2022 ICT Mentorship Episode 13
Introduction
In this lesson, the instructor will explain how he runs his demo accounts up quickly and the mindset behind it. He also reminds students of what he stated in the previous lesson.
Market Structure for Precision Technicians and Advanced Price Action Theory
- The previous lesson covered market structure for precision technicians and advanced price action theory.
Running Demo Accounts Up Quickly
- Students asked how the instructor ran his ten thousand dollar account up to 256,000 dollars.
- The instructor wants to illustrate how a new student can do live trading with a model and aim for 20% per month.
- Aiming for consistent gains of 20% per month is a goal that students should strive for.
- Consistent gains of 20% per month, even starting with one dollar, can have astonishing compounding effects.
Objectives and Goals
The instructor explains his objectives and goals when trading.
Weekly Objective
- The instructor has an objective for each week when trading.
Daily Objective
- There is also an objective for each day when trading.
Monthly Goal
- The monthly goal is to aim for consistent gains of 20%.
Live Trading
The instructor discusses live trading and when students should consider it.
Live Trading Considerations
- Students need to refine their own model with what they are taught before considering live trading.
- Students need to have a well-documented trading plan before considering live trading.
- Students need to be consistent with a demo account for six months before considering live trading.
Instructor's Stance on Live Trading
- The instructor never tells his students whether or not they are ready for live trading.
- He does not want to be blamed if a student loses money in live trading.
- The instructor himself got into live trading too fast and had no idea what he was doing.
Conclusion
The instructor concludes the lesson by discussing his experience with live trading and how students should approach it.
Live Trading Experience
- The instructor rushed into real money trading in 1992 without knowing what he was doing.
- He tricked himself into believing that it was easy after reading one book and not backtesting.
- He does not want his students to make the same mistake.
Approach to Live Trading
- Students need to take their time and refine their own model before considering live trading.
- Students need to have a well-documented trading plan before considering live trading.
- Students need to be consistent with a demo account for six months before considering live trading.
Understanding Trading and Desensitizing Yourself
In this section, the speaker discusses the importance of understanding what you are trying to do in trading. He emphasizes that if you feel nervous or anxious while engaging in the marketplace, it means that you are not ready. The speaker also talks about desensitizing yourself to the results and not being attached to them.
Importance of Preparation
- It is important to have a solid price action model and a well-documented trade plan.
- Traders should know what they are going to do, why they are doing it, what they are waiting for, and what will cause them to push the button to get in.
- Traders should determine their stop loss in advance and how much they are willing to risk.
Desensitizing Yourself
- Traders need to be indifferent to losing money.
- They should not be attached to the results.
- The speaker recommends using a demo account for forward testing before engaging with live funds.
Using Demo Accounts for Trading
In this section, the speaker talks about using demo accounts for trading. He explains how he uses paper accounts as a way of staying plugged into the market without taking on monetary risk.
Benefits of Demo Accounts
- Demo accounts provide context and keep traders glued close to what the market is doing.
- They allow traders to read tape and answer student questions while still appreciating depth.
- They help traders manage their desire to get back into trading without exposing themselves unnecessarily.
Balancing Compliance with Teaching
In this section, the speaker addresses concerns around teaching through demos instead of licensed trade advice. He explains that he operates through demo accounts as a way of protecting himself and his students from financial losses.
Compliance Issues
- The speaker is not licensed to give trade advice.
- He operates through demo accounts to protect himself and his students from financial losses.
- Traders cannot make money by following him in a trade.
Trading Strategy
In this section, the speaker discusses his trading strategy. He talks about how he watches the NASDAQ and E-mini S&P for energy to the upside and how these markets generally move together.
Potential Trade Opportunities
- The speaker believes that the market could potentially trade up into an up-closed candle or reach up into a little area with fair value.
- He explains that he does not want to sell it short even though he is bearish.
- The speaker also mentions that there is a magnet or draw on liquidity that traders should be aware of.
Trading Strategies with Micro Accounts
In this section, the speaker discusses his experience trading in a demo account and how he uses it to satisfy his itch when not trading with a live account. He also explains how he uses a micro account with a discount broker and shows the details of what he is implying by doing these things.
Using Demo Account for Trading
- The speaker trades in a demo account to satisfy his itch when not trading with a live account.
- He runs up levels quickly in the demo account without any fraud required.
Trading with Micro Account
- The speaker uses a micro e-mini Nasdaq where every one point or four ticks is equivalent to two dollars.
- He uses a micro account with a discount broker and hypothetically trades with an AMP Futures account.
Market Analysis
- The speaker analyzes the hourly chart and identifies areas of liquidity drawdown and buy-side liquidity above relative equal highs.
- Down closed candles act as support during bullish market moves while up close candles should not be breached during bearish market moves.
- When looking for long-term price swings, retracements into imbalances are expected before the market rallies above down close candles that support price.
Conclusion
- The overall market structure suggests that it's likely to go higher and aim for run above these highs despite short-term retracements into imbalances.
Understanding Order Blocks
In this section, the speaker explains how retail-minded traders can identify order blocks and what to expect from them.
Identifying Order Blocks
- Retail-minded traders can identify order blocks by looking for resistance levels acting as a ceiling price.
- A high probability bullish order block must have an imbalance coupled with a down closed candle.
- The underlying narrative is that the market is likely to go higher to reach for buy side liquidity.
Trading Strategies
In this section, the speaker discusses trading strategies based on identifying order blocks.
Judas Swing
- When trading down into an imbalance after the equity has opened at 9:30 in the morning New York time, it's like a Judas swing.
- The market is likely to go up above a certain level to take the buy side because the algorithm keeps pressing higher and higher.
- Don't chase going higher before or after the equity opening at 9:30.
Intermediate Term Low
- Look for a discount market low to high below 50 and inside an order block after equities have opened.
- An intermediate term low forms when price fills in a gap between two candles' highs and lows.
- Once it starts rallying, this low should not be taken out.
Buy Side Liquidity
- As price goes higher, down closed candles should support price.
- When price rallies above a certain level, buy stops become market orders to buy the market which floods it with liquidity for those who bought lower.
Understanding Smart Money Trading
In this section, the speaker discusses how smart money traders accumulate long positions by buying during down close candles. They wait for the market to rally and avoid taking stop losses prematurely.
Accumulating Long Positions
- Smart money traders buy during down close candles to accumulate more long positions.
- The market rallies when there are down close candles, and it retraces back into an imbalance. This is where smart money can buy again.
Order Block Trading
- Order block trades through fair value gap and retracement can be used to get long.
- Algorithm only has a small little retracement inside the fair value gap so you would be a buyer just that that candle is low it runs right to the target.
Stop Losses and Trailing Stops
- Trailing stop losses should not be taken if they are below the middle of a candle's threshold of the bullshort block because it may dig into that candle acting as an order block.
- If the market comes down and breaks the low of these down closed candles, then it might be failing and going lower, which means getting stopped out was probably the right thing to do.
Live Execution Example
- The speaker shows live execution examples using trading view with demo accounts but assures viewers that this logic applies in real-life trading accounts as well.
Simplifying Complex Trading Topics
In this section, the speaker discusses how he simplifies complex trading topics to make them more easily understood by his students.
Simplifying Advanced Market Structure
- The speaker shows how he simplifies advanced market structure within the scope of what he teaches on his YouTube channel.
- He explains that he is teaching the same ideas as in his more advanced lessons, but in a more palatable manner.
- The goal is to teach simple logical setups that repeat every week and many times every day.
Precision and Theory in Action
- The speaker demonstrates precision and theory in action using TradingView settings.
- He emphasizes that none of his methods are retail, Elliott wave, harmonic, or supply and demand strategies. They are unique to him.
Building Positions with Micro Accounts
- The speaker illustrates how he builds positions with micro accounts by compounding trades.
- He explains that he buys three micro contracts initially and then pyramids into smaller positions with subsequent trades. This allows him to weather retracements better.
Trading Strategy and Goal Setting
In this section, the speaker discusses his trading strategy and goal setting. He emphasizes the importance of proper leverage and money management to optimize position size and gearing. The speaker also stresses the need for goal setting in trading.
Trading Strategy
- The speaker considers a trade with three scalings as one trade.
- He starts with a hypothetical $10,000 account and makes 21+ profit in one trade.
- Proper leverage and money management can make $10,000 optimal for this position size and gearing.
- The speaker encourages traders to aim for low hanging objectives that are easy for their capability.
Goal Setting
- Having a weekly or daily goal is important in trading.
- Traders should set targets to avoid hitting nothing 100% of the time.
- The speaker sets very low hanging objectives that are extremely easy for his capability.
- Goal setting takes some measure of time to grow into understanding.
Balancing Act in Trading
In this section, the speaker talks about balancing act in trading. He explains how traders should not take one comment out of context but rather have a balanced approach when listening to him.
Balancing Act
- Traders should not take one comment out of context when listening to the speaker's advice on trading.
- Missing a trade means there is likely another opportunity soon after.
- Traders should not overtrade but rather cultivate peace of mind by stopping after hitting their target profit objective.
Avoiding Overtrading
In this section, the speaker emphasizes the importance of avoiding overtrading. He shares his experience of blowing up his accounts due to losing control and taking too many trades per day.
Avoiding Overtrading
- Losing control leads to taking too many trades per day.
- Overtrading is impossible to execute properly.
- Traders should avoid overtrading and aim for a balanced approach in trading.
Studying Market Structure
In this section, the speaker talks about studying market structure and creating a language that simplifies it for traders.
Simplifying Market Structure
- The speaker studies market structure at a deeper level than what is commonly taught.
- He has created a language that simplifies market structure without all the complications.
- The language he teaches accomplishes the same method as more complicated approaches.
- The speaker's lessons on YouTube show how complicated the real intricacies of marketplaces are.
Finding Consistency and Profitability in Trading
In this section, the speaker talks about finding consistency and profitability in trading and how it can help traders outpace inflation.
Learning to Trade Effectively
- Traders often struggle with finding an approach that consistently makes them money.
- The speaker believes he has found an effective method for trading that is better than others.
- His approach requires time, effort, and patience to learn but can lead to consistent profitability.
- Traders who learn his approach can outpace inflation and achieve their financial goals.
Losing Money in Trading
- Every trader experiences losses regardless of their system or discipline.
- Some traders take stunning losses while others take mediocre ones that are just a nuisance.
- Even experienced traders can have periods of drawdown but can regain their equity quickly.
Passion for Trading
In this section, the speaker emphasizes the importance of having passion for trading and learning how to do it effectively.
Learning How to Trade Effectively
- Learning how to trade effectively is like riding a bike; once you learn it, you don't forget it.
- It may take time and effort to learn but once you do, it becomes yours forever.
- Having passion for trading is important because it gives traders the confidence and comfort to succeed.
- Traders who find consistency and profitability in trading can outpace inflation and achieve their financial goals.
Importance of Diligence in Trading
In this section, the speaker emphasizes the importance of being diligent in trading by placing oneself in front of charts and backtesting.
The Power of Price Action
- The speaker stresses that price action is a powerful teacher and that constantly looking at it trains one's eye to see what it does by default.
Learning from Examples
- The speaker compares learning from a book to learning from price action. He notes that books only show a handful of examples, while price action provides repeating signatures every week and every day.
- He also points out that books tend to show only examples that help sell the book, whereas he teaches how to go through price action and ferret out these repeating signatures.
Final Remarks
- The speaker concludes by wishing the listener a good weekend and promising to touch base on Tuesday.