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ICT Charter Price Action Model 8 - Targeting 6% Per Month
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ICT Charter Price Action Model 8 - Targeting 6% Per Month

6% Trading Model Overview

Introduction to the 6% Trading Model

  • The session introduces the 6% trading model, aiming for a monthly objective with aspirations of doubling equity over a year.
  • Focus is on building a career based on achieving 25 pips per week, emphasizing the importance of weekly range expansion in price action.

Understanding Liquidity Runs

  • The concept of liquidity runs is discussed, highlighting their role in price action and market movements.
  • The speaker contrasts their approach with those claiming to achieve unrealistic pip gains, advocating for realistic expectations in trading.

Model Simplification and Components

Streamlining Trading Models

  • The model aims to simplify concepts learned from mentorship without overwhelming traders with excessive components.
  • Emphasis on finding a "sweet spot" for each specific concept rather than including every possible indicator or tool.

Tailoring Strategies for Different Traders

  • Swing traders may not need all indicators that day traders require; focus should be on relevant tools based on trading style.
  • Concerns from members about missing components are addressed; foundational models are designed to build upon as skills develop.

Weekly Chart Analysis

Assessing Market Expansion

  • Initial analysis involves determining whether the weekly chart indicates potential upward or downward expansion.
  • Weekly ranges provide ample opportunities for setups targeting 25 pips, reinforcing that this target is significant within trading contexts.

Historical Context and Wealth Generation

  • Reflecting on personal experiences as an S&P trader, the speaker emphasizes that wealth comes from consistent pip management rather than sheer volume.
  • Acknowledgment that even smaller targets (e.g., 15 pips per week) can be effective if approached with proper risk management strategies.

Risk Management and Trade Execution

Managing Potential Risks

  • The model encourages limiting potential risks while maximizing rewards through strategic trade management.

Understanding Weekly Trading Goals

Setting Realistic Expectations for Pips

  • The goal is to aim for more than 25 pips, but being content with achieving just that is essential. Traders should not feel upset if they don't reach their target, as many setups will present themselves throughout the week.
  • Focus on one currency pair at a time. If a trade doesn't go as planned, it's important to maintain discipline and patience rather than abandoning learned strategies.
  • Achieving 25 pips should be within reach for those who have completed pre-tutorials. However, expectations may vary based on individual progress in mentorship.
  • Tools and strategies are designed to enhance precision and trade management rather than prevent losses or guarantee success against others in trading competitions.
  • The focus should be on personal improvement over time rather than comparing oneself to others. Consistency in aiming for achievable goals leads to long-term success.

Analyzing Market Trends

  • Understanding weekly range expansion involves analyzing whether the market is bullish or bearish by applying institutional order flow concepts primarily on the weekly chart.
  • This analysis requires a solid foundation of knowledge from previous mentorship content, allowing traders to communicate effectively about market conditions without revisiting all past lessons.
  • The average weekly range is estimated between 150 to 200 pips; however, this does not mean every currency pair will consistently deliver this amount each week.
  • Aiming for only 25 pips within a larger potential range encourages realistic expectations and helps develop consistent trading habits without striving for unattainable perfection.
  • Traders should focus on repeatable actions that yield small gains instead of seeking extraordinary results with every trade encounter.

Embracing Simplicity in Trading

  • It's crucial not to let social media comparisons affect one's perception of success; impressing oneself through diligence is more valuable than trying to impress others.
  • Aiming for 25 pips per week can be sufficient when considering overall market behavior and seasonal tendencies that influence price movements throughout the year.
  • There’s no need to predict exact highs or lows each week; instead, traders should look for reliable setups that provide manageable opportunities within the broader market context.
  • Focusing on "bread and butter" setups allows traders to find consistent entry points without needing absolute extremes in price movement each week.

Understanding Weekly Trading Models

Overview of the Trading Model

  • The model focuses on capturing a modest profit of 25 Pips, aiming for market movements beyond this threshold before locking in profits.
  • Initial risk management involves securing 25 Pips, with potential for additional profits at higher levels (40, 60, and 80 Pips) if the market allows.
  • Emphasis is placed on identifying market conditions that favor movement within a projected range of 150 to 200 Pips weekly.

Market Conditions and Timing

  • Traders should be cautious about seeking profits in range-bound markets; pushing for gains in such environments may lead to regret.
  • Acknowledging that while achieving 25 Pips is feasible, it represents only a small portion of the broader weekly potential.

Day of the Week Strategy

  • The strategy does not require entering trades at the week's high or low; instead, it focuses on consistent thinking and capturing modest gains.
  • The model encourages waiting for daily highs or lows to form early in the week (Monday-Wednesday), allowing traders to avoid unnecessary risks.

Trade Setup and Execution

  • Traders are advised to wait for anchor points during specific days to frame their trade setups effectively without forcing entries prematurely.
  • Utilizing compound interest principles can enhance profitability over time by focusing on smaller, consistent gains rather than large wins.

Inefficiencies and Range Expansion

  • The focus shifts towards identifying inefficiencies in price action as well as liquidity pools that can guide trading decisions.
  • Understanding probable directions based on weekly bar expansions helps traders anticipate market movements more accurately.

Practical Application of Strategies

  • An example illustrates how Monday's consolidation followed by Tuesday's drop can set up opportunities for Thursday trades without needing early week entries.

Understanding Liquidity Runs in Trading

Concept of Liquidity Runs

  • Liquidity runs involve utilizing gaps in liquidity, specifically fair value gaps and voids, to facilitate market entry aligned with weekly expansion trends.
  • In a bearish week, traders should focus on the highs from Monday, Tuesday, or Wednesday to identify potential downward movements and inefficiencies within that range.

Weekly Highs and Market Behavior

  • If the market is expected to decline but creates a higher high on Wednesday, it indicates a strong probability that this high will represent the week's peak.
  • The analysis uses the dollar Swiss chart to illustrate how these concepts apply throughout the week by mapping out key days and liquidity pools.

Targeting Liquidity Pools

  • A typical scenario includes anticipating a weekly Judas swing or protraction that neutralizes buy-side liquidity while building sell-stop liquidity below old lows.
  • Following breakdown on Wednesday, Thursday's market may target fair value gaps created earlier for classic sell day setups aimed at capturing liquidity runs.

Trade Execution Strategies

  • Traders can enter positions around significant levels (e.g., 9985), capitalizing on market structure breaks observed during trading sessions.
  • The strategy involves selling near institutional levels while recognizing price action returning to fair value after initial spikes.

Analyzing Market Conditions

  • Observations of equal highs indicate potential buy stops above them; subsequent price action suggests a likely retracement back into previous ranges.
  • This pattern allows traders to identify inefficiencies below current prices as they seek rebalancing opportunities based on prior buying and selling activity.

Framing Weekly Objectives

  • By analyzing charts like the dollar Swiss weekly chart, traders can determine where price might expand next based on historical patterns of highs and lows.

Market Dynamics and Fair Value Gaps

Understanding Market Behavior

  • The chart indicates a tendency for price to decline during rebalancing, evidenced by a significant down week followed by an up week and subsequent down weeks within a defined range.
  • The concept of "consequent encroachment" is introduced, referring to the midpoint of a fair value gap where insufficient sell-side orders exist, allowing for potential price stabilization.
  • This midpoint is deemed acceptable for filling fair value; prices can stop there without needing to drop lower, indicating flexibility in market behavior.

Analyzing Price Action

  • When prices reach the middle of a fair value gap, it’s termed consequent encroachment; this level serves as an equilibrium point in trading strategies.
  • Weekly charts provide insights into market bias direction but may not always reflect immediate trading opportunities due to their slower development compared to shorter time frames.

Trading Strategies and Time Frames

  • Traders are encouraged to start with higher time frames (weekly or daily) for overall market direction before switching to more dynamic charts like one-minute or five-minute intervals for execution.
  • Maintaining focus on buying or selling narratives is crucial; even if trades result in losses, the overarching strategy should remain intact unless fundamentally altered.

Practical Application on Charts

  • A practical example using a 15-minute chart illustrates how buy stops were triggered above Monday's high, showcasing classic institutional selling patterns through price action analysis.
  • Historical context aids understanding; recognizing repeated patterns across various markets enhances predictive capabilities over time.

Weekly Market Profiles and Expectations

  • Observing weekly bearish expansions helps set expectations; if early indicators do not retrace adequately, it shapes the week's profile based on prior highs and lows.

Weekly Trading Strategy Insights

Understanding Weekly Range Expansion

  • The focus is on a broader weekly expansion rather than making small profits at various levels. The aim is to capitalize on significant market movements beyond the initial consolidation observed earlier in the week.
  • Observing higher highs on Wednesdays indicates distribution above the weekly open, suggesting potential for further selling opportunities as it rallies.

Targeting Stop Runs and Profit Taking

  • Once prices drop below certain levels, traders can look to scale out portions of their trades, targeting gains of 25 pips or more. This requires training one's eye to recognize these ranges effectively.
  • When considering short positions within fair value gaps, it's essential to identify key lows that do not need to be breached initially for successful trades.

Maintaining Trade Discipline

  • Traders should avoid being swayed by shorter time frames (like 15-minute charts), sticking instead with the overarching narrative derived from weekly analysis.
  • Profits should be taken progressively as price moves below defined levels while maintaining a stop loss set at 25 pips until reaching specific targets.

Managing Risk and Position Trades

  • As trades progress, partial profits can be taken at intervals (10, 20, or 30 pips), allowing traders to manage risk without fear during retracements.
  • If a lower low is established later in the week, traders are advised to take additional profits or close entire positions based on their trading strategy.

Framework for Long-Term Trading Models

  • The discussion emphasizes that one does not need multiple models for swing trading; rather, foundational frameworks provided in mentorship can guide unique approaches using price action models.
  • Identifying break points within price action allows traders to frame their entries effectively while understanding liquidity runs and target expectations based on previous highs and lows.

Final Thoughts on Trade Execution

  • When entering trades near identified break points, it's crucial not to overextend into new positions if already engaged elsewhere; managing existing trades takes precedence.
  • For Friday trading strategies focused on capturing smaller gains (e.g., 25 pips), proper stop placement above order blocks ensures risk management aligns with expected outcomes.

Understanding Price Movements in Trading

The Concept of Premium and Discount

  • The opal trade entry is ideally positioned at premium or discount levels, but this does not always hold true. A fair value gap is essential for price movements to revert back upwards.

Fair Value and Market Imbalance

  • Prices need to return to fair value due to excessive selling creating a sell-side imbalance. This indicates a lack of buying pressure, necessitating a price correction.

Entry Strategies and Stop Losses

  • Entering trades at the bottom of the gap allows for strategic positioning; stop losses should be placed above rejection blocks identified on the chart.

Risk Management in Trading

  • When determining risk, traders should consider their entry point and set stop losses accordingly. A reasonable risk-to-reward ratio can lead to profitable outcomes.

Simplifying Complex Information

  • Many traders overcomplicate strategies with excessive information. Understanding core concepts from previous teachings is crucial for effective trading without unnecessary complexity.

Experience-Based Learning

Playlists: ICT Charter Content
Video description

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.