Okay folks, welcome back. This is the third teaching of a series of eight for the first month of the ICT mentorship. Okay, we're going to be continuing on our theme of understanding the mindset that you have to have going into the marketplace, looking at things in a little bit reverse order than you're normally taught from a retail perspective.
And this is one of those teachings that you're going to have that if you're new, you actually have the advantage here. For those that have been trading for a while that have adopted bad habits or an understanding or a belief that they have an understanding, it's going to be a little bit expensive for them because they're going to have to purge some of the things that they either subscribe to or wrestle with it until they either do or elect not to use this insight at all. I mapped out a...
crude depiction here and I've been using it for months actually as a teaching tool. But we're going to really hammer it down in this mentorship because it's imperative that you know how we as traders are supposed to be viewing marketplace, the data delivery, reverse psychology, whatever the psychology of this informed money is, it's going to be diametrically opposed to. That of the uninformed or speculative money or quote unquote dumb money.
And when we have these ideas, when we look at price, the first thing we have to do is establish who is the victim here. Generally, there's a victim always in every crime. And the perspective that the speculative uninformed money has is that, number one, they don't acknowledge that there is a smart money. There is not an entity out there that has.
quote unquote, the right things always on the right perspective or that a market is rigged or controlled or manipulated or has any influence over long term price delivery. The uninformed money, OK, or those that are uninformed in regards to how smart money actually operates and exists in the marketplace, their actual perspective really is that indicators are the answer and uninformed money. their perspective holds the belief that price moves by indicators influence. OK, and the influence of an indicator being overbought or oversold.
That is what the precursor is to a market moving higher or lower. And I can tell you, I subscribe to that for years as a new trader. And it took a long time for me to actually be broken away from that type of mindset. So if you're new and you haven't been exposed to indicator itis.
and you're not infected with that yet, you're actually pretty good in terms of advantage. Those that like to use indicators are going to have a little bit of a struggle with this mentorship because I'm telling you basically you need to get that out of your system, get that off your charts, because it is not how you're going to be able to see smart money. In fact, we're going to be able to use these indicators to be informed as to what the uninformed traders are actually thinking.
So when we talk about sentiment next month, you'll have a lot more understanding about what that is, how it's developed and what you can do with it. Now, obviously, we only exposed one side of the paradigm here by specifically dealing with the speculative uninformed money's perspective. You're not here to really so much learn about those individuals, because obviously, you know, we all know that there's a losing crowd in the marketplace.
And your idea of, you know, being a part of that group is foolish. So we're here only to focus on what the smart money view is on the marketplace. And that begins by understanding that there is a huge, vast, enormous new pool of liquidity coming into the marketplace every single day.
Even though there's new busted accounts all the time, the statistics data tell us that 90% of traders lose their money. Large funds are in the same category. Not every fund is profitable just because there's a lot of people that are investing money into this fund or this fund manager.
does not in no way guarantee that that fund will exist a year two years five years from now So we as informed traders, our perspective is to hold the perspective of what a liquidity provider or smart money view is on the marketplace. And they put a spotlight on the aspects of uninformed money because that's what makes the world go round in the marketplace. The smart money is there to provide liquidity, but they're doing it at a exchange premium.
In other words, they're putting in trades that they're going to most likely come back to to either offset. or neutralize for their interests. And we're going to talk more about that as we go. But for now, understand that the smart money knows, in fact, that there is a large body of uninformed money out there. Contrast that with what we spoke of concerning the uninformed money's perspective is there's a lack of an entity out there that has a smart money perspective on the price.
They don't have an opinion or an idea-based. perspective that there is someone or some entity or entities after they have a smart money perspective or that the banks would actually trade against large firms or funds that goes against the grain of what a free market is. So when we have a smart money perspective in the marketplace we actually use their perspective as everybody else's liquidity.
And price is delivered to engineer efficiency for the smart money entities only. It's not anything outside that. So to hold the perspective of a liquidity provider, you are adopting a smart money perspective, and everybody else is liquidity.
And the liquidity is going to be in the form of buy stops, sell stops, pending orders above and below the market highs that are most recently formed on your charts. Once we understand that there's two distinct perspectives, that's what creates the market efficiency paradigm. Both of both groups have their individual perspectives. The one that is smart money, they have the unique perspective of understanding already what the uninformed money is going to believe about the marketplace. And that gives them their edge.
On top of that, they're actually in control of price, just like anything else. If you own a storefront or if you own a business. and your commodity is sold, who sets the price for that commodity?
You. You're the store owner. Well, currency is owned by the bank, and they set the price on the value of that bank note or that digit on your screen that says you have X, Y, Z number of dollars in or francs or pounds or whatever it is that you're measuring your currency in. That value is set by the central bank that has printed that money.
And... Why this is such a speed bump for people's understanding is beyond me because if you look at the state of the world we're in right now, obviously corruption and deceit is the name of the game. So it's not a shock to hear if you first time being exposed to this that the central banks are in absolute control of what their price of their currency is. And they can set it at any time at any price they want. Don't believe me?
Look at what they did with the Swiss franc and the euro when it was depegged. Instantaneous wipeout. Okay?
So once we understand both perspectives, okay, intimately, okay, we no longer have a at odds perspective on the marketplace. We don't vilify the market maker. We don't vilify smart money.
We don't beat up or make fun of the uninformed money. In fact, what we do is we find a balance in between that. And we don't think in terms of victim or aggressor.
We just think in terms of efficiency because the markets are always going to trade in an efficient manner. But it's slanted and more prone to lace the pockets of the smart money because they have the advantage of pricing wherever they want price to go to. And they already know what the perspective is of the uniform money.
And they also know how to manipulate that perspective at any given time based on chart patterns, based on indicators, based on just reactions to market news. Now, as we go through this. mentorship, we're going to be focusing primarily on your understanding of these four primary drivers in price delivery. It's retracement, expansion, reversal, and consolidation.
Now, we're not going to talk specifically about that, but I want you to understand that all the things we're teaching here, they're all frameworks for you to understand those four general principles. We can't teach specific contexts or topics without having a broad-based understanding and foundation. And that's what this entire month of September is doing.
It brings everybody to a reference point to start at the same location. Some of you that are advanced have watched a lot of my free tutorials over the years. You need to put that aside for a moment and start with this perspective in mind. And I promise you it's going to deliver everything that you skipped over. We're going to fill in all those gaps.
But understanding that the interbank price delivery algorithm. OK, to understand that it's going to have to come by exposure and exposure creates experience. That experience is going to give you the understanding of going into the charts, seeing what they what they should be doing at price, what you should be seeing in price by seeing each individual component.
explained in detail and context, each individual part or component of the whole will be able to dovetail nicely and you'll understand how everything fits together. But suppress that desire to feel like you have to have techniques and patterns and intricate secrets about how the chart does this or chart does that. You have to have the framework in mind and the foundation of why these things exist. Otherwise, all those little things ain't going to make any sense to you when I'm calling on you to refer to them.
So with all that, what specifically should you be focusing on right now as a new student in this mentorship? The first thing you need to know is there are very little things you should be bringing into your expectations and what your understanding should be. In other words, basically what I'm saying is you need to have no previous knowledge brought in with this.
Kind of like put everything aside and assume it's very difficult for those that have already gone through different disciplines of trading because they have to try to forget what they already know. And even if they've made money with it, which is the worst thing that could have ever happened, is if anything outside of institutional order flow led to your profitability, it really was just coincidence. And coincidence can happen for a long time.
I did it for nine months and was all pure luck. And then it no longer worked again. So.
So understanding right now what it is specifically you're supposed to be doing, that's important as a new mentor student. The first thing you need to be doing is creating a daily price action log with price charts. Now, I know some of you don't want to do this. Some of you have resisted me telling you for years to do this.
But I'm telling you, you all are here and you've paid for this mentorship. You paid for the understanding and experience that I've gained over the last 23 plus years. I can tell you how I got it. was doing the very things I'm going to tell you to do in this specific video. It starts here.
If you skip this video, if you skip what I'm teaching you in this video, if you ignore what I'm telling you what to do in regards to what specific things you should start with right now, it does not mean, okay, just because you've been trading longer than anybody else and because you have understanding what optimal trade entry is, because you understand what an order block bullish embarrass is, because you understand what a liquidity void is, that is not an advantage. OK, you need to go back to square one and understand that this is strength in your development. If you don't do these types of things, you're actually going to hurt your development.
You're going to hurt and stunt your growth throughout this mentorship. So go back to square one. You're the new student. Do everything that's been described here and advise, because this is where the money starts coming in. If you have these things in place and you start right at this very core principle, it will develop.
We're going to be focusing on this. throughout the entire 12 months. Every month, we're going to build on what rules and what things that you're supposed to be looking for in the charts.
But for right now, primarily, the only thing I want you to be doing is starting with a daily chart. Okay. Your daily chart needs to show 12 months, no less than nine months view.
You have to have that much perspective on your chart. Don't have so much of a perspective. You have multiple years on your chart, 12 months to nine months, ideally.
Okay. And you have a four hour chart. Your four-hour chart needs to have three months of price action viewed the 60-minute chart one hour chart has to have at least three weeks View and the 15-minute chart needs to have at least three to four days view that means for every chart here I'm recommending a specific amount of data that needs to be displayed for that respective time frame what you need to resist doing right now is you need to resist the urge to forecast price movements. That's not for your stage of development right now.
Do not try to rush ahead and try to figure out what the market's going to do next because that's going to be a problem for you and it's only going to lead to frustration. We will get you there and it's going to happen in due time. But for now, resist that urge.
But there are some things you need to be specifically dealing with these charts. You need to note where price shown a quick movement from a specific level. In other words, if it's run quickly higher or lower from a particular level, that's noteworthy. You need to note that on your chart.
You need to also note recent highs and lows that haven't been retested. That means if a high is formed on your chart, if the price has not come back up to that level in recent time, you need to make a special note of that because it's going to probably be influential going in the future. Vice versa, just contrarily speaking, you're going to be able to look.
for the lows to have formed that have not been recently traded to. And that low will be influential later on in future price delivery as well. Note areas on the charts where price has left clean highs and clean lows.
Basically, that looks like two equal highs that formed in close proximity to one another. Whenever we see a high go up and form and then it trades away from that for a little while and comes right back to it. and doesn't make a new high or maybe falls just a little bit short just a little bit above it i note that as a clean high and usually buy stops will form above that and the market will usually come back up there and run through that it doesn't mean it won't continue through it but it's usually a big bullseye for a price to want to go up into that area and the reverse is said for double bottoms or equal lows when a low is formed and another low is equally formed in close proximity to the initial one that's a big area for sell stops to pull or build up underneath those lows.
And the market tends to have a willingness to go down there and test that liquidity. That means the market will go down into that area, whether it continues to go lower or if it goes down and then reverses. There's conditions that we look for to frame all that. And you will know when to expect the specific conditions. But for now, I want you to start practicing looking for that in your charts and having them noted on your chart.
Note what days the highs and the lows form and. This is for the weekly range, and you want to note what time of day that occurs, what kill zone. Is it the high and low of the week forming in London, or is it forming in New York? Because all those things are going to lend well to prognostication and what should happen going forward. And you want to note the daily high and the daily low every single trading day.
And you want to note when the daily high and the daily low forms for every individual trading day. Now, what does that look like? Well, it starts off with a bare bones chart. This is a daily chart, and I'm using the Swiss franc here.
It could be any chart, any pair, but you want to start with one currency pair in this mentorship. You want to specifically deal with one. I would recommend you doing something apart from the British pound and the euro, only because you're going to see me specifically dealing with that in this individual mentorship.
But you want to be doing something with a currency pair that is not being utilized in this mentorship. So that way you're getting a unique perspective. that you yourself have arrived at using this as a guideline.
But the first thing you want to do is obviously note the most recent highs and the recent lows where markets have shown a willingness to repel from. That's the first thing you want to note because this is how you identify order blocks. This is how you identify liquidity voids.
This is all the beginning frameworks of that. But you need to be able to note those recent highs and recent lows. That's what's been done for you here.
Next, you're going to drop down into a four-hour chart. And those same levels I just noted on the daily chart are shown here. And there's more highs and more lows that come into visibility by doing a lower timeframe perspective.
We went from, again, the chart was a daily chart before. Now we're looking at those same levels just drop down into a four-hour chart. Those levels will be transposed immediately to what the four-hour chart shows.
Then you go through doing the same thing. You're looking for areas where it's too clean. equal highs and equal lows in close proximity to one another and you'll look for where the market has moved quickly away from a particular Level when it creates these real big candles or bars Okay on your chart you want to note that because they're going to be influential in your expectations of where price should go and where They should not go you're gonna go down to an hourly chart.
Okay an hourly chart. You're gonna be looking at Individual days and okay over a course of one or two weeks and You can get the weekly range defined with the hourly chart, and you can look at the intraday highs and lows with an hourly chart. Hourly chart is a really good bellwether chart.
If you're a short-term trader or a day trader, that's like the daily chart for the barometer, whether you should be a buyer or seller. And we'll teach all those things. All those intricate details will be taught in this mentorship for now.
You're going to be taking all those levels you found on the daily chart in the four-hour and transposing those to an hourly chart. Now, you want to keep this chart. OK, in this format, separate from all the other charts that I'm going to talk about now. OK, anything else we talk about in terms of what we're specifically looking for, they don't get utilized on the same chart.
You create another chart. So you're going to have two individual independent. U.S. Swissy charts.
OK, but you're going to carry the information on two separate charts. That way you don't have charts that are too busy, have too many things on there and you get confused and all kinds of things that we worry about. Then you'll create another Swiss franc chart.
OK, and for that you're going to use a 15 minute chart. And when it's loaded, obviously it's going to be naked, bare, nothing on there. And the 15 minute chart looks like a lot of noise. It doesn't give you any perspective without any frames of reference. And you want to take.
The course of action we talked about using the daily to four-hour and one-hour chart. Do that same thing with the individual 15-minute chart, but you only need to be applying it to the last 15 I'm sorry, the last three days, three to four days. And using those reference points in the last three to four days on a 15-minute chart, okay, you're going to be looking at also the daily highs and the daily lows. And you can see this is how I do my charts on a 15 minute basis.
You're actually going to see me actually do this very practice every single day going forward, starting with this week that we're going to enter into the mentorship. I note the previous day's highs and previous day's lows and then draw them out to where zero GMT is, which is eight o'clock in the evening time in my time frame. And in this delivery of data with this platform, this is how I note my daily highs and daily lows.
It's important to note also the days of the week. Now, I'm not going to give you all the specifics here because you're actually going to be watching me do it on a day-to-day basis. So you'll be able to get a rough idea in this tutorial.
But more specifically, you're going to actually see me actually creating documents for my individual record keeping. So you're going to see actually how I do my charts, how I log them. And yes, even after 23 years of trading, I still do this.
It's important to do it. It's understanding. It's clarity.
It gives you perspective. And it's what professionals do. Sorry, it's just there's no way around it. The folks that are really concerned about the market, they have logs, they keep journals.
These are types of things they do. If you notice real quick, why noting the previous day's highs and previous days lows? If you look at Wednesday's data, OK, you see the little delineation where it says Wednesday. If you look at the previous day, obviously, it would be Tuesday in the course of a normal week.
The high that was formed on Tuesday. On Wednesday, the price came right up there and ran through that around the 97.90 level. Notice it did not continue through that. It just went up through the previous day's or Tuesday's high. Then it sold off.
When it sold off, it went all the way down. Where did it go down to? Just any old level.
It went down to Tuesday's low, just breaching it by a pip or two, and then came back off into consolidation. Then look at what happened on Thursday. Thursday, we had price retrace back into the range that was created.
from Wednesday's high down into Wednesday's low. Thursday starts the day with trading in consolidation. It rallies up, closes in a range, okay, that was formed from Wednesday's high and Wednesday's low. Then it sells off, and where does it sell off to? Moving just below.
Then it pulls off that low and goes into consolidation. Then we have Friday. The market just goes straight on up, rolls right on through Thursday's high, and creating a new high.
Prior to Friday, the weekly high was formed on Wednesday. It ran out the stops and all the liquidity that would be resting above Wednesday's high, all done on Friday. So we're going to be using these reference points and giving you a lot more insight about specifics and what you're doing with it.
But for now, I want you to know that this is what you're going to be doing going forward. Every single trading day, you're going to document price action and you're going to build on your understanding. Every month I give you more reference points to add to your charts and why it's important, what the information will do for you, what advantages it gives to you by having it. And by having your charts very uniformly organized like this, when you're trading, your chart is going to have its independent analysis.
You're not going to have all these things on your chart. But these charts are always going to be referred to while you're watching price. Because by having three charts. OK, because you're going to have one that's executable in the words what you're watching on the setup right now, because you never want to marry the ideas that you have in your analysis.
You need to reflect on them, but you don't want to be so cast iron and can't do it any other way. It has to be that way. Otherwise, if you're watching real time price action, if you see something that doesn't make sense for what the underlying conditions that you're expecting occurs in the marketplace, you won't have the flexibility to switch gears or go to the sidelines. You'll just hold on to the market with strong conviction. And that's imposing your will.
That the market's going to do what they're going to do, and it's not going to happen because you want it to happen. It's going to happen because it's going to happen, and we try to get in sync with what the market's going to do. Whether it's going to be moving sideways, whether it's going to go higher, whether it's going to lower.
We don't know any of those directions with a great deal. of certainty. We just know probabilities.
But we know how to go into the marketplace looking for these types of things over and over and over again. They repeat and you'll be able to find those repeating occurrences in price action after going through this mentorship.