Lecture Notes: Market Efficiency Paradigm

Introduction

• Series Context: Second teaching of a series of eight for September 2016.
• Main Topic: Market efficiency paradigm.

Key Concepts

Retail Traders vs. Smart Money

• Uninformed Money: New traders collectively seen as uninformed money.
• Smart Money: Exists as a small group, often banks, that quietly influence market directions.

Misconceptions About Market Influence

• Retail Traders: Often believe they drive the market due to their numbers.
• Facade of Indicators: Belief that indicators, trends, moving averages, etc., drive markets.
• Reality: Markets are moved by a small group, not the general retail populace.

Personal Insights

• Experience: Presenter has experience with both uninformed and smart money groups.
• Transition: Initially part of uninformed money, transitioned to understanding smart money.

Market Mechanics

Paradigm Shift

• Understanding Market Control: A shift in thinking is needed to recognize smart money's control.

Interbank Price Delivery Algorithm

• Daily Range Structure:
  • Consolidation
  • Expansion
  • Retracement or Reversal
• Price Cycle: Follows a pattern from consolidation to expansion and then to either retracement or reversal.

Market Phases

• Asian Range: Initial consolidation phase.
• London Session: Typically sees manipulation and reversal.
• New York Session: Expansion and consolidation ending with a potential reversal.

Trading Strategies

Institutional Order Flow

• Trade Setup Elements: Context and framework around trades, referring to institutional order flow.
• Price Concepts: Order blocks, fair value gaps, liquidity voids/pools, stop runs, equilibrium.

Learning Approach

• Intraday Study: Encouraged for quick feedback; applicable to long-term trading.
• Understanding Price Movements: Comprehend expansion, retracement, reversal, and consolidation.

Ethical Considerations

• Confidentiality: Importance of keeping knowledge exclusive to avoid diluting its effectiveness.
• Legacy: Use knowledge for personal and familial advantage, not for public distribution.

Conclusion

• Key Learning: Understanding the generic process of price delivery.
• Repetition: Encouraged to revisit concepts as understanding deepens over time.
• Good Luck: Ending note wishing success in trading efforts.