ICT Mentorship Lecture Notes: How New Students Should Start (Part 3)

Source: How New Students Should Start Part 3 (The Inner Circle Trader)
Topic: Macro Trading Keys, Chart Information Management, and PD Array Matrices

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Executive Summary & Core Philosophy

• Information Management over Chart Clutter: New traders often overload charts with indicators, heatmaps, and liquidity maps, creating analysis paralysis. Effective trading requires managing data through structured, separate chart layouts and detailed journals.
• The Core Notepad Principle: The chart layout should mirror what is in your trading journal/notepad. Avoid cluttering your primary execution screen; keep specialized studies on designated layout spaces.
• Five Pillars of Algorithmic Price Delivery:
  1. HTF Macro Perspective (Monthly, Weekly, Daily Keys: Open, High, Low, Close).
  2. New Week Opening Gap (NWOG) Matrix.
  3. New Day Opening Gap (NDOG) Matrix.
  4. First Presented Fair Value Gap Matrix.
  5. Regular Trading Hours (RTH) Opening Range Gap Matrix.

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1. Monthly Macro Keys & High Time Frame (HTF) Perspective

Setup & Regimen

• Timeframe: Monthly Chart (1M).
• Rolling 3-Month Window: Highlight and annotate the Open, High, Low, and Close for the past 3 consecutive completed calendar months (e.g., June, July, August).
• Previous Week Reference: Annotate the Previous Week's High (PWH) and Previous Week's Low (PWL) using clean, consistent visual cues (e.g., blue solid lines for highs/lows, black dashed lines for opening prices).

Market Structure & Bias Principles

• Equilibrium (50%): Find the midpoint between the 3-month high and 3-month low.
  • Premium (> 50%): Look for short-term sell ideas or target discount levels.
  • Discount (< 50%): Look for short-term buy ideas or target premium levels.
• Quarterly Shifts & Seasonal Tendencies:
  • Macro swings move in 1-to-3 month quarterly shifts.
  • Example Seasonal Tendency: Index futures generally display weakness during September, often trading down into a low in late September/October before an end-of-year rally.

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2. Transposing HTF Levels to Lower Timeframes

Multi-Timeframe Alignment

• Higher time frame levels (Monthly/Weekly/Daily) dictate the direction and high-probability targets for lower time frames (1D down to 1m).
• Price moves smoothly through "open space" (areas lacking HTF friction or opposing order blocks) once HTF inefficiencies or key levels are engaged.

Grading Ranges: Octants & Quadrants

When evaluating Fair Value Gaps (FVG) or Volume Imbalances (VI):

• Consequent Encroachment (CE): The 50% midpoint of an inefficiency or gap.
• Quadrant Division (25% Increments): Upper Quadrant (75%), Midpoint/CE (50%), Lower Quadrant (25%).
• Octant Division (12.5% Increments): Breaks the range into 8ths to track algorithmic precision on intraday charts (e.g., 1m candles turning precisely at the 1/8th or 7/8th octant levels).

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3. New Week Opening Gap (NWOG) Matrix

Definition & Calculation

• NWOG: The price gap between Friday’s market close at 4:59 PM EST and Sunday’s market open at 6:00 PM EST.

Management Rules

• Maintain a rotating 5-week display of NWOGs on a dedicated chart layout (NWOG Matrix).
• Use TradingView Object Tree / Layer settings to keep past gaps organized by week/month and toggle visibility cleanly.

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4. New Day Opening Gap (NDOG) & First Presented FVG Matrix

First Presented Fair Value Gap

• Defined as the very first Fair Value Gap that forms after the 9:30 AM EST equity market open.
• Tracks initial institutional displacement and establishes intraday directional bias.

Matrix Separation

• Keep NDOGs and First Presented FVGs on a separate layout tab if chart density becomes cumbersome.

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

Calculation

• Toggle chart settings to Regular Trading Hours (RTH).
• Anchor Points: Measure the gap between the previous trading day's RTH close (4:14 PM EST) and the current day's RTH open (9:30 AM EST).

Nested PD Arrays & "Shadows"

• Nested Gaps: When multiple RTH gaps overlap during market consolidation, focus on the widest gap as the master reference.
• Shadows: The specific region where two distinct RTH opening range gaps overlap (bleed-over area).
  • Overlapping RTH gap bounds create high-probability order block support/resistance levels without needing traditional trendlines.

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6. Student Execution & Regimen Guidelines

Rules for New Students

1. NFP Week Rule: During Non-Farm Payroll (NFP) week, new traders should stop active trading by Wednesday at 11:00 AM EST.
2. Process over Action: Avoid "action-hound" trading in consolidation or post-objective environments.
3. Daily Routine:
   • Maintain clean HTF levels (Monthly/Weekly/Daily).
   • Log key PD arrays and gap matrices in your notepad/journal.
   • Clean up intraday chart scribbles after each trading session to maintain fresh technical focus.