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ICT Charter Price Action Model 9 - One Shot One Kill Trade Plan & Algorithmic Theory
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ICT Charter Price Action Model 9 - One Shot One Kill Trade Plan & Algorithmic Theory

IC Internship: 50 to 75 Pips per Week Model

Introduction to the Price Action Model

  • The session introduces the IC internship focusing on a price action model designed for achieving 50 to 75 pips weekly, referred to as "one shot one kill."
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  • The presenter emphasizes that there are five stages in developing a trade plan: preparation, opportunity discovery, trade planning, trade execution, and trade management.

Preparation Stage

  • In the preparation stage, traders should note all medium and high-impact market events for the upcoming week.
  • A focus is placed on analyzing the last 20 weeks of data to determine the highest high and lowest low, establishing a current dealing range.
  • This analysis aims at predicting price movements on an institutional level rather than intraday fluctuations.

Opportunity Discovery

  • Traders look for potential liquidity draws by identifying old highs and lows within their established range.
  • The presenter shares that they used this model publicly on YouTube while anticipating bullish Euro dollar trends against bearish dollar trends during this period.

Trade Planning

  • The strategy involves targeting easy gains of around 50 pips while being aware of potential runs towards buy-side or sell-side liquidity based on institutional order flow.
  • When preparing for market declines or rallies, traders should align their strategies with economic calendar events that suggest volatility injections.

Trade Execution & Management

  • For bearish trades, optimal entries are anticipated during retracements in key trading sessions (London/New York).
  • Conversely, bullish trades require similar entry strategies but focused on retracements lower during those same sessions.

Position Management Strategies

  • When entering short positions using demo accounts, traders should utilize PD array convergence as their entry point within kill zones.
  • For profit-taking strategies: close 80% of positions after reaching a 50-pip target and allow remaining positions to aim for up to 75 pips while taking partial profits along the way.

Understanding Position Sizing in Trading

Calculation of Position Size

  • The formula for calculating position size is: Position Size = (Account Equity * R%) / (Stop Loss in Pips). This helps determine how much leverage to use based on account equity and risk percentage.
  • For example, with an account equity of $10,000 and a risk per trade of 1%, the maximum risk is $100. If the stop loss is set at 20 pips, this translates into using micro lots where each represents $0.10 per pip.
  • In another scenario with an account equity of $110,000 and a similar risk percentage, the calculation allows for trading mini lots (10K), which represent $1 per pip. A 20-pip stop loss would then cost $20.

Adjusting Risk After Losses

  • If a trader experiences a full loss equivalent to their R%, they should reduce their R% by 50% until recovering half of that loss before returning to the original risk level.
  • For instance, if a trader loses $100, they must adjust their next trade to only risk $50 until they recover at least $25 from subsequent trades.

Managing Winning Trades

  • When experiencing consecutive winning trades (e.g., five in a row), it’s advisable to drop the R% by 50%. This strategy helps mitigate risks associated with potential future losses while promoting steady growth in equity.

Real-Time Example: Euro Dollar Trade Analysis

Market Conditions and Bias

  • Analyzing market conditions for the Euro Dollar as of December 4th, 2020 shows bullish sentiment based on prior commentary suggesting price could reach higher objectives due to favorable economic indicators.
  • The analysis references historical highs and fair value gaps on weekly charts that support bullish expectations for intraday trading setups.

Economic Calendar Impact

  • On December 1st, high-impact news events were anticipated from the Federal Reserve Chair's speech at 10:00 AM New York time. This was expected to influence market movements significantly.

Execution Strategy

  • The execution plan involved looking for optimal entry points during New York session openings after identifying bullish range expansions on daily charts.
  • Utilizing Fibonacci retracement levels helped pinpoint precise entry areas during trades aimed at capturing gains between 50 to 75 pips.

Trade Management and Outcomes

Price Action Model Number Nine: One Shot One Kill Strategy

Overview of the Trading Model

  • The lecture discusses Price Action Model Number Nine, focusing on a strategy aimed at capturing 50 to 75 pips per week.
  • Emphasis is placed on understanding weekly range expansion and higher time frame bias, which can confirm or negate weekend analysis based on Monday's trading activity.

Trading Days and Timing

  • The speaker prefers to trade on Tuesday or Wednesday, often willing to skip Monday due to statistical evidence that suggests Tuesday frequently establishes the week's higher low.
  • While there are instances where missing Monday trades resulted in missed opportunities, the speaker maintains a strategic approach by using Monday for analysis rather than execution.

Trade Entry Strategies

  • The ideal scenario involves waiting for optimal trade entries that return into fair value gaps and target liquidity around equal lows; if conditions aren't met, smaller scalps may be executed instead.
  • Acknowledgment of potential inaccuracies in analysis leads to a flexible approach where smaller trades can compensate for larger missed opportunities.

Integration with Previous Models

  • The speaker plans to integrate insights from Model Number Eight with Model Number Nine for enhanced trading strategies.
  • Discussion includes analyzing lower time frames and identifying key price levels that indicate potential market movements.

Market Analysis Techniques

  • Analyzing S&T Divergence reveals market weaknesses; this informs expectations of downside expansion within the weekly candle framework.
  • Fair Value Gaps and liquidity pools are critical components in determining entry points for trades aiming at achieving 50 to 75 pips.

Execution of Trades

  • Each one shot one kill trade is treated as an individual order while also considering model number eight setups as separate but complementary strategies.
  • Specific entry techniques involve placing limit orders above recent highs with defined stop losses, allowing for systematic profit-taking at various levels below identified lows.

Trading Strategy Insights

Partial Profit Taking Strategy

  • The speaker discusses taking partial profits at one standard deviation between a low and high, indicating this is part of a measured move strategy.
  • Emphasizes the importance of executing multiple orders to maximize account growth quickly, referring to this approach as "one shot one kill."
  • Highlights that the first profit target is set 510 pips below the entry point, aiming for consistent risk management while capitalizing on market opportunities.

Order Framing Techniques

  • Describes using two separate orders with similar logic but different profit-taking strategies; the second order focuses on reaching relative equal lows.
  • Discusses utilizing equilibrium levels in a discount market to identify potential sell-side liquidity pools for better trade entries.

Limit Order Placement

  • Introduces a method for placing limit orders at the midpoint between two significant price points (low and high), ensuring optimal entry without excessive spread considerations.
  • Critiques certain brokers for limiting order placements due to their internal liquidity practices, suggesting an alternative strategy by splitting ranges.

Risk Management and Pyramiding

  • Explains that both orders carry the same risk profile but differ in profit-taking mechanics; emphasizes careful planning around market movements.
  • Discusses conditions under which pyramiding can be applied, focusing on maintaining positions above equilibrium levels to enhance profitability.

Expected Returns from Trading Strategies

  • Outlines expected returns based on leverage and risk management strategies; notes that without pyramiding or taking partial profits, returns could reach approximately 14.5%.

Trading Strategies and Market Insights

Partial Exits in Trading

  • Discusses the management of partial exits in trading, emphasizing that the decision on how much to take off should be based on personal experience rather than strict rules.
  • Suggests a general approach of taking half off initially, allowing for two additional partial exits at 25% each from the remaining balance, with the last portion set to a limit order.

Adding Positions and Stop Loss Management

  • Explains adding positions when there is an immediate rebalance, recommending using half of what was used for previous entries without taking any initial partials.
  • Mentions setting stop losses just above gaps in price action, indicating a strategy focused on minimizing risk while maximizing potential gains.

The Learning Curve in Trading

  • Highlights the importance of experience and continuous learning in trading, stating that even after 30 years, one can still feel like a novice due to market complexities.
  • Warns against overestimating one's understanding of market dynamics; emphasizes mastering oneself rather than trying to master the market itself.

The Importance of Exposure and Experience

  • Critiques those who believe they could have learned complex trading strategies quickly; stresses that extensive exposure and time spent learning are crucial for true understanding.
  • Points out that exclusive lessons provided within a community help develop bias through consistent observation of market behavior relative to time.

Navigating Market Variables

  • Addresses misconceptions about simplifying trading education into short lessons; underscores the necessity of navigating various asset classes and understanding seasonal tendencies.
  • Emphasizes that numerous variables affect trading outcomes, making it unrealistic to expect mastery from brief lessons alone.

Individual Trading Styles and Flexibility

  • Acknowledges individual trader characteristics influencing their interpretations of price movements; encourages flexibility in choosing personal trading methods while providing essential rules where applicable.

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Channel: The Inner Circle Trader
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Government Required Risk Disclaimer and Disclosure Statement CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.