ICT Mentorship Core Content - Month 03 - Institutional Order Flow

Understanding Institutional Order Flow in Trading

Institutional order flow refers to the movement of large-scale orders from institutional traders in the market.
Analyzing institutional order flow can help traders anticipate price movements and identify areas of liquidity.
Institutional order flow can be observed on different timeframes, such as monthly charts.
Looking at the bodies of candles rather than the wicks can reveal areas of liquidity.
Market efficiency paradigm involves thinking like a market maker and identifying the maximum level of liquidity relative to past and present market movements.
Areas of liquidity can be identified by observing where the market has traded from and where it is currently located.
When the market rebalances by closing a liquidity gap, it may seek liquidity in the opposite direction.
The color of candles can indicate the direction of institutional order flow, with black candles representing selling pressure and green candles representing buying pressure.
By understanding institutional order flow, traders can anticipate where the market may move next based on liquidity-seeking behavior.

The bodies of the candlesticks hold the institutional volume, while the wicks are related to retail pricing.
Erroneous price action can occur due to brokers allowing price to run farther than expected.
Analyzing the bodies of the candlesticks provides a clearer view of the market and volume from an institutional order flow standpoint.
Price tends to trade just below the bodies of the candlesticks to seek the truest form of institutional volume.
Market movement can be predicted by identifying areas where price is likely to reach for liquidity.
Violations of certain lows or highs can indicate potential range expansions or stop clearing.
Bullish or bearish order blocks can influence price movement, even if there is some wicking through them.
Wicks are not significant barriers for institutional order flow, but stops are expected to be resting below the bodies of the candlesticks.

The bodies of the candlesticks indicate the respect of a bullish order block, suggesting that price may trade down to that level in the future.
If the bullish order block is recapitalized and stops are cleared, price may reach up to the next level of institutional order flow, creating a bearish order block.
As price rallies up, institutional order flow remains bullish until it reaches the bearish order block, where stops below the lows are cleared.
The violation of the candlestick bodies by a down candle indicates a shift in institutional order flow to the downside.
Price may then retrace back into the previous order block before reaching up to the bearish order block.
By understanding monthly levels of institutional order flow and points of reference, the entire price movement can be mapped out on a higher time frame chart.
The larger funds and banks reprice based on these institutional order flow levels, which are not primarily for retail traders.
Analyzing the candlestick bodies and wicks helps identify potential buying or selling opportunities within the order blocks.

Bullish prices expected until reaching a monthly bearish order block.
Price repelled and breaks down after violation of a specific candle.
Market provides clear delivery of price with crystal clear opportunities.
Price trades lower, followed by a small retracement and then a sell-off.
Bearish order block is formed, leading to new selling and acceleration downward.
Institutional overflow reaching for stops below the bearish order block.
Pattern formed to undo the bias of previous buying.
Price moves between range extremes, with hedging and bookmaking taking place.
Unwinding of long positions as sellers take off the orders used to go long.
Market reaches below consolidation, clearing out stops.
Another layer of institutional order flow is sought for the opposite side.
Expectation of market trading back into down candles for new buying opportunities.

Identifying candlestick patterns and their significance.
Understanding the motivation behind selling at a specific point to drive prices lower.
Smart money using sell stops to trigger market orders and buying opportunities.
Mitigating short positions by buying them back and causing explosive price action.
Expected buying and expansion after reaching a bull shoulder block.
Objectives of price movement: reaching previous high, triggering stops, and expanding further.
Confirmation of bearishness through breaking key candlestick levels.
Reaching for liquidity and ultimately returning to the bull shoulder block.
Analysis on different time frames for more detailed insights.
Daily chart showing a bullish candle within a bearish order block and subsequent retracement.

Market is showing a pattern of bull and bear shoulder blocks.
Daily chart indicates a drop in prices, while the institutional overflow on the monthly chart suggests a potential buying opportunity.
Buyers enter the market when price breaks above short-term highs and comes back down to the monthly bullish order block.
Buying opportunities occur when price hits previous down candles and rallies away.
Consolidation periods are followed by new buying opportunities.
Market responds to the weekly and monthly order blocks.
Bearishness is expected when price breaks below the monthly bearish order block.
Look for a return back to a breaker or a bearish order block when price breaks down.
Consider the weak or bearish institutional overflow on the daily chart.
Mitigation blocks occur when the market returns to a monthly order block, unwinding previous buying.
Red areas on the charts indicate the creation of new bearish order blocks.

The market seeks large institutional liquidity found on the monthly and weekly charts.
The biggest moves in price are found on the monthly and weekly basis.
Large funds control billions of dollars and their orders drive the market.
Transpose levels from the monthly and weekly charts onto the daily chart for better trading signals.
By trading around these levels, traders can anticipate significant price swings before they happen.
Understanding institutional overflow helps identify where stops or liquidity are located in the market.
The market goes to these levels to either remove participants or draw them in as counterparties.
Trading based on institutional order flow increases the chances of successful trades.