ICT Forex - The ICT ATM Method

Introduction to the ICT ATM Method

Overview of the ICT ATM Method

• The session focuses on introducing the ICT ATM method, which is a standalone price action pattern used in trading.

• This method capitalizes on stop runs and can be easily identified on a 60-minute chart, making it accessible for traders.

Understanding Market Conditions

• The discussion includes how to apply the ATM method in both bearish and bullish market conditions, emphasizing target and stop placement.

• The speaker reflects on their early experiences with support and resistance levels, highlighting the confusion many new traders face regarding which levels to focus on.

Key Concepts of Trading Patterns

Identifying Key Highs and Lows

• Traders are encouraged to use a 60-minute chart to identify key highs that form short-term peaks before breaking down through swing lows.

• A valid pattern is established when price action creates a "check mark" formation by surpassing previous highs before retracing back.

Two-stage Moves

• The strength of this setup increases if it forms part of a two-stage move where an initial high is followed by another upward movement that eventually breaks down.

• Recognizing these patterns allows traders to classify real support and resistance based on market structure changes.

Execution of Trades Using the ATM Method

Entry Points and Risk Management

• When entering trades, it's crucial to frame potential profit targets based on swing lows while defining risk just above key highs or rejection points.

Understanding Price Action and Trade Setups

Analyzing Short-Term Highs and Lows

• The discussion begins with the importance of identifying entry points and stop-loss levels to protect overall trading positions.

• A specific price action scenario is described where a short-term high is violated, leading to a sell opportunity as the price trades below this level.

• The risk for this trade setup is defined at 65 pips, indicating a calculated approach to potential losses versus gains.

• Transitioning to a 15-minute timeframe allows for refining the trade setup, reducing the stop-loss from 65 pips to 20 pips while targeting a Fibonacci extension level.

Identifying Bullish Conditions

• A bullish condition example illustrates scanning price action on a 60-minute chart, focusing on key lows and swing highs that indicate potential upward movement.

• The concept of "violating" previous swing lows is emphasized as part of recognizing market trends and potential reversals.

• The analysis suggests waiting for price retracement back to broken swing highs before entering long positions.

Risk Management in Trading

• In an example of bullish conditions, traders are advised on setting buy stops above swing highs while maintaining stop-losses below recent lows for effective risk management.

• A detailed breakdown shows risking 140 pips to potentially gain 225 pips, highlighting the importance of reward-to-risk ratios in trading strategies.

Refining Trade Entries

• By zooming into a 15-minute timeframe, traders can adjust their strategy further by lowering stop-losses while aiming for the same profit target.

• This adjustment leads to an improved risk-to-reward ratio nearing three-to-one, demonstrating how timeframes affect trading decisions.

Optimal Trade Entry Techniques

• Moving down to a five-minute chart allows traders to refine entries even more; using optimal trade entry techniques can reduce stop-losses significantly while maintaining profit targets.

• The final strategy emphasizes finding key turning points in price action and utilizing liquidity runs effectively within established risk parameters.