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ICT Mentorship Core Content - Month 02 - The Secrets To Selecting High Reward Setups
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ICT Mentorship Core Content - Month 02 - The Secrets To Selecting High Reward Setups

Introduction

In this section, the speaker introduces the topic of high reward trading setups and explains that this teaching will be more specific than his previous Trading Plan Development series.

Importance of a Mentor or Framework

  • It's important to have a mentor or framework when starting out in trading.
  • The speaker's role as a mentor often involves helping traders determine where to begin and what to focus on.
  • The Trading Plan Development series is still valuable for beginners, but this teaching will be more specific to forex trading.

Micro Version of Trading Plan Development Series

In this section, the speaker explains that this teaching will cover the specific processes and decision-making involved in his forex trading strategy.

Importance of Understanding Decision-Making Processes

  • Understanding decision-making processes is key to successful trading.
  • This teaching will cover the processes and decisions involved in determining whether to buy, sell, or stay on the sidelines.
  • The speaker emphasizes that entry signals, stop placement, patterns, etc. are not as important as understanding how to arrive at a decision.

ICT Mindset

In this section, the speaker discusses the importance of having an ICT mindset and understanding how it frames opinions about certain assets.

Process Thinking

  • The ICT mindset involves process thinking.
  • Day-to-day decisions are based on individual processes that collectively form an overall decision-making process.
  • Understanding these processes is key to developing an effective forex trading strategy.

Secret to Successful Trading

In this section, the speaker emphasizes that understanding what makes a process arrive at a decision is key to successful trading.

Components of Arriving at a Decision

  • To make informed decisions about buying, selling or staying on the sidelines requires understanding what components make up the decision-making process.
  • This includes understanding what asset class to trade, which specific pair to focus on, and what factors make a trader bullish or bearish.

Trading Process Overview

In this section, the speaker discusses the importance of having a defined trading process and outlines the key steps involved in creating one.

Importance of Patience

  • Every trader needs to have patience.
  • After spending time in front of charts and working with others, traders will learn about themselves as traders.

Understanding Trade Environments

  • Traders need to understand what defines trade environments.
  • Determining when not to trade is something that comes from experience and learning.

Defining Trade Parameters

  • Traders need to determine their trade parameters.
  • These parameters must be specific and binary.

Executable Criteria for Trades

  • Traders need to know what makes their executable criteria for trades.
  • These criteria must be highly refined and specific.

Unique Trading Model

  • Each trader needs a unique trading model that is defined by them.
  • This model should not be shared with others.

Developing a Process-Oriented Thinking

In this section, the speaker emphasizes the importance of developing process-oriented thinking in trading. He explains that efficiency in trading comes from process-oriented thinking and not impulsive or reactionary thinking.

Importance of Experience

  • The speaker believes that to be bullish or bearish in the marketplace, one must have a real understanding of why that scenario should take place.
  • Experience is crucial for traders to learn. One should log and keep track of their experience for future reference.
  • Winning trades do not necessarily make someone a good trader, and losing trades do not mean they are bad. It is essential to understand why things happen.

Finding High Reward Trade Setups

  • To find high reward trade setups, traders need to know what they are looking for specifically and where to find that information.
  • There are always plenty of trading signals available, but traders need to know what defines the setups for them as individuals.
  • Conceptual ideas and a broad brush idea of breaking down what it is that we look for in the marketplace can help develop process-oriented thinking.

Impulsive Thinking Hinders Development

  • Efficiency in trading comes from process-oriented thinking and not impulsive or reactionary thinking.
  • Traders who struggle tend to be those who try to be reactionary or impulsively think about what they want to do right now.
  • Insatiable desire leads new traders into feeling rushed into taking signals prematurely.

Understanding Trading Concepts

In this section, the speaker emphasizes the importance of understanding trading concepts before focusing on technicals and specific trade scenarios.

Importance of Understanding Trading Concepts

  • The speaker believes that understanding trading concepts is crucial before focusing on technicals and specific trade scenarios.
  • The speaker emphasizes that he needed to be told these things when he first started as a trader, but no one was around to tell him.
  • Traders need an intimate relationship with their mentor to learn the process behind high reward trade setups.

Process-Oriented Thinking Leads to High Reward Trade Setups

  • Conceptual ideas and a broad brush idea of breaking down what it is that we look for in the marketplace can help develop process-oriented thinking.
  • The speaker believes that his teaching provides an intimate experience on a day-by-day basis, building on total understanding.
  • Technicals, trade scenarios, and specific get-in-get-out type things are not necessary until traders have developed process-oriented thinking.

Impulsive Thinking and Professional Trading

In this section, the speaker warns against impulsive thinking in trading and explains why professional traders are not in a rush to put money at work.

Impulsive Thinking and High Reward Trading Scenarios

  • The speaker warns against impulsive thinking in trading.
  • Professional traders are not in a rush to put money at work.
  • They want to wait for a scenario that makes sense.
  • Traders often ask what makes a certain level or order block significant, but it's hard to answer without going through all the necessary steps.

The Importance of Experience and Process-Oriented Thinking

  • The speaker emphasizes the importance of experience and process-oriented thinking in trading.
  • He requires 12 months with him because it takes time to internalize the necessary information and develop an intimate relationship with the process.
  • Experience gives traders reference points that allow them to arrive at decisions quickly.

Trade Templates and Decision Points

In this section, the speaker discusses how he will teach his mentees about trade templates and decision points.

Developing Trade Templates

  • At the end of their mentorship, mentees will receive a flow chart for when to be a buyer or seller for swing trades.
  • Every specific decision point that goes through his head as a trader will be included in these templates.

Decision Points

  • Mentees will learn what tools to use for each decision point, such as what makes them buy or sell, when a trade is no longer good, and when to move their stop.
  • The speaker's mental process is process-oriented thinking, which allows him to arrive at decisions quickly.

Using Tools and Processes for Trading

In this section, the speaker discusses how he will teach his mentees about using tools and processes for trading.

ICT Related Information

  • The speaker will teach his mentees how to use the tools and processes along the lines of ICT related information.

Importance of Listening

  • The speaker emphasizes the importance of listening carefully to his teachings.
  • Viewers should avoid distractions and pay close attention.

Big Picture Perspective

In this section, the speaker discusses the four areas of reference that make up the big picture perspective. These include macro market analysis, interest rate analysis, intermarket analysis, and seasonal influences.

Four Areas of Reference

  • Macro market analysis: Determines whether we are in an inflationary or deflationary market condition.
  • Interest rate analysis: Considers whether interest rates are high or low and if there has been a trend in interest rates.
  • Intermarket analysis: Focuses on the relationship between commodities and the US dollar index.
  • Seasonal influences: Examines how seasonal factors can impact markets.

Two Components for Big Picture Perspective

  • At least two of these components must come into agreement to arrive at a big picture perspective.
  • The grand scheme of things is defined by at least two areas of study coming into agreement.

Macro Market Analysis

  • Determines whether we are in an inflationary or deflationary market condition.
  • Has a direct relationship with currency and equities prices.

Interest Rate Analysis

  • Considers whether interest rates are high or low and if there has been a trend in interest rates.
  • Looks at differentials between two interest rate markets to create carrying charge markets.

Intermarket Analysis

  • Focuses on the relationship between commodities and the US dollar index.

Introduction to High Reward Trading

In this section, the speaker introduces the concept of high reward trading and explains how it is achieved through a combination of factors.

Factors for High Reward Trading

  • The big picture perspective: This involves analyzing interest rates and commodity markets to determine directional bias on a currency. A high reward trade setup occurs when the big picture perspective, intermediate perspective, and short-term perspective are all in agreement.
  • Seasonal influences: This refers to bullish or bearish seasonal tendencies for an asset class or currency. For example, if commodities usually go higher during a certain time period, this will put downward pressure on the dollar and create easy buy signals in currencies with higher interest rates.
  • Interest rate analysis: The speaker explains how to analyze interest rates specifically and use them for timing trades.
  • Intermediate perspective: This involves looking at top-down analysis, traders' data, and market sentiment. Top-down analysis means looking at higher time frames down to lower time frames. Traders' data comes from the CFTC report that gives information on large commercial traders and large speculators. Market sentiment can be measured through resources like brokerage firms or online forums.

Conclusion

The speaker emphasizes that these factors are important for framing a decision-making process as a trader but do not cover everything about every individual component.

Intermediate Perspective on the Marketplace Framing High Reward Trading Scenarios

In this section, the speaker discusses how to analyze monthly and weekly charts to identify key levels, order blocks, and indications of price movement. He emphasizes that large funds do most of their analysis on these timeframes and execute trades on daily charts.

Top-Down Analysis

  • Monthly chart analysis involves identifying key levels, intermediate and long-term highs and lows, specific order blocks, and levels that indicate a clear intention to repel price higher or lower.
  • Weekly chart analysis provides a higher timeframe perspective for identifying high reward trading scenarios because large funds do a great deal of analysis on weekly charts.
  • The markets move based on monthly, weekly, and daily charts. Intraday charts only reflect what is already indicated by these larger timeframes.

Areas of Focus

  • To frame an intermediate perspective for trading scenarios, at least two areas of focus must be in agreement. These include top-down analysis (monthly/weekly/daily), COT data (bullish/bearish hedging by smart money), and market sentiment (extreme bullishness/bearishness).
  • COT data involves looking at extreme levels historically in the last 12 months or four years when commercials get to a 12-month extreme higher or low reading relative to the net sum zero line used for the COT net traded position chart.
  • Market sentiment is determined by looking at extreme market bullishness or bearishness through various readings.

Conclusion

The speaker concludes by emphasizing that understanding these concepts is essential for successful trading. He encourages viewers to take notes and learn more through his mentorship program.

  • To be successful in trading, it is essential to understand the concepts discussed in this video.
  • Taking notes and learning more through the speaker's mentorship program can help traders gain a deeper understanding of these concepts.

Framing Trade Ideas with Market Sentiment and Commitment Traders Data

In this section, the speaker explains how to use market sentiment and commitment traders data to frame intermediate trade ideas.

Intermediate Perspective Criteria

  • To arrive at an intermediate perspective, you need to come to an agreement that at least two out of three areas of study align with your perspective.
  • The three areas of study are commitment traders data information, market sentiment, and technical analysis.
  • For example, if the weekly chart indicates higher prices and commercial traders suggest bullishness, that would be enough to frame an intermediate term perspective.

Short-Term Perspectives

In this section, the speaker discusses how to arrive at a short-term perspective using correlation analysis, time and price theory, and interbank price delivery algorithm (IPTA).

Correlation Analysis

  • Correlation analysis involves looking at the relationship between the dollar making higher highs and a currency's failure to make lower lows.
  • Correlated pair SMT analysis is used for closely correlated pairs like euro-dollar and British pound-dollar.

Time and Price Theory

  • Time and price theory involves looking at quarterly effects where every three months or so there is a new price shift in higher time frames.
  • If the market has been going higher, you'll probably see it go into consolidation or reverse over the next three months.

IPTA (Interbank Price Delivery Algorithm)

  • IPTA is used for short-term perspectives by analyzing interbank flows in real-time.
  • It helps identify key levels where banks are likely to execute trades.

Symmetrical vs Asymmetrical Markets

In this section, the speaker explains symmetrical and asymmetrical markets and how to trade them.

Symmetrical Markets

  • Correlated pairs move in tandem in symmetrical markets.
  • If they do not move in tandem, that indicates a lack of symmetry in the marketplace, and traders need to be selective with their trades.

Asymmetrical Markets

  • In asymmetrical markets, the dollar is clearly moving higher while all foreign currencies are moving lower in sympathy.
  • Traders need to be very selective with their trades because there is a lack of symmetry in the marketplace.

Short-term Trading Perspective

In this section, the speaker discusses the three areas of study required for short-term trading perspective: correlation analysis, time and price theory, and interbank price delivery algorithm (IPTA).

Three Areas of Study

  • Correlation analysis is used to determine whether to be bullish on dollar or bearish on foreign currencies.
  • Time and price theory is used to indicate where you are at relative to the short-term perspective.
  • IPTA is used to understand institutional overflow.

Weekly Range Trading

In this section, the speaker explains that he is a weekly range trader and how he capitalizes on interpreting the weekly range that may unfold for the week ahead.

One Shot One Kill Setups

  • The speaker teaches one shot one kill setups in his free tutorials.
  • These setups are his bread and butter go-to strategy.

Weekly Range Trading

  • The speaker primarily trades using a weekly range strategy.
  • He looks for high reward setups when things are in alignment across big picture, intermediate term, and short term perspectives.

Daily Range Theory

In this section, the speaker discusses time and price theory as it relates to engineering the daily range of power three: open high low close.

Daily Range Theory

  • Time and price theory is used for engineering the daily range of power three.
  • The daily candle transforms from power three using these theories.

Short-term Trading Perspective Continued

In this section, the speaker continues to discuss short-term trading perspective and how it relates to framing ideas of trading around a big picture perspective, intermediate term perspective, and short term perspective.

Three Areas of Study Continued

  • The three areas of study required for short-term trading perspective are correlation analysis, time and price theory, and IPTA.
  • These areas must come by way of these three areas of study: correlation analysis, time and price theory, and IPTA.

Short-term Perspective

  • The speaker explains that the quarterly effect in a monthly effect or weekly range is a short-term perspective.
  • When things are in alignment across big picture, intermediate term, and short term perspectives being a buyer all across those three perspectives leads to high reward setups.

Market Efficiency Paradigm

In this section, the speaker discusses the market efficiency paradigm and how they look at the marketplace in terms of where orders are. They also explain that smart money does not always go where existing orders are but sometimes seeks them to engineer counterparties to their execution.

Understanding Liquidity and Market Efficiency

  • The speaker explains that understanding liquidity is important in knowing why the market will seek it.
  • Smart money does not always go where existing orders are but sometimes seeks them to engineer counterparties to their execution.
  • Running old highs for buy stops and old lows for sell stops can be a forced injection of liquidity to be counterparty to their bookmaking.

Breaking Down the Market

  • The speaker explains that they will break down the market into specific perspectives in their studies during this mentorship.
  • The big picture perspective and intermediate term perspective usually happen at the beginning of the week, while short-term perspective changes on a day-by-day basis.
  • Nightly or daily procedures will largely consist of homework based on these perspectives.

Scalping and Trade Plan Development

  • Once you understand price action extremely well, you can operate as a scalper using this information efficiently.
  • Three things need to come in agreement when operating as a scalper: big picture perspective, intermediate term perspective, and short-term perspective.
  • Understanding quarterly effect, monthly effect, weekly range, daily range, time of day, smt divergence, correlated smt divergence, cracking correlation means for you as a trader is essential for trade plan development.

Conclusion

  • The market efficiency paradigm is the only thing that traders need to worry about in terms of trade plan development.
  • The speaker's model as a day trader, short-term trader, and one-shot one kill trader consists of the information presented in this section.

Understanding the Three Perspectives of Trading

In this section, the speaker discusses how to approach trading from three different perspectives: big picture, intermediate term, and short-term. He explains that by aligning these perspectives, traders can identify high reward trade setups.

Focusing on Higher Time Frames

  • Losses are not incurred as much in intermediate and long-term trading.
  • Majority of losing trades occur in short-term perspective or during market transitions.
  • Operating with 15-minute timeframe but primarily focusing on weekly and daily charts for trade setups.

Identifying High Reward Trade Setups

  • Seven things must be in agreement for a high reward trade setup.
  • Four things must be in agreement from the big picture perspective and two things from the intermediate term perspective.
  • All three perspectives (big picture, intermediate term, and short-term) must have one thing in agreement each.
  • This framework provides clarity and understanding of what to expect from the market.

Importance of Process-Oriented Thinking

  • The process-oriented thinking is important for arriving at a decision when identifying trade setups.
  • There is a method behind the speaker's approach to trading that involves going through these three perspectives.
  • Going through this process gives traders clarity and helps them find unique trade setups that work for them.

Conclusion

  • Traders need to understand why certain components make a difference in identifying high reward trade setups.
  • It may be boring but it is necessary to go through the process-oriented thinking to become a successful trader.

The Importance of a Trading Plan

In this section, the speaker emphasizes the importance of having a trading plan and explains why it is not commonly sold in courses.

Why Trading Plans are Not Commonly Sold

  • Courses do not sell actual trading plans.
  • No one sells step-by-step trading plans with reasons for each step.
  • The mentorship aims to provide specific insights into the speaker's trading process.

Developing Your Own Trading Model

  • The goal is to help traders develop their own unique trading model.
  • Understanding how different perspectives blend together is key to building a flow chart for every model of trading.
  • Breaking down individual components intimately helps traders understand how to arrive at decisions relative to specific points of reference.

Benefits of Having a Process-Oriented Thinking

  • A process-oriented thinking makes your trading binary, which helps suppress fear and greed.
  • By working your trading model into an area of study and execution, you will have no problem with fear and greed.
  • Suppressing emotions during trades leads to boring but effective trades.

Understanding the Framework

In this section, the speaker explains that everything in the mentorship program is refined to great detail and there are no secret strategies. The focus is on specific processes that will lend well to specific conditions.

The Backbone of Trading

  • The tutorial provides a framework or backbone for trading.
  • This framework is what allows the speaker to call the markets and predict their movements.
  • All of the information provided in this tutorial is exactly what traders need to know but may not have realized it before.
  • Once traders understand this framework, they can become independent thinkers and efficient traders.

Building on the Framework

  • Traders will build on this framework individually and conceptually.
  • A pdf file will be provided once all concepts are fleshed out, which will help traders understand why certain reference points are influential in decision making.
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.