Notes
- When we enter a position using FVG, we can do so at the IOFED or Consequent Encroachment (CE) level.
- IOFED (Institutional Order Flow Entry Drill) is an entry technique at the edge of the FVG. If we are bullish, we enter at the upper edge of the FVG. If we are bearish, we enter at the lower edge of the FVG.
- Michael uses a painting analogy to describe a gap-filling process in price action, likening market gaps to unevenly painted areas on a wall. A painter would reapply paint to cover missed spots. Similarly, in price action, a gap needs to be “filled” or revisited before the market continues its trend.
- The market aims to operate efficiently, meaning any gap or unbalanced price range will eventually be revisited. The analogy is extended by suggesting that market movements overlap similarly to a painter’s roller, ensuring complete coverage of an area.
- The algorithm moves the market in a way that retail traders often misunderstand. Retail indicators like RSI, MACD, and moving averages create a distraction, while the market’s true movement is based on price action and algorithmic rebalancing.
- New traders often struggle because they don’t trust the algorithm, i.e. the ICT methodology. However, consistent study will help traders develop confidence in the price movement patterns over time.
- The final hour of trading often sees liquidity runs, making it a crucial time for short-term strategies.
ES Trade Example - Trade Executions
Balanced Price Range And Consequent Encroachment
Balanced Price Range
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