Summary of "TCT mentorship - Lecture 3 | Supply & Demand"
Assets, tickers & instruments mentioned
- Solana (SOL) — used as the primary chart/example.
- Concepts and instruments discussed: supply zones, demand zones, order blocks (OB), structure supply/demand, fair value gap (FVG or “inefficiency”), ranges, deviations, liquidity (teased for next lecture), TCT schematics / TCT model 1 accumulation.
- Market participants referenced: market makers, smart money.
Key concepts & definitions
- Supply zone: an area on the chart where sellers dominated and caused a downside expansion. When price returns to this area, sellers (or market makers) will likely defend it, producing a reaction or rejection.
- Demand zone: an area where buyers dominated and caused an upside expansion. Returns to this area are likely defended by buyers.
- Market makers: described as the primary agents able to move price; the methodology is predicated on trading with their footprints (order blocks / FVGs).
- Fair Value Gap (FVG / inefficiency): a three-candle formation where the wick high of candle 1 and the wick low of candle 3 do not touch, leaving a body gap. This gap is required for a valid order block in this methodology.
- Order block (OBIF — Order Block with Inefficiency):
- Bullish OB: the last bearish candle before an expansion up (must leave an FVG).
- Bearish OB: the last bullish candle before an expansion down (must leave an FVG).
- When drawing the block, include wick highs/lows (even if the wick belongs to candle 1 or 2).
- Structure supply / structure demand: multi-candle supply/demand areas (a range of candles) representing the same idea as OBs; these also must include an FVG/inefficiency.
- Refined zones: overlapping structures across timeframes that produce narrower, higher-confidence points of interest (POIs).
- Supply chain (informal): a sequence where one order block creates another; the reaction from the later OB often produces a strong move.
Order Block with Inefficiency (OBIF): the single-candle or multi-candle representation of a supply/demand area that includes a required FVG (three-candle inefficiency).
Concrete rules / methodology
Order block identification (OBIF rule)
- Must be a three-candle formation:
- Candle 1: the last candle of the prior direction.
- Candle 2: a confirming candle.
- Candle 3: the expansion candle (the large move away).
- The wick high of candle 1 and the wick low of candle 3 must not connect — this creates the FVG/inefficiency.
- The order block area is the last candle’s high/low including wicks.
Structure supply / demand
- Use multiple candles (for example, two pullback candles into the expansion) to draw a larger zone.
- The same FVG/inefficiency requirement applies for valid structure zones.
Zone drawing conventions
- Always include wick highs and lows when marking zones.
- Refined zones result from overlapping structures across timeframes — these create tighter POIs.
Timeframe process
- Scan multiple timeframes (examples: daily, 4H, 3H, 2H, 1H, 45m, 30m, 15m).
- Prefer higher-timeframe OBs that remain unmitigated on lower timeframes.
- An OB that has been mitigated (price touched the zone and then expanded away) is considered invalid and should be discarded.
Three primary locations to search for S&D zones
- Pivot points: the pivot/order block at a lower-high in a downtrend or a higher-low in an uptrend.
- Within a range: demand in the lower (discount) section; supply in the upper (premium) section.
- Deviations: supply above the range high or demand below the range low (possible range deviations before a re-entry).
Exception to the FVG requirement
- If a zone is the only supply/demand within a defined range and it was only very lightly/briefly mitigated (a tiny tap), you may redraw it slightly above/below that tiny mitigation and still consider it — but only if no other nearby S/D exists.
Confirmation and trade execution
- An OB/structure zone provides a Point of Interest (POI); do NOT take trades solely on the zone.
- Wait for confirmations (TCT schematics / model-based confirmation to be taught later).
- Multiple overlapping supply zones across structures/timeframes increase confluence; the most refined (lower-timeframe) OB often gets targeted.
Wick / mitigation notes
- Price may wick into an OB to take liquidity; a wick alone does not automatically invalidate a zone.
- If a full mitigation occurs followed by an expansion away, discard that block — it is no longer valid.
Practical workflow demonstrated (chart-based)
- Identify the macro range (define range high and range low).
- Scan left and across timeframes to find the last bullish/bearish candle before a large expansion that left an FVG — mark these as order blocks.
- Add structure supply/demand zones where multiple candles form the move (ensure an FVG is present).
- Use higher-timeframe OBs for context and refine with lower-timeframe OBs for more precise POIs.
- Look for pivot OBs that align with market structure (lower-highs/lower-lows or higher-lows/higher-highs).
- Watch for overlapping zones (confluence) — these are higher-probability POIs.
Example from the lecture:
- SOL chart walk-through: a daily order block above the range high and multiple lower-timeframe OBs (12H, 6H, 2H, 1H, 30m) inside the range. Price reacted at these areas as predicted. The instructor showed a sequence of OBs forming a “supply chain” with strong reactions.
Timeframes emphasized
- Demonstration referenced many timeframes: daily, 4H, 18H, 12H, 8H, 6H, 3H, 2H, 1H, 45m, 30m, 15m, etc.
- Emphasis: multi-timeframe scanning and preferring higher-timeframe unmitigated OBs refined by lower-timeframe OBs.
Performance, outcomes & observed patterns
- Overlapping OBs and an unmitigated higher-timeframe OB often yield clear reactions — this supports taking shorts/longs at those POIs.
- The instructor referred to a successful short call based on identified zones (no explicit P&L provided).
- A useful pattern: a second order block formed from a prior OB often produces a notably strong reaction.
Cautions, rules & best practices
- Context is critical: don’t draw order blocks randomly — use market structure and ranges.
- Discard mitigated order blocks (once mitigation + expansion away has occurred).
- Always require the inefficiency (FVG) unless using the single-light-mitigation exception in an otherwise empty range.
- Prefer higher-timeframe unmitigated OBs that are also unmitigated on lower timeframes.
- Wait for confirmations (TCT schematics) before trading a zone — a POI alone is not a trade signal.
Teasers / next topics
- Lecture 4 will cover liquidity (liquidity sweeps / liquidity grabs).
- Upcoming lectures will teach TCT schematics (model-based trade confirmations, e.g., model 1 accumulation) used to confirm trades.
Disclosures / disclaimers
- The provided transcript did not include an explicit legal disclaimer such as “not financial advice.”
Presenters / source
- Presenter: TCT mentorship instructor (host of “TCT Mentorship — Lecture 3 | Supply & Demand”).
- Source: the lecture video content (chart examples primarily on Solana).
Category
Finance
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