How New Students Should Start Part 1

Date: 2026-08-31

So we’re looking at a new month beginning tomorrow. Today is August 31st, 2026, and I’m going to walk you through a new week and a new month. We’re entering the seasonal tendency months where market price delivery gets a whole lot better. It gets very clean. There are a lot of economic drivers coming into the marketplace because of the holidays and end-of-year spending, so in my opinion, price action is going to be much better.

We want to start by looking at the economic calendar. What I have up here is the Forex Factory economic calendar. I’ve zoomed in as much as I could so everything can be shown. I’m specifically blocking all the advertisements because I don’t advertise companies on other people’s websites.

I have every filter turned on right now. One of the most important things I like to do—since I’m not actively trading Forex at the moment—is filter by the currencies that are relevant. If you’re trading Forex, any currency that’s germane to the pair you’re trading should be toggled on. Forex will be back on the menu soon, but right now I’m not concerned with it, so we’ll only toggle the U.S. dollar.

I’m also not particularly concerned about the gray or yellow events compared with medium- and high-impact events. The yellow events are low impact. That doesn’t mean price can’t fluctuate around them; I’m simply not concerned about them. Gray events are generally things like speeches, which you may still want some awareness of.

We’ll keep the relevant events in play and apply the filter. That condenses what was a much larger list into something smaller by removing all the foreign-currency-related events.

As you can see, we have G20 meetings. It’s labeled low impact, but it can still have an impact, particularly in the absence of anything significant that’s medium or high impact.

Filtering the economic calendar

[02:54] ICT: So where it says Impact, straight down there. Generally, what I like to do is look at this on the weekend. We’re doing it this week because I told everybody I wasn’t taking any trades this week. They think I’m lying. Whenever I say sincerely, it means I’m sincere about what I’m saying. I’m not joshing anybody or trying to be sarcastic.

We have a light economic calendar today. Then, for the first day of September, we have ISM Manufacturing PMI at 10:00 a.m. and JOLTS Job Openings, a medium-impact event. So at 10:00 tomorrow, there’s a lot of interest around the data coming out at that time. Monday is pure price action because it’s Non-Farm Payroll Friday this week, which I’ll show you in a moment.

Every Monday of Non-Farm Payroll week is a day you should be drilled in and trying to find a setup. Any other Monday is potluck, meaning it can give you a good day, but sometimes it won’t. You have to know what you’re doing and have some experience. I tell new traders not to be so demanding about finding a setup every Monday. Patience and building a disciplined approach to engaging the market are crucial in the beginning because whatever habits you develop early tend to stay with you. If you’re toxic in how you approach it—rushing to take trades, trying to do things you don’t understand, or assuming you’re correct when you naturally won’t always be correct in the beginning—it can weigh on you mentally and psychologically. It’s very easy to talk yourself out of trading altogether.

When we’re looking at the economic calendar, we’re identifying where the big waves of interference with normal price delivery are likely to occur. Those are determined by the orange- and red-folder events. Note the time they occur and the day they occur.

So we’ll breeze through it quickly. On Tuesday, the big hitters are 10:00 a.m. ISM Manufacturing PMI and JOLTS Job Openings. On Wednesday, we have 8:15 a.m. Non-Farm Employment Change. Thursday is a day where new traders should not be engaging price action, but they should be studying it. At 8:30 we have Unemployment Claims, and then ISM PMI at 10:00 a.m.

[05:53] ICT: Finally, on Friday, we have Average Hourly Earnings, Non-Farm Payroll Change, and the Unemployment Rate.

[06:05] ICT: This is where the market gets wonky at 8:30 a.m. and usually does all kinds of crazy stuff. It’s moving on what I consider fake data because, for years now, our government has been putting out unreliable data. I don’t care what the actual numbers are or how they change because they’re always revising them later anyway. To me, that proves the data is unreliable.

What matters for trading is that everybody knows the report comes out at 8:30, usually on the first Friday of every month, and Non-Farm Payroll creates volatility. That volatility is like a flame, and every little moth flies closer and closer to it until they get burned.

I teach students who are brand new or don’t have much experience to avoid trading Thursday and Friday of Non-Farm Payroll week. Up until about 11:00 a.m. Wednesday is your safer window for finding setups that aren’t as likely to cannibalize you as Thursday and Friday.

If you’re brand new, Thursday and Friday of NFP week are generally going to challenge you every month. Focus your attention on Monday, because everybody wants to avoid traveling through the dangerous waters later in the week. They’re going to try to get their pound of flesh—their profit, their little piece of the cake—as early as possible, right out of the gate on Monday.

I’ve taught this for years, yet somehow people on the internet started saying, “Michael or ICT says never trade Mondays.” That’s not true. That’s not true at all.

What I just explained is the actual context behind what I say about Mondays. Every Monday of a week that ends with Non-Farm Payroll Friday is a day when you should be in your seat looking for a setup because it’s going to be there. Every other Monday is more hit-or-miss depending on your experience.

My experienced students and I can obviously sit down and find a setup every Monday, but I want to be practical as an educator. I’m not going to tell a new trader that they should be able to find a setup every Monday outside of Non-Farm Payroll week. I include that clarification simply because of all the nonsense people say on the internet.

[08:26] ICT: Now they’ve been schooled in regard to that.

Let’s just say it that way. The rest of the week, as we already said, is a no-touch for a new student.

For instance, let’s say Caden was prepared to start engaging price action with a demo account—which technically, he isn’t yet. He should not be trying to trade Thursday or Friday this week.

Does that make sense? Yes. All right, so with that, let’s go over to the chart now.

Preparing weekly chart context

[09:26] ICT: Give me a second. Let me transition over to that. You should see the NASDAQ daily chart.

What we have here is the highest high and the lowest low of each daily range for the September delivery contract of the E-mini NASDAQ.

As you can see up here—not that it matters—the market is open, and we’re not trying to do anything with live price action. We’re just getting a feel for what we should be doing on a week-by-week basis.

This is technically something you should be doing on a Saturday evening or Sunday afternoon before the market opens. It only takes a little bit of time. I’m spending more time explaining why it’s important, why it’s salient, and what the benefit is. That’s really what this message is about: giving you a primer for how to prepare for the week ahead.

We already have the benefit of some trading having occurred today. If we disregard this current candle, then we’re left with Friday, Thursday, Wednesday, Tuesday, and Monday from last week.

[11:18] ICT: All right, so let’s go through a little bit of business here. Let’s go into a monthly chart real quick.

What you want to do is note the previous month’s high. This right here is July. That’s the high, that’s the low, and that’s where we stopped trading. You want to label that, so you double-tap on it. Your settings will pop up, then you go to Text and put the label in here.

But you’re looking at the—what am I on?

Let’s check which one I was doing. Let’s start with the top one first: July Monthly High. You want that positioned in the middle and right-justified so it sits over here.

[12:48] ICT: For very high-time-frame levels like this, you want them bold and black. Then do the same thing here: middle, right-justified, same bit of business. You can see it doesn’t take very long to set this up. By having these levels annotated on your chart, make sure they’re visible on all time frames.

You want them showing on every minute-based chart. If you’re trading sub-1-minute, make sure the Seconds tab is toggled as well. But definitely have them visible on the hourly, daily, and weekly time frames.

[14:06] ICT: Okay, so we have all the levels highlighted here. That way, no matter what time frame we drop down to, these larger-term, macro, big-picture levels are always visible to us.

Obviously, today the likelihood of taking out the high or low of August isn’t very high. We’ll do the same thing here. The benefit is that now you can hover over July like this. Don’t go all the way to the end of it; hover somewhere around here. When it highlights and that little indicator pops up at the end showing that it’s active, you know you’ve selected the correct one. Hold down Control, press your mouse button, and drag it away.

It’s easier to just do it than explain it.

[22:39] ICT: That closing price is the July Monthly Close. So we have this low and this high. Where is the current range, in deference to where we are in August—the month we’re closing today—and relative to July?

[22:56] ICT: Presently, we’re around the middle of August’s range, and we’re in the upper half of July’s range between its high and low.

[23:14] ICT: See that line right there? That’s Equilibrium. So we’re in the upper half of July’s range, but for August we’re just slightly in discount—just a small amount—because we’re below the midpoint between August’s high and low. Now we look for where the liquidity is in close proximity to current price. Market price at the moment is right here. If you look over here, you’ll see it fluctuating and moving around. This candlestick is today’s daily candlestick living out its life cycle. It opened here, traded slightly above it, and it’s barely visible.

Mapping daily imbalance levels

[33:19] ICT: You want to have it like that. Why? Because it’s anchored to a daily time frame. If we were doing the same thing on a weekly chart, we’d use the same approach—not the boldest line, but the one right before it. That way, when we’re navigating on lower time frames, it stands out. It’s prominent and tells you, “Hey, there’s something significant about this level. Don’t get lost in the minutia of price action.” Price is utilizing a very specific range here, and it’s this sell-side imbalance, buy-side inefficiency, which is a Suspension Block. So now we have that anchored, and we’re trading in the lower half of this SIBI Suspension Block.

[34:01] ICT: At the same time, we’re at the high end of this buy-side imbalance, sell-side inefficiency, and we’re around the middle of the August range as we end the month of August and begin a new week and new month.

[34:18] ICT: Now let’s drop down to a 60-minute chart. Right away, we have several reference points we can use when assessing trade setups. So far, price has run above this high here. We had relative equal highs that were bumped right here, and that happened last Friday at 10:00 a.m. Then price broke down. We overshot this inefficiency, and we have a significant daily low right here. Notice that throughout this area, price failed to reach the halfway point of that daily buy-side imbalance, sell-side inefficiency.

When you’re first starting out, I think you should annotate these things and keep track of the context. So label this as a Daily SIBI. That way, it helps keep everything framed in the proper perspective.

[39:41] ICT: Price used it here, traded sideways, and then used this level here. See how it’s using that daily gray box I shaded out as a buy-side imbalance, sell-side inefficiency? It rises up to this level and uses the upper octant.

An octant is the halfway point between the uppermost percentile, or the high of the range you’re measuring, and the first quadrant. So halfway between those two levels is an octant.

[40:22] ICT: Look how we fell out after taking this minor buy-side liquidity here. So we have minor buy side. When you have very small levels of liquidity like this, you can mark them one of two ways. I like to use short little trend lines for them. If we get too zoomed in, just tap this and it’ll bring the chart back to center.

[41:32] ICT: All right, so now this big wick right here—we’ve basically completed about half of the annotations you need to worry about. The only other thing of interest is going into Regular Trading Hours and looking for gaps. Since we haven’t opened for today yet, we want to zoom in right here. Take that closing price and put a line on it. Drop it right there.

[42:14] ICT: Now, that settlement time is basically the part of this annotation that’s going to change as soon as we get the 9:30 opening. At that point, this will become the Regular Trading Hours Opening Range Gap. That’s what this means right now: Regular Trading Hours Opening Range Gap Settlement, because we still have some time before the market opens. It’s basically 8:30 a.m. Eastern Time now, and always have your—

Organizing gap reference layouts

[43:52] ICT: You want to create a separate layout that contains just the new Regular Trading Hours Opening Range Gaps and keep a running tally of them. That chart should have nothing but those levels on it. Then you can quickly toggle over to that layout whenever you need that information, just like we’re doing here. If I want to go back to my other working chart with all the other annotations, I can switch to it immediately.

I already know we’re sitting inside Friday, August 21st’s First Presented Fair Value Gap. That’s where price is right now. We have sell-side liquidity resting here and here, and this area is also part of an old inefficiency I used last week. So that’s a draw lower simply because there’s liquidity there and an inefficiency below.

Then I can switch back to the other workspace and everything remains easy to navigate. You’re not trying to cram everything onto one chart because it’ll become cluttered. If I put everything I use onto one chart, it would be a mess—complete overload. The way you manage that is simply by using the different workspaces or layouts up here.

Now we’ll go back to Electronic Trading Hours. This is minor sell side. From here, we’ll just sit and watch how price behaves. It’s not complex and it’s not hard. We’ve already seen a disruption to the upside, and we’ve already seen price use the high of that daily buy-side imbalance, sell-side inefficiency—that’s the gray-shaded area.

[52:30] ICT: We’re inside this range, so price is trying to explore key levels, and you can’t get much more significant than being inside this daily-chart inefficiency.

[53:37] ICT: So the damage was done here.

[53:38] ICT: It was made jagged—that stop raid right there.

Building a liquidity draw

[53:43] ICT: Now we want to see acceleration below this low. We just got below it, and we don’t want to see price come back up in here. We want to see it get really heavy and draw down into the next level inside that daily buy-side imbalance, sell-side inefficiency, the gray-shaded area on the daily chart. This is the upper octant of it—the upper level when you divide the range into equal eighths. Then we’d have this next level.

We want to see whether price has enough interest to reach that level purely on the basis of these key levels. Does it gravitate toward it? If it does and shows no indication of reversal, the next order of business would be that minor sell-side liquidity.

What I’m fleshing out here is how to arrive at the draw on liquidity, step by step, by fleshing out the chart. No entries are required. This is the first thing you’re supposed to learn under my tutelage: knowing what you’re looking for, why it should be there, which levels are important, and what would change the narrative. If price goes above this level and closes above it, that changes the entire interest in reaching down here.

But before price gets here, this is a reasonable level to monitor for strength in the sell-off. You want to see price reach it while continuing to show interest in moving lower through the way the candlesticks book.

We had this drop here, creating a sell-side imbalance, buy-side inefficiency.

Price trades back up into it, accumulates more shorts, and then takes out that low. Every time price creates a new low, I like to do something like this—you’ve seen it many times in my executions. This is the low, and I’m watching it. The color isn’t particularly significant, but for now I’ll keep it like this. I want to study how price behaves after booking that lower low. Is it showing a lack of interest in continuation? If it retraces, what would it retrace into?

We have this wick right here, so I want to grade that wick.

If any retracement occurs, I want to see the candle bodies stay below that level. In this case, I’d mark it red and observe what price does in here.

[57:06] ICT: For setups to come consistently and for those setups to be reliable in price action, you have to understand why price should behave a specific way. Where should it be going? Why should it even move in that direction? The more supporting elements you can use that are anchored to the daily chart, the more probable the idea becomes. That doesn’t mean guaranteed, and it certainly doesn’t mean you’ll never have a losing trade.

[57:39] ICT: It means knowing that you know what you’re looking for. Your perspective may still be inaccurate because of your skill set, or you may simply have done something wrong. That’s a transactional operating error, and you’re the operator. You made the mistake, and you have to own that.

[58:03] ICT: I’m watching this wick right here the same way I’m watching this one. I’m not going to draw a line out, but I’m watching roughly the halfway point, about right there. If the bodies close above that, then we have to really focus on this. Price can create something like this, leave it as a wick, and continue lower, or it can come all the way back up here and close above it. If that happens, it requires much more attention.

If you had taken a short up here at this Volume Imbalance, I’m thinking in terms of, “Okay, if I had a short from this level or added more inside this SIBI, my stop would have to be up here. How much pain would I be feeling based on what price action is showing me?” So far, this is a reasonable retracement. It doesn’t mean anything significant, but that would change if we get a close above this wick.

Wicks are wonderful little mile markers for measuring continuation in selling and buying. When you’re short, you want to see price stay below the midpoint. That’s premium sensitivity. Preferably, you don’t want price trading in the upper half of the wick at all. It can spike into it, but it’s better if it doesn’t trade there. We’re seeing the early signs of that here. It doesn’t mean it’s definitely going to continue lower yet, but the early signs are wonderful. Even if you divide this portion in half, the body can’t even touch it. Price only traded up to there.

When I see that, I want price to start wilting and rolling over. If instead it comes back up and closes above this level, then we have to process more information relative to this range. This is a premium wick. Even though it’s in the lower portion of this individual candlestick, relative to where price is trading now, it’s above price, so that makes it a premium array.

The more time passes and the more candles move away from the area where you hypothetically entered—and the more distance price gains away from that area—the more it builds an onside narrative. While you’re watching price action, that gives you encouragement. When price starts running back toward your entry, it becomes defensive. Then you have to start thinking, “Do I take some of the trade off? Do I close the trade and cancel the entire transaction?”

But those decisions belong to the stage where you’re actually learning to enter and manage trades. Right now, I’m simply teaching you how to flesh out the chart, map the draw on liquidity, and understand what we’re looking for.

Technically, I could probably end the video here, but I’m going to continue. I want to see whether price can break down and reach that next level on the lower quadrant at 29,371.00. Market structure is a little wonky, but there are still signatures in here. I’m watching this small Volume Imbalance right there, and we’re inside the macro—the final 10 minutes of the hour.

[01:03:14] ICT: We’re going into the first 10 minutes of the new hour, so it would look like this. What we’re looking for is a decisive move—a run toward either inefficiency or liquidity. Think of it as the micro start of a new race. It’s like new energy entering into whatever should be unfolding in price action, and it should begin showing itself between these two vertical lines.

The macro doesn’t give you directional intelligence at all. It simply gives you a time when price should start spooling. You want to see price begin doing whatever you were already expecting based on your other analysis concepts, which we’ve fleshed out here. Now we want to see it animate, start moving, and show signs that what you’re looking for and expecting is potentially beginning to unfold.

[01:08:43] ICT: You would be taking a partial here. Why?

[01:08:44] ICT: Because you have a low here and a draw level down here based on the lower quadrant. That line comes from the higher-time-frame range we graded out—the daily buy-side imbalance, sell-side inefficiency. Do you know what I’m referring to? All right, between this low and that level, you can grade the range, and you get what Dad calls an Event Horizon.

[01:09:19] ICT: Right there, and that’s where we’re trading right now. So that would be a partial for me if I were short from up here. Once we took out that low, I want to see what happens next. Now we’re creating a new low, which is exactly what price just did.

[01:09:44] ICT: And it’s occurring during a macro time. To avoid missing the opportunity to pay yourself, if price moves from here all the way down to this level, that’s great—you can take another partial there. But because we’ve already been moving continuously lower for about half an hour, with no significant short-term run on buy-side liquidity, the halfway point is a good area for a brand-new trader to pay the transaction something. That’s what I try to teach through execution.

As a demo trader—because I don’t teach people to trade real money; I’m not licensed to do that—you would practice this with paper trading. If you’re tape reading, you would highlight it. Hypothetically, when price reaches this area, you should be thinking, “This would be a good place to take something off.” Say you had three contracts, three micros. You could take one micro off as soon as price reaches that level.

Then when you get this little retracement, we’re watching this wick the same way we watched the wick over here. Same thing. As long as the bodies aren’t closing above it, the idea remains intact. You can see how quickly the chart can become busy when you annotate all of this, but just know what you’re looking for. In the beginning, while you’re tape reading, it’s fine to draw these things out because you want to log them in your journal and show where those little mile markers were and how price kept indicating continuation.

When price starts closing above levels that it shouldn’t, those are warning signs. It means there is now a concern. It doesn’t necessarily mean you immediately bail and close the entire trade. But as a new trader—or a new student—when you see price begin doing the things we say it shouldn’t do—

[01:11:53] ICT: If it closes above that, now we have to concern ourselves with this because, after doing what it’s done here, it should not close above this midpoint. From a trader’s perspective, you’ve already taken a partial here, so you could roll your stop down to just above this level. If it stops you out, who cares? You’ve already funded the transaction with that partial, and it removes the need to be right about price reaching this target or the draw on sell-side liquidity down there.

Managing your expectations, emotions, and the psychology of holding a trade is directly linked to reward. We’re motivated by reward and fearful of consequence: “What if I did it wrong? What if I held too long? What if I didn’t take profit when I should have?” The way I teach removes the dependency on being right. Being right is simply a byproduct of doing what I’m teaching. You’re not aiming to be right; you’re aiming to consistently follow a model or approach.

The statistical probabilities of what I teach are something you measure in your own hands until you’re either convinced by the evidence that these things behave the way I teach them, or they quickly fall apart and you don’t have to spend any more time with me. But as you move forward through these lectures, we’re starting reasonably and humbly, like we’re doing today. This is a very simple beginning point.

ICT: You start like this. You don’t do crazy stuff and immediately try to demo trade. You don’t push the limits of your experience by trying to take funded account challenges. That’s all gambling at this stage, and you’re going to place far too much importance on the results when you don’t have enough experience to justify any measurement of performance.

It’s unreasonable and unrealistic to grade yourself that way. On your first day of school, the teacher isn’t going to say, “Okay, I’m going to give you the final exam on everything you should’ve learned.” You’ve been there for five minutes. What'd you learn? See what it just did there?

Testing inversion gap behavior

[01:14:34] ICT: It took out that low and quickly came back above that wick.

Now that’s a reason for concern. We want to see whether this holds and price comes back up and clears this on a closing basis, or whether it’s just a small run through these little highs inside the SIBI. Those kinds of fast flashes in price action are scary for brand-new students because they immediately create concern. We had a nice 60-handle drop from over here, and if you used something in this area, about 55 handles or so.

We have a new lower low, so that’s the low of the morning. If this move has legs and price wants to trade back above here and return into this SIBI, you can measure that by watching this area. Does price support it as an Inversion Fair Value Gap?

When I’m watching price action, I always have PD Arrays that I want to see continuously support the trade idea I’m either in or observing. If price turns bullish, it should trade above this, come back down into it, respect the upper half rather than the lower half, and then continue higher.

So far, though, it’s showing a willingness to behave as a Bearish Fair Value Gap, which is exactly what I want to see if I’m targeting this level and the sell-side liquidity below.

You need a way to measure the continuity of the price run you’re observing. If price starts showing a willingness to support this area as an Inversion Fair Value Gap, then we’ve probably created an intermediate-term low.

ICT: Meaning we could trade higher. For the hypothetical position taken from up here, after taking one partial here—and maybe a second partial here, depending on how many contracts you had—

the stop loss would be just above this level.

So hypothetically, if price trades up there, that would stop out the remainder of a position that has already had profits taken off. And if you didn’t take a partial at that first level, you still would’ve had an opportunity to take one just below this low, around the midpoint between that low and this level—the area we measured earlier as the Event Horizon.

ICT: So now I’d like to see price use the low of that gap and not put a body in the upper half. It showed a willingness to trade up into it, but it hasn’t gone above it and treated it as a discount array yet. It can still do that. But right now, I’m watching to see whether price can use the lower half of that gap and work lower. If it starts selling off, it’ll probably have no trouble getting down here. If it trades back above the gap and closes above it, then we’d watch the upper half. That’s the Consequent Encroachment of the gap.

Now, why did I choose that gap? Why did I select this one down here?

Because it’s laying on top of a wick Consequent Encroachment. So we have two PD Arrays nested together. Two PD Arrays in the same proximity give you a lot of information—immediate intel and immediate feedback for measuring the strength and continuity of a price run.

[01:19:24] ICT: *It’s getting a little blocky in here. Usually when price gets like this, it can snap back against the run that’s already been underway. That could produce a minor buy-side run here *without taking out this high or the hypothetical stop loss just above it, and that would still be okay.

[01:19:50] ICT: We could see it wick up into that area and then drop lower. The longer price stays like this, though, the less likely it becomes that we’re going to reach that sell side. What we want to see is continuously heavier price action. By not having an actual trade on, the student has far less concern about the outcome and can focus on what price is actually communicating. What intel is it giving you? What pieces of information are being presented?

So far, price is working the lower half, and it hasn’t aggressively pushed through. It still can from where it is. That changes if we get back below this low. If price trades back below this low, then I would expect to see large down-close candles reaching toward that sell side because it still hasn’t treated this as an Inversion Fair Value Gap.

[01:21:01] ICT: Originally, because it’s a sell-side imbalance, buy-side inefficiency, it’s a down-close candle.

[01:21:05] ICT: We traded up into it. If price had gone above it, traded back down, treated it as a discount array, and then started running higher from there, that would mean this low had become an intermediate-term low. It could be the low of the session, the low of the day, or even the low of the week.

Here, price traded up into it and wicked outside of it. The bodies weren’t able to close at the high, but they were able to close above the gap, so that’s a concern until we take out this low. If we take out that low, the concern is abated and it doesn’t hold much significance anymore. We’re closing in on the last couple of minutes of the macro time, so I’d really like to see price animate to the downside. Remember how much time we spent in this area?

[01:22:38] ICT: The more time price spends in that area, the less likely it is to continue lower because we’re inside a macro time.

[01:22:48] ICT: It should be proving to you that it wants to move in the direction you anticipated. If it consolidates like it’s doing here, that’s problematic. When that occurs immediately after the macro time—which ends at the 10-minute mark after 9:00—we would want to see it use this little consolidation and then continue, almost like a delayed reaction. I don’t like seeing that, but in recent years, with all the manipulation, fake data, “the war’s over,” “we’re going to war,” “we’re going to hit you historically harder than ever before,” those kinds of things create anomalies where volatility can suddenly spike. It distorts some of the precision elements that are generally available in price action. Right now, we’re having to deal with a lot of crap.

All right, so we’re outside of it now. Did we close above it?

ICT: So far, all it did was take those highs out, and the body stayed inside this. All right, so we’re outside of the macro time. We basically consolidated and made a lower low twice. We took this low here, and then this low was taken there. So hypothetically, we booked about 55 to 60 handles from that Volume Imbalance, and that was the premise we were watching price action under.

That little high right there was taken here. I’d move the stop loss to 29,412.00. That would lock in about 30 handles from the hypothetical entry up there, strictly for tape-reading purposes.

[01:26:32] ICT: So if price were to go there, that’s fine. It is what it is. You had two opportunities to fund the position down here, and if you get knocked out up there, you’re still getting taken out with more. Hypothetically, you’re being paid for your time.

Remember, we have the previous day’s Regular Trading Hours settlement up here. By nature, the closer we get to 9:30—and we’re about 15 or 16 minutes away from it—any price action post-9:30 will have us watching for a run toward this level.

So right away, with the way I teach partials and Event Horizon, you may know what you’re looking for and say, “I’d like to see price get down to this level and continue lower,” but you also have to ask: how can I make sure I take something away and reward myself for participating?

[01:27:39] ICT: There are a lot of people out there who say taking partials is stupid. Look at that. Is it stupid now?

[01:27:53] ICT: We’re not doing this to impress our parents, our girlfriend, boyfriend, significant other, or coworkers. We’re here trying to build a skill set that, if developed correctly, could eventually provide a secondary income, and in the right hands and with the right opportunities, potentially flourish into something greater. That’s not promised to everybody—or anybody—but there is a way of managing yourself and managing risk that is absolutely paramount, while understanding how price should behave and perform.

So you would’ve been pushed out with another 32 handles. That’s 32 more handles hypothetically added to your account after taking a partial here or here, whichever one you chose using the Event Horizon. Now we’re getting closer to the time when this level is going to behave like a big magnet.

Generally, price is going to want to get back up toward this level.

[01:29:09] ICT: It’s a little too much now. We’re being obnoxious with that. It’s a magnet. Okay, so the premise is that we’re looking for price to gravitate back toward that level. Notice how much more animated it becomes after consolidating during the macro. If price consolidates during that window, I expect it to become really animated immediately afterward. That’s an artifact of recent market activity. It’s not something I saw frequently in previous decades; it’s simply something I’ve observed recently.

If I don’t get the move I’m looking for during that 20-minute macro window, then I’m expecting it immediately after the 10-minute marker of the new hour, like we’re seeing here at 10 minutes after 9:00. You would look for the same phenomenon at 10 minutes after 10:00, 11:00, 12:00, and so on. Every hour, the last 10 minutes of the closing hour and first 10 minutes of the new hour form our macro time. We’re looking for that sweet spot in time to confirm the underlying narrative we’re operating under. It didn’t deliver during the macro here, which was cause for concern.

*By lowering our hypothetical stop loss to just above this high, from an entry up here, we get pushed out of the transaction with a reward. If instead you left your stop all the way up here and ignored what I was outlining down here, once price retraces this far you’ve surrendered most of the open hypothetical profit. Now your internal dialogue becomes fear and anxiety: “Is it going to hit my stop?” You’re no longer objectively reading price. *You’re watching a horror movie where you’re the star being chased by Jason or Michael Myers.

Instead, I want to be Maverick in Top Gun. I know there are bogeys out there, but I’m going to take a shot at this target, take a shot at that target, and then protect my exit strategy. I might take a few shots on the wing of the jet, but I’m getting back to the aircraft carrier in good condition and profitably. They don’t destroy me, even if I’m taken out of my campaign to attack this level and then that level.

You’re navigating price knowing, “Okay, I’m seeing signs of more turbulence than I want.” That becomes confirmed if we see significant animation after 9:10, which is the end of that 20-minute macro window. And what is price doing now? It’s accelerating and animating to the upside. So you know where it’s going.

[01:32:47] ICT: Now, because this is here as a SIBI, we’re going to see whether it acts as an Inversion Fair Value Gap that draws price up into the Regular Trading Hours Opening Range Gap Settlement.

What I want to see now is whether this creates an Inversion Fair Value Gap. Once we get above it, does it support price and allow it to run up into this line here? That would be a gap closure. We’re at or below the halfway point of this wick here.

[01:33:52] ICT: So if it can start putting bodies above that, then we have two things changing the tide, increasing the likelihood that price reaches up into that level as well.

Reading opening-range competing draws

[01:35:18] ICT: In the beginning, a new student isn’t going to know that there are two primary draws competing during the opening range, which is 9:30 to 10:00 a.m. One is this minor sell-side liquidity over here, and the other is the Regular Trading Hours Opening Range Gap high, where we settled during Regular Trading Hours.

[01:36:32] ICT: So I don’t know if it’s going to be a straight shot right up into it or if it’s going to give me a gap fill. We have some formidable lows here. I mean, look at how this is booking. It’s pretty thick(RTH Chart). There are a lot of trees to get through in that forest before you get to the house.

[01:36:57] ICT: A new student won’t know how to navigate that yet, so what you have to do is submit yourself to observation. When we open at 9:30, ask yourself: what is price trying to get to? Do you think it’s going to go for gap closure or half gap? Whatever the halfway point of that gap is, there’s about a 70% probability of price reaching it before 10:00 a.m. So within the first 30 minutes, if you have a gap, half of that gap gets filled by 10:00 a.m. roughly 70% of the time.

Or does price use this area, drop back down, treat it as a SIBI, sell off, and trade into the sell-side liquidity? Then, once a low forms below here, you can measure from that low back up to the gap level, split that range in half, and that becomes half gap. You can target that and potentially leave a runner on to see whether price goes for a full gap closure.

So many people come in wanting to learn, but they don’t want to sit down and do this kind of work—simple observations and laboratory experiments where you’re not risking anything. You’re learning. You’re gathering information. You’re watching price action behave a certain way and measuring its willingness to continue or not continue relative to an underlying expectation.

Brand-new people who refuse to do that are just being foolish. They think they know everything. This is proper learning.

[01:39:10] ICT: This is what I put myself through, and this is what I put every one of my students through. The ones who come out the other side having done it are the ones consistently finding their setups. I gotta let these pups in.

All right, so we’ve made our way into the upper half of that SIBI. Now I would want to see price try to grind up into that level right there. During the first couple of minutes, which will begin in about 70 seconds, price can come down. It could go as far as this low here. That would clear out the low for anyone trailing their stop loss up here.

It could drop down, take out that low, wick into this, and then go back up into that level. That’s reasonable. That’s not a trade; it’s simply an expectation to study and observe. If price completely wilts and breaks below here, then obviously we’ll look for that lower sell-side liquidity down there.

Right now, we’re so close to the opening bell that the expectation is for price to try to get back to gap closure. That’s fair value in its purest sense—where we settled Friday during Regular Trading Hours.

All right, eight seconds. Watch how much movement occurs immediately at 9:30. See how much energy is pulling price back up toward the Regular Trading Hours Opening Range Gap high. The Regular Trading Hours Opening Range Gap low is here.

[01:44:00] ICT: Boom, done. Just like that. Hard to go against a 70% likelihood.

[01:44:15] ICT: We’re going right back toward the high of that daily buy-side imbalance, sell-side inefficiency from the daily chart.

[01:44:42] ICT: It kept that low intact, which I found interesting because I thought they would come down, take it out, and then rip higher. Because they didn’t take it, it makes me think this move might be short-lived—price goes up, then comes back down and goes after anyone who’s trailed their stop below here.

[01:45:02] ICT: By splitting the range in half between targets and knowing what you’re looking for, you can identify significant and intermediate-term structure. In hindsight, it’s obvious that this is an intermediate-term low, but the skill is being able to see why it should form that way in real time. This is a short-term low, that’s a short-term high, that’s an intermediate-term high, and that’s another intermediate-term high. Significant price runs and significant highs or lows tend to form from long-term or intermediate-term highs and lows. Knowing how they should form, when they’re likely to form inside a macro, and where they sit relative to a target gives you the framework.

We traded above the gap, and now we want to see whether price comes right back down and takes out that low. The people who are long and want to hold the position are likely going to have their stop loss below here. If price gets down there and accelerates through it, then our attention shifts to the sell-side liquidity below.

Again, this is navigation, not trade entry. It’s about knowing what to expect and reading price action. Right below that low is, to me, a prime candidate for a stop raid because since this low formed, there hasn’t been any meaningful hunt on sell-side liquidity. Right out of the gate at 9:30, price ran to gap closure and beyond. How likely is it that those longs get a completely free ride with no adversity? Not very.

So I’m watching this area to see whether it acts as an Inversion Fair Value Gap. Can price trade down, blow out those lows, use this as resistance, and then continue lower? If it does, that becomes a really interesting study. Right now, though, the question is simply: what does price do next?

Doing this every single day is the practice. For people who work during the daytime, it would really be in their interest to have some kind of software program—

ICT: Or if you’re using a Windows-based application, I think you can hold down Ctrl+Alt and hit R, and it’ll record your screen.

[01:48:21] ICT: Turn that on before you leave for work and let it record a 1-minute chart all day. When you get home, after you’ve showered, changed, gone to the gym, eaten dinner, had your family time—whatever you need to do—sit down and watch the 1-minute time frame book price. You have the benefit of pausing it and saying, “Okay, right now I think it’s going to do this. It should do that. It shouldn’t do this. It shouldn’t do that.” Then unpause it and continue doing that through the first hour, from 9:30 to 10:30.

If you just do that—look, see what it just did? It took out the lows, based on everything I just outlined. I’m not trying to beat my chest; obviously, I know how to do that. But to me, that’s indicative of whether we’re going higher or lower. We took that low out. If price comes back above and treats this as an Inversion Fair Value Gap again, then we’ll make a higher high and continue running higher. But if price stays below this gap, this low is next, and then the sell-side liquidity down here becomes the target.

If it trades there, we’re done for the session, and we’ve had a really good lecture for Caden. Did you learn anything yet?

[01:49:41] ICT: Come on. So now I’m trying to pantomime—which is very difficult for me to do—the perspective of a new trader, a new student. But by observing the things I talk about that are important when charting the morning session leading into the 9:30 to 10:00 opening range, we literally observed all of these things in real time. We identified where an intermediate-term low could potentially form based on this becoming an Inversion Fair Value Gap and price trading above it. Then, right before 9:30, I said price was going to gravitate toward this level, and it did. Once it did that straight out of the gate and traded above the gap, I said it was reasonable for price to come back down and take out the longs whose stop losses were sitting right here.

As a brand-new student, I remember seeing things like that during my own studies and how much confidence it gave me. “I saw that.” I didn’t make any money from it, but I made the observation and then witnessed it happen. Those little things—the little attaboys and attagirls, the pat on the back of “I saw something, I observed it, and I measured its delivery”—are important. You watched every individual candlestick behave in a certain manner.

Look where the bodies are staying. We did get a close above it here, but look—it immediately rejected, which is exactly what you want to see. The lower half is the premium sensitivity.

If this is going to remain a Bearish Fair Value Gap, that’s its original utilization—how it was first formed.

[01:52:09] ICT: In bearish markets, this will be treated as a premium array to send prices lower. We’re down inside this area now, and we want to see it lose its ability to provide discount sensitivity. In other words, we want to see price wax right through it—just cut straight through it.

[01:52:24] ICT: And if it does that, this is going to get smoked, and then they’ll take the sell-side liquidity down here. If I were trading based on everything I’ve said, I would’ve been looking for a run long toward that gap. Once price traded through it, chances are I wouldn’t have captured everything up here. But as soon as this candlestick traded down and closed like that, I would’ve immediately treated this as an Inversion Fair Value Gap, just as I indicated.

Then, with this next candlestick opening and trading up into Immediate Rebalance right there, I would be short aiming for that low.

I’m not confident I would’ve gotten out down here with any significant size, but I definitely would’ve taken 50% to 65% of the trade off below this low.

The stop on the remaining balance would be right above this high.

Then I’d look for another partial below this low, specifically halfway between that low and this line. The remainder would be left to run toward the sell-side liquidity, which is this low back over here.

For somebody who’s already been trading for a while and already has a model, whether they’re making money or not, a lecture like this might not seem very sexy. But for a brand-new student learning price action with my concepts, these lectures are gold mines. We’re reading and interpreting price as it’s actually delivering, identifying what’s permissible for price to do and what becomes significant when it does certain things. Those are the observations you’re supposed to measure in your journal.

Every time during today’s tape reading that I said, “It should do this,” “I want to see this,” or “Let’s watch whether it does this,” that’s an inflection point you should capture. While watching the video, screenshot the chart exactly at that moment, before you know the outcome. Then annotate those open areas on the chart yourself and write down what you expected and why.

For example, because price traded above the high of the Regular Trading Hours Opening Range Gap—

[01:55:52] ICT: —it was reasonable to anticipate these stops being traded and then price trading back down into this gap. You want to screenshot the moment when this candlestick closes and the next one opens. Then annotate what happened afterward: price traded lower and came right back up into the high of the gap I identified as an Inversion Fair Value Gap.

there’s no Volume Imbalance. I just wanted to make sure. This is Immediate Rebalance. It can occur on the next candle as it forms or on the very next one. There’s no Fair Value Gap there, so it’s Immediate Rebalance.

Whenever you see that, put it in your journal. It’s one of my strongest PD Arrays because it gives you immediate feedback. When you’re working with Inversion Fair Value Gaps and you get this type of behavior, it’s immediate. It’s so sweet and so consistent. There’s nothing better than that because you’re combining narrative, market structure, an obvious draw on liquidity, and immediate price confirmation.

Look at this large up-close candle after price ran through and cleared the Regular Trading Hours high where we settled on Friday.

As soon as this candle closes, I’m watching the very next candle: Does it trade back to the high of that Immediate Rebalance? If it does, I’m looking to sell short. The stop loss would be based on this up-close candle right here.

Split that candle in half. That’s the Mean Threshold.

[01:57:47] ICT: One tick above that. I’ll show you what it looks like. From there to there—one tick above that. That’s the stop. “Well, that’s too many handles for me.”

[01:57:58] ICT: Well, then you’re going to have to use a micro. “I can’t make money with micros.” Then you don’t have the right mindset for a trader. You’re a gambler. You’re focused only on the biggest possible bang for your buck and you’re not considering the risk. What you’re trying to do here is time a significant high during the most volatile time of the day, so you have to know how to define that risk and be comfortable with it. This candlestick opens, trades up into here, and then we get the Immediate Rebalance, which becomes immediate delivery to the sell side. There and there. Look how fast that happened. And now look where we are—we’re back in this muck.

[01:58:38] ICT: I generally think price could go lower, but I may be proven wrong here. What I want to see is price wane, fail to go any higher, and then just waltz its way down into this low and touch this line. If it reaches that line, then we measure how much emphasis there is on continuing lower.

Does it reject and go higher from there, or does it simply go higher from right here?

[01:59:08] ICT: I’m watching the lower half of this gap, from this dotted midpoint line down to the low of the gap.

[01:59:14] ICT: I’m watching how the bodies behave in here because if they continue failing to get above and close above the midpoint, then I’m expecting lower prices.