Ultimate Beginner's Guide to ICT Trading Concepts

Introduction

• Overview of foundational concepts from ICT method.
• Focus on the complexity and nuance of the method.

Swing Points and Liquidity

Swing Points:

• Definition: Swing Highs and Swing Lows identified by three candles.
  • Swing High: Center candle has lower highs on both sides.
  • Swing Low: Center candle has higher lows on both sides.
• Importance: Retail traders place orders around these points, leading to deeper liquidity zones.

Buy-side and Sell-side Liquidity:

• Buy-side Liquidity: Above a swing high due to stop orders and buy stop orders.
• Sell-side Liquidity: Below a swing low due to stop-loss and sell stop orders.
• Identification of liquidity levels is crucial.

Real Chart Example

• 5-minute chart of mini S&P illustrating swing points and liquidity.
• Identified swing highs and lows and their significance.

Equal Highs and Lows, Old Highs and Lows

• Equal Highs/Lows: Clusters of swing points at similar levels.
• Old Highs/Lows: Stand out isolated swing points that may signal market manipulation.

Discount and Premium Zones

• Range: Space between swing lows and swing highs.
• Premium Zone: Upper range for short trades.
• Discount Zone: Lower range for long trades.

Optimal Trade Entry (OTE)

• Specific Fibonacci retracement zone (0.62 - 0.79) within discount or premium zones.
• Midpoint at 0.705 is crucial for price action.

Fair Value Gaps

Concepts:

• Bullish Fair Value Gap (BC): No overlap between the first and third candle’s shadows.
• Bearish Fair Value Gap (CB): Reverse scenario for bearish movements.
• Consequent Encroachment: Midpoint of the fair value gap.
• Used as zones of support/resistance; possible inversion leads to reversal.

Order Blocks

Types:

• High-Probability Order Blocks: Large body candles indicating strong trends.
• Low-Probability Order Blocks: Small body candles within trends.

Examples:

• Real chart examples illustrating bullish and bearish order block setups.

Daily Bias

• Used to determine likely market movement (bullish/bearish) for the next day.
• Key indicators: Previous day’s high and low.
• Examples show how to apply daily bias to predict market movements.

Conclusion

• Review of the foundational ICT concepts.
• Encouragement to incorporate these into trading practices.
• Further study recommended through ICT's channel.

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