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ICT Charter Price Action Model #4 Supplementary Lesson
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ICT Charter Price Action Model #4 Supplementary Lesson

Lesson Overview

This lesson delves into Price Action Model Number Four on position trading, focusing on quarterly shifts and seasonal tendencies in the market.

ICT Price Action Model Number Four

  • The model revolves around quarterly shifts in the market every three months, coupled with seasonal tendencies.
  • The setup involves utilizing a smart money tool or technique with correlated pairs and blending it with the Confluence of the COOT hedging program.
  • The pattern is based on external range liquidity as the profit objective.

Framework and Application

  • Reflecting on a past presentation showcasing a bearish seasonal tendency in the British pound to illustrate the framework's effectiveness.
  • Emphasizing trust in the teachings by highlighting real-world market occurrences as validation.

Market Analysis and Interpretation

  • Analyzing EPOD data ranges over 20, 40, and 60 days to understand commercial traders' net positions beyond traditional COT graphs.
  • Examining daily chart structures for price movements and SMT divergences to identify potential setups like Euro Dollar vs. British Pound scenarios.

Implementation and Strategy

  • Discussing expectations for monthly candle expansions targeting specific price levels using historical data from the last six months.
  • Describing an ideal scenario where commercials hold a heavy net short position during a seasonal tendency, aiming for higher highs in liquidity-rich areas.

Future Insights

  • Teasing upcoming examples to demonstrate how different models complement each other despite individual focus areas like long-term perspective trading.

Lesson Overview

In this section, the speaker discusses the importance of understanding 12 unique models to gain a comprehensive perspective on trading. The emphasis is on studying these models collectively to grasp price action effectively.

Importance of Studying 12 Unique Models

  • The speaker emphasizes the significance of not trying to mimic their day trading style but rather focusing on learning and understanding the 12 unique models provided.
  • These 12 models serve as a foundation for gaining a complete perspective and broad understanding of price action, both individually and collectively.
  • The lesson aims to provide detailed insights without overwhelming learners with unnecessary hype, allowing individuals to draw their conclusions from the material presented.
  • There is an acknowledgment that learners may initially have expectations different from what the models offer, highlighting the need for a gradual and conceptual understanding rather than immediate trade entry guidance.
  • The speaker stresses that acquiring expertise in trading requires time and cannot be rushed or condensed into quick solutions, emphasizing the need for conceptual comprehension before introducing complementary elements.

Structured Learning Approach

This part delves into the structured approach to learning trading concepts gradually over time, avoiding information overload and fostering a deep understanding through incremental study.

Gradual Learning Process

  • The speaker explains that frustrating moments in learning are essential for triggering "aha" moments that lead to addiction to studying further, emphasizing the value of gradual comprehension over immediate gratification.
  • Learners are cautioned against seeking all knowledge at once due to potential overload, contrasting structured mentorship with scattered free tutorials that may hinder effective learning.
  • Structured mentorship is likened to consuming an elephant piece by piece, ensuring a thorough understanding of trading concepts without overwhelming learners with excessive information.
  • Emphasis is placed on repetitive themes across all 12 models, highlighting interconnectedness among them and encouraging learners to explore each model individually before grasping their collective impact.

Paradigm Shift in Understanding

This segment focuses on how engaging with all 12 models individually first can lead to a paradigm shift in one's perception of price action and enhance overall comprehension through gradual study.

Shifting Perspectives

  • Understanding price action involves identifying where one stands within the spectrum of the 12 models, indicating a transformative shift in how traders perceive market dynamics based on their engagement with each model.
  • Learners are encouraged to relate to each model independently before integrating them collectively into their analysis process, highlighting the interconnected nature of these models' functionalities.

Seasonal Trading Tendencies

This part revisits foundational lessons by examining seasonal tendencies in trading using specific examples like analyzing bearish trends in Pound Sterling during May.

Analyzing Seasonal Trends

  • Reiteration of foundational lessons underscores seasonal tendencies such as May being historically bearish for Pound Sterling, showcasing practical applications of theoretical concepts in real-world trading scenarios.

Understanding Market Trends

In this section, the speaker discusses the importance of studying market trends and understanding the dynamics between different market players.

Analyzing Market Trends

  • The speaker emphasizes the significance of quarterly shifts in price swings, advising to note significant changes every three months.
  • Understanding seasonal tendencies is crucial for market analysis, focusing on current quarters and hot trends.
  • By studying commercials' actions over large speculators', one can gain insights into market liquidity and pricing manipulation.
  • Large speculators mirror commercial activities but are not as indicative for analysis.

Interpreting COT Data

This part delves into interpreting Commitments of Traders (COT) data and how it reflects market dynamics.

Deciphering COT Data

  • Commercials provide liquidity by offering currency, influencing price movements to deter interest from speculators.
  • Small speculators' actions are often inaccurate, while large speculators' activities reflect commercials' opposite moves.

Utilizing Hedge Programming

The speaker explains a practical approach to utilizing hedge programming for effective trading strategies.

Implementing Hedge Programming

  • Identifying the highest and lowest points within a range helps determine current market positioning effectively.
  • Graphical representations aid in visualizing commercial net positions for strategic decision-making.

Analyzing Market Behavior

This segment focuses on analyzing market behavior based on commercial net positions and order blocks.

Understanding Market Behavior

  • Observing commercial net positions relative to zero lines provides insights into bullish or bearish market sentiments.

Model Number Four: Seasonal Trading Strategies

In this section, the speaker delves into the concept of seasonal trading strategies, particularly focusing on Model Number Four and its application in identifying profitable opportunities based on seasonal tendencies.

Understanding Seasonal Trading Strategies

  • The key to successful seasonal trading is knowing Model Number Four and understanding how to leverage it for quarterly shifts or monthly seasonal tendencies.
  • A significant move in nonfarm payroll data can indicate a potential swing in the market, highlighting the importance of recognizing one-sided directional movements for profitable trades.
  • Emphasizes that while not every trade will be successful, considering seasonal tendencies like the bearish trend of the British pound in May can lead to lucrative investment opportunities.
  • Model Number Four presents trades that are heavily one-sided, offering favorable risk-reward ratios despite not being foolproof, making them attractive options for traders.
  • New traders may underestimate the power of seasonal trading strategies like Model Number Four due to limited exposure but should recognize its potential across various markets and months.

Logic and Parameters for Seasonal Trades

This segment explores the logic and parameters behind executing seasonal trades effectively, using specific examples related to bearish trends in GBP/USD during May.

Implementing Seasonal Trade Logic

  • The strategy involves capitalizing on bearish tendencies in pound sterling during May by anticipating a quarterly shift and observing divergence patterns in dollar Index or euro dollar indicators.
  • Short positions are initiated at the open of the last up closed candle following specific criteria aligned with historical data and market conditions.
  • Detailed analysis of monthly ranges reveals consistent bearish trends in May for pound sterling futures contracts over several years, emphasizing the reliability of this strategy over time.

Long-Term Viability of Seasonal Trading Models

Discusses the enduring strength and reliability of seasonal trading models like Model Number Four over extended periods, highlighting their robustness based on decades of historical data.

Longevity and Reliability

  • Seasonal trading models boast 40 years of supporting data, showcasing their longevity and credibility as reliable tools for traders seeking consistent returns over time.
  • The abundance of historical data reinforces these models' efficacy without requiring extensive sample sizes due to established seasonal tendencies observed consistently across different markets.

Fair Value Gaps and Trading Strategies

In this section, the speaker discusses fair value gaps, trading strategies based on monthly ranges, and analysis of the dollar index and British pound.

Fair Value Gaps

  • Fair value gaps are emphasized as a way to demonstrate authenticity in teaching without fluff or rehashing.

Monthly Range Trading Strategy

  • The speaker anticipates an expansion of the monthly range in May with a strong impulse move lower.
  • Seeking range within the monthly candle before June's new monthly range begins.
  • Profit-seeking within the four weekly ranges that construct a monthly range.

Dollar Index Analysis

  • Bullish sentiment on the dollar index is highlighted, expecting equal highs to be surpassed.
  • Notable higher low on May 1st indicating a bullish scenario.
  • Emphasis on liquidity draw supporting a bullish dollar outlook.

Market Analysis: Dollar Index vs. British Pound

This segment delves into detailed analysis comparing the dollar index and British pound charts.

Dollar Index Insights

  • Positive outlook for the dollar index with expectations of surpassing equal highs and reaching Weekly Cy levels.
  • Higher low observed on May 1st contributing to a bullish stance.
  • Bullish sentiment supported by liquidity dynamics.

British Pound Comparison

  • Contrast between dollar index positivity and British pound's formation of higher highs despite expectations for a lower low in the dollar index.
  • Discussion on accumulation of dollars and order pairing above old highs for liquidity generation.
  • Reference to missed opportunities related to seasonal tendencies lessons provided earlier in social media posts.

Utilizing Seasonal Tendencies for Trading Success

This part focuses on leveraging seasonal tendencies for creating watchlists and identifying potential profitable trades.

Seasonal Tendencies Strategy

  • Encouragement to study seasonal tendencies across various markets for each month in a calendar year (2019).
  • Creation of watchlists per month based on best-performing pairs or commodities quarterly shifts for mega trades potential.
  • Leveraging model number four insights from previous mentorship content for strategic trading decisions.

Unveiling Trading Secrets: Mega Trades Approach

Unveiling secrets behind successful trading approaches focusing on mega trades, swing trading, and quarterly shifts.

Mega Trades Revelation

  • Integration of swing trading techniques with seasonal tendencies insights for identifying mega trades opportunities annually.
  • Emphasizing limitless possibilities through combining core content elements into robust trading systems surpassing conventional market strategies.
  • Assertion that model number four remains unparalleled in delivering substantial returns compared to other methodologies regardless of discipline or competition outcomes.

New Section

In this section, the speaker discusses their personality and teaching style, emphasizing the importance of separating personality from content for effective learning.

Personality and Teaching Style

  • The speaker acknowledges being polarizing in personality but asserts that they can help anyone succeed in trading if their personality is separated from the content taught. They express confidence in transforming individuals into successful traders capable of precise market setups.
  • Emphasizes consistency in teaching methods, mentioning the need for individuals to adapt to the speaker's approach rather than expecting the speaker to change. The speaker highlights a shift towards relying on market signals rather than external data sources.
  • Reflects on past experiences with commercial data reliance and mentions a pivotal realization leading to the development of model number four. This model combines decoding market signals with seasonal trends on a monthly and quarterly basis.

New Section

This segment delves into seasonal tendencies in financial markets, highlighting how central banks influence market movements through stimulation and agitation.

Central Bank Influence

  • Explores how financial markets undergo cyclical swings every three months due to central bank interventions aimed at preventing stagnation. The speaker emphasizes that stagnant markets are unfavorable for central banks who prefer volatility and movement.
  • Discusses seasonal tendencies as tools used by central banks to control narratives around market conditions, influencing trader perceptions and behaviors. Large speculators at major financial institutions are key targets for central bank strategies.

New Section

This part focuses on the relationship between large speculators, commercials, and central banks in shaping market dynamics.

Market Dynamics

  • Highlights how large speculators often oppose commercials in trading positions based on CO2 data analysis. The speaker prioritizes understanding current actions of commercials each quarter to inform trading decisions using model number four.
  • Explores the role of central banks as counterparties to major financial institutions like UBS, JP Morgan, Goldman Sachs, among others. Central banks aim to stimulate volatility and liquidity within markets without intending harm to these institutions.

New Section

In this section, the speaker discusses the premeditated nature of their statements and the importance of revisiting past lessons for learning purposes.

Premeditated Statements and Learning

  • The speaker emphasizes that their statements are premeditated and aimed at facilitating learning. They encourage revisiting past lessons for a deeper understanding.
  • Reflecting on model number four from the previous year, the speaker highlights the difference in appreciation between new and returning members.
  • The speaker stresses the significance of learning through errors and mentions the predictability of certain market behaviors based on statistical probabilities.

Study Guidance and Market Insights

In this section, the speaker emphasizes the importance of continuous learning in trading and provides insights into market tendencies and strategies for success.

Prioritizing Learning and Growth

  • The speaker highlights that current knowledge is just a fraction of what traders will eventually learn, emphasizing the need for patience and continuous study.

Leveraging Seasonal Tendencies

  • Discusses the significance of recognizing seasonal tendencies in trading, using past successes to illustrate the effectiveness of understanding market patterns.

Scripted Approach to Trading

  • Emphasizes a scripted approach to trading decisions based on market mechanics, encouraging traders to focus on low-hanging fruit scenarios for successful trades.

Market Analysis Strategies

This segment delves into specific market analysis strategies, including Breakers, fair value gaps, and order blocks.

Utilizing Breakers in Trading

  • Explains how Breakers can serve as entry points in trading when prices break below them before rebounding.

Understanding Order Blocks

  • Critiques common misconceptions around order blocks prevalent on platforms like YouTube, stressing the importance of contextual factors over simplistic interpretations.

Efficient Market Navigation

This part focuses on navigating markets efficiently by analyzing liquidity pools and making informed trading decisions.

Liquidity Pool Dynamics

  • Explores how smart money strategically targets liquidity pools by driving prices lower to access larger pools for profitable trades.

Importance of Adhering to Rules

  • Stresses the necessity of following established rules and strategies in trading to avoid costly mistakes and align with market dynamics effectively.

Trading Strategies and Risk Management

In this section, the speaker discusses trading strategies, risk management, and potential entry points in trading.

Utilizing Trading Strategies

  • The speaker emphasizes using taught techniques to synchronize with market movements for effective trading.
  • Discusses the concept of refining risk in trading strategies to optimize outcomes.
  • Highlights missed opportunities due to lack of timely action and advises on profit-taking before significant events like FOMC meetings.
  • Analyzes price movements and liquidity handling as crucial aspects of efficient trading decisions.

Real-Time Market Analysis and Decision-Making

This segment focuses on real-time market analysis, decision-making processes, and leveraging social media platforms for insights.

Real-Time Market Insights

  • Emphasizes the use of Twitter for real-time market updates and insights without providing direct financial advice.
  • Encourages learners to observe market movements closely for valuable hindsight learning experiences.
  • Stresses the importance of consistent application of strategies for successful trading outcomes.

Position Trading Strategies and Risk Assessment

The discussion shifts towards position trading strategies, risk assessment, and maximizing profit potential through strategic entries.

Position Trading Dynamics

  • Details the potential profitability in position trading with a focus on risk assessment and profit objectives.
  • Introduces algorithmic thinking in analyzing price swings for informed decision-making in trading.
  • Explores consolidation patterns, smart money concepts, seasonal tendencies, and divergence analysis for trade validation.

Trade Execution Timing and Entry Points

This part delves into trade execution timing considerations, entry points identification based on fair value gaps, and proof-seeking before committing to trades.

Strategic Trade Execution

  • Discusses optimal trade execution timing based on market conditions such as non-farm payroll releases.
  • Advises traders on waiting for confirmation signals or fair value gaps before entering trades to enhance precision.

Position Management and Pyramiding Strategy

In this section, the speaker discusses position management strategies, specifically focusing on pyramiding techniques to enhance trading efficiency.

Position Management Techniques

  • When pyramiding positions, it is advisable to add fewer contracts as you build up your position to avoid overleveraging.
  • Initially, the speaker focused on buying strength in commodities but faced challenges when markets turned bearish due to lack of strategy.
  • The speaker learned a pyramiding technique from Ken Roberts involving increasing position sizes based on equity growth, which led to risky overleveraging experiences.
  • Overleveraging through pyramiding can lead to significant gains but also poses substantial risks that could potentially wipe out trading accounts.

Risk Management and Maximum Exposure

  • To manage risk effectively, consider adding to positions only if the total risk exposure remains within a predetermined maximum percentage of your account balance.
  • The speaker suggests keeping maximum risk exposure low (e.g., 1%) for traders unless they have extensive profitable trading experience.

Dealing Ranges and Trading Strategies

This segment delves into dealing ranges in trading and how traders can incorporate them into their strategies for more informed decision-making.

Understanding Dealing Ranges

  • Dealing ranges are defined by initial sell signals followed by price declines, indicating distribution by sellers in the market.
  • By defining dealing ranges accurately, traders can apply various trading models like the PD Matrix and seasonal tendencies for strategic entries and exits.

Strategic Entry Points

  • Traders should enter or add positions at the midpoint or higher within a dealing range when prices are at a premium level for better odds of success.
  • Probability diminishes significantly for additional entries outside premium levels within dealing ranges despite historical seasonal trends.

Future Outlook and Trading Framework

The speaker concludes with insights on future market prospects and emphasizes the importance of incorporating learned strategies into an algorithmic framework for successful trading.

Market Forecasting

  • The speaker anticipates promising opportunities in 2020 based on current market conditions and trends observed during the discussion.

Algorithmic Trading Approach

Detailed Analysis of Trading Strategies

In this section, the speaker delves into the intricacies of trading strategies, emphasizing the importance of understanding core content and utilizing frameworks to make informed decisions.

Understanding Core Content and Frameworks

  • The speaker highlights the significance of comprehending content that may seem dry but holds crucial insights leading to consistency in trading.
  • Emphasizes the movement potential in trading setups, illustrating how a 500 Pips move aligns with effective trading criteria provided earlier.
  • Discusses risk management by analyzing stop-loss placement relative to entry points, emphasizing minimal risk within approximately 50 Pips from entry.

Risk Management and Position Sizing

  • Advises on determining initial allocation based on risk tolerance, suggesting staying below 1% for the first entry to allow for potential position additions while managing overall risk exposure effectively.
  • Acknowledges the gray area in advising specific financial actions due to regulatory constraints, guiding traders to self-determine their approach within suggested frameworks.

Entry Points and Trading Models

  • Stresses entering trades above midpoint premium levels for optimal results within a specific model focused on position trading rather than day or swing trading approaches.
  • Clarifies the scope of the discussed model as position trade-oriented, highlighting pyramid techniques and high-probability considerations aligned with algorithmic price analysis.

Scaling Out and Profit-Taking Strategies

  • Details profit-taking strategies at predefined liquidity levels post-entry, advocating for partial scaling out across multiple positions based on individual trade scenarios.
  • Explores scaling techniques through partial exits at different price levels within a trade sequence, addressing challenges such as FIFO rules in certain jurisdictions while optimizing profit potential.

Market Symmetry and Analytical Depth

  • Reflecting on market tendencies and seasonal influences near month-end periods, showcasing symmetrical price movements as opportunities for detailed analysis and strategic planning.

Lesson Insights and Reflections

In this section, the speaker reflects on the depth of knowledge available for study, emphasizing the importance of starting with foundational concepts to grasp advanced topics effectively.

Reflecting on Learning Journey

  • The speaker highlights the vast amount of information available for future reference, suggesting that revisiting foundational charts can provide valuable insights even after a decade.
  • Learners are commended for achieving a level of understanding unparalleled outside their community, underscoring the significance of their progress and dedication to learning.
  • Emphasizes the personal sacrifice and effort invested in acquiring knowledge, cautioning against undervaluing the learning process or taking it for granted.

Trading Strategies and Mindset

This segment delves into the importance of trust in learning processes, highlighting the need for adherence to specific criteria and avoiding impulsive decision-making.

Trust in Learning Process

  • Acknowledges the trust required when embarking on a learning journey, drawing from personal experiences of investing in education across various domains.
  • Stresses the significance of following predetermined criteria rather than relying on luck or intuition when making trading decisions to maintain consistency and discipline.

Strategic Trading Approach

The discussion centers around maintaining discipline in trading by adhering strictly to established rules and frameworks without deviating based on personal interpretations.

Discipline in Trading

  • Advocates for a disciplined approach to trading by waiting for specific criteria alignment before executing trades, emphasizing patience over impulsive actions.
  • Encourages learners to adhere strictly to provided guidelines without attempting creative deviations that may hinder growth potential or lead to unnecessary risks.

Long-Term Success in Trading

Focuses on long-term success strategies by reiterating the importance of trust in mentorship guidance and following established models diligently.

Long-Term Success Principles

  • Highlights that adherence to prescribed models leads to significant financial gains, positioning these strategies as coveted knowledge sought after by traders globally.

Small Scale Fair Value Gaps and Optimal Trade Entries

The speaker discusses the concept of small-scale fair value gaps and optimal trade entries, highlighting that despite not using all taught strategies, individuals are still eager to participate. Some participants await new models while existing effective models remain underutilized.

Understanding Participant Behavior

  • Small-scale fair value gaps and optimal trade entries attract interest even when not utilizing all taught strategies.
  • Participants eagerly anticipate new models (e.g., model number five or twelve) while overlooking existing effective models at their disposal.

Reflection on Engagement and Expectations

The speaker prompts listeners to reflect on their reasons for engaging with the content provided. Encourages introspection regarding expectations versus actual outcomes from the learning experience.

Self-Reflection and Expectations

  • Listeners urged to contemplate reasons for engaging with the speaker's content.
  • Emphasizes the importance of aligning expectations with actual outcomes from the learning experience.

Market Predictions and Execution Proficiency

Discussion centers around the speaker's ability to predict market movements accurately in advance, contrasting this proficiency with participants' trading performance and exposure to losing trades.

Market Prediction Accuracy

  • Speaker highlights predicting market movements accurately ahead of time.
Playlists: ICT Charter Content
Video description

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.