Financial markets such as Forex are one of the best ways to earn money and increase capital. There are methods and tips that traders can use to increase their income easily. Price action is one of these tools and methods that can easily double your capital with minimal knowledge. But price action has different methods and types, and ICT price action is one of these methods. ICT price action was invented by a person named Michael Huddleston, which today traders use for more profit. If you want to know what ICT price action is, read on.
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ICT price action style
ICT is another method of price action through which people can increase their trading profit. This method was invented by a person named Michael Huddleston who has more than 30 years of trading experience. This person has trained more than 60,000 students and was one of Larry Williams’ students. He invented this method when he was working in one of the big banks. According to Michael Huddleston himself, he invented this method through reverse engineering and better understanding of banking trading algorithms. IT style of price action has many advantages and disadvantages, which we will discuss in the following article on ICT price action. If you are not familiar with the concept of price action and its types, I suggest that you read the article comparing different price action methods.
Benefits of ICT price action
- Identify market fluctuations and changes based on liquidity
- Better review of trading sessions
- Better planning and planning
- Detailed review of market inputs and outputs
- Liquidity check
- No need to have extensive knowledge about digital currencies
Disadvantages of ICT price action
- It is not possible to check partial structures
- You will have problems in multi-time mode
- Block order division is not done well
Basic concepts of ICT price action
ICT price action has a series of basic concepts that you should be familiar with. These are actually the same ICT patterns that we want to explain to you dear ones. Another profitable method of price action is price action RTM, which you can learn more about by reading its article.
Market movement or market structure gives people views of the cryptocurrency market. These structures move in a nested manner, which they use to analyze multi-time frames.
When the price of digital assets starts to settle in a price range, keep an eye on this price range, as the chart will then turn bullish. However, you should be careful that if the chart has a downward trend before the placement, it will definitely rise after the placement, otherwise the chart will not rise.
This mode is exactly the opposite of the consolidation mode, that is, in this mode, after the price is fixed in a price range, the chart becomes downward. Note that before this time frame, the chart is in an upward trend.
Price balance (Equal balance)
Price equilibrium occurs when the value of an asset returns to 50% of its previous price after an auction. The price does not stay in this area for a long time, so whenever it reaches this area, it can be used to predict the market in lower time frames.
cheap or discount
When the graph changes its state from ascending to descending and reaches 50% of its state, it is called discount state.
Expensive mode or Premium
This mode is exactly the opposite of Discount mode, where the chart changes from downward to upward. This mode is formed when the downward movement reaches above 50%, which can be used to predict the market in high time frames.
Read more: Forex training course
In order to use this mode and understand it better, you need to change your chart type to candlestick. Sometimes the chart starts to move in a certain direction, in which case the price reversal is seen again. In this case, candles with a low shadow and a large and long body are usually formed.
The upper areas of the ceilings or the lower floors, where traders usually place their entry stops, are called liquidity pools. Banks fill their orders by dragging the price there or close their previous orders. By reading the article, getting to know the liquidity pool with the concept of liquidity. Learn more about liquidity.
Order Block (OrderBlock)
Order Blocks (OrdersBlocks) are areas where the supply and demand areas are formed. Orders in these areas are closed and filled quickly, and the next movements of the orders are formed after the orders are filled. Banks use this feature to replenish liquidity and also use orderblocks in cascading transactions. If the orders placed in these areas are large and contiguous, subsequent order blocks will not be filled. ICT price action examines these areas, which is one of the most important advantages of this price action style.
What is BMS and how is it formed?
In volatile markets such as digital currencies and forex, the price is always fluctuating. Therefore, it is a bit difficult to find the market reversal point in this situation, which is determined by breaking the floor or ceiling of the trading range. This process or breaking the floor or ceiling is called structural failure or BMS. So that if the bottom is broken, our trend in analytical time will be downward, but if the ceiling is broken, the analytical trend will be upward.
Read more: digital currency fluctuation training
Divergence in ICT price action
In ICT price action, divergence occurs when the price of a digital asset moves against the market trend and in the opposite direction of the technical index. By recognizing and identifying the divergence, you realize that the price trend is going to change and decline. Also, in some cases, it is possible that the trend of change is too intense and leads to the direction of price change. How to detect the bubble or the divergence is done through two tools RSI and MACD.
Traders buy and sell when they see some patterns. For example, when you see twin ceiling and floor patterns, you do not buy or sell until you get confirmation from these patterns, or until they give you the signal. ICT patterns also work like this and you should follow them and start trading when the price action gives you a signal. In the basic concepts of ICT price action section, we introduced and explained the ICT patterns to you, using these patterns you can check the market better in advance and recognize price changes.
Divergence in ICT price action
Divergence occurs when the price of an asset moves against the direction of a technical indicator such as an oscillator or against other data. Divergence warns you that the current price trend may weaken and in some other cases it may cause a change in price direction. Also, divergence can be found using RSI and MDCD; But to detect the stop hunting of the market makers, it is necessary to check the chart on the instruments that are dependent on each other.
Trend line and its tricks by Market Maker
We know that price is always moving towards liquidity. Usually the trend line is considered an important factor, but these lines can be ignored because a trader who buys and sells based on the trend line always places his loss line below it. Therefore, the market maker first takes the price below the trend line to collect liquidity and then returns to its original movement.
Liquidity structure and price reaching them
Financial markets in general are either within a certain range or have no past, which makes analysis difficult. Within the range, it includes an impulse wave that is considered as its top and bottom, this definition may have a specific appearance and range in each timeframe. If we don’t have a recent chart, by changing the timeframe or by zooming, a suitable chart will be prepared to check it.
Price Action is one of the best ways to make money for people who don’t have much knowledge of digital currencies. This tool helps them to buy and sell digital currencies using the simplest methods. Price action itself also has different types, of which ICT price action is one of them. In this article, we tried to introduce you to this method so that you can get a better understanding of this method of income generation. However, it is better to prepare a digital currency training course so that you can get to know all the concepts of digital currencies by watching a few sessions.