ICT Month 4 | 2016

Question 1

How can I determine Smart Money Accumulation and Distribution?

Answer 1

1. Interest Rtaes are the single most influential driving force behind market making
2. Understanding Interest Rates Shifts & changes can assist me in selecting trades
3. Technical Analkysis of key Interest Rates can unlock professional money managment / movement.
4. Interest Rates Triad provice a visual depiction of Smart Money Accumulation & Distirbution.

Question 1

What is Interest Rate Triad?

Answer 1

• 30 Year Bond - Key long term interst rate
• 10 Year Note - Intermediate Term
• 5 yer note Short Term.

they are all futures market by looking at those three it can unlock the most of things that are hidden.

• Overlaying or comparative analysis on these three interest rates unlocks price action
• Failure Swings at opportunistic time can validate Institutional Order Flow.

Question 2

What does SM look like in price action? (bearish)

Answer 2

1. Base asset or Benchmarkt creates a HH (YM, DXY, CRB)
2. SM distirbution cna be seen when correlated assets are making LHs.

The reason why that is occurring is because MS is heavily distributing (Selling) while hte base asset is moving higher.

Uninformed Money will see HH on Benchmark and think this should be going higher -> because strength (Retail). But if general market averages start making LHs that is indication that there is distribution under way.

Question 3

What does SM look like in price action? (bullish)

Answer 3

1. Base asset or benchmarkt creates a LL
2. SM accumulation will be seen with HL

Basically a SMT confirming that SM is accumulation because if SM really is buying heavy the price will NOT be permited to go lower.

Question 4

What is Interest Rate Triad.

Answer 4

• 30 Year Treasurey Market, 10 Year Note Market & 5 Year note MRakte
• Overlaying these three markets will highlight when Accumulation & Distribution in the Interst Rate Market takws place - from SM perspective.

Question 5

What signature am I looking for i Interst Rates when DYX is at important key level?

Answer 5

The tree Interst rates should confirm each HH or LL at a Moment when DXY is at significant price point.

Failure Swing highlights sm Participations in the market & trading opportunities are validated,

I just need of of three to break the symmetry because large volumes will be mowing.

Question 6

What is Interest Rate Shift?

Answer 6

Interest Rate Shift is Basically SMT between the Interest Rates ZB, ZN and ZF. there is going to be a shift in the marketplace AND if this occurs when DXY is at Important Institutional Refference Point this confirms the idea.

If I am looking for a selling opportunity on DXY then the opposite should be seen on interest Rates and they should be forming a SMT which would then confirm the IDEA,

Because of the SMT on the Interest Ratees that confirms that there is a Shift in the Interest Rate Market.

Remember: nterest Rate are the Number 1 leading driver for price in the currency market.

Question 7

What does SMT in ZN, ZF and ZB confirm?

Answer 7

If I see the actual divergence between ZN, ZF and ZB that basically confirms the shift in the market.

But I do not just purely look at Bond Market to find SMT I have to have an idea first DXY and then go into Bond Market to look for confirmation.

The poinw where there is a significant divergence between DXY and Interest Rate that confirms that SM is actively trading.

Question 8

What I anticipate for price to do when it moves into old areas of Institutional Order Flow?

Answer 8

I anticipate Dynamic Price movements.

Question 9

How does ICT Action plan look like inrelationship to ZB, ZN, ZF and DXY.

Answer 9

When price trades to a Key Price Level refer to Interest Rate Triad (ZB, ZN and ZF) & DXY to confirm Smart Money is behind my trade idea. If there is no obvious indication that they are moving large funds - pass on the trade idea and look for new ones that do.

If I want ot be a buyer of DXY then I want ot see Interest Rate Triad make aDivergence on high and that would confirm SM is trading.

SMT on Inteterest Rates Traid will confirm teh Sell or Buy Signal.

this is how I validate the above listed PD arrays because SM is going to leave fingerprints and it is going to be in a form of Interest Rate Triad.

Question 10

What is External range liquidity?

Answer 10

• Current trading range will have BSL above range high
• Current tradnig range iwll have SSL below range low
• Runs on Liquidity - seek to pair orders with the pending order liquidity - Liquidity pools
• External Range Liquidity Runs can be High Resistance or Low Resistance in Nature - ideally trading in low resistance conditions.

Question 11

What is Internal Range Liquidity?

Answer 11

• when current trading range is likely to remain Liquidity Voids will fill in the Gaps
• when current trading range is likely to remain - Fair Value Gaps will fill in Gap Risk
• Gap Sisk is simply when market repricies quickly to an area of where there was NO trading - closing in a range.
• Orderblocks inside trading range will be populated with new Buy & Sell Orders
• Market Maker Buy & Sell Models will form inside the range.

Question 12

Where will consolidaitons most likely form?

Answer 12

• At the key HTF price level
• At the EQ of the dealing range.

Question 13

After external rnage liquidity where should price trade next?

Answer 13

Once price takes out the external rnage liqudity I can anticipate it trading back to internal range liquidity. Where could price be pulling to? Returning back to rebalance any inefficiencies or purge any swing points for liquidity.

Question 14

How can I frame a trade from internal to external?

Answer 14

Example: going short from -OB that is return back to internal rang eliquidity But I am going to be looking for external range liqudity to exit on which is Sellside Liquidity below old low.

Majority of ICT trades are from internal range liqudiity entry and taking of at external range liquidity.

Question 15

Definition of bullish OB?

Answer 15

The lowest candle or Price Bar with a Down Close that has the most range between Open to Close and is enar a Support level.

Question 16

Validation of bullish OB?

Answer 16

When the high of the lowest down close canlde is traded thru by a later formed cnadle or price bar.

Question 17

What am I waiting for once price taps into the key PD level?

Answer 17

Once price traes into the support level I am waiting for price ot show me that large entitries are entering by displacing higher in price and forming a bullish OB.

Question 18

On which price levels should I be focusing on on bullish OB?

Answer 18

• its high
• Opening price
• MT of the body. Price should not close below this level if I am anticipating bullish prices. It can wick into it but it should not close below it.

Question 19

How much higher should price trade from a bullish OB?

Answer 19

Price should trade 2 to 3 times the Body of the bullish OB and from there i could anticipate retracement.

Question 20

When I should use the bodies of OB and when the wick?

Answer 20

Use the bodies of the candles when there is OB with NO FVG.
Use the wicks of the OB if OB is paired with FVG.

Question 21

How does simple trading plan with OB look like?

Answer 21

Analyze the HTF M W D. After SSL purge wait for displacement to tell me that SM is in the markets & then simply rewait for OBs to be retraded back ot.

Question 22

What is Breaker?

Answer 22

Breaker is a form of mitigation.

Question 23

Describe the bearish BRK?

Answer 23

Bearish BRK is a bearish range or down closec andle in the most recent swing low prior to an old high being violated. The buyers that buy this low and later see this same swing low violated will lookto mitigate the loss. When price returns back to old low that is selling opportunity.

Breaker is basically a stop hunt pattern.

Question 24

Describe the logic behind bearish BRK?

Answer 24

The raid on STH indicates buyers are trapped long, this stop hunt has to occur for BRK.

Repricing Lower has to occur quickly & that is a indication that price is bearish & that buyers have been trappedn. This displacement or repricing lower is confirmation that I am potentially seeing new BRK forming.

Once Market Structure is broken down all retracements will be viewed as selling opportunity.

Question 25

Describe the logic behind bullish BRK?

Answer 25

Swing low has to be taken out which is basically the raid on sell stops indicates that the sellers are trapped below old low. Range expansion higher taking out STH. Expanison highers is CONFIRMATION that market had a run on Sell Stops and break of old high confirms a stop hunt.
Any retracements back into old high I would be a buyer.

Question 26

What is Mitigation Block?

Answer 26

After a market structure shift lower to the don side that is CONFIRMATION that Market is bearish & there are participatns that want to take market lower. This is MS shwoing their hand that they want to take price lower. Indication that the market has confirmation that it wants to go lower. Any retracemetns back into the old low market would simply be mitigating longs that were used to send price higher. Mitigation block is the last down close candle before the rally higher. mitigation blocks are really classic support turned resistance.

Question 27

What Is rejection block?

Answer 27

It is basically looking at old high or low and if that has a lot of wicks is basically confirmaiton for me for a rejection block.

Rejection block = old high with big wick focusign on bodies and vice versa.

Question 28

What is the significance about Rejection block and turtle Soup?

Answer 28

Turtle Soup can also occur on bodies of the candles meaning. Swing high on bodies of the candles and then higher high created to the right on bodies of the candles that is also a sign of distribution and basically turtle soup.

Question 29

What is really a rejection Block?

Answer 29

Looking for the highest open or close inside of a swing high. Wicks are just drawing my attention to a potential rejection Block. Focusing on the highest open or close and on the CE of the wick.

Question 30

How are Market Makers trading?

Answer 30

Market makers are going to be scaling in early so they are going to have areas at which they START buying early. Because THEIR Positions are much larger they require a big deal of movement & Time to price in their orders BECAUSE they can not enter their all in ONE order. SM has to scale in that position and that is going to be seen in form of hedging.

Question 31

Describe Buy curve and sell curve as price drops into HTF support level?

Answer 31

As the price drops into lower LEVEL of Support SM is going to be building MORE positions. I will see that as price would go lower & lower there would be small little transitions that CAUSED market to create little STLs in the market.
I have to have a understanding that lower level support level is the ultimate price level that it is most likely going to have its impulsive price swing away from.

Prior to that low formed there are going to be initial short term rallies taking place.

Everytime the price creates a small short term move higher on Sell curve I am going to be focusing on the last down close candle because that is a +OB but It is occuuring during the Sell Side of the curve.

Question 33

What is Market Maker Buy Model?

Answer 33

Market Mkaer buy model si price swing lower that trades higher. Market is going lower just to go higher.

Eventually I will see the priec move higher away from a major Support level and I will see buy side of the curve come underway. The market will start pricing new HH and as it does I will be focusing on the old down close candles during the Sell Side of the curve. (+OB)

Every time where there was +OB created on Sell Side of the curve (meaning down closec andel that saw a little bit of price swing higher) that has indicated that there was HEDGING going on that down close candle or +OB. On the buy curve I am going to watch price reclaim or recapitalize that old order blcok from Sell Curve on Buy Curve.

Every new buying opportunity is going to be matched up to the previous down candle (+OB) while the price was dropping earlier on the Sell Side of the curve.

And eventually EVERYTHING will match up with the down close candles on both sides of the Market Maker Buy Model.

Question 33

What is bullish Reclaimed OB?

Answer 33

Is a candle or bar that was previously used to Buy Price and short term bounce confirms minor displacement. In the buy side of the curve these “old” blocks will be reclaimed longs.

On the buc side of the curve I can anticipate price will come back to teh reclaimed +OB from sell curve for reaccumulation -> this is recapitalization of the OB.

Question 33

What is bearish Reclaimed Bar?

Answer 33

Bearish Reclaimed Bar is a candel that was perviously used to Sell Price and a short term decline confirms minor displacement. In the Sell Side of Curve these old blocks will be reclaimed shorts.

Question 33

What is Market Maker Sell Model?

Answer 33

Anticipating the market to trade higher just to then go lower. Every up candle that has displacement or short term decline confirms that there are hedging under way. That means SM is selling short early and MMs are selling into these rallies.

When I get to Sell Side of Curve every single time I see market trade back into up candle or bullish candle (-OB) from Buy curve right before the down move on Buy curve that bearish OB is goign to be RECLAIMED bearish OB & I can take that as a new short.

Matching up during the buy side of curve while price is beeing build up into a premium the Market Makers are actually going to hedge into that rally selling short because they have deeper pockets than US.

I can match Buy Curve with Sell Curve by looking at every single up candle that has a small displacement or short term decline that is confirming that there was hedging under way.

If there is a displacement in price and we see bearish after an up cnadle I can assume that this is going to be evidence that they have eben hedging and selling short early.

Every time on sell curve price retrades back into -OB from Buy I could be a seller.

Question 34

What am I doing with Buy curve or Sell Curve?

Answer 34

I use buy & sell curve to be able to match up old OBs during buy curve & sell curve and I wait for that reclaiemd mechanism where MMs would use this same refernce pints to add new positions.

Question 34

What is a propulsion block?

Answer 34

Is a candle or bar that has previously traded down into a +OB and takes over the role of Price Support for higher Price movements. High or low of the propulsion candle should be very sensitive and price should also NOT break thru the MT of the propulsion candle on body of the candle.

Question 35

What makes a candle a propulsion candle?

Answer 35

For a fact that it already dropped into an OB then price created a new higher OB that touches the initial one. The higher down close candle would be sensitive. Price should Never trade thru the +MT if bullish on a propulsion candle.

Question 36

What is a bullish vaccum Block?

Answer 36

Bullish vaccum block is a gap created in Price Action as a result of a volatility event. The Gap forms by a vaccum of liqudity directly related to an event. NFP can create a Vacuum Block or in futures a session opening can.

Inside tof this area there was absolutely no trades beeing made. No trading inside of the GAP there is no way for trade to execute hre it is a vaccum of liqudiity. The market will want to come back and close that in. Inside of the GAP there is no trades beeing made absance of liqudity or absance og price beeing traded there. Focusing on Premium Discount and CE of the GAP.

Question 37

When is vaccum block a exhaustion gap?

Answer 37

If the market has been rallying higher for a couple of days then this could be exhaustion gap aka the last bit of moment before the reversal.

Question 38

When could I anticipate for the GAP to stay open or fill only halfway?

Answer 38

Bullish OB paired with the GAP and I could potentially be expecting for price ot leave that little bit of GAP open but for this to occur I have to see immediate feedback at the +OB that would confirm the buy.

Question 39

What if price comes back to the GAP before New York?

Answer 39

If the Time of the day is before New York and price is at the GAP then New York will most likely come back and close the GAP.

If price trades in the GAP during 6AM during 7AM tit will most likely fill in the GAP.

But if price trades into the GAP durign 10AM or 11AM then I can most likely anticipate the GAP is NOT going to get fully filled. Perhaps come back into the GAP during later time.

Question 40

What if price fully closes in a vaccum block?

Answer 40

Price fully closing in a GAP that would be a full return
on a vaccum block. Meaning range is fully filled and that means the range is balanced out. After filling in the GAP I could anticipate the price ot continue in its intended direction.

Question 41

What if Price does close in a gap and then rally higher?

Answer 41

If price does close in a GAP and then I see a rally higher I do not want to see price come back BELOW the level that would have closed the GAP.

Price has been delievred efficiently into the GAP and after displacemeent higher I just want to see price rallying higher pirce has come back down and closed or filled that vaccum of liquidity meaning there is NO reason more for price to come back lower.

Question 42

What if Vaccum Block (GAP) is paired with OB?

Answer 42

If ther eis a bullish OB paired with vaccum Block (GAP) price might only want to come back to +OB that would be inside that GAP and continue trading higher not closing the GAP fully.

Question 43

What is Liquidity Void?

Answer 43

Liquidity Void is a Range in Price Delivery where one side of the Market Liquidity is shown in wide or “long” one sided ranges or candles. Price typically will WANT TO revisit thia “poor range” or void of contrarian liquidity.

One sided delivery ranges are typically going to be revvisited.

Question 44

When is price in Balanced range?

Answer 44

When price is in small consolidaiton or trading in range then price is in Balance.

At some point price will eventually move out of the consolidation. when this occurs I know there are participants in form of SM. Smart Moeny is the one with enough deep pockets that can move price out of consolidations or move it at all rally.

This move outside of consolidation causes price Imbalance or displacement.

Imbalance = Displacement.

Question 45

How long can the Imbalance stay open?

Answer 45

Imbalance can sty open for a while, there is no specific time when the voids are going to be filled. Relative to what I see in PA.

Question 46

What is indication that SM wants to move price around?

Answer 46

Consolidation & after that agressive move out of the consolidation (expansion) when I see that is indication that there is SM in the marketplace and price is wanting to go lower.

Because they are SM and have larger orders then I their participations is oging to have to be scaled in. SM can not enter the whole position at once. They have to gradually scale it in.

Question 47

What is Sell Side Liquidity Void indicating?

Answer 47

Liquidity Void there is basically only one sided delivery of price & taht is going lower. It was all sellside liquidity only meaning for efficient delivery there has to be buyside delivery. Inside of that run lower very little buying took place, so because of that I can anticipate a move back into teh liqudity void (SIBI).

I anticipate price to trade into this range for price to trade with buyside delivery as there was only Sell Side Liquidity & the Buy Side Liquidity is missing.

Question 48

What is Liquidity?

Answer 48

Liquidity is the open interest of buyers & sellers in the market and can be further defined by those entities at or near specific price level.

I have to always ask myself of where are the Orders. Buystops above the marketplace & Sellstops below the marketplace

Question 49

How do I want to buy and sell as SM trader?

Answer 49

I as a SM minded trader I want ot sell to the buyers above us or above market price. And a buyer below the marketprice from sellers that are willing to sell below marketprice.

Retail will be typically buying on a breakout higher or some continuation bull pattern. For me to be a buyer I required for makret to pull back to a level of discount.

Question 50

In regards to liquidity pools where do I want to be a seller?

Answer 50

If the market is bearish then I want to be ideally selling above old highs. AND retail will see that as a bullish Breakout.

If price prints just above the old high while HTF is beraish I can be a seller there as SOME retail traders are going to be buying there. I am actually selling short in a liqudiity pool of buyers.

Question 51

How can I validate the Liquidity Pool setup?

Answer 51

When the low is violated or price moves below the recent low. The sell stops become Market Orders to Sell at Market. This injects Sell Side Liquidity into the marketplace and typically paired with SM buyers.

Question 52

In which grades are stop hunts going to occur?

Answer 52

Stop hunts are going to occur in grades of 10, 20 or 30 pips and pairing that with any HTF PD array.

Question 53

When to anticipate SSL raids?

Answer 53

When the market is underlyingly bullish on HTF:

Question 54

When to anticipte BSL raids?

Answer 54

When the market is underlyingly bearish on HTF.

Question 55

What is FVG?

Answer 55

FVG is a range in Price delivery where one side of the Market Liquidity is offered and typically confirmed with a Liquidity Void on LTF Charts in the same range of Price. Price can actually “GAP” to create a literal vacuum of Trading this posting an actual Price Gap.

Question 56

What is paint roller analogy when it comes to FVG

Answer 56

FVG for example only Sellside Liquidity aka delivery has been offered. I av to use that paint rollera analogy. That FVG (SIBI) is a range of poor price action or only delivered on the down side. I am going to expect for price ot eventually want to trade back into the FVG with buyside delivery for efficient delivery.

Question 57

What is efficiently traded area?

Answer 57

From STL to the STH that is buyside delivery and then price turns at that STH and continues trading lower breaking pass the STL that above is now efficient delivery as there was Buyside Delivery and Sellside delivery. Anything below the STL would be poor delivery or delivery of only Sellside Liquidity. Price will might want to revisit that for efficient delivery.

Question 58

What can liquidity be?

Answer 58

Liquidity can be eingeered or neutralized. MMs can draw participatns into the market or take them out. Engineering liquidity runs is basically putting participants in on the wrong side.

Question 59

Which type of indicator divergences are out there?

Answer 59

• Type 1 - Price makes HH indicator makes LH
• Type 2 (trend following) - Price makes HL while indicator makes LL.

*They should just act as a confirmaiton tool for me when I want ot enter the market.

Question 60

How can I trade with the indicator?

Answer 60

Indicator should just act as a confirmation parameter. My bias should have nothing to do with the indicator. Indicator is rather a confirmaiton tool.

Question 61

Where are indicators very helpfull?

Answer 61

With indicators I can pick tops & bottoms BUT they are not giving me the clue to where price is going or WHERE is liquidity. Indicator has NO clue of where the actual orders are in price. Price is attacking Stops on the fund level which is liquidity pools.

Question 62

What is so significant about double tops and double bottoms?

Answer 62

There is a phenomenon where double top projected higher iwll give me a top. projected higher 1 STD that is where algo will most likely take price as it will rememember where price actuall was.

Double tops and double bottoms are just basically highs and lows in close proximity.

The algo will know those reference points even if time has passed. *Basically looking at Original consolidation of MMXM (double top / double bottom)

Never trust double tops and double bottoms as algo will seek liquidity above or below them.

Question 63

In which order are indicator divergangces going to play out?

Answer 63

There is usually a phenomenon when price is at the HTF resistnace level that on indicator there is going to be first Type 1 divergence (FAKE) and then followed by Type 2 divergence (real one).