FVG Entry: 2022 Model Retracement

1. The Entry Point: The Displacement-Created FVG

Let's recap the sequence so far:

1. Price raids a significant liquidity pool (e.g., a previous day's high).
2. It then reverses direction and breaks a recent swing point with displacement (the MSS).

This aggressive displacement move is the signature of institutional intent. It is so one-sided that it leaves behind inefficiencies in the market. As you learned in Module 6, the most important of these is the Fair Value Gap (FVG). This FVG, born from the displacement that confirmed our MSS, becomes our high-probability point of interest (POI) for trade entry.

The core idea is simple: we wait for the market to retrace back into this FVG to "rebalance" the price action before continuing in the new direction. This retracement is our opportunity to join the move.

2. Refining the Entry Zone: The Role of Premium & Discount

While the FVG tells us where to look for an entry, the concepts of Premium and Discount (from Module 4) tell us which FVGs are valid. This is a critical filter that significantly increases the probability of success.

• For a short (sell) trade, we only want to enter if the FVG is located in a Premium market (above the 50% equilibrium level of the displacement move). Selling at a high price is a better deal.
• For a long (buy) trade, we only want to enter if the FVG is located in a Discount market (below the 50% equilibrium level of the displacement move). Buying at a low price is a better deal.

To determine this, we use the Fibonacci tool, drawing it from the start to the end of the displacement leg that caused the Market Structure Shift.

The following resource provides a clear, step-by-step guide for both bullish and bearish setups, emphasizing this exact point.

3. Execution: Entry, Stop Loss, and Take Profit

Once you've identified a valid FVG in the correct Premium/Discount zone, it's time to execute the trade. This involves three components:

1. Entry: The most common method is to place a limit order at the edge of the FVG closest to the current price. For a more precise entry, some traders aim for the FVG's Consequent Encroachment (the 50% level of the gap), but entering at the beginning of the FVG ensures you don't miss the trade if the retracement is shallow.

2. Stop Loss: Your stop loss must be placed at a logical structural point that invalidates the trade idea.

   • For a buy trade, the stop loss goes below the swing low that performed the liquidity sweep.
   • For a sell trade, the stop loss goes above the swing high that performed the liquidity sweep.
     Placing it anywhere else (e.g., just below the FVG) exposes you to being stopped out by a deeper retracement before the real move begins.

3. Take Profit: Your target should be a significant, opposing liquidity pool. This is the "draw on liquidity" that is pulling price in the first place.

   • After a buy entry, you would target a clear buy-side liquidity pool (e.g., an old high).
   • After a sell entry, you would target a clear sell-side liquidity pool (e.g., an old low).

The following images provide a perfect visual summary of these rules for both buy and sell models.

4. Video Walkthroughs

Reading about a model is one thing; seeing it applied on a chart is another. The following video demonstrates the complete process, from identifying the liquidity grab to executing the entry within the FVG, for both long and short trades.

For another perspective and reinforcement of these rules, this next video also provides a great explanation.

Conclusion

You have now learned the complete sequence for executing a trade using the foundational ICT 2022 Mentorship Model. By waiting for price to retrace into a displacement-created Fair Value Gap, you are entering on a pullback in alignment with the newly established institutional order flow. This method provides a clear, rule-based framework for high-probability trading.

Key Takeaways:

• The entry point for the 2022 Model is the Fair Value Gap (FVG) created by the displacement move that caused the Market Structure Shift.
• The entry must be contextualized using Premium and Discount. You only buy from an FVG in a discount zone and sell from an FVG in a premium zone.
• Stop Loss is placed logically beyond the swing point that swept the initial liquidity, protecting you from deeper retracements.
• Take Profit is targeted at opposing liquidity pools, which provides a logical objective for the trade.
• The full sequence is: HTF Sweep -> LTF MSS with Displacement -> Retracement to FVG in Premium/Discount -> Execute Trade.

Preview of the Next Lesson:

Now that you have mastered the foundational 2022 Model, we will explore a more specific, time-based variation. In the next lesson, we will define the characteristics and time windows for the 'Silver Bullet' strategy, which applies these same principles within very specific one-hour windows during the New York session for short-term opportunities.