Skip to Content

58-ICT Mentorship Core Content - Month 6 - Elements To Successful Swing Trading

Last modified by Drunk Monkey on 2022-09-20 06:34
1 00:00:11,700 --> 00:00:19,650 ICT: Welcome back, folks, this is February 2017. Swing Trading lesson number two, the elements to successful swing trading.
2 00:00:24,900 --> 00:00:35,190 Okay, successful swing trading hallmarks. Okay, the first is going to be an obvious trend in higher timeframe charts, that means it's obviously moving
3 00:00:35,220 --> 00:00:43,260 higher or wanting to move higher and let the consolidation or it's trying to move lower or it's already left to consolidation and started moving lower
4 00:00:45,690 --> 00:00:56,250 institutional order flow on the higher timeframe charts must be clear. And means is it giving you clear indications that it wants to trade higher or lower
5 00:01:00,660 --> 00:01:08,940 interest rate markets support the trade. Are we seeing higher interest rates? Are we seeing lower interest rates? Are we starting to see the divergence in the
6 00:01:08,940 --> 00:01:22,560 yields, that will indicate a shift that's most likely going to occur in the near future? CT data that's Commitment of Traders report is a confirming now it's not
7 00:01:22,560 --> 00:01:35,310 required or necessary. But this can enhance the probabilities of the trade. Opposing PDA or premium discount arrays are obvious in the charts that's on the
8 00:01:35,310 --> 00:01:46,500 monthly, weekly and daily. And seasonal tendencies, and again, this is not required. But it does enhance the probability of the trade panning out
9 00:01:46,500 --> 00:02:02,010 profitably. And the supporting inter market analysis confirm your idea in the trade. Now, obviously, this is a very broad overview. And it's not every single
10 00:02:02,010 --> 00:02:12,780 Hallmark. But in my trading, for swing trades, these are the types of things I like to look for, the larger the amount of things on this list that I can
11 00:02:12,870 --> 00:02:23,850 accumulate to build the idea that my trade is valid, the more likely to trade does pan out, there's going to be times where you don't have every one of these
12 00:02:23,850 --> 00:02:34,170 things on the list in your favor. But the trade will still be viable. If you stick to trades that have these hallmarks in them, swing trading will be a lot
13 00:02:34,170 --> 00:02:43,500 easier for you, your accuracy will be stunning, you'll be really cherry picking the best scenarios, and the trades will pan out in your favor. Before we
14 00:02:43,500 --> 00:02:55,290 continue, I want to preface it by saying that this is going to be one of those teachings that are going to probably be frowned upon this is going to be the the
15 00:02:55,290 --> 00:03:05,340 low end delivery of February in most people's eyes in this in this community. And the reason why this is the one that has the homework in it. No one likes
16 00:03:05,340 --> 00:03:13,890 homework, remember what it was like to be in grade school. But for me to take you to the next level understanding number one, we had to test where you are at,
17 00:03:14,130 --> 00:03:24,120 in your understanding, we have to reveal to you where you are in your understanding. And by giving us a basis on what's to you know, relate that to,
18 00:03:24,660 --> 00:03:33,570 before I give you the swing trading model, I want you to be engaged in these ideas I'm going to share with you in this teaching for the elements of
19 00:03:33,570 --> 00:03:42,600 successful swing trading. I'm going to give you brought her views and ideas to stimulate your thought process. Okay, and the homework is going to be at the end
20 00:03:42,600 --> 00:03:49,980 and the last slide. But I want you to understand while we go through this, I want you to think about these things because it's going to help you with the
21 00:03:49,980 --> 00:03:57,840 homework assignment at the end. If you're not paying attention. Now a lot of charts in this one, it's all theory, I want you to think about what I'm asking
22 00:03:57,840 --> 00:04:04,530 you to do, because I'm going to fill in all the gaps that you create for yourself or would you have right now and your understanding as it relates to
23 00:04:04,530 --> 00:04:14,790 swing trading when we get to lesson three. Okay, institutional sponsorship, when you're looking to buy, Are there signs in relative strength analysis to support
24 00:04:14,790 --> 00:04:25,140 the trade? That is to suggest that if you're buying Euro dollar on a lower low the dollar index is it seeing a lower high that would be weakness on the dollar
25 00:04:25,140 --> 00:04:34,890 failing to make a higher high and the lower low on Euro dollar would be running out the sell stops before the move higher. And when shorting Are there signs in
26 00:04:34,890 --> 00:04:44,850 relative strength analysis as support to trade an example of shorting dollar Swissy on a lower high is the dollar index seeing that higher high. So there
27 00:04:44,850 --> 00:04:58,590 would be SMT divergence ideas to measure institutional sponsorship bank accumulation and distribution that seen by studying the price action and while
28 00:04:59,490 --> 00:05:07,200 prices move Going higher are all the down candles becoming support and seeing higher prices thereafter? And are the swing highs breaking and seeing higher
29 00:05:07,200 --> 00:05:09,030 highs after the swing highs broken?
30 00:05:10,590 --> 00:05:21,000 And in down markets or bearish markets? Are the up candles becoming resistance and seeing lower prices thereafter? And are the swing lows breaking? And are we
31 00:05:21,000 --> 00:05:30,000 seeing lower prices as a result, basically put common terms is are we seeing higher highs and higher lows when it's bullish, and our resistance levels
32 00:05:30,000 --> 00:05:39,150 breaking and new support levels being found. The way we look for bank accumulation is we look at every down candle to support new buying, because the
33 00:05:39,150 --> 00:05:47,310 new buying is going to occur when the market recedes backwards or retraces and goes lower. When this happens, that gives them buying opportunities to buy at a
34 00:05:47,310 --> 00:05:57,120 discount they did not buy or do not buy rather, at premium prices they have to buy when the algorithm permits them an opportunity to buy at a lower price. When
35 00:05:57,120 --> 00:06:05,460 we see lower bear markets trending lower, we wouldn't be focusing on these up candles because we know that the market rallying is going to give them a short
36 00:06:05,460 --> 00:06:15,630 term premium to sell more into and establish new shorts or add new shorts to the bearish model that's unfolding in the marketplace. That's going to promote
37 00:06:15,660 --> 00:06:26,670 resistance ideas and are we seeing support levels giving way are we seeing lower prices and a failure to break through resistance levels and new creation or
38 00:06:26,670 --> 00:06:39,150 resistance levels in the form of up candles, we measure accumulation from the banks by buying at down candles and we measure bank distribution at up candles
39 00:06:39,360 --> 00:06:50,820 as resistance. Okay, when you're looking for your setups, you wanna be looking for markets that have clear price action and very discernible levels. Okay above
40 00:06:50,820 --> 00:07:00,240 where we are current market price or below the market price. Regardless of what asset class you're trading, okay, the PDAs are obvious and they're easy to
41 00:07:00,240 --> 00:07:11,190 identify. And means above us, we can clearly see as any voids, mitigation blocks, breakers, fair value gaps, rejection blocks, old highs or lows. And
42 00:07:11,190 --> 00:07:22,080 below as we would see mitigation blocks, breakers, liquidity voids, fair value gaps, bullish order blocks, rejection blocks and old lows or old highs in that
43 00:07:22,440 --> 00:07:32,730 spectrum of the PDAs. The more obvious they are in terms of the current price action you're trading at, for the asset class on their study, the more
44 00:07:32,730 --> 00:07:43,470 discernible more clear and obvious they are, the better that trades going to be. Price not traded at in recent weeks or months left in imbalance basis, monthly
45 00:07:43,470 --> 00:07:52,320 and weekly, those levels are going to be a high draw on price, especially as it relates to monthly and weekly levels. So price is going to return back to fair
46 00:07:52,320 --> 00:08:00,450 value, or it's going to seek a new level of imbalance if price is at equilibrium, we're gonna be looking for an opportunity to see that price move to
47 00:08:00,450 --> 00:08:07,530 an imbalance. Preferably we want to see it move out of a consolidation and then it will move to an unbalanced level. If it's moving higher, it's going to go to
48 00:08:07,530 --> 00:08:15,240 a premium. If it breaks out of consolidation lower, we're looking for it to go to a deep discount. That's an imbalance on the buy side and an imbalance on the
49 00:08:15,240 --> 00:08:27,270 sell side we'll be moving to a premium. The cleanest price action, or the most favorable markets to trade in, there's less chance for our erroneous price
50 00:08:27,270 --> 00:08:39,270 action to distract us and or fool us been doing this for two decades or more. And I have learned the hardest lesson is to demand the cleanest price action in
51 00:08:39,270 --> 00:08:48,090 your charts, the more obvious price action is the more favorable the outcome is going to be. It's It's simple as that the times that I've forced the idea the
52 00:08:48,090 --> 00:08:57,030 times that I've made the idea come to fruition in my own mind, okay, instead of just simply looking at the chart and say, okay, is this outcome favorable? Is it
53 00:08:57,030 --> 00:09:05,520 likely? Is it probable? Or am I just really forcing something, that times that trade is literally leaps off the chart those instances, that's when the trade is
54 00:09:05,520 --> 00:09:13,920 most highest probable? It's going to be the easiest ones to take to because they're just they're very easy to see. If you have to study the chart and look
55 00:09:13,920 --> 00:09:20,850 for it and you hem and haw about it and back and forth. And you argue with yourself. Is this really that? Is this an order block or is this a liquidity
56 00:09:20,850 --> 00:09:31,200 boy, if you're having to convince yourself chances are it's probably not a good trait pass on it. And it's price respecting institutional levels that means the
57 00:09:31,200 --> 00:09:38,880 big figure levels 00 levels, the 50 mid figure levels, the 80 level, the 20 level, or the small round numbers 37 days
58 00:09:44,610 --> 00:09:53,310 Okay, and we're really looking at in less than three are we talking about we're specific rules and rule based conceptual methods. But in our trading in every
59 00:09:53,310 --> 00:10:03,660 discipline, not just swing trading, we have to have rule based conceptual methods and every trade has to pass through a rule based filtering process. Now
60 00:10:03,660 --> 00:10:11,790 the rules are standardized and they're static. And that means they cannot be changing on each and every trade setup. Whatever we do, we do the same
61 00:10:11,790 --> 00:10:22,530 procedure, every single trade setup. When the trade setups fail the filtering process, the trade is passed on period. No exceptions. We do not make the rule
62 00:10:22,530 --> 00:10:31,770 exceptions. Well, ICT said he liked that trade, if your rule based IDEA says you can't take that trade, and you hear me say I like to take that trade. You don't
63 00:10:31,770 --> 00:10:44,070 side with ICT, you side with your war based ideas. When the trade setups pass the filtering process, the trade is executed on risk in equity management
64 00:10:44,100 --> 00:10:53,100 permitting. Now just because we see a set up there, we may already have a trade or two trades open. And our risk parameters will not permit us to have more
65 00:10:53,100 --> 00:11:02,820 allocation exposed to the marketplace, we cannot assume more risk than a specific percentage. Just because the trades there doesn't mean we break our
66 00:11:02,820 --> 00:11:10,740 money management rules just to take the trade, we either have to weigh out whether or not that new trade is more valid than the ones that we have existing
67 00:11:11,070 --> 00:11:20,010 and or if it's a better potential payer. So in other words, if if you have a trade and say, See, we're in gold, we're long, and we think 1240 is going to
68 00:11:20,010 --> 00:11:28,770 unfold. But then we look at the soybean market. And we think soybeans are going to go up a full dollar, well, that means is probably going to be a better payout
69 00:11:29,190 --> 00:11:40,950 with the soybean market because it may explode faster, and you get more velocity with your money. So if that happens, we may see a opportunity that trends buyers
70 00:11:40,980 --> 00:11:50,280 over a shorter period of time in soybeans than we do in gold. And you have to weigh these factors out. Well, every time you take a trade, for instance, you
71 00:11:50,280 --> 00:12:00,180 may see an opportunity in the Euro dollar and you're already short dollar Swissy. You know, and you have to take these in consideration which which one
72 00:12:00,180 --> 00:12:11,100 has the more likely probable outcome that would be profitable for you, if you see a better setup, and you want to cut the trade that you have on now to take
73 00:12:11,130 --> 00:12:21,000 on a new trade, that's the way you would do it. But you cannot take a new setup just because it's a good setup. You can't keep that open risk and the other
74 00:12:21,000 --> 00:12:35,730 trades yet to take something off or pass on the trade. But you can not take the setup. If your risk and or equity management doesn't permit it. Probabilities
75 00:12:35,730 --> 00:12:47,100 reward diligence. Limiting setups to three to one reward the risk permits at as low is 34% accuracy to be net profitable. Now it's not wildly profitable, but
76 00:12:47,190 --> 00:12:57,570 marginally profitable. And that means you're making money when you're wrong 66% of the time. Now for some of you, that sounds like a good idea. If you're new,
77 00:12:57,570 --> 00:13:05,940 and you know what it's like to be a new trader, you're probably like a 99% accuracy in terms of being wrong. And I believe me, I know what that felt like
78 00:13:05,970 --> 00:13:13,680 when we see setups that pay off three to one, or we look for setups that we're willing to hold for three times what our initial risk was, we're giving
79 00:13:13,680 --> 00:13:23,580 ourselves the potential to do very well and not require a great deal of accuracy. But if we can frame our setups with rewards of five times our risk, we
80 00:13:23,580 --> 00:13:33,240 have a higher odds of being profitable. And we can endure losses much easier. Now the setups that we have the most movement potential offer, the better risk
81 00:13:33,240 --> 00:13:40,770 reward ratios. Now, obviously, it's it's common sense. But I did say that we would mention, in every teaching discipline, we would mentioned some form of
82 00:13:40,770 --> 00:13:46,380 money management and risk management. And this is the only thing we're gonna be talking about. But I want you to think about this because it's going to be part
83 00:13:46,380 --> 00:13:47,130 of your homework.
84 00:13:50,250 --> 00:13:58,560 And that brings us to our homework, which is a mock trading plan. Now, mock trading plan is something that you are going to be formulating yourself, you're
85 00:13:58,560 --> 00:14:07,200 going to create it yourself, you're going to map out everything from the beginning process to the end. And what you do throughout the trading process of
86 00:14:07,200 --> 00:14:15,210 being in the trade. what stocks to trade with executes the trade would make your stop loss what it is, when do you move your stop loss? When do you take your
87 00:14:15,210 --> 00:14:24,750 profits? When do you collapse the trade? How do you pick the trade? How do you How are you going to frame the trade? Okay, I already know some of you have no
88 00:14:24,750 --> 00:14:33,900 idea what to do with this, okay, but I still want your involvement, because it's going to help you jump a big huge step forward in your understanding. When I
89 00:14:33,900 --> 00:14:42,000 give you less than three. I'm gonna actually walk you through the process of mill building a swing trading model from ground up. But the first thing you want
90 00:14:42,000 --> 00:14:50,010 to be doing is you want to be outlining what you right now in your present understanding what you would look for for an initial opportunity. What frames
91 00:14:50,010 --> 00:14:58,950 that opportunity, what would you see as an opportunity need to make that in a form where you can put it to paper, you're gonna write it out what makes your
92 00:14:59,250 --> 00:15:08,220 opportunity and opportunity, what are you looking for in a chart? And then secondly, what would you identify as a trade setup for valid swing trade? Now?
93 00:15:09,210 --> 00:15:16,680 It's one thing knowing what you're looking for. But then how do you frame it as a as a swing trade. And again, I don't expect everyone to us to know how to do
94 00:15:16,680 --> 00:15:25,770 this, obviously, because you paid me to learn. But I want you to do the work to try your best right now with what you know, to try to formulate a mock trading
95 00:15:25,830 --> 00:15:36,120 plan. That's all we're doing is it's an exercise. Okay. Thirdly, how would you determine your profit objectives? What makes the objective a goal in terms of if
96 00:15:36,120 --> 00:15:43,920 it gets to that level? I'm going to take profit? What is that? How are you defining it? And it has to be in a static form where every trade will be
97 00:15:44,220 --> 00:15:52,890 filtered? In that same capacity, every single setup, every trading opportunity is the same way? How are you looking for the setups to be profitable? What makes
98 00:15:52,890 --> 00:16:02,580 that a profitable trade? How would you frame the risk management? How much are you gonna risk per trade? How much of your account are going to have it total
99 00:16:02,580 --> 00:16:12,180 exposure? And when are you going to move your stop? Or are you going to take partial profits, I want to see this in writing, I want you to share it with me
100 00:16:12,180 --> 00:16:21,300 either by way of the forum, preferably. Or if you just really, really shy, you just want to send it to me in an email, that's fine. But if you're going to do
101 00:16:21,300 --> 00:16:28,800 it an email, just know that I'm not gonna probably get to it right away. I'll look at it over the course of the coming months. But for now, just to be
102 00:16:28,800 --> 00:16:37,470 interactive, for those that have the willingness to do it, you know, consider the form and what would your filter process consist of? Like? How are you going
103 00:16:37,470 --> 00:16:45,780 to go through what you understand about the marketplace and ICT concepts? How are you filtering the markets? How are you filtering your trade ideas? What is
104 00:16:45,780 --> 00:16:54,510 the step by step process that you're going to go through to eliminate the opportunities that don't have the highest probabilities or to move to the
105 00:16:54,510 --> 00:17:03,780 executable stage on your trades? What is that process going to be? I want over in vague terms in this teaching here and to stimulate your ideas and thought
106 00:17:03,780 --> 00:17:12,090 processes, but how are you in this mock homework of trading plan development, I want you to create a swing trading model for you. And it's not that you're going
107 00:17:12,090 --> 00:17:18,000 to be trading on it. I'm not asking you to trade it now even on a demo, but I just want to see where you're at in your understanding. And I want you to have a
108 00:17:18,000 --> 00:17:25,260 record of what you think you know, right now. And then when we complete this month, how much that increases, okay, because it's gonna give you a big
109 00:17:25,380 --> 00:17:29,370 measuring stick to know how much you really gleaned from this month's content.
110 00:17:31,860 --> 00:17:39,900 Now, lesson three, I'm going to address all this. And I'm going to actually present a model for your contrast. Now, don't pass on this exercise, you want to
111 00:17:39,900 --> 00:17:48,990 put it to paper form. And if you are willing, please consider sharing it with the ICT forum and others. That way, you can see what other people will have in
112 00:17:48,990 --> 00:17:57,570 terms of feedback, and then actually may instill some more ideas, because it's going to be this coming Friday, before you actually get less than three. So I
113 00:17:57,570 --> 00:18:04,920 want you to have some time to interact with one another on the forum. And also to think about, but you have a time limit, you have to have it done. By
114 00:18:04,920 --> 00:18:12,900 Wednesday, you have to have it up there by Wednesday, you have to have it, you have to have it in paper by Wednesday. And the reason why because I don't want
115 00:18:12,900 --> 00:18:23,100 you cheating. And missing the lovely opportunity of being able to take that big growth spurt when I give you less than three. Now, you're going to use one
116 00:18:23,100 --> 00:18:33,450 example, in hindsight for your study. For illustration purposes. Now, again, you don't have to do this in the form, I'm asking you to consider it. But for your
117 00:18:33,450 --> 00:18:42,810 own study, you need to find an opportunity in hindsight, as an illustrative point of reference using what you think you know about swing trading, and all
118 00:18:42,810 --> 00:18:53,550 the ICT concepts right now. Have that used for your record. And then when we complete this month, I want you to go through the process of actually how I show
119 00:18:53,550 --> 00:18:59,610 you how to build a swing trading model. What procedure do you go through what steps you go through, and then we're actually gonna go in the marketplace and
120 00:18:59,610 --> 00:19:08,550 find a setup and actually execute on it. And we'll see how that pans out going into the coming weeks after we complete this content. But you're going to have a
121 00:19:08,550 --> 00:19:19,260 greater understanding about what it is you should know, once Lesson three has been given to you. And then it'll fill in all the gaps. And then once we get
122 00:19:19,260 --> 00:19:27,930 into the specific setups, that'll make it really rich for you. Because then you'll know what the setups I do in terms of swing trading. And it's only two,
123 00:19:28,050 --> 00:19:36,690 it's not a whole lot. And then you'll know how to go about it yourself. But if you skip on this lesson, I promise you, you're going to miss the wonderful
124 00:19:36,690 --> 00:19:44,850 opportunity of filling in a lot of gaps. If you think you're just going to just walk Lesson three and so this others go right to the meat of it. Oh no, no, no.
125 00:19:45,210 --> 00:19:56,370 It helps solidify and you retain the information. And you you build the process oriented thinking by doing this. Trust me, this isn't the first time I've done
126 00:19:56,370 --> 00:20:05,400 this, the folks that always try to jump ahead and don't do things like that. As they never do, as well as the ones that actually do it, take some time, put
127 00:20:05,400 --> 00:20:14,550 yourself to, to a pad of paper and a pen, and write out the things that would make your swing trading model, what it is, from beginning to end, what starts
128 00:20:14,550 --> 00:20:21,750 the process, what would change is the process mid trade, what cancels the trade, you may have an idea and you think that trade is going to be there. But
129 00:20:21,750 --> 00:20:28,290 something changes, what would change that idea, and you nixed the trade, you don't want to do it anymore, and you won't execute on it, it kills the whole
130 00:20:28,290 --> 00:20:36,810 idea before the actual trade starts. All those ideas have to be in the plan, you have to have that. Because if you don't have it, you're either going to force us
131 00:20:36,810 --> 00:20:43,380 to trade or you're going to skip on something, and you'll miss an opportunity. So this way, when you when you make a decision, you always know why that
132 00:20:43,380 --> 00:20:52,530 decision is made, you're not reacting on emotions, you're not reacting on psychological impact from either me or talking heads on the TV or watching other
133 00:20:52,530 --> 00:21:01,380 people on Twitter or on the forums, you're only executing and making decisions based on the information you're receiving from price. And that way, you know,
134 00:21:01,380 --> 00:21:09,120 immediate feedback, you have the right side of the marketplace, or you're probably on the wrong side. And then you'll be able to, you'll be more fluid in
135 00:21:09,120 --> 00:21:14,670 your trading, you'll know exactly what it is you're supposed to be doing, and why you should be doing it. And if you get stopped out, you're not going to
136 00:21:14,670 --> 00:21:20,580 wonder why you got stopped out. You don't know exactly reason why you got stopped out. And if there's a new opportunity based on that occurrence, you'll
137 00:21:20,580 --> 00:21:28,560 know that as well. Or you'll know how to move to the sidelines. So I'm going to wish you well in your homework. Remind you that you have to have it done by
138 00:21:28,560 --> 00:21:38,460 Wednesday. I know it's a rather daunting task for some of you I know. But certainly try to have it done before Friday 8pm Because I don't want you to see
139 00:21:38,460 --> 00:21:50,700 the lesson three and if you do not get it done before Friday. Take the time to do this exercise, please. I'm asking you as your mentor. Humor me, please. It's
140 00:21:50,700 --> 00:22:00,630 for your benefit. It's for your enrichment through this study. Do the mock up right now. From what you understand about the ICT concepts, what would you would
141 00:22:00,660 --> 00:22:11,490 be looking for how you frame the story. And then if it takes you getting to Sunday, then watch lesson three, the please don't do Lesson three until you do
142 00:22:11,490 --> 00:22:21,000 this exercise. I promise you you will love your job leaps and bounds ahead and your understanding if you do it until next week. I wish you good luck and good
143 00:22:21,000 --> 00:22:21,360 trading