corvette that you  flipped, which I don't flip Corvettes. You're
109. 11:46getting all kinds of stuff out there. Nonsense.  But you don't see anybody going into that Robin
110. 11:50Cup. Hello. So, we're looking at the swing lower  right here. Market breaks down, trades back up
111. 12:00into this, back up in this fair value gap here,  and sells off. And there's another fair value gap
112. 12:05right there. Trades up into that as well. This is  a one minute chart. So, it's giving you multiple
113. 12:12points of execution that you could trade on and  then dives. See these two candles here? That's one
114. 12:20consecutive bearish order block. The opening price  extended out in time. Why is this a good bearish
115. 12:28order block? Because it has that gap and it's  taking liquidity. And there's a market structure
116. 12:36shift. There's your high frequency, high power,  high probability, bearish order block. Forget
117. 12:42everybody else's interpretation of my concept,  the order block. That's it. Okay. What is an order
118. 12:52block? You get you see a lot of people asking what  is an order block? Only my students and mentorship
119. 12:56know what an order block is. Okay. What it is,  it's a change in the state of delivery. Okay, it's
120. 13:03a change in the state of delivery. The market's  being offered higher, higher, higher, higher in
121. 13:10these two up close candles. How did this series of  up close candles begin with this candle's opening
122. 13:16right there? That opening once this candle trades  below it, that changes the state of delivery. So,
123. 13:26you go back to that point of reference right  there. And that's why it's sensitive. the
124. 13:31algorithm remembers that right there. Okay, that's  all I'm going to give you on the free mentorship
125. 13:36level. But that is your answer. Okay, that is what  an order block is. It is a change in the state
126. 13:42of delivery. Much in the same way, all of this  movement down here, all these down close candles,
127. 13:47the opening on that candle starts this series  of delivery on the downside. When that opening
128. 13:52price gets violated here, it changes its state  of delivery. Now, it was offering sellside.
129. 13:59When it goes above that opening, now it's offering  buy side. What will it be doing after that? It
130. 14:05will be looking for buy stops. Buy stops. Buy  stops because it's offering buyside liquidity.
131. 14:12So with that, I want you to think about how this  is useful. Okay. Number one, you're looking at
132. 14:23London highs and lows. The session for London  open. Okay. For instance, like 2 o'clock in the
133. 14:29morning to 5:'lock in the morning. New York time.  Every every time I tell you, just always set it
134. 14:34with New York local time. 2 o'clock to 5:00 in  the morning. That's your London session. What's
135. 14:40the highs and lows of that session? Okay, that's  important because the market's going to probably
136. 14:44sweep above those highs or sweep below those lows  and create situations like this. Okay. And the New
137. 14:53York session is 7:00 in the morning to 10:00 in  the morning, New York local time. Okay. What's
138. 14:57the session high and low for that? And do the same  thing for Asia. Okay, 7:00 p.m. to 9:00 p.m. And
139. 15:07that's it. Those are the three times of the day  that I'm looking for specific key highs and key
140. 15:12lows and any intraday high and low forming right  before the equities open at 9:30. Pretty easy,
141. 15:20right? The hours of operation again are generally  between 8:30 in the morning to 11, but it can be
142. 15:25extended all the way to New York lunch noon. I do  not tend to take trades after noon local time New
143. 15:33York. All right, so we talked about internal range  liquidity. And internal range liquidity is looking
144. 15:40for short-term lows or short-term highs inside a  price leg that we're retracing back into. Okay,
145. 15:48that's all it means. internal range. Liquidity  is a short-term higher low with stops above or
146. 15:53below it or an imbalance in that same range of  price action. And I taught you market structure
147. 16:00shifts showed you exactly all that's necessary.  That is all that you require and the skill set of
148. 16:08identifying pools of liquidity. That is going  to be something you learn rather quickly just
149. 16:13by going through old data and looking at  the times of the day I gave you in this.