2022 ICT Mentorship [No Rant] ep. 3 – Internal Range Li… — Transcript

All right, folks, welcome back. This is the internal range liquidity and market structure shifts lecture. Again, 15-minute time frame on the E-mini NASDAQ 100 Futures Contract for March delivery 2022. And take your attention over here, okay? This old low and these relative equal highs. See that old low below? That is sell stops, and relative equal highs above that are buy stops. Now, you could have used this high here; there's nothing inherently wrong about that. But whenever I see equal highs like this might, and if it's higher than an old high over here, I'm going to use that. So that way, there's a little bit of insight for you for your study journal. The sell side liquidity, you can see that the market trades down, hits that, runs through it, then rallies all the way back up, clearing equal highs. So the buy stops have been taken here, okay? So at both of these price points here and here, that's the, I guess, the point at which you'll look for or anticipate a market structure shift. You don't force it, okay? I see a lot of people try to teach my concepts that'll talk about market structure breaks or shifts, and we'll use that term interchangeably. But for intraday, I want you to think about intraday market structure shifts because it's not necessarily a break in market structure that leads to prolonged multi-day movement. Okay, what do I mean by that? If you see a market structure that's bearish and it's broken to the downside intraday, that may just lead to an intraday price leg that may eventually see that high be taken out in the same day. So that's why I'm using the term market structure shift, not market structure break, for our conversation here on this mentorship. Just know that when I'm going to lean on that term market structure break, it means a little bit more in context versus an intraday shift in market structure just means there's likely a downside draw or an upside draw intraday by seeing the term shift. Okay, so there's a little bit of semantics there. All right, so we have both of these areas here and here where there would be a likelihood of a market structure shift. Up here, we look for a fake run above here. So that fake run above, how do we know it's going to be a market structure shift that's bearish? Now, keep this price level in mind. So it's essentially 14,600 and 14,820, which are eyeballing it. Okay, now dropping all the way down into a two-minute chart, this is that same particular day. Here's those relative equal highs and this run down here. If you recall, 14,600 and around that 14,860 or so. If you look at this market structure without having the levels on your chart, it's easy to get lost. When we had this low form, right before this low was formed, there's a swing high right there. Now, in the first mentorship video I gave you, I mentioned that high-frequency trading algorithms will use market structure on a 3-minute, 2-minute, 1-minute chart, many times sub-1 minute. That would be like 45-second, 30-second, 15-second intervals. If you look at this short-term high here right before this low formed, when this high is taken out right there on that candle, that's significant only if this run down here has traded into sell stops, okay? Below an old low of some kind. It could be a double bottom, it could be a single low, but it's got to be trading under some retail idea that would be viewed as support. Up here, the same thing. When this run above these relative equal highs happens right there, you're anticipating a market structure shift. Let me go back to this for a second. We had this high on this candle, then we had the candle right after that here, the highest one, and then the lower high of this candle here. So that's a swing high, very simple little pattern, but it means a lot when it's in the proper context. When this high is broken with this particular candle right there, that is significant only on the basis that we have taken liquidity out of the marketplace. That's it. So when it broke this short-term high, this is more meaningful, and then the market will start to seek buy stops, okay? Or buy side liquidity that would rest above here, here, and here. So here's those sell stops. So this little area here shaded in, that's an area where sell stops would be residing below that 14,600 level, okay, on that 15-minute time frame. So the market dove into that liquidity, and you may or may not know that is a buy. You don't need to anticipate a shift in market structure when the market rallies above. When does that happen? On this candle right here. See that little light bulb? That's when you're thinking, okay, now I have a condition in the marketplace that I might see an opportunity intraday. Let's see if there's further evidence to that. Short-term high is taken here. We traded above it. It does not need to close above that, okay? Really important. Once that candle closes and this candle opens, you're going to monitor this candle, and you want to see as soon as this candle closes, does it create that fair value gap? If it creates a fair value gap, again, that's a candle with a high, one single pass up, next candle has a low that doesn't completely overlap. All this, that's fair value gap, real simple, okay? This candle is where you would look to potentially trade at the earliest because now there's a gap there. The market trades down into that, boom, takes off. See these down closed candles? See that? That's all one continuous order block. What's it doing? It's inside that pool of liquidity, sell stops. Where's the open on that series of down close candles? Right here. That's the price level extending out in time. Boom. So inside this fair value gap, this opening price on the order block, that's your buy plus three pips or whatever for spread, and that's what you would use for a limit order. Well, price starts to run where? Above the highs where buy stops will be here, above this high here, and above this high here. So the buy stops above here, that was taken. This swing low forms once this candle closes. So this candle we're watching, does it go below that short-term low? It does. So now we have a shift in market structure that is now bearish only because we've taken buy stops. Fair value gap forms, the market rallies up into that. You go short there. What are you looking for? Below here, sell stops. Below here, sell stops. Below here, sell stops, and in this fair value here. So if you are in a position that has multiple contracts, you can take partials below here. I really wouldn't do it there, but below here, here, and some. You saying, why wouldn't you take them below their ICT? Well, if you're trying to get short here, that's not really that much movement. So if you're going to take something off your trade below that low, why not just try to reach for that one, and you could get it there right here, okay? And then below that low is nice as well. This is below the 50 level of this high and that low, okay? Okay, so 50% level, that's what we're targeting. Now, this candle's low was the high end or first objective inside this gap. So that's your target. You're going to look for that. So you're looking for low hanging fruit, the easiest target to get to. You're not trying to be perfect, and you grow into eventually holding to see if it will fill in that gap. Okay, this fair value gap was going down to this candle's high. That's something that you strive for over time if you understand what I just showed you here. That's a very simple process of looking for number one, liquidity, gauging what happens without having to know for certain because you don't know. You're not going to know until the market shows its hand. This is it showing its hand. Now, let's go into a one-minute chart and see how that looks a little bit different but still has the same characteristics. Here's that same price structure just on a one-minute chart. The same logic still there, right? Swing high taken after liquidity has been traded into. This short-term high gets violated right when this trade down in here. What's actually occurring? Okay, put this in your notes. High-frequency algorithms are hammering. They're just throwing orders in, buy, buy, buy, buy, buy. That is not okay. Here's an imp—

low and these relative equal highs see that old low below that is sell stops and relative equal highs above that is buy stops now you could have used this High here there's nothing inherently wrong about that but whenever

I see equal highs like this might and if it's higher than an old high over here I'm going to use that so that way there's a little bit of insight for you for your study journal the sell side liquidity you can

see that the market trades down hits that runs through it then rallies all the way back up clearing equal highs so the buy stops have been taken here okay so at both of these price points here and here that's

the I guess the point at which you'll look for or anticipate a market structure Shift You Don't Force It okay I see a lot of people try to teach my Concepts that'll talk about Market structure breaks or shifts and we'll use

that term interchangeably but for intraday I want you to think about intraday Market structure shifts because it's not necessarily A break-in Market structure that leads to prolonged multi-day movement okay what do I mean by that if you see a market structure

that's bearish and it's broken to the downside intraday that may just lead to an intraday price leg that may eventually see that high be taken out in the same day so that's why I'm using the term Market structure shift not Market

structure break for our conversation here on this mentorship just know that when I'm going to lean on that term Market structure break it means a little bit more in context versus an intraday shift in Market structure just means there's

likely a downside draw or an upside draw intraday by seeing the term shift okay so there's a little bit of semantics there all right so we have both of these areas here and here where there would be a likelihood of a market structure shift

up here we look for a fake run above here so that fake run above how do we know it's going to be a market structure shift that's bearish now keep this price level in mind so it's essentially 14,600

and 14,820 which're is eyeballing it okay now dropping all the way down into a two-minute chart this is that same particular day here's those relative equal highs and this run down here if you recall 146 and around that 14860 or

so if you look at this Market structure without having the levels on your chart it's easy to get lost when we had this low form right before this low was formed there's a swing high right there now in the first mentorship video

I gave you I mentioned that high frequency trading algorithms will use marked structure on a 3 minute 2 minute 1 minute chart many times sub 1 minute that would be like 45 second 30 second 15c intervals if you look at this

short-term High here right before this low formed when this high is taken out right there on that candle that's significant only if this run down here has traded into cell stops okay below an old low of some kind it could be a

double bottom it could be a single low but it's got to be Trading under some retail idea that would be viewed as support up here the same thing when this run above these relative equal highs happens right there you're anticipating

a market structure shift let me go back to this for a second we had this high on this candle then we had the candle right after that here the highest one and then the lower high of this candle here so

that's a swing High very simple little pattern but it means a lot when it's in the proper context when this high is broken with this particular candle right there that is significant only on the basis that we have taken liquidity out

of the marketplace that's it so when it broke this short-term high this is more meaningful and then the market will start to seek buy stops okay or buy side liquidity that would rest above here here and here so here's those sell stops

so this little area here shaded in that's a area where sell stops would be residing below that 14600 level okay on that 15 minute time frame so the market dove into that liquidity and you may or may not know that is a buy you don't

need to anticipate a shift in Market structure when the market rallies above when does that happen on this candle right here see that little light bulb that's when you're thinking okay now I have a condition in the marketplace that

I might see an opportunity intraday let's see if there's further evidence to that short-term high is taken here we traded above it it does not need to close above that okay really important once that candle closes and this candle

opens you're going to monitor this candle and you want to see as soon as this candle closes does it create that fair value Gap If it creates a fair value Gap again that's a candle with a high one single

pass up next candle has a low that doesn't completely overlap all this that's fair value Gap real simple okay this candle is where you would look to potentially trade at the earliest because now there's a gap there the

market trades down into that boom takes off see these down closed candles see that that's all one continuous order block what's it doing it's inside that pool of liquidity sell stops where's the open on that series of down Clos candles right here

that's the price level extending out in Time Boom so inside this fair value Gap this opening price on the order block that's your buy plus three Pips or whatever for spread and that's what you would use for a limit order well price

starts to run where above the highs where buy stops will be here Above This High here and above this High here so the buy stops above here that was taken this swing low forms once this candle closes so this candle we're watching

does it go below that short-term low it does so now we have a shift in Market structure that is now bearish only because we've taken buy stops fair value Gap forms the market rallies up into that you go short there what are you

looking for below here sell stops below here sell stops below here sell stops and in this Fair Val here so if you are in a position that has multiple contracts you can take partials below here I really wouldn't do

it there but below here here and some you saying why wouldn't you take them below their ICT well if you're trying to get short here that's not really that much movement so if you're going to take something off your trade below that low

why not just try to reach for that one and you could get it there right here okay and then below that low is nice as well this is below the 50 level of this high and that low okay okay so 50% level

that's what we targeting now this candle's low was the high end or first objective inside this Gap so that's your target you're going to look for that so you're looking for low hanging fruit the easiest Target to get to you're not

trying to be perfect and you grow into eventually holding to see if it will fill in that Gap okay this Fair B Gap was going down to this candle's High that's something that you strive for over time if you understand what I just

showed you here that's a very simple process of looking for number one liquidity gauging what happens without having to know for certain because you don't know you're not going to know until the market shows its hand this is

it showing its hand now let's go into a one minute chart and see how that looks a little bit different but still has the same characteristics here's that same price structure just on a one minute chart the same logic still there right swing High

taken after liquidity has been traded into this short-term High gets violated right when this trade down in here what's actually occurring okay put this in your notes high frequency algorithms are hammering they're just throwing orders in buy buy buy buy buy that is

not okay here's an important thing that is not causing the market to go higher it's just volume that's coming in the algorithms that deliver price that offer price that are constantly offering price in the marketplace that's what's beginning to

spool and go higher okay and regardless of where you want to trade at your limit orders they may not get filled where you're trying to buy with a market order you may think you're getting in at 14662 but by the time your order is

executed and confirmed you're in 14664 that's slippage okay that's negative slippage if you were trying to buy it at 14662 and it filled you at 14661 that's positive slipage that's better than what you were expecting so when price starts to Rally all this

is is a default to the algorithm constantly offering price at a higher price so we're looking at the swing low right here Market breaks down trades break back up into this back up in this fair value Gap here and sells off and

there's another fair value Gap right there trades up into that as well this is a one minute chart so it's giving you multiple points of execution that you could trade on and then Dives see these two candles here that's one consecutive

bearish order block the opening price extending out in time why is this a good bear shoulder block because it has that Gap and it's taking liquidity and there's a market structure shift there's your high frequency high power high probability bearish order

block what it is it's a change in the state of delivery the Market's being offered higher higher higher higher in these two up closed candles how did this series of up closed candles begin with this candle's opening right there that

opening once this candle trades below it that changes the state of delivery so you go back to that point of reference right there and that's why it's sensitive the algorithm remembers that right there okay that's all I'm going to

give you on the Free mentorship level but that is your answer okay that is what an order block is it is a change in the state of delivery much in the same way all of this movement down here all

these down closed candles the opening on that candle starts the series of delivery on the downside when that opening price gets violated here it changes its state of delivery now it was offering sell side when it goes above

that opening now it's offering buy side what will it be doing after that it'll be looking for buy stops buy stops buy stops because it's offering buy side liquidity same thing here buy side is being offered until that opening price

is violated right there then the change of state of delivery occurs now the Market's going to be doing what offering sells side liquidity what's that mean it's going to start going lower and attacking the sell stops all the sells

side liquidity it's offering it to the marketplace that's what's happening that's what the algorithm is doing but the market goes down to that 50% level because it's going down to what but I teach you what did I say in the first

video it's going down from a premium Market relative to this low in this High 50% is here that's equilibrium so it's going to go down to a discount and that's that Gap right here it doesn't look like a gap so much here but if you

go back up one more time that's that single opening right there on a two-minute chart and then on a one minute chart it's two candles that make that up but you're going to have to do is go through a progression of going

from the 3 minute 2 minute and one minute chart and you'll get your Market structure and your areas of where it wants to look for an imbalance or old low old high and it just makes it easy and here's the lipstick on it on the one

minute chart swing high is broken Market structure is now bullish rallies taking buy stops taking buy stops taking by stops this right here these highs right here is just staying below that low it's building up more interest that this is what

resistance that is engineering liquidity that way when this runs above it those individuals that know what you're learning today they know that that's a pull of liquidity for buyers coming in at a high price why is that useful

because smart money they bought down here or here or here or here or here that's where they sell to high seeking buyers real nice delivery here as well filling that fair value Gap change in the state of delivery now it's offering

sell side what's that mean it's going to match up sell stops it's going to keep going below old lows into an imbalance until we get down to a discount so with that I want you to think about how this is useful number

one you're looking at London highs and lows a session for London open okay for instance like 2:00 in the morning to 5:00 in the morning New York time every every time I tell you just always set it with New York local time 2 o'clock to 5

o'clock in the morning that's your London session what's the highest in lows of that session okay that's important because the Market's going to probably sweep above those highs or sweep below those lows and create situations like this okay and the New

York session is 7:00 in the morning to 10:00 in the morning New York local time okay what's the session high and low for that and do the same thing for Asia okay 7:00 p.m. to 9:00 p.m. and that's it

those are the three times of the day that I'm looking for specific key highs and key lows and any intraday high and low forming right before the equities open at 9:30 pretty easy right the hours of operation again are generally between

8:30 in the morning to 11:00 but it can be extended all way to New York lunch noon I do not tend to take trades after noon local time New York uh that hour is usually very problematic and it's just

it's better not to even look for any kind of setups wait until 1:00 preferably really 1:30 to 4:00 then you got the afternoon Trend typically you'll see between 2:00 and 3:00 there's a setup that usually forms in the

afternoon Trend or setup in the period of the time of the day that will also offer opportunities but that's outside the scope of what I'm going to be teaching in this mentorship all right so we talked about internal range liquidity

and internal range liquidity is looking for short-term lows or short-term highs inside a price leg that we're retracing back into okay that's all it means internal range liquidity is a short-term higher low with stops above below it or

an imbalance in that same range of price action and I taught you Market structure shifts showed you exactly all that's necessary that is all that you require and the skill set of identifying pools of liquidity that is going to be

something you learn rather quickly just by going through old data and looking at the times of the day I gave you in this lecture all right your homework is you're going to go through your em mini Futures intraday charts and you're going

be looking for stop hunts that lead to Market structure shifts intraday you're going to log your examples with your own annotations for your study Journal so what I showed with the break in the market going higher and lower above old

highs or lower below and old low that's running for stops that's a stop hunt then you're looking for that signature for the market structure shift on the three two and or one minute charts okay if you look for that between 8:30 in the

morning to noon New York local time in the eem mini markets or if you're watching the micro markets the same logic exists okay but you're going to start going back from today and go back as far as the data will allow you and

you annotate your 15-minute time frame for your buy side liqu pool and your cide liquidity pools and then going down into the 3 minute 2 minute one minute chart so for every individual day that you're logging and you're back testing

back testing is just Dressing Your Chart out like I'm showing you here and then studying it not just do it until account done really go into to see how price moved and how it [Music] delivered