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ICT Charter Price Action Model 12 - Scalping Intraday Model
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ICT Charter Price Action Model 12 - Scalping Intraday Model

ICT Mentorship Price Action Model #12: Scalping Strategy

Overview of the Scalping Model

  • Introduction to ICT mentorship price action model number 12, focusing on a scalping strategy aimed at achieving 20 pips per trade.
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  • The model utilizes daily range expansion, order blocks, and fair value gaps as key components for setup and execution.

Key Concepts in the Model

  • Emphasis on identifying the probable direction of the current daily bar or candle through order blocks and fair value gaps.
  • Valid order blocks are defined by their relationship with fair value gaps; however, some may not have an associated gap but can still be significant.

Order Blocks and Fair Value Gaps

  • Clarification that this model is not limited to scalping; it can be adapted for larger time frames to achieve greater pip gains.
  • Discussion on how to identify fair value gaps within price runs that are not necessarily close to an order block.

Practical Application: Euro Dollar Example

  • The example focuses on the euro dollar using a 5-minute chart to establish a bullish directional bias.
  • Identification of a down closed candle before a significant move, noting its lack of a fair value gap which may classify it as low probability.

Entry Patterns and Expansion Moves

  • Importance of waiting for confirmation from the order block before entering trades; looking for signs of expansion after retesting.
  • Explanation of how price reacts upon hitting an order block, leading to potential entry points based on subsequent expansion swings.

Conclusion: Understanding Market Dynamics

  • Distinction between high probability order blocks versus those without ideal setups; understanding market behavior is crucial for successful trading strategies.

Understanding Fair Value Gaps in Trading

Key Concepts of Price Action and Fair Value Gaps

  • The discussion begins with the importance of price dropping into a fair value gap, indicating potential trading opportunities. A small price range can lead to larger ranges, which is crucial for scalpers seeking volatility and directional impulse.
  • The speaker highlights the significance of order block expansion swings and fair value gap formations. They note that minor drawdowns (1-2 pips) are acceptable when targeting a 20 pip run, emphasizing the need to consider spreads.
  • An example involving Euro Dollar illustrates how price action behaves after hitting a low. The formation of an impulse swing suggests potential stop runs, but caution is advised as not all setups may be on the radar initially.

Identifying Order Blocks and Expansion Swings

  • The analysis continues with identifying order blocks where price drops before expanding upwards. This involves recognizing high probability order blocks alongside fair value gaps for bullish setups.
  • A model is introduced that provides entry patterns based on fair value gaps. Traders should aim for entries at or just below candle lows while factoring in spreads to achieve targeted expansions.

Strategies for Targeting Profits

  • The speaker advises against limiting profit targets strictly to 20 pips; instead, traders should look for additional models and liquidity runs beyond initial targets to maximize gains.
  • Emphasis is placed on not chasing prices but rather waiting for setups that provide clear entry points within fair value gaps, reinforcing the idea of patience in trading strategies.

Practical Examples: Guppy Analysis

  • Analyzing Pound Yen (Guppy), the speaker discusses how price interacts with order blocks and identifies key areas where traders might enter based on previous up-close candles forming bearish order blocks.
  • It’s important to assess whether price has reached equilibrium levels before considering trades. Fair value gaps must be evaluated carefully against market conditions to ensure effective entries.

Algorithmic Theory and Market Behavior

  • The discussion transitions into algorithmic theories relevant to trading strategies, stressing that certain conditions must occur sequentially for predictable outcomes in market behavior.
  • Understanding these theories enhances traders' ability to interpret price action logically rather than relying solely on guesswork, providing depth in market analysis.

Conclusion: Timing Entries Based on Broker Variability

  • Finally, it’s noted that how far into a fair value gap prices move can vary by broker due to differences in spreads. This variability necessitates strategic timing when entering trades at either end of a fair value gap.

Understanding Fair Value Gaps and Trading Strategies

The Concept of Fair Value Gaps

  • A bearish gap is identified as a potential entry point, emphasizing the importance of filling this gap for effective trading.
  • When trading fair value gaps, it’s crucial to manage risk by placing stops above the gap while being mentally prepared for price fluctuations.

Managing Fear in Trading

  • Traders may experience fear when prices fill gaps; it's essential to adhere to protocols and trust that stop-loss orders will function correctly.

Price Action and Order Blocks

  • Analyzing price action involves recognizing impulse swings followed by retracements into order blocks, which signal potential expansion moves.
  • Waiting for fair value gaps to form before entering trades can lead to more strategic short entries based on candle highs.

Scalability of Trading Models

  • The discussed models are scalable across various time frames, from 15-minute charts to daily charts, allowing flexibility in trading strategies.
  • These patterns are not limited to day trading; they can also be applied in longer-term positions.

Enhancing Probability with Institutional Order Flow

  • Higher probability setups occur within institutional order flow during specific "Kill Zones," enhancing the likelihood of successful trades.
  • This model is forgiving for traders who may miss ideal entries, providing alternative strategies through order block identification.

Profit Taking and Scaling Techniques

  • For profit-taking strategies, focus on identifying discount arrays when bearish or premium arrays when bullish for optimal exit points.
  • A suggested approach includes taking partial profits at predetermined pip targets while leaving a portion open for further movement.

Simplifying Trade Execution

  • The model encourages simplicity: aim for straightforward entries without overcomplicating the strategy.

Utilizing Price Models in Trading

Understanding Fair Value and Projections

  • The discussion begins with the concept of fair value, emphasizing how price runs can be analyzed to determine projections, typically around 10 to 15 pips below a standard low.
  • Traders can adjust their positions by taking off 20 pips from the current price, utilizing mini lots for better risk management.

Expanding Entry Techniques

  • The model discussed is not limited to scalping; it can also facilitate larger-term price moves.
  • Traders are encouraged to use this model for adding to existing positions when favorable market conditions arise.

Versatility of Trading Models

  • The speaker highlights the flexibility of trading models, indicating that they can be adapted over time as traders become more familiar with their functionalities.
  • Specific patterns require patience and validation from market movements before acting on them.

Simplifying Complex Concepts

  • Acknowledging the simplicity of the discussed model, it is described as highly visual and principle-based, making it accessible even at its most basic level.
  • Future discussions will aim to flesh out these concepts into a comprehensive trading plan.

Building a Comprehensive Trading Plan

  • The speaker asserts that enough information has been provided to create an effective trading plan based on previous teachings about money management and profit-taking strategies.
  • There’s an emphasis on experience; traders should feel empowered to formulate their plans using the insights shared without feeling overwhelmed if they don’t grasp everything immediately.

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