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ICT YT - 2025-03-30 - 2025 Lecture Series - Weekly Option Strategy Intro 03-28-2025

Last modified by Drunk Monkey on 2025-04-03 12:13
1 00:00:31 --> 00:00:37 ICT: Folks, welcome back. So we're going to be looking at the summary of
2 00:00:37 --> 00:00:43 weekending. March, 28 2025 I'm not going to do every day, obviously, because I do
3 00:00:43 --> 00:00:50 what I do on x and on the telegram channel, but the NASDAQ, if you take a
4 00:00:50 --> 00:00:51 look at this,
5 00:00:54 --> 00:01:01 this is our June 2025, really sharp for Nasdaq futures,
6 00:01:02 --> 00:01:11 and if you recall watching last week's weekly summary video, if you haven't
7 00:01:11 --> 00:01:15 watched that, it's beneficial for you to watch that first before watching this
8 00:01:15 --> 00:01:20 one. So if you look at the daily chart, we mentioned that
9 00:01:24 --> 00:01:29 this area ran in here. Thought that we could
10 00:01:29 --> 00:01:36 create up into that here and then reject that and create back down and reach for
11 00:01:36 --> 00:01:41 this low. Now I was incorrect in the sense that I was off by a couple handles
12 00:01:41 --> 00:01:45 because it didn't get to that low, but overall it was pretty good, close enough
13 00:01:45 --> 00:01:52 for government work. So let's kind of like break this down a little bit inside
14 00:01:52 --> 00:01:56 of all these wicks in here. I mentioned this in the telegram channel, when you
15 00:01:56 --> 00:02:00 looking at price action, and it's doing things like this, and we have traded
16 00:02:00 --> 00:02:04 below it, but we're still remaining bearish. What I like to look for is
17 00:02:04 --> 00:02:13 inside that area of long legged shadows or tails on the candlesticks, now above
18 00:02:13 --> 00:02:18 the high of a candle that's usually called wick, but down below it, tails,
19 00:02:18 --> 00:02:24 shadows, whatever you want to call it, but when the market trades lower, and
20 00:02:24 --> 00:02:30 I'm bearish, I like that. I like to know where the consequent encroachment is on
21 00:02:30 --> 00:02:35 the longest of the wicks. If there's multiple wicks in here, or in this case,
22 00:02:35 --> 00:02:43 tails, that's this one here. So if you look at that range from the open down to
23 00:02:43 --> 00:02:47 the low of it, half of that's consequent encroachment. If you note that and draw
24 00:02:47 --> 00:02:52 that out in time, you'll see that that's pretty much as far as the market's going
25 00:02:52 --> 00:02:57 to trade to now, if you don't know this concept that I've been teaching for a
26 00:02:57 --> 00:03:02 while now, it's something that you should go back and look at your charts,
27 00:03:03 --> 00:03:08 find it in hindsight. Collect lots of examples of it, and you'll start seeing
28 00:03:08 --> 00:03:15 the foundation to my gray pool areas, where it's a PD array that's using the
29 00:03:15 --> 00:03:21 wicks themselves and two or more consequent encroachment levels that
30 00:03:21 --> 00:03:26 constitute a gray pull. So while that's not the case here, it's just simply a
31 00:03:26 --> 00:03:32 consequent encroachment mid tail or shadow of this longest leg
32 00:03:34 --> 00:03:40 candlesticks formation here, with that below the opening price.
33 00:03:42 --> 00:03:48 It's above that volume imbalance that I mentioned last Saturday, before we would
34 00:03:48 --> 00:03:55 get to that premium wick consequent encroachment. And why am I calling it a
35 00:03:55 --> 00:04:01 premium wick consequent encroachment? Because the market's down here and
36 00:04:01 --> 00:04:07 trading up to it on Tuesday, Wednesday, then falls out of bed and aims towards
37 00:04:07 --> 00:04:11 that low I mentioned that we would likely do after getting up into that
38 00:04:11 --> 00:04:20 area. Okay, so the initial draw was this volume imbalance, but because the market
39 00:04:20 --> 00:04:27 is volatile, and it can trade through it. It trades to it and to the
40 00:04:27 --> 00:04:34 consequent correction of this long legged handle, stick doji type formation
41 00:04:34 --> 00:04:41 underneath it in this area in here, I want to talk a little bit about options.
42 00:04:42 --> 00:04:46 Now it's going to be a soft roll out in this conversation, because this is going
43 00:04:46 --> 00:04:49 to it's going to be a very short video. And in the past, you've heard me say
44 00:04:49 --> 00:04:54 things like that, and I end up going for a long, long time. As of right now, I'm
45 00:04:55 --> 00:04:56 not in the
46 00:04:59 --> 00:05:01 i. Not able to do that. So
47 00:05:01 --> 00:05:06 we'll have to just do the small videos and be content with that still. But the
48 00:05:07 --> 00:05:12 the run up into this volume imbalance and as much as that premium wick
49 00:05:12 --> 00:05:19 consequent encroachment, if we were to anticipate that very run down here now,
50 00:05:19 --> 00:05:24 I hope I can talk like this now because I outlined it before it happened. So
51 00:05:24 --> 00:05:31 last Saturday, I mentioned that we would draw up here and then reject and trade
52 00:05:31 --> 00:05:38 lower to go back below this low. That remains to be seen. If it happens on
53 00:05:38 --> 00:05:48 Sundays, opening trading into Monday, first action, but assuming that this was
54 00:05:48 --> 00:05:54 something that you wanted to navigate, there are things that we can do that are
55 00:05:54 --> 00:06:02 outside the futures market And the CFD market, and it involves the options
56 00:06:02 --> 00:06:08 market. So one of the things I like doing, and what I used to do as a
57 00:06:08 --> 00:06:14 younger man, was look for weekly option place. And that means that if I could
58 00:06:14 --> 00:06:19 predict real close, it doesn't have to be perfect, but this was the number one
59 00:06:19 --> 00:06:22 reason why I was wanting to know what the weekly high and the weekly low would
60 00:06:22 --> 00:06:27 likely be, because I could take an opportunity and trade options with it.
61 00:06:28 --> 00:06:31 Now, originally, when I first started, I was interested in buying very, very
62 00:06:31 --> 00:06:37 cheap, undervalued options and hopefully see them balloon up in profit. And I
63 00:06:37 --> 00:06:42 found out quickly that I wasn't that good at that. And my very first trade,
64 00:06:42 --> 00:06:45 and many of you that's been following me for a long time know that my very first
65 00:06:45 --> 00:06:50 trade was a losing trade where I lost half of the amount of money I put up for
66 00:06:50 --> 00:06:56 the premium of an orange juice option. I spent $1,500 and overnight I lost to 700
67 00:06:56 --> 00:07:03 a little bit more than $750 and that was a very jarring event for me, because
68 00:07:03 --> 00:07:07 back then, you know, as a 20 year old, you know, seven $50 I wasn't even making
69 00:07:07 --> 00:07:15 that a week gross before taxes taken out. So it's, it was something that hurt
70 00:07:15 --> 00:07:21 me. But eventually I started thinking myself, somebody made that $750 and they
71 00:07:21 --> 00:07:26 made it overnight. So what were they doing? Well, they were writing the
72 00:07:26 --> 00:07:33 option that I purchased, so I was going in and buying an outright long option.
73 00:07:34 --> 00:07:39 And then the market itself said, No, you're wrong. The very next day, market
74 00:07:39 --> 00:07:47 opened up and the option value fell out of bed to tune up 50% or more. So the
75 00:07:47 --> 00:07:53 the option writer, the person that was on the other side of the transaction
76 00:07:53 --> 00:07:59 that sold the option for me to purchase, they were able to collect a premium
77 00:08:00 --> 00:08:06 increase in their equity on the trade, but the value of the option diminished.
78 00:08:07 --> 00:08:13 So they are basically they were shorting the position that I purchased the long
79 00:08:13 --> 00:08:19 option on. Said in a different way, in simpler terms, let's assume for a moment
80 00:08:19 --> 00:08:26 that you felt that the Nasdaq futures should go to this area and then trade
81 00:08:26 --> 00:08:35 lower. You could trade the SBX option market. And I know a lot of you'd like
82 00:08:35 --> 00:08:40 to trade the spy, but the SBX is actually a little bit better. You have a
83 00:08:40 --> 00:08:47 lot more options in terms of the strike prices. And what a strike price is is
84 00:08:47 --> 00:08:55 the determination of what value the option is going to be based on. So for
85 00:08:55 --> 00:08:59 instance, if we were looking at the market likely trading up into this area
86 00:08:59 --> 00:09:05 and then becoming bearish the rest of the week, we could look to sell all
87 00:09:05 --> 00:09:12 options above this area here. Now I'm not suggesting that we're going to do
88 00:09:12 --> 00:09:18 this with Nasdaq futures options. I'm suggesting that if you're interested in
89 00:09:18 --> 00:09:21 this, and I'm only going to spend a couple weeks on it, because I don't
90 00:09:21 --> 00:09:25 think that it's for everyone, but I have mentioned in the past where I will cover
91 00:09:25 --> 00:09:32 how I used to do it when I was younger man. You can take a small account and
92 00:09:32 --> 00:09:37 parlay it up over time to a point where you could carve out your own living with
93 00:09:37 --> 00:09:42 it and never do a whole lot of trades. You're looking for one really good setup
94 00:09:42 --> 00:09:47 per week, and you're holding the trade for about a week or so, and then you're
95 00:09:47 --> 00:09:51 getting out. You're not trying to get rich on every single trade. You're not
96 00:09:51 --> 00:09:56 trying to make your options go 567, 100% increase all the time. You're just
97 00:09:56 --> 00:09:59 trying to double your money. Maybe get a double, if you're lucky, get a triple.
98 00:09:59 --> 00:10:03 I. Uh, but you don't even need to have that. Sometimes, if you just get a
99 00:10:03 --> 00:10:09 single, you know, one for one, that's in itself many times what's potentially
100 00:10:09 --> 00:10:13 more than you're probably earning at your job. So I kind of like want to toss
101 00:10:13 --> 00:10:17 this out there, and I want you to think about how when we're looking at these
102 00:10:17 --> 00:10:21 higher Time Frame daily moves, when we're spending time on these time frames
103 00:10:22 --> 00:10:29 when there is a likely intermediate term or long term, higher low forming that
104 00:10:29 --> 00:10:35 that presents this very opportunity where we can sell the option. Now, let
105 00:10:35 --> 00:10:39 me make sure you understand this clearly, because the writer of the
106 00:10:39 --> 00:10:47 option has a whole lot more risk than the purchaser of the option. So for
107 00:10:47 --> 00:10:52 instance, let's say that you were going to and let's say this is the SBX market,
108 00:10:53 --> 00:10:54 the cash market for S P,
109 00:10:56 --> 00:10:58 the idea would be that
110 00:10:59 --> 00:11:04 you're trying to pick a strike price above where you think the market's going
111 00:11:04 --> 00:11:08 to turn and start trading lower. Now, ideally, if the
112 00:11:09 --> 00:11:10 premiums,
113 00:11:12 --> 00:11:18 like the put the call ratio and options tools that suggest when there's an
114 00:11:18 --> 00:11:21 overvaluation or an undervaluation, and and I'll talk a little bit about that
115 00:11:21 --> 00:11:25 when we get into it next week. A little bit more detail. But for now, I want you
116 00:11:25 --> 00:11:30 to think about how you might be interested in seeing the opportunity of
117 00:11:30 --> 00:11:35 selling call options. Now, a call option is the the right, but you're not
118 00:11:35 --> 00:11:42 obligated to buy the underlying and that means, if you're selling call options on
119 00:11:42 --> 00:11:47 SBX. What you're saying is you're given the opportunity for someone that wants
120 00:11:47 --> 00:11:54 to buy a long call option, and if they buy it and it goes up, they potentially
121 00:11:54 --> 00:11:58 have the right to exercise that and purchase it, but they're not obligated
122 00:11:58 --> 00:12:06 to exercise the option, but they have a limited risk, meaning that whatever they
123 00:12:06 --> 00:12:10 paid for the the option itself, that's the most plus the commission costs,
124 00:12:10 --> 00:12:14 that's the that's the most they could ever lose on the transaction. You, on
125 00:12:14 --> 00:12:18 the other hand, don't have that protection. You have a little bit
126 00:12:18 --> 00:12:24 different risk paradigm there. So I want you to think about how there is
127 00:12:24 --> 00:12:29 absolutely inherent risk to this. But when the market's predisposed to go
128 00:12:29 --> 00:12:34 higher or lower on an intermediate term basis, what do you think that purchasers
129 00:12:34 --> 00:12:39 of call options above these highs on Tuesday and Wednesday or this week that
130 00:12:39 --> 00:12:44 just passed? How do you think they feel right now, when we're just sitting way
131 00:12:44 --> 00:12:49 down here, their call options are becoming cheaper. They're getting less
132 00:12:49 --> 00:12:54 likely to be profitable, and with the the effects of like theta and time
133 00:12:54 --> 00:13:01 decay, it could really be diminishing over the course of just a few days. So
134 00:13:01 --> 00:13:06 with that, I want you to take a look at how the market has traded on a weekly
135 00:13:06 --> 00:13:11 and daily chart, and you're framing these types of setups on those two time
136 00:13:11 --> 00:13:17 frames. So it's very, very high, higher Time Frame oriented for people to have
137 00:13:17 --> 00:13:23 jobs that have a whole lot of affinity for wanting to learn how to trade. Don't
138 00:13:23 --> 00:13:28 have a lot of money, but they don't have the ability or time or the luxury that
139 00:13:28 --> 00:13:33 go into intraday trading like I teach primarily a higher Time Frame, working
140 00:13:33 --> 00:13:37 class, Hero type approach. This is kind of like what I was trying to do, because
141 00:13:37 --> 00:13:43 I was killing myself as a young man working and trying to do this while I
142 00:13:43 --> 00:13:48 was driving around and taking great deals of risk, not paying attention when
143 00:13:48 --> 00:13:52 I was doing driving, because I'm looking at a little handheld device that was
144 00:13:52 --> 00:13:57 telling me real time prices for the commodity markets I was trading. So I
145 00:13:57 --> 00:14:04 was entertaining ideas that would lend an alternative to simply being in there
146 00:14:05 --> 00:14:08 and trying to catch short term trades, because I wanted to be like Larry
147 00:14:08 --> 00:14:13 Williams, to be a short term trader. He was my hero. He was the the biggest
148 00:14:13 --> 00:14:18 influence I had in in trading, initially, and he inspired me to want to
149 00:14:18 --> 00:14:23 do what he was doing and until I got good at short term trading, I had a lot
150 00:14:23 --> 00:14:29 of adversities, so I started system hopping and changing strategies. And one
151 00:14:29 --> 00:14:34 of the things that I learned that there was a guy back in the day called Don
152 00:14:34 --> 00:14:41 Fishback, and he had a odds, 90% odds, course, on options. And of course, I
153 00:14:41 --> 00:14:45 went to traders library out in Columbia, Maryland. And, you know, every two,
154 00:14:45 --> 00:14:50 three weeks, I'd save up money and get some kind of books, or, you know, VCR
155 00:14:50 --> 00:14:55 tapes back then, and try to, you know, learn more about the markets and
156 00:14:55 --> 00:14:58 whatnot, basically wasting my money because I was, I was chasing all kinds
157 00:14:58 --> 00:15:03 of things that just don't. Work. But his course on options trading really
158 00:15:03 --> 00:15:08 inspired me to try to think about how I could do that on a short term trading
159 00:15:08 --> 00:15:14 basis with weekly opportunities, because I knew enough to know that on a daily
160 00:15:14 --> 00:15:20 chart, the moves that would transpire over the the full week of Monday to
161 00:15:20 --> 00:15:26 Friday's trading, many times offered opportunities where, if I was accurate
162 00:15:26 --> 00:15:30 in the direction on the weekly chart where I was going to go, and if it was
163 00:15:30 --> 00:15:36 going to spend five days or so moving away from the extreme of that weekly
164 00:15:36 --> 00:15:41 range. In this case, it'll say that we knew that it was likely to go up to this
165 00:15:41 --> 00:15:46 area, and we felt comfortable assuming the risk on the market going lower and
166 00:15:46 --> 00:15:50 not going any higher. And again, please permit me to say it like that, because I
167 00:15:50 --> 00:15:54 did, in fact, call this last week. So it's not like I'm hypothetically saying
168 00:15:54 --> 00:16:00 anything here. I'm stating that if you believe that you're gonna have this
169 00:16:00 --> 00:16:06 skill set in the future as well. You could write options now. The option
170 00:16:06 --> 00:16:12 writer is the person that is taking the option itself to the market and saying,
171 00:16:12 --> 00:16:17 Okay, here's, here's what I'm willing to take the other side of and when there's
172 00:16:17 --> 00:16:24 a buyer of that strike price of that instrument on that very vehicle that
173 00:16:24 --> 00:16:28 you're trading on there, and we're going to be looking at SBX options, is what
174 00:16:28 --> 00:16:31 we're going to be looking at the
175 00:16:33 --> 00:16:34 the joining of those two
176 00:16:35 --> 00:16:42 parties, the buyer and the writer, the writer, he or she collects the premium
177 00:16:42 --> 00:16:48 paid it immediately upon the transaction. So let's say, for instance,
178 00:16:48 --> 00:16:52 that you felt that, and then say this, this daily chart was not NASDAQ, but
179 00:16:52 --> 00:16:58 SPX, the cash market for s, p, if that were the case. And let's assume for a
180 00:16:58 --> 00:17:05 moment that the options above this high here for SPX, say that the options were
181 00:17:05 --> 00:17:08 valued at, I don't know. I'm just going to give you a ballpark number, and it
182 00:17:08 --> 00:17:14 may or may not been accurate, but let's just say it's $500 okay, per option
183 00:17:15 --> 00:17:20 based on a strike price higher than that high. Now, I know some of you guys are
184 00:17:20 --> 00:17:23 already options traders, and you're probably listening to me talk about
185 00:17:23 --> 00:17:26 this, and you're thinking, well, you need to tell them this. You need to tell
186 00:17:26 --> 00:17:30 them that there's a lot of you in here that are new. Don't have any idea about
187 00:17:30 --> 00:17:35 what options trading is. I'm just giving you the underlying premise to what I was
188 00:17:35 --> 00:17:42 doing as a younger man. Okay, so you could collect the immediate premium paid
189 00:17:42 --> 00:17:46 by the option buyer. So there's people out there that saw it running up like
190 00:17:46 --> 00:17:50 that, got excited and maybe thought, wow, you know it's going to keep going
191 00:17:50 --> 00:17:56 higher. So they buy call options. Now, if you're picking a strike price on an
192 00:17:56 --> 00:18:01 option and a strike price, they say, say, this is where we were trading at on
193 00:18:01 --> 00:18:06 Tuesday and Wednesday of the week, you could have the 600 level. That would be
194 00:18:07 --> 00:18:12 an example of, like a strike price, okay? And it's usually in SPX. It's
195 00:18:12 --> 00:18:21 every five handles. So the next one would be below. It would be 595 and in
196 00:18:21 --> 00:18:30 590 and in 585 but facing it on SPX, not NASDAQ. I don't know some of your
197 00:18:30 --> 00:18:33 ranking well, you should be showing this on the SPS chart. I don't want to be
198 00:18:33 --> 00:18:38 doing too many things in this review. I'm worn out, I'm uncomfortable, and I'm
199 00:18:38 --> 00:18:45 trying to get through it as best I can. But if you were to sell those options by
200 00:18:46 --> 00:18:49 writing them, this is what you're doing. You're, you're, you're the underwriter
201 00:18:49 --> 00:18:55 of the option, basically. So the premium paid by the buyer of that call option,
202 00:18:56 --> 00:19:01 you get that immediately deposit into your account. Now if you're wrong, that
203 00:19:01 --> 00:19:11 quickly evaporates. Okay, you could see very, very harsh debits to your account
204 00:19:11 --> 00:19:16 balance if you're really wrong, and you're selling a lot of options, but
205 00:19:17 --> 00:19:20 premise is, you're trying to do one, okay, you're going to start with
206 00:19:20 --> 00:19:23 everything in any endeavor. You're going to start with just one. Start with just
207 00:19:23 --> 00:19:27 one. So what you're looking for is an opportunity each week to sell one
208 00:19:27 --> 00:19:32 option, whether a call option or a put option. A call option is the right to
209 00:19:32 --> 00:19:37 own and purchase the underlying instrument, but you're not obligated to
210 00:19:37 --> 00:19:42 buy it. So you can walk away in whatever you paid for the option, and plus
211 00:19:42 --> 00:19:45 commissions, that's your total investment. You cannot lose any more
212 00:19:45 --> 00:19:50 than that. And it's very intriguing. It's very enticing for people to want to
213 00:19:50 --> 00:19:56 do that when you're purchasing long puts and long calls, and a put option is the
214 00:19:56 --> 00:20:00 opposite of the call. It means that you're likely to profit. It if the
215 00:20:00 --> 00:20:04 market does, in fact, drop lower than your strike price. Now, easy way to
216 00:20:04 --> 00:20:10 remember is call up, put down. Okay, so if you're bullish on market, you can be
217 00:20:10 --> 00:20:17 buying in a long call. But if you are able to look at the marketplace and time
218 00:20:17 --> 00:20:23 when the market is no longer likely to be short term bullish like we had on
219 00:20:23 --> 00:20:28 Tuesday and Wednesday call, options were getting real interesting to Street Money
220 00:20:28 --> 00:20:33 retail traders, they want to see a continuation on the upside. You see the
221 00:20:33 --> 00:20:37 people in CNBC. You read all the headlines in Barron's Wall Street
222 00:20:37 --> 00:20:42 Journal, investors, Business Daily, and you read the article headlines by people
223 00:20:42 --> 00:20:46 that are interesting, saying, we're at a trade, we're at a tradable low, and we
224 00:20:46 --> 00:20:52 can come back into 50 to 75% of this price run lower. So when the public sees
225 00:20:52 --> 00:20:55 that, because they subscribe to the magazines, they subscribe to the
226 00:20:56 --> 00:20:59 newspapers and whatnot, they feel like they're informed. So yeah, they're going
227 00:20:59 --> 00:21:02 to go in there and say, Well, it's been going up. So let me go and buy some call
228 00:21:02 --> 00:21:09 options on the market. At the time when we as smart money investors, we're
229 00:21:09 --> 00:21:13 looking at the market timing, it with things that are not retail oriented. So
230 00:21:13 --> 00:21:16 when we're looking at the market, like to go up here, like we mentioned last
231 00:21:16 --> 00:21:22 Saturday, just to go lower, we can wait for the market get to that extreme when
232 00:21:22 --> 00:21:27 retail will be absolutely bullish and they will be interested in buying call
233 00:21:27 --> 00:21:33 options, but as a younger man, I would be interested in selling or writing call
234 00:21:33 --> 00:21:38 options to the marketplace so that way I could collect the immediate premium by
235 00:21:38 --> 00:21:44 the buyers of the call option. Now they have limited risk. I don't have the same
236 00:21:47 --> 00:21:53 benefits of that. I could lose more than I made on the premium. Like it could be
237 00:21:53 --> 00:21:59 worse. It could be really bad. So what you're doing, essentially, is you're
238 00:21:59 --> 00:22:04 collecting premium by writing the option, and then as the market moves in
239 00:22:04 --> 00:22:09 your favor and against the underlying direction that would profit that call
240 00:22:09 --> 00:22:17 option, their premium that they paid will diminish, which means that you get
241 00:22:17 --> 00:22:22 to keep it, and then eventually, at some point when you're comfortable and you're
242 00:22:22 --> 00:22:29 able to do so you you exercise your side of the option by
243 00:22:30 --> 00:22:31 getting out of it.
244 00:22:32 --> 00:22:37 So you're exiting the trade. You you have to buy one. Okay, so
245 00:22:38 --> 00:22:39 knowing this isn't
246 00:22:42 --> 00:22:45 going to be for everybody. I'm not going to spend a whole lot of time with it. So
247 00:22:45 --> 00:22:50 every Friday, for the next two weeks, I'll talk about this as a strategy and
248 00:22:50 --> 00:22:54 how to how to build an idea of how you might want to implement it. I'm not
249 00:22:54 --> 00:22:59 going to do a soup to nuts. Do this. Do this, do this. You know, step by step by
250 00:22:59 --> 00:23:05 step, there's a lot better resources out there than I would ever be in terms of
251 00:23:05 --> 00:23:12 options trading all of the Greeks, if you want to get nuts about it, I tried
252 00:23:12 --> 00:23:16 not to do all that. And in the beginning, as a younger man, I got
253 00:23:16 --> 00:23:20 really bogged down with wanting to know everything about every Greek, and Greeks
254 00:23:20 --> 00:23:28 like the Gamma, Theta, all those things that are the Delta, all these things are
255 00:23:28 --> 00:23:37 components to make up the pricing and the evaluation of an option. So for
256 00:23:37 --> 00:23:41 those that are very astute and academic, you can obviously spend a whole lot more
257 00:23:41 --> 00:23:47 time than I'm willing to invest in in talking about it. But what I'm primarily
258 00:23:48 --> 00:23:54 introducing is an idea, a strategy that may or may not fit you, and because it
259 00:23:54 --> 00:23:59 may not fit most of you, I'm not going to try to drive it down your throat,
260 00:23:59 --> 00:24:05 like I would be like, a inversion, fair value gap, or an order block, or, you
261 00:24:05 --> 00:24:09 know, model 2022, like or that there's an algorithm. Okay, I'm just loosely
262 00:24:09 --> 00:24:12 presenting something, so that way, if you want to pursue it, there's really
263 00:24:12 --> 00:24:16 wonderful resources out there. And then two Fridays from now, I'll give you my
264 00:24:16 --> 00:24:21 opinion of the option resources. And I think that are valuable. If you're going
265 00:24:21 --> 00:24:24 to purchase anything, I don't get anything from it. They're just like
266 00:24:24 --> 00:24:29 books or resources that we can go and look at it, but that I felt were were
267 00:24:29 --> 00:24:33 good. And invariably, what will happen is, is people that are more astute with
268 00:24:33 --> 00:24:38 trading options in our community, they'll speak up and they'll say, Well,
269 00:24:38 --> 00:24:42 this is this is who I use. Oh, this is how I do it, and you might get some kind
270 00:24:42 --> 00:24:46 of a conversation going on with the other members in our community on x, and
271 00:24:46 --> 00:24:50 then that might lead to something in the future for you, or it's just a departure
272 00:24:50 --> 00:24:53 from what you're used to seeing here, and this is something to break up the
273 00:24:53 --> 00:25:01 monotony of the standard ICT conversation pieces. So anyway. I want
274 00:25:01 --> 00:25:08 to talk about how we traded up on Monday into that volume and balance. And then
275 00:25:08 --> 00:25:13 Tuesday, we traded higher into the consequent growth in that wick. And then
276 00:25:14 --> 00:25:19 we broke lower on Wednesday, drawing right back down into this volume and
277 00:25:19 --> 00:25:24 balance. Now, because the market is predisposed to go lower. We we framed it
278 00:25:24 --> 00:25:29 with it likely being bearish, even if it trades back up into this area. We want
279 00:25:29 --> 00:25:33 to see it, reject it. I think this would meet and and agree with anyone's
280 00:25:33 --> 00:25:39 definition of rejecting. I went higher and quickly see the see the time amount
281 00:25:40 --> 00:25:46 of candles it took for it to get there, and then how fast it moved away. That
282 00:25:47 --> 00:25:54 indicates stream weakness. Now, because it's up here and it's likely to draw
283 00:25:54 --> 00:26:01 down to that low, how can we trade that and not need it to go to that low and
284 00:26:01 --> 00:26:05 lower yet, because, as you saw on Friday, I have a short position that was
285 00:26:05 --> 00:26:13 only two ticks away from being filled or potentially filled getting out. It would
286 00:26:13 --> 00:26:18 have been the low of the day, but I was two ticks away from the daily low on
287 00:26:18 --> 00:26:26 Friday. And right now, I'm over the weekend, holding short for contracts. So
288 00:26:27 --> 00:26:35 my expectation is that, because we went so hard on Friday, lower, we will likely
289 00:26:35 --> 00:26:41 gap lower than this low here. That's what I'm anticipating. Now, if we don't
290 00:26:41 --> 00:26:45 got lower, and then we open a little bit higher, I'll look for it to trade down,
291 00:26:45 --> 00:26:50 and then make another attempt to get below that low. Worst case scenario, you
292 00:26:50 --> 00:26:53 know, it reverses on me, and then after a day or two, then it goes lower.
293 00:26:54 --> 00:26:59 That's, in my opinion, less likely, but it's always potentially there, because I
294 00:26:59 --> 00:27:03 don't do a lot of holding over the weekend. But in this instance, because
295 00:27:03 --> 00:27:07 it's it was so likely to get down there on Friday, and I'll talk a little bit
296 00:27:07 --> 00:27:13 about after four o'clock pm in a moment, but because it's shown its willingness
297 00:27:13 --> 00:27:18 to be so heavy, and really no interest in going higher, and it quickly repelled
298 00:27:18 --> 00:27:23 that level up here, this volume imbalance, I would have never expected
299 00:27:23 --> 00:27:27 it to create some short term low to trade back up. Why we're weak, we're
300 00:27:27 --> 00:27:30 likely to take out that low here. We have relative equal lows. That's going
301 00:27:30 --> 00:27:36 to be a real quick draw. And then look at this single candle here, and then we
302 00:27:36 --> 00:27:40 had this big down candle here. This is a balanced price range, so it's not
303 00:27:40 --> 00:27:44 likely, after creating this candle here, it's not likely to trade back up in this
304 00:27:44 --> 00:27:49 area and treat that as a fair value gap. It's likely to just continue going lower
305 00:27:49 --> 00:27:53 and going lower. It did, and then fell just short of getting right below that
306 00:27:53 --> 00:27:57 low. Now these levels down here probably looking at them, wondering what they
307 00:27:57 --> 00:28:01 are. What I've done was I put a Fibonacci on the highest bodies and
308 00:28:01 --> 00:28:07 lowest body. And had projections ran, okay, and you know what those
309 00:28:07 --> 00:28:13 projections are. But the if we get below here, this is the minimum expectation I
310 00:28:13 --> 00:28:19 expect to see, and this is kind of like the perfect scenario for for Swing
311 00:28:19 --> 00:28:23 Trading. That would be a perfect level for me to be content with if it was to
312 00:28:23 --> 00:28:29 trade down there. Now, I'm not going to hold my position that long, because of
313 00:28:29 --> 00:28:34 the markets volatility, because of all the saber rattling, the issues with
314 00:28:34 --> 00:28:39 Canada, the tariffs, like all kinds of things are going on, I don't want to
315 00:28:39 --> 00:28:43 hold and to be honest with you, you know, I don't feel all that comfortable
316 00:28:44 --> 00:28:50 holding over the weekend, you know, but I felt inclined to do so because I felt
317 00:28:53 --> 00:28:59 it's not a lot of risk for contracts. Isn't a terrible amount of leverage, and
318 00:28:59 --> 00:29:04 it's, in my opinion, likely that this gap lower than that low Okay, and
319 00:29:04 --> 00:29:08 whatever the first print will be on Sunday. If it's lower than that, then I
320 00:29:08 --> 00:29:11 would expect to see that super my fill would be, and then it would be better
321 00:29:11 --> 00:29:16 than what I had my limit order set at on Friday. So let's break this down a
322 00:29:16 --> 00:29:19 little bit further. Here's an hourly chart. You can see we traded up into
323 00:29:19 --> 00:29:24 that premium wick, consequent curse me on the daily chart, and we had a lot of
324 00:29:24 --> 00:29:27 displacement lower we opened on this candle came right back up to that
325 00:29:27 --> 00:29:32 original draw on liquidity, which was that volume imbalance. Okay, so I only
326 00:29:32 --> 00:29:36 gave you two PD raise on that daily chart, so you can track and maintain
327 00:29:36 --> 00:29:44 your awareness or keep your bearings in where we're at in price relative to the
328 00:29:44 --> 00:29:50 daily chart. All the way over here we see those relative equal lows that I
329 00:29:50 --> 00:29:54 mentioned on the daily chart, their cell side below that. And then we had another
330 00:29:54 --> 00:29:56 one here on the hourly chart, you can see real clear so.
331 00:30:00 --> 00:30:04 Now I've made them slightly
332 00:30:06 --> 00:30:10 faded so that way you can see that we did trade to it. But this is the one
333 00:30:10 --> 00:30:18 that's active now, okay, so this was the volume imbalance on the daily chart that
334 00:30:18 --> 00:30:23 once we moved away from it would draw down into that. Notice how we did that
335 00:30:23 --> 00:30:28 very thing here to consequent encroachment, which I'm not going to
336 00:30:28 --> 00:30:32 measure. And you can do that on your own chart, and we trade right back up into
337 00:30:32 --> 00:30:37 this inefficiency right here. See that now it trades outside of a little bit
338 00:30:37 --> 00:30:42 there, into an area that's a balanced price range. So this candle is open to
339 00:30:42 --> 00:30:49 its high and this candle before it all that price action back and forth. It
340 00:30:50 --> 00:30:55 stops and goes the other direction. We have the market trade back down. And
341 00:30:55 --> 00:31:00 then once we get down below the midpoint of this area here, it has difficulty
342 00:31:00 --> 00:31:04 doing a lot going any higher, it breaks lower. Then we have this sell side,
343 00:31:04 --> 00:31:08 imbalance by side, and efficiency trades up into it there. And then it's off to
344 00:31:08 --> 00:31:12 the race as we go, go, go, go, and then sell side, take him. Once we took out
345 00:31:12 --> 00:31:17 these lows, it had a lot of heaviness, meaning that it was more likely to
346 00:31:17 --> 00:31:22 continue lower than any consideration of the retracement. There's no need for it
347 00:31:22 --> 00:31:26 to go there. It's in a hurry to get somewhere. Where is that? These old
348 00:31:26 --> 00:31:32 daily lows here? So if we look at how we traded and got right to the close, it
349 00:31:32 --> 00:31:37 was so close I felt that we were going to at least give me my fill, but it
350 00:31:37 --> 00:31:44 denied me. And that sometimes was going to happen, I'll drop down into a hourly
351 00:31:44 --> 00:31:47 chart, same time frame, but we're breaking the days out with vertical
352 00:31:47 --> 00:31:53 lines, showing you Mondays, Tuesdays, Wednesdays, Thursdays, Fridays trading.
353 00:31:54 --> 00:31:59 Notice how we had essentially a market maker. Sell model, okay? Original
354 00:31:59 --> 00:32:04 consolidation, Smart Money reversal, low risk style, distribution,
355 00:32:05 --> 00:32:09 redistribution, and then the second leg is the most aggressive to the downside.
356 00:32:12 --> 00:32:18 Let's see that time frame. Here's that blue volume and balance, and now,
357 00:32:18 --> 00:32:21 because we went below it, and we're bearish, and we're aiming for this low
358 00:32:21 --> 00:32:26 down here, and that original relative equal lows on the daily chart. We're
359 00:32:27 --> 00:32:31 going to divide that range up here in quadrants, and now it's going to act as
360 00:32:31 --> 00:32:38 an inversion fair value gap. Okay, so once we leave the upper half and come
361 00:32:38 --> 00:32:43 outside on a closing basis. Notice we don't have a closing basis there. It
362 00:32:43 --> 00:32:47 trades outside of it. That's just like a I call that a mohawk. It's just like
363 00:32:47 --> 00:32:50 coloring outside the line like you have if you have a child and they color a
364 00:32:50 --> 00:32:53 picture for you and they show here you go, mommy, here you go, daddy. You're
365 00:32:53 --> 00:32:57 not going to look at your child and say, Look at you. You fool. You didn't even
366 00:32:57 --> 00:33:00 stay inside the line. You're not going to do that. It's a treasure to you.
367 00:33:00 --> 00:33:05 Well, this coloring outside the lines is permissible. We anticipate those types
368 00:33:05 --> 00:33:10 of things happening. But when it does close outside of it, we're then going to
369 00:33:10 --> 00:33:16 watch, does it return back inside of it? And does the lower half maintain price?
370 00:33:16 --> 00:33:21 And does it stay outside the upper half? As you can see, that in fact, is what we
371 00:33:21 --> 00:33:25 have. And then leave it here we have a displacement this first fair value gap.
372 00:33:25 --> 00:33:30 This is exactly how I teach my inversion fair value gap, okay, this is the
373 00:33:30 --> 00:33:37 easiest application to an inversion fair value gap from ICT, that first fair
374 00:33:37 --> 00:33:42 value gap that forms after breaking away, validating the inversion fair
375 00:33:42 --> 00:33:44 value. Once that forms,
376 00:33:46 --> 00:33:50 creating up into it there Perfect. That's exactly
377 00:33:50 --> 00:33:54 what you're looking for. And you place a stop just above consequent encroachment,
378 00:33:54 --> 00:34:00 that will be your underlying risk. Now, that might be incredible in terms of
379 00:34:01 --> 00:34:07 risk for you? Well, that's unfortunate because there are micros, and a lot of
380 00:34:07 --> 00:34:10 you don't want to touch a micro because you think that that's somehow like a
381 00:34:12 --> 00:34:17 size matters type thing, like you have to only
382 00:34:17 --> 00:34:21 do a mini contract, or you're not a real man. You're not a real professional
383 00:34:21 --> 00:34:26 trader unless you're using minis. If you use a micro, you're somehow substandard.
384 00:34:27 --> 00:34:33 No, you use the micro to facilitate the trade and you manage risk impeccably.
385 00:34:33 --> 00:34:40 That's that's what the micro is there for. It's not a distinguishing vehicle
386 00:34:40 --> 00:34:45 between the pros and the neophytes. Are novice traders. You know, I have
387 00:34:45 --> 00:34:49 students that are doing very, very well, and they're doing it just with micros,
388 00:34:49 --> 00:34:54 and they don't ever touch a mini, ever, and they don't have a job, that's all
389 00:34:54 --> 00:34:59 they do. So for the people that are very opinionated, chances are they're working
390 00:34:59 --> 00:35:05 at Jiffy Lee while they're. Talking like that. So the fair value gap that forms
391 00:35:05 --> 00:35:09 after the validation of the inversion fair value gap, that's when you want to
392 00:35:09 --> 00:35:13 start your position. And in any opportunity you can add to it, you can
393 00:35:13 --> 00:35:19 do that. So the market does, in fact, break lower. It trades down to the first
394 00:35:19 --> 00:35:22 relative equal lows on the daily chart. Their sell side there, and it
395 00:35:22 --> 00:35:27 consolidates a little bit, then comes and breaks lower again. Immediate
396 00:35:27 --> 00:35:32 rebalance, breaks lower injury and drifts right into almost filming me on
397 00:35:32 --> 00:35:38 Friday, almost taking out that old low on the daily chart. Here's a one minute
398 00:35:38 --> 00:35:43 chart here. And I kind of like want to talk about I got a lot of questions
399 00:35:43 --> 00:35:47 asking me, how did I trust that the market was going to make this type of
400 00:35:47 --> 00:35:49 move here after the
401 00:35:50 --> 00:35:51 four o'clock
402 00:35:52 --> 00:35:59 record trading hours close at 414 usually, if you're a prop firm trader
403 00:35:59 --> 00:36:06 and you're using these monetized demo accounts, these ideas of trading past
404 00:36:06 --> 00:36:10 four o'clock. I believe, I'm not sure if it's still true, but I believe at least
405 00:36:10 --> 00:36:15 one of the companies were the rules. What you had to be out by four o'clock
406 00:36:15 --> 00:36:19 Eastern time, and if I'm incorrect, at least in the comment section, correct
407 00:36:19 --> 00:36:24 me, because I would like to know if I'm wrong, but I think the rules are you
408 00:36:24 --> 00:36:30 have to be out by four o'clock. And that's true. You never get these types
409 00:36:30 --> 00:36:36 of movements here, which in this case, because we're so close to that old daily
410 00:36:36 --> 00:36:41 low when everything's bearish, the market's going to wait until four
411 00:36:41 --> 00:36:45 o'clock close, and that bell starts ringing. But then you have 15 minutes of
412 00:36:45 --> 00:36:53 settlement still, and then during those 15 minutes, and you get to 414 great
413 00:36:53 --> 00:36:57 when the new one minute candle would open up. That's the closing bell. You're
414 00:36:57 --> 00:37:01 you're done, ready trading hours closes, but electronic trading hours are still
415 00:37:01 --> 00:37:07 going until five o'clock. So you have 45 minutes still trading, and you have that
416 00:37:07 --> 00:37:12 hour break until 6pm eastern time, when the markets really disposed predisposed
417 00:37:12 --> 00:37:17 rather to to move lower. Many times, it'll have this little bit of a Judas
418 00:37:17 --> 00:37:21 swing going into the four o'clock hour. And then after four o'clock, it really
419 00:37:21 --> 00:37:28 starts to accelerate into a target higher or lower. So it kind of it acts
420 00:37:28 --> 00:37:36 like a market on close algorithm, where it knows that the majority of
421 00:37:36 --> 00:37:40 individuals are not participating right now. They're at their day trading. They
422 00:37:40 --> 00:37:46 got out. They're too afraid to hold over, because usually it gets real quiet
423 00:37:46 --> 00:37:50 and listless. It doesn't give you a whole lot of price movement. But when
424 00:37:50 --> 00:37:54 it's so close to a whole deal alone like that, and we're in a very bearish market
425 00:37:54 --> 00:37:59 Friday, this is when I am anticipating that type of run. So I'm going to hold
426 00:37:59 --> 00:38:05 on to it as long as I can, even if it's the last minute, because I've done this
427 00:38:05 --> 00:38:09 before where I got basically the low of the day, and I was aiming for that very
428 00:38:09 --> 00:38:14 thing on Friday, and it just simply didn't give it to me, and it's okay, but
429 00:38:16 --> 00:38:20 these levels here, you can see them on the FIB, if you put them On that, you're
430 00:38:20 --> 00:38:27 looking at it over the view of the highest wick down to that lowest wick,
431 00:38:27 --> 00:38:34 and that projection lower, that's negative 0.5 then you have negative one
432 00:38:34 --> 00:38:40 and then negative 1.5 this is where I believe that we're going to Open at or
433 00:38:40 --> 00:38:45 below. That's what I think we're going to aim for on Sundays opening. It's a
434 00:38:45 --> 00:38:49 guess. It's it's not scientific. It's just a hunch. It's just experience
435 00:38:49 --> 00:38:53 speaking, and I'm probably wrong, so don't hold me to it, not that you can do
436 00:38:53 --> 00:38:56 anything with it anyway. You can't position yourself ahead of Sunday's
437 00:38:56 --> 00:38:59 opening, but that's what I believe is going to happen. But I kind of like
438 00:38:59 --> 00:39:06 wanted to talk a little bit about that here, because I know that most of you
439 00:39:06 --> 00:39:10 are probably prop firm traders, and you probably won't be able to participate in
440 00:39:10 --> 00:39:14 some of these things. And when there's earning weeks, you'll never catch these
441 00:39:14 --> 00:39:17 types of continuations either. And usually that's how it happens as well.
442 00:39:18 --> 00:39:21 But I think that's going to be it for this one. I'm kind of worn out, and I'll
443 00:39:21 --> 00:39:24 catch up with you, Lord willing on Monday. Until then, enjoy your weekend
444 00:39:24 --> 00:39:25 and be safe. You.