ICT Mentorship Core Content

Episode 1 - Elements of a Trade Setup

I. Summary

 This is the first teaching of the ICT monthly mentorship for month of September 2016.
 Each month you’ll get 8 individual teaching.
 The framework or the context is to determine whether the price is in an expansion,
retracement, reversal, or a consolidation.
 There are 4 major ICT tools to look at on the chart: orderblocks, FVG, liquidity pools and
equilibrium.
 The Interbank Price Delivery Algorithm (IPDA) is the artificial intelligence that manipulate
the price.
 The market is highly manipulated especially the forex one which is what we are primarily
doing here.
 The fingerprints of these manipulations are easy to see once you understand how the IPDA
functions.
 Prerequisites: free tutorials  sniper series, market maker series, precision trading concept.
 All markets start from a consolidation and move into an expansion, then it goes back to a
consolidation again or a retracement or a reversal.
 The consolidation is the beginning of everything because that’s where the markets are
building orders: the market maker keeps the price in a tight range, until there is enough
money on both sides of the range. Whichever one has the highest amount of money to be
absorbed, that’s the direction it’s going to move in. We don’t know what that is, but we wait
for the expansion  that’s when we get the clue of what the market is most likely doing, and
then we wait for either retracement or reversal, but we always for the first expansion.

A. Expansion

 Expansion is when price moves quickly from a level of equilibrium (middle of the range of a
consolidation = use fib 50%).
 Expansion couples directly with the tool of orderblock = when price leaves a level quickly,
this indicates a willingness on the part of market makers to reveal their intended repricing
model.
 If price move up quickly from an equilibrium, that will give us an indication to look for a
bullish orderblock that the market makers leave near the equilibrium, we wait the price to
come back into the orderblock, and then
buy.
 In this example, price go up quickly from
the equilibrium, the orderblock is the
down candle (without the wick?) right
before that up move. We would buy when
the price return to that level (100 pips).
 This simple principle repeats itself all the time.
 The orderblock is introduced in the sniper series tutorial.

B. Retracement

 Retracement is when price moves back inside the recently created price range.
 When price returns inside a recent price range this indicates a willingness on the part of the
market makers to reprice to levels not efficiently traded for fair value.
 The go to for ICT tools is liquidity gaps and voids: when we see a real quick rallies up or
down in price, many times it will want to come back in and close that range created.
 Example of a liquidity void: this is a
retracement: in the orange shaded area we
had a real quick sudden movement away
from a price level and that quick sudden
movement creates what we call a liquidity
void in other words it as the market drops
aggressively like that there's going to be
pockets where the price wasn't delivered on
every available price level.
 As a trader there's two options:
o Getting long and try to fill in that range.
o Wait for it to come all the way back up to it and fill in the liquidity void once it hits it
then it'll probably resume going lower.

C. Reversal

 The reversal is when price moves the opposite direction the current direction has taken in.
 Reversals are coupled with the ICT tool of liquidity pools.
 When the price reverses direction it indicates the market makers have ran in level of stops
and a significant move should unfold in the new direction.
 What do we look for in price: the liquidity pools just above an old high and just below an old
low.
 Example: every x indicates where stops would be, and the market goes just above those
levels and rejects it and goes the other way.
 The USDCHF is really choppy it tends to have a lot of this type of price action so it has a
characteristic that is very favorable if you're into type of trading.

D. Consolidation

 Whenever we're referring to consolidation, we're directly relating that to the ICT tool of
equilibrium.
 Consolidation is when price moves inside a clear trading range and shows no willingness to
move significantly higher or lower.
 When price consolidates it indicates the market makers are allowing orders to build on both
sides of the market  expect a new expansion near term.
 We're waiting for the impulse swinging price away from the equilibrium price level that is
found exactly in the halfway point of the consolidation range.
 Example: here we've identified a range defined specifically by the bodies of the candles not
the wicks. As you can see price moves out in an expansive manner and then comes right back
down to the equilibrium price point and then
expands to the outside.

E. Conclusion

 By understanding these specific characteristics

and elements of trading a setup you'll give
yourself framework to learn how to study price
action and eventually work towards understanding consistent setup discovery. You'll be able
to discover what type of trade you're going to be because one of these characteristics is
going to be your bread-and-butter condition.
 Don't think that you have to have all of them well known and under your belt before you're
actually consistent because you can just find one element (equilibrium, orderblocks, liquidity
gaps or liquidity pools) as we described here, and start being consistently profitable in your
trading, it only takes one setup, you know what context or framework you're going to trade
and couple that with an ICT tool and then wait for those conditions.
 You're not going to get a trade every single day, but you can get a couple of them every
single week.
 If you look at four major pairs with one condition or criteria you'll find a trade every single
day but that's not what you're trying to do right now, you're going to grow into that over
time but for now just go through your charts and try to look at all the examples that's already
happened in the left side of your chart and outline them individually based on the
characteristics and elements that we've identified here in this teaching.