ICT price action training
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amirIntroduction:
Introducing ICT: Inner Circle Trader
ICT stands for Inner Circle Trader and was introduced to the market by Michael Huddleston.
Michael Huddleston is one of the important figures in the world of business and financial transactions. He is the founder of Inner Circle Trader (ICT) and Price Action style instructor.
Here are some details about Mr. Huddleston:
Trading history : Michael Huddleston is a professional trader who has several decades of experience in different markets. He started working as a trader in the stock market in 1970 and then expanded to other markets such as the foreign exchange market, global commodity market and financial derivatives markets. In 2008, he was recognized as one of the top 100 traders in the world by Barron’s magazine. In 2013, Huddleston was recognized as one of the top 50 traders in the world by Bloomberg Markets magazine. He was also recognized as one of the top 100 traders in the world in 2014 by Barron’s magazine.
ICT price action style : Along the way, Michael Huddleston learned about the reverse engineering of the bankers’ view and discovered the algorithmic functioning of their transactions. This clever discovery led to the invention of the ICT price action style .
Training : More than 55 thousand traders have been trained in ICT under Michael’s supervision. He loves sharing his trading insights and ideas and mentoring new and developing traders.
What is ICT strategy ?
. Inner Circle Trader (ICT) is an analytical method in price action that analyzes the behavior of large market traders (banks and financial institutions). This method will help you to see their behavior, analyze them and better predict the price trend. This style has a number of versions and variations provided by different masters. Of course, all these versions use the behavior analysis of big marketers, but according to your personality, interests and abilities, you can choose one of them.
ICT analyzes market behavior through price movement. Instead of relying on charts or complex algorithms, ICT analysts study raw price data. In the following, we discuss the basic topics related to ICT:
1- Trade with price action
Candlestick Patterns: ICT analysts use candlestick patterns to identify reversals, trend continuations and market sentiment. Patterns like pin bar, engulfing candles and doji are important.
Support and resistance levels: ICT analysts pay attention to historical support and resistance levels. These areas act as boundaries within which price reacts.
Market structure: Recognizing market structure includes recognizing higher highs (HH), higher lows (HL), lower highs (LH) and lower lows (LL). This knowledge helps to recognize the change points (turning points) of the direction.
ICT’s unique perspective lies in analyzing market dynamics:
Liquidity pool: ICT believes that institutional actors (market makers) create liquidity pools at specific price levels. These pools attract retail traders and they unknowingly provide liquidity. Market makers then execute their orders and trigger price action.
Liquidity Pool _
Definition: Liquidity pool means the area of the chart where institutional players (usually banks and financial institutions) place their orders. This area acts as a “pool” of liquidity.
Why Pool Liquidity?: Market makers unknowingly provide liquidity in these areas. They strategically place their orders at these points to stimulate price movement. Let’s look at an example of a liquidity pool in the forex market:
Suppose you are looking for a buying opportunity in the EUR/USD currency pair. You see the price is pulling down and it looks like the price is approaching a key support level (a liquidity pool). You decide to buy at this point as a retail trader.
– Example:
- You are waiting for a buying opportunity near the support level.
- You see a Bullish Engulfing candle where the price seems to be reversing.
- You buy with a stop below the entry point.
- Unfortunately, the price will move down and your trade will be stopped (it may reach zero with a loss or trailing stop and you will break even).
In this example, the liquidity pool is near the support level. This is where you got a stop and the price moved up. This indicates that the liquidity pool is an important point in forex analysis that traders can exploit.
Attract Retail Traders : The liquidity pool attracts Retail Traders. When retail traders place their orders near these areas, market makers use this opportunity to accumulate their favorable positions.
Stimulation of price movement : Market makers stimulate price movement by executing their orders in the liquidity pool. These impulses can lead to a change in price direction, breaking of support and resistance levels, and even the formation of price patterns.
In general, the liquidity pool is one of the important factors in analyzing the behavior of large traders and traders can use it to predict price movements.
Stop Hunts : ICT identifies areas that trap the retail trader.
Retail traders place their stop loss orders in those areas. Market makers deliberately activate these stops and accumulate their hunted positions at favorable prices.
2- ICT tools and techniques
Below we take a look at some ICT-related tools and techniques:
1- Market structure analysis:
Ceilings and floors : ICT focuses on identifying HH, LH, HL and LL patterns. These patterns help determine the current trend and possible points for reversal.
Fibonacci retracements: Traders use Fibonacci levels to predict retracements in a trend. The golden ratios (38.2%, 50% and 61.8%) are important reference points.
2- Order blocks and key levels:
Order Blocks: These areas on the chart are areas where significant buying or selling has been done. ICT considers them as possible points to change direction.
Key Levels: These are the price levels where market makers are likely to intervene. They often align with Rand numbers or previous highs/lows.
3- The use of ICT in Forex trading
1- Patience and discipline
- ICT emphasizes patience and waiting for high-probability setups. Rushing into transactions is not recommended.
One of the basic principles in the Inner Circle Trader (ICT) method is to emphasize patience and waiting for setups with high target probability. The reason for this emphasis is that rushing into trades may lead to mistakes and losses.
Here are some tips related to patience and discipline in ICT:
– Setups with high probability : ICT recommends that traders look for setups with high winning probability. Instead of entering each trade, traders should wait for favorable conditions to enter the trade.
– Avoiding hasty entry : ICT advises traders to avoid hasty entry into transactions. This means waiting for confirmation of patterns, support and resistance levels, and confirmation of market structure.
2- Trading based on sessions
- ICT divides trading time into specific sessions (such as London and New York). Each session has distinct characteristics and traders adjust their strategies accordingly.
In ICT forex style, proper risk management is very important. ICT is for adjusting the stop loss levels and avoiding to increase the stop amount.
4- Criticisms and differences
Although the ICT method in Forex has its supporters, critics believe that this method lacks empirical and scientific proof.
Summary:
In the Forex ICT course, you will be taught that you should watch out for liquidity pools at resistance or support levels and do not hastily enter into a transaction with a reversal candle and look at the prices with a professional perspective.
In general, you will be taught the following topics in the Forex ICT course:
– Stimulation of price movement : In this case, market makers (banks and financial institutions) stimulate price movement by executing their orders in the liquidity pool. These impulses can lead to a change in price direction, breaking of support and resistance levels, and even the formation of price patterns.
– Price direction change: By executing orders in the liquidity pool, market makers can change the price up or down. This may lead to the formation of a new trend.
– Breaking support and resistance levels: By executing orders at critical points such as support and resistance levels, market makers can break these levels and direct the price movement to a new direction.
– Formation of price patterns: stimulations can lead to the formation of price patterns such as reversals, forms and candlestick patterns.
Stimulation of price movement is one of the important factors in analyzing the behavior of big marketers and traders can use it to predict price movements.
In short, Inner Circle Trader offers a unique perspective on forex trading. His focus on price action, liquidity pools and market structure will suit traders looking for an alternative approach.
Conclusion
Inner Circle Trader (ICT) is an analytical method in price action that analyzes the behavior of large market traders (banks and financial institutions). This method will help you to see their behavior, analyze them and better predict the price trend. This style has a number of versions and variations provided by different masters. Of course, all these versions benefit from the analysis of the behavior of great actors, but according to your personality, interests and abilities, you can choose one of them. Some examples of other styles are:
- RTM style (Remember the Markets): This style is an enhanced supply and demand style. In this style, attention is paid to structural patterns.
- Elliott Wave style: This style is based on Elliott wave patterns.
- Al Brooks Price Action Style: This style also uses price action analysis.
- MDT style (Master Daily Tradings): This style is derived from the power of price movement.
Each of these styles has its own characteristics and advantages, and you can choose one of them based on your needs and desires.
Remember that no trading method guarantees success and careful research is essential before choosing any strategy.
