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ICT Mentorship Core Content - Month 08 - Essentials To ICT Daytrading
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ICT Mentorship Core Content - Month 08 - Essentials To ICT Daytrading

Introduction to ICT Day Trading Model

Overview of the Lesson

  • The session introduces April 2017's content for the ICT mentorship, focusing on the essentials of day trading.
  • The aim is to capitalize on daily market movements, highlighting that day trading is often viewed skeptically by analysts and technical experts.

Understanding Day Trading

  • Day trading does not equate to everyday trading; not all days are suitable for this strategy.
  • On average, there are two setups per trading day, which will be discussed in detail throughout the month.

Daily Range and Expectations

Capitalizing on Daily Movements

  • Traders should aim to capture 65% to 70% of the daily range while leaving some potential profit near the day's high or low.
  • The expected daily range is based on averaging the last five days' price movements.

Adjusting Expectations

  • There may be instances where the average daily range can double or exceed expectations within a single day.

Directional Bias and Trade Setups

Importance of Directional Plays

  • A significant portion of successful day trades relies on having a directional bias aligned with institutional order flow.
  • Higher time frame insights can enhance trade setups, increasing profitability odds.

Risk Management Strategies

  • Day trades allow traders to limit stop losses effectively, reducing initial risk compared to longer-term positions.

Integrating Day Trading with Other Strategies

Broader Application of Techniques

  • Even if one doesn't want to focus solely on day trading, understanding its principles can help reduce risk in other trading styles.

Combining Entry Techniques

  • Incorporating entry techniques from day trading into higher time frame strategies can yield significantly better risk-reward ratios.

Key Takeaways for Successful Day Trading

Focused Approach Required

  • It's crucial not to overtrade; typically only two primary setups exist in a single day.

Realistic Profit Expectations

  • Capturing even a small portion of the daily range (e.g., 30 Pips out of an average 120 Pips range) is considered successful and preferable over attempting too many trades.

Continuous Improvement

Understanding Day Trading Dynamics

The Impact of FOMC and Non-Farm Payroll Days

  • Day trades on FOMC and non-farm payroll days often lead to no setups, suggesting traders should remain on the sidelines.
  • Participating in these days does not significantly increase odds for success in day trading; sometimes it's better to observe rather than engage.

Analyzing Daily Setups

  • Higher time frame institutional order flow is crucial, focusing on monthly, weekly, and daily PD arrays from the last 20, 40, and 60 trading days.
  • A solid understanding of PD arrays is assumed; primarily focus on daily setups for effective day trading without needing weekly or monthly insights.

Interbank Price Delivery Algorithm (IPTA)

  • IPTA aims to find new liquidity levels by moving prices accordingly; understanding current candle direction is essential.
  • Forecasting involves predicting whether IPTA will target higher or lower prices based on existing market conditions and PD arrays.

Timing Considerations in Day Trading

  • The day of the week influences trading outcomes; some days have higher probabilities for successful trades while others may be unpredictable.
  • Time of day is critical; specific times yield better opportunities for profitable trades rather than random engagement throughout the day.

Key Trading Windows

  • Flexibility with time is necessary as certain hours are more conducive to price movements driven by market makers.
  • Focused trading sessions include the London session open (ICT kill zone), typically between 2 AM - 4 AM New York time.

News Impact and Session Insights

  • The London session's hot spot aligns with economic calendar events that can manipulate price just before news releases.

Understanding Trading Sessions and Strategies

The Importance of Time Frames in Trading

  • Understanding the fractal nature of trading ranges is crucial, as daily ranges are formed within weekly ranges, which in turn are part of monthly ranges.
  • Traders should be aware of when to avoid the London session; New York sessions are generally more favorable unless London has already completed a significant portion of its average daily range.
  • If 80% or more of the average daily range is achieved during the London session, it’s advisable to refrain from trading during New York due to potential market stagnation or unexpected reversals.

Strategies for London Close Trading

  • The London close strategy focuses on capitalizing on market positions at specific times rather than merely closing trades; it can serve as an entry point for longer-term trades.
  • Key moments occur around 2 PM and 3 PM New York time, particularly with FOMC interest rate announcements that can influence market behavior significantly.

Asian Session Dynamics

  • The Asian session opens around 8 PM New York time and often presents small setups; traders should be alert for potential highs or lows forming unexpectedly during this period.
  • During the overlap between Australian and Asian sessions, significant price movements can occur, especially with pairs like Yen, Aussie, and Kiwi.

Market Behavior During Lunch Hours

  • The London lunch hour (5 AM - 7 AM NY time) typically sees reduced activity; traders should anticipate either retracement or consolidation during this period.
  • It’s wise to secure profits before the lunch hour begins since reversals may happen due to economic reports released around that time.

Weekly Trading Characteristics

  • Sundays usually present limited trading opportunities due to small daily ranges; however, understanding Sunday data is essential for those using Sunday candles in their analysis.

Trading Strategies for Weekly Ranges

Understanding Monday's Trading Dynamics

  • If Monday experiences a significant range and trades into a premium relative to the daily chart, it may indicate the high of the week.
  • Conversely, if Monday has a large range day and trades down into a discount on the daily chart, it could signal that Monday will be the lowest low of the week.

The Importance of Tuesdays in Trading

  • On bullish weeks, Tuesday has a 77% likelihood of creating the low of the week during London trading hours, making it an ideal day for day trading.
  • In bearish markets, there is about a 70% chance that Tuesday's limit open will create the week's high.

Midweek Trading Insights: Wednesdays and Thursdays

  • Wednesdays are generally favorable for trading as they provide insights from previous days (Sunday through Tuesday), aiding decision-making.
  • Thursdays can also present good trading opportunities but require caution due to potential reversals; often, Thursday’s New York session caps weekly ranges.

Friday's Market Behavior

  • Fridays typically see smaller ranges as traders close out positions for the week. However, if objectives remain unmet by Thursday regarding PD arrays, unexpected volatility may occur.

Establishing Weekly Range Framework

  • The new trading week's opening price is determined on Sunday; this aids intra-week directional buys. If Sunday candles aren't available, using Monday's opening is acceptable.
  • The weekly range framework involves drawing out Sunday’s opening price on hourly charts until Thursday to identify potential reversal points.

Reversal Signals and Trade Planning

  • A trade above Sunday’s opening price on Thursday indicates an intra-week reversal which can lead to bullish setups in subsequent weeks.
  • If prices trade below Sunday’s opening after being bullish earlier in the week, this signals a potential bearish trend moving forward into Friday or next week.

Price Action Considerations Throughout the Week

Bearish Trading Strategies and Weekly Candle Analysis

Understanding Bearish Market Conditions

  • The focus is on bearish trading ideas, anticipating that the weekly candle will close lower than it opened on Sunday. This applies whether the data provider opens on Sunday or Monday.
  • Short selling is encouraged daily in London and continued in New York as long as prices remain below the Sunday opening price, with caution advised when approaching higher time frame discount PD arrays.

Trading Dynamics Based on Price Levels

  • When trading below the Sunday opening price during a bullish weekly bias, traders should look for price movements early in the week to identify potential reversals.
  • Institutional order flow suggests higher prices if trading at a discount PD array; thus, if conditions are met, traders forecast a bullish weekly candle closing above its opening.

Weekly Candle Patterns and Range Expansion

  • Traders aim to buy long throughout the week if prices stay above Sunday's opening price, focusing on low formations in London and continuations into New York.
  • Analyzing historical data from GBP/USD over three weeks helps illustrate these strategies and their effectiveness.

Key Insights from Weekly Charts

  • Each weekly range represents comprehensive market data (open, high, low, close), emphasizing large candles with opposing open/close positions for effective range expansion anticipation.
  • Recognizing that new setups form every week allows traders to capitalize on opportunities without fear of missing out due to fluctuating market conditions.

Practical Considerations for Day Trading

  • Not every week will yield profits; understanding this reality is crucial for maintaining realistic expectations while using established criteria for identifying opportunities.

Understanding Market Dynamics: Trading Strategies and Price Action

Analyzing the Asian Session and Weekly Trends

  • Traders should monitor the range of the Asian session on Mondays, particularly from Sunday’s opening to Frankfurt's setup. A significant range indicates potential for forming weekly highs or lows.
  • Observing daily charts can reveal alignment with premium or discount arrays, providing insights into expected market movements for the week.
  • The focus should be on shorts if prices remain below Sunday’s opening price, establishing a clear trading filter for decision-making.

Importance of Contextual Analysis

  • It is crucial not to make hasty decisions based solely on general trends; specific market conditions must be analyzed before executing trades.
  • The discussion introduces three case studies using the daily chart of the pound, highlighting how premium PD arrays and old low discount PD arrays influence trading strategies.

Case Study Insights: Daily Rejection Blocks

  • The first example illustrates a daily rejection block where prices traded above Sunday’s opening but began to decline immediately on Monday.
  • Following a sell-off after transitioning from Monday to Tuesday, prices consolidated until Wednesday's London open, indicating market indecision.
  • Prices found support at a fair value gap during Tuesday and Wednesday before rallying again, demonstrating how gaps can act as critical support levels.

Trading Objectives Based on Market Conditions

  • On Friday, traders anticipated selling opportunities below Sunday’s opening price due to price action within a premium PD array context.
  • Specific short objectives were set at 12420, 123.75, and 123.10; however, only some targets were reached during the week.

Contrarian Approaches in Trading Scenarios

  • The second scenario presents another daily rejection block alongside a bullish order block that complicates straightforward selling strategies when below Sunday’s opening price.
  • Despite being under this threshold early in the week, traders must recognize when prices hit discount areas that may provide unexpected support instead of continuing downward pressure.

Adjusting Strategies Based on Market Behavior

  • When encountering discount PD arrays while still below Sunday's opening price, it signals potential reversals rather than continued selling opportunities.
  • This necessitates shifting focus from initial expectations based solely on opening prices to broader weekly profiles and patterns observed throughout the week.

Understanding Price Dynamics and PD Arrays in Trading

The Role of PD Arrays in Price Movement

  • Discussion on how price behavior is analyzed using historical data (20, 40, and 60 days) to understand the Premium/Discount (PD) array matrix.
  • Explanation of how price trades down into a bullish order block within a fair value gap, indicating resistance to further decline despite potential sell setups.
  • Introduction of key concepts such as discount PD arrays and liquidity voids, highlighting their significance in predicting price movements.

Analyzing Weekly Trading Patterns

  • Description of trading patterns observed from Sunday’s opening price through the week, emphasizing expectations for higher weekly closes based on daily discounts.
  • Strategy outlined for day trading: looking for declines to buy during London and New York sessions while monitoring specific timeframes like CME openings.

Daily Trading Strategies Based on PD Arrays

  • Criteria established for identifying logical buying opportunities at discount PD arrays during lower time frames.
  • Insights into Friday's trading dynamics, noting that it can be quieter with ranges capped by previous Thursday's activity.

Integrating Opening Prices with PD Arrays

  • Analysis of how opening prices interact with premium and discount PD arrays to forecast weekly ranges effectively.
  • Emphasis on blending Sunday’s opening prices with daily chart analysis to determine whether to act as buyers or sellers throughout the week.

Building a Strong Foundation for Day Trading

  • Encouragement to study and label PD arrays on charts rather than relying solely on video content; understanding these elements is crucial for successful trading.
  • Importance of recognizing market conditions beyond just opening prices; traders should anticipate movements between different types of PD arrays.
Playlists: 2017 ICT Private Mentorship Core Content Month 08
Video description

2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in April 2017. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.