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ICT Mentorship - Core Content - Month 02 - Framing Low Risk Trade Setups
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ICT Mentorship - Core Content - Month 02 - Framing Low Risk Trade Setups

Introduction

The instructor introduces the topic of low-risk trade setups and explains why selecting trade setups on higher time frame charts is ideal.

Importance of Higher Time Frame Charts

  • Selecting trade setups on higher time frame charts is ideal for high odds probability trades.
  • Higher time frame charts provide directional bias, institutional order flow, and support or resistance ideas.
  • Large institutions and banks analyze markets on daily, weekly, and monthly basis.

Lower Risk Trade Setups

The instructor explains how to lower risk in a trade by focusing on higher time frames and transposing those levels to lower time frames.

Refining Trade Setups with Higher Time Frames

  • Conditions that lend to a trade setup on a higher time frame can be refined to a lower time frame.
  • Transposing the higher time frame levels to lower time frame charts reduces overall exposure in terms of pips for stop losses.
  • Refining higher time frame levels to lower time frame charts allows for smaller stop loss placement and by default lower risk.

Example Setup: Aussie Dollar Daily Chart

The instructor uses an example setup to demonstrate how refining with lower risk works.

Using Higher Time Frame Levels for Directional Bias

  • The daily chart level 7512 is an old bullish order block because banks have bought there before.
  • Trading into that level again provides a higher probability setup.
  • A buy order would be needed above this level on an hourly chart.

Refining the Setup with Lower Risk

  • Going down into a 15-minute timeframe allows for buying at a lower price point and offering less in terms of risk exposure.

Reducing Risk with Bullish Order Blocks

In this section, the speaker discusses how to reduce risk when buying by using bullish order blocks and refining entry points.

Using Bullish Order Blocks

  • A bullish order block is a valuable level to buy from because it has been traded through.
  • To reduce risk, focus on the midpoint of the candle up to its high and be a buyer in that area.
  • Place a stop loss below the entry point so that if price goes higher, it should not go down to the stop loss.

Refining Entry Points

  • By zooming in on a 5-minute chart, refine the entry point from 75.20 to 75.15.
  • Use price action on the timeframe you've executed on and look at where price is going to be reaching for it.
  • Have an eight-pip stop loss and first profit of eight pips above here second and third so we have a multiple of three r before we even take out the buy stops above this old high on a five minute chart.

Understanding Risk vs Reward in Trading

In this section, the speaker emphasizes understanding risk vs reward in trading and how refining risk can lead to greater rewards.

Risk vs Reward

  • Refining your risk can lead to getting multiple of 3r reward for your one dollar risk.
  • It's amazing how you can take this and refine it down to smaller time frames; you don't have to have big super wide stops but it does require you to understand what you're doing and why you're doing it.
  • You can't get in there with these ultra-short stop-loss orders if you don't understand price action and why it should be responding on these levels.
Playlists: 2016 ICT Private Mentorship Core Content Month 02
Video description

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