ICT Forex Scout Sniper Basic Field Guide - Vol. 5

Introduction to Range Finding in ICT Scout Sniper Field Guide

Overview of the Episode

• Michael introduces Part 5 of the ICT Scout Sniper Basic Field Guide, focusing on range finding.

• The episode will review previous assignments related to tracking institutional price action and analyzing charts for reference points and order blocks.

Chart Analysis and Examples

• Michael plans to provide examples using specific currency pairs, including EUR/USD for bullish scenarios and CAD/JPY as an exotic pair.

• Emphasis is placed on understanding target selection concepts based on price swings, highlighting that perception varies among traders.

Key Concepts Introduced

• Introduction of the 50% rule concerning symmetrical price swings, which will be discussed alongside MT4 FIB calibration.

• Discussion includes market symmetry in bullish conditions and equilibrium price swing fulcrums for both upside and downside objectives.

Detailed Chart Examination: EUR/USD

Daily Chart Insights

• Michael analyzes the daily chart of EUR/USD, noting significant highs at approximately 1.3450.

• He highlights a key level at 1.3420 as an institutional reference point where price action was previously focused.

Four-Hour Chart Analysis

• Transitioning to a four-hour chart, he identifies market structure breaks confirming bullish trends around the 1.3476 level.

• Multiple order blocks are marked on this chart, indicating areas where price has dipped into these zones before moving upward.

Practical Application of Order Blocks

Identifying Trading Opportunities

• Michael emphasizes maintaining awareness of sensitive lows when anticipating future price movements above them.

• He discusses how traders can utilize Fibonacci retracement levels effectively within identified order blocks for potential buying opportunities.

Candlestick Patterns Confirmation

Market Analysis and Trading Strategies

Key Levels and Fibonacci Retracement

• The discussion begins with referencing a significant price level at 134.20, indicating the importance of old highs in market analysis.

• A Fibonacci retracement is drawn from the 134.50 level to identify potential bounce areas, particularly around 134.74, suggesting this range could be a buying opportunity.

Optimal Trade Entries

• Price movements are analyzed within optimal trade entry zones; a notable rally occurs after an initial entry point is identified.

• The speaker highlights another order block around 135.08, emphasizing that if prices dip into this area again, it presents another buying opportunity.

Market Behavior and Institutional Selling

• A bearish environment is discussed where institutions sold into a bullish candle before a decline, illustrating how to recognize selling pressure in the market.

• The strategy involves waiting for price to return to previous levels (order blocks), which can indicate potential selling opportunities.

Analyzing Swing Highs and Order Blocks

• The analysis includes identifying swing highs and lows to determine equilibrium points for trading decisions; these points help in setting up sell orders when prices reach certain levels.

• Observations on candle behavior reveal rejection patterns at key levels, reinforcing the need for careful monitoring of price action within order blocks.

Practical Application of Concepts

• The speaker emphasizes practical application by analyzing past price movements that align with theoretical concepts discussed earlier.

• An example from October illustrates how prices dipped into an order block leading to an explosive rally, showcasing institutional involvement in market moves.

Universal Application of Trading Concepts

• The speaker asserts that the strategies shared are not limited to specific currency pairs but can be applied universally across various markets.

Analysis of Trading Strategies on Exotic Currency Pairs

Overview of Trading Preferences

• The speaker expresses a personal preference against trading exotic currency pairs, despite acknowledging that they can be effective for some traders.

Price Movement Analysis

• A significant price rally is noted in the Canadian dollar to Japanese yen pair, with an increase of over 500 pips from August to late September.

• Areas of potential price bounce are identified through consolidation patterns at previous highs and lows on the chart.

Institutional Order Blocks

• The discussion highlights the importance of identifying institutional order blocks, using specific down candles within consolidations as reference points for potential trades.

• Optimal trade entry levels are suggested between 94.60 and 94.65, allowing for slippage in order execution.

Retracement and Trade Entry Patterns

• The speaker emphasizes utilizing retracement strategies by analyzing swings between defined low and high points to identify favorable trading opportunities.

• It is mentioned that smaller time frames (5-minute or 15-minute charts) should be used to confirm price patterns aligning with optimal trade entries.

Trade Execution Insights

• An example illustrates how price movements can yield substantial gains; a bounce from identified levels could result in a profit of around 100 pips.

• Further analysis shows that after reaching resistance levels, prices may return to origin points where initial moves began, providing additional trading opportunities.

Zooming into Specific Price Levels

• The focus shifts to examining lower time frames for precise entry points based on previously established higher-level analysis.

• Emphasis is placed on recalling concepts from earlier videos in the series to enhance understanding and application of trading strategies.

Calibration of Key Levels

Hidden Optimal Trade Entry Explained

Understanding the Concept of Hidden Optimal Trade Entry

• The discussion begins with a focus on identifying levels in trading charts, particularly highlighting the concept of "hidden optimal trade entry" related to support and resistance.

• It is emphasized that if a level is strong, price will not dip below it twice, indicating accumulation at that level before moving upward.

• The speaker introduces the use of Fibonacci tools to identify key price levels, anchoring them to significant highs and mid figures for better analysis.

• A unique application of Fibonacci retracement is presented, which the speaker claims is not commonly found in other resources but has proven effective in their trading experience.

• Trusting this method requires practice and personal research; results from using this technique have been positive for the speaker.

Price Action and Psychological Barriers

• The importance of psychological barriers in price movement is discussed; specific levels (e.g., 94.74, 94.69, 94.63) are identified as potential optimal trade entries within an order block.

• There’s an acknowledgment that prices may not always reach these anticipated levels but should still be considered as probable ranges for potential bounces.

• An example illustrates how price can move slightly through a retracement level before rallying significantly—demonstrating practical application of these concepts.

• The speaker contrasts basic price retracements with more advanced Fibonacci applications, stressing the need for deeper analysis beyond simple high-low comparisons.

• Emphasis on utilizing institutional levels alongside mid figure and full figure levels when analyzing order blocks.

Practical Application Across Different Pairs

• While discussing various currency pairs, it's noted that this methodology can be applied universally across different markets despite personal preferences in trading pairs.

• The process involves identifying areas where higher time frame order blocks suggest possible bounces while considering mid figure levels as critical reference points.

• A clean approach to marking significant highs during consolidation phases is recommended for clarity in analysis and decision-making processes.

• The effectiveness of this pattern is reiterated; it has consistently yielded accurate predictions despite skepticism about its validity among traders unfamiliar with it.

• This hidden optimal trade entry strategy relies heavily on support and resistance as anchor points rather than traditional swing highs or lows.

Conclusion: Mastery Through Practice

• Ultimately, mastering this unique trading pattern hinges on consistent practice and understanding its nuances within market behavior.

Understanding Market Levels and Order Blocks

Key Concepts of Price Levels

• The speaker discusses the significance of price levels, particularly focusing on 9350 as a mid-figure level that is crucial for trading decisions.

• A reference to Fibonacci retracement is made, indicating how it can help identify potential bounce points between key price levels (9350 and 9366).

• The importance of institutional levels is emphasized, suggesting traders should consider the 9320 level for potential buy signals.

Optimal Trade Entry Strategies

• The concept of optimal trade entry based on psychological and institutional levels is introduced, with a focus on the range between 9336 and 9348 for potential buying opportunities.

• A specific buying zone is identified between 9348 and 9335, where traders could enter if prices dip into this range.

Analyzing Market Structure

• The speaker highlights how market structure can be analyzed without relying solely on institutional levels by referencing big figures like the 9300 mark.

• Discussion includes how price movements around these significant figures can indicate market behavior, especially when approaching order blocks.

Utilizing Fibonacci Retracement in Trading

• The use of Fibonacci retracement to identify entry points near the 62% level is discussed; this method helps pinpoint precise moments to enter trades.

• Emphasis is placed on developing trust in these methods over time through consistent practice in analyzing charts daily.

Practical Application with Currency Pairs

• The Australian dollar/Japanese yen pair is examined as an example outside typical trading pairs, showcasing real-time results from a live account.

• A specific trade setup involving an anticipated order block illustrates practical application; traders are encouraged to study such setups for better understanding.

Understanding Price Action and Order Flow

Key Concepts in Trading Ranges

• The discussion begins with identifying a reference point for entry in a longer-term price swing, emphasizing the importance of recognizing order blocks formed during consolidation.

• A specific price level (90.158 or 91.60) is highlighted as critical for traders to monitor, indicating sensitivity around this area when making trading decisions.

• Traders unfamiliar with price action may miss buying opportunities due to fear; understanding institutional order flow is crucial for recognizing potential trades within defined ranges.

• The concept of confluence between support and resistance levels is introduced, suggesting that a one pip variance can indicate strong buying potential at identified levels.

• Reference points from previous examples are used to illustrate how Fibonacci concepts can aid in determining optimal trade entries based on historical price movements.

Analyzing Price Movements

• The analysis continues by establishing two key reference points (90.120 and 91.50), using Fibonacci retracement levels to identify potential buy zones.

• A 62% retracement level at 91.55 is noted as an ideal entry point, allowing traders to set risk parameters effectively while considering spreads.

• Emphasis is placed on maintaining awareness of market structure; if prices drop below certain lows, it may signal a failed bullish premise and necessitate reevaluation of the trade.

• Institutional traders are credited with driving significant price movements; retail traders must adapt their strategies accordingly to align with these larger market forces.

Practical Application of Trading Strategies

• The discussion transitions into practical applications on smaller time frames (e.g., five-minute charts), where traders can observe real-time order flow dynamics and refine their entries further.

• Examples are provided showing how price reacts around established order blocks, reinforcing the idea that prior candle formations can predict future movements effectively.

• Consolidation patterns are revisited, demonstrating how they serve as unfulfilled range applications that present additional buying opportunities when prices retrace back into them.

• Specific levels (like 90.160 plus spread considerations) are suggested as viable entry points for buyers looking to capitalize on upward momentum following retracements.

Final Thoughts on Market Structure

• Observations about order flow highlight the significance of understanding past candle behavior before major moves occur, which aids in predicting future trends accurately.

• As the analysis zoomed out again, it reiterates the importance of defining high and low ranges for effective trading strategy formulation amidst fluctuating market conditions.

Understanding Price Patterns and Trading Strategies

Identifying Price Patterns

• The discussion emphasizes the importance of hunting for price patterns to anticipate higher prices, suggesting a bullish outlook based on institutional order flow.

• A specific price level of 9211 is highlighted as a key area where prices rally before retracing, indicating a strategy to chase back down to the 62% to 70% retracement levels.

Utilizing Unfulfilled Range Concepts

• The concept of unfulfilled ranges is introduced, with expectations that prices will not return below certain institutional levels. Ideal buy areas are identified between the 92.45 and 90.40 levels.

• An example from a 15-minute chart illustrates how price movements can be analyzed using order blocks, showing how price returns after hitting specific retracement levels.

Analyzing Market Sessions

• The analysis includes observations about market behavior leading into weekends and highlights potential trading opportunities based on pip ranges observed in previous sessions.

• Specific attention is given to the Australian Yen pair's behavior during Asian sessions, noting how lows are formed at particular times which align with market characteristics.

Understanding Pair Personalities

• The speaker discusses the significance of understanding different currency pairs' personalities and their behaviors during various trading hours, particularly focusing on significant highs and lows.

• Comparisons are made with other pairs like British Pound and Euro, emphasizing their daily high-low formations during London sessions.

Insights on Profit Taking

• A critical reflection on profit-taking strategies reveals that traders must learn to anticipate price moves accurately rather than relying solely on gut feelings or overtrading tendencies.

• The speaker shares personal experiences regarding challenges faced in profit-taking decisions over nearly two decades of trading experience.

Lessons from Early Trading Experiences

• New traders often mistakenly believe profitability is guaranteed after initial successes; this mindset can lead to significant losses if not managed properly.

Understanding Trading Psychology and Profit Taking

The Importance of Setting Exit Points

• Traders often struggle with greed, aiming to capture the absolute highest point in a trade. It's emphasized that one does not need every pip; rather, focusing on securing pips is crucial.

• The objective of trading should align with one's trading style. This series aims to help traders find a single high-quality opportunity each week, as daily trading can lead to impulsive decisions without discipline.

• Discipline is essential for adhering to trading rules. The military theme of this series highlights the importance of structure and strategy in trading practices.

Overcoming Psychological Barriers

• The speaker shares personal experiences of making mistakes in trading, emphasizing that even experienced traders face challenges and must learn from their past errors.

• A predetermined exit point before entering a trade is vital. Without it, traders may experience regret over missed profits if they exit too early or hold on too long.

Managing Expectations and Emotions

• Many traders wrestle with feelings of inadequacy when they see potential profits slip away after exiting trades at predetermined levels. It’s important to recognize that executing a plan correctly should be valued over chasing additional pips.

• Developing discipline in profit-taking is critical. Traders must accept their exit strategies without self-reproach, understanding that consistency leads to long-term success.

Building a Strong Trading Foundation

• Successful trading requires acknowledging that perfection isn't attainable; even seasoned traders make mistakes but can still achieve profitability through disciplined practices.

• Internal conflicts about profit-taking can plague traders mentally. Recognizing these thoughts as part of the process helps maintain focus on established strategies rather than emotional reactions.

Establishing Clear Profit Objectives

• Overanalyzing trades can hinder performance; once a solid plan is established, sticking to it without second-guessing is essential for success.

• Exiting trades at predetermined profit levels should not be viewed as weakness but rather as strength and discipline—key traits among successful forex traders who consistently make money.

• Changing one’s mindset about taking profits is necessary for growth in trading skills. Accepting predetermined exits allows for gradual development into larger profit objectives over time.

Understanding Price Levels and Profit Taking in Trading

The Importance of Price Levels

• Understanding price levels is crucial for determining where profits should be taken. The discussion emphasizes that this concept applies universally across all time frames, not just specific ones.

Analyzing Market Structure

• A crude diagram illustrates the concept of price swings, indicating a minor price level and potential longer-term swings. This analysis is relevant even on shorter time frames like a five-minute chart.

Support Levels and Entry Points

• The focus shifts to identifying support levels before entering trades. It’s suggested that traders look for setups during significant market times, such as the London kill zone.

Targeting Profits with Price Swings

• Recognizing multiple price swings within larger swings is essential for setting profit targets. A 50% retracement rule is introduced, highlighting how smaller swings relate to larger ones.

Asymmetrical vs Symmetrical Price Swings

• The distinction between asymmetrical and symmetrical price swings is explained. Symmetrical moves are characterized by equal distances from pivot points, which can serve as fulcrum points in trading strategies.

Measuring Moves for Profit Targets

• When breaking key highs or lows, traders should measure the distance from these points to set profit targets accurately. This method involves adding measured distances to determine potential upside objectives.

Utilizing Fibonacci Retracements

• Fibonacci retracements are discussed as tools for identifying optimal entry points based on previous high and low prices. These levels help traders anticipate future movements but do not guarantee specific outcomes.

Probability in Trading Outcomes

Understanding Fibonacci Extensions in Trading

Key Concepts of Price Action and Fibonacci Levels

• The speaker discusses the significance of price breaking a high, indicating a potential movement of 100 pips if this occurs. This is illustrated with a hand-drawn example, emphasizing the importance of recognizing price action patterns.

• The speaker introduces Fibonacci extensions, explaining that moving from a low to a high can yield significant price targets (127 pips and 162 pips). These numbers are derived from Fibonacci retracement levels, which some listeners may not fully understand.

• A method for applying Fibonacci tools is described: anchoring from the high to the low to plot key extension levels (1.27 and 1.62). These levels serve as critical points for taking profits when prices reach them.

• The speaker emphasizes that these predetermined levels provide clarity in trading decisions, allowing traders to set limit orders confidently at identified profit-taking points.

• Live examples will further clarify how these concepts apply in real-time trading scenarios, enhancing understanding through practical application.

Analyzing Price Movements and Retracements

• The discussion shifts to analyzing price movements after an impulse move up followed by retracement. Identifying order blocks or optimal trade entries within this range supports bullish expectations.

• By utilizing Fibonacci tools on specific price ranges, traders can anticipate higher projections (200% extension), providing insight into potential future highs based on previous lows.

• The speaker notes that while prices may exceed expected extension levels (127%, 162%, or even 200%), these figures remain ideal exit points due to their clear determination based on market structure.

• Clarification is made regarding terminology; the speaker prefers "price swing" over "Elliott Wave," focusing instead on market structure highs as reference points for setting extensions during upward trends.

• A deeper retracement could occur within established ranges; however, support resistance dynamics suggest potential for upward movement if buying opportunities arise at strategic locations within those ranges.

Setting Up Trades with Predetermined Exit Points

• If traders identify buying opportunities near consolidation areas or order blocks, they can set anticipatory targets based on previous highs—typically around 100 pips—using calculated exit strategies effectively.

• Traders should utilize their knowledge of Fibonacci extensions (127 and 162 pips from lows) as upside objectives once prices break above prior highs during trades without needing immediate access to calculation tools.

• Emphasizing preparation, traders are encouraged to determine exit points before entering trades so they can place limit orders and manage their time efficiently while awaiting fulfillment of targets.

• This approach allows flexibility in personal schedules; traders can engage in other activities knowing their positions are set up correctly with defined profit-taking strategies already established.

Exploring Bearish Opportunities

• Transitioning into bearish scenarios, the speaker highlights the need for identifying selling opportunities when market structures indicate downward trends following significant breaks lower in price swings.

• Understanding individual price swings becomes crucial; recognizing where retracements occur provides insights into potential selling opportunities aligned with overall bearish sentiment.

Fibonacci Extensions in Trading

Understanding Fibonacci Extensions

• The speaker discusses using Fibonacci extensions, specifically the 127% and 162% levels, to identify potential price objectives in trading.

• Emphasizes the importance of recognizing market structure when analyzing price swings and applying Fibonacci retracement levels for better accuracy.

• Highlights that projecting Fibonacci from significant highs and lows can reveal key extension points, aiding traders in setting targets for trades.

Application of Fibonacci Levels

• When a low is violated, traders should analyze the range from this low to high to determine downside objectives at the 127% and 162% extensions.

• The speaker notes that these extensions are crucial for identifying selling opportunities during bearish market movements by pulling Fibonacci from recent highs to lows.

• Suggests that while aiming for a 200% extension may be tempting, focusing on the more consistent 127% and 162% levels is advisable for reliable outcomes.

Market Structure Considerations

• Discusses how understanding market structure helps in determining significant retracement points within larger bearish impulses.

• Reiterates that smaller price swings must also be referenced when calculating Fibonacci levels to ensure accurate predictions of future price movements.

Examples of Using Fibonacci Extensions

• Provides examples where specific order blocks align with identified Fibonacci extension levels, reinforcing bullish or bearish sentiments based on historical data.

• Illustrates an entry point within an optimal trade area between the 62% and 70% retracement zones before targeting upside objectives through calculated extensions.

Practical Insights on Trade Execution

• Demonstrates how successful trades can be executed by reversing the Fibonacci tool from high to low after identifying potential rally points within order blocks.

• Concludes with additional examples showing multiple instances where traders can apply these principles across different currency pairs effectively.

Trading Strategies: Understanding Impulse Moves and Retracements

Key Concepts in Trading

• The objective is to identify low points and impulse moves, focusing on retracements from specific ranges. Traders should recognize the importance of the 127% and 162% Fibonacci extensions as guidelines for trading decisions.

• Emphasizes the significance of using established price levels (high to low) for optimal trade entries. Sellers can target profit objectives at key fulcrum points, particularly when prices break below these levels.

• Discusses the potential for a significant price move downwards, with a focus on adhering to trading rules. The highest extension level discussed is a 200% extension based on previous price movements.

Profit Taking Strategies

• For sellers, profit-taking strategies involve targeting the 127% and 162% extensions. A noted example shows that prices moved only slightly beyond the 162% extension before reversing back up.

• Highlights an opportunity where traders could have missed out on covering shorts if they aimed for a higher target (200% extension), illustrating the importance of timely decision-making in trading.

Short-Term Trading Insights

• Analyzes short-term impulse moves followed by retracements, indicating that traders should be aware of entry points around these fluctuations to capitalize on market movements effectively.