Understanding Institutional Market Structure and Liquidity Rebalancing

Understanding market structure as more than just support and resistance is crucial for successful trading, emphasizing liquidity and imbalance to predict market movements.

### Understanding ICT's Institutional Market Structure for Trading
* 📉 ICT criticizes a YouTube trader for relying on the **replay function and market structure**, emphasizing the importance of **understanding the underlying narrative of the market**.
* 📚 Initially, ICT started teaching **basic market structure ideas** from Larry Williams on BabyPips in **2010**.
* 💧 ICT distinguishes between classic market structure and institutional market structure, where the latter focuses on **liquidity and imbalances**.
* 🏦 According to ICT, institutional traders view the market as **reaching for liquidity** (e.g., stop orders) and **rebalancing imbalances**.
* 📈 ICT's approach involves identifying areas where the market is likely to go to **gather liquidity or rebalance**.
* 🔮 By understanding the present narrative of the market, traders can gain a **deeper insight into price movements**.
* ❌ ICT challenges the notion that market structure is a **one-size-fits-all solution** and highlights the need to complement classic market structure with an **institutional perspective**.
* 🎯 Ultimately, ICT's trading strategy revolves around **anticipating where the market is headed** based on liquidity and imbalance areas, while considering the **current market narrative**.

all right folks, welcome back. A little bit of an impromptu, off-the-cuff video from good old ICT. All right, so what brought me on YouTube today? Well, yesterday I had a whole lot of fun exposing another YouTube fraud, and I'm sure you all probably caught wind of that. And I let a little bit of my colorful language come out. I'm human, I'm not perfect, but sometimes things need to be said in no uncertain terms. So carrying on along with that theme and keeping this circus alive, I got sent by seven or eight of you this fellow. Now, you've probably heard me say things in the past on this YouTube channel where I'm comparing, contrasting, where I'll show you entries, I'll show you the management of the position, albeit in demo or paper trade on TradingView, but I'm not using the replay function. This young man seems to be fond of the replay button or these types of things here in his charts or overlays, and that's not trading, that's not executing, it's not managing anything.

that's not even pushing any button. It's just marking up, and that's it. And while that's okay, and I don't have a problem with that per se, I do have a problem with that. This right here, okay, because everyone knows who that's directed to, namely me. So you can see a lot of the stuff here. There's an influence that I've had on this guy, and while I don't trade like he's doing, you can see the influence I had on him. Market structure is not all there is. Okay, I'm going to give you a little bit of a lesson today, and this is something I wouldn't really prefer to keep for my mentorship, but I really feel generous today, so I'm going to take you over to the chart, and this is the British pound. Okay, now I'm going to start talking about things in hindsight here, but I'm also at the end of this. I'm going to take you right into yesterday's mentorship video, and you'll actually see and hear me say what I told my group.

almost 18 hours ago. Oh, let's see. When was it posted? Yeah, 17 hours ago. So, and the time right now is noon, East Coast time. You can see it down here. So, everything I'm saying and what I'm going to show you at the end of the video. I was on the hard right edge of the chart. And before it even did what I'm going to explain to you here, I already seen what it was going to do. So, I was able to forecast it. Let's say it that way. Okay. So, this idea of market structure being just structure, that's not at all what the markets rely on. There is an underlying narrative that needs to be understood. Otherwise, if you don't understand what the present narrative is, what is the market following? What premise is it under? And market structure is not the be-all and end-all. It's not the panacea. It's not the answer to everything. Now, it does provide framework. I'm not gonna deny that. Okay. And in fact, that's how I started teaching on BabyPips back in 2010. I started with

very basic rudimentary ideas about market structure that I learned from Larry Williams. I later on learned years after my introduction to Larry Williams' idea of market structure, which is nowadays prevalent everybody's rip-off course. The idea of market structure, okay, and when there's a market structure break or when there's a shift in market structure, there's two distinctions there, okay, not everything is equal when it comes to market structure. There's classic market structure and then there is institutional market structure, and I'm going to tell you and teach you exactly the difference between those two, okay. The young man that runs this, I don't have an Instagram, otherwise I would have reached out and commented on here, and I'm not going to create Instagram yet because I'm going to be creating one in March of 2022. Once I get my Instagram back in operation in March, I'm going to tag a couple people, and then I'll let you know what that account is because I want them to be tagged. Otherwise, if they know what

instagram. I have they'll just block me, and it'll be just, you know, falling on deaf ears. But at least everybody will see it. It'll be there, and then we can let the games begin. Now with all that out of the way, let's get down to the nitty-gritty here. We're looking at the British pounds, the daily chart, and I want you to think about how the ideas of support and resistance are again prevalent in retail and the young man that operates that Instagram is pretty much a support and resistance kind of guy. And while that's fine, and support resistance can work, now listen, it can work if you are in alignment with the present narrative. Now what is narrative and what's the difference between narrative and market structure? Well, if you look at price action like this, okay, market structure in its classic sense. Well, if you look at this high here, this high being broken there, and if it comes back down in that's a classic resistance broken turn support. I don't subscribe to that. I don't subscribe to that at all. Now I

did in the beginning when I first started in 1992, I felt that that was the answer. It's not. Now, there are times when the market will react the levels like that, especially if it's a higher time frame like a weekly or daily level. There's going to be some sensitivity there, but there isn't always going to be that higher time frame level to key off of. So, you're going to have to use smaller time frames; otherwise, you'll just sit on your hands a lot throughout the year and have very little trading. And I guess that's not a problem if you're predisposed to having a long-term perspective and analysis, but most traders today want to be in their either short-term trading or scalping day trading, that type of thing, because it's the fast money game everybody wants to be a part of. And maybe I'm guilty of, you know, helping that movement, but that only matches my personal personality really. If it doesn't match yours, then obviously it's not a good thing for you to do.

but what is being shown here in this chart? We have old high here. Notice the candles close here and then open here, so we have this wick and we have this wick right there. Same thing here, small little wicks above it. When I'm looking at price, I'm looking at how the market reaches back into areas of liquidity. And most people will say, Well, yeah, there's buy stops above this high, there's sell slots below that low, there's sell slots below that low, buy stops above this high. And sometimes that's true, and other times it's not. I want you to think about price like this. Okay, I'm going to go into your settings on trading view, go to settings and go up to wicks and toggle that box, take it off, and now you have this. When I'm looking at price, I'm looking at it initially with this perspective. I'm ignoring the wicks, I'm focusing on the bodies because that's the primary volume in each one of these individual candles. I'm not arguing that this candle didn't

trade higher okay during this interval on that day. Yes, the British pound versus U.S. dollar did in fact trade higher. I'm not referring to it after it's closed and moved away from it in the same sense. Now there are times and there are things I'm looking for when I'm considering the wick, but right now I'm teaching market structure, okay, and this is institutional market structure. That means your perception of price being support and resistance is not the same thing as the interbank. Those traders are not looking at the market through the lens of support and resistance. They're looking at it from two unique perspectives: liquidity and imbalance, that's it. Now above these candles bodies, there's going to be buy-side liquidity, that means buy stops, anyone that's been short has a buy stop right there. Now you might be thinking, who would have a stop when it's trading over here, large funds, or folks that hold a position long term, there's a lot of businesses that hold currency because they're waiting to do future transactions, so liquidity above here.

may not necessarily line up with the commerce end of the forex, but there's going to be a large fund; some entity will have a stop here or a buying interest above that high. Long-term trend models will look to buy above that. So when the market trades up there, notice what it's doing. The bodies go just above that old area where the bodies were here. It does not go above where those wicks were. It doesn't need to. The institutional perspective I'm showing you here is the market's reaching for that liquidity just in the same way it did in a reverse. These bodies here, the market dropped down below that to accumulate all the sell-side liquidity there, and then it rallies above to take the buy-side liquid here, and then ultimately there. Now that's reaching for liquidity. That's institutional market structure 101. Institutional market structure 201. Okay, the next level is imbalance. Now I want to go back to using the wicks for this. All right, so now we had this price run right there, and it goes above these candles.

close or the body of it. So we have a first run into that area and it attacks that liquidity when it creates this price run. What is it created in this particular candle? It's created an imbalance. What's in balance? It's moved one-sided. It covered a lot of ground and it is one single large candle on the daily chart. So when this next candle here closes, we know that there is an area between this candle's low and this candle's opening that is primarily all one-sidedness. It's all buying. Now, if we look at this and frame in such a way where this begins the imbalance and this ends it, well, if we start to trade down into that like we did on Wednesday, the likelihood is that we're probably going to trade down into this candle's high to rebalance. And I don't need it to trade back to this particular candle. Now I'm going to put it in for contrast. There you go. So it does trade to it, and that's fine, but I'm not looking at it.

that way, I'm looking at it from an institutional market structure. This needs to be rebalanced. If it's going lower, it's going to rebalance there. It just happens to have this old high back here, which would be classic market structure where it retrades back to resistance, broken turn support. That's fine and great. I don't subscribe to that. What I'm looking at is the importance of this candle's high. Now, back on BabyPips in 2010, I taught everyone to look at the daily highs and lows, and if you were to study those, you would start seeing these things as I teach it. Most students really drew no parallel to what I do in teaching and mentorship and even on this YouTube channel to those early days when I used to prompt everyone, Look at the last three days' high and low and look at the open and the closing price, because if you would have been studying that, you would have found the early observations that I had in 1992. So if you look at what's going

on here, we're going to take this whole framework and drop down into an hourly chart. All right, so here's the hourly chart on the British pound. Now, if you're looking at this time frame, once we traded lower on this candle, when I see stuff like this and it comes right back up, I immediately disregard that wick. I don't care about it because it's running liquidity. What's it running? All the stops below these relative equal lows. When that does that and starts to trade down again, once we cross below it, that to me is a level that is not significant at all. It's insignificant, so it's irrelevant to me, and I block it out of my mind. So, it would be the same as what I toggled off the wicks. I'm not going to do that here because I'm going to show you the importance of having those wicks now with what I'm teaching, but I disregard it. I pay no attention to it, okay? The reason why is because this was a stop run, and we went through

it anyway, so I don't look at this low as a return back to that low because it's support broken turn resistance because you'll see here it never trades back to it, and this is the fallacy that classic support resistance or classic market structure denies you access to what I'm going to show you here. Now I talked about how the market reaches for liquidity, and I talked about how the market reaches for rebalancing imbalances. That's the institutional mindset. The key is understanding what the present narrative is. So, is the market going down to rebalance, or is it going down to tag sell stops? It's doing one or the other. That's it. That's why the market's dropping. It's not because there's more sellers than buyers. It's not an absence of buyers. It's not selling pressure. It's the market going down to rebalance and/or going down for sell-side liquidity or sell stops. The market doesn't care if you're in the position or not. It doesn't care if ICT is in the

position or not, it's going to where the orders are going to be residing. If it is not going down to get cell stops, it's going to drop to go to a level to rebalance it. What is that? Well, once we broke this low here, what market structure from a classic perspective do you have to lean on except for this little area here? You have this stuff back up here. So what if it doesn't go up there? Do you miss this trade, apparently so, but I don't miss those types of trades. I don't miss those opportunities because I understand the institutional mindset behind market structure. So let's go into a greater detail. This swing low here, what do you think was resting right below that cell stops? The market has rallied trailing stop losses could be positioned right there. We also have that same thing I described on the daily chart with that big candle, a big bullish candle that's occurring right here. The same thing but this is now a one-hour candle. So there's an imbalance from this

high to this low, it's all buying. So in this area, we have two things that the market from up here. Once it breaks down, where is it likely to reach for? Well, there's an imbalance down here that may want to rebalance and cover over top of this up-close candle. The market will likely deliver a down candle into that range. Okay, it's also conveniently enough a south side liquidity pool where there is cell stops resting right below that pooling. They're converging, they're overlapping. Everybody has their same cell stop just below that low if they haven't already trailed it up here and been stopped out. It's resting right below there. A lot of trending models on a fund level may be using this level for a stop. I'm not trying to make the case I know who it is this has a stop there. It's irrelevant but my eye has been trained to look for these swing lows, look for areas of imbalance and under the pretense that there is a narrative underway that this market's likely to go down.

because we've left this consolidation, we've done so in decidingly sharp price decline, and now we have the opposite of this candle here. And the opposite of the daily candle I showed you was in balance, we have that here with this down-close candle. So when you see things like this: order blocks, market maker liquidity zones, I don't know what liquidity zone is, but liquidity London breakout, I don't do those, but kill zones, voids, yeah, that's speaking from ignorance, and this imbalance, the market trades right back up into that imbalance, then trades down. It does not go back to your classic support resistance idea, it doesn't go back to any other market structure idea, there's no turning point that it comes back up to. So why did it just stop right there and go down and go right into that level right there and below that low. Now some of you are sitting here thinking, yeah, this is easy for him to talk about this in hindsight, it's easy for him to say all this stuff now because it's already in the chart.

everybody's a genius in hindsight, that I admit early on. When you're learning anything, you have to learn from a hindsight perspective. But I want to take you into what I showed last night after I drop into the 15-minute time frame. But remember this little area for in balance. We're gonna drop into a 15-minute. All right, here's the 15-minute time frame and the price drives up into again one single candle. That's an imbalance. It's all selling, so the market's wanting to go back up to that level to rebalance. This what is rebalancing actually referring to? Well, when the market delivers price and it's dropping to be efficiently delivered and offered equally as it passed through that range of price, it will likely want to go back up in there because it gives the opportunity for anyone that wants to buy in this area, okay, in that range. Buyers may not want to buy at a higher price or at a lower price because they have a fixed interest in a specific price range because they may

be buying a currency or only willing to buy a currency at a specific price to do a transaction with another corporate entity. This is the part of the business that none of you really understand because you think it's just support resistance, or you think it's, you know, order blocks, or market structure. It's not just that stuff. You have to have an underlying narrative understood and what the market's likely to do. Then you'll have a greater understanding, and then you can balance and complement classic market structure. And now what I'm teaching you here, institutional market structure. So what's occurring here? The market's going right back up to rebalance all of the selling in here. Trades up into it, doesn't get into that old low, notice that, but then turns there, drops down, breaks these lows, comes right back up in last up closed candle. What is that? That's what I teach here on this YouTube channel. That's your bearish order block. Why is it a bearish order block? Because number one, it's acting inside the narrative where it

creates a high. It broke lower. We ran salsa. Liquidity came right back up into this level here. If I put a short-term overbought oversold indicator, this area is going to be overbought. I don't need to see that. I know it's overbought because from this high and this low, watch here. I'll show you from this high down to this low right there. If that's a range or dealing range that work in present study of if you're watching it live from this high down to that low when it was trading right there, how much has it covered from the high to the low? A large percentage of it, right about 80 percent of it. Now I'm eyeballing that. I'm not going to put the fib on. I felt inclined to do so, but I'll leave it to you to do it. That's about 80 if not more of a percentage from this low to high. It's retraced all that and it went right above this short-term high. What is it doing? It's going after the

buy stops so the market's only going up from this low up to that high to take out the buy stops. Then it drops hard and does it drop just to some random level? No, that's that level that I showed you perfectly. So when you see stuff like this joker that's coming from a stance of ignorance. There is no umbrella statement that market structure answers everything. Structure is not structure. There's two different forms of market structure: the classic retail perspective that Larry Williams has really made popular and what I have taught early on and then what I understood later on after that, which is how the markets really book it runs for liquidity or it runs to rebalance. That's it. It doesn't matter what your pattern or my pattern says. It doesn't matter what theology says about that particular market, okay? It doesn't matter what the fundamentals are, okay? It doesn't matter the opinion of CNBC's anchors. It doesn't matter what anybody says. It matters what the narrative is right now. Is it going lower?

to go down for stops, or to rebalance. If that's not true, then it's going to consolidate or go higher. If you can't discern whether or not it's going to consolidate or go higher, then it's likely to keep going lower. So, what is it going to reach for liquidity, which is sell-side liquidity or sell stops, or it's going down to an area to overlap an area where one single candle stands by itself, and that imbalance will be the draw on liquidity. Okay, so let's go over to the video, and I'll close this one. You can hear me actually talk about this whole business here and going down the den levels 18 hours ago, almost now. Daily chart, British Pound again, disregard this wick here. So, we have two areas of liquidity here and here. And finally, on the cable 15-minute timeframe, a lot of distortion when you have these wicks in here. So just kind of imagine that this is not there, and we have a little imbalance there. We can see it trade up into that, but it

could really just reach in here too. I like that better than just touching that because that would be hitting this level but leaving the gap entirely open. I like that. I like the idea coming up to it, just getting above this candle's high and rolling over and getting that.

Market Structure Is Not It

I am the Mentor of your Mentor.

I am "The Ghost In The Machine".

The Author & Creator of "Smart Money Concepts" and what many erroneously call Wyckoff Theory.

There is absolutely nothing like what you are going to learn from me on this channel.

I am often imitated, many have renamed my life's work... but you will see the Source of most things being marketed today as "Bank Trading", "SMC", "Interbank Trading"... and Price Action trading... sprouted right from the lectures and teachings I Authored.

There is no Mentor who taught me these concepts.  There is no "competitor" who can match these concepts.

I have freely shared my Private Mentorship Core Content lectures to prevent frauds from reselling them and now you can see how many have plagiarized my concepts, and some have foolishly pretended to have created them themselves.  

Procure yourself some note taking instruments... roll up your sleeves... & discover how little you really knew until now.

Enjoy,
Michael J. Huddleston




The Inner Circle Trader

Exposing a YouTube Trader and Discussing Market Structure

An experienced trader criticizes a YouTuber for relying on replay functions in his charts and overlays, emphasizing the importance of understanding the underlying narrative in the market.

The experienced trader plans to teach about the difference between classic market structure and institutional market structure on his Instagram, which will be active in March 2022.

Understanding Market Structure and Liquidity in Trading

The concept of support and resistance in trading is discussed in relation to market structure and narrative.

The speaker emphasizes the importance of considering liquidity and imbalance in institutional market structure analysis, rather than just focusing on support and resistance.

The role of buy-side liquidity and the perspective of interbank traders are highlighted in understanding market dynamics.

Understanding Institutional Market Structure

The market reaches for liquidity by moving beyond previous price levels to trigger stop orders or buying interest.

Imbalance is created when the market makes a one-sided move, leading to a need for rebalancing in the opposite direction.

Daily highs and lows play a crucial role in understanding these market dynamics and can be applied to lower timeframes, such as the hourly chart, to identify significant levels.

Interpreting Market Movements and Institutional Mindset

The market moves based on liquidity and rebalancing of imbalances, rather than the classic idea of support and resistance.

It is driven by the institutional mindset to reach for liquidity and stop levels.

The focus is on understanding the present narrative of the market's movement, rather than relying on traditional market structure concepts.

Understanding Market Rebalancing in Trading

Market rebalancing in trading is the process of the market returning to a specific price level to allow for more balanced buying and selling opportunities.

It involves a deeper understanding of the underlying narrative of the market, going beyond just support resistance and market structure.

The concept also encompasses the idea of efficiently delivering and offering prices, as well as identifying overbought and oversold conditions.

Interpreting Market Structure and Movement

The market's direction is determined by the movement of buy stops and the need to rebalance liquidity.

Market structure is viewed from two perspectives: the classic retail viewpoint and the liquidity/rebalancing perspective.

The narrative of the market at the current moment is what truly matters in predicting its direction, regardless of patterns, theology, or fundamentals.