VIDEO
HIGHLIGHT
Log InSign up
ICT Mentorship Core Content - Month 06 - The Million Dollar Swing Setup
SummaryTranscriptChat

ICT Mentorship Core Content - Month 06 - The Million Dollar Swing Setup

The Million Dollar Swing Setup

In this lesson, the instructor discusses the "million dollar swing setup" and how to identify it. He emphasizes the importance of seasonal tendencies in the market and explains his process for analyzing major markets and inter-market relationships.

Seasonal Tendency

  • The instructor starts by looking for a seasonal tendency in the market.
  • If there is a seasonal tendency, he proceeds with further analysis.
  • If there is no seasonal tendency, he waits for a new one.

Major Market Analysis

  • After identifying a seasonal tendency, the instructor analyzes the four major asset classes to determine if they are in a risk-on or risk-off state and whether they are trending or consolidating.
  • He then looks at closely correlated pairs between stocks, bonds/interest rates, commodities, and currencies to do a top-down analysis of major levels that would be salient for a swing trade.

Trade Setup

  • Once he has completed his analysis of major markets and inter-market relationships, he looks for trade setups that align with his findings.
  • He emphasizes that historical evidence of consistent repetition is what makes this setup worth pursuing.

Short-Term Trading

  • If conditions are not right for swing trading, the instructor considers short-term or day trades instead of forcing an opinion on taking a swing trade without proper framework.

Intermarket Analysis for Swing Trade Setups

This section covers the conditions required for buying a metal or foreign currency. It explains how to analyze the COT hedging program and determine if commercials are buying or selling. It also discusses the correlation analysis process, commodity filter process, and open interest filter process.

Analyzing the COT Hedging Program

  • To buy a metal or foreign currency, look at the COT hedging program.
  • Determine if commercials are buying or selling currently.
  • If commercials are buying, proceed to the correlation analysis process.
  • If commercials are selling, consider short term or day trades for now and wait for swing trading conditions.

Correlation Analysis Process

  • Ask yourself if the dollar index is supporting bearish price action for the US dollar.
  • If yes, proceed to the commodity filter process.
  • If no, consider short term or day trades for now and wait for swing trading conditions.

Commodity Filter Process

  • Ask yourself if commodities are rallying higher breaking old highs or rejecting old lows.
  • If yes, proceed to the open interest filter process.
  • If no, consider short term or day trades for now and wait for swing trading conditions.

Open Interest Filter Process

  • Check if open interest is dropping by 10 to 15% or more.
  • This indicates commercial short covering.
  • Proceed to top-down analysis process if open interest has dropped.
  • Consider short term or day trades for now and wait for swing trade conditions if it hasn't dropped.

Trading Process Overview

This section provides an overview of the trading process and outlines the steps involved in identifying trade setups.

Correlation Analysis Process

  • Ask if the dollar index is supporting bullish price action for the US dollar. If yes, proceed to commodity filter process. If no, consider short-term or day trades.
  • Use commodity filter process to determine if commodities are dropping lower, breaking old lows, or rejecting old highs. If yes, proceed to open interest filter process. If no, consider short-term or day trades.

Open Interest Filter Process

  • Determine if open interest is rising or has increased 10 to 15% or more (commercial short selling). If yes, proceed to top-down analysis process. If no, consider short-term or day trades.

Top-Down Analysis Process

  • Note the 9 to 18 month history of price action.
  • Identify all PD arrays on monthly weekly daily and 4-hour time frames and transpose all to your four hour time frame chart.
  • Look for PD arrays that converge with one another to determine high probability institutional order flow and levels.
  • Based on bullish or bearish stance/premise being traded focus on respective PD arrays for trade setups.

Buy Trade Setup

  • Note all monthly and weekly discount arrays offering explosive rally potential.
  • Confirm a monthly weekly daily discount array entry as support for dollar index weakness for SMT divergence.
  • Execute trade entry using buying on a stop technique when buying a bullish breaker/mitigation block or liquidity void/fair value gap.
  • Use position trading entry techniques for limit and stop orders.

Sell Trade Setup

  • Note all monthly weekly premium arrays offering explosive rally potential lower.
  • Confirm a monthly weekly daily array entry at resistance with dollar index strength for SMT divergence.
  • Execute trade entry using selling on a stop technique when shorting a bearish breaker/mitigation block or liquidity void/fair value gap.
  • Use position trading entry techniques for limit and stop orders.

Trade Management

  • Look for contrary monthly weekly daily premium arrays to reach for while long if applicable.
  • Leave stop loss from initial placement until price has moved one third of your intended trade direction.
  • Take something off in profit when trade moves in your favor one quarter of your intended objective using 20 to 30% for scaling first profit.
  • Move protective stop loss to break even after first profit is taken, never before.
  • When trade moves to fifty percent of your intended objective, look for new buying opportunities to add back to one quarter taken off after a short term decline.

Sell Trade Management

This section covers the management of sell trades.

Be Mindful of Market Cannon

  • The market cannon will likely make a run for sell stops at or just above 50 percent of the range you hold through.
  • Don't rush trailing the stop loss if you're stopped out.
  • Reconsider the original reasons for the trade if they're still valid re-enter at a new monthly weekly or daily discount array.

Look for Contrary Monthly Weekly Daily Discount Arrays

  • Look for contrary monthly weekly daily discount arrays to reach for while short if applicable.
  • Look for fib extension confluences for discount arrays.

Leave Stop Loss from Initial Placement Until Price Has Moved One Third of Your Intended Trade Direction

Take Something Off in Profit If Trade Moves in Your Favor One Quarter of Your Intended Objective

  • Use 20 to 30 for scaling first profit.

Move Protective Stop Loss to Break Even After First Profit Is Taken Never Before

When Trade Moves to 50% of Your Intended Objective, Look For New Shorting Opportunities

  • Add back to one quarter taken off after a short term bounce.

Take Full Position Off at Intended Discount Array Objectives or 75% to 80%

  • Trail stop loss above the most recent four hour short term high.

Million Dollar Swing Set Up: Gold Example

This section discusses swing trading using gold as an example and how seasonal tendencies can be used in trading.

Seasonal Tendency

  • There is a strong tendency for gold to rally from December into mid-February early March.
  • We are using calendar reference points at the bottom of the chart.

Major Market Analysis

  • Bond markets are trending
  • Dollar index is trending
  • CRB index is flat going into December
  • Stock market is trending

Commercial Analysis

  • The commercials show a lessening of shorts with the red line going higher at the same time we are oversold sentiment wise.
  • Open interest is declined aggressively over 100 contracts.

Justification for Dollar Index Confirming Gold Should Go Higher

  • The midpoint of December going into January gold was failing to make lower lows at a major support level for gold.
  • The dollar index shows a willingness to go higher so there's the diversions we're looking for.

Commodities Sampling

  • Soybeans was able to take out short-term highs every low was being rejected so there were bullishness undertones in the commodity market for soybeans.

Gold Market Analysis

In this section, the speaker discusses the bullish nature of commodities and analyzes the gold market. They provide a trade objective for a long position in gold.

Trade Objective

  • The speaker notes the 1142 level on the monthly chart as an important high for gold.
  • The objective for a long position is set at the 1250 level noted off of the weekly October 17, 2016 candle.
  • Another important level to note is the 1200 level seen by May's candle in 2016.
  • The range projection up from the 1142 level is around 1255 to 1260 with an equilibrium price point at 1200.
  • A stop run is expected after trading through the equilibrium price point on the upside, taking out sell stops below the marketplace.
  • After breaching midway point or equilibrium, another stop run may occur before reaching final objective of 1255 to 1260.

Price Swing Projections

  • Fibonacci pull from high down to low and use extensions of 127 and 162 to arrive at confluence of fibonacci and weekly/monthly pd arrays at swing projection of 1260.
  • Second portion should only see another stop run after high is taken out that's formed at midway point of overall price swing.

Understanding the Million Dollar Trade Setup

In this section, the speaker explains how to identify a million-dollar trade setup by breaking down the overall market systematically and looking for specific conditions.

Identifying Conditions for Trading

  • The speaker emphasizes that traders must put in work to identify trading setups and cannot rely on plug-and-play systems.
  • Traders must look for specific conditions before entering the market, and if these conditions are not met, they should wait.
  • Once traders have identified the right conditions, they can enter the market with confidence and know when to take stop losses or buy/sell on stops or limits.

Anticipating Price Swings

  • Traders should use study notes to make their own notes and draw references to things they didn't think about before.
  • Traders should anticipate price swings by dividing them in half once they hit the halfway point. They should then anticipate a stop run or retracement before looking for expansion going towards their larger objective.
  • After breaching the midway point, traders should anticipate a second stop run after a retracement. Generally, there isn't another stop run at all; it just makes a quick run towards the objective on the upside.

Limiting Trades

  • The speaker notes that his trading strategy reduces overtrading since it only focuses on seasonally poised trades that are likely to move higher or lower.
  • While most of his trades are short-term or day trades, he believes that swing trades set up around four to six weeks. He recommends using his strategy as an alternative if you can't day trade or short-term trade.

The Importance of Patience in Trading

In this section, the speaker emphasizes the importance of patience in trading and explains that waiting for new information is crucial to success.

Key Points:

  • Successful traders are patient and willing to wait for new information.
  • Rule-based ideas are necessary for successful swing trading.
  • The swing trading model outlined is not difficult or highly technical but requires a procedure that leads to the desired outcome.
  • Using the framework provided, traders can go back over the last two years and see if their ideas ferret out all solid swing trades.

Framework for Position Trading, Swing Trading, and Short-Term Trading

In this section, the speaker outlines a framework for position trading, swing trading, and short-term trading.

Key Points:

  • Traders will learn all the rules about each individual discipline before moving on to the next month's content.
  • After completing the swing trading model, traders will be able to do real-time analysis to ferret out any new short-term or swing trades going forward.
  • Traders will continuously look for swing trade ideas while learning short-term trading in March.
  • In April, traders will be absolutely trading one-shot one kills every single week while learning day trading.
  • After learning day trading in April and May, traders will move on to scalping and other content later in the mentorship.

Conclusion

In this section, the speaker concludes by encouraging feedback on his swing trading model and emphasizing that it requires thinking and some prior knowledge.

Key Points:

  • The swing trading model is not complicated but requires thinking and some prior knowledge.
  • Feedback on his model is encouraged.
  • Good luck and good trading!
Playlists: 2017 ICT Private Mentorship Core Content Month 06
Video description

2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in February 2017. 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.