4 Best ICT Trading Strategy Explained!

Effective ICT Trading Strategies

Overview of ICT Trading Strategies

• The video introduces various ICT trading strategies, emphasizing that many are overly complicated and difficult to implement in real trading scenarios.

• It promises to break down four effective and simple strategies, covering their psychological underpinnings, chart identification methods, and optimal trading approaches.

Silver Bullet Trading Strategy

• The Silver Bullet strategy is highlighted as a top smart money setup that integrates liquidity concepts, market structure shifts, and fair value gap entries.

• In bearish scenarios, the price first breaks above the day's high to target liquidity before signaling a potential reversal through a market structure shift.

• This strategy relies on institutional behavior; smart money attracts buyers by pushing prices higher before reversing direction to collect sell-side liquidity below the day’s low.

Execution Steps for Silver Bullet Strategy

• To apply this strategy on Trading View: set the time frame to 5 minutes and mark the day’s high and low prior to the New York session opening.

• Identify fair value gaps created during price movements as potential entry points for trades after confirming reversals through market structure shifts.

Turtle Soup Setup

• The Turtle Soup setup combines market direction liquidity with fair value gap entries. A bullish setup occurs when price sweeps below recent lows while resting above a bullish fair value gap.

• The psychology behind this strategy involves understanding where liquidity exists—below swing lows for long positions or above swing highs for short positions—and how it can be exploited by smart money.

Key Insights on Turtle Soup Strategy

• By sweeping sell-side liquidity, traders can gain momentum needed for upward movement. This method capitalizes on accumulating stop-loss orders at these levels.

• When combined with a fair value gap just below a liquidity pool, it creates high probability trade opportunities that align with prevailing trends.

This structured approach provides clarity on effective trading strategies within ICT frameworks while ensuring key insights are easily accessible through timestamps.

Understanding Fair Value Gaps and Change in State of Delivery

Fair Value Gaps (FVG) and Liquidity Pools

• The left-hand side shows an FVG area below the swing low, indicating a higher likelihood of price tapping into liquidity beneath the recent low before moving upward from the FVG.

• Price is expected to engage sell-side liquidity, reject the FVG, and push higher; this strategy can capitalize on false breakouts through turtle soup tactics.

Introduction to Change in State of Delivery (CISD)

• CISD represents a reversal pattern where price momentum shifts direction suddenly, signaling potential reversals.

• A clear bullish trend is observed with significant bullish momentum breaking previous highs; however, if price drops below demand areas, it indicates a change in delivery state.

Implications of CISD

• A drop below demand levels suggests buyers failed to maintain long positions while sellers gain control, indicating a possible downward reversal.

• After identifying bearish market bias post-breakout, traders should look for short opportunities as former support becomes resistance.

Key Differences: CISD vs. Change of Character

• While both concepts indicate market shifts, CISD focuses on sudden momentum changes rather than structural breaks that signal overall trend shifts.

• Not every CISD pattern leads to successful trades; context and structure are crucial for effective trading.

Conditions for Effective CISD Trading

Rule 1: Higher Time Frame Key Levels

• A valid CISD occurs after tapping into significant higher time frame key zones (e.g., 4-hour or daily), enhancing reliability due to their influence on price movement.

Rule 2: Sweeping Liquidity Pools

• High-quality setups often follow liquidity sweeps around equal highs/lows where stop-losses are placed; this triggers stops and sets up potential reversals.

Rule 3: Volume and Confirmation

• Validating a CISD setup requires attention to trading volume and price momentum; fair value gaps can indicate heightened activity leading up to a shift in direction.

Understanding Optimal Trade Entry and Fair Value Gaps

The Role of Fair Value Gaps in Trading

• Fair value gaps indicate institutional involvement, enhancing the credibility of trading setups. A price retracement into these gaps can signal a high-probability entry point.

• Combining volume analysis with fair value gaps and the concept of CISD (Candle Inverted Support/Resistance Dynamics) increases trade success rates while minimizing risks.

Implementing ICT's Optimal Trade Entry Strategy

• The optimal trade entry strategy utilizes Fibonacci retracement levels to identify potential market reversals during an uptrend, allowing traders to buy low and sell high.

• Timing is crucial; entering too early may lead to losses if prices drop further, while waiting too long could result in missing the trade altogether.

Utilizing Fibonacci Retracement Levels

• Fibonacci retracement levels help define correction ranges within impulsive moves, identifying key support zones for potential entries.

• The 61.8% and 78.6% retracement levels are particularly significant as they offer better risk-to-reward ratios and safer entry points.

Combining Strategies for Enhanced Trading Success

• By integrating optimal trading zones with fair value gaps, traders can pinpoint strong supply and demand areas that enhance the likelihood of successful trades.

• A conservative approach involves setting buy limits at specific fair value gaps within the optimal trading zone to avoid liquidity traps.

Conclusion: High-Quality Trade Setups

• Merging optimal trading zones with fair value gaps leads to identifying robust trade setups that have a higher probability of profitability.