ICT Mentorship Lecture 3 Notes

Introduction

• Third teaching in an eight-part series for ICT mentorship.
• Focus: Understanding the mindset for approaching the marketplace.
• Reverse order thinking compared to retail perspectives.
• Advantage for new traders as they don’t have to unlearn bad habits.

Understanding the Marketplace Mindset

• Smart Money vs Uninformed Money
  • Smart money: Informed, strategic, and aware of the market's manipulations.
  • Uninformed money: Relies on indicators, unaware of smart money dynamics.
  • Key to trading is understanding these differing perspectives.
• Indicators
  • Indicators are often misleading; new traders should avoid them.
  • They are used to gauge uninformed trader sentiment.

Smart Money Perspective

• Liquidity and Price Control
  • Smart money acts as liquidity providers.
  • Smart money uses uninformed money's actions and views as liquidity.
  • Price is controlled by smart money, similar to how a store owner controls product pricing.
  • Central banks have control over currency pricing.

Market Efficiency Paradigm

• Two Perspectives
  • Smart money and uninformed money create market efficiency.
  • Smart money’s edge: Predicting uninformed money behavior and controlling price.
• Market Dynamics
  • Price manipulation through chart patterns, indicators, and news reactions.
  • Focus on retracement, expansion, reversal, and consolidation in price delivery.

Developing the Right Mindset and Skills

• Starting Fresh
  • New traders should start with a clean slate, forgetting past trading habits.
  • Daily price action logs and keeping detailed charts are crucial.

Practical Steps for Chart Analysis

• Daily, Four-hour, Hourly, and 15-minute Charts
  • Daily chart: 9-12 months view.
  • Four-hour chart: 3 months view.
  • Hourly chart: 3 weeks view.
  • 15-minute chart: 3-4 days view.
• Chart Notations
  • Note quick price movements, recent highs and lows, clean highs/lows, and daily/weekly highs/lows.
  • Avoid forecasting prices prematurely.

Chart Examples and Techniques

• Efficient Chart Analysis
  • Keep separate charts for analysis and trading.
  • Use specific currency pairs not used in the mentorship to gain unique insights.

Conclusion

• Importance of daily documentation and understanding market structures.
• Avoidance of rigid beliefs; remain flexible in analyzing and reacting to market conditions.
• Focus on developing a probability-based approach rather than certainty in trading.