ICT Charter PAM 11 - Trade Plan and Algorithmic Theory
Last modified by Drunk Monkey on 2024-02-17 08:03
Outline
00:02 - A day trading model for identifying profitable trades.
- Focus on lower-risk, higher-reward setups in day trading models 11 and 12.
- Identify optimal trade entry setups based on market structure, calendar events, and liquidity.
04:30 - Trading strategies and risk management.
- Trader anticipates optimal trade entries on 15/5-min charts based on 60-min price swings, managing shorts with sell limit orders and longs with buy limit orders.
- ICT explains stop loss management, position sizing formula, and risk management.
08:54 - Price action model for day trading.
- ICT explains how to create a smooth equity curve by reducing leverage and managing losses.
- ICT explains how to use weekly range expansion in trading, emphasizing the importance of finding setups that allow for profitable exits without needing to reach targets.
12:27 - Analyzing audio transcript for market analysis insights.
- ICT anticipates price to reach above yesterday's high, with potential for bullish scenario.
- ICT identifies potential buying opportunity in Australian Dollar based on higher timeframe liquidity.
16:18 - Trading with a focus on finding profitability in small movements.
- Trader identifies potential trading opportunities using previous day's high and weekly range expansions.
- The speaker emphasizes the importance of being flexible and adaptable in trading, rather than trying to predict the absolute end of a weekly candle.
- The speaker provides examples of setups that can be used to profit from intra-week movements, such as using the highest high of the week or the lowest low of the week as a filter for potential runs.
- ICT identifies a common trading setup in various markets, including futures, commodities, and bonds, with a potential for a straight line run.
Transcription
| 1 | 00:00:02 --> 00:00:13 | ICT: Welcome back folks, this is Price Action Model number 1130 pips intraday trade model day trading model trade plan it's a bit of a tongue twister almost |
| 2 | 00:00:13 --> 00:00:13 | wasn't |
| 3 | 00:00:23 --> 00:00:35 | all right ICT Price Action Model number 1130 pips intraday trade plan day trading model. Now before we get into it, model number 11 and model number 12 |
| 4 | 00:00:35 --> 00:00:46 | Are, are considered by my definition as a bread and butter type model. So there's setups that are going to happen most frequently. And as a result of that |
| 5 | 00:00:46 --> 00:00:58 | they have a higher strike rate or they should have a higher strike rate, but they should not be your go to initially. Okay. The reason why I say that is |
| 6 | 00:00:58 --> 00:01:11 | because it requires you to know the most about the content and how you engage with price before you start working with lower are multiple setups, I don't |
| 7 | 00:01:11 --> 00:01:28 | require a three to 520 to 1020 Different our model return for one risk. These models 11 and 12 tend to be lower in their return relative to the initial risk. |
| 8 | 00:01:28 --> 00:01:38 | Now that's not meant to discourage you, it just meant that you don't try to get rich with these types of setups just because there's a plethora of them forming |
| 9 | 00:01:39 --> 00:01:49 | doesn't mean go in there and go hog wild on every single setup and over leverage every single one of them. So with that, let's get into it. Like every model |
| 10 | 00:01:49 --> 00:02:00 | before, there's five stages to the trade, land development, preparation, opportunity discovery, trade planning, trade execution, and finally, trade |
| 11 | 00:02:00 --> 00:02:12 | management. Okay, preparation, running on medium and high impact events for the markets that you're gonna be following. Study the events of the week to come and |
| 12 | 00:02:12 --> 00:02:24 | consider how the current market structure and calendar events may suggest a specific weekly profile for that week's range. We're gonna be determining the IP |
| 13 | 00:02:24 --> 00:02:35 | to data range for the last 20. Now it's very specific with model 11. Here. The last 20 trading days is all that's required. We do not count Sundays. When we |
| 14 | 00:02:35 --> 00:02:44 | noting the highest high and the lowest low in the past 20 trading days. This is your current dealing range. Inside this dealing range, we will look for the next |
| 15 | 00:02:44 --> 00:02:55 | draw on liquidity Where's price likely to trade to next below which old low above which old high we look for a pdra in the direction of the weekly range |
| 16 | 00:02:55 --> 00:03:10 | bias we target external range liquidity for this model. We anticipate price to move to an optimal trade entry that would support our weekly bias on the day and |
| 17 | 00:03:10 --> 00:03:20 | news release found on the economic calendar for the current or next trading week. This volatility injection is what we will wait for this will be a run |
| 18 | 00:03:20 --> 00:03:32 | based on a low resistance liquidity run condition. Opportunity discovery. We're gonna be looking for 30 Pip ranges now what I mean by that we're looking for the |
| 19 | 00:03:32 --> 00:03:44 | probability of delivering a expansion that would cover over 30 pips allowing us an entry to exit with a favorable 30 pip range. And when we looking for that on |
| 20 | 00:03:44 --> 00:03:53 | a 60 minute chart that would enable a run to buy side liquidity when bullish institutional order flow is present or target the sell side liquidity when |
| 21 | 00:03:53 --> 00:04:04 | bearish institutional order flow is present. Trade planning when the market is poised to decline, we want to look for a convergence of both manipulation and |
| 22 | 00:04:04 --> 00:04:14 | price. Opposite to our trade bias at a time the economic calendar suggests a volatility injection would likely unfold. We will short 60 minute premium |
| 23 | 00:04:14 --> 00:04:25 | optimal trade entry setups. When the market is poised to rally, we want to look for a convergence of both manipulation and price opposite to our trade bias at a |
| 24 | 00:04:25 --> 00:04:37 | time economic calendar suggests the volatility in Jackson will likely unfold. We will by 60 minute discount optimal trade entry setups trade executions when we |
| 25 | 00:04:37 --> 00:04:48 | are bearish we will anticipate a 15 or five minute premium optimal trade entry to form on a 60 minute retracement higher during London Open and or New York |
| 26 | 00:04:48 --> 00:05:01 | open kill zones. Now what am I saying here? Using the 60 minute chart as the basis but narrowing down our focus to a 15 or five min. And that's where the |
| 27 | 00:05:01 --> 00:05:09 | optimal trade entry that we're gonna be hunting, the entry will be there. But based on a 60 minute price swing higher, that sets up that optimal trade entry |
| 28 | 00:05:09 --> 00:05:21 | that would be a bearish entry, but located on a 15 or five minute chart when we are bullish, we will anticipate a 15 EUR five minute discount optimal trade |
| 29 | 00:05:21 --> 00:05:31 | entry to form on a 60 minute retracement lower during London Open and or New York open kill zones short trade management when we are entering a short we will |
| 30 | 00:05:31 --> 00:05:42 | place a sell limit order we will execute with our demo account. We will use the 62% retracement fib minus five pips as our entry price when using the settlement |
| 31 | 00:05:42 --> 00:05:56 | order. Long trade management when we are entering along we will place a buy limit order we will execute with our demo account. We will use the 62% |
| 32 | 00:05:57 --> 00:06:10 | retracement level on the FIB plus five pips as our entry price when using the buy limit order short trade management when we are entering a short, we will |
| 33 | 00:06:10 --> 00:06:21 | place a sell limit order to take 30 pips as our objective on a single position. If you capture a 30 Pip objective, close the order via a buy limit order and |
| 34 | 00:06:21 --> 00:06:33 | wait for another opportunity. Long trade management when we are entering along we will place a buy limit order to take 30 pips as our objective when a single |
| 35 | 00:06:33 --> 00:06:47 | position. If you capture a 30 Pip objective, close the order via sell limit order and wait for another opportunity. Stop Loss management. Stop Loss opens |
| 36 | 00:06:47 --> 00:07:00 | with a 20 Pip risk when we are in profit 15 pips of our expected 30 Pip objective stop loss can be reduced by five pips. When we are in profit 20 pips |
| 37 | 00:07:00 --> 00:07:16 | of our expected 30 Pip objective stop loss can be reduced to break even money management, position size calculation formula, position size equals account |
| 38 | 00:07:16 --> 00:07:29 | equity times our percent divided by stop loss in pips. position size is the amount of leverage your trades or trades assume account equity is the total |
| 39 | 00:07:29 --> 00:07:37 | amount in your trading account. Our percent is the percent of risk you're willing to take on portrayed. The difference between the entry price and your |
| 40 | 00:07:37 --> 00:07:50 | stop loss is the number of pips you will use to divide the result of equity times our percent. Okay, in our example, our hypothetical count equity is 10,000 |
| 41 | 00:07:50 --> 00:08:05 | US Dollars risk per trade 1% or 10,000 times 1% or 100. US dollars. Stock required for the trade is 20 pips in microwatts, or one kg leverage each, which |
| 42 | 00:08:05 --> 00:08:18 | represents 10 cents per pip 20 pips times 10 cents equates to two US Dollars $100 divided by $2 equals 50 Micro lots per trade or 1% of the account equity, |
| 43 | 00:08:18 --> 00:08:32 | were always rounding down. And our hypothetical example here using mini lots everything remaining the same 10k leverage, which would represent $1 per pip 20 |
| 44 | 00:08:32 --> 00:08:49 | pip stop loss required at $1 per pip equates to 20 US dollars. So $100 divided by $20 equals five mini lots per trade, or 1% of the account equity, again, |
| 45 | 00:08:49 --> 00:09:07 | always rounding down. And finally, for standard lots, it's not favorable and does not accommodate for that size leverage. If your demo account takes a loss |
| 46 | 00:09:07 --> 00:09:17 | on a trade, and it is the full our percent you assumed dropped off percent by 50%. And when the losses recovered by 50%, you are permitted to return to the |
| 47 | 00:09:17 --> 00:09:27 | maximum our percent per trade. If the reduced our percent trade assumes a loss reduce the our percent by 50% until the previous trade loss is recovered by 50%. |
| 48 | 00:09:30 --> 00:09:39 | If you take a series of five winning trades in a row, drop your art percent by 50%. You are likely to assume a loss eventually and this will build in equity |
| 49 | 00:09:39 --> 00:09:49 | leveling and reduce the likelihood of a large drawdown. You want a smooth equity curve that slopes or stairsteps higher, not erratic distribution with deep |
| 50 | 00:09:49 --> 00:10:01 | declines. Start back testing. Collect multiple sample sets with this trade plan. If you're unclear about some of the past also rewatch the lessons for this price |
| 51 | 00:10:01 --> 00:10:02 | action model. |
| 52 | 00:10:03 --> 00:10:12 | I will provide sample sets but do not rely or wait for mine. Dig into your charts and study what was provided here. This is the algorithmic theory lecture |
| 53 | 00:10:12 --> 00:10:23 | and discussion for price action model. 11 is the day trading model, and it stocks 30 pips per trade. Obviously, you know, the benefit of looking for a |
| 54 | 00:10:23 --> 00:10:33 | weekly expansion, like most of the models were looking for that. This one here, it targets, old daily highs and lows, and this is one that's going to repeat a |
| 55 | 00:10:33 --> 00:10:44 | lot too. You can see a lot of setups form over the week with this because daily highs and lows have a lot of built in liquidity. So if we're bullish, I like to |
| 56 | 00:10:44 --> 00:10:56 | look for previous day's highs into week highs last week's high that type of scenario for runs on liquidity. But since we're usually below an old low and |
| 57 | 00:10:56 --> 00:11:06 | we're bullish, we're basically entering on internal range liquidity and utilizing external range liquidity to get us our hopefully profitable exit. But |
| 58 | 00:11:07 --> 00:11:18 | I kind of like want to talk a little bit about how we don't need the weekly range expansion, or the targets that would contribute to why we would expect the |
| 59 | 00:11:18 --> 00:11:30 | weekly range to expand bullish ly or bearishly. And still find setups. Okay, so again, it's not about being right. It's not about being accurate all the time. |
| 60 | 00:11:31 --> 00:11:41 | It's a matter of finding setups that allowed the volatility, to push market price from where you enter to where it allows you a profitable exit, and it |
| 61 | 00:11:41 --> 00:11:52 | doesn't need to go to your target. That's basically the same thing with all the models in every trading aspect. If you demand perfection, you're guaranteeing |
| 62 | 00:11:52 --> 00:12:02 | imperfection forever, because you're never going to get anything except for frustrated. So I want to talk a little bit about how we can use this model, and |
| 63 | 00:12:02 --> 00:12:15 | also not requiring it to be perfect. So let's assume for a moment, you're sitting down to your desk, and you're considering the Australian dollar and the |
| 64 | 00:12:15 --> 00:12:28 | weekly range expansion. Your nice one of these candles is obviously a weekly candle. At the time of this recording, it's Wednesday, June 1 2022. And it would |
| 65 | 00:12:28 --> 00:12:36 | be reasonable to anticipate the weekly rain to maybe run up into this area here, maybe even revisit this area. Why because we've already taken sell side |
| 66 | 00:12:36 --> 00:12:49 | liquidity out here. Now we have taken by side here, and we've broke took out sellside. So we're likely to go back into this range from high to low. And |
| 67 | 00:12:49 --> 00:12:59 | there's a small likelihood that we could get it to go that level. So this right here would be a reasonable assumption for HR on liquidity. This does not need to |
| 68 | 00:12:59 --> 00:13:08 | be traded to define profitability. And that's the benefit of having something like this model is very small in terms of its expectation for pips, or points or |
| 69 | 00:13:08 --> 00:13:19 | handles whenever you're trading. So on a daily chart, we're looking at the previous day, this is equivalent to what would be Tuesday's trading, or may |
| 70 | 00:13:19 --> 00:13:33 | 31 2022. So have the high basically noted there, and I'm expecting price to make a run above that, but using this area here, these worlds of equal highs, the gap |
| 71 | 00:13:33 --> 00:13:41 | over here, that's my draw on liquidity, okay. Now, I did not take this trade obviously, I have not been trading Forex for a while since you all know that. |
| 72 | 00:13:42 --> 00:13:51 | But I want to kind of give you an idea of what may unfold and how this is not something that should play your development. In fact, it should encourage you |
| 73 | 00:13:53 --> 00:14:06 | that likely drawn liquidity to this level here and reaching above yesterday's high is enough to warrant a likely bullish scenario. So bias going into |
| 74 | 00:14:06 --> 00:14:15 | Wednesday trading for Australian Dollar should have been and this is obviously with the benefit of hindsight, but I think I've earned that right to be able to |
| 75 | 00:14:15 --> 00:14:32 | talk like that I think meal but if we go into a lower timeframe chart alright, and here's June 1 trading and we had sellside taken right here consolidated had |
| 76 | 00:14:32 --> 00:14:45 | sellside buildup on a tear and the market dropped down, rallied in rammed up above previous day's high, but notice it did not reach that objective. It |
| 77 | 00:14:45 --> 00:14:57 | collapsed and went down below this low here is this a failure? Now if you go down to your 15 minute timeframe, you see your Bellwether chart. You can see we |
| 78 | 00:14:57 --> 00:15:14 | have Run from this low up, consolidated, created a pool of liquidity for sell side market drops down at midnight creates a Judas swing and rallies comes back |
| 79 | 00:15:14 --> 00:15:27 | down in does this fair value gap in order block support price? Yes. So we have buyside here, that's obvious here. And then we have the previous day's high. And |
| 80 | 00:15:27 --> 00:15:35 | we have that drop in liquidity that could be a longer term, higher timeframe drawl and liquidity. So when the market starts to rally, again, this is long and |
| 81 | 00:15:35 --> 00:15:45 | open. So it's two o'clock to five o'clock in the morning. It rallies once more, it shows a nice energetic candle to the upside creates a fair value gap, it |
| 82 | 00:15:45 --> 00:15:54 | drops down into consequent encouragement. That's a buy right there. You can be long there and expect the previous day's high right now then because you're |
| 83 | 00:15:54 --> 00:16:05 | expecting the likelihood of that higher timeframe drawn liquidity where the weekly range may expand up into those relative equal highs. This is a larger, |
| 84 | 00:16:05 --> 00:16:15 | higher timeframe. Drawn liquidity. He doesn't go to these all the time, right from jump straight. In other words, it doesn't have to go right from here |
| 85 | 00:16:15 --> 00:16:22 | straight line up to that. That's a lot. And it's a big movement there. So it'd be reasonable for it to obviously, at least run above the previous day's high, |
| 86 | 00:16:22 --> 00:16:33 | which is this level here. But if it goes above previous day's high, how can we anticipate how far it can go? Well, in the simplest of terms, look at where we |
| 87 | 00:16:33 --> 00:16:55 | are, we're at point 7205 So 10 pips above that would be what 07215 10 pips above that would be 07230 So essentially, about 25 pips above with increments of 10 in |
| 88 | 00:16:55 --> 00:17:10 | your scaling, and it goes up into New York open. So we had previous day's highs taken 25 pips above previous day's high, all on this run up into going into New |
| 89 | 00:17:10 --> 00:17:22 | York open, then it collapses. Is it reasonable to assume that you could be going long here, taking a partial at previous day's high, we're just below before it |
| 90 | 00:17:22 --> 00:17:33 | runs in then 10 pips above the high and 20 pips above the previous day's high. If you're not taking partials, in any of these, you're doing yourself a |
| 91 | 00:17:33 --> 00:17:41 | disservice, you haven't applied the things that you've been trained to do in his mentorship. So what make a difference if it came back on you like this and stop |
| 92 | 00:17:41 --> 00:17:54 | you out at your original entry. Because you've paid the trader here, here, and here. And it's been a straight shot from London Open, and overnight at midnight. |
| 93 | 00:17:54 --> 00:18:06 | So we're in a new session. So it's likely to do what move to a discount. So we could see come back down to the old high, maybe sweet below it, but this here |
| 94 | 00:18:06 --> 00:18:16 | shows an aggressive move lower. So does that mean go in and start hunting this objective here? Again, not yet. But you can find profitability with this model, |
| 95 | 00:18:17 --> 00:18:33 | small little movements, and buying around in here at the London Open. That's 1020 3040 50 Plus pips in Australian dollar, using this model, using previous |
| 96 | 00:18:33 --> 00:18:42 | day's high, weekly range expansions, doesn't even need to go to the target that you would expect to see it trade to. Again, that's what I was referring to all |
| 97 | 00:18:42 --> 00:18:53 | the time. We do not try to predict the closing price, or the weekly range. All we need is the direction where it can make a move one way or the other. We're |
| 98 | 00:18:53 --> 00:19:05 | deciding, okay, that's all it is. We're not predicting the absolute end of a weekly candle being higher or lower. We're anticipating and looking for evidence |
| 99 | 00:19:05 --> 00:19:18 | to support one side over the other. You're going to get it wrong, I get it wrong. But you can find setups and be technically incorrect but fundamentally |
| 100 | 00:19:19 --> 00:19:32 | profitable. What matters more to you? If you're the young guy in here, you want to be right and rich. And I'm telling you, it's better just to be rich. Because |
| 101 | 00:19:32 --> 00:19:41 | being right all the time. Yeah, it's not it's not realistic. You can't be right all the time. I'm like, right. So if you can find setups |
| 102 | 00:19:43 --> 00:19:55 | that offer the movement you're looking for, and you can take out 30 to 50 pips. Then you take them and if it reverses on you after you've taken profits, who |
| 103 | 00:19:55 --> 00:20:07 | cares? Next trade? Next seven. So this is one Those models that are very easy you can be streamline, systematically taken multiple times, you know, throughout |
| 104 | 00:20:07 --> 00:20:19 | the week, there's, again a plethora of setups with this one. You can use the intra week highs, you don't necessarily have to have just yesterday's high, you |
| 105 | 00:20:19 --> 00:20:26 | can use the highest high of the week or the lowest low of the week, and anticipate a run if you're expecting the weekly range to expand in a specific |
| 106 | 00:20:26 --> 00:20:36 | direction. That weekly range expansion is like a filter. Okay? There are times where I'll take trades like this. And I may have started the week with a an |
| 107 | 00:20:36 --> 00:20:45 | expectation that the weekly range may go higher, okay, and expand higher. But I'll take shorts, and then what do I do in instance, I don't risk as much |
| 108 | 00:20:46 --> 00:20:56 | because it's going against my underlying bias. But because I'm flexible, and I can work with intraday volatility, I don't need it to be only one side. And over |
| 109 | 00:20:56 --> 00:21:05 | time, you'll graduate into that understanding and prowess as well. But don't force it get good at picking one direction, operating in that one alone. |
| 110 | 00:21:06 --> 00:21:14 | profiting and and moving to the sideline and conditioning yourself for that. Because if you do that, over time, it'll give you longevity, it'll give you |
| 111 | 00:21:14 --> 00:21:27 | peace of mind. You won't be wrestling with the Well, I gotta take it on the trade, war, fear of missing something. These setups form every single day, |
| 112 | 00:21:27 --> 00:21:44 | there's something to trade with this model. Every single trading day This one appears whether is a futures contract, a commodity, a bond market, an index |
| 113 | 00:21:44 --> 00:21:55 | future. You know, it's it's there. I haven't looked at crypto. But I'd be interested to know if any of you are able to see this type of model form |
| 114 | 00:21:55 --> 00:22:02 | frequently in crypto. I don't look at crypto enough to know but I would venture to say it probably forms a significant amount of time over the course of a |
| 115 | 00:22:02 --> 00:22:14 | month. And then dropping down into a five minute chart you can see all of the business here. Really nice delivery rebalanced to the gap discount low here and |
| 116 | 00:22:14 --> 00:22:25 | consequent encroachment of that of the higher Time Frame rate in London open and you can see all the down close candles and gaps are being supported price. And |
| 117 | 00:22:25 --> 00:22:34 | when right before we leave the lung open kill zone starts to run. Then we have typical five o'clock to seven o'clock in the morning consolidation. And then it |
| 118 | 00:22:34 --> 00:22:46 | starts running right up into New York open. Notice it does not come down to kind of retracement. It's this consolidation and run straightaway. That is straight |
| 119 | 00:22:46 --> 00:22:58 | line run. And they typically can set up your New York open or New York session market reversal profiles. Not all the time, but generally it can happen. And |
| 120 | 00:22:58 --> 00:23:11 | today. The first of June 2022. We had the dollar find some bullishness this morning so it started to run up a little bit causing all of this here. And I |
| 121 | 00:23:11 --> 00:23:16 | think that's going to be it for this one. Hopefully you found this one insightful. Until next time. Be safe |