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ICT Mentorship Core Content - Month 07 - Short Term Trading Using Monthly & Weekly Ranges
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ICT Mentorship Core Content - Month 07 - Short Term Trading Using Monthly & Weekly Ranges

Introduction to Short-Term Trading

Overview of the Lesson

  • The lesson focuses on short-term trading, specifically combining higher time frame monthly and weekly ranges.
  • The instructor introduces their "one shot one kill" approach applicable across various asset classes, including Forex, bonds, indices, stocks, and commodities.

Definition and Importance of Short-Term Trading

  • Short-term trading is defined as trading over a duration of one week or a few days, utilizing both monthly and weekly charts for setup framing.
  • Emphasis is placed on understanding the weekly range as crucial for success in short-term trading; it serves as the backbone for forecasting trades.

Key Concepts in Short-Term Trading

Trading Strategies

  • Traders should avoid forcing trades when setups are not clear; patience is essential to wait for obvious opportunities.
  • The instructor believes that short-term trading has the highest probability of success due to frequent setups and consistent trade opportunities.

Learning from Previous Lessons

  • It’s important to review notes from previous months (January's long-term model and February's swing trading model), as they complement this month's teachings.
  • Continuous reference to past lessons is encouraged to reinforce learning; simply receiving new information isn't sufficient for mastery.

Psychological Aspects of Trading

Trader Mindset

  • Acknowledgment that many traders may not fully grasp the nuances of the "one shot one kill" method; deeper insights will be revealed throughout the month.
  • The instructor shares personal insights about their quick decision-making ability which aligns well with short-term trading strategies.

Integration with Other Trading Styles

Modular Approach to Learning

  • The content aims to blend different styles of trading (short-term, long-term, swing), emphasizing that all concepts are interconnected.
  • Understanding smaller time frames enhances comprehension of higher time frames; everything fits together like a dovetail joint in woodworking.

Conclusion: Focus on Key Principles

Core Takeaways

Understanding Weekly Ranges and PD Arrays in Trading

The Importance of Weekly Ranges

  • The speaker emphasizes the significance of identifying weekly high and low ranges, noting that they can predict intraday highs and lows with precision, often within one or two pips.
  • Acknowledges that even if the current trading style isn't a trader's primary discipline, understanding these concepts can enhance risk management for swing and long-term traders.

Framework for Trade Analysis

  • Introduces the PD array matrix as a foundational tool for framing trades, highlighting its consistent presence in all teachings moving forward.
  • Discusses analyzing market conditions by looking at fair value gaps to determine bearish or bullish trends, stressing the need to identify potential future discount arrays.

Risk Management Strategies

  • Explains how to transition from a higher time frame premium array to a lower time frame discount array when assessing trade opportunities.
  • Describes how traders should focus on maximizing their risk-to-reward ratio by holding onto trades longer rather than prematurely closing them for smaller profits.

Identifying Market Movements

  • Encourages traders to maintain their positions until reaching significant targets like bullish order blocks instead of settling for minor gains.
  • Simplifies the concept of tracking monthly PD arrays (both premium and discount), which guide traders' expectations about future price movements.

Contextualizing Trade Decisions

  • Stresses the importance of recognizing whether markets are operating from a monthly premium or discount array to inform weekly trading strategies.
  • Advises traders to analyze historical charts to understand major market moves based on identified PD arrays, enhancing predictive capabilities.

Patience in Trading

  • Highlights that waiting for new information regarding active PD arrays is crucial; it fosters patience and context in decision-making processes.
  • Discusses eliminating options based on available data from monthly PD arrays while searching for corresponding weekly discounts or premiums.

Maximizing Trade Potential

  • Suggests looking beyond immediate objectives by considering old highs/lows as potential targets when transitioning between different market states.
  • Emphasizes leaving portions of trades open can lead to greater overall profits compared to taking early exits at smaller objectives.

Understanding Shorting Opportunities in Trading

Overview of Chart Analysis

  • The discussion begins with the importance of identifying shorting opportunities by transitioning from a monthly chart to lower time frames, focusing on premium arrays.
  • Emphasis is placed on observing price movements away from premium arrays down to daily and four-hour charts, indicating potential sell programs.

Time Frame Hierarchy

  • The speaker outlines a hierarchy of time frames: monthly, weekly, daily, four-hour, and one-hour charts. Each serves as a reference for identifying premium arrays.
  • All PD (Price Delivery) arrays are considered—both premium and discount—to identify potential setups for short-term trading or "one-shot kill" trades.

Market Conditions and Expectations

  • When analyzing market conditions, if bearish sentiment is present at the monthly level (indicating overbought conditions), traders should anticipate price declines towards weekly discounts.
  • The significance of monitoring both premium and discount arrays across multiple time frames is highlighted to ensure continuous market analysis.

Execution Strategy

  • Traders aim for breaking discount arrays while moving from higher to lower time frames; this process helps define clear trading objectives.
  • A focus on specific pairs or markets is necessary since not all will exhibit every discount array; typically only a few exist within any given context.

Practical Application of Concepts

  • The methodology involves framing the market contextually to pinpoint likely price targets based on identified PD arrays.
  • Executable strategies are refined down to the one-hour chart for immediate trading actions aimed at reaching weekly discount levels.

Summary of Trading Process

  • The overall process includes starting with a monthly premium array and seeking opposing weekly discounts while considering various time frame setups.
  • If initial opportunities are missed at the monthly level, traders should shift focus downwards through weekly or daily charts until suitable setups emerge.

Reverse Strategy: Buying Opportunities

  • Conversely, when looking for buying opportunities, traders analyze monthly discount arrays expecting upward movements through subsequent lower time frames.

Understanding Discount and Premium PD Arrays

Framework for Analyzing Market Conditions

  • The analysis begins with examining discount PD arrays to determine support and pricing, using the monthly chart as a foundational reference point.
  • Historical institutional price models are identified, focusing on bullish order flow indicators such as old highs or lows that previously caused market increases.
  • The approach involves identifying oversold conditions on a monthly basis while scouting for higher time frame premium arrays on the weekly chart.
  • Even if the monthly discount array is missed, it serves as an indication of potential upward movement in the market, guiding targets towards weekly premium levels.
  • The difference between monthly discounts and weekly premiums can be significant, often spanning hundreds or thousands of pips.

Detailed Analysis Across Time Frames

  • A comprehensive search for various discount PD arrays occurs across multiple time frames: weekly, daily, and four-hour charts.
  • Key elements include bullish breakers, liquidity voids below current market action, and historical candle bodies that indicate potential price movements.
  • Directional moves are framed from the monthly perspective while timing setups with one-hour charts aims at reaching weekly premium arrays through short-term trades.
  • Transitioning from a weekly to lower time frames allows traders to identify daily discounts while scouting opposing PD arrays for execution opportunities.
  • This method emphasizes a "one shot one kill" setup—an effective strategy yielding consistent trading opportunities each week.

Swing Trade Progression Insights

  • Understanding swing trade progression is crucial; it involves recognizing impulse legs followed by retracements within larger price movements over extended periods (e.g., six months).
  • Each price leg consists of smaller impulse swings and expansions that can be analyzed further down into individual fractals for more precise trading signals.
  • The model suggests that every move up creates potential short-term trades based on previous lows leading to higher prices—a critical observation for traders seeking entry points.
  • By breaking down these movements into their components (impulse swings and retracements), traders can uncover numerous setups within just one market pair over time.

Understanding Market Opportunities and Trading Strategies

Identifying Buying Opportunities

  • The speaker discusses the potential for buyers in a bullish market, emphasizing the importance of framing the marketplace correctly to identify opportunities.
  • There are potentially 16 buying opportunities identified within an overall fractal, excluding short-term trades that could be executed during retracements.

Analyzing Market Conditions

  • The focus is on identifying markets poised to trade higher on a higher time frame, utilizing seasonal tendencies as a bonus factor.
  • Key indicators include monitoring the bond market's movement and assessing commercial traders' positions—specifically looking for lessening short positions or net long positions.

Timing and Execution of Trades

  • The ideal trading days are Monday through Wednesday, where rallies followed by retracements signal potential buying opportunities.
  • A significant impulse swing observed during these days indicates smart money players pushing prices higher, which is crucial for confirming bullish sentiment.

Retracement Strategies

  • Retracements are expected between Monday and Wednesday; they may occur directly after Sunday’s rally or start from Monday with shallow retracements.
  • Traders should look for expansion swings into premium arrays during these retracement periods to maximize profitability.

Kill Zones and Time Frames

  • The concept of "Kill Zones" is introduced, highlighting optimal trading times such as the London and New York opens, along with Asian session timings (6 PM to 9 PM NY time).
  • It’s advised not to trade close to 10 PM due to lunch breaks in Asia; however, hourly discount PD arrays can also be utilized within these kill zones.

Bearish Market Analysis

Conditions for Bearish Markets

  • In bearish markets, traders seek conditions that indicate potential declines while considering seasonal trends as advantageous but not essential.
  • Monitoring bond market movements and commercial trader positions helps assess whether there is a build-up of net short positions or lessening long positions.

Inter-Market Analysis

Market Analysis and Trading Strategies

Understanding Market Movements

  • The market is expected to retrace higher from Monday into Wednesday, with a subsequent expansion down to lower lows. This analysis is based on the point of origin identified from a higher time frame monthly premium array.
  • A necessary condition for profitability involves the retracement reaching a level of premium before executing an expansion swing aimed at discount arrays. The trade framework incorporates various time frames: monthly, weekly, daily, four-hour, and one-hour.

Time Frame Analysis

  • Monthly ranges are analyzed by noting the high and low of each monthly candle. This helps in determining where price could potentially draw towards, focusing on probable directions based on historical data.
  • Emphasis is placed on probabilities rather than certainties; there are no guarantees in trading outcomes. Higher time frame analyses guide traders in identifying likely price movements.
  • Weekly ranges build upon monthly analysis; understanding the high and low of every weekly candle allows traders to assess potential price movements within the context of the larger monthly range.

Weekly and Daily Trade Framing

  • Each week involves studying how weekly trades operate within their respective monthly ranges. Traders look for confluence between anticipated movements on both weekly and monthly charts.
  • The goal is to ensure that weekly candles expand in alignment with expectations set by previous analyses, contributing to larger moves in the direction predicted for the month.

Case Study: Japanese Yen Analysis

  • An example using the Japanese Yen illustrates market behavior from 2015 to 2016. Price moved significantly from highs around 125.80 downwards into a discount market by June 2016.
  • Historical support levels were identified between February and June 2014 as critical points where prices dropped back towards their point of origin.

Monthly Ranges and Premium Arrays

  • The discussion highlights distinguishing between individual monthly candle ranges versus broader trading ranges; clarity is essential when analyzing these metrics.
  • Monthly discount PD arrays are framed around significant downward movements prior to major shifts in price direction, aiding traders in identifying potential entry points.
  • Both premium and discount arrays are established at key levels within the defined monthly range, guiding future trading decisions based on probability assessments.

Weekly Chart Refinement

  • Applying insights from monthly analysis onto a weekly chart refines understanding of individual premium arrays while maintaining clarity through selective representation of data points.

Understanding Price Movement and Trading Strategies

Weekly and Daily Chart Analysis

  • The discussion begins with the identification of key price objectives, particularly focusing on a significant level around 106. This indicates potential opportunities within four premium arrays on a weekly chart.
  • Transitioning to a four-hour chart, the speaker applies order block theory and rejection block theory while incorporating a day-of-week filter for Monday through Wednesday, highlighting bullish buy order blocks and mitigation areas.
  • A red shaded area at approximately 118.70 is identified as the premium array target on a weekly basis, suggesting multiple buying opportunities throughout the weeks.
  • The analysis emphasizes how price movements are systematic each week, providing consistent buying opportunities as delineated by vertical dashed lines marking Sundays.
  • Observations reveal that lows of the week typically form during Monday to Wednesday, indicating critical points for potential market movement.

Intra-week Highs and Lows

  • When an intra-week high formed between Monday and Wednesday is broken, it signals aggressive price expansion towards monthly or weekly premium arrays; this behavior reverses in bearish conditions.
  • The importance of monitoring the Monday through Wednesday range is highlighted; breaking this range can indicate bullish market conditions leading to higher premium targets.
  • If the highest high from Monday to Wednesday is breached later in the week (e.g., Thursday or Friday), it confirms bullish momentum towards identified premium arrays.
  • Conversely, if the low formed during this period breaks in a bearish context, it suggests an aggressive sell-off program targeting long-term discount rates.

Conclusion and Future Insights

Playlists: 2017 ICT Private Mentorship Core Content Month 07
Video description

2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in March 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.