ICT Mentorship YouTube 2022 Episode 7: Daily Bias and Consolidation Hurdles

Overview

• Topic: Daily bias and consolidation hurdles in trading.
• Focus: Understanding daily chart analysis and tactics for handling trading consolidations.

Key Points

Daily Chart Analysis

• Example: NASDAQ continuous contract on TradingView.
• Concepts Covered:
  • Buy-side Liquidity: Price runs above relative equal highs, then drops below a swing low.
  • Sell-side Liquidity: Price moving below previous lows, leading to a likely retracement within a range.
  • Equilibrium: Midpoint between high and low indicating premium (above) and discount (below).
  • Difficulty in Bias: Consolidation around equilibrium can obscure market direction, necessitating more intel after market open.
  • Intraday Bias: Lower timeframes are crucial during consolidation; trade intraday liquidity pools with precision.

Establishing Bias

• Market Structure: Look for lower market structure shifts and trade into fair value gaps.
• Expected Moves: Each day should align with the bias, but accept up-close candles in a generally bearish bias.
• Risk Management: Lower leverage for counter-trend trades. Risk should be kept below 1% for beginners.
• Example Parameters: Account trading max 10 contracts; use max leverage within bias, minimal leverage against it.

Dealing with Consolidation

• Indicators: Use smaller timeframes and look for liquidity pools.
• Cross-checking: Utilizing related markets like S&P and Dow to confirm setups.
• Pattern Recognition: Identifying resistance and fair value gaps to project market moves.
• Market Behavior: Recognize the nature of up-close candles and market expansions.
• Handling Uncertainty: Embrace imperfections and don't expect perfection in trading setups.

Practical Application

• Live Trading Example:
  • NASDAQ Trade: Explanation of real trades to demonstrate points.
  • Feedback Loop: Putting a trade in to understand market reaction.
  • Algorithms: Markets run on time and price, essential for specific times (e.g., 8:30 AM New York time).
• Trading Smaller Timeframes:
  • Specific candle setups, fair value gaps, and order blocks within 2-minute and 15-minute charts.
  • Examples of identifying fair value gaps and executing trades on signals.
• Intermarket Relationships:
  • Use S&P and Dow to gauge NASDAQ moves, looking at divergence for confirmation.

Psychological Insights and Planning

• Expectations: Daily bias often leads to aspiring for perfect trades, but this mindset should be adjusted.
• Realistic Goals: Learning to manage expectations helps maintain consistency and avoid bad habits.
• Long-term Consistency: Track and analyze position-based long-term improvements over quick wins.

Conclusions

• Experience Sharing: Learning from real trades and understanding market setups is more valuable than theories.
• Balance: Emphasizing incremental gains and stability over major but unsustainable profits.
• Self-Development: Continuous improvement and adhering to analytical insights ensure long-term success.