Understanding Market Cause, Structure, and Direction
📘 ARTICLE 1
This framework documents my ICC + Liquidity trading model, designed to trade with institutional intent, not prediction.
The goal is simple:
- Identify why price moves (liquidity)
- Confirm what price is doing (structure)
- Participate only when continuation is probable
This is not a high-frequency system.
It is a high-clarity decision framework.
1. ICC: The Market’s Natural Cycle
Markets move in a repeating sequence:
- Indication (Impulse) – aggressive participation
- Correction (Pullback) – rebalancing + inducement
- Continuation – expansion toward liquidity
Every trade must clearly fit one phase of this cycle.
If you cannot identify the phase → you do not trade.
2. Higher Timeframe Foundation (4H)
All bias and structure are defined on the 4H timeframe.
On your 4H chart, draw:
- Market structure highs and lows
- Last valid BOS with displacement
- Previous Day High / Low
- Previous Week High / Low
- Equal Highs / Equal Lows
📌 Visual rule:
If price is between major highs and lows with no clear objective → you are in no-man’s land.
3. Indication (Impulse) — What It Looks Like on Chart
Valid Indication (fig below):
- A candle that closes beyond structure
- Larger than recent candles
- Minimal opposing wick
- Clear separation from prior range
📉 Invalid example:
- Wick breaks high but closes inside
- Overlapping candles
- Choppy structure break
👉 If you cannot visually see “intent” immediately, it is not an impulse.
4. Correction — Where Traders Lose Patience
After indication, price must pull back.
On the chart:
- Draw Fibonacci from impulse low → high (bullish)
- Mark 50% equilibrium
- Highlight 61.8–78.6% discount zone
📌 Important:
Fibonacci is not a signal.
It only helps define cheap vs expensive.
5. Liquidity: The Cause of Expansion
Internal Liquidity (Inducement)
On the chart:
- Mark the last HL before the impulse
- Mark weak internal lows inside the range
These are often swept during correction to:
- Trap breakout traders
- Fuel continuation
External Liquidity (Objectives)
Mark clearly:
- PDH / PDL
- PWH / PWL
- EQH / EQL
- Major swing highs/lows
These are targets, not entries.
6. Value Filter (Critical Visual Rule)(Premium/Discount)
On the 4H chart:
- Draw a box from impulse low → high
- Mark equilibrium (50%)
📌 Rules:
- Bullish trades only below equilibrium
- Bearish trades only above equilibrium
MSS outside value = low probability, even if structure shifts.
7. MSS: Structure Alignment, Not Execution
Bullish MSS (Draw This Sequence):
- Price fails to make LL
- Breaks last LH with displacement
- Closes above that LH
📌 MSS tells you bias alignment, not entry timing.
Summary 📘 ARTICLE 1
- Liquidity explains why?
- Structure explains what?
- ICC explains how?
📘 ARTICLE 2
ICC + Liquidity Execution Model
Entries, Invalidation, and Trade Management
Correct bias does not guarantee profit.
Execution and invalidation rules do.
This article documents exact entry logic, with visuals you can recreate.
1. The Non-Negotiable Trade Sequence
On every chart, confirm this order:
Liquidity → Displacement → MSS → Pullback → Entry → Target
If this order breaks, the trade is invalid.
2. Primary Entry Model (Visual Walkthrough)
Chart Setup (Bullish Example)
- 4H bullish structure
- External liquidity above (PDH / EQH)
- Impulse breaks structure
- Price corrects into discount
- Internal liquidity is swept
- MSS occurs on lower timeframe
Entry Visualization
On the lower timeframe (M5–M15):
- Draw a box around the MSS break zone
- Wait for price to pull back into that box
- Enter on bullish confirmation candle
📍 Stop: below HL
🎯 Target: next external liquidity
This entry avoids:
- FOMO
- MSS fake-outs
- Late continuation entries
3. Continuation vs Reversal (Chart Difference)
Continuation Chart
- HTF trend intact
- Internal liquidity sweep
- MSS in discount
- Target = external liquidity
📊 Highest expectancy model
Reversal Chart
- External liquidity already taken
- Strong displacement against HTF trend
- MSS at extreme
- Target = equilibrium / internal liquidity
📉 Higher accuracy, lower R:R
📉 Smaller position size recommended
4. Invalidation Rules (Mark These on Chart)
Do NOT trade if:
- MSS happens before liquidity ( BE PATIENT )
- MSS occurs at mid-range, except it is within the BRS zone.
- BOS lacks displacement ( No Indication )
- Liquidity is taken after MSS ( May be used to continue correction, hence trend change )
Exit Immediately if:
- Strong opposing displacement appears
- HTF structure invalidates
- High-impact news causes abnormal expansion
Professionals exit early.
Retail traders hope.
5. Real-Time Execution Checklist (On Your Screen)
Before clicking buy/sell, ask:
- Where is price in the 4H range?
- Has liquidity been taken?
- Was there displacement? ( in the expected direction for the continuation )
- Did MSS occur in value? ( Premium and Discount )
- Has price pulled back?
- Is my target external liquidity?
If any answer is “no” → stand aside.
Expected Results (Reality-Based)
- Win rate: ~55–65%
- R:R: 1:2 to 1:4
- Fewer trades
- Controlled drawdown
- Long-term consistency
Final Words
This ICC + Liquidity framework is not about predicting tops or bottoms.
It is about waiting until institutions reveal intent, then entering at value.
Liquidity is the cause.
Structure is confirmation.
ICC is execution.
Anything else is noise.
ShoutOut to Trades by SCI