ICT Mentorship - Equilibrium vs. Discount

Introduction

• Session: Fourth of eight installments for the first month of ICT mentorship.
• Topic: Equilibrium vs. Discount.

Key Concepts

• Optimal Trade Entry: Introduced in 2010, involves looking at swing projections, retracements, and using Fibonacci.
• Fibonacci: Used to illustrate equilibrium, not magical in itself.
• Institutional Order Flow: Understanding banks' role in price movements, not based on supply and demand but on banks' greed for profits.

Building the Framework

• Daily Chart: Recommended starting point for new traders.
• Demo Account: Everyone should be working inside the Forex LTD demo account.
• Swing Projections: Identifying the largest price swings on the chart.

Understanding Equilibrium

• Equilibrium: Midway point of a price move, identified using Fibonacci (50% level).
• Impulse Price Swing: A strong movement away from a low or high, indicating institutional buying or selling.
• Swing High/Low Formation: Requires four candles - one high, one central, one lower on each side.
• Retracement to Equilibrium: Market retraces to 50% level after identifying an impulse swing.
• Discount: Prices below equilibrium, considered a buying opportunity if the market is bullish.

Practical Application

• Price Swing Analysis: Using Fibonacci to determine equilibrium and discount levels.
• Entry Signals: Not covered in this session, focus on context and framework.
• Institutional Actions: Banks accumulate positions low and sell higher, target buy stops above previous highs.

Case Study Examples

• Chart Analysis: Examined multiple impulsive price swings and their retracements to equilibrium and discount levels.
• Optimal Trade Entry: Defined as 62-79% retracement levels below equilibrium.
• Price Reactions: How markets react dynamically after reaching discount levels.

Summary

• Equilibrium vs. Discount: Understanding the difference and how markets behave relative to these levels.
• Future Sessions: Will cover equilibrium vs. premium, additional order flow concepts, and entry signals.