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ICT Charter Price Action Model 10 - Swing Trading
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ICT Charter Price Action Model 10 - Swing Trading

Price Action Model #10: Swing Trading Insights

Overview of the Swing Trading Model

  • The discussion introduces Price Action Model #10, focusing on swing trading setups targeting 50 to 75 pips.
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  • Emphasizes that while the model targets specific pip amounts, it can be adapted for smaller or larger trades.
  • Acknowledges that not every trader may resonate with this model; suggests revisiting it after some time if needed.

Key Components of the Model

  • The model is based on weekly range expansion, aiming to identify probable directional movements for upcoming weekly candles.
  • Traders should look for anchor points forming on Mondays, Tuesdays, or Wednesdays to frame trade setups.
  • Utilizes external range liquidity pools for entries and exits in alignment with weekly expansion trends.

Practical Application and Chart Analysis

  • An example using a chart illustrates how external range liquidity pools serve as entry and exit points during bearish scenarios.
  • Highlights the importance of identifying market structure breaks and optimal trade entries within price action analysis.

Framework and Foundations

  • Stresses that these models are foundational concepts rather than complete trading systems or plans; they require personal adaptation through practice.
  • Encourages traders to analyze price action daily to find patterns that resonate most effectively with their trading style.

Understanding Market Behavior

  • Discusses how recognizing bearish trends helps in setting external range liquidity targets below old lows.

Understanding Short Positions and Profit Taking Strategies

Key Concepts in Short Selling

  • When considering short positions, traders should take partial profits or fully exit if the price movement is not within a range of 50 to 75 pips. Holding for lower prices is advisable as the weekly chart indicates potential declines.
  • The parent price swing's midpoint serves as a reference point; prices must drop below this level to reach equilibrium or discounts, which are critical for effective trading strategies.
  • Profits should be taken when prices break below established lows, especially when trading outside defined ranges. This approach helps manage risk effectively.

Trading Techniques and Patterns

  • Understanding "Turtle Soup" scenarios is essential; these involve recognizing optimal trade entries and fair value gaps while targeting equal highs for long positions and equal lows for shorts.
  • Incorporating external range liquidity into trading strategies allows traders to sell short above previous highs and buy below old lows, fostering better entry and exit habits.

Rules for Managing Trades

  • Traders cannot initiate short sales unless they are above a previous short-term high. Similarly, covering trades must occur below old lows or newly formed short-term lows.
  • Once entering a position on a 4-hour chart, it’s crucial to take partial profits at logical levels as the market moves downwards, ensuring that losses are minimized during fluctuations.

Partial Exits and Position Management

  • As prices create new short-term lows, traders should take additional portions off their positions. This strategy protects against adverse movements while allowing profit realization.
  • If entering long positions using Turtle Soup patterns, buying must occur below old lows. Full position collapses can only happen after selling above an old high.

Finalizing Trade Strategies

  • After taking two partial profits from a position, it's vital to tighten stop-loss orders significantly to protect remaining open positions from sudden reversals in price action.
  • Observing patterns such as three drives (higher highs followed by rejection points), traders can identify potential reversal zones where exiting trades may be prudent.

Applying Strategies Across Time Frames

Broader Market Analysis

  • The discussed strategies apply across various time frames beyond day trading; utilizing the 4-hour chart provides insights applicable even on shorter time frames like the 15-minute chart used with currency pairs like cable.

Market Analysis and Trading Strategies

Overview of Market Conditions

  • The speaker emphasizes the importance of reviewing past market analyses, specifically referencing February 15th, 2019, to understand current trading strategies.
  • A visual representation is discussed, focusing on identifying single or double tops as key indicators in a bearish market environment.

Trading Patterns and Timing

  • Ideal trading conditions are outlined: selling during specific times (London or New York open) on bearish days (Monday to Wednesday).
  • The speaker shares personal experience with the Euro dollar trade, highlighting the use of a double bottom pattern for short-selling opportunities.

Price Action Models

  • The discussion includes how price action models can incorporate both double tops/bottoms and single highs/lows; the focus remains on anticipating stop runs.
  • Emphasis is placed on being a short seller above old highs or double tops while waiting for price violations to cover positions.

Strategic Selling Techniques

  • Recommendations include covering trades typically on Thursdays at New York open when bearish trends are expected to reverse.
  • For bullish scenarios, traders should visualize an inverted model where lows precede highs; this approach aids in understanding potential buying opportunities.

Practical Application and Risk Management

  • Traders are encouraged to practice their strategies on paper before executing live trades to build confidence in their decision-making processes.
  • As prices create new lows, partial profit-taking strategies are advised; traders should be mindful of liquidity pools around significant figures like 128 big figure.

Final Thoughts on Trade Execution

  • The importance of adhering to established rules for taking profits is reiterated; traders must exit entire positions after reaching certain targets.

Trading Strategies and Partial Exits

Understanding Trade Execution and Scaling Out

  • The speaker emphasizes the importance of observing market movements live, suggesting that traders should consider buying or selling based on short-term lows and highs.
  • Personalization in trading strategies is highlighted; traders can choose their scaling out percentages, such as taking 50% off initially, followed by 25%, and then the remaining 25%.
  • The model discussed is described as simplistic yet effective, focusing on clear entry and exit points without unnecessary complexity.

Analyzing Market Patterns

  • The speaker illustrates a scenario with equal lows where buying opportunities arise only after price trades above defined short-term highs.
  • A practical example shows how to take partial profits at various stages of a trade, reinforcing the idea of structured exits based on market behavior.
  • The versatility of this trading pattern is emphasized; it can be applied across different time frames for day trading.

Practical Application of Trading Models

  • Another example involves selling when prices drop below established lows, demonstrating how to manage positions effectively through partial exits.
  • The discussion includes using old lows as significant reference points for liquidity, which can influence decision-making in trades.

Profit Taking Strategies

  • Traders are encouraged to set profit targets (e.g., 50 pips), with suggestions for scaling out portions of their position at different profit levels (e.g., taking half off at 25 pips).
  • Various scenarios for exiting trades are presented, allowing flexibility in managing profits while maintaining exposure to potential further gains.

Final Thoughts on Trading Discipline

  • Emphasis is placed on understanding liquidity dynamics; older price levels may hold more significance than recent ones when making trading decisions.

Trading Strategies and Homework Assignments

Overview of Trading Model Assignment

  • The speaker emphasizes the importance of studying charts and encourages participants to find 10 examples related to a specific trading model for their study journal.
  • Participants are instructed not to email their findings due to high email volume; instead, they should prepare for a discussion next Saturday on buy-side examples using the same model.
  • The speaker advises looking beyond Forex markets, suggesting that participants explore stocks and commodities to see the model's applicability across different asset classes.

Key Concepts in Trading Outside Range Liquidity

  • The concept of trading outside established ranges is introduced, highlighting how this approach can enhance entry and exit strategies by identifying liquidity above and below current market prices.
  • Consistent daily practice in identifying these models is encouraged, as it may lead traders to adopt this strategy more comfortably over time.

Exit Strategies for Long and Short Positions

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Channel: The Inner Circle Trader
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Government Required Risk Disclaimer and Disclosure Statement 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.