05-ICT Mentorship Core Content - Month 1 - Equilibrium Vs. Premium

Last modified by Drunk Monkey on 2022-08-26 17:20
1 00:00:28,530 --> 00:00:38,160 ICT: Welcome back, folks, this is ICT with a fifth installment of the eighth in the continuous series for the first month of the ICT mentorship for the month of
2 00:00:38,160 --> 00:00:48,510 September. The previous tutorial in Session Four, we looked at equilibrium versus discount. This session we'll be looking at equilibrium versus premium.
3 00:00:49,200 --> 00:00:57,840 And we went through a great deal of content and regards to discount versus equilibrium. So we will have to spend so much time with this tutorial because
4 00:00:57,840 --> 00:01:09,990 everything we're selling here is basically diametrically opposed to what you would expect to see in the equilibrium versus discount to teaching. So looking
5 00:01:09,990 --> 00:01:21,630 at what we have, when we look for premium markets and markets that are in a premium, that when we talk about commodities later on in this mentorship, the
6 00:01:21,630 --> 00:01:31,680 topic of premium will come up again. But when I'm referring to premium as it relates to price action, I'm actually referring to the current range that we're
7 00:01:32,190 --> 00:01:41,580 trading in. And the first thing we look for is an impulse price swing, which is we have an impulse price swing here we have an impulse price swing here, we have
8 00:01:41,580 --> 00:01:53,550 another impulse price swing here. So the first thing we look for in prices, an impulse swing, and we see one here, we see another one here, we see another one
9 00:01:53,550 --> 00:02:07,560 here. And these three price swings actually make up one larger price swing, which is an impulse leg or impulse swing by its by its own right. So when we
10 00:02:07,560 --> 00:02:20,940 define our ranges, okay, the use of the Fibonacci is helpful in this case, because we can take the thin draw from a high, down to a price low. And I'm
11 00:02:20,940 --> 00:02:33,750 using this low here because it's the most lowest in contrast to this high in price comes all the way back up to I've taught in many years, the optimal trade
12 00:02:33,750 --> 00:02:45,780 entry, which is a standard 79% to 60% retracement level on the fib. Now, I didn't create that. But if it was simply looking at that alone 62% to 70%
13 00:02:45,780 --> 00:02:55,290 retracement levels, looking for buyers and sellers, they're everywhere we loaded, it would be no no work at all in terms of taking trades. But obviously,
14 00:02:55,320 --> 00:03:06,840 you probably learned very quickly, there's much more to it than just pulling a favor over top of price swings. We have in this larger price swing, we have a
15 00:03:06,840 --> 00:03:17,370 smaller price swing here, okay. And we have the high down to this low and the market starts to retrace equilibrium, or half of the impulse price swing has to
16 00:03:17,370 --> 00:03:25,230 be at least touched and then once it hits that we watch for price to reach up into this area here. And then there's other disciplines out there. And other
17 00:03:25,230 --> 00:03:34,530 mentors, other teachers will say that the 50% retracement level is a good level to trade at based on price swings. I don't agree with that. I understand that.
18 00:03:34,620 --> 00:03:42,270 Sometimes it's going to work. But what I want to do is I want to be selling at a market that's at a premium level for a market to be at a premium in this current
19 00:03:42,270 --> 00:03:49,680 price range here. And that's assuming none of the price action from this high down all the way to the right has not happened yet. So you'd be watching price
20 00:03:49,920 --> 00:04:00,150 in this initial range. And price did not get back up to the midway point or 50% of the range that was created in the high the low. That's all equilibrium means
21 00:04:00,150 --> 00:04:11,610 is 50% on the Fed town describing it, but the concept is is you have to see a market price, a move above the halfway point. Once it does that start it starts
22 00:04:11,610 --> 00:04:20,610 going into what is referred to as a premium market. That means it's at a really high price relative to its current trading range. We all need overbought and
23 00:04:20,610 --> 00:04:29,340 oversold indicators to help us classify an overbought or oversold market, we just simply need to know the current price range we're trading in. And if we get
24 00:04:29,340 --> 00:04:38,400 above the 50% level, okay, we start getting into what would be deemed as overbought or any premium level on this price. So in here, it obviously never
25 00:04:38,400 --> 00:04:47,730 gets above the 50% and everything touches it so it never gives us an opportunity to get short relative to this timeframe or this price line. So there would be
26 00:04:47,730 --> 00:04:58,830 nothing to do there. The next price leg here. Okay, the same thing from this high to this low. Nothing in terms of that price swing there, it doesn't get
27 00:04:58,830 --> 00:05:08,220 back up to the 50% I level, but look closer, there's another smaller price swing that has formed right in here. Okay, so we could look at that
28 00:05:09,750 --> 00:05:18,960 measure the high to the low, and the market gets right to a pre, I'm sorry, equilibrium, but does not stay above to go to a premium market, it only goes
29 00:05:18,960 --> 00:05:28,170 right to the Fibonacci 15 level, or what we deem as equilibrium. So the price goes to an equilibrium price point, and then immediately sells off. This would
30 00:05:28,170 --> 00:05:37,200 be a missed opportunity in regards of looking at equilibrium to premium. The reason why we want to focus primarily on the 62 or 77 tradesmen levels in that
31 00:05:37,200 --> 00:05:45,570 range, this they'll be selling short, is because the market is going to be really pressed higher, and would be really, in terms of overbought and oversold,
32 00:05:45,750 --> 00:05:54,450 it would be very overbought. And you would be expecting a willingness to sell software and go lower, there's going to be times when the market does not give
33 00:05:54,510 --> 00:06:09,840 that scenario to you. And you just gotta let those particular price swings go without you. The next price swing is this high to this low market trades back up
34 00:06:09,840 --> 00:06:23,370 to equilibrium here and move this over as you can see a little bit better. Case market trades back to equilibrium goes back above it into a premium market. And
35 00:06:23,370 --> 00:06:33,480 it goes right on through what will be deemed as an optimal trade entry. Okay, or selling at a premium. So here's the wonderful thing about this. You can look at
36 00:06:33,480 --> 00:06:42,390 this and say, okay, if I'm measuring this high to this low, and I'm gonna be selling, I'm above equilibrium, I want to get short. In this area between 62 and
37 00:06:42,390 --> 00:06:50,970 seven times and tracing level. Okay. You look over here. Maybe there's something over here institutionally, in terms of a bearish waterblock isn't like that you
38 00:06:50,970 --> 00:06:58,290 can define, we're gonna say that that's not there, we're gonna say that we went short, just purely on price action, retracing back into this Fibonacci level
39 00:06:58,290 --> 00:07:08,880 here, it comes all the way up and hits you where your stop would be. When you see these conditions where the market trades above equilibrium, and goes through
40 00:07:08,910 --> 00:07:18,630 the levels of 62 and 70%, trace levels, what that does is it gives you a condition that we saw in the equilibrium to discount if it takes out a previous
41 00:07:18,630 --> 00:07:26,910 low. When it's in discount, it's probably gonna be a turtle soup by in this case, it's going to be a turtle soup sell, it's going to be reaching for stops
42 00:07:26,940 --> 00:07:35,850 above the impulse swings. Hi. Can you see that here? It goes up, runs out the stops here and then goes lower? where's it gonna go? Where do you take profits
43 00:07:35,850 --> 00:07:45,570 at low lows, that's already established in the marketplace here. And here, you see, that's exactly what the market does. You can also use when you're defining
44 00:07:45,570 --> 00:07:56,550 your ranges, all price swings from high down to low. Okay, you want to anchor your your Fibonacci when the market goes down from this high all the way down to
45 00:07:56,550 --> 00:08:04,890 here, okay, and creates that low. Soon as we start seeing it bounce up, you need four candles, remember, it's the same thing we just saw on the equilibrium to
46 00:08:04,890 --> 00:08:15,360 discount teaching. Once you see a swing low form, you're watching that fourth candle, the show willingness to go higher, it does. And then you simply wait,
47 00:08:15,360 --> 00:08:23,670 here's the equilibrium price point is this 15% level and the price goes through that. So now you're gonna be watching it, you want to watch to see if price gets
48 00:08:23,670 --> 00:08:33,810 to 60 to 70% tracing levels, it does. And it does it while it's running at the high here. So two scenarios, one, you could use this high down to this low and
49 00:08:33,810 --> 00:08:44,790 got a stop out in the initial 62 disadvantages retracement levels where we saw earlier, but it ran right through it. If you had not anchored your fib to this
50 00:08:44,790 --> 00:08:55,440 high to this low, you would never see this optimal trade entry. Okay, or return to a premium to go short prices above the equilibrium price point and it takes
51 00:08:55,440 --> 00:09:04,200 out an old high. So we're running stops at an old high and we're going back into what would be a premium market. We're above the equilibrium price point of the
52 00:09:04,200 --> 00:09:13,980 range high and the range low. And we take stops out that's really really good in terms of probabilities. And the market goes down and sweeps out a previous low.
53 00:09:14,190 --> 00:09:23,760 Remember when we were looking at the equilibrium to discount every time we were buying we were taking profits at above an old high. Okay, so when you see that,
54 00:09:23,970 --> 00:09:31,350 all we're seeing is the reverse of that in the equilibrium versus premium market. So we're always looking to sell at a premium premium is defined by as to
55 00:09:31,350 --> 00:09:44,730 be above the equilibrium price point or 50 50% level the Fibonacci anchored on a swing of clear, discernible price action. In other words, if it looks sloppy, if
56 00:09:44,730 --> 00:09:53,550 it doesn't relate to us solid pricing and obviously obvious price swings are the ones we look at. We're not looking at anything it looks questionable. If it's a
57 00:09:53,550 --> 00:10:03,780 pure price line, we measure it and this is a high. This is a low and we went through all the initial stages of all these high low, high low high low
58 00:10:03,810 --> 00:10:04,500 scenarios.
59 00:10:05,910 --> 00:10:12,870 Really nice scenario here, again, taking profits initially at below this low here, when he would hit that, and then you'd hold out for potential run for some
60 00:10:12,870 --> 00:10:27,090 of your trade to be taken off below this low here. Now market goes into another area of premium relative to equilibrium and go back to this larger price swing
61 00:10:27,090 --> 00:10:38,700 here. This low all up to this high mark goes right into the seven 970 9% retracement level, hits it perfectly to the pit, then rolls down. Where do you
62 00:10:38,700 --> 00:10:48,630 take your profits at? Again, we're looking to take profits at below this low here. Okay, and into the order block down in here, which is what you see right
63 00:10:48,660 --> 00:11:04,470 there. Okay, you have another range that you can use this high to this low. Okay? Now what's what's really nice about this is if the market is in a
64 00:11:04,470 --> 00:11:16,830 consolidation, this type of trading is your go to, okay, a long protraction airy state in the marketplace where it goes up and down No, no real movement higher
65 00:11:16,860 --> 00:11:25,410 in one direction or lower one direction. It just stays in a large consolidation. You want to be trading turtle soups for understanding where premium and discount
66 00:11:25,830 --> 00:11:36,000 are. And if you have the high here and you pull down to the low here, when the market gets above equilibrium right in here, it goes right into the 70.5. Or
67 00:11:36,000 --> 00:11:47,370 what would be the optimal trade entry sweet spot, okay, or ote and the market is a sell out there. Where do you want to take your profits at below and all low or
68 00:11:47,580 --> 00:11:55,350 below this low rate there. Every time the market makes a swing low, you have to take a look at it, it only takes three candles. This is why I do not use the
69 00:11:55,800 --> 00:12:06,000 Williams fractal that requires five candles, I only need three candles. So we have a candle low here, a lower candle low here, a small, smaller little candle
70 00:12:06,000 --> 00:12:15,090 in here, the market blows through that that would be your your target right there, you would take first profit, then you would come back end up taking your
71 00:12:15,090 --> 00:12:25,800 stop out right there. Now, if you get a stop and say you don't take first profit, let's play devil's advocate for a moment. Say you're greedy, you're
72 00:12:25,800 --> 00:12:34,350 impatient you're developing these don't want to do anything to take some profits out. Or it couldn't happen for you. You didn't do it like that, the mark comes
73 00:12:34,350 --> 00:12:45,630 back and takes your stop loss out. If you see that scenario, okay, you're gonna be looking for old highs to be breached. While we're above the 50% level. So
74 00:12:45,630 --> 00:12:53,880 we're in pretty, we're in a deep premium. Okay, so markets are overbought, right and here, the market runs through this previous high. So we're in turtle soup
75 00:12:53,880 --> 00:13:04,560 scenario, we can be looking for turtle soup cells, Mark comes up starts to come down, one more time runs through you take your stop out. Again, this is going to
76 00:13:04,560 --> 00:13:15,120 happen in your trading. Do not try to avoid it because it's going to happen. So the same scenario, we have an old high mark goes back above it. If it's at a
77 00:13:15,360 --> 00:13:26,580 premium. And you've defined the range here, you take this scenario as a sell on turtle suit basis. For each above an old high sell short break to take profits
78 00:13:26,580 --> 00:13:34,950 at below the first low. It's here, the next low was right here. And we have another range created here. So while we're watching this form, as soon as we see
79 00:13:34,950 --> 00:13:47,070 a swing low form this candle here, we know they're probably gonna run run back up into this range here. Now we have a new range, the impulse price swing is
80 00:13:47,070 --> 00:14:00,150 this high down to this low here's equilibrium price expands to equilibrium once we start seeing that we will have to get to 62 it does the bodies of the candle
81 00:14:00,150 --> 00:14:06,540 stop perfectly right there. You could sell short right there. What's nice is is you're gonna see the bottom of this candle is up candle that's a bearish
82 00:14:06,540 --> 00:14:16,920 overclock, which we'll learn more about. That's a sell by itself, where you got to take profits at below the old low right in here, goes right down below that
83 00:14:16,950 --> 00:14:29,850 and does what trades back up higher. If we use the price swing from the high we just anchored to to this low. The same thing occurs here we have this high all
84 00:14:29,850 --> 00:14:38,100 the way down to this price low price comes all the way up into the 79 trace level above equilibrium we start watching. Now we're in an era where the price
85 00:14:38,100 --> 00:14:46,500 is going into equilibrium. I'm sorry, from equilibrium up into premium. Okay, premium is above equilibrium in a range that's been defined from high to low.
86 00:14:47,100 --> 00:14:57,600 And look what's happening. We're running out an area of stops above an old high again very, very good probabilities for getting short. Take that as a turtle
87 00:14:57,600 --> 00:15:04,350 soup inside of a premium Bay. to market and you could look to take profits on a swing low.
88 00:15:05,730 --> 00:15:15,270 Here's your swing low here, the market trades down to that you'd have to take profits below here. market trades down into small little consolidation here. And
89 00:15:15,270 --> 00:15:21,870 I'm not going to define anything else in this chart because I could do all kinds of other things to it looks like you're coding but you'll learn other things to
90 00:15:21,870 --> 00:15:30,360 look at. And it has to do with this candle over here. So we'll refer to this candle later on in recapitalized bullish order box and bearish sort of box. But
91 00:15:31,350 --> 00:15:35,820 the market creates another range, this high down to this low here
92 00:15:42,840 --> 00:15:50,130 to this high down to this low market goes above equilibrium here, where's it going to go to? We want to watch it go to at least 60 to 70 tracing level it
93 00:15:50,130 --> 00:15:59,430 does that disrupt the Saudi point five ot optimal trade entry and then sell software? Do you take profits at low swing low to swing low? take profits right
94 00:15:59,430 --> 00:16:12,000 there. Now, they're not astronomical trades, okay? They're not enormous trades. But to get short, and here at 90 big figure, and covering below the low on this
95 00:16:12,000 --> 00:16:22,260 candle here at 9694. That's over 100 pips, nothing wrong with that. This is a daily chart we're trading off of, again, this is helping us folks that cannot be
96 00:16:22,260 --> 00:16:35,250 doing day trades, okay, you don't need a great deal of movement on a daily chart to make a decent amount of pips, we're gonna go back to this high. And use that
97 00:16:35,250 --> 00:16:43,470 same old low here, okay. From this high down to this low, if you went short here, based on a stop run above here, and we're at a premium or above
98 00:16:43,470 --> 00:16:51,390 equilibrium, we've defined our range, we're looking to sell into strength. It's scary when you first start looking at it as a new trader. But that's exactly
99 00:16:51,390 --> 00:16:57,780 what you want to be doing as a professional trader, you want to be selling at premium prices. Think about it, you could sell something, if you own it, say you
100 00:16:57,780 --> 00:17:04,860 own a car, and you want to sell your car, do you want to sell it at a discount, that doesn't make any sense, you want to sell it at a premium. So professional
101 00:17:04,860 --> 00:17:16,080 traders sell their long positions, or they sell new short positions at premium prices. No better place in the world to sell short, or sell Long's above an old
102 00:17:16,080 --> 00:17:24,300 high because there's going to be willing buyers right there in the form of buy stops. So when we see this area here, we get short, from this area here going
103 00:17:24,300 --> 00:17:38,670 short. And if you just took profits once this low formed, that low comes in at 9739 9739 and open is 9799. So we're gonna say we went short, somewhere around
104 00:17:38,670 --> 00:17:49,410 the 98. Big figure to low comes in at 9739. So that means your stop, I'm sorry, your limit order to take profits would be below 9739. So you'd get the low here
105 00:17:49,410 --> 00:18:04,050 so you're aiming for 10 pips below that low. Below this low right here. You'd be looking for 9729, roughly 9730 to 70 pips, using a setup that's on a daily
106 00:18:04,050 --> 00:18:11,370 chart, you're not intraday trading, you're not looking at five minute 15 minute charts, you're not you're not being forced to do it ICT does most of his
107 00:18:11,370 --> 00:18:20,460 teaching through intraday trading. But the same concepts appear in these higher timeframe charts, don't discount that I'm teaching you in a 15 minute basis,
108 00:18:20,610 --> 00:18:28,500 because all of the concepts are universal. And I know it's hard for you to understand that as a new trader, because it just seems like I can't be watching
109 00:18:28,500 --> 00:18:41,010 that charger. Therefore I can't trade. That's not true. That's not true at all. So by having these ideas of looking at price over the course of a premium
110 00:18:41,010 --> 00:18:55,140 market, we go down to a tee, we go down to an hourly chart. Okay, and what's nice is you don't have to trade with a bias. Most people are always asking me,
111 00:18:55,140 --> 00:19:02,610 Hey, looking, can you give me a way of trading with a daily bias? Give me the trend direction like well, I need to know that well, you don't really need to
112 00:19:02,610 --> 00:19:08,760 know that you don't need to know it. And the reason why you don't need to know is because you need to know how to trade inside of a range. Because there's
113 00:19:08,760 --> 00:19:15,810 ranges are always there. Whether you're in a trending market, whether you're in consolidation, or they're universal market, those profiles will always give you
114 00:19:15,810 --> 00:19:26,430 ranges to trade in and you don't need to break out of the range to make money. We have a swing high here. Oh, am I using that swing high Michael? Not this one
115 00:19:26,430 --> 00:19:32,250 here, not this one here because this is the most recent one prior to this down move. I could use this one here but I'm going to use this because has more price
116 00:19:32,250 --> 00:19:44,790 action around it. Just high down to the lowest low. Okay, market trades up to equilibrium in here. Okay, does it get to premium? No, it doesn't get there yet.
117 00:19:44,850 --> 00:19:51,540 It comes down off of this a little bit then trades right up into 79 Seven tradesmen level right in here closes in a range which we'll talk about in the
118 00:19:51,540 --> 00:20:02,340 next teaching over here. The market sale that sells off and where you're gonna be looking to take profits at If you had a small swing well here you have a
119 00:20:02,340 --> 00:20:08,460 certain real good swing low here. So if you're getting short up here and on an hourly basis
120 00:20:14,130 --> 00:20:29,010 say we got shorted 9770 nice round number. To get that level here's 42 pips to get up below this low here 60 pips if you go 10 pips below that, that'll give
121 00:20:29,010 --> 00:20:39,840 you nice 70 pips and give me nice 70 pips and then look at the reaction going 10 pips below here yeah, this range low from that high up here where we would have
122 00:20:39,840 --> 00:20:49,530 been selling at based on the concepts again, it's all hypothetical in hindsight here but the conceptual idea is the same going forward. ranges 60 pips 10 pips
123 00:20:49,530 --> 00:20:57,840 will be 70 you got at least four pips below that for for spread to take you out in absolutely does that it doesn't go very much lower at all.