What is Rebalance? - ICT Concepts

Summary

In this enlightening video, the creator delves into the concept of rebalancing, particularly focusing on how a fair value gap can be rebalanced both before and after it is created. The explanation begins with scenarios where a fair value gap is closed after its inception, emphasizing how price action tends to reverse post-rebalancing. The video further explores situations where rebalancing occurs preemptively, preventing a fair value gap from forming in the first place. This concept is particularly significant on the daily chart and helps traders understand underlying market movements and avoid potential missteps. Overall, the video provides a concise understanding of the rebalancing process, catering to those eager to refine their trading skills.

Highlights

• Understanding how price rebalance occurs post fair value gap creation! 🏦
• Exploring preemptive rebalancing before a fair value gap is formed! 🕵️
• Daily charts are instrumental for observing preemptive rebalancing! 📊
• Learning rebalancing helps refine trading strategies and skills! 🔧
• Encourages viewers to suggest more concepts for future videos! 🚀

Key Takeaways

• Rebalance involves closing a fair value gap, influencing price action reversals! 🔄
• Two types of rebalancing: post-gap formation and pre-gap prevention! 🔍
• Daily charts offer a clearer perspective on preemptive rebalancing tactics! 🗓️
• Understanding rebalancing helps avoid trading missteps and refine skills! 📈
• Join the conversation by suggesting more topics for concise videos! 💬

Overview

Rebalance in trading refers to the process where a fair value gap, once formed on a price chart, is closed. This video intriguingly unpacks how rebalancing functions after a gap is created, causing either reversals or significant price actions. It shows practical examples where closing these gaps potentially signals a shift in market trends.

The content delves into a lesser-known aspect of rebalancing: its occurrence before a fair value gap forms. This preventive measure ensures that prices move smoothly without leaving gaps that could affect future price actions. The examples showcased effectively demonstrate how prior balancing can avert unnecessary market imbalances.

Moreover, rebalancing on daily charts offers a broader understanding of market moves. It aids traders in anticipating price movements, offering them more precise entry and exit points. Understanding such concepts forms a crucial part of advanced trading strategies, encouraging viewers to expand their knowledge horizons in market analysis.

Chapters

• 00:00 - 00:30: Introduction to Rebalancing Concepts The chapter provides an introduction to the basic concepts of rebalancing in financial contexts. It outlines two main points in time when fair value gaps can be rebalanced: before they are created and after they are created. The chapter focuses initially on the process after the fair value gap has been created, using examples to illustrate this point. The discussion aims to clarify these concepts for the reader.
• 00:30 - 01:00: Rebalancing After Fair Value Gap is Created This chapter explains the concept of rebalancing after a fair value gap is created. It describes how a rebalance occurs when the price comes down to close the fair value gap, leading to a situation where there is no longer an imbalance. This lack of imbalance may cause the price to reverse or present the possibility of reversal. The chapter also hints at an upcoming example to further elaborate on the topic.
• 01:00 - 01:30: Rebalancing Before Fair Value Gap is Created The chapter discusses the concept of rebalancing before a fair value gap is created in the context of candle charts. It notes that this is a common occurrence with most candles. Focus is given to a specific section of the chart with three candles at 10:40, 10:45, and 10:50. It explains that as the price moved quickly and the third candle opened, a fair value gap appeared. This gap would remain if the price continued moving upwards.
• 01:30 - 02:00: Detailed Example of Rebalancing The chapter 'Detailed Example of Rebalancing' explains the concept of rebalancing in trading, focusing on the daily chart. It illustrates how prices adjust to eliminate perceived fair value gaps before moving higher. This process ensures a balance in pricing, preventing the creation of unfair value scenarios, as exemplified by the analysis of two specific candles on the chart.
• 02:00 - 02:30: Conclusion and Viewer Interaction The chapter titled 'Conclusion and Viewer Interaction' wraps up the video by discussing the market movement where the candle opened, moved down to rebalance daily, and then moved higher. The host expresses hope that viewers found the video helpful and invites them to request more quick and concise videos on other concepts by leaving comments.

What is Rebalance? - ICT Concepts Transcription

• 00:00 - 00:30 [Music] how's it going everyone this video is going to be over rebalancing there are two ways a fair value gap is rebalanced one before it is created and one after it is created we will start with after it's created because it will make more sense and then we will go to the other examples so for example if we look at these fair value gaps here right we have one here one here
• 00:30 - 01:00 and so a rebalance of these would be when price comes down and closes the fair value gap you can see these were all rebalanced and one thing to notice is after you rebalance something there's not an imbalance there so price tends to reverse or has the possibility of reversing the next example we're going to go over
• 01:00 - 01:30 is when a fair value gap is rebalanced before it is created which is the majority of candles so let's zoom in here but if you look right here at these three candles this one at 10 40 10 45 10 50. you can see that when price moves it moved rather quickly through here and so when this candle the third candle opened right it opened right up here there was a fair value gap right if it would have continued up we
• 01:30 - 02:00 would have had a fair value up here but you can see before price moved higher it came down balanced this out made sure there was no fair value got created and then continued to move higher this kind of rebalance i more focus for on the daily chart for example if we're looking at these two candles here this is where it would have been rebalanced and you can see
• 02:00 - 02:30 this candle opened came down rebalanced the daily before moving higher i hope this video helped out if you have any other concepts you want a quick concise video on just leave them in the comments below thank you