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ICT Charter Price Action Model 11 - Trade Plan & Algorithmic Theory
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ICT Charter Price Action Model 11 - Trade Plan & Algorithmic Theory

30 Pips Intraday Trade Model Overview

Introduction to the Trading Model

  • The video introduces "Price Action Model Number 11," focusing on a 30 Pips intraday trade model, which is described as a day trading plan.
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  • Models 11 and 12 are characterized as "bread and butter" setups, indicating they occur frequently and have a higher strike rate.
  • Emphasis is placed on understanding market content before engaging with lower risk-to-reward setups; these models typically yield lower returns relative to initial risk.

Stages of Trade Plan Development

Preparation Phase

  • The preparation stage involves noting all medium and high-impact market events for the upcoming week.
  • Traders should analyze the last 20 trading days (excluding Sundays), identifying the highest high and lowest low to establish a current dealing range.

Opportunity Discovery

  • Focus shifts to identifying potential liquidity draws within the established range, targeting price movements above old highs or below old lows.
  • Anticipation of price movement towards an optimal trade entry that aligns with weekly bias based on economic calendar events.

Trade Planning Strategies

Identifying Market Conditions

  • Traders look for 30 pip ranges on a 60-minute chart, aiming for expansions that allow favorable entries into bullish or bearish positions.
  • When expecting market declines, traders seek convergence between manipulation and opposing price trends at times of anticipated volatility injections.

Execution Techniques

  • For short trades during expected rallies, traders will identify premium optimal trade entry setups; conversely, discount setups are sought when anticipating declines.

Trade Management Practices

Short Trade Management

  • A sell limit order is placed with specific entry criteria using Fibonacci retracement levels during key market openings (London/New York).

Long Trade Management

  • Similar strategies apply for long trades where buy limit orders target specific profit objectives while managing stop-loss effectively.

Risk Management Considerations

Stop-Loss Strategy

  • A stop-loss opens with a risk of 20 pips; adjustments can be made once in profit by reducing it based on achieved pip targets.

Position Sizing Formula

Understanding Risk Management in Trading

Calculating Position Size

  • The example discusses a hypothetical account with an equity of $10,000 and a risk per trade set at 1%, equating to $100. A stop loss of 20 pips is required for the trade.
  • Using micro lots (1K leverage), each pip is worth $0.10; thus, 20 pips equal $2. This results in trading 50 micro lots per trade, which represents 1% of the account equity.
  • When using mini lots ($1 per pip), the same stop loss leads to a total of $20, allowing for 5 mini lots per trade while still adhering to the 1% risk rule.

Adjusting Risk After Losses

  • If a demo account incurs a full R percent loss, it’s advised to reduce the R percent by 50%. Once losses are recovered by half, traders can return to their maximum R percent.
  • In case of consecutive winning trades (five in a row), it's recommended to drop the R percent by 50% as this helps mitigate potential future losses and promotes smoother equity growth.

Importance of Backtesting

  • Traders should backtest multiple sample sets with their trading plan. If any processes are unclear, they are encouraged to revisit previous lessons on price action models.
  • The discussion emphasizes that this model targets old daily highs and lows due to their built-in liquidity, making them favorable for setups throughout the week.

Utilizing Weekly Range Expansion

Analyzing Market Liquidity

  • The speaker highlights that setups can be found without needing weekly range expansion or specific targets; instead, focus on market volatility and liquidity.
  • It’s emphasized that perfection is not necessary in trading; rather than seeking accuracy all the time, traders should find setups that allow price movement towards profitable exits.

Practical Application Example

  • On June 1st, considering Australian dollar movements within weekly candles suggests potential upward movement into certain areas based on prior sell-side liquidity being taken out.
  • The analysis indicates that even if prices do not reach expected levels during trades, there remains potential for profitability through understanding market dynamics.

Observations from Lower Time Frames

  • A lower time frame analysis reveals how market behavior can create opportunities despite not reaching initial objectives; recognizing patterns like consolidation and pullbacks is crucial for decision-making.

Market Dynamics and Trading Strategies

Understanding Market Movements

  • The market shows a potential rally at the London open, indicating a draw on liquidity that could lead to higher time frame movements.
  • Anticipation of running above the previous day's high is based on expectations of liquidity draws, suggesting that price may not move in a straight line but can expand into relative equal highs.
  • A practical approach involves calculating potential price levels, such as 10 to 25 pips above the previous day's high, to set realistic targets during trading sessions.

Trading Execution and Risk Management

  • Traders are encouraged to take partial profits at strategic points like the previous day's high or slightly below it, ensuring they capitalize on upward movements.
  • Emphasizing risk management, traders should take partial profits even if the market reverses after their entry point; this practice helps mitigate losses and secure gains.

Flexibility in Trading Approaches

  • The market's aggressive moves suggest caution; traders should avoid prematurely re-entering positions until clear setups present themselves again.
  • Utilizing models based on previous highs and weekly range expansions allows for consistent profitability without needing to predict exact closing prices.

Mindset and Strategy Adaptation

  • Successful trading requires focusing on evidence-based setups rather than striving for perfection; being profitable is prioritized over always being right.
  • New traders should aim for consistent profit-taking strategies rather than fixating on individual trades; flexibility in approach leads to better long-term outcomes.

Daily Trading Opportunities

  • There are numerous opportunities each week using intra-week highs or lows as indicators for potential trades while remaining adaptable within daily volatility.
  • Developing proficiency in identifying one direction consistently can enhance trading longevity and reduce anxiety about missing out on trades.

Observations Across Markets

  • This trading model appears applicable across various markets including futures contracts, commodities, bonds, and indices; its effectiveness may also extend into cryptocurrency markets.

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Channel: The Inner Circle Trader
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.