The Missing Piece to ICT Concepts (you need structure)

0:00 From the very moment I started learning about ICT/SMC concepts, they resonated with me. I knew they had potential. I knew I could make these concepts work to finally become profitable. Yet, the problem I ran into quite soon after was that I had knowledge about all these different concepts. I knew what a was. I knew what a liquidity sweep was. I knew how the market moves. Yet, I couldn't get the concepts to work because I had no idea how to structure them properly. The concept really only started working for me the moment I understood it's all about the PD rays and how they lead to different probabilities because understanding that will allow you to structure it properly to consistently find a daily bias to consistently find the best entry that you are looking for

0:45 to then eventually rinse and repeat payouts. Now, I can promise you one thing that by the end of this video, you will know how to get ICT/SMC concepts to work for you because you know how to structure them properly. The first thing we need to talk about is again when we talk about ICT/SMC concepts, there are so many out there and it feels like every month there's a new update all of a sudden and there's many more concepts. You don't need all concepts. You just need to pick a few that resonate with you. So for me for example that's liquidity and fair value gaps and liquidity swing highs and swing lows. Pick a handful of concepts that make sense to you. Now most likely the reason why you like those concepts is because they make sense to you because they give a rational explanation to whatever is

1:31 going on right here instead of just drawing a random support and resistance line and then saying well yeah just buy when we come into the support. It just doesn't make a whole lot of sense. The reason why that's important to understand is because that's also why most people get into ICT/SMC concepts because it gives them a rational explanation to why things are happening. But there's a trade-off. There's a downside to that because often times what that leads to is people get too caught up in that. People think there needs to be a logical explanation behind every single loss or every single trade they take. Now that might lead you to a point where eventually you might think you're able to get and achieve 100% win rate in the market. So often times because you have the rational explanation and because you think you

2:17 know how the market moves, you think in binary and not how the market actually operates in itself. So you think that either this should happen or this should happen. But it's never in between. It's never well it's a 60% chance that this might happen or 40% chance. So it's binary instead of how the market operates probabilistic with probabilities. The concepts that resonate with you even if there's a rational explanation behind them. They are a means to an end. That's it. It's a means to an end. It's a means to calculate probabilities to eventually understand if this is a good trade or if this is a bad trade. Now we're going to dive into that deeper and deeper. But the way I need you to understand that is the market is all about probabilities. So how likely is something to happen? It's not this is guaranteed to happen.

3:02 No, this has 70% of 70% chance of happening next. So for me it helped a lot to understand that probabilities you can replace the word probabilities with possibilities. So the market has a lot of different possibilities, right? We can go higher, we can go lower right there. We can also potentially consolidate. Our job is to eliminate possibilities to find the next highest probability move. Now that sounds super vague. I know. I'm going to explain it more clearly. So what I need you to understand is that when you have a lot of different possibilities, so you have a lot of different choices that you can make, that inherently makes a singular choice lower probability. So, for example, if there's 20 suspects at a crime scene and you are the detective

3:48 and you're trying to figure out who committed this crime, then 20 different choices, 20 different suspects, that makes the singular choice of suspect number five inherently low probability, right? There's there's a low chance that you're all of a sudden going to guess that correctly. So what you do as a detective is you look for clues to eliminate potential possibilities to eliminate potential suspects. Now not eliminate them as in murder them, but eliminate the choice. So for example, if I now ask the question, okay, half of the suspects were not at the crime scene. So from the 20 total suspects, there were only 10 that were actually at the crime scene. Now all of a sudden if I pick from those 10 suspects the choice the singular choice if I make a singular

4:34 choice from all those suspects that choice is inherently higher probability just because I removed half of the possibilities. Now eventually if you find the right clues if you find the right signs that will lead you to only well be left with one or two suspects. So the choice between those becomes even higher probability that one of those is the criminal. Now, that's a very funny murder mystery, but of course, we're not here for for a murder mystery. Now, how does this work or how does this translate over to the market? Well, again, I mentioned PD rays are the keys. So, what are PDAs? Again, fair value gaps and liquidity. So, swing highs and swing lows, those are what we call PDAs. But you might also know, for example, an order block, a mitigation block, a breaker block, all these different PDAs.

5:20 But let's just limit it for now to a fair value gap, and swing high, swing low. So those are PDAs and what can we do with PDAs? Now from every PDA there's two possibilities. We can either respect it or we can disrespect it. So for example in the example of a swing low right there. We can either retrace back into the swing low right there and respect it. So meaning that we have a liquidity sweep and that we continue higher. Or what we could also have is for example this swing high right here. We don't respect it but we disrespect it. So instead of a liquidity sweep, we get a liquidity run right there and instead we continue higher towards the next target. Those are the two possibilities. Same for a fair value gap. When we have a fair value gap right there, we can either respect it, retrace back into it and continue higher from

6:07 it, or we have a fair value gap like this one right there where we we trace back into it, we disrespect it, and it it's just basically ignored. Those are the two possibilities. Respect or disrespect from every single PD rate. It's the same thing with an order block, mitigation block, breaker block, inverse of anything you can imagine. Now that makes our whole story as a detective a lot easier because if we can now figure out that we are for example respecting this swing low right there, then that will mean that we are likely to move towards for example this next fair value gap. Why is that? Well, price as you see it right here, price is always moving towards a PDA. Those PD rays are often times referred to as the target, but within the ICT and SMC space, you might know that as a draw on liquidity. So,

6:54 for example, this right here can be the next target. That's a swing high, the next drawn liquidity. This right here might also be the next target. Now, this afterwards might also be the next target. What are those? Those are simply PD rays. So, we're always moving towards a next PD. Is our job as a trader to figure out what the next PDA is going to be. So what is what the next target is? What the next drawn liquidity actually is. So by understanding the possibilities that we have from those PDAs, that is going to make a whole lot of sense. Now in order for that to make sense, I'm going to draw a perfect analogy to make this very clear in your mind. I recently had a friend who start trading more seriously, who start taking trading more seriously and he was analyzing US dollar JPY and he sent me his analysis. His conclusion was

7:41 eventually well he thought that we might continue lower at that moment in time to eventually reach the 2023 maybe even the 2022 lows right there and that was based on a whole liquidity story. Now whether he is wrong or right doesn't really matter but the fact is that you don't need to know if we are going to reach for the 2023 lows in order for you to make this work in order for you to actually make money. Now, let me explain because right here I'm drawing a door. Now, my drawing skills are not very good in honesty, but this is a door right there. Now, in front of the door, you might have a doormat right there with something like home right there where you wipe your shoes before you leave or

8:27 before you enter the house. Now, I would like to make a bet with you. Every single time someone steps on this doormat, the front door is going to open right there. The front door of my house is going to open. Now, sometimes that will result in losses. Again, that's the world of probabilities, right? Because we understand, okay, sometimes someone might step on the mat by accident and they might actually go somewhere else instead of going through the front door. But let's say that's a 70% chance right there that when someone steps on my door right there, the front door is going to open. If I would bet $100 every single time right there, and if I if I am correct 70% of the time, I walk away with $200. But if I'm wrong 30% of the time, I lose that $100 US that I put in. That's a very profitable bet. An

9:12 extremely profitable bet. That's the same as your trading plan having a win rate of 70% and having a risk-to-reward an RR of 1 to2 RR on every single trade. This is what trading is all about. But what my friend instead was doing, well, someone was visiting my house and was actually taking a shower right here. and I expect them to open the front door within the next 5 seconds. Well, again, unless you someone unless you take that person out of your shower and you kick them out and you tell them open the front door right now, otherwise I miss my bet. I think everyone can see that that's not a very profitable bet, right? But that's the thing with my friends and with most people that use ICT/SMC concepts because they're trying to bet so far into the future, they now think

9:58 they understand the market completely and they force their will onto the market instead of letting the market show its hand and then following whatever the market wants to do. So for example, instead of saying, well, I think we need to actually continue lower towards the London lows right there. We are going to sweep the London lows. Then we are going to continue higher towards those highs. We're going to get a tiny trace back into gap and then we are going to continue higher. Instead of doing that, it's just about if we disrespect one possibility, this fair value gap right there, then we are likely to continue higher towards the next PD rate right there. Same thing because it's a logical chain of events. If someone steps on my doormat, they're likely to open my front door. If someone grabs a

10:44 glass out of my kitchen, they're likely to open a tap to get some water and that can continue, right? It's a logical chain of events. This is something I like to call a parameter where, for example, in the example of the doormat, that the doormat is the parameter. Of course, the example of the marker right here, the parameters are the following. If we respect this swing low right there, so we actually sweep the swing low and we continue higher right there, then it's very likely that we are going to reach this next fair value gap. Now, if we disrespect the fair value gap, so that's one of the two possibilities, either respect or disrespect. If we disrespect that fair value gap, it is very likely that we are now going to reach toward the next PD rate, that swing high. If we run this swing high, disrespect that swing high, it's very

11:30 likely that we are going to reach towards the next swing high. I'm setting parameters. If X happens, I will expect Y. The same if we now create a retracement into the bullish volume gap that will be created right there and we respect that bullish volume gap right there. I'm expecting that we will continue higher towards the swing high. But if we do retrace back into the fair value gap right there and instead we disrespect it and we continue lower, I will expect that we will continue lower towards this fair value gap and that will be the next likely target. So that way you can already see how that determines for example your daily bias because if we now start running this swing high right there or we retrace back into this gap and we respect it then this right here is going to be my daily bias. That is going to be my bias

12:15 towards the next swing high. And then it's not about being right or wrong. It's just about marking out what is the next likely, what is the highest probability thing that price can do next. I think this is very important to understand because within ICT/SMC communities, it's very much about what is right or wrong or you are right or wrong. It's not what trading is about. The same if you are doing a forecast for example, it's not about being right or wrong. It's marking out the different possibilities of what might happen. Once you see the different possibilities play out for example we do see this play out or we see this play out right here then capitalizing on the move that you had forecasted and this again leads to not forcing your will onto the market but

13:02 saying hey market show me whatever you want to do and I will capitalize on that move. So how we structure this properly is if we for example take a look at this swing low right here then we see that swing low we can potentially respect it or disrespect it right. So we can either sweep it to continue higher or we can run it to continue lower towards the next target. Now what we see is that we potentially sweep it. We retrace back into this fair value gap right there. Then we also have this fair value gap and we actually also have this bullish fair value gap. All possibilities. We can either continue lower from this fair value gap right there or we could disrespect it to continue higher. We could potentially continue higher from this rev gap or disrespect to continue lower. There's many different possibilities. What we see right here is if we let it develop a little bit and we see we are respecting this fair value

13:47 gap. We keep trading above this fair value gap, disrespecting it. Now we respect this fair value gap with the wicks that we see right there to now continue higher. Then the moment that happens and we see we are respecting this faile gap. We are disrespecting that bearish foy gap and we are still respecting the swing low that we came from right there. It is very likely that the next move is towards the next PDA that we have right there. So this whole area right here is what we call a context area right there. From the moment we respect this revol gap and that respecting again is that wicking that we see right there. So we are wicking and we are continuing higher from it. The same what we see with this swing low right there. we are retracing back into it. We are wicking it and we are continuing higher. So we are pushing

14:34 away from it. The same with this bearish volume up. The reason why we are disrespecting it is we try to wick it. We tried to push lower from it but instead we continue higher again right there. So we didn't continue lower if that makes sense. If we continue lower we were actually respecting it. Once we see that we have this context area and that on the lower time frame going to the 15minut going into the 5m minute right there. Even again, be my guest. Eventually, you can dive into the 1 minute time frame right there. That is going to be very interesting to then continue higher from it and then finding your entry in that area. This video is quite a lot to take in, but the only thing I really want you to focus on right now is pick any chart and mark out these swing highs and swing lows and fair value gaps and just create that

15:19 story. Okay, if we disrespect this swing high right there, I think we will now reach for the next swing high right there. If we instead retrace back into this fair value gap right there, respect it again, I would still argue the same thing. We can continue higher towards that next target. But if instead we disrespect it, I think we might continue lower for a while and for example reach into this bullish f right there. If you just start off with that, start looking at that in your own chart, start looking at previous price action and then in real time with live price action, this whole world will open up to you and actually structuring the ICT/SMC concepts will become a whole lot easier and then you can get these concepts to work. Now, to help you out, I also have a lot more videos to help you out with

16:06 this as well. All right, perfect. Thank you.