All language subtitles for Lesson 04 Consolidations EN

Welcome back folks to lesson four
of the may, 2017 ICT mentorship, ICT

amplified day trading and scalping.

This teaching is trading in consolidate.

okay.

What's the secrets behind
trading consolidations?

Well, the first thing you need to
understand is the focus on the daily

and or for our order flow subordination.

What is order flow telling you on
a daily basis on a daily chart, is

price suggested to go higher based
on if the order flow or was it.

Most likely going to go lower before our
chart is your last line of defense in

terms of determining directional bias.

You want to be trading in preferably
both the daily and four hour, both

suggesting higher prices or lower
prices and looking for consolidations

in price and a lower timeframe.

So in other words, we could be
looking at a consolidation around

an hourly chart or a 15 minute time.

And that may be a build up of
new positions, or it could be a

buildup of orders to then look for
a rejection, basically turtle soup.

But when it comes to, uh, consolidations,
I want you to think in two camps,

obviously what retail traders are
thinking, trying to do the opposite of

that in your own trading and that of.

Smartline he does with their trades.

So retail traders, they're going
to be looking for breakouts to

establish a directional bias.

Uh, they have no insights as to
what the market may be telling them.

They're looking for a cause and effect, if
it does this, then I'll understand that.

Okay.

But they're basically chasing after
price smart money will engineer or

fade breakouts of a consolidation.

Smart money is not trying to follow price.

It's going to allow price to go to a
specific level when after, when, if the

trades to a specific key level of price
or a quarterly reference point or a PDF.

And it happens to me in agreement
with a breakout of a consolidation.

Many times, you're going to see a
lot of institutional sponsorship on

the move that fades that very thing.

Retail trends.

By the previous low and
sell the previous high.

And this is in keeping with the traditions
of technical analysis or what is

known as classical support resistance.

Obviously we've seen many instances
where support and resistance aren't

limited to just the actual old, low
and the old high, um, liquidity rests

just above and old high or below.

Which obviously brings us to smart
money's perspective by buying under an

old, low and selling above an old high.

When the markets are in consolidation,
understand that the consolidation

itself is permitting the open float,
which is the up of orders above and

below the current market action.

So market price being what it is.

If markets are trading in a
consolidation, that market price, you

want to be looking above short-term
and below short-term for where the

buy stocks and sell stocks would be.

That's your open float.

When the market moves in consolidations
in the long sideways consolidation,

the longer that consolidation is, the
more orders are aligned to build up.

Now, obviously as a day trader,
we're not going to expect a.

Phase of consolidation.

It can be rather brief, but inside
that consolidation, we have to

understand what's being permitted.

The orders are being allowed to stack
up in terms of breakout orders, in

terms of trailed stop-loss orders,
stop orders, they would key up a entry.

For instance, buying on a
stop for strength and selling

on a stop for weakness.

All those ideas overlap.

And it creates a great deal
of near term open float.

So in other words, the open interest
above the marketplace will start to

concentrate the open inches below
the marketplace begin to concentrate,

and you'll have a lot of liquidity
basically bracketing the market price.

When we look at the daily and or for our
order flow, the subordination to the.

In terms of price action when
consolidations occur, whatever

the direction that daily or four
hour is, that's going to be the

direction of the move outside
of the consolidation most often.

So if price moves above the
consolidation, take out on OHI

and daily and our four hour is.

That's usually going to be
the best scenario work for

trading in the consolidation.

Now, if daily and four hour order
flow is bullish, any moves below

the consolidation would be viewed
as smart money accumulating.

The cell stops for move higher.

If the daily or for our
order flow is bearish.

Any move of other consolidation above
an old high is going to be viewed

as smart money knocking out by stops
and accumulating short position.

The opposite's going to be
seen with the retail crowd.

They're going to be
basically chasing price,

retail traders, chase, expansions
that originate from the equilibrium

and smart money fades the expansions
that originate from the equilibrium.

Now let me explain this
a little bit more clear.

When the market is bearish on a daily
or four hour in terms of its order flow.

This subordination factor is going to
be seen in the lower timeframe charts,

where if there's a consolidation in
price starts to trade away from the

equilibrium price point higher, if
it breaks a short term high in event,

doing that many times, retail traders
are going to see that as something.

Okay.

And they're going to look for
expanses, usually ABCD type movements,

smart money does not see that they
actually fade that and they're

going to go the opposite direction.

So any short-term high that's
broken and as price moves away

from the equilibrium price point
or middle of the consolidation.

They fade that as a short-term stock run
and then they send it to the opposite

extreme of the consolidation and
just outside the consolidation range.

Again, retail thinks in terms of old
high classic retail resistance, old,

low classic retail support, we're more
focused on the equilibrium price point

because we understand premium and
discount, not just simply what prices do.

I don't know what high or low, because
we understand if it turned at an old

high liquidity is going to be just below
that high for a bare, shorter block,

or it's going to go above that high
for the liquidity resting above it in

the form of buy stops, the equilibrium.

We want to see price moving,
expanding away from that.

Now, if we're looking for now,
the daily or four hour is bearish.

Okay.

In the order flow subordination.

On a lower timeframe.

We expect any consolidations, any
rally away from the equilibrium price

point, it breaks a short-term high.

We will be looking to sell short retail
is going to want to see that as a

break in, um, Structure, if you will.

Okay.

Uh, for folks that want to trade
empowered, if they're going to see those

types of things that would in their
minds indicate a ABCD correction to the

upside, if daily or four hour order flow
is moving lower, as we understand it.

And we see an expansion away from the
equilibrium price point or the middle

of the range, and it breaks a short-term
high, that is our sell scenario.

And we're looking for the opposite end or.

The old, low or retail support that's,
what's going to be targeted next and then

move the low that the opposite said for
what equilibrium is expanding downward.

When the order flow on a
daily or four hour is bullish.

If we see a short-term low it's broken.

On an expansion away from equilibrium.

We'll see that as a Ronald and by stops,
not a break Instructure for lower prices.

We see that as a sweep, one cell stops
to accumulate new longs in, even on a run

for the other end of the consolidation
or just outside of it for the liquidity,

for the buy stops, pair that out.

Okay.

Some of the scenarios, conceptually,
it's just what it looks like.

We have price moving away.

From equilibrium all the way up
to the outside of a consolidation.

So we're going to be referencing
old highs and old lows, whatever

that defined range would be.

We're just classically defining in
terms of support resistance here.

Whenever you see price in a
consolidation, that's clearly

definable in price rallies above.

At consolidation when daily and or
for hour is bearish, retail traders

are going to see this as a bullish
breakout, and they're gonna be

wanting to buy that, that buying.

If they're surging into marketplace
as a buyer that creates the perfect

opportunity as counterparty to us
who mimics the smart traders smart.

Money's going to be selling that breakout
when daily and or four hour is bear.

So we want to see consolidations in
a rally outside of that consolidation

to entice retail or less informed
traders to buy thinking they're buying

strength when a higher timeframe
daily or four hour order flow is going

to cause the lower timeframes to be
subordinate to those higher timeframes.

So we're going to be doing the
same thing as a smart money.

We're going to be selling
those breakouts in consolidate.

When the daily or four hour is Bush
and the price breaks down below the

consolidation, retail traders are going
to see that as a break in the structure.

They're going to see that as weakness.

Okay.

And they're going to look
to sell short on weakness.

So retail traders are trying to
sell that as a breakout entry for

a short position, smart money.

We'll see the opposite of that.

If the daily or four hour.

Seeing Bush order flow.

When we see this break below and old
consolidation, we understand that that's

accumulation of cell stops in the form
of pairing up their orders to go long.

Now, inside of the range or the
consolidation when the daily or

four hour order flow is bullish.

What I like to anticipate is
traders seeing that old low, that

showed a short term little bounce.

When price trades back down to that
same equal load, they're going to be

buying there and guess where they're
going to put their stop loss just

below that previous short-term low.

So when retail traders see this they're
trading the old low as classic support

resistance theory doesn't work that
right there is what we anticipate seeing.

And then when we get the.

When price trades down below the previous
low outside of the consolidation, that's

where we're looking to be a buyer and
we're buying up those cell stops when

again, the daily indoor four hour is
in a bullish or a flow that creates

our low risk high probability entry.

Now, when we have these conditions,
we're looking for price to

return back to equilibrium.

We do not anticipate or
always hold for the opposite.

End of the consolidation.

We don't know.

We have no idea if that's going to
occur with any validity, we just simply

take the move back to the equilibrium
because price, wall and consolidations

is always going to want to gravitate
back to the mean in equilibrium is the

middle of what we deemed as Fairview.

So always when we're in consolidations,
anticipate price, expanding away

from the equilibrium price point
then outside of the consolidation.

But meantime, it'll snap back up into the
middle of ranger, go back to equilibrium.

If the daily or four hours bullish here,
even if we are going to bounce lower

after he equilibrium, many times this
in itself will provide an opportunity

to get long and have a tradable.

Okay.

The opposite here when the daily we're
four hours bearish and we see price

trade back up to an old high, while
it's inside the consolidation again.

Retail.

Chair's going to see this as an
old high classic support resistance

theory is going to be in operation.

They're going to sell short right there
and you know what they're going to do

with your stop there by stops are going
to be placed just above the previous

height that was inside the consolidation.

They have new understanding of order flow.

They have no understanding of how
markets have, um, building up of

liquidity around specific price levels,
and they have no appreciation for

how that liquidity is sought after.

So when retail traders see this as
their entry point, we're anticipating

this and in the buildup of buy
stops just above that previous high.

So when we.

Wait for that exercise, patients
were looking for the consolidation

breakout above a previous high.

And when that happens, we're doing
the same thing by mimicking what smart

money does by selling above scooping up.

Those buy stops that retail
traders are less informed.

Traders are going to be placing
cause there's going to be a

buildup of that buy-side liquidity.

So when price trades up there.

If they will permit an opportunity for
short sellers at the bank to pair up their

shorts with obvious level of buy stops
that we resting above that previous high.

Okay.

When the daily or four hour order
flow is bearish and we see a price

move moving away from and higher away
from that equilibrium price point

and it breaks a short-term high at
short-term highs, broken retail traders

are going to see that as a break.

And they're going to look to buy going
along and then look for an ABC type

formation and expect to see strength
in that particular market smart money.

On the other hand, we see that as
a opportunity to sell away from

the expansion, because again,
the subordination in the lower

timeframe charts are going to have
to follow what's being dictated on

the daily and or four-hour charts.

So if it's bare shorter flood that
we're seeing on a daily and our.

And we see a consolidation.

We all have to identify where equilibrium
is and then look for short-term

highs or just above equilibrium.

And in a rally above that many
times, we're going to see this as

the ideal entry point for shorts.

Once that short-term highs broken,
that's an accumulation on buy stops.

So if they're going to run the
buy stops in a daily or a four

hour bearish environment, that's
where we look to go through.

And we aim for the liquidity
resting below the previous low, that

creates the consolidation support.

We're going to pair up our buying to cover
our short with those individuals that

have cell stops resting below an old low,

all facilitated.

Bye run on by stops from a short-term
high that was created just above the

equilibrium price point that we used
to sell into those willing buyers.

So what we're doing is we're pairing
orders, just like the smart money does at

the bank level using institutional order
flow from a daily and or four hour chart.

When the dealer four hour is bullish,
retail traders are going to see that.

So.

Opportunity in their mind, by
having the expansion lower, that

breaks below it old short-term low.

They're going to see that as a break in
support of breaking market structure.

And they'll see that as selling
short on weakness, and they're gonna

be looking for a continuation or
breakdown in that particular market.

We anticipate this very thing and
by them doing that, we're going

to fade that whole move that.

It breaks that short-term low retail sees
that as an opportunity to sell short.

And again, they're selling weakness.

That's an opportunity for us
to fade that and do the very

opposite smart money on their hand.

When they see that short-term low
in a daily or four hour is bullish.

What they see is a run on cell
stops that short-term low is going

to be building up a liquidity pool.

Self stops that would create immediate
injections of selling liquidity.

Why would they want to
seek selling liquidity?

Because they need to buy the market long.

Their counterparty is gonna be
this run on that short term, low

or expansion away from equilibrium
when daily or four hours bullish.

What we're looking for is
this particular edition right

here, where price comes down.

Snap.

Short-term sell-side liquidity.

They use that sell side liquidity
to be counterparties, to buy long.

When that occurs, they expect and
anticipate a move outside of the

consolidation, the pair up their
orders with the buy stops that

arresting above the old consolidation.

So, what we do here is we do the
same things that the bank traders do.

We anticipate it and we use the
generic price action characteristics

that are inside of the consolidation
that retail traders don't think they

don't think about price like this.

They think about selling weakness
and buying strength, and they have no

understanding of what fair value is
and how to use it with the equilibrium.

So now when we look at price X.

On the lower timeframes for day
trading and on higher timeframes as

well, the daily or four hour order
flow, if it's bullish or bearish,

are we respecting a bullish or block?

Are we reaching up to a premium PD array?

That means we're going to be bullish.

That means the consolidations
that we're seeing here.

This is a pattern that we would
like to see for our day trades.

That short term low could be in
many cases, the Asian session.

Or it could be a previous day's low
and either one of those scenarios,

we've created a wonderful opportunity
to get long as a day trade and

everything I just said here could
be reversed for going short.

So I want you to think about when
markets go on consolidation, there's

some very generic characteristics
that we'd look at, or at least I do

as a trader and it helps me build
an idea, but it all stems from the

subordination that price is going to hold.

Relative to the daily and four hour
directional bias based on institutional

order flow by using what the PDA Ray
matrix would be suggesting is in play

right now of discount or premium market.

We use our PDA matrix to determine
what those levels are reaching

for and basically, and that's,
that's our directional bias.

So if we see that directional bias
arrived, From a daily chart or a

four hour chart, we have higher
timeframe, directional bias on

our side than any consolidation.

We know what side we
need to be working on.

Any short-term load is
violated below the equilibrium.

We're gonna look to go long on that.

If it's bullish on the dealer for our,
any move below the old load or the

consolidation, we anticipate that as it
run on sell side liquidity, why they want

to run the sell stops because they want.

What they're buying.

So again, we have to focus primarily
on the daily and four-hour for day

trades that give us the high probability
directional plays, and also how to not get

beat up by cheating and consolidations and
working on one side of the marketplace and

seeking that liquidity like the banks do.

So until the next lesson, I wish
you good luck and good trading.