ICT Lecture Notes: How New Students Should Start (Part 1)

Core Framework: Economic Calendar, HTF Chart Mapping, Macro Windows & Tape Reading

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Executive Summary & Overview

In Part 1 of the "How New Students Should Start" series, Michael Huddleston (The Inner Circle Trader - ICT) establishes the foundational workflow for brand-new and developing students. The lecture lays out the exact step-by-step routine required to prepare charts, filter fundamental news drivers, map macro levels across multiple timeframes, measure algorithmic price delivery using gradient matrices, and execute disciplined tape-reading drills without risking capital.

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Table of Contents

1. Economic Calendar & Macro Event Discipline
2. Multi-Timeframe Workspace & Layout Architecture
3. Higher Timeframe Chart Mapping & Annotations
4. PD Arrays, Suspension Blocks & Gradient Matrices
5. Regular Trading Hours (RTH) Opening Range Gap Matrix
6. Wick Analysis, Consequent Encroachment & Event Horizons
7. Macro Time Windows & Post-Macro Animation
8. Trade Execution, Risk Management & Partial Framework
9. Daily Student Execution & Journaling Protocol

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1. Economic Calendar & Macro Event Discipline

1.1 Seasonal Tendency Window

• Timing: September through year-end (holiday spending, institutional rebalancing, quarterly drivers).
• Characteristics: Price delivery transitions into clean, high-probability algorithmic trends with reduced random noise compared to summer consolidation.

1.2 Forex Factory Filtering Protocol

• Currency Toggle: Toggle USD ON when trading index futures (NASDAQ/S&P). Filter out non-pertinent foreign currencies unless actively trading forex pairs.
• Impact Color Folder Coding:
  • Red Folder: High Impact (e.g., NFP, CPI, FOMC, ISM PMI). High volatility potential.
  • Orange Folder: Medium Impact (e.g., JOLTS Job Openings, ADP Employment Change). Significant market drivers.
  • Yellow/Gray Folder: Low Impact / Speeches. Generally ignored unless high-impact events are absent.

+-----------------------------------------------------------------------+
|                       NFP WEEK TRADING MATRIX                         |
+---------------+-------------------------------------------------------+
| Monday        | PREMIER TRADING DAY                                   |
|               | - Highest probability setup of NFP week.              |
|               | - Institutions position early to avoid end-of-week    |
|               |   volatility.                                         |
+---------------+-------------------------------------------------------+
| Tuesday       | REGULAR ENGAGEMENT                                    |
|               | - Trade around scheduled medium/high impact news      |
|               |   drivers (e.g., 10:00 AM ISM/JOLTS).                 |
+---------------+-------------------------------------------------------+
| Wednesday     | HARD CUTOFF AT 11:00 AM EST                           |
|               | - Morning setups allowed until 11:00 AM EST.          |
|               | - Cease all trading activity after 11:00 AM.          |
+---------------+-------------------------------------------------------+
| Thursday      | STRICT NO-TOUCH ZONE (Study / Observation Only)       |
|               | - Pre-NFP positioning causes deceptive price swings.  |
+---------------+-------------------------------------------------------+
| Friday        | STRICT NO-TOUCH ZONE (8:30 AM EST NFP Data Release)   |
|               | - Extreme volatility ("Moth to a flame").             |
|               | - Government economic data is unreliable / revised.   |
+---------------+-------------------------------------------------------+

1.3 Debunking Monday Trading Myths

• Myth: "ICT says never trade on Mondays."
• Fact: NFP Monday is an absolute guarantee that a high-probability setup will form, as traders rush to capture profit before Thursday/Friday danger zones.
• Non-NFP Mondays: Hit-or-miss ("potluck"). Requires advanced experience; new students should remain patient and avoid forcing trades on non-NFP Mondays.

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2. Multi-Timeframe Workspace & Layout Architecture

2.1 Workspace Separation Rule

To eliminate chart clutter and cognitive overload, never place all annotations on a single workspace chart. Maintain dedicated TradingView layouts:

1. Naked / Working Chart: Primary execution and short-term markup workspace.
2. HTF Macro Levels Workspace: Contains Monthly, Weekly, and Daily high/low/close levels.
3. NWOG / NDOG Workspace: Dedicated to tracking New Week Opening Gaps and New Day Opening Gaps.
4. RTH Opening Range Gap Workspace: Specifically records Regular Trading Hours settlement gaps.
5. First Presented FVG Workspace: Tracks original, unmitigated Fair Value Gaps across higher timeframes.

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3. Higher Timeframe Chart Mapping & Annotations

3.1 Monthly Level Mapping

• Levels Required:
  • PMH: Previous Month High (e.g., July Monthly High).
  • PML: Previous Month Low (e.g., July Monthly Low).
  • PMC: Previous Month Close (exact closing price on the last calendar day at 17:00 EST).
• Monthly Open Rule: The Monthly Open is omitted because monthly opening prices naturally get absorbed into New Week Opening Gaps (NWOG) every 4 weeks.

3.2 Formatting & Visibility Settings

• Font Style: Bold, Black, Middle-Right Justified.
• Right-Justification Rationale: Anchoring text labels to the far right prevents labels from migrating across the screen when compressing or expanding lower timeframes (15-min, 5-min, 1-min).
• Timeframe Visibility Toggles: Toggle visibility ON across Monthly, Weekly, Daily, Hourly, Minute, and Second tabs so HTF key levels remain visible during lower-timeframe tape reading.

+-----------------------------------------------------------------------+
|                    MONTHLY & DAILY RANGE ANALYSIS                     |
+-----------------------------------------------------------------------+
|                     PREMIUM ZONE (Above Equilibrium)                  |
|                     - Look for SIBIs, Premium Wicks, BSL Runs          |
|                                                                       |
| ------------------- EQUILIBRIUM (50% Midpoint) ----------------------- |
|                                                                       |
|                     DISCOUNT ZONE (Below Equilibrium)                 |
|                     - Look for BISIs, Discount Wicks, SSL Runs         |
+-----------------------------------------------------------------------+

3.3 Liquidity Pool Mapping

• Buy Side Liquidity (BSL): Resting above PMH, PDH, and swing highs (buy stops, breakout buyers). Color code: Blue.
• Sell Side Liquidity (SSL): Resting below PML, PDL, and swing lows (sell stops, breakout sellers). Color code: Red / Deep Red, right-justified under price axis.

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4. PD Arrays, Suspension Blocks & Gradient Matrices

4.1 Inefficiency Classifications

• SIBI (Sellside Imbalance Buyside Efficiency): Price trades down aggressively leaving a gap where only sellside was delivered. Functions as a Premium array (resistance).
• BISI (Buyside Imbalance Sellside Efficiency): Price trades up aggressively leaving a gap where only buyside was delivered. Functions as a Discount array (support).
• Volume Imbalance: A gap created between consecutive candlestick bodies where wicks overlap, but bodies do not touch.

4.2 Suspension Blocks

• Definition: A SIBI or BISI bounded at both its top and bottom by a Volume Imbalance (where body shadows fail to overlap).
• Significance: Represents extreme institutional order flow displacement. Functions as a major barrier and key reference array on lower timeframes.

4.3 Octant & Quadrant Gradient Matrices

When grading wide higher-timeframe inefficiencies or ranges:

• Quadrants (1/4ths): Divide range at 25%, 50% (Equilibrium), and 75%.
• Octants (1/8ths): Divide range into equal eights (12.5% / 0.125 increments).
  • Upper Octant (0.125 / 87.5%): Key sensitivity level when price first enters a HTF SIBI from below.

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5. Regular Trading Hours (RTH) Opening Range Gap Matrix

5.1 RTH Settlement Baseline

• Settlement Time: Friday 16:00 / 17:00 EST closing price.
• Pre-Market Annotation: Prior to 09:30 AM EST, draw a horizontal line on the Friday settlement price and label it RTH ORG Settlement.

5.2 09:30 AM EST Label Transition Protocol

                      [09:30 AM EST Open Price]
                                 |
         +-----------------------+-----------------------+
         |                                               |
  Opens ABOVE Settlement                           Opens BELOW Settlement
         |                                               |
         v                                               v
  Settlement = LOW of Gap                         Settlement = HIGH of Gap
  Label: "RTH ORG Low"                            Label: "RTH ORG High"
  (Premium Gap Above Open)                        (Discount Gap Below Open)

5.3 Gap Closure Probability Rule

• 70% Probability Rule: In the first 30 minutes of trading (09:30 AM – 10:00 AM EST), price has a 70% probability of filling at least 50% (half gap) of the RTH Opening Range Gap before establishing the true directional trend for the morning session.

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6. Wick Analysis, Consequent Encroachment & Event Horizons

6.1 Consequent Encroachment (CE)

• Definition: The exact 50% midpoint of a prominent candlestick wick/tail.
• Execution Marker:
  • Bearish / Premium Wick: Price can wick into the upper half of a premium wick, but candlestick bodies must close below Consequent Encroachment (CE) to maintain bearish continuation.
  • A body closing above CE indicates loss of bearish momentum and signals higher timeframe retracement.

6.2 Event Horizon

• Definition: The exact 50% midpoint calculated between a recent swing low/high and a major HTF PD Array target (e.g., HTF SIBI or SSL).
• Partial Profit Anchor: Functions as the primary target for taking a first partial profit (e.g., taking off 1 of 3 micro contracts) to de-risk the trade early.

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7. Macro Time Windows & Post-Macro Animation

7.1 Hourly Macro Window Structure

• Window Duration: The last 10 minutes of the closing hour to the first 10 minutes of the new hour (20-minute total window).
  • Examples: 08:50–09:10 AM EST, 09:50–10:10 AM EST, 10:50–11:10 AM EST, 11:50–12:10 PM EST.

7.2 Function & Anomaly Handling

• Core Function: Macro windows do not provide directional bias; they act as time-based catalysts for price spooling / animation toward liquidity or inefficiencies.
• Macro Consolidation Anomaly: If price consolidates without direction during the 20-minute macro window, expect aggressive, explosive price animation immediately after the 10-minute mark (e.g., post-09:10 AM EST).

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8. Trade Execution, Risk Management & Partial Framework

8.1 Inversion Fair Value Gaps (IFVG) & Immediate Rebalance (IRB)

• Inversion Fair Value Gap (IFVG): A SIBI that fails as resistance, gets crossed above by a strong candle, and then acts as support on a return visit (or vice versa for BISI).
• Immediate Rebalance (IRB): Occurs when a candle closes and the very next candle immediately rebalances the space without leaving an open gap. One of ICT's highest-probability delivery signatures.

8.2 Partial Profit Logic ("Paying Yourself")

• Taking partials at Event Horizons or 50% gap closure levels removes emotional anxiety, protects capital, and converts open float into realized profit.
• Stop Loss Management: After securing a partial, roll the stop loss to just above/below the Mean Threshold (50% midpoint) of the key entry candle or 1 tick above/below the CE of a key wick.

+-----------------------------------------------------------------------+
|                    ICT TAPE-READING EXECUTION MODEL                   |
+-----------------------------------------------------------------------+
| 1. Identify HTF Draw on Liquidity (e.g., SSL or RTH Settlement Gap). |
| 2. Wait for 09:30 AM EST Open & check RTH ORG Gap direction.           |
| 3. Observe 08:50-09:10 or 09:50-10:10 AM Macro Windows for spooling.  |
| 4. Identify Entry Array: IFVG / Immediate Rebalance / Volume Imbalance.|
| 5. Take Partial 1 at Event Horizon (50% distance to target).          |
| 6. Trail Stop Loss to Mean Threshold / CE of entry candle.            |
| 7. Exit remaining position at full HTF target / Gap closure.          |
+-----------------------------------------------------------------------+

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9. Daily Student Execution & Journaling Protocol

9.1 Daily Screen Recording Drill

1. Record the 1-Minute Chart: Screen record 1-minute price action during RTH (09:30 AM – 10:30 AM EST).
2. Review Session Drills: Play back the recording after trading hours.
3. Pause-Predict-Unpause Routine:
   • Pause: At key inflection points (09:30 AM open, entry into macro window, touch of SIBI/BISI).
   • Predict: State expected delivery (e.g., "Price should respect CE of this wick and draw down to SSL").
   • Unpause: Observe actual candle delivery, body closes, and speed of delivery.

9.2 Journal Documentation Rules

• Take high-resolution screenshots at the exact moment of market inflection.
• Annotate all PD arrays, wicks, macro windows, and event horizons directly on the image.
• Log whether price respected body closure rules (CE / Mean Threshold) and record transactional operating errors for continuous improvement.