Introduction to ICT Trading Concepts

Jul 14, 2024

Lecture Notes: Introduction to ICT Trading Concepts

Overview of the New Tutorial Series

  • Aimed at making concepts more user-friendly and concise
  • Shorter and more dense with content
  • Focus on Forex trading

Key Topics Covered

  • ICT Concepts
    • Theory of liquidity raids or stop runs
    • Introduction to liquidity pools: How to locate high probability liquidity pools
    • Introduction of the ICT order block: High accuracy entry points
    • Low drawdown entry tactics
    • High probability targeting
    • Benefits of scaling profits
    • How to make money when you are wrong
  • Price Action Study
    • Overview of price action in Forex
    • Importance of demo trading before live trading
    • Understanding what moves the markets

Key Points for New Traders

  • Beginners are at an advantage if they have not been exposed to retail trading concepts (e.g., Elliott Wave, supply and demand, harmonic patterns)
  • Retail trading concepts often distract from key elements: Open, high, low, and close
  • Price is fractal: Patterns can be seen across all timeframes

Trading Approach

  • Price action should be studied in demo accounts
  • Key concept: Think about where other traders' ideas would fail
  • Focus on equal highs and equal lows: These represent potential stop runs
  • Double tops and bottoms should be noted with horizontal trendlines
  • Importance of not trading zones, but specific price levels

Practical Application

  • Use a 15-minute timeframe to identify patterns
  • Study the market's reaction to double tops and bottoms
  • Look for liquidity pools above highs and below lows
    • Institutional traders seek counterparties to fill large orders
  • Example: Bearish Order Block
    • Spot the up candle before a down move
    • Entry point: When price retraces back to the bearish order block low
    • Concept of “Low-risk entry”: Returns to the order block indicate smart money selling short

Case Study in Demo Trading

  • Context and setup for a 15-minute time frame trade: Eurodollar
    • Use Fibonacci levels for optimal trade entry (62%-79% retracement)
    • Target levels: Old lows, old highs, and symmetrical price swings
  • Example of a trade setup:
    • Bearish ICT Order Block: Low-risk entry
    • Targeting sell stops below equal lows (10-20 pips beyond)
    • Importance of scalability: Taking partial profits along the way

Psychological Aspects

  • Patience: Wait for the next setup
  • Discipline: Only trade planned setups and not random movements
  • Avoiding the urge to ‘chase’ price

Final Points

  • Structure and predictability are key
  • Importance of a systematic approach to trading

Summary

  • Introduction to key ICT concepts and their practical application in Forex trading
  • Stress on demo trading and precise targeting
  • Encouraging a mindset opposite to traditional retail trading approaches

For further learning, it's crucial to watch example trades as demonstrated in the lecture. This helps in contextualizing theoretical knowledge into practical scenarios.