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ICT YT - 2022-09-14 - The Tough Lessons - Why I Avoid AM Sessions After Large Range Days.srt

Last modified by Drunk Monkey on 2022-10-11 06:56

Outline

02:01 - How liquidity will be hunted on the heels of the PPI numbers.

04:26 - Annotation of the high and stop loss.

09:16 - Why you don’t want to see this candle high.

11:55 - The fear of missing out is a big factor in trading.

13:49 - Why you don’t want to take a trade in the morning session after a large-range day.

19:02 - You have to know where you’re likely to get it wrong -.

21:06 - If it accelerates back below the opening price, then it should not come back up.

23:37 - How to use this as a secondary entry technique.

25:52 - How do you know when you’re going to fall victim to this?

28:06 - Why you need to avoid trading in the morning session.

Transcription

1 00:02:01,890 --> 00:02:11,910 ICT: Right, so I've already tweeted that I'm watching that Fairbury get with this vise on liquidity pool rate there. And I think that this liquidity will be
2 00:02:11,910 --> 00:02:25,020 hunted. On the heels of the PPI numbers, it's going to come out here in about a minute and a half. So you have a volume imbalance in here between the bar
3 00:02:25,020 --> 00:02:34,530 disease candles here and you have the low of that candle and this candle is high. So plus the short term high so I'm thinking they're going to pump it right
4 00:02:34,530 --> 00:02:45,120 above the opening price at midnight, power three kicks in after it takes the short term stops here and then attack the sell side. Now I've already stated I'm
5 00:02:45,120 --> 00:02:55,710 not going to push the button because it's a big day yesterday so I'm not trying to chase it but it's important for you and them to see why the morning session
6 00:02:55,740 --> 00:03:07,110 after a big down day or big up day should be avoided in trading the pm session later on. Can you see how that fair value gap is a draw on liquidity rate before
7 00:03:07,920 --> 00:03:22,170 the news event that's going to come out here in a couple of seconds Yes, you know, you don't have to be polite they hear about you and then they never hear
8 00:03:22,170 --> 00:03:22,380 you
9 00:03:31,800 --> 00:03:37,950 now I know somebody out here because I've already shared a short little video explaining that I think it's gonna go up the debt if you have a gap and then go
10 00:03:37,950 --> 00:03:46,710 down below 39 3050 I already know there's people out there that's going to be taking this trade and this is going to be probably one of those instances where
11 00:03:46,710 --> 00:03:49,110 they're gonna regret it right there. There's a gap there
12 00:03:55,440 --> 00:03:58,440 so PPI numbers it's a high impact news driver
13 00:04:04,860 --> 00:04:17,490 they want to see it overlap all these gaps and attack the low here aggressively and then big smashed down into sellside.
14 00:04:23,370 --> 00:04:34,740 Does that would be at both the high right here. That's framing the high the gap. But again, because it's the day after large rains day, we don't want to do
15 00:04:34,740 --> 00:04:45,180 anything because it's more prone to be either a losing trade or get stuck in chop
16 00:05:09,510 --> 00:05:24,360 actually annotate the high to represent a stop loss so we'll go got one quarter point no one act as a stop loss
17 00:05:37,980 --> 00:05:39,090 now we can see visually
18 00:05:44,730 --> 00:05:57,870 see right away like I would have wanted to see this thing completely come down and overtake that gap there but it's been lethargic so far so that would be a
19 00:05:57,870 --> 00:06:01,290 problem for me like it would need to really expand lower
20 00:06:09,090 --> 00:06:20,550 but if we can get below 39 3050 level it could probably snap up from there because a lot of folks that are looking to trade a breakout below yesterday's
21 00:06:20,550 --> 00:06:33,780 low which is again over here and anyone that tried to buy it they had their stop loss below here in the form of a sell stop so they washed it overnight into this
22 00:06:33,780 --> 00:06:40,770 area here and to do order below or looking for a continuation and take out yesterday's low
23 00:06:49,800 --> 00:06:59,820 mass see how we're inside this small fear of a gap and here we don't want to see it respected and in any of that we want to see this come Rayleigh into it and
24 00:06:59,820 --> 00:07:05,850 get below it and once it gets below it you can act this some measure of resistance you're saying
25 00:07:20,820 --> 00:07:34,320 know if you're in a trade as it hits into that fear vague that we're talking about now that'd be a partial but again bearing in mind that we're trading days
26 00:07:34,320 --> 00:07:43,950 that are not going to be on the heels of a large range day at least not the morning session z are struggling to get below that fear Vega
27 00:07:59,580 --> 00:08:10,500 now we've already taken the liquidity below the low here in here that's why I think we're we're stuck in this range here now because a lot more liquidity
28 00:08:10,920 --> 00:08:12,120 below yesterday's low.
29 00:09:16,500 --> 00:09:28,350 Now you don't want to see this candle here. You don't want to see it's high taken out to revisit that fear of a gap now. That's not constructive for a low
30 00:09:28,350 --> 00:09:42,510 resistance liquidity run to take out the third arm 4250 and 3938 50 level touching here. We're going back into the body here. That's permissible. But we
31 00:09:42,510 --> 00:09:50,130 don't want to see you go back above this candle time. That would be it would be an instance where I would neutralize trade
32 00:09:55,410 --> 00:09:57,300 no words protecting the stop
33 00:10:02,879 --> 00:10:13,019 Returning back to the opening price at midnight. That's that dotted line here. So the logic is, we should be bearish. But we don't trade the morning session,
34 00:10:14,009 --> 00:10:25,379 we worked above the opening price at midnight overnight, came down took out the short term, sell side here left the yesterday's low intact, returned to a fair
35 00:10:25,379 --> 00:10:33,689 value gap and above the opening price. So that's power three. The only thing that's not going good for it is because it's on the heels of a day, that was
36 00:10:33,689 --> 00:10:43,079 large, big washout day yesterday. So don't try to go in on the morning session. A lot of manipulation in the morning session one big down day or update.
37 00:10:45,629 --> 00:10:56,189 spending way too much time hanging around it opening prices should have already rejected it went lower. So a lot of folks ask me all the time, if I'm in a
38 00:10:56,189 --> 00:11:08,489 trade, how do I know when to kill it like keep the stop loss from being tripped and taking the full initial risk or absorbing the risk, or that way by being
39 00:11:08,489 --> 00:11:19,589 stopped out? What I just outlined here, if it takes out this candles high here, I won't allow for the stock to be hit. So I would close a trade here. So while
40 00:11:19,589 --> 00:11:39,059 I'm pointing and talking to you, this zone not in a trade. But I was in a trade of you here ready to go collapse tree or use the open position tab here. Close
41 00:11:39,059 --> 00:11:54,209 it out. But it's already given in my mind. A clear illustration of what it is that keeps me from wanting to trade the following days morning session on a big
42 00:11:54,209 --> 00:12:06,689 day. Any day, there's a big huge range like yesterday was massive. The next day everybody's doing what that didn't trade yesterday where they want to do they
43 00:12:06,689 --> 00:12:17,909 want to be a participant in something. So the the natural order of things is the excitement, the fear of missing out, all those things will be new catalysts for
44 00:12:17,909 --> 00:12:22,439 them that go in and engage in that's usually what happens here, they get chopped up
45 00:12:36,660 --> 00:12:38,880 see how long it's the opening price?
46 00:12:59,160 --> 00:13:12,330 Not be it for me, I collapse trade there. If it was as long as if I was in a trade going about that would indicate that it's likely to go higher and longer,
47 00:13:12,840 --> 00:13:16,890 and maybe even challenge overnight high. So I wouldn't be willing to sit in that.
48 00:13:28,200 --> 00:13:39,630 So it's hard to tell where like, if we were to use the volume and balancing here were these candles separate, where there's no bodies connecting them. That was
49 00:13:39,630 --> 00:13:50,670 my entry. You know, I could have potentially either broke even or just covered commission costs or maybe took the commission costs into effect. But either way,
50 00:13:50,700 --> 00:13:58,560 would not be offering an opportunity for the stop loss to be tagged. But I'll leave the line here in the event that it does punch up into it, because that
51 00:13:58,560 --> 00:14:08,940 would be an illustration because they want to see me get it wrong. Like they see all the time. Every single time I show something or I call something, it comes
52 00:14:08,940 --> 00:14:18,210 to fruition. So it would be beneficial for them to see and understand why I'm saying I don't want to trade the morning session after the larger aims days.
53 00:14:18,570 --> 00:14:31,110 Because even though it could pan out if it went down to 3938 50 Would I haven't gone back up into this area here that would otherwise force my hands and not
54 00:14:31,110 --> 00:14:43,590 stay in a trade to protect the stop loss that's being illustrated here that little wine it would further well prove why I have the logic where I don't want
55 00:14:43,590 --> 00:14:48,900 to take a trade in the morning session after a large range day because that's more more prone to be inaccurate
56 00:14:56,400 --> 00:15:03,600 So that right there doesn't that doesn't bode well for the short So we will, we would already been neutralizing the position anyway.
57 00:15:11,460 --> 00:15:25,380 So for study purposes it did go up into the fair value gap, it did trade down into the discount fair value gap that would offered what? Partial, so a partial
58 00:15:25,380 --> 00:15:39,060 taken, they're looking to not really adjust the stop loss, because coming back into here, we already had made the decision that if we take out this candles
59 00:15:39,060 --> 00:15:49,620 high, we would neutralize a trade anyway, protecting the full stop. So this is the part that, you know, a lot of students, they, they struggle with this
60 00:15:49,620 --> 00:15:58,980 because they don't number one. They want to get their full profit, to hear other people out there saying yeah, this is this is foolish to take a partial, you
61 00:15:58,980 --> 00:16:09,660 took the initial risk. So why take a small little are multiple, when you've taken let's say to 2% risk, why would you want to take a half a 1% off and a
62 00:16:09,660 --> 00:16:19,650 partial. Because you're trying to make money. I mean, that's why you're doing it, you know, unless you take away something from the position when it gives you
63 00:16:19,650 --> 00:16:27,450 an opportunity to do so profitably. The broker is not going to do that for you. And, and the platform isn't going to just magically just do it for you, you have
64 00:16:27,450 --> 00:16:32,280 to have orders in there, or engage them manually, if there's profit to take take.
65 00:16:42,270 --> 00:16:53,250 Now, let's play devil's advocate for a moment, say it just come up to take out that short term high right there. And then say, sinks and goes down here and
66 00:16:53,250 --> 00:17:04,470 takes the sell side now. Invariably, because I've already shared the expectation, what I think would likely happen here, not that I'm engaging, you
67 00:17:04,470 --> 00:17:12,960 can see it's a live account, there's no button being pushed, and we talked about it as it was happening. This instance where it comes up, just take that short
68 00:17:12,960 --> 00:17:22,650 term high name runs down here and takes the 39 3050 out, and they're hearing me now talk like this, they'll say, Well, you know, you collapsed the treat, you
69 00:17:22,650 --> 00:17:34,050 would have missed that treat, right? That's, that's that's the point, you have to manage the risk. Trade within the realm of high probability. And the fact
70 00:17:34,050 --> 00:17:43,980 that we want to bow this candle is high, after running in here and trading to a discount, we don't ever want to see it come back up here again, like it's the
71 00:17:43,980 --> 00:17:52,650 logic is, is it needs to come down to the sell side, and then attack the sell side here. If it's hemming and hawing or you know, hanging around in that the
72 00:17:52,650 --> 00:18:02,730 senator here at the opening price, or in the fair value gap, it's spending too much time. So the first thing I teach, because of the algorithms tendency to
73 00:18:03,300 --> 00:18:14,670 lean heavily on time first, then price. So the aspects of time this morning was the 830 news release, we should have seen it do what we saw, it ran up hit the
74 00:18:15,120 --> 00:18:26,940 Vega, it broke lower went out into Vega, there's a discount relative to the range low and the high that formed here. So trading down to this area here if
75 00:18:26,940 --> 00:18:39,540 you didn't take a partial while you're regretting it now. So all these things are building blocks to understanding number one, trade management trade
76 00:18:39,540 --> 00:18:50,580 selection. The first stage of how losses are mitigated and drawdown, you have to understand how you're going to lose like where are the opportunities for you to
77 00:18:50,580 --> 00:18:58,560 fall victim to price, just because we can see fair value guys just because you can see liquidity pools. And just because there's a new driver coming out does
78 00:18:58,560 --> 00:19:10,230 not mean that everything's going to come together and all the planets are going online. And it's it's going to be perfect for you. So in my time, I Belger. The
79 00:19:11,880 --> 00:19:20,610 the time I spent trying to figure out where my losing trades. She always whenever whenever she's in earshot of the microphone, if I'm recording, she'll
80 00:19:20,610 --> 00:19:33,390 always come near me and shake her head and make her ears wet. Do you have to know where you're likely to get it wrong. And by no no's in advance, you just
81 00:19:33,420 --> 00:19:42,270 simply let the market do what it wants to do. But you when you engage like a study, because when it doesn't pan out in the manner that you would if you would
82 00:19:42,270 --> 00:19:50,220 have pushed a button, okay, if you would have done it for real. But because you have rules of engagement that tell you that you're not actually going to push
83 00:19:50,220 --> 00:19:57,570 the button you're just going to watch price and study it. Watch how it reacts off this candle is high in the fear of a gap and it should expand up in here and
84 00:19:57,570 --> 00:20:10,080 take out these highs. Maybe we reach up into here But unless you have parameters that keep you from wanting to sit on your hands and do nothing, that's one of
85 00:20:10,080 --> 00:20:20,430 the most important tenants to profitable longevity. And consistency is knowing when not to do something, there's nothing wrong with sitting in front of the
86 00:20:20,430 --> 00:20:28,530 charts and studying price, but you can't be in a position where it's going to load you into actually pushing the button when you know, your rules, or at least
87 00:20:28,530 --> 00:20:37,920 my rules I'm trying to share with everybody else, is that many times after large Range Days, even if I was, let's say, sciatica, a series of trades yesterday,
88 00:20:37,920 --> 00:20:45,420 and I was profitable. But you know, I was not I went, I didn't do anything, we sat here we watched it, and it moved too quickly. So there was nothing for me to
89 00:20:45,420 --> 00:20:58,350 do. If I would have made money yesterday and I went in, in the morning session here, I would be breaking my own rules. So I I'm actually hoping that this thing
90 00:20:58,350 --> 00:21:05,370 goes up and hits what would otherwise be a stoploss. For me, so that way, they get a taste of what it was like me getting it wrong, but I'm sticking to my
91 00:21:05,370 --> 00:21:09,960 roles. And it would really illustrate why I have the role.
92 00:21:35,039 --> 00:21:46,919 Now, if it accelerates back below the opening price, which is that little blue dotted line, if it accelerates down below that, then it should not come back up,
93 00:21:46,979 --> 00:21:58,469 it would have been just them running back up here to take two stops here and then price lower with the fact that we're just spending too much time, it's not
94 00:21:58,679 --> 00:22:08,219 trying to get somewhere in a hurry, that being below this low. And for the liquidity. So it should have in my mind, if I would have been in this trade.
95 00:22:09,719 --> 00:22:20,339 Like say it was real entry, and it wasn't on the heels of a large range day yesterday. I'd be really interested to see it move now. Like when I do my
96 00:22:20,339 --> 00:22:31,349 recordings, and I have the benefit of typing out what I think is likely to occur. Like I'll say, I'm expecting range expansion now. Speed. Now I want to
97 00:22:31,349 --> 00:22:41,339 see it start moving with a lot of velocity right now. I'd be wanting that to happen at this moment, actually minutes ago. But because it's hanging around.
98 00:22:43,619 --> 00:22:57,239 Notice the high and the low of the day. That being the highest point day, this being the lowest point of the day. Where are we at presently, in reference to
99 00:22:57,239 --> 00:23:06,899 that range between that high and that low? Where's price right now that would be equilibrium. Right? Right. So it's, it's stagnating around equilibrium so that
100 00:23:06,929 --> 00:23:14,969 we don't like to see that. If it returns back to equilibrium, we want to see it move quickly away from it, it has to move right away from that, because
101 00:23:14,969 --> 00:23:25,229 equilibrium is acting as fair value. So if the algorithm is giving that moment, where it returns back to equilibrium, or midpoint of the range, it needs to
102 00:23:25,229 --> 00:23:36,959 signal to us as smart money that is wanting to spool to a logical next liquidity pool that being below this low here. And here, because it's spending too much
103 00:23:36,959 --> 00:23:49,109 time. That's a concern. So if OWD wasn't a live trade, I'd be demanding price. Now not get above the midpoint of this coast candle here because mean threshold,
104 00:23:50,039 --> 00:24:01,229 this could act as a bearish order block and trade lower, attack this low in here. Now, if it does this, folks that again, heard me outline this here again.
105 00:24:03,719 --> 00:24:12,749 There'll be concerned with the fact that well wait a minute, now your initial trade was a failure because you've closed it. Well now because partial would
106 00:24:12,749 --> 00:24:22,469 have been taken down here. This could be utilized as a secondary entry technique where if it goes up and hits the opening of this candle here, that could be a
107 00:24:22,469 --> 00:24:36,599 short entry, and a stop about the short term hot. So we'll we'll look at as the next case study here, please read this out but as you can see there. So let's do
108 00:24:36,599 --> 00:24:55,109 this. Again, the idea is this is not to be done, because it's a day after the large range day. But these are trade ideas that I would engage on if it weren't
109 00:24:59,339 --> 00:25:10,169 if it touches that we will assume that that would be a short entry. Okay? And stop would be here. Alright, so there you go, that'd be a short entry in the
110 00:25:10,169 --> 00:25:19,289 stop loss would be here, one a day that I would not be trading a morning session. So I've already outlined publicly recording that this fair pay gap,
111 00:25:19,289 --> 00:25:27,809 that'd be an area I'd expected to trade today and go for the sell side, normal, but not engaging, not pushing the button in, you can borrow, we're here. We're
112 00:25:27,809 --> 00:25:40,169 not doing anything. The Live account hasn't been pushed, there's no trade entries. This idea here, if it weren't a day, after large range day, this
113 00:25:40,199 --> 00:25:50,279 wouldn't be a trade that I would consider as well. But again, if it runs out my hits it, it just helps put it in perspective as the reasons why I don't trade it
114 00:25:50,489 --> 00:25:59,189 on a day after a large range day. And if I did these things, they would see me losing. And then I would have examples of saying, okay, here, I did this wrong.
115 00:25:59,459 --> 00:26:09,899 And the market did this as a result. And I got stopped out and I absorbed a loss. The folks that study with me, because I don't show them a litany of losing
116 00:26:09,899 --> 00:26:18,119 conditions and trades or failed ideas. It seems too good to be true. And it's only because I have been doing it long enough to know that these are my problem
117 00:26:18,119 --> 00:26:26,069 areas. And this is where I'm going to fall victim to it. And it's going to probably snap up here and hit that line and it would be viewed as a stoploss
118 00:26:26,069 --> 00:26:36,119 being hit. And the difference between the two levels, that would be the loss, but lookouts is hanging around still in equilibrium between
119 00:26:37,799 --> 00:26:46,859 here inherence trough fit on that just to illustrate some shorter is going to be people that aren't falling, what I mean, there's 50% of that, it's just hanging
120 00:26:46,859 --> 00:26:55,499 around in there. So we don't want to see that it should have already moved away one direction or the other, but because they're just stagnant. That is the
121 00:26:55,499 --> 00:27:05,429 characteristic of what the morning session looks like, after a big range day, and extremely large range they like yesterday, but the afternoon should have
122 00:27:05,429 --> 00:27:20,009 something it will that's my that's my aim, I'm looking for something to be a little bit more high probability a little bit more of a low resistance liquidity
123 00:27:20,009 --> 00:27:28,079 run, where it's going to be easy to see, it's going to be trying to run to a specific pool of liquidity. And with the proper market structure behind it,
124 00:27:28,079 --> 00:27:36,419 whereas this is just it's just going sideways. And all we're trying to do is capture a move that would otherwise make perfect sense that it should take out
125 00:27:36,419 --> 00:27:46,469 yesterday's low if everything's bearish. Okay. And yes, they obviously would indicate that average bear would see. And there's probably something bearish to
126 00:27:46,469 --> 00:27:54,149 the market right now. It would make sense what they want to take out yesterday's low, but this is what happens, it denies them in the morning, the follow through
127 00:27:54,149 --> 00:28:04,529 that they're looking for, and there's a stop loss. So for those who want to see me get it wrong, and when I would frame a trade and how it would be wrong, I
128 00:28:04,529 --> 00:28:15,239 know when I'm likely to fail. And that's not a weakness, that's a strength. Because I have these understandings of where I've fallen victim to price over
129 00:28:15,239 --> 00:28:25,439 the last 30 years, I try to avoid, I tread very lightly in these conditions, because I don't know if the algorithm is going to do what I want it to do. In
130 00:28:25,439 --> 00:28:40,589 these instances, outside of these times these problem areas. My executions are cleaner, my understanding is, you know better synced to what the markets
131 00:28:40,589 --> 00:28:49,199 algorithms doing. And I don't regret missing any moves. Like for instance, if this would have panned out, say it would have went down to 3938 50. And it did
132 00:28:49,199 --> 00:28:58,919 it cleanly just ran right down to it. I'd be on Twitter, and or in this recording and saying okay, but it means nothing, because I have a rule that says
133 00:28:58,919 --> 00:29:10,379 I cannot trade in the morning session. So I don't I don't puff myself up on that. And I don't want anybody feeling like, well, I missed that move. Because
134 00:29:10,379 --> 00:29:18,869 if you do that, and you feed yourself toxic thinking about, Oh, I messed up, or I missed the move that took place like a lot of people that have regret for not
135 00:29:18,869 --> 00:29:29,189 having been in the move yesterday. And they struggle with that. And I talked about this last night in the Twitter space, saying that it leads to people
136 00:29:29,189 --> 00:29:38,099 wanting to rush to get into my new tomorrow, which is today's trading the day after the large range day. And they do things and they fall victim to this is
137 00:29:38,249 --> 00:29:49,799 consolidation day where it's just chopping up and down, up and down. Now there's trades here, but the new students, many times that the young men, they see
138 00:29:49,799 --> 00:29:58,379 themselves as a superhero because they've watched a couple videos, they've seen me do something so it feels like well, I've watched him do it so therefore I'm
139 00:29:58,379 --> 00:30:08,249 gonna be able to do it and they Ignore the times when I'm saying that these are kryptonite to me, like these sessions after large Range Days in the morning.
140 00:30:09,149 --> 00:30:20,339 They are kryptonite to me. So if I'm going to trade like Superman, okay, I'm not going to go out there when the playing field is covered with Kryptonite where I
141 00:30:20,339 --> 00:30:31,139 know my weaknesses have the advantage over my strengths. So it's hard to communicate that to some individual, especially when it's a language barrier.
142 00:30:31,529 --> 00:30:38,669 They think that just because there's something on my chart that I'm making note of, or referencing, therefore, then it's going to be a winning trade, just
143 00:30:38,669 --> 00:30:49,949 simply because I see T said, so. No, there's times like this, where I'm illustrating it with Fourcade clarity, that this is the very reason why I don't
144 00:30:49,949 --> 00:30:58,199 want to be trading the next day's morning session. And I would rather wait till the afternoon, where things hopefully have worked out all the the range here and
145 00:30:58,199 --> 00:31:07,139 the liquidity that is above or below the range that's formed in the morning session going into the New York lunch, then I can work with that as a PM session
146 00:31:07,169 --> 00:31:15,119 idea. It doesn't mean I'm going to have a winning trade, it means that I'm simply just waiting for something that is a little bit more likely to be
147 00:31:15,299 --> 00:31:17,849 trustworthy. Does that make sense? Yes.
148 00:31:21,089 --> 00:31:29,069 Again, look how much time we're just hanging around in there. That's very frustrating. It's frustrating for anyone that's going long. It's frustrating for
149 00:31:29,069 --> 00:31:37,739 anyone that tried to go short. And that's one of the characteristics that's the signature of a morning session after a large range day. It's punishing, like
150 00:31:37,739 --> 00:31:47,699 it's nerve racking. And it's just better for me to just leave it alone because I know I can find something in the afternoon or the next trading day. I don't have
151 00:31:47,699 --> 00:32:00,329 to have anything for this afternoon, but I'm gonna go on hunting looking for. So this makes sense to you. Yes. That's gonna be it. Hope you guys found that
152 00:32:00,329 --> 00:32:00,899 insightful