ICT Mentorship Series: Equilibrium vs Premium

Overview

• Session: Fifth of eight in the ICT mentorship series for September.
• Previous Session: Discussed equilibrium vs discount.
• Current Session: Focus on equilibrium vs premium.

Key Concepts

• Premium Markets:
  • Refers to the current trading range.
  • Impulse price swings are crucial.
  • Use of Fibonacci retracements to identify premium levels.

Impulse Price Swings

• Definition: A single price movement from high to low or vice versa.
• Multiple impulse swings can make up a larger swing.

Fibonacci Retracement

• Used to define trading ranges.
• Key Levels: 62% to 79% for optimal trade entry (OTE).
• Above 50% is considered premium.

Equilibrium vs Premium

• Equilibrium (50% level): A reference point in a price swing.
• Premium: Market price above the 50% level.
• No need for overbought/oversold indicators, just the current range.

Trading at Premium

• Strategy: Sell in premium market conditions.
• Look for price to go above equilibrium and into premium.
• Use 62% to 79% levels for trade entries.
• Avoid trades if price doesn't reach the premium level.

Market Scenarios

• Missed Opportunities: If price reaches equilibrium but not premium.
• Optimal Trade Entries: Occur when price hits 62-79% retracement.
• Watch for stop runs above previous highs.

Trade Examples

• Example 1: High to low swing not reaching premium.
• Example 2: Price above equilibrium leads to a stop-out scenario.
• Example 3: Optimal trade entry identified; short position taken above equilibrium.
• Example 4: Long consolidation offering turtle soup trades.

Important Trading Insights

• Turtle Soup Strategy: A method for trading stop runs.
• Order Blocks: Important for determining trade entries and exits.
• Swing Low/High Analysis: Critical for determining potential profit targets.

Daily Chart Considerations

• Larger time frames like daily charts can work similarly to shorter time frames.
• Key is identifying equilibrium and premium levels.

Practical Tips

• Use price action to identify premium and equilibrium zones.
• Be patient; not every price swing will offer a trading opportunity.
• Focus on high-probability trades where price moves into premium.

Conclusion

• Understanding equilibrium vs premium is crucial for identifying sell opportunities in premium markets.
• Always measure clear price swings for accurate analysis.