Summary:
In a Trader Roundup live discussion hosted by Kitt with ICT (Michael), participants review a lecture and share takeaways about allowing small candle bodies to slightly exceed fair value gap boundaries in volatile markets, emphasizing risk control and that not everyone is suited to trading. Michael explains that key levels require alignment of time, price, and gradient levels derived from dynamic five-day ranges of opening gaps or other ranges, framing premium/discount for targets and setups. A trader asks how to choose among many sub-minute PD arrays; Michael says PD arrays are validated when they form over gradient levels at the right times. Others discuss learning via ICT’s X/Twitter spaces, note-taking, journaling (including using Notion and ChatGPT), scaling position size via pyramiding, displacement, event horizon partial exits, and using premarket liquidity. A brief religious question arises, and Michael reiterates focusing on process, patience, and delayed gratification.
QUIZ:
Test your knowledge (click each question to reveal the answer)
According to ICT, why might small candle bodies slightly outside a Fair Value Gap sometimes be ignored?
a) They always invalidate the setup
b) They represent strong institutional activity
c) They are insignificant price action and can be disregarded
d) They confirm that the market is reversing
Answer: c) They are insignificant price action and can be disregarded.
Evidence (00:11:30–00:11:55): ICT explains that small deviations outside the level may not matter:
“That small little segment of price action that still by definition is the body… what type of body is it, it’s an insignificant amount of price action. So to me, I disregard that.”
What condition must be present for a Fair Value Gap or PD Array to become a valid “key level” according to ICT?
a) It must occur during high volume
b) It must align with a gradient level and time
c) It must appear on a daily chart
d) It must close completely before trading
Answer: b) It must align with a gradient level and time.
Evidence (00:14:50–00:16:05): ICT states that the key factor is alignment with gradient levels:
“Every one of those ranges has a gradient level, and when it agrees with a P.D array… now you have a key level. It’s not a key level unless that criteria is there.”
In ICT’s explanation of algorithmic market behavior, what role do gradient levels serve?
a) They determine trading volume
b) They function like yard lines marking where price interacts
c) They identify market news events
d) They replace Fair Value Gaps
Answer: b) They function like yard lines marking where price interacts.
Evidence (00:21:20–00:22:05): ICT compares gradient levels to football field yard lines:
“The P.D array that lays down on top, that yard line, which is the gradient level… when it’s the right time to make the play.”
According to ICT, why do many Fair Value Gaps fail to produce trades?
a) Because they are too small
b) Because traders enter too early
c) Because they are not aligned with gradient levels
d) Because they occur during low liquidity
Answer: c) Because they are not aligned with gradient levels.
Evidence (00:22:10–00:23:10): ICT explains that most gaps are ignored by the algorithm:
“Just because you see a fair value gap means nothing. It has to lay over top of a gradient level at a right time… that’s what validates the fair value gaps.”
What does ICT say happens if price trades outside the defined range created by recent opening gaps?
a) Traders should double their position
b) Traders should immediately reverse their trade
c) Traders should stop trading and wait for a new range
d) Traders should switch timeframes
Answer: c) Traders should stop trading and wait for a new range.
Evidence (00:14:05–00:14:35): ICT explains how to respond when price leaves the defined range:
“What happens if it trades below that? You’re gonna sit on your hands… when a new day opening gap comes in… now you can trade, but you have a range to work within.”
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