Speaker A
All right, folks, welcome back. Hope everyone's doing well. So, we are in episode 37 of the continuing series of the ICT mentorship for YouTube 2022. Here's our daily chart for the E-mini S&P June contract for 2020.
Episode 37 of ICT mentorship covers E-mini S&P price action, fair value gaps, liquidity, and cautions against trading on volatile news days like non-farm payroll.
Ask about this video. Answers come from its transcript only — with the timestamp, so you can check them.
Generated from the transcript and can be wrong — check the timestamp.
Key Takeaways
- Avoid trading during major news events like non-farm payroll due to unpredictable volatility.
- Use fair value gaps and liquidity concepts to identify potential market bias and price targets.
- Study price action across multiple time frames to gain a comprehensive market understanding.
- Develop discipline by limiting trading during high-risk periods and focusing on learning.
- Experience and risk management are critical before transitioning from demo to live trading.
What the video covers
- Analysis of the E-mini S&P June 2020 daily chart focusing on fair value gaps and breakers.
- Explanation of market structure shifts and liquidity concepts such as short-term highs and BICEP liquidity.
- Advice against trading during non-farm payroll and FOMC days due to high volatility and risk.
- Encouragement to study price action during volatile events for educational purposes, not speculation.
- Discussion of multiple time frames (daily, hourly, 15-minute) to understand market behavior and key levels.
- Introduction of the ICT Power 3 concept: accumulating, manipulating, distributing price action phases.
- Mentor emphasizes risk management and the importance of experience before live trading.
- Recommendation to stop trading midweek during volatile weeks and focus on observation and study.
- Use of specific chart levels such as fair value gaps and short-term highs as bias indicators.
- Mentor shares personal trading philosophy and encourages a disciplined mindset.
Chapters
- 00:00Introduction and Daily Chart Overview
- 01:35Non-Farm Payroll Trading Caution
- 03:10Bias and Liquidity Levels Explained
- 04:45Avoiding High Volatility Trading Days
- 06:08Key Chart Levels and Risk Management
- 07:37Hourly Chart Analysis and Market Structure
- 09:1415-Minute Chart and ICT Power 3 Concept
- 11:14Summary and Trading Philosophy
Full Transcript — Download SRT & Markdown
Speaker A
And you can see we have worked inside this fair value. This is also a breaker. Okay, a breaker is a low-high-low or low, find the high in between, extending out in time. The market trades down into that.
Speaker A
It's also coming down to fill in this fair value gap. So, we came down, filled that in, and now we're starting the rally. Next BICEP liquidity is this short-term high here, and then if we can get some acceleration
Speaker A
from the upside, we have relatively equal highs up here and that fair value gap. Okay, so for the students here that are looking for a little bit more meat on the bone for bias, okay, when the market is moved from a low like
Speaker A
this and starts to trade higher and creates a swing low, it's easy to assume that it might want to come back up to this high here. So, notice how each day with the exception—there's one single day here—
Speaker A
each day was bullish, okay? So, the bias would be expected to be bullish until we take out this high. It does that here, then we have a day or two of retracement, which is logical because we created a
Speaker A
fair value gap here. It trades down, fills it in once more, tests it, and rallies. So, we're looking for tomorrow, which is Friday, non-farm payroll. It is a day I do not advise anyone to actually try to speculate on.
Speaker A
Now, there's going to be a group out there that have said, "I've made money doing non-farm payroll trades." My reasoning for telling you not to trade is because you're here to learn how to read price action. So, if I say
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go out there and study non-farm payroll Friday price action, which can tend to be very volatile, choppy, or sometimes it becomes a dud—it doesn't do anything—but you don't have the experience to weather something that's very volatile
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and can be jarring to you, okay? And if you're out here trying to gamble with live money, which is what none of you should be doing if you're in here learning how to read price, that's why you're here to learn
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how to read price. Months from now, if you come to the conclusion that you think you've done well enough on paper and then demo consistently, if you decide to go into live trading, you've done that on your own. I've done
Speaker A
nothing to instigate that or try to get you to do it, okay? So, bias is going to be derived from this chart here because we're likely to run this short-term high. That's what I'm thinking. I'm expecting that it could happen overnight.
Speaker A
There's nothing saying it's going to wait until tomorrow 8:30 when non-farm payroll comes out, but if it doesn't run out this high tonight at 8:30, if we're above the fair value gap high here—in other words, the
Speaker A
candlestick's low here—if we're above that level at 8:30 and we have not taken out that high, I would expect price to try to make an attempt to get to that level. It doesn't need to go through it,
Speaker A
but the bias would be, I would expect that to be attempted, okay? Now, does that mean go out and try to trade? Not for a payroll tomorrow. No. A lot can happen from the time of this recording, which is a little bit before
Speaker A
nine o'clock Eastern Time in the United States. So, I'm not trying to trade, not from payroll, okay? I'm not instigating any interest for you to go out and do it tomorrow, but I do believe that you should study it,
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try to determine what side of liquidity is going to reach for before the 8:30 news release, and when that volatility hits the marketplace, watch and see what it does on like a one- and five-minute chart. Get a feel for
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what it's doing, and it's an amazing study for liquidity purposes only. But unfortunately, sometimes these moves can appear, well, to the untrained eye, random, and then to the initiated here, sometimes the patterns that I'm teaching you in the logic materialize in the
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chart, and sometimes they do pan out to script, but not always. So, the reason why I tell everyone to avoid big days like FOMC and non-farm payroll weeks is because you don't have the experience, and you can get hurt
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very quickly not knowing what you're doing. So, I try to be responsible as a mentor, try to protect you from yourself because, like I was when I was younger, it was very easy for me to fall into a trap or
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think I can do something I couldn't. So that way you understand, I try to teach my students to stop trading by the New York session on Wednesday. So, if you had something that was profitable, quote unquote, up to that point, stop trading for the
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rest of the week and then observe, just study the price action the rest of the week, but don't try to push any buttons because you don't have any experience working in these sometimes very challenging market profiles on the Thursday and Friday of
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non-farm payroll weeks. They can be choppy, they can be sporadic, they can come back against you when you really don't expect them to, and they lose a lot of their precision. Not all the time, but most of the time,
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they lose their precision. So, I want to be focusing on those days where I don't have those disadvantages, where everyone else is like, "Well, I got time to be in front of the charts, so it's gamble and it's casino time,"
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and that's not the way I do things. I'm trying to promote the idea of a super mindset about what it is you're dealing with and respect the measure of risk. So, be mindful of these levels here, the two blue lines here
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and that red line here. It's a little bit lighter than these. You won't see these on a lower time frame, but this here is that short-term high here, and the two blue lines here are respective to that fair value gap on the
Speaker A
daily chart. [Music] All right, hourly chart, E-mini S&P market trades down to the discount low, the fair value gap. Again, these levels here are not drawn because of the basis of support resistance on an hourly chart, okay? These are the same levels
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that I drew on the daily, and my change time frames from daily to hourly, they transpose to these levels here respectively, okay? So, the market trades down on Wednesday, hits the fair value gap low, then we consolidate, and then we drop one
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more time to it here, then we make a dead mad dash to take out the short-term high here. We have a shift in market structure that's bullish. We take out this short-term high here and relatively equal highs,
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and now we're gravitating towards what looks like a run on the buy side here. Now, it does not need to do that tomorrow. I could be wrong about that. I'm just saying that I think that this is the next draw on liquidity, so study
Speaker A
that, that's all. Now, we do have a small little fair value gap in here. Be mindful that you might want to drop down into that before going up there. That's certainly something to study also. All right, on the 15-minute time frame,
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you can see here this is the markup for the short-term high here on Wednesday's trading. We hit the fair value gap low on the daily chart, went back, hung around in consolidation, rallied up, and I was in here trying to get a feel
Speaker A
for what it wanted to do. I was thinking that I could capture a run to take the buy side out here. That's what I was aiming for initially, really early in the session, and this got chopped up a lot in here,
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and it's fine. I really don't care about that, but once I realized it wasn't trying to rally and they were going to try to take it once more below the New York midnight opening, which is this candle here,
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I want you to take a look at the way this day formed before I get into any more discussion about it. We open here, consolidated, rallied up, and then dropped down into the fair value gap low on the daily chart
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and bounced there, rallied up, took out the short-term high here, and kept on rallying and enclosed here. This formation of price action is what I dub my ICT Power 3, where it's accumulating, manipulating, distributing. So, it's opening, create the low of the day,
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and then rally. Now, if you see this pattern on a daily chart, it's easy to understand, but when you look at the lower time frames, it's easy to get lost in all the candlesticks and all the volatility.
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the quick fluctuations on these one minute and five minute charts that's why the uninitiated will look at and say it's noise it's it's not noise okay it's doing what it does on the daily chart just being represented on a
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smaller interval like a one or five minute chart so if you lose the context of like for instance the levels here and here you won't understand that it's dropping down to the higher time frame key level which is the very very cap low
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then the market can rally higher but once i got on side i shorted from in here and covered inside this candle as we were dipping below the short-term low i forced myself to engage not because i'm breaking rules not because i'm
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undisciplined but because i want to teach you why i avoid these days because my precision drops precipitously i don't have the the visibility on these particular days that i do have on others so if you have a built-in advantage
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why would you go to an area or arena where you have built-in disadvantages if you have advantages by trading on the days that don't create these types of conditions you trade in those arenas and then that time frame
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and you avoid the times where historically your proven walk forward real trading results have been diminished on these particular days so how many times you have to have your flesh torn open and bleed out before you realize this is probably
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a time of the month where i shouldn't be doing anything or lower my expectations in terms of the measure of precision so over 30 years that's what i've come to trust especially as a mentor teaching other people how to read price action i really
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press upon my students to stop trading on wednesday by the new york session so if you haven't bagged anything by that time from sunday's weekly open until until wednesday's new york session begins don't do any trades and deal with that
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desire of wanting to trade but don't do anything that forges discipline it forges patience and it also teaches you especially when the weeks are really bad and it doesn't give you a whole lot of movement you're going to be rewarded
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psychologically and emotionally because you didn't do anything but on twitter i've coached those individuals there too and i said don't take any trades don't do it and today they did and they regretted it so some people decide to listen to me after
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the pain but my whole point in doing these types of lessons in lectures is to try to spare you from all that you don't have to go through the same things i did painfully to learn the lessons so
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listen okay it's for your benefit so anyway i went short in here and i shared that on a vignette little tiny little video clip where you can see the uh the business and the executions and such but the
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the afternoon that's set up i want to go into that a little bit and i didn't buy anything down here i didn't do any of that turn here i was actually shopping for some things that i need for
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the summer so it took my attention away from being down here but once i got back to the screens and i saw the market dropping down into this area here i tweeted and i asked everyone on twitter if they could find the five minute fair
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value at the above price and i gave them a minute or two and i shared a chart in case they were confused as to what it was being discussed so my expectation was we're here and we were likely to drop into that
Speaker A
in the pm session so in other words as we going into lunch and on the other side of the lunch we could have easily traded up into this area as an upside objective and then i didn't mention it
Speaker A
but you obviously know if we get above that movie the next logical draw on liquidity it'll be about this high here okay so on twitter if you want to go over to twitter you can see this is my handle a
Speaker A
lot of you guys keep asking i've already mentioned it on several videos now but it's the at symbol capital i underscore one time am underscore t h e underscore ict i am the inner circle trader or i am the ict
Speaker A
so you don't have to follow me on twitter i'm not looking for a lot of follow since i'm not trying to get everybody to follow me in fact you can just go to twitter.combackslash and put this here in without the at symbol and you can
Speaker A
look at my tweets they're not protected so that way you don't have to join that platform okay so i know there's a lot of people that simply will not join because all the politics is associated with it i
Speaker A
get it but we're over there having fun and hopefully you know you guys can check it out and join the fun if not then that's cool but it's a little bit more time friendly and easier to be alerted
Speaker A
unlike the community tab on my youtube channel i'm not really sure why sometimes people don't get notifications and sometimes they do i don't know so when you guys contact me or send me messages through tradingview or whatever asking me there's things i don't know
Speaker A
okay i just put videos up or posts and if you get them you get them if you don't you have to go to the actual community post and see it but twitter obviously has always been my playground i've enjoyed it in the past and you can
Speaker A
see here the time 11 37 a.m this is local time eastern time and june 2nd i asked everyone on e-mini s p five-minute chart locate the fair value up above market price that's this one here okay so i gave a
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little bit of time for folks to look for it themselves and then i gave this here okay so the market was trading right there and draw on look what it was here okay so obviously you can see here
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we did shortly after that it was bagged and tagged was it was trading up into that level there so the question is going to be what's the purpose of that you know what's the whole reason for me bringing
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it up you know that's not a trade ict that's not a a button being pushed that's not a an entry a stop and a target right i'm teaching you by being your spotter sometimes i'll see things and i'll say
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look at this or study that for clarity folks that is not a trade signal i'm not telling you to buy or sell anything i am trying to inspire you to look at price with the things i'm teaching you
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real time at that moment before it actually develops and delivers in price before your charts actually show it i'm taking your attention to the right side of the marketplace i'm pointing to a level i want you to study where we are at that time at
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market price which is in this example here and then study how it gets to that level i'm sometimes going to be wrong folks okay admittedly i'm i'm gonna do it wrong okay but i want you to study from when i say take notice of something
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and study and see if it wants to deliver that by a specific time okay i've noticed since um i'll comment on something on twitter it's almost like it immediately runs to it so that's also an interesting thing for me
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i'm not sure what to make of that but i know once i say something it's really quick to be johnny on the spot and get to where i'm pointing to so i'll leave that up for you to decide if
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it's anything noteworthy behind that all right so this is a two-minute chart and before i even get into this this is not a trade entry and this is not a trade exit okay if you look at the shape of these arrows okay
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i'm not trying to defraud you i'm not trying to fake something i'm not trying to pretend that i took this trade okay i did not do it i'm just showing you graphically this is how you would have your chart
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so if you want to journal things after the fact what you want to do is you have your chart set up like this and you have an order block the down closed candle prior to this move up here and then we drop after
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consolidation into the fairway gap right there right here is where i tweeted look at this very valuable so price was here that was the moment of the tweet and then up to here it delivers so the pattern is this
Speaker A
okay so when you have that you go back into your charts you mark it up like this and then over here you want to put down any observations how long did it take before this move started to be delivered to the
Speaker A
upside after it went into the fair bay gap well this each one of these candles is two minutes right so it went into it here here said it's four minutes and then six minutes and then starts delivering six minutes
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after hitting it and then it took one two three four five six seven eight nine roughly 20 minutes to deliver that expectation and price so it went from a discount how's this discount we moved from the low to here
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think about what's being shown we are above the new york men like opening price so the market dropped down to a discount creating the low of the day now we above this opening price and we're going into lunch
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here is the new york session lunch hour so we have time before 12 o'clock for this to potentially deliver but i was giving it time see if it wants to go there in the pm session which will be on
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the other side of lunch around one o'clock to 1 30 and then start to deliver that but like i was mentioning moments ago lately when i post or talk about anything it's like it wants to get there right away
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so again make of it what you want but after you have your annotations on your chart you want to basically put down any observation that you notice but you want to phrase it in such a way like you saw
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this in advance so what happens is you're tricking your subconscious into believing that this is a experience that you really had and it's like self it's called self talk okay you're reassuring and reinforcing something that would be a positive thing
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for you and while you may not have seen that trade and you didn't have the experience that i was showing on twitter today before it happened you borrow that experience for the study but in your journaling your chart would
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look like this okay and then you would fill in these little areas where it where it would draw on your observations the things that you saw come to fruition and never try to put anything negative in it don't say
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i wish i would have saw this or i was foolish and i didn't see this unfold and i missed another trade or i'm never going to get this this is frustrating these journal entries are for you to reflect upon
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at a later time and you want them to be positive you want to basically cheerlead yourself in your journaling and keep things very fact oriented everything is a matter of fact and you want to phrase it like you saw
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it beforehand and over time how much time i don't know but when you do this for weeks and months maybe half a year or so certainly by the first year of doing it you will have tricked your brain
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into having all of this pseudo experience the benefit of this because you're logging the chart and making it look like this and retaining and then referring back to them each weekend looking at the previous week looking at the previous month and
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just scrolling through your charts and reading your annotations yes it's laborious yes it takes time yes it is boring in the beginning but when you start learning to see these things form live then you'll understand the benefit of
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having done it because this is how you get it nothing else gives it to you watching my videos will not do it for you you have to be in here doing this part if you fail under my tutelage it's because you
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don't do this okay this is where everybody that fails starts their tailspin into failure they don't want to do this stuff they're like i ain't doing that i ain't got time for that well then you don't want to succeed
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because i'm telling you there's no shortcut around it you will do this or you will fail period and the story have a nice day now notice what we have here we have a short term low here during the new york
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lunch hour we're consolidating the market drops back down and takes out that short term low we have unfinished business about that old high here this is a stop run here and it just slowly drifts up and takes that old high out the only
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setup i liked was obviously the short and the re-entry in addition to the short i did and you can see that on the vignette that i posted on twitter so i'm not going to bog the video down here with that it's already
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made public the afternoon session or after the low was formed notice there's no model entry for what i've taught you so far but we have a nice fair value gap with the continuation of the upside with a fair value gap i was pointing out real
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time before it happened so this would be the only other setup which i did not take it's i didn't trade this in a demo account i didn't demo trade it but i did give you the logic to look for real time in twitter before it
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unfolded so this is the framework that you would have in your journal and everything i mentioned in this lecture tonight hopefully was insightful to you and helpful and i will touch base with you again next tuesday lord willing
Speaker A
until i'll talk to you next time be safe
Topics:ICT mentorshipE-mini S&Pfair value gapliquiditynon-farm payrollprice actionmarket structuretrading risk managementtrading educationtechnical analysis
