Chapter 1 lesson 3 - Higher timeframe importance Flashcards
What’s the purpose of the algorithm in the market?
Deliver liquidity and rebalance areas of imbalance.
What’s the script the algorithm runs on?
Time and price.
Is there a difference between the different timeframes?
Time frames are fractal. The ICT concepts work on all time frames. The only difference between the timeframes is the time it takes for the candle to close.
Which timeframe candle is critical to determine bias?
Start with the weekly candle to determine the bias of the weekly candle, then use it to determine the daily bias.
Use the following principles to determine bias:
1. Price always drawls towards either liquidity or imbalances
2. Price will consolidate in a range in order to generate liquidity.
How does the daily bias help your trade?
If anticipation a bearish close, wait for price to go above the opening, sell while price is moving up, and exit when price makes the bullish close.
If anticipation a bullish close, wait for price to go below the opening, buy while price is moving down, and exit when price makes the bearish close.
You need to find an entry on the lower time frame though.
If we’re expecting the weekly candle to be bullish, how do we expect price to move throughout the week?
If the week is bullish, the low of the week would generally form within the first 1 - 3 days of the week, then price will expand over the remaining days.
The same principle applies to other time frames, eg for daily, price on lower time frame will swing.
What is propulsion?
When a candle clears an order block, it becomes an order block itself. When this pattern repeats, it’s called propulsion.
What is the significance of price moving into an order block?
If you see price coming into the order block on a daily level, or any area of significance like a fvg or imbalance, you want to be looking for a buy/sell entry.
You want to determine where price is reacting off of, and where price is moving towards.
