EASIEST Way to Trade ICT (Full Free ICT Course)

Key Concepts

Market Structure, Manipulation, Displacement, Impulse Structure, Premium & Discount, Fair Value Gaps (FVG), Liquidity, Order Blocks, Manipulation Blocks, Breaker Blocks, Time & Price, Power of Three, Time-Based Liquidity, Daily Bias, Market Maker Models (MMM), SMT Divergence, Risk Management.

1. Market Structure

• Definition: Highs and lows in the market. Key is identifying which highs and lows are significant.
• Importance: Foundation of analysis, involved in every ICT concept.
• Manipulation vs. Displacement:
  • Manipulation: Price action that fails to displace or push rapidly beyond structure. Often involves taking out liquidity (stop losses). Look for reversals after manipulation.
  • Displacement: Energetic push through structure, creating fair value gaps. Expect continuation after displacement.
  • Example: Market pushes up through a high without forming fair value gaps (manipulation), then reverses. Market displaces through a low, creating a fair value gap, then continues lower.
• Internal Range Liquidity (IRL) to External Range Liquidity (ERL): Market moves between fair value gaps (internal) and highs/lows (external).

2. Impulse Structure

• Definition: Structure formed with displacement and fair value gaps.
• Key Point: Not all structure is equal. Only consider structure formed with forceful pushes.
• Higher Time Frame (HTF) vs. Lower Time Frame (LTF): HTF impulses contain many LTF impulses. Use LTF structure in context of HTF direction.
• Application: Ignore structure that isn't manipulation/displacement. Look to sell above highs (with confirmations) if overall impulse is bearish.

3. Premium and Discount

• Concept: Apply business principles to trading. Sell at a premium, buy at a discount.
• Tool: Use Fibonacci retracement tool (settings provided) to mark out the midpoint of a range.
  • Above 0.5: Premium (look to sell if bearish)
  • Below 0.5: Discount (look to buy if bullish)
• Context is Key: Don't blindly sell in premium or buy in discount. Use in conjunction with market structure and bias.
• Application: Use premium/discount to determine where a trend is likely to end.

4. Fair Value Gaps (FVG)

• Definition: Three-candle formation with an expansive middle candle, creating a gap between the wicks of candle 1 and candle 3.
• Significance: Shows displacement and a desire to move further.
• Usage: Higher time frame levels, directional bias, trade entries, stop losses.
• High Probability vs. Low Probability FVGs:
  • High Probability:
    • One-Sided Gaps: Consistent candle direction (all up-close or all down-close). Shows consistent momentum.
    • Break and Structure Gaps (BSG): FVG that breaks through structure.
    • Combination: One-sided AND break and structure gap.
  • Low Probability:
    • Two-Sided Gaps: Inconsistent candle direction (mix of up-close and down-close). Shows lack of displacement.
• Inverted Fair Value Gaps (iFVG): When the market closes outside of a fair value gap. Indicates a likely change in direction.
  • Look for iFVGs at two-sided gaps or break and structure gaps that fail.
  • After iFVG confirmation, look for opposing liquidity.

5. Liquidity

• Definition: The ease with which an asset can be bought or sold.
• Importance: Smart money needs liquidity to get active in the market.
• Trading with Smart Money:
  • Bullish Market: Buy from sellers (below lows/sell-side liquidity).
  • Bearish Market: Sell to buyers (above highs/buy-side liquidity).
• Application: In an impulse, buy below lows if bullish, sell above highs if bearish.

6. Order Blocks

• Definition: Candles formed just before expansive moves in price. Used as levels to trade from.
• Bullish Market: Down-close candles before a move up.
• Bearish Market: Up-close candles before a move down.
• Ideal Characteristics: Occur before a fair value gap and displacement.
• Institutional Perspective: Order blocks represent areas where institutions are buying/selling against retail trends (e.g., selling to create a manipulation to buy lower).

7. Manipulation Blocks

• Definition: Same as an order block, except it closes beyond liquidity.
• Higher Probability: Especially powerful if the very next candle engulfs it (body engulfs body).
• Application: Use the candle that closes beyond liquidity as the key level.

8. Breaker Blocks

• Definition: Levels that occur before raids on liquidity (manipulation).
• Key Times: Look for them during volatile times of day when liquidity sweeps are expected.
• Unicorn Model: Breaker block linked with a fair value gap.
• Identification:
  • Bullish Breaker: Up-close candle before a run on stops (sweep of lows), quickly engulfed.
  • Bearish Breaker: Down-close candle before a run on stops (sweep of highs), quickly engulfed.
• Confirmation: Look for engulfing of the breaker block candle.

9. Time & Price

• Definition: Analyzing the market using time cycles and session behavior.
• Importance: Refines trade selection, identifies liquidity sweeps, understands market cycles.
• Power of Three (Accumulation, Manipulation, Distribution):
  • Accumulation: Ranging, consolidation.
  • Manipulation: Liquidity raids, stop hunts.
  • Distribution: Expansive moves in the direction of the trend.
• Trading Focus: Trade manipulation and distribution, avoid trading during accumulation.
• Time Cycles (Weekly & Daily):
  • Weekly: Monday (accumulation), Tuesday (manipulation), Wednesday (distribution), Thursday (continuation/reversal).
  • Daily: Asia (accumulation), London (manipulation), New York AM (distribution), New York PM (continuation/reversal).
• Key Principle: Expansion in one session/day often leads to consolidation in the next.
• Time-Based Liquidity: Highs and lows made during specific time periods (e.g., previous week's high, London session high).

10. Daily Bias

• Definition: The expected direction of the current daily candle (bullish or bearish).
• Importance: Essential for trading the correct side of the market.
• Key Concepts:
  • Internal to External Range Liquidity
  • Candle by Candle Bias: Engulfing patterns indicate likely direction.
  • Alignment: Higher time frames (weekly, daily) in agreement.
  • Reactivity Theory: Observing how price reacts to key levels (FVGs, order blocks). Are we seeing displacement away from these levels?

11. Market Maker Models (MMM)

• Definition: Strategy to visualize retracements and expansions on a lower time frame.
• Purpose: Identify the side of the curve you're on, confirm higher time frame bias, aid in trade entries and stop loss placement.
• Structure: Two or more consolidations leading into a reversal.
• Confirmation: Market structure shift (displacement) on a lower time frame.
• Trading Focus: On the "right side" of the MMM, only look for one side of price action (e.g., only buy if bullish).

12. SMT Divergence

• Definition: Smart Money Tool. A crack in correlation between related assets, indicating manipulation.
• Examples:
  • NQ (Nasdaq) and ES (S&P 500): Should move together.
  • EU (EUR/USD) and DXY (US Dollar Index): Should move inversely.
  • Bitcoin and Ethereum: Should move together.
• Interpretation:
  • Divergence at highs: Bearish.
  • Divergence at lows: Bullish.

13. Trading Plan (Putting It All Together)

• Bias Checklist:
  1. Weekly IRL to ERL and weekly candle bias.
  2. Daily time frame analysis (IRL to ERL, candle bias).
  3. Market maker models to confirm.
  4. Reactions to time-based liquidity and opening price.
• Economic Calendar: Use to map out the week and anticipate volatility. Focus on red folder news events.
• Entry Checklist (Requires Clear Bias):
  1. Higher time frames equal lower time frames (alignment).
  2. Manipulation beyond session open or time-based liquidity swept.
  3. Lower time frame confirmation (market structure shift, SMT divergence, or inverted fair value gap).
• Lower Time Frame Confirmations:
  • Market Structure Shift: Break of impulse structure, creating a fair value gap.
  • SMT Divergence: Crack in correlation between related assets.
  • Inverted Fair Value Gap: Market closes a candle outside of a fair value gap.
• Targeting: Opposing time-based liquidity (previous day's high/low, session high/low).

14. Risk Management

• R (Risk per Trade) Calculation: Total drawdown / Number of consecutive losses.
• Dynamic Risk Adjustment:
  • Start at 1R.
  • At 2R profit, risk 2R.
  • In drawdown, cut risk in half.
• Daily Stop Loss: Stop trading after two losses or one win (with 2R or better risk-to-reward).
• Trimming vs. Break Even Stops: Trimming secures profit, reduces risk, and allows for more flexibility.

Synthesis/Conclusion

This video provides a comprehensive ICT trading strategy, emphasizing the importance of understanding market structure, identifying manipulation and displacement, and using time-based analysis to refine entries and targets. The strategy involves a top-down approach, starting with higher time frame bias and using lower time frame confirmations to execute trades. Risk management is also crucial, with a focus on dynamic risk adjustment and limiting daily losses. The key takeaway is that successful ICT trading requires a combination of multiple confluences and a disciplined approach to risk management.