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ICT Charter PAM 12 - Scalping Intraday Model

Last modified by Drunk Monkey on 2024-02-17 08:03

Outline

00:08 - A price action model for scalping.

- Identify likely direction of daily bar, wait for order block to facilitate expansion swing.
- ICT teaches how to find fair value gaps in price runs without order blocks, scalable to larger timeframes.

04:09 - Trading order blocks and fair value gaps.

- ICT identifies a bullish order block on the chart, highlighting the importance of fair value gaps in confirming the setup.
- The speaker emphasizes the distinction between a high-probability down-closed candle with a fair value gap and an order block, highlighting the importance of price action inside the candle.
- The speaker identifies a potential order block at a low price, indicating a likelihood of a bullish move.
- The speaker uses Model 12 to identify an entry pattern for the potential bullish move.

09:53 - Trading fair value gaps in forex.

- The speaker identifies a fair value gap in the GBP/JPY currency pair, with a potential 20 pip run.
- The speaker uses the PD array matrix to determine the appropriate entry and exit points for the trade.
- ICT explains how to identify fair value gaps in price action and trade with a logical theory behind it.

14:33 - Identifying fair value gaps and trading setups.

- The speaker discusses the fair value gap in a stock, explaining that it's a bearish pattern that can lead to a low fill for shorts and a high fill for longs.
- The speaker provides an example of a cable stock with a bearish order block and an impulse price swing, highlighting the importance of waiting for the fair value gap to form before entering a short position.
- ICT explains how to identify and trade setups using institutional order flow and a fractal pattern, with a focus on the 15-minute timeframe.
- The model is scalable and can be applied to higher timeframes, including daily charts, with a higher probability of success when inside a kill zone and directionally derived institutional order flow.

19:38 - A price action trading model.

- The speaker discusses a scalping model for trading fair value gaps, using a one-shot entry technique with a small stop loss and a scaling strategy for maximizing profits.
- The speaker provides an example of how to use this model in a larger price action model or timeframe, with a focus on capturing 20 pips and leaving a small portion on for potential additional price movement.
- The speaker discusses a price action model that is easy to use and has a high level of visualization, making it a good option for traders.
- The speaker plans to formulate a trading plan using this model and other price action models, with the goal of increasing confidence in understanding price action as a whole.

Transcription

1 00:00:08 --> 00:00:23 ICT: Okay folks, welcome back. This is the s&p mentorship Price Action Model number 12 Is the scalping model. And its focus is 20 pips portrayed que si ICC
2 00:00:23 --> 00:00:35 Price Action Model number 12, a scalping model 20 pips per trade, the stage use for this model is a daily range expansion, order blocks, and fair value gap is
3 00:00:35 --> 00:00:49 the setup, internal range to 20 Pip price runs is the pattern. Alright, so the daily range expansion, what we're going to be focusing on is the identification
4 00:00:49 --> 00:00:59 of the likely or most probable direction of the current daily bar or candle. We're gonna be focusing on order blocks, coupled with a fair value got now right
5 00:00:59 --> 00:01:09 away, you're already thinking, Oh, I've heard this before, Michael. Now, we're gonna be waiting for an order block to form, then in expansion swing to unfold.
6 00:01:09 --> 00:01:22 So what we're doing is, we're waiting for that order blocks to facilitate a expansion swing. So while we qualify valid order blocks, or high probability
7 00:01:22 --> 00:01:33 order blocks, with fair value gaps, sometimes an order block will form a down close candle near a, an important key level from a higher timeframe level. And
8 00:01:33 --> 00:01:46 that down close candle may not necessarily have a fair value gap. So we're filtering that with any down close candle that was at the beginning of a initial
9 00:01:46 --> 00:01:57 expansion price swing, then it has to be retested, okay, that we're about gets traded down into, then after that takes place, the expansion swing that unfolds
10 00:01:57 --> 00:02:09 after the retest of the order block, we are then looking for the fair value gap. And again, internal range liquidity, we're gonna be utilizing that in the form
11 00:02:09 --> 00:02:21 of internal rate liquidity pools to facilitate an entry in the direction of a simple 20 Pip price run. Now, right away, your mind is probably thinking, okay,
12 00:02:21 --> 00:02:29 all you're doing is talking about the same thing you've already talked about in recent months. Before I get into it, I want you to understand certain things
13 00:02:29 --> 00:02:41 here. I've taught you how to qualify in my definition, a high probability waterblock, they are coupled with a fair value got linked directly to the
14 00:02:41 --> 00:02:53 candle. This model is not suggesting that at all, what we're doing is showing you how to find fair value gaps in the middle of price runs that are not
15 00:02:53 --> 00:03:03 directly related to or close to necessarily a order block. The question is, is what gap do I use? I'm getting that question all the time. And I promised
16 00:03:03 --> 00:03:13 everybody that I would come to you if you just waited. Okay, there's a lot of other things I want to build on. But this is one simple measure. Now, right
17 00:03:13 --> 00:03:25 away, your mind should be turning. This isn't limited to a scalping model. While I am presenting it in a scalpers presentation. It's not limited to that it's not
18 00:03:25 --> 00:03:36 certainly at all limited to 20. pips, if you scale this up to larger timeframes, the model will deliver larger PIP calls, okay, or the profit margins will
19 00:03:37 --> 00:03:48 increase in terms of pips, relative to the timeframe you're looking at it. Okay, so our first example here in this very, very brief model, because there's really
20 00:03:48 --> 00:03:56 not a lot to talk about, because everything I'm going to say here, you've already learned in the core content. So this is the Eurodollar. Okay, and the
21 00:03:56 --> 00:04:05 model was built on for scalping five minute charts. Okay, so we're looking for a directional bias. I've already taught you how to do that. When the bias is
22 00:04:05 --> 00:04:17 bullish. In this case for the euro dollar. We could see a bullish order block here. Now notice this down close candle right before this big move here. There's
23 00:04:17 --> 00:04:27 really an absence of any fair value gap. Now, does that make that a low probability or block? Well, in terms of my definition, yes. Now, will I be
24 00:04:27 --> 00:04:37 wrong? Yes. And it's okay. Why am I okay with being wrong? Because I know this model will give me the entry patterns that I'm looking for. That won't give me
25 00:04:38 --> 00:04:47 the fair value game. In an ideal world. We want to see this down close candle, create some kind of a gap here, there isn't one because this comes down closes
26 00:04:47 --> 00:04:57 any likelihood of a gap. So this one here won't necessarily have my attention right away. What would I be waiting for? This model? Watch what happens the
27 00:04:57 --> 00:05:06 price comes back down, slams in The Order block this down closed candle, the last upper portion, okay. In other words, the highest portion of the candle or
28 00:05:06 --> 00:05:18 the high to the midpoint or means threshold is what I'm highlighting here. Now, in full order block theory, we would use the entire candle. But I like to use
29 00:05:18 --> 00:05:28 the upper portion because that's where the most sensitivity is going to be. So price trades down into it. Even at this moment here, I don't have to be a buyer.
30 00:05:28 --> 00:05:39 In fact, I don't want to be a buyer there with this model. What am I waiting for? I'm waiting for the order block to prove there is expansion. Okay, so
31 00:05:39 --> 00:05:53 there's an expansion swing here, taking price higher. Inside this price swing, there's a fair value gap. Right here, one single pass through one candle
32 00:05:53 --> 00:06:04 previous candles high. Next candles low, there's your fair value got this candles low is what we frame the fair value gaps high. So all I need to do is
33 00:06:04 --> 00:06:18 trade to this price or lower. And we could add the spread and we can be a buyer there. This is what happens here. This is the order block. Fear of how you get
34 00:06:18 --> 00:06:32 coupled for this model. Notice the distinction here. This down closed candle can't be referred to an order block in the sense that what I taught as a high
35 00:06:32 --> 00:06:44 probability down closed candle with a fair value gap above it. Okay, that would be the ideal high probability order block this order block for down close candle
36 00:06:44 --> 00:06:55 has the gap inside of the candle. See? Difference? Okay. So the distinction is that we want to see price show a willingness to want to rally. Why is this
37 00:06:55 --> 00:07:04 pattern powerful? Why is it even being mentioned? Why does it have its own model? The reason is this smart money bought down here, I may have missed that
38 00:07:04 --> 00:07:15 you're going to miss it. Okay, price comes back down into it. I may not still see it here. But if I see the price react and it creates an expansion move here,
39 00:07:16 --> 00:07:28 I can see that the narrative is okay, they bought here off the order block. They did a huge accumulation of orders here. This one I may have missed this one, I
40 00:07:28 --> 00:07:40 won't miss the expansion move. I go inside of this range here. And find where's the fair value gap? Well, there it is. Which gap do I buy that one using Model
41 00:07:40 --> 00:07:48 number 12. This is what you're looking for. price drops down into the fair value gap here. We know that there's a displacement here. And there's a displacement
42 00:07:48 --> 00:07:58 here. They have kept price in a relatively small range. Small ranges bring one large ranges as a scalper intraday, you want volatility you want directional
43 00:07:58 --> 00:08:11 impulse. This is what you're looking for. Coupling both order block, expansion swing, then fear of a gap formation by the top of the gap, or in this case, the
44 00:08:11 --> 00:08:23 low of this candle here. Give a little bit of drawdown not much at all. I mean, very, very, very modest, very modest drawdown. We're talking like one or two
45 00:08:23 --> 00:08:33 pips. Okay, if you're if you're adding that minus the spread much, you're obviously price runs, the shaded area is 20 pips. Now this price when if you
46 00:08:33 --> 00:08:42 look at it actually went higher in a day, the only thing I'm showing is a 20 Pip run for illustrative purposes. look at another example here after buying that
47 00:08:42 --> 00:08:58 low, you can see very, very nice handsome price action. Another Euro dollar, you see price comes down. Don't last down close candle, new fair value got to speak
48 00:08:58 --> 00:09:09 up in here. Price creates a impulse swing. I may miss it. I mean, second guessed this, I don't know what's going on. It's got double bottom formation here. We
49 00:09:09 --> 00:09:17 know there's a likelihood of what a potential stock run. So I'm not having this really on my radar yet. But watch what happens price drops down into your block.
50 00:09:18 --> 00:09:28 And then we have expansion. Okay, so we have the expansion swing in here. My eye goes inside this range. And I want to see where's the fair value gap? There's a
51 00:09:28 --> 00:09:37 fair value gap. And yes, in this sense, we do have the high probability order block with down close candle with a fair value gap. So right away, you know,
52 00:09:37 --> 00:09:49 this is the likelihood of a potential bullish order block. But if you would use that theory, would you have gotten filled on this? It never got down there. But
53 00:09:49 --> 00:09:57 model 12 gives you the entry pattern. Fair value gap here. Here's your entry
54 00:09:58 --> 00:10:10 at this time Candle is low or just below it, plus spread. Beautiful 20 Pip expansion and well beyond and I left this over here just for context, relatively
55 00:10:10 --> 00:10:23 equal highs. And you can you can incorporate other models take profits that you use for additional Pip pip objectives. Don't limit it to 20 pips. So obviously
56 00:10:23 --> 00:10:35 if you can get 20 pips and bank that take 80% off and then look for other models to overlap with target theory. So wherever price may lead to, relative to what
57 00:10:35 --> 00:10:45 you've learned in other models in the core content, look for those as additional runs for liquidity. But this model specifically is dealing with 20 Pip runs,
58 00:10:45 --> 00:10:55 you're not trying to get the absolute well you're not trying to get the absolute high all you want is bread and butter give me 20 pips Thank you very much. Next
59 00:10:55 --> 00:11:07 example here is the Guppy which is pound yen. Up close candles here all one order block price trades down comes right back up into the order block. And then
60 00:11:07 --> 00:11:20 we have the proof price swing, we have an expansion price swing lower. So my eye looks inside this range here, where's the fair value got this one down here is
61 00:11:20 --> 00:11:30 too low, it's not enough for me to want to chase that because we're too far extended. Last two up close candles in here, they may want to make a run up into
62 00:11:30 --> 00:11:38 these up close candles in the form of bearish order block. So I would never want to look for like this here as a fair value gap, I would want to look for this
63 00:11:38 --> 00:11:53 price high down to the low think in terms of your PD array matrix. The high to this low split in half, it has to go above or at the 50% level to get to a
64 00:11:53 --> 00:12:08 equilibrium or premium level that will be filtered for this right here. The fair value gap is here. to fair value gap. And this candles Hi, folks just above it
65 00:12:08 --> 00:12:20 would be your fill right in here. And the shaded area constitutes a 20 Pip run, factoring spread and slippage or whatever the point is, is all you're looking
66 00:12:20 --> 00:12:34 for is that 20 Pip bread and butter setup. There's waterblock hits it expansion price swing, we're looking for the fair value gap, then that's the protocol. So
67 00:12:34 --> 00:12:44 we're not forcing a perception of okay, I'm gonna look for every potential fair value gap, and I'm gonna trade it No, you do not want to do that. And if you've
68 00:12:44 --> 00:12:54 tried doing it recently, since you've learned about fair value gaps, you've probably encountered that conundrum. So some of the algorithmic theory that
69 00:12:54 --> 00:13:08 we'll cover in 2020 are things like this, where certain things have to happen in a series of or a specific order, then an outcome should be reasonably expected.
70 00:13:08 --> 00:13:17 Okay. So it helps you have more prognostication, it gives you perception. It gives you depth of understanding about what you're seeing in terms of price
71 00:13:17 --> 00:13:29 action at the moment, and not just guessing, because there is a logical theory behind why and where price reacts and trades from this actually has another
72 00:13:29 --> 00:13:37 example here that I didn't have. But as I'm talking to you, I'm looking at it right now I went right to it. We have the last few close candles here, price
73 00:13:37 --> 00:13:49 trades down away and comes right back up into the bearish order block. Then we have what don't we have a expansion swing? For Vega right there. There's your
74 00:13:49 --> 00:14:01 fill. Think about this range here. The shaded area 20 pips from here to here, there's 20 pips. Okay, it's right there. I didn't include it because I wasn't
75 00:14:01 --> 00:14:12 looking for that one in the same day. But the same day gives it to you again, same pattern, same concept, you look at an order block, or you can wait and
76 00:14:12 --> 00:14:21 catch it after. In other words, you're not always going to need to anticipate these setups. Many times you're going to catch it after it does this where it
77 00:14:21 --> 00:14:31 starts to run. This is reason why I say we don't chase price, we do not do it because there's going to be a procedure that will allow you to get into the
78 00:14:31 --> 00:14:41 marketplace at a fair value. Hence the fair value gap. And that's what's happening here. Now, how far into fair value got it goes is going to be
79 00:14:41 --> 00:14:53 dependent on your broker. And that's the reason why this pattern is set to trading at the low of the fair pay gap for shorts and at the high for lungs.
80 00:14:55 --> 00:15:02 Okay, because every spread is going to be different. Every broker is going to be slightly different Some brokers may come all the way up and fill in this gap,
81 00:15:02 --> 00:15:12 some of them may go up to consequent encouragement, some may just tap where the gap is, well, in this case, fair a gap that's bearish, it would be the low the
82 00:15:12 --> 00:15:21 gap, that's what you're looking for, for your entry. That may be all it does, and it never fills that gap. So that's the reason why I create these models in
83 00:15:21 --> 00:15:34 the way a half because it's meant for you to get a fill with your demo. So that way you can build experience and not miss a lot of the price swings. Whenever
84 00:15:34 --> 00:15:46 we're trading fair value gaps, we allocate the underlying risk that would be associated with the gap filling, okay, so our, our, our stop would be above
85 00:15:46 --> 00:16:00 here. But we are allowing with money management to endure if you will, any closure of that gap. So that's going to be factored in. Granted, that's a
86 00:16:00 --> 00:16:08 default when you're using the stop up here, but it's not the same thing from mentally seeing it happen when you're in a tray you get short here, but it comes
87 00:16:08 --> 00:16:17 up and fills the gap you're gonna be afraid you're gonna feel fearful that is going to keep on running. You just got to stick to the protocol and trust that
88 00:16:17 --> 00:16:28 the stock is going to do its job and the gap may just closing that's all there is or may go to constant encouragement and that's all there is. Okay, our last
89 00:16:28 --> 00:16:39 example this is Cable we have the last up close candle bearish order block we have price create an impulse price swing price comes back trades into the order
90 00:16:39 --> 00:16:52 block here. Now we want to see what we want to see the expansion price swing here. The impulse price swing is the initial displacement. The retracement is
91 00:16:52 --> 00:17:02 retested the order block, then the expansion move, where price really starts to get accelerated. This is where we do not chase it, we just simply wait for the
92 00:17:02 --> 00:17:14 fair value got the form. We have a fair value gap right here. Right here. Okay. And with that fear of a gap, we wait for price to come back up into this candles
93 00:17:14 --> 00:17:27 high, which is the fair value gaps low. Your short entry is there. And 20 pips is just the shaded area. And it does a whole lot more obviously here. When we
94 00:17:27 --> 00:17:35 look at this model, it's one thing to say okay, there's a fair value gap, here's an order block. Okay, I want you to go back and look at examples of every
95 00:17:35 --> 00:17:47 potential pair that you are considering in your career, right now, you may have just a few because I've told you so but eventually, some of you're gonna get
96 00:17:47 --> 00:17:56 really comfortable with looking through a larger portfolio and other asset classes. And you'll start to see this pattern form on higher timeframes. And
97 00:17:57 --> 00:18:07 this could be your bread and butter setup for like a 15 minute timeframe, and doing intraday swings. It's not limited to a five minute chart, remember, price
98 00:18:07 --> 00:18:15 is fractal, it allows you to do it in every timeframe. This pattern still works on daily charts to see if you're a position trader or a long term Swing Trader.
99 00:18:15 --> 00:18:24 It exists there as well. Okay, so don't think that I'm just giving you a another day trader another scalping technique. And I can't ever use that, Michael, why
100 00:18:24 --> 00:18:34 are you wasting my time it does. Every one of these models are scalable, you can expand them, or reduce them to lower timeframes down to a one minute chart. It's
101 00:18:34 --> 00:18:45 completely up to you. But the theory behind it, and the narrative that's used is the same. Okay. Now, in closing, some of the things that make these setups
102 00:18:45 --> 00:18:54 better or higher probability is obviously within a kill zone, within institutional order flow that's directionally derived. In other words,
103 00:18:54 --> 00:19:02 what is the directional bias institutional fall on a daily chart? If you're trading in that direction, and inside of a kill zone, and this pattern forms,
104 00:19:03 --> 00:19:13 man, is it a loaded deal, it's just one of those easy, low hanging fruit setups. It's a very, very easy model to find a setup with. And it's one of those models
105 00:19:13 --> 00:19:22 that are very forgiving, because some of you are complaining that and I'm not saying it's a bad thing, it's normal for you to say, I can't see this real time.
106 00:19:22 --> 00:19:32 Well, this is one of those very forgiving models where it kind of like, acts like a crutch, okay, or training wheels. There is an order block there, you may
107 00:19:32 --> 00:19:39 have missed it, and it retraced back to the order block and it starts to move away from the order block. And you feel like Oh man, I'm gonna chase it. Don't
108 00:19:39 --> 00:19:49 wait for the fair value gap. When that fair value gets gets filled, or trades too. There's your signal. That's your entry technique, your pattern and then
109 00:19:49 --> 00:20:01 trade it and take 20 pips out now. How would you use this with a larger price action model or a larger timeframe model? Use don't lose for that 20 pips, you
110 00:20:01 --> 00:20:12 just look for simple opposing PD arrays. That means, if you're bearish, you're gonna be looking for the very next discount array that will allow you or
111 00:20:12 --> 00:20:19 facilitate a healthy profit margin. What does that mean? I don't know what your stop is going to be, they're all gonna be different. Obviously, you can see
112 00:20:19 --> 00:20:32 every one of these setups here has a different scale in terms of PIP per stop loss. So if your model is going to force you to be a five to one setup trader,
113 00:20:33 --> 00:20:44 then obviously, you know, you want to consider that and where your scalings are going to be. That's gonna obviously skew the five the one modeling or gearing
114 00:20:44 --> 00:20:57 that you're you're trying to employ. But you always want to find some way to create some first level of scaling. This model is a one shot entry give me 20
115 00:20:57 --> 00:21:09 pips and leave a very, very small portion. That's how I'm presenting it here. So if you are scaling, say, say did one standard lot in the form of 10 minis you
116 00:21:09 --> 00:21:17 could take eight of those minis off at 20 pips. So whenever you get first profit in the scalping model, leave two minis on to see if you can get anything else
117 00:21:17 --> 00:21:28 additional price movement for the next PD array, whether it be premium array when you're going long, or discounted rate when you're going short. Don't try to
118 00:21:28 --> 00:21:38 make more of this model than I just told you. It's very, very simple. It's very easy. And like I said, it's very forgiving, because it allows you to you miss
119 00:21:38 --> 00:21:48 the boat, okay, on the ideal entry, because the ideal entry will be selling up here. Okay, or selling up here on the first fair value got right in here. So
120 00:21:48 --> 00:21:56 that Faraday got gets close, you can sell short, but then you had to encounter all this consolidation, do you get to the bearish order block retest, there's a
121 00:21:56 --> 00:22:11 short optimal trade entry, price expansion, beautiful, symmetrical price swing, then retrace back into now the fair value got. Price runs again, standard blow
122 00:22:11 --> 00:22:22 how many pips below that, do all your projections 1015, you know, you know the model. And you can get the low here. So you can take 20 off 20 pips off here
123 00:22:23 --> 00:22:37 with eight of the 10 minis on one standard lot gearing, but two minis would be on board to capture all the remaining portion here. So you can you can expand
124 00:22:37 --> 00:22:49 this model. Also to use as entering a larger term price mu, you can actually use this to use additional entries, technique onwards, if you have a larger price
125 00:22:49 --> 00:22:59 when say, say for whatever reason, maybe you were lucky enough to get short up here, you can use this model to add to an existing position. Okay, so don't
126 00:22:59 --> 00:23:08 think that it's limited to a scalping model. If you're, if so many ways you can use these models, and they'll dovetail once you get to know what, what all of
127 00:23:08 --> 00:23:18 them can do over time. And when you can plug and play certain ones. Obviously, this pattern here is very, very specific requires you to do certain things in
128 00:23:18 --> 00:23:27 terms of waiting, and the price has to prove it self to you. And a lot of you may really resonate with this one, because it's a very easy model. Very, very
129 00:23:27 --> 00:23:40 easy. It's highly visual. And it's principle based. And even at its core, bare bones, you know, just a skeleton with no more flesh added to it like we will do
130 00:23:40 --> 00:23:50 in 2020, we start going back through these again, and creating more of a trading plan type thing. Whereas right now, I'm just giving you an idea, okay, it's a
131 00:23:50 --> 00:24:01 model to the CERN where you are in one of these models. And you can build on it, flush it out. By itself, I've given you enough to be a trading plan. Everything
132 00:24:01 --> 00:24:12 I just explained to you, in concert with what I've taught you about money management, and take profits and how to work within the pdra matrix. It's you
133 00:24:12 --> 00:24:20 have you have the entire trading plan right there. And only thing I haven't done is go by step by step using the criteria that creates a trading plan. I'm just
134 00:24:20 --> 00:24:27 having a conversation with you like, I'm assuming because you have experienced with me now and you have experienced in the market. I can say what I've said to
135 00:24:27 --> 00:24:35 you, and you can take that information, and it's okay. I know is that what he means by all that I'm going to formulate a trading plan. Don't be discouraged if
136 00:24:35 --> 00:24:42 you don't feel that way. That's okay. Because that's what the next round of going through these price action models is going to do. We're actually going to
137 00:24:42 --> 00:24:52 sit down and put detail behind everything. What is it we're supposed to be dealing with all these individual models. Once that's done, and you go back
138 00:24:52 --> 00:25:02 through them all, collectively at the end of next year. You'll feel much more confident about your own Thinking about price action as a whole and this is just
139 00:25:02 --> 00:25:11 gonna be one small little facet in the greater whole of your understanding as it comes to price action so if you found this insightful and I'll talk to you next
140 00:25:11 --> 00:25:12 time wish you good luck and good trading