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ICT Mentorship Core Content - Month 06 - Classic Swing Trading Approach
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ICT Mentorship Core Content - Month 06 - Classic Swing Trading Approach

Lesson Three Overview

In this lesson, we will be discussing the classic swing trading approach and how to define market conditions.

Defining Market Conditions

  • When defining market conditions, we look at where the price can reach for both an uptrend and a downtrend.
  • If discount arrays have provided support for price, probabilities increase that premium arrays will be solved after above the market price. If premium arrays have provided resistance for price, probabilities increase that discount arrays will be sought below the market price.
  • To define the range of current market prices, we look for the nearest bearish mitigation block above us and bullish mitigation block below us.

Identifying Market Direction

  • We look above us for any bearish breakers that have not yet been traded up to and below us for any bullish breakers that have not been traded to.
  • Above current market price, we look for liquidity voids where prices quickly dropped lower or repriced aggressively fast leaving a big range of only downside delivery. Conversely, we would look for any liquidity voids below us where prices showed a strong willingness to rally quickly leaving a poor wake of only buy-side delivery in price.
  • We look for the nearest bearish order block above us and bullish order block below us.
  • We note candles with wicks at short-term highs as there would be liquidity resting just above the bodies of these candles. Below these candles with wicks are rejection blocks respectively.
  • We also consider old highs or historical lows framing PD arrays above or below current market action respectively.

Premium Spectrum vs Discount Spectrum

  • The PD array matrix is used to determine premium and discount arrays. Every array above market price is the premium spectrum, and every array below current market action is the discount spectrum.
  • We look for which side of the marketplace has most recently shown a displacement where price moved away from levels aggressively with speed involved or large ranges indicating a massive push by smart money.

Shorting Opportunities

  • When looking at shorting opportunities, we start with a monthly chart and look for the market to move away from a resistance level that could be a bearish order block.

Swing Trading Approach

In this section, the speaker discusses the swing trading approach and how to identify buying and selling opportunities using different time frames.

Identifying Buying Opportunities

  • Look for premium arrays in the monthly chart to indicate a buy program.
  • The weekly chart should show sensitivity at discount arrays moving price into a buy program.
  • On the daily chart, look for price finding support at discount arrays.
  • In the four-hour executable time frame, look for sensitivity in the discount arrays for buying opportunities.

Identifying Selling Opportunities

  • Look for premium PD arrays in the monthly, weekly, and daily charts to indicate a cell program or bearish prices.
  • In the four-hour executable time frame, look for bearish order blocks or selling above an old high to run out buy stops.

Classic Swing Trading Approach

In this section, the speaker outlines a classic swing trading approach model that involves analyzing seasonal interest rate data and commitment of traders report.

Market Analysis

  • Determine if market is pre-disposed or poised to trade higher on a higher time frame by analyzing seasonal interest rate data and commitment of traders report.

Inter-Market Analysis and Bullishness

In this section, the speaker discusses how inter-market analysis can support bullishness in the market. They explain that a few things on a macro scale are needed to support the idea that prices should be trading higher.

Supporting Bullishness with Inter-Market Analysis

  • Inter-market analysis supports bullishness.
  • A few things on a macro scale are needed to support the idea that prices should be trading higher.
  • You don't need everything in agreement, just a small sample of things indicating that prices should be bullish.
  • Interest rates are the highest probability factor supporting bullishness.

Interest Rates and Forex Trading

  • Interest rate differentials between currencies can indicate which ones will have higher yields.
  • The New Zealand dollar and Australian dollar have been indicated as having high interest rates among all other currencies traded in Forex.
  • More people are likely to buy these currencies than sell them because of their higher interest rates.

Market Conditions for Trading

In this section, the speaker explains how traders can identify market conditions for trading. They discuss waiting for retracements and building confidence before taking trade entries.

Identifying Market Conditions for Trading

  • Traders need to identify market conditions that outline long-term bullishness.
  • Once markets with these conditions rally, traders wait for retracements before taking trade entries.
  • This is the highest probable direction type trading for swing trading.

Waiting for Retracements and Building Confidence

  • After an impulse price swing occurs, traders wait for retracements before taking trade entries.
  • Traders look for conditions in the marketplace while it's rallying up where it could offer resistance.
  • Traders anticipate the market to start topping out and eventually giving a retracement.
  • Traders wait for price to give them clues and confidence that it has made a low before taking trade entries.

Counter Trend Swing Trade

In this section, the speaker discusses how to identify high probability long entries during retracements in a bullish market.

Identifying Specific Price Levels

  • Look for specific price levels during retracements that indicate sensitivity for bullish buy opportunities.
  • Hunt for things that line up with long-term analysis and higher time frame movements.
  • Map out discount to premium levels below the intermediate term high prior to the retracement.

Looking for Mitigation Blocks

  • Look for mitigation blocks, bullish breakers, liquidity voids, fair value gaps, and bullish order blocks within the defined range.
  • Identify candles with long wicks as potential areas where the market may seek liquidity below their bodies.

Mapping Out Discount Array Matrix

  • Map out discount array matrix by looking at PD arrays on a discount basis within the impulse swing from point of origin to intermediate term high before retracement.
  • Determine what levels would be indicative of strong likelihood to buy or where institutional order flow may step in.

Foreign Trade Procedure

In this section, the speaker discusses how to determine whether a market is in a training environment or range-bound consolidation on monthly and weekly charts.

Determining Monthly PD Arrays

  • Determine monthly PD arrays and refer to active discount arrays for shorter blocks, liquidity voids below marketplace, fair value gaps underneath market price, old lows at bullish breakers and mitigation blocks.
  • Transpose monthly levels over to weekly chart.

Determining Weekly PD Arrays

  • Determine weekly PD arrays and refer specifically to active discount arrays on weekly chart.
  • Determine premium arrays on weekly chart when weekly discount arrays are active.

Transposing to Daily Chart

  • Transpose bullish discount weekly chart order blocks, liquidity voids, bullish breakers, mitigation blocks, old lows and fair value gaps below marketplace to daily chart.

Trading Strategy Overview

The speaker explains a trading strategy that involves identifying active discount arrays and using them to determine buying opportunities.

Identifying Discount Arrays

  • Identify active discount arrays in the discount spectrum.
  • Transpose active discount arrays to a four-hour chart.
  • Determine four-hour discount arrays by labeling bullish order blocks, old lows, and other relevant factors.

Buying Opportunities

  • Buy all four-hour discount arrays, including bullish breaker, bullish mitigation block, and violated old low.
  • Look for turtle soup long entry or rejection block below candles.
  • Scale out at daily, weekly, and monthly premium arrays defined on the four-hour chart.

Trade Setups

  • Aim for trade setups that offer at least three times the range between entry and closest premium array from all time frames.
  • Take profits along the way as price moves toward premium ranges on higher time frames.
  • Utilize set up failure protocol if buy set up fails on four-hour discount array.

Lower Priced Discount Arrays

  • Refer to daily, weekly, and monthly discount arrays to buy at lower prices if no more four-hour charts are available.
  • Buy 50% of position size of initial trade or previous failed trade utilized.
  • Confirm lower time frame for our premium arrays give way or fail as price moves in your favor in new discount erase support price as it moves toward the premium raise on the higher time frame.

Swing Trade Progression

The speaker explains the swing trade progression and how to identify bullish trends.

Bullish Trends

  • Identify first impulse swing, retracement, and secondary expansion swing.
  • Look for smaller impulse swings with deep retracements and another secondary expansion swing on daily charts.
  • Make higher highs and higher lows to confirm a bullish trend.

Understanding Price Swings and Fractals

In this section, the speaker explains how price swings are fractal in nature and occur across different time frames. The speaker also discusses how traders can use this information to identify discount arrays and make trading decisions.

Price Swings Across Different Time Frames

  • Price swings occur across different time frames, from monthly to weekly, daily, and four-hour charts.
  • Each price swing consists of impulse swings, retracements, and expansion swings.
  • The larger impulse swing on a higher time frame contains smaller impulse swings on lower time frames.
  • Traders can drop down into the next higher time frame discount array if their trade fails.

Identifying Discount Arrays

  • Traders can identify discount arrays by looking for premium to discount (PD) arrays when prices pull back.
  • When the algorithm gets back into these discount arrays, it will look to seek liquidity below the market price to allow traders at the bank level to populate those levels with orders.
  • Traders should look for ideas inside of that next higher time frame discount array to be a buyer and be in sync with the larger macro uptrend.

Bearish Market Conditions

In this section, the speaker discusses how traders can identify bearish market conditions using seasonal tendencies, interest rates, commercial positions, inter-market analysis, and institutional market structure.

Identifying Bearish Market Conditions

  • Seasonal tendencies may suggest that an asset class is predisposed to bearish price activity long term and consistently showing that repeats more than it does trade higher.
  • Interest rates can be a strong deciding factor in bearish market conditions on a macro level.
  • Commercial positions being heavily net short may suggest that the market is poised to trade lower.
  • Traders should look for seasonal tendencies, interest rates, and commercial positions to support their bearish trading decisions.
  • Inter-market analysis and institutional market structure can also support the idea of a decline in price.

Trading Strategies

In this section, the speaker discusses trading strategies and how to profit from impulse price swings.

Impulse Price Swing

  • An impulse price swing is followed by a retracement, which is then followed by an expansion price swing.
  • To profit from the expansion price swing, traders need to go into the marketplace during the retracement.
  • Traders study prices and define them in terms of PD arrays.

Defining Prices in Terms of PD Arrays

In this section, the speaker explains how to define prices in terms of PD arrays.

Short Term Low

  • Traders take the low at the short term low and all the way up to the point of origin.
  • This is defined in terms of Premium PD array Matrix.

Bearish Order Blocks

  • Bearish order blocks are bearish liquidity voids, bearish breakers, bears mitigation blocks, bear value gaps, old highs to sell above and rejection blocks which are candles that have long wicks.
  • Traders look to sell just above the bodies of these candles.

Swing Trade Procedure

In this section, the speaker outlines a swing trade procedure for determining market profiles and identifying premium arrays.

Determining Market Profile

  • Determine 9 to 18 month market profile.
  • Preferably see price moving out of consolidation not being in a range.
  • Want to see it wanting to trend.

Monthly PD Arrays

  • Refer most active premium arrays on monthly chart.
  • If monthly premium arrays resist price determine discount arrays on monthly chart.

Weekly Chart

  • Break down PD arrays into premium basis.
  • Refer all active premium arrays on weekly chart.
  • If weekly premium array resists price determine where discount rates are on weekly chart.

Daily Chart

  • Determine daily premium arrays.
  • Refer most active premium raise on the daily chart.
  • Take those premium arrays and transpose them over to your four-hour chart.

Four Hour Chart

  • Determine where the premium arrays are bear shorter blocks old highs bearish Breakers mitigation blocks that are above you all those premium arrays.
  • Refer to active premium arrays for that time frame only.

Trading Strategies for Bearish Market Conditions

In this section, the speaker discusses trading strategies for bearish market conditions.

Key Points:

  • When looking to sell short, look for rejection blocks where price does not go through the wicks of long wicked candles.
  • Sell short at any level that has been transposed from the daily, weekly, and monthly discount arrays.
  • Take profits at the daily, weekly, and monthly discount ranges as price reaches them and scales out of trades.
  • Look for trade setups that offer at least three times the range between entry and closest discount array on all time frames.

Set Up Failure Protocol

In this section, the speaker discusses what to do when a set up fails.

Key Points:

  • If a cell setup on the four-hour premium array fails and results in a loss, don't panic. Simply look for the higher-priced four-hour premium array to sell at.
  • Focus on monthly, weekly, and daily conditions that are bearish when executing on a four-hour chart.
  • If there are no more premium arrays to sell at on an hourly chart after being stopped out of an initial trade or previous failed trade, refer to daily, weekly, and monthly premium arrays to sell at a higher price than you currently have.

Confirming Lower Time Frame Discount Arrays Give Way or Fail

In this section, the speaker discusses how to confirm lower time frame discount arrays give way or fail.

Key Points:

  • Look for bullish order blocks or down candles to be broken every support level is broken.
  • See new resistance levels found at old up candles as long as you keep seeing institutional sponsorship on your side.
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.