2022 ICT Mentorship Episode 6

Main Ideas / Concepts Taught

Core philosophy: how to “internalize” price delivery

• The speaker argues you should not trade patterns “for patterns’ sake.”
• You should not trade:
  • indicator readings (e.g., RSI, Stochastics)
  • “momentum”
• Instead, the approach is:
  • Enter longs where retail sells
  • Enter shorts where retail buys
• The rationale given:
  • Most retail traders fail due to flawed logic, inconsistency, and lack of longevity/discipline.
  • Mentorship is framed as teaching the internal logic/dialogue of institutional trading, while acknowledging that trading ultimately routes through retail avenues to reach the marketplace.

“Market efficiency paradigm” and “institutional order flow”

Price behavior is explained through:

• Smart/informed money vs speculative/uninformed money
• Smart money is said to “anticipate price seeking opposing liquidity.”

The “efficiency paradigm” emphasizes:

• Institutions care about time and price, especially time of day (specific times increase likelihood of volatility and short-term reversals).
• There are no “secret indicators”—the key focus is time of day and liquidity behavior.
• Chart inefficiencies (e.g., gaps/imbalances) are treated as efficient delivery mechanisms that get revisited later.

Liquidity and stop-placement logic

• Retail is described as being trapped by stop-loss uncertainty:
  • fearing a stop-out from a stop that’s too shallow
  • fearing a spike through the stop (stop too deep/high) followed by reversal
• Institutional behavior is described as:
  • “cannibalizing” groups with mismatched stop placement
  • using time and liquidity to drive price against weaker positioning

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Methodology / Instructions (Detailed)

A) Fair Value Gap (FVG) rules — bearish (short setup)

Context

• Used as an institutional order-flow concept and a “3-candle formation.”
• Bearish FVG tends to form after a:
  • run into buy-side liquidity (price runs above prior highs)
  • followed by a breakdown

Formation rules (3 candles)

It’s a three-candle structure:

• Candle 1: defines one boundary of the gap (its low matters)
• Candle 2: the gap resides here (where imbalance is formed)
• Candle 3: defines the other boundary of the gap (its high matters)

Boundary definitions (as stated):

• Upper end of bearish FVG: Low of Candle 1
• Lower end of bearish FVG: High of Candle 3
• The “fair value” size = difference between Candle 1 low and Candle 3 high

The speaker emphasizes an overlap condition (paraphrased):

• Candle 1 low is traded below on the immediate following candle
• Candle 2 has an extended low that goes below Candle 1 low
• Candle 3 does not trade back up through the boundary that would negate the gap (i.e., it should fail to trade back in the described way)

Interpretation:

• The gap represents sell-side efficient offering, leaving inefficient pockets between boundaries that are later revisited.
• In the right context, bearish FVG becomes a short signal: price may move lower and “trade back” into/through that area.

Where/how to enter and place stop (simple execution)

• Easiest entry: place a limit order just above Candle 3 high
• Stop-loss placement (options):
  • above Candle 1 high (as described), or
  • above Candle 2 (depending on risk/learning stage)
• The speaker stresses:
  • avoid being too loose early
  • backtesting and demo practice are recommended

Where to look for it (context rule)

• Don’t search for the gap “all the time.”
• Look for periods where price runs:
  • above an old high / multiple highs (e.g., double top)
  • implying buy stops above highs = buy-side liquidity
• Smart money is expected to sell (short) from that liquidity area, using the FVG as the executable imbalance.

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B) Market structure shift (MSS) + Displacement (bearish)

Process described

For bearish MSS:

1. Market trades higher short-term, then forms a retracement
2. Price breaks above an old high / short-term high
3. Then it breaks down when it takes out a prior short-term low

Displacement requirements:

• Must be “energetic,” not a small lethargic drift
• Ideally includes a strong bearish candle with close below the level (not just a wick)

Key definitions

After MSS:

• Displacement low: the low established by the breaking move (below prior short-term low)
• Displacement high: the top of that displacement leg (high within that bounding range)

Hunting location for bearish FVG

• Look for bearish FVG within the range:
  • between displacement high and displacement low

Execution rule

• If no FVG appears in that range:
  • don’t take the trade
  • move on

Time-frame scope

• Taught as a multi-time-frame concept, but the speaker is specifically using intraday examples.

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C) Bullish FVG rules — long setup

The bullish setup mirrors bearish but reversed, with parallel 3-candle logic.

Formation rules (3 candles)

• Candle 1: has an important high boundary
• Candle 2: where the gap is formed
• Candle 3: has an important low boundary

Boundary definitions (as stated):

• Upper end of bullish FVG: High of Candle 1
• Lower end of bullish FVG: Low of Candle 3
• Candle 2 is where the imbalance “forms.”

Where it tends to occur (context rule)

Bullish FVG is expected after:

• price runs below old lows and creates a move into sell-side liquidity
• then price rallies and takes out a short-term high
• with energetic displacement higher

Displacement range rule

1. Find MSS bullishly and draw displacement low to high
2. Look for bullish FVG inside that displacement range
3. If no bullish FVG exists there:
   • no trade

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D) Practical walkthrough / charting “how to do it” (as shown)

Step-by-step workflow

• Start on a 15-minute bellwether chart (naked chart).
• Mark:
  • a relevant swing high
  • the run into liquidity
  • a specific time reference (example given: 8:30 due to employment/news volatility)
• Then “strip down” through lower timeframes:
  • 15m → 5m → 4m → 3m → 2m → 1m
• The same imbalance logic is said to appear as you drill down.

Entry example (bearish scenario shown)

• Once the market breaks below a short-term low, the learner looks for bearish FVG inside the displacement zone.
• Entry suggested:
  • on/above Candle 3 high
• Stop is placed above the appropriate candle boundary (per the earlier rules).

Replay/visualization for teaching

• The speaker demonstrates TradingView replay to show the pattern forming in real time (not used normally).

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E) Profit-taking framework (internal/external range liquidity + FVG targets)

Range concept:

• Range = from a recent high to a low
• Equilibrium ≈ 50% of the range (Fibonacci is mentioned as an illustrative tool)
  • Above 50% = premium
  • Below 50% = discount

For bearish short trades:

• Targets described as tied to:
  • “cell stops below lows”
  • revisiting the favorable value gap region

Liquidity references:

• Internal range liquidity: within the high-to-low range mid-region
• External range liquidity: below lows / outside the main internal area

Partial profit logic:

• take partials on nearer targets (internal)
• before aiming for deeper external liquidity
• avoid trailing stops too aggressively before key structure levels are taken out

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Lessons Emphasized / Cautions

• Don’t turn this into a “fancy dance” or a generic mentorship template—use the model as given.
• Backtest and demonstrate practice is strongly recommended before trading live money.
• Losing trades are expected; the goal is:
  • correct interpretation of price
  • repeatable structure
• The speaker rejects interpretations based on “chart religion” tools (e.g., volume profile or generic indicator overlays), while acknowledging those tools may still be data—the interpretation matters.

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Speakers / Sources Featured

• Speaker: the channel’s mentor/instructor (not named in subtitles; identified only via narration and “my students” references)
• Source material mentioned:
  • Auto-references to e-mini markets (notably E-mini Nasdaq / NQH2022 on TradingView)
  • TradingView (platform tool, especially replay/visualization)