56-ICT Mentorship Core Content - Month 5 - Position Trade Management

Last modified by Drunk Monkey on 2022-09-19 16:26
1 00:00:15,990 --> 00:00:23,760 ICT: Welcome back, folks, this is lesson eight of the January 2017, ICT mentorship, this tutorial is going to be specifically dealing with the
2 00:00:23,760 --> 00:00:34,890 possession trade management. Okay, for bullish market conditions, we like to anticipate potential bullish seasonal tendencies. And again, like I preface each
3 00:00:34,980 --> 00:00:44,910 and every one of the seasonal teachings, it's not a be all end all. It's not a panacea. It's just a rule of thumb, a roadmap, if you will about what may unfold
4 00:00:45,300 --> 00:00:52,470 in price action, just because it's done for the last 40 plus years doesn't mean this year or next year, or the three years from now, when you sit down in front
5 00:00:52,470 --> 00:01:00,150 of the charts doesn't mean that's going to be the outcome and you see in price. But we start there, because seasonal tendencies are just that there's a tendency
6 00:01:00,150 --> 00:01:09,750 for price to do certain things. Since we're looking for bullish market conditions, we're gonna be focusing on the bullish seasonal tendencies that are
7 00:01:09,750 --> 00:01:19,500 most likely to occur in the next three to four months. We went through some of my ideal seasonal tendencies, which ones I like, and how to go in to the
8 00:01:19,500 --> 00:01:28,500 marketplace and look for them. What we do after we identify what most likely will unfold for a bullish seasonal tendency is and we have to look at Inter
9 00:01:28,500 --> 00:01:37,170 market analysis confirmations, is there something to suggest there really is a bullish technical picture for that seasonal tendency to come to fruition? If
10 00:01:37,170 --> 00:01:44,850 there isn't any technicals to align with that seasonal tendency to seasonal to seasonal isn't going to drive price. But technicals in alignment with the
11 00:01:44,850 --> 00:01:54,810 seasonal tendency are a very powerful couple. What is the interest rate markets telling you, okay, are our yields increasing because of the yields are
12 00:01:54,810 --> 00:02:04,890 increasing, that's going to be good for the currency that you're trading. If we see divergence between the yields, that may suggest there's going to be a shift
13 00:02:04,890 --> 00:02:15,660 or a pause in the underlying direction of the marketplace. At the current moment, when we look at Inter market analysis, we are blending the two of
14 00:02:15,690 --> 00:02:27,840 interest rate yields. And we're also blending the four major asset classes, the stock market, interest rates, commodities, and currencies, all four of them
15 00:02:28,200 --> 00:02:37,080 together should be confirming your general outlook on the marketplace. Now, you may not get clear pictures from all four. But if you're getting three to
16 00:02:37,080 --> 00:02:45,780 indicate that your directional bias for your asset you're going to be trading is in fact, what they're suggesting as well are confirming, then you probably got a
17 00:02:45,810 --> 00:03:00,630 pretty good trade idea lined up. Once this occurs, we go into a higher timeframe monthly and weekly chart for PDA. Now PDA is premium discount array or PD array.
18 00:03:01,230 --> 00:03:11,190 I'm going to be abbreviating that for the remainder of this mentorship. So that way, when you receive PDA, it's the premium discount arrays. That means the
19 00:03:11,190 --> 00:03:20,760 order blocks all the things that I look for, for institutional reference points. We're looking for higher timeframe, weekly, and monthly charts to indicate where
20 00:03:20,820 --> 00:03:29,490 institutional order flow on those particular timeframes will look to seek to trade to when we understand there's two higher timeframes, then we'll know what
21 00:03:29,490 --> 00:03:37,920 the daily chart is going to do. And we're gonna be focusing on a daily chart for a quarterly shift or intermediate price swing, every three or four months, we're
22 00:03:37,920 --> 00:03:45,600 gonna be looking for this new price swing to occur. And we're gonna be looking at Inter market analysis interest rate yields to suggest that is, in fact,
23 00:03:45,750 --> 00:03:53,550 unfolding. We're not trying to pick the absolute low, and we're not trying to pick the absolute high, we are trying to get in sync with that quarterly shift
24 00:03:53,730 --> 00:04:03,420 to get the meat in between. In other words, the biggest portion of the move, that's what we're focusing on. We use the daily PDAs to frame our bullish
25 00:04:03,450 --> 00:04:07,140 setups. In other words we're looking for or blocks, voids, gaps.
26 00:04:08,789 --> 00:04:20,519 Rejection blocks, old highs or lows, we're looking for those things to the frame are by setup. We're waiting for that to occur based on what we see on the higher
27 00:04:20,519 --> 00:04:29,099 timeframes and with inter market analysis, and hopefully, seasonal tendency is also suggesting a bullish move as well. When we have these things in alignment,
28 00:04:29,309 --> 00:04:39,209 we have a great deal with confluences. In our camp, we're looking for a high probability scenario in that case. Once you get to this stage, what you're gonna
29 00:04:39,209 --> 00:04:47,309 have to do is, you're gonna have to determine whether you're going to be a buyer on a stop or buyer on a limit. It doesn't matter which one you'll elect to go
30 00:04:47,309 --> 00:04:56,639 with. But just understand that if you are going to be trading with limit orders, there's a probability of you missing moves or missing your fills because you're
31 00:04:56,639 --> 00:05:05,519 demanding a specific price level. When you go on Stop, generally, you're going to end up getting filled more times using that order. But unfortunately, that
32 00:05:05,519 --> 00:05:12,419 creates a little bit more gap in between where you're entering and where your stop loss is going to be if as long as you're not over leveraging your account,
33 00:05:13,349 --> 00:05:26,099 which brings us to how much money should you be risking no more than 1%. And again, keeping the idea that you're taking big positions, in terms of the time
34 00:05:26,099 --> 00:05:32,759 that you're in here, but not big positions in terms of how much you're allocating today, to the trades. So you're looking for big moves with a little
35 00:05:32,759 --> 00:05:42,989 bit of a your account. By having that your risk is going to be reduced. But your maximum payout is going to be massive in terms of how many pips you draw, but
36 00:05:42,989 --> 00:05:51,209 still, it's gonna be relative in terms of the percentage because it's just the nature of this timeframe. Once you determine you're going to be buying on a stop
37 00:05:51,209 --> 00:06:01,619 or a limit, and you enter the position, you're going to be trailing your stop loss below the lowest low in the last 40 trading days. Now, this brings us back
38 00:06:01,619 --> 00:06:10,319 to the IP to data range. Why are we looking for the lowest level last 40 trading days because if we're looking for a bullish move, the market will most likely
39 00:06:10,319 --> 00:06:20,339 not want to go back 40 trading days to find a low, it's going to be looking for the highs in the last 40 trading days. So that means we are going to have a
40 00:06:20,339 --> 00:06:30,689 trailing stop loss order that's very handsomely behind the current market price. And it's going to take a very significant price move to stop you out, avoids
41 00:06:30,719 --> 00:06:37,469 getting knocked out of the marketplace prematurely. And when you're trading long term trends or long term quarterly shifts, the worst thing that can happen is
42 00:06:37,469 --> 00:06:46,019 getting knocked out prematurely and in the market moves take place and you miss out on that move. In this timeframe, you are not looking to trail your stop loss
43 00:06:46,019 --> 00:06:56,669 Ultra tight, you have to have some freedom in the market, you can't just let it you can't demand really ultra tight stops in long term trading, you got to allow
44 00:06:56,669 --> 00:07:04,499 it to move a little bit gyrate pool back against you sometimes. And initially, when you first get into a trade, you just gotta have to weather that. And
45 00:07:04,619 --> 00:07:14,279 unfortunately, it may not be your cup of tea, but that's, again, the nature of the beast. Once the trend starts underway, and you start moving in your favor,
46 00:07:14,999 --> 00:07:22,889 if it moves 50% of the reigns that you expect to see unfold on the monthly and or weekly chart, because that's what you're actually trading off of you're
47 00:07:22,889 --> 00:07:33,869 executing on a daily chart. Once that range moves to 50% of what you expect to see in terms of profitability, say, say it's a 500 pip range or 1000 pip range.
48 00:07:34,439 --> 00:07:44,909 If it moves, if it's 1000 pip range we're referring to if it moves 500 pips in your favor, you need to still consider what the lowest low was in last 40 days,
49 00:07:45,089 --> 00:07:53,969 your stop loss is going to be below that. But when we get above 50%, then we're going to be looking for the lowest low in the last 20 days, once we get about
50 00:07:53,969 --> 00:08:04,379 three quarters of the way of the tire weekly monthly range, you want to start trailing your stop loss below the most recent low in the last 20 trading days.
51 00:08:04,739 --> 00:08:14,249 Okay, and I'll talk about that news and examples in a moment. But you're permitting price to seek out the liquidity on the upside and giving it a lot of
52 00:08:14,249 --> 00:08:24,869 room to consolidate if it needs to before it goes another leg higher. If you keep your stop loss below the lowest loan last 40 trading days, you're going to
53 00:08:24,869 --> 00:08:29,249 have a better chance of staying in the move and not being stopped out prematurely.
54 00:08:32,669 --> 00:08:39,359 Okay for bearish market conditions. So I could probably just save this slide and decide everything I just said for the bullish just reverse it but for
55 00:08:39,359 --> 00:08:47,519 completeness sake, we are being paid to do this now. So I want to give you both sides. The bearish market conditions again, we're anticipating a potential bear
56 00:08:47,519 --> 00:08:55,409 seasonal tendency. So we're focusing on the bearish tendencies that have the most ideal conditions, what times of the year are they expected? We already know
57 00:08:55,409 --> 00:09:04,739 what they are we went through those three teachings. And once we understand what is most likely to occur seasonally, again, we're just looking for it first
58 00:09:04,739 --> 00:09:14,219 there, then we're looking for inter market analysis confirmations Is there a suggestion across all four major asset classes, currency markets, interest
59 00:09:14,219 --> 00:09:23,219 rates, commodities and the stock market are the all in agreement with the expectation you have for the next three to four months. And if interest rate
60 00:09:23,219 --> 00:09:34,319 yields are confirming that direction as well, interest rates rising or increasing or decreasing? Is that salient to your expectation for the bearish
61 00:09:34,319 --> 00:09:44,969 move that you're trying to take on for next quarterly shift? If this does align, then we go to the higher timeframe monthly and weekly and we start looking for
62 00:09:44,969 --> 00:09:54,419 the ranges and we look for the PDA for monthly and weekly objectives institutionally. Where are we looking to go? Well, how far are we looking to go
63 00:09:54,419 --> 00:10:03,779 down? Where are the old lows? Where are the bullish order blocks? Where are the liquid The voids on the downside, where are the fair value gaps below us? Where
64 00:10:03,779 --> 00:10:11,129 are the mitigation blocks and potential breakers, we have to be mindful of that all those ideas, we have to start mapping those out, because they're either
65 00:10:11,129 --> 00:10:20,729 going to be speed bumps, or they're going to be rocket fuel for our next price leg in our bears expectation, so we have to be mindful that going forward, we'll
66 00:10:20,729 --> 00:10:27,359 have them already in our charts, we won't be surprised by them. And once we have all these ideas, then we can expect that quarterly shift to take place and then
67 00:10:27,629 --> 00:10:36,269 therefore have an intermediate term price swing, moving over the course of two to three, potentially four months at maximum, where we see a bearish move take
68 00:10:36,269 --> 00:10:46,859 place. Once we have the scenario outlined, okay, I'm expect the monthly and or weekly rains or swing to take effect,
69 00:10:47,280 --> 00:10:55,290 what we're gonna be doing is focusing on the daily chart and we're gonna be utilizing the daily PDAs. That means the daily premium discount arrays, or
70 00:10:55,410 --> 00:11:03,150 basically we're looking for bearish order blocks, we're looking for bearish liquidity voids to fill in, we're looking for old highs to sell above, we're
71 00:11:03,150 --> 00:11:12,270 looking for rejection blocks above old highs, candles body and we're looking for bearish breakers to trade into we're looking for mitigation bucks to trade
72 00:11:12,270 --> 00:11:21,030 against and sell off of all those ideas. We're looking for that on a daily timeframe to get in sync with the move we expect to see unfold on the monthly
73 00:11:21,030 --> 00:11:31,950 and weekly charts. So we're using the daily PDA to frame our bearish setups. Once we have our setup, what we're looking for is the determination are we going
74 00:11:31,950 --> 00:11:39,750 to be selling on a stock or are we selling on a limit order. And that's going to be a matter of personal preference. Again, like I said, with the bullish market
75 00:11:39,750 --> 00:11:48,990 conditions, if you're going to be selling on a limit, chances are you may not get your fill. So just take that in consideration. If you're 100%, certain you
76 00:11:48,990 --> 00:11:57,210 have to have the entry, selling on a stop is almost guaranteed, you're going to get that fill in because you're going to be selling on weakness. And once that
77 00:11:57,210 --> 00:12:05,790 price is triggered, you'll be short again but it opens a little bit more risk from where you enter and where your stop loss needs to be. Which brings us to
78 00:12:05,790 --> 00:12:14,280 once you're in the move, you're gonna be using a trailing stop loss above the highest high in the last 40 trading days. And what that's going to keep you from
79 00:12:14,280 --> 00:12:23,460 having happen is a premature stop out, you don't want to get knocked out of the market before you actually see the move transpire. You don't want to have any
80 00:12:23,460 --> 00:12:33,840 opportunity for the market to have a move against you. And see it take off once it knocks you out. It's not it's very frustrating to see to happen. And if you
81 00:12:33,840 --> 00:12:43,170 waited a long time for these long term services to get set up, just to get knocked out prematurely you exercise so much patience to get to that stage, then
82 00:12:43,170 --> 00:12:51,420 to once get in it and then it knocks you out worsening cafes, you get fearful or never get another opportunity to get back in and it takes off and runs away from
83 00:12:51,420 --> 00:12:59,550 you, then you have to wait for another higher level objective to get in to. And then you obviously lose some of the potential profit. But nonetheless, you can
84 00:12:59,550 --> 00:13:08,280 still get into positions. But it's nothing worse than that. And having all the analysis done the homework to patients factor and get in the market top notch
85 00:13:08,280 --> 00:13:15,750 out prematurely because you're trying to have too much of a tight stop loss, you don't need to do that on higher timeframe trading. In fact, it's better if you
86 00:13:15,750 --> 00:13:23,730 keep a wider stop, and you try not to rush to move it up to break even because breakeven on long term trading is just the worst thing that possibly you ever
87 00:13:23,730 --> 00:13:30,540 consider. You don't want to do that. So we're going to trailing your stop loss above the highest high in the last 40 trading days. And by doing so what you're
88 00:13:30,540 --> 00:13:40,500 doing is actually giving the market room to breathe and move around. When you identify the range at which you're trying to see unfold on a monthly and or
89 00:13:40,500 --> 00:13:48,660 weekly chart, when the price moves 50% of that range in your favor. Okay, in other words, it's moved here to this as you thought it was going to even at that
90 00:13:48,660 --> 00:13:56,700 moment, okay, you're still gonna be using the highest time last 40 trading days, your stop is going to be above that, okay, because you're not trying to get
91 00:13:56,700 --> 00:14:03,930 knocked out. Once it moves to about three quarters of the the range that you anticipate seeing, then what you're going to be doing is you're gonna be looking
92 00:14:03,930 --> 00:14:11,970 for the highest high in the last 20 trading days, because you're gonna getting really close to that ultimate objective, and it may not really get there. So you
93 00:14:11,970 --> 00:14:20,610 want to lock in as much profit as possible. If you use the highest high in the last 40 trading days, and you seemed three quarters of the move, you may see a
94 00:14:20,610 --> 00:14:30,210 deep retracement that maybe ended up becoming the actual reversal that you didn't expect to see things like optimal trade entry. If you go 79% of the total
95 00:14:30,210 --> 00:14:39,600 move you expect to see, but then fail and go the other direction and you would just be knocked out with a great deal of more larger loss by using that trailing
96 00:14:39,600 --> 00:14:49,440 48 Stop Loss above the highest high in last 40 trading days by reducing it to only 20 trading days and we're using crypto procedures for data ranges. But
97 00:14:49,470 --> 00:14:58,680 we're using measuring the ranges. Okay and grading the scale of how far that move has already happened. When we start getting mature in our move. We want to
98 00:14:58,680 --> 00:15:08,520 start locking in more relatively that that position, but we're only going to drop down to a 20 day look back, once we get to three quarters of the move that
99 00:15:08,520 --> 00:15:16,440 we expect to see, then we have to start dropping back in terms of how far we go back in terms of using a stop loss basis,
100 00:15:16,530 --> 00:15:23,730 we're not going to use 40 trading days, the entire duration of the trade, but we get three quarters of the move under our belt, you know, obviously, we're gonna
101 00:15:23,730 --> 00:15:31,890 be looking to lock in some of that profit, and keeping it from moving a great deal against us. So by using a 20 day look back every single day while we're in
102 00:15:31,890 --> 00:15:39,270 the trade, once three quarters of the move has been seen, what you're doing is you're ultimately bringing a stoploss closer to the market price, but not so
103 00:15:39,270 --> 00:15:48,270 close to it knocked you out. If it does knock you out and goes to the below a 20 day low, chances are you probably made a really handsome profit, or you probably
104 00:15:48,270 --> 00:15:57,330 saved yourself a complete reversal and watch it erode more profits. If you were to step this kept that 40 trading day high. So let's take a look at a couple
105 00:15:57,330 --> 00:16:09,960 examples real quick, and then we'll button this January teaching up. Okay, we're looking at the Japanese yen into the weekly chart. And we have the high up here.
106 00:16:10,320 --> 00:16:18,810 And we have these equal lows we talked about during the live teachings of the mentorship. And then below these equal lows, we have these two candles, which
107 00:16:18,810 --> 00:16:31,020 makes the bullet or block. And what we're going to do is we're going to add a Fibonacci just to grade the scale of this entire range. So we have this high,
108 00:16:31,620 --> 00:16:43,260 all the way down to this low I'm sorry, this this high rather on this candle. And that gives us our range low. And this is our range high. Okay, and here's
109 00:16:43,260 --> 00:16:53,700 equilibrium right in here. Okay, so we're looking at this move here, after market structure has been broken, we had this swing low here, it's violated
110 00:16:53,700 --> 00:17:02,820 here, and then we have a rally. So we're gonna be looking at this high in here on a daily looking for an ultimate move down to this level here. So we're gonna
111 00:17:02,820 --> 00:17:07,650 go to a daily chart now dropping down into it, and we're going to be looking at the sell side first.
112 00:17:18,960 --> 00:17:31,440 Okay, here's that move. We'll refer to this in a minute when we get to the buy side objectives. But here we have this high here, the price has the break in
113 00:17:31,440 --> 00:17:44,460 market structure here. And we have a rally up, it goes into this last candle, which is a PDA on a weekly basis. And it's also a PDA for the daily, it's a
114 00:17:44,460 --> 00:18:00,060 bearish order block for us here, trades right up into the body of this candle, which is the open comes in at 121 69. The high on this candle comes in at 2172.
115 00:18:00,420 --> 00:18:09,060 So only three pips higher than this opening price. At that candle here we have the up candle. So we're going to be doing what we're going to be deciding if
116 00:18:09,060 --> 00:18:24,480 we're going to sell short, want to limit Rumi selling short either on a limit above this close, or we're going to be selling on a stop down here. Which one
117 00:18:24,480 --> 00:18:33,360 are you going to do but what we're doing is once we get in we have to use the high in the last 40 trading days. And I have here a range that's already been
118 00:18:33,360 --> 00:18:47,040 created with 42 here so there's 40 trading days from this day here, which is the trade day here because you have the up candle. This is the day you would trade
119 00:18:47,130 --> 00:19:02,940 look back 40 days your stop loss has to be above here. So your range of risk is framed out for you doing this and set yourself a limit you have a stop loss of
120 00:19:02,940 --> 00:19:15,210 250 pips you got to be above that say 260 pips that's your stop. Okay, some of you are probably cringing with that to 160 pips, good grief is long term trading
121 00:19:15,210 --> 00:19:23,760 folks. It's I mean, you really got to change your way of thinking about it because it's not going to be the same as it was when we were discussing complete
122 00:19:25,200 --> 00:19:54,420 intraday action. And then you can do things like this you can go here is 1234
123 00:20:01,319 --> 00:20:31,889 5678 And we won't get nine, this fall short of that. Okay, so we have basically eight are on this trade
124 00:20:38,100 --> 00:20:54,000 that's falling short even at the objective so we can have that one off here and your AR right there. Okay, so selling short up here. We have eight times 260
125 00:20:54,000 --> 00:21:09,090 pips. Think about that. That's a massive move. Okay, it's huge move. Okay. And as you trade this what you're doing is is you're, you're continuously every
126 00:21:09,090 --> 00:21:20,970 single time you look at the trading day you're in, you're going to be looking back. Again, I have another Ranger here with 40 Pip 40 trading days range, or
127 00:21:20,970 --> 00:21:30,720 approximation, let's say like that. Okay, every trading day, you're going to keep looking back what was the highest high in the last 40 trading days. Okay,
128 00:21:30,750 --> 00:21:38,640 each trading day. You're looking at the right end of this here. Okay, every single trading day you're looking at the highest high and you're keeping your
129 00:21:39,060 --> 00:21:50,190 stop loss above that high. Whatever that whatever the high is, okay, like right in here. Looking back in the last 40 trading days your stock is above this high.
130 00:21:52,860 --> 00:22:03,900 At this point here we have a real deep trading retracement your stop it's got to be above these highs. Okay, this is where we actually hit the objective. So
131 00:22:03,900 --> 00:22:12,030 anything past that doesn't mean anything. But at this moment here, your stop has to be above this hot here. So it keeps you from getting knocked out prematurely.
132 00:22:13,470 --> 00:22:28,110 And again, eight times 260 pips so huge, huge move. So we're going to focus now on the buy side. And we saw that weekly bullish order block down here. And we
133 00:22:28,110 --> 00:22:39,270 expected it to trade back up to the weekly bearish order block. In here, here's the by looking back 40 trading days you're biased by position has a protective
134 00:22:39,270 --> 00:22:48,750 cell stop below these lows in here. Okay, if you bought in here before the election, and we had that big wild whipsaw, even with this wild whipsaw, if you
135 00:22:48,750 --> 00:22:56,370 would have bought this day here want to limit below the close here on a limit on this candle. If you bought here on this candle on a limit on this day here,
136 00:22:57,240 --> 00:23:06,060 yeah, you would have saw profits and then on the election day, you would have rode through all this probably would have been scary for you. But even then 40
137 00:23:06,060 --> 00:23:15,570 trading days back, your stock has to be below here. So you're not knocked out long term you're in there. And again, the same thing you're looking for the
138 00:23:15,570 --> 00:23:25,620 lowest low when you buy it in the last 40 trading days. Like for instance if you bought here, your stop has to be below this low.
139 00:23:28,980 --> 00:23:30,540 Let's see which one's lower this one
140 00:23:32,520 --> 00:23:42,900 below is 109 19. And then you have this candle here. Yeah, one to 919. So it's gotta be below this low here. And you have another buying opportunity on this
141 00:23:42,900 --> 00:23:57,120 day here. Again, your stock still stays below here. On this day, again, your stops still stays below here. On this day here, the lowest low in the last 40
142 00:23:57,120 --> 00:24:04,080 trading days is here still but we have to change gears now. Once we get half the range
143 00:24:09,540 --> 00:24:14,430 add a fib to this.
144 00:24:16,830 --> 00:24:31,620 We have our low up to our high here. And once price trades through this here, we start looking back 20 trading days and we start trailing our stop loss below the
145 00:24:31,620 --> 00:24:33,450 lowest low in the last 20 trading days.
146 00:24:35,100 --> 00:24:36,630 So we get 20
147 00:24:38,520 --> 00:24:50,490 from here, your stop loss has to be below here. On this buying day here. The last 20 trading days your stop loss so below here. This day here the last 20
148 00:24:50,490 --> 00:25:02,610 trading days is still below here. This day here the last 20 trading days. Stop Loss has to be below here. And on this trading day your stop loss has to be
149 00:25:02,610 --> 00:25:13,110 below this trading day slow and after that it just hits the objective the weekly bearish order block. So again above halfway point, you want to start trailing
150 00:25:13,110 --> 00:25:21,720 your stop loss tighter below the low the last 20 trading days but prior to equilibrium or halfway move, you want to be 40 trading days back using it to
151 00:25:21,720 --> 00:25:31,800 daily ranges because not likely it's going to seek that liquidity it's going to lead seeking the liquidity above the 40 day highs and above the 20 highs and
152 00:25:31,800 --> 00:25:40,770 it's gonna be looking for the 60 day high. Now you can see how that if the daily range comes into play using these higher timeframes. So until we talk again, I
153 00:25:40,770 --> 00:25:42,630 wish you good luck and good trading