Timeframe Selection Overview
"this topic is going to be specifically dealing with the time frame selection and defining setups for your model"
Monthly Chart - Position Trading
"for the monthly chart we use this for position trading"
Benefits of Monthly Chart
"the monthly charts actually going to do a lot of assistance for your trading and your analysis"
"the precision and the accuracy that i have has a lot to do with the direction that's derived by the information on the monthly chart"
Removes Price Action Shock
"if you trade on these longer-term charts or at least trade off of the the ideas that come from the monthly charts it removes a lot of the price action shock that comes with intraday trading or short-term trading"
ICT's Personal Experience
"i can admit to you like i've done many times in the past i am not a long-term trader i don't have the personality to to hold on to a position that long i tend to change my mind a lot"
Who Should Use Monthly Charts
"if you're a person it takes a long time to make a decision uh it comes hell or high water you're sticking with it that's probably the avenue that would best suit you as a trader"
Weekly Chart - Swing Trading
"the weekly chart we use that for swing trading"
Swing Trading Definition
"swing train's a little bit more frequent than long-term position trading uh swing trading is invite by my definition it's typically a one or two trades within a three month period"
"every quarter of the year in other words every three to four months there's going to be a setup that takes place and you can find them very easily on a weekly chart"
Patience Requirement
"because the weekly chart is much like the monthly in regards to how long it takes to form the setups it takes a great deal of patience"
Removes Short-term Volatility
"for those individuals that can't be in the marketplace on a very intraday minute by minute basis again this the weekly chart will actually serve you very well you don't have to do a whole lot of trading it's a whole lot of time in between the setups and much like the monthly chart it removes that that initial shock of short-term volatility"
ICT's Use of Weekly Chart
"while i may not be trading specifically on the setup itself i will use those ideas to help frame the short-term trades that i take or even in day trades"
Daily Chart - The Best Chart
"the daily chart to me personally i believe this chart is the best chart"
Why Daily Chart Is Best
"it gives you the best of both worlds it gives you a long-term perspective it gives you all of the near-term banking levels so all the levels that the banks would be interested in all the large funds would be interested in you can clearly see those on this daily chart"
"the daily chart also gives us the framework to do a lot of analysis for short-term trading so it has the benefits of higher time frame but not to the degree of weekly and monthly but it does give you a higher time frame perspective"
What You Find on Daily Chart
"if we can arrive at strong analysis reference points in terms of institutional order flow if we can look at points at which there may be stops there may be a liquidity void there may be a fair value gap"
"if you apply that to the daily chart you'll have a plethora of setups and plenty of things to trade on"
If You Had to Choose One Chart
"if there was a a chart selection i had someone hold a gun to my head uh which chart would i'd like to trade off of it would be the daily chart because it gives you a great deal of range to work within it gives you the inter bank levels to be monitoring where stops would be residing um where long-term objectives would be seen in form of liquidity above or below the marketplace"
Recommended Starting Point
"i would suggest that you start in the daily chart even if you're going to know it in your heart of hearts that you're going to try to be a day trader start the daily chart because the daily chart is going to be a really good bellwether"
"it's just the one that will give you everything you need to know with a lot of the higher time frame reference points and it'll also give you the directional bias"
"you find that on the daily chart that tells you everything there and once you go through this teaching and the next teaching with institutional order flow you'll see how easy and uh the the daily bias is really it's not that hard but the problem is trusting it that's that's the hard part"
4 Hours or Less - Day Trading
"four hours or less is day trading"
Specific Day Trading Concepts
"we're not going to speak too much about day trading in this particular teaching because there's a lot of things that we got to go in regards to day trading and specific concepts that are inherently related to time of day"
Five Trader Models
1. Trend Trader
"a trend trader that's one model that a trader can be using all my concepts with uh you'll be trading only in the direction of the monthly and weekly charts so in other words if the monthly and weekly are indicating it's going to be a bearish marketplace you're going to only be trading short and holding on to these positions for a great deal of time if it's bullish on the monthly and weekly chart obviously you're going to look for buy signals you're going to hold them for a great deal time that is the nature of trend trading"
"i am not a long-term position trader so while i tried that early on in my career it didn't fit me and it didn't tickle my fancy so i'm a short-term trader"
2. Swing Trader
"swing trader which i've done a lot in my early days but because i found that it was more of an allure for me to be in the marketplace more than just a couple times a month a swing trader they're trading the daily intermediate term price action and you're going to see there's a lot of setups that require you to sit on your hands and wait but when they form and you position yourself in them they offer stellar rewards and they just go on and on and the payouts are amazing but again it requires a great deal of patience"
"i can tell you as your mentor i just don't have a lot of patience for swing trading on the daily chart it just takes too much time to wait for the setups and for the trades to pan out"
ICT's Velocity Philosophy
"i want my money to have velocity in other words i want to be able to put my money at work let it do its thing get my return and then compound that returned rate and my base equity and put it back to work again into something that gives me more velocity"
3. Contrarian Trader
"contrarian trader okay now it doesn't always mean that being contrarian is the right way to go about it and it doesn't mean that not being a contrarian is the right way always as well there's going to be times when to be a contrary in trader is optimal and what you're basically doing is you're trading reversal patterns at market streams"
"when the market's really gone a great distance higher and it's been moving higher for a long period of time eventually it's going to hit a specific level or significant level i should say usually and typically it's on a higher time frame it will create reversal patterns"
"it doesn't mean the market's going to reverse and create a top there it can and sometimes it will but you can still trade reversal patterns at extreme moves or what would become referred to as capitulation where the market just moves extremely you know that last bit of burst higher if it's been bullish or that quick sudden drop you know with a great deal of magnitude going lower and it usually makes the low of the move"
"it could be on a short term basis where if you watch the daily chart we may go above a previous month time and that may be a really good selling scenario to sell short but not forever but it's still an opportunity to trade with"
4. Short-term Trader
"for short-term trading which again that's what i excel in uh you're trading the weekly ranges and you're holding for typically about one to five days in duration"
5. Day Trader
"setups that are found for the day traders model where you're trading intraday swing trading with exits by 2 pm new york time"
ICT's Three Primary Setups
"ict what are the only three setups that you teach well this is what i'm gonna use for the example the daily chart you already know what i like to do i like to either be uh trading inside of a range or inside of an institutional reference point looking for an optimal trade entry that's number one"
Setup 1: Trading Inside a Range / Optimal Trade Entry
"trading inside of a range or inside of an institutional reference point looking for an optimal trade entry"
Setup 2: Selling at Bearish Order Block
"i like to sell at a bearish order block"
Setup 3: Turtle Soup / Stop Runs Above Highs
"i like to sell short above old highs in the form of a turtle soup that's stop runs that go above old highs and then when they trade back down i'm a seller or i get short"
Core Philosophy & Mindset
Find Your Own Model
"it's important as a mentor i don't try to force you into a specific mold it's never been my goal to give you a copy me be just like ict that's not going to work it's never going to work for anyone"
"it does give you a goal it gives you a framework to work within while striving for replication of some of the things you probably see me do you're going to discover the trader that actually resides in you"
The Epiphany Moment
"one day and it sounds like you know a fairy tale but it really is you'll have an epiphany where all of these things will suddenly make sense to you and you'll know what type of trader you want to be and what's even better is you actually know what setups did you like"
Align With Your Psychology
"your comfort level and your psychological makeup as a trader has to align with that so in other words your patience level your aptitude and your life i mean let's just be real about it your life has to allow you the ability to be in front of the charts or at least do the analysis and then execute on that analysis"
Conceptual & Modular Learning
"that's the benefit of studying conceptually and modular things because you'll quickly ascertain whether or not a specific pattern or concept gels with you in other words does it resonate with you as a trader"
Universal Application
"your pattern or your bread and butter go to setup once you understand it it's applicable on all these time frames"
Not About Indicators
"most of your trades are linked to a mathematically derived indicator when we look at setups we're looking at specifically finding unique characteristics that repeat themselves over and over again in price action because there are generic characteristics and traits in price action that repeat over and over again they're not limited to any one of these specific time frames"
Velocity Philosophy
"because i have a universal application and i have experience doing all these types of trading just because i don't elect to trade on a monthly or weekly or daily all the time what i'm actually telling you is i can do that but because of my appetite for more action and because i want to put my money at work faster get it ready to return and put it back to work again so i can turn it in and capitalize on velocity turning my money over and over and over again quicker"
Trust The Process
"do not let me convince you or try to talk you into that's the best way to go because it's not it's not for everyone"
"you can still compound your money exceedingly well trading on a higher time frame charts believe me it's not about the setups or the time frame it's about your unique alignment with the setups and the time frame that meets the happy medium for you as a trader"
Study & Review Flashcards
Click each card to reveal the answer from the transcript