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ICT Mentorship Core Content - Month 03 - Timeframe Selection & Defining Setups
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ICT Mentorship Core Content - Month 03 - Timeframe Selection & Defining Setups

Introduction to Time Frame Selection

The instructor introduces the topic of time frame selection and defining setups for trading models, emphasizing the importance of different time frames for various trading strategies.

Monthly Chart for Position Trading

  • Monthly charts are utilized for position trading.
  • Provides assistance in trading and analysis, especially for those focusing on longer-term positions.
  • Emphasizes the significance of monthly charts as a basis for long-term position trading.

Weekly Chart for Swing Trading

  • Utilized for swing trading, involving one or two trades within a three-month period.
  • Requires patience due to the time it takes to form setups.
  • Offers valuable insights even if not directly traded upon.

Daily Chart for Short-Term Trading

  • Ideal for short-term trading, offering a balance between long-term perspective and near-term banking levels.
  • Enables analysis of institutional order flow and identification of key points such as stops and liquidity voids.
  • Suitable for traders uncomfortable with intraday price action or lower time frames.

Transitioning Between Time Frames

  • Suggests moving from daily to weekly charts if daily chart movements feel too fast or overwhelming.

Day Trading Concepts and Time Frame Selection

The speaker discusses the importance of understanding day trading concepts and selecting appropriate time frames for trading setups.

Importance of Time Frame Selection

  • Emphasizes the need for traders to develop their unique trading style rather than imitating others.
  • Highlights the significance of gaining experience in the market to have an epiphany about one's trading preferences and setups.
  • Discusses how different time frames impact trading opportunities based on individual patience levels and preferences.
  • Illustrates that a trader's preferred setups may vary based on the time frame, emphasizing the importance of aligning with one's comfort level.
  • Stresses that time frame selection should align with a trader's psychological makeup, including patience level and lifestyle constraints.

Finding Unique Setups as a Trader

The speaker delves into the process of identifying setups that resonate with individual traders' preferences and styles.

Identifying Personalized Setups

  • Encourages traders to explore various tools and concepts to determine what resonates with them personally.
  • Shares personal experience in refining a trading model focused on institutional order flow and price action for specific setup criteria.
  • Reflects on initial reliance on indicators versus developing objective criteria for trades based on observable price action patterns.
  • Acknowledges common tendencies among new traders to seek external validation through indicators rather than honing their analytical skills.
  • Differentiates between mathematically derived indicators and unique price action characteristics that repeat across various time frames for effective setup identification.

Trend Trading Strategies

The speaker explores trend trading strategies based on monthly and weekly chart analysis.

Trend Trading Approach

  • Emphasizes the importance of finding setups that align with a trader's preferences, even if they do not overlap across different time frames.

Short-Term Trading Strategies

In this section, the speaker discusses short-term trading strategies, particularly swing trading and day trading, highlighting the differences in approach and mindset required for each.

Swing Trading

  • Swing traders focus on daily intermediate-term price action.
  • Requires patience as setups may take time to form but offer significant rewards.
  • The speaker prefers faster money turnover for more velocity in trading.

Contrarian Trading

  • Discusses starting as a contrarian trader.
  • Being a contrarian trader involves trading reversal patterns at market extremes.
  • Contrarian trading includes identifying blow-off moves and capitulation for potential reversals.

Short-Term Trading

  • Opportunities for short-term trades include identifying blow-off moves or specific levels for reversals.
  • Day traders focus on weekly ranges with trades lasting one to five days.

Time Frame Selection in Trading

This part delves into the importance of selecting the right time frame in trading based on individual preferences and lifestyle constraints.

Time Frame Selection

  • The speaker's expertise spans from long-term charts to day trading setups.
  • Excels in four-hour or shorter time frames with day trading setups.

Aligning Trading Style with Personal Preferences

Aligning one's trading style with personal preferences and lifestyle demands is crucial for success in the financial markets.

Personal Alignment

  • Emphasizes aligning trading style with personal goals and preferences for efficient money turnover.

Detailed Analysis of Monthly Chart Trading

In this section, the speaker delves into the significance of utilizing monthly charts for trading strategies, emphasizing the long-term price action reference and potential opportunities they offer.

Importance of Monthly Charts

  • The daily chart provides insights on market direction, with the monthly chart serving as a long-term price action reference for significant trading swings.
  • Trading setups on monthly charts unfold over extended periods, offering low-risk high-reward opportunities that align with directional biases.
  • Trading in the direction of the monthly chart's trend can provide advantages even if one misses optimal entry points due to its extended timeframe.

Analyzing Monthly Price Action

  • Swings on monthly charts can span several hundred pips, requiring patience for unfolding but presenting substantial trading opportunities.
  • Each candle on a monthly chart represents a month's worth of data, showcasing significant price movements and potential trade setups.

Leveraging Time Frames for Trading

  • Significant pip movements over months highlight the profit potential in trading based on monthly chart patterns and trends.

Understanding Price Action on Monthly Charts

In this section, the speaker delves into the importance of understanding price action on monthly charts and how to interpret movements without relying on external indicators or trends.

Analyzing Price Movements

  • The speaker emphasizes the purity of understanding price action without needing prior trend knowledge or indicator analysis.
  • Focus is placed on identifying significant price movements, such as a strong move from consolidation levels, to gauge market sentiment.
  • Smart money selling during upswings is highlighted, indicating missed short-selling opportunities when prices break below previous candle lows.

Identifying Trading Setups on Monthly Charts

This segment discusses how traders can identify potential trading setups based on historical price movements and key levels on monthly charts.

Recognizing Trade Opportunities

  • Traders are advised to observe specific candlestick lows for potential trade entries after prolonged periods of price movement.
  • Breakouts above bearish candles signal potential upward momentum, with stops likely resting at key levels like 146.
  • Expectations of bullishness arise when prices trade back into previously violated bearish candles, indicating a shift in market sentiment.

Utilizing Stop Loss Orders and Market Dynamics

This part focuses on the role of stop loss orders by large funds and their impact on market movements, emphasizing the significance of identifying stop levels for strategic trading decisions.

Understanding Market Dynamics

  • Large funds strategically place stop loss orders below key levels like 122, leading to rapid market movements when these stops are triggered.
  • Market acceleration towards stop levels showcases the influence of institutional trading activities in driving price actions.

Trading Strategies Analysis

In this section, the speaker discusses trading strategies and the importance of understanding potential price ranges for effective trading decisions.

Possession Trading Strategy

  • A possession trader can consider shorting around the 150.80 level and aim for a move down to the 122's.
  • Analyzing the Euro Dollar pair, traders can identify key levels like 151 and bearish order blocks for potential trading opportunities.
  • By defining a range between 151 and 122 on a monthly chart, traders gain insight into potential price movements.

Refining Strategies on Different Timeframes

  • The identified price swing of over 2900 pips on a monthly chart can be refined on a weekly chart for intermediate-term trading setups.
  • Weekly charts offer more detailed insights into market behavior, including interactions with institutional reference points.

Chart Analysis and Trade Setups

This section delves into refining trade setups by breaking down analysis from monthly to daily charts.

Utilizing Weekly Chart Insights

  • Market behaviors near institutional reference points on weekly charts provide selling opportunities in alignment with monthly chart expectations.
  • Understanding liquidity zones based on monthly analysis helps anticipate market movements at different levels.

Daily Chart Application

  • Transitioning to daily charts allows traders to focus on short-term actions, identifying highs, lows, and framing trades within known ranges.
  • Using Fibonacci retracement between high and low points aids in grading price swings and anticipating new trading scenarios.

Pattern Trading Strategies

Pattern trading strategies are discussed, emphasizing optimal trade entries based on known ranges and order blocks.

Optimal Trade Entries

  • Identifying setups at specific levels within known ranges enhances trade entry precision.

Trading Strategies and Market Analysis

In this section, the speaker discusses trading strategies involving stop runs, false breaks, and order blocks. The focus is on identifying key patterns and setups for effective trading decisions.

Understanding Stop Runs and Protecting Positions

  • Traders absorb liquidity on the buy side to pair up orders for selling into known participants who want to buy at specific levels with trailed stop losses.

Leveraging False Breaks for Profit

  • Markets often trigger buy stops above recent highs, leading to traders being knocked out or experiencing favorable movements.

Holy Grail Setup: False Breaks Above Highs

  • Identifying false breaks above highs on higher time frame charts can signal potential price reversals, offering lucrative trading opportunities.

Importance of Higher Time Frame Analysis

  • Analyzing stop runs requires insights from higher time frames like monthly charts to maintain a bias until proven wrong by market movements.

Trading Strategies Based on Order Blocks

Trading Discipline and Strategy

In this segment, the speaker discusses the importance of discipline in trading and outlines three key forms of discipline that are essential across all time frames.

Importance of Trading Discipline

  • The speaker emphasizes the significance of maintaining discipline in trading by waiting for market expansion after a range-bound phase.

Consistency Across Time Frames

  • Three forms of discipline are highlighted as crucial for trading success, irrespective of the preferred strategy or time frame used.

Avoiding Comparison and Frustration

  • Traders are advised against comparing themselves to others excelling in different trading techniques, emphasizing the need to identify one's unique pattern for successful trading.

Focus on Price Action Characteristics

  • The speaker stresses the importance of observing price action characteristics such as voids and previous highs to determine potential trade setups.

Simplified Trading Approach

  • Emphasizes focusing solely on three specific conditions in the marketplace for trading success, avoiding unnecessary complexity and sticking to proven strategies.

Efficiency Through Simplicity

This part delves into how simplicity and focus on three core characteristics in price action can lead to consistent success in trading.

Streamlined Trading Methodology

Playlists: 2016 ICT Private Mentorship Core Content Month 03
Video description

2016 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in November 2016. 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.