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ICT > ICT Month 2 |2016 > Flashcards

ICT Month 2 |2016 Flashcards

1
Q

What to avoid when growing small accounts?

A
  • DO NOT try to rush to make massive gains in either pips or %gain
  • DO NOT open yourself to a lot of risk in hope to make a lot of money
  • DO NOT assume taking small Risk defined traders will not grow your account -> submit to it
  • DO NOT sacrifice trading equity for poor planning.
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2
Q

What should I aim for with small account grow?

A
  • Determine how to anticipate a favorable Risk to Reward model.
  • Learn to respect Risk side of the trade setups more than the reward. Meaning Risk is more Important than reward.
  • 3:1 identify trade setups that permit 3:1 RR.
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3
Q

What approach should I have when selecting setups?

A

HIghly selective setups is the key to go !!!!
adding more to the Bread & Butter Setups.
High Payout -> Low Risk
Drawdown is what is going to hurt me!! I will have Drawdown & that is going to hurt me psychologically.

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4
Q

How to approach taking trades with the daily bullish OB?

A

On that day as price trades into Daily OB I will drop down to LTF and look for some confirmation. But what is confirmation. Same thing as on HTF I will be looking for +OB -> Price is FRACTAL.

Example: Identify the +OB on the daily TF and then dropping down lower to 1h TF. Wait for price to reach the HTF Key Level. Once the HTF Key level is reached WAIT to see if Banks sponsor this level (meaning some displacement from the level). Displacement higher should create another bullish OB on LTF (1h TF when HTF is on D TF) then anticipate buying in discount of the displacement range on the hourly range.

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5
Q

What should I know before placing a trade?

A
  • Where am I entering
  • What am I expecting
  • Where is price most likely going to trade to
  • Where should my SL be,
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6
Q

Where can I place my SL in OB?

A

If price is bullish I can place my SL below the MT of the +OB becuase if PRICE is bullish it should NOT trade below the MT of +OB.

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7
Q

On which HTF levels are Bread & Butter formed?

A

Bread & butter setups are formed on the Daily levles . once price trades into +OB [ D TF ] there should be willingness to rally higher. Why? becuase price is at the daily bullish OB where Instiuttional buying should step in.

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8
Q

What makes the setup worth taking?

A
  • Selecting traed setups on HTF Charts is ideal
  • Large Institutions & Banks analyze markets on the Daily - Weekla & Monthly levels
  • Locating price levels that align with IOF is key
  • HTF setups form slow & provide a lot of time to plan accordingly.
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9
Q

What can I do to lower the Risk per trade?

A
  • HTF has more influence on Price so we focus there. HTF has dominance over LTF.
  • The conditions that lend to a Trade Setup on HTF can be refined on LTF.
  • Transpose the HTF levels to LTF charts!! -> that way I can reduce the SL.
  • Refining HTF levels to LTF charts allow for smaller SL placement & Risk.
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10
Q

How does the next price swign start?

A

Everything happens after the turtle soup and starts with OB.

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11
Q

What trading with Fear of taking losses actually does to my trading:

A
  • Studying concerned about taking loss promotes Fear based decision Making
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12
Q

What are some of the Institutional Reference Points?

A

Orderblocks, Old Highs, Old Lows, Mitigation Blocks, FVG, Breaker Blocs

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13
Q

What are the components to whether I will be a buyer or a seller?

A
  1. Every trader has to have PATIANCE beeing able to wait for a trade idea to build.
  2. Define Trade Environment -> are there good environments for trading
  3. Determine Trade Paroments -> what makes my trade a buy or sell. Has to be very defined “Algorithmic” has to very BLACK & WHITE the process or structure has to be very binary that is a must.

Process oriented thinking is KEY.

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14
Q

How should process oriented thinking look like?

A
  • Process has to be very binary + PATIENCE
  • What makes my trade buy or sell -> it has to be binary. DO x or do Y -> Black or white decision process. If I do not have that binary decision making process I am going to trade with emotions.

What am I looking for? Where to find that info?

Process of WHY things should be doing what they are doing -> this is KEY.

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15
Q

Which things complete BIG PICTURE perspective?

A
  1. Macro Market Analysis
  2. Interest Rate Analysis
  3. Intermarket Analysis
  4. Seasonal Influences
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16
Q

Which things complete Intermediate perspective?

A
  1. Top Down Analysis -> from HTF to LTF
  2. COT Data: CFTC report looking at it, it gives me report on large specs & commercials
  3. Market Sentiment: ICT looking at what is community suggestings that market should do.
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17
Q

Which things complete Short Term perspective?

A
  1. Correlation Analysis
  2. Time & Price theory
  3. IPDA - Interbank Price Delivery algo
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18
Q

What to look for when doing big picture analysis?

A

I only need 2 out of 4 components to agree.
1. Macro Market Analysis: inflationary or deflationary markets
2. Interest Rate Analysis: Higher Rates, Lower Rates, Unexpected Change (FOMC), Differential between 2 Interest Votes
3. Intermarket Analysis: CRB Index (commodities), USDX
4. Seasonal Tendency: Bullish Seasonal or bearish Seasonal.

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19
Q

What does it mean differential between 2 Interest Votes?

A

Meaning pairing a currency that has high interest rate with the currency that has low interest rate carying change markets -> easy trades.

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20
Q

Does seasonal tendency has big impact on commodities?

A

Bullish or Bearish Seasonal commmodities have a large influence from seasonal tendency. &if I see that on commodities then it si going to be mirrored on the DXY.

If CRB index is entering bullish seasonal that is going to put bearish DXY -> meaning if bearish DXY then I cna potentially see aasy buy signals in currencies with Interest Rates that are going higher.

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21
Q

What to focus when doing top down analysis on Intermediate Perspective?

A
  1. Monthly Chart Analysis
  2. Weekly Chart Analysis
  3. Daily Chart Analysis

Monthly chart looking at key levels, intermediate and long term highs and lows. Specific OB & levles that there was DYNAMIC reaction away higher or lower.

Weekly chart looking at HTF Prespective. Large funds do a lot of analysis on weekly chart most of their work occurs on M & W TF and executing on Daily Chart.

M, W & D TF are really what makes the market move higher or lower.

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22
Q

What to focus when doing COT Data analysis on Intermediate Perspective?

A
  • Bullish Hedging by SM (commercials)
  • Bearish Hedging by SM (commercials)
  • Extreme levels historically.

Extreme levels in the last 12 months and 4 years. When commercials COT get to 12 month extreme (high or low) that usually indicates change in their hedging porgram meaning LTH or ITH could be forming.

23
Q

What to focus on when doign Market Sentiment Analysis?

A
  • Extreme Market Bulishness
  • Extreme Market Bearishsness
24
Q

What to focus when doing Correlation analysis on Short Term Perspective?

A
  • USDX SMT Divergence -> that is a SMT between DXY & currency related to DXY
  • Correlated Pair SMT Analysis -> closely corelated pairs GU & EU

Correlated pairs move in tandem when they do not that gives me insight of asymmetrical market.

25
Q

What to focus when doing Correlation analysis on Short Term Perspective?

A
  • Quarterly effect - 3 to 4 Monthy new price shift
  • Monthly Effect
  • Weekly Range - Bread & Butter, OSOK
  • Daily Range - PO3, OHLC
  • Time of Day.

watching the market over the course of 3 to 4 months to see what is it doing. Looking at the market quarterly shifts.

26
Q

What does it mean to look at markets in terms of orders?

A

Everytime when I look at the market place I have to look in terms of orders. Where are the orders in the market place -> seeking where existing orders are that would allow them to engineer counterparties for their execution. Run old highs for BSL & run old lows for SSL -> force injection of liquidity.

27
Q

What to focus when doing IPDA analysis on Short Term Perspective?

A
  • Institutional Order Flow
  • Liquidity Seeking -> how does the market seek liqudity.
  • Market Efficiency Paradigm.
28
Q

What perspective should I focus on when Day trader?

A

As a day trader or short term trader Short Term Perspective is all ICT needs. He just needs 3 things to come into an agreement from “Short Term Perspective”.

29
Q

How many things for me have to overlap from all the perspectives together?

A

In all together 7things have to align for me to make a high probability trade.

2 from Big Picture
2 from Intermediate
3 from each group from Short Term Perspective.

this gives me clarity & reason why price should to that I need 7 things that alsign for a high reward setup.

Read the Instruction Manual from 2016 & then you are going to be ready.

Process oriented thinking X or Y, Black or white and nothing ELSE.

30
Q

What is a False Bull Flag in price action?

A
  1. Not all sudden price rallies that move into consolidaiton are bull flags
  2. In mature bull trends or in HTF Distribution levels price will push false bull flag
  3. Retail traders will see a classic “continuation long pattern” but it will result in Reversal.
  4. Understanding HTF Charts & premium markets will assist in identifying.
31
Q

What is a False Bear Flag in price action?

A
  1. Not all sudden Price declines that move into consolidation are Bear Flags
  2. In Mature Bear Trends or in HTF Accumulation levles price will post a false Bear Flags
  3. Retail Traders will see a classic “Continuation Sell pattern” but it will resutl in Price reversal.
  4. Understanding HTF Charts & Discount Markets will assist in identifying when they are potential False Bear Flags.
32
Q

Why is consolidation occuring at the Premium PD Array?

A

IPDA is holding Price in at Premium Market pricing to allow buyers to accumulate long entries which SM is selling to. SM is selling to willing buyers in Premium Market

33
Q

Which two ways can price turn?

A

Turtle Soup: price will start to come up and then drop lower -> easy one because price will go up for BSL & then reverse. Once the turtle soup occurs & price drops I want to sell the first return back to -OB.

the second way is Failure Swing.

34
Q

Where is the bulk of the volume?

A

The bulk of the volume is inside of the bodies of the candles & that is why I should also consider a stop hunt once price wicks below the bodies of the candles. Wicks are just manipulation and neutralization.

If price trades above the bodies of the candls when looking at the swing high that is going to be considered as a stop hunt.

35
Q

How does the false bull flag loook like

A
  1. Price ralies higher one sided delivery or only buyside delivery
  2. Consolidaiton (flag) I do not know for how long price will stay in consolidaiton and I really do not care. SM took price higher and then into consolidaiton so the retail will start thinking that price is bullish.
  3. Market will many times make a higher high move about the STH and then drop lower - Reversal.
36
Q

What are the characteristics of False BOS above Price consolidation?

A
  1. Primary in Bearish Markets - when market it strading lower
  2. At some measure of EQ in Price, market will move into a range
  3. Breakout traders are going to have buy stops above old highs to buy & have sell stops below low to sell short. Do NOT mind taking a lot of Ls just tot catch a large move lower.
  4. Market makers will typically send price ABOVE the range to neutralize Buy Stops when Bearish HTF.
37
Q

What are the characteristics of False BOS below Price consolidation?

A
  1. Generally in bullish market conditions
  2. At some measure of EQ makret will move into a range
  3. Breakout traders will have Sell Orders below an old low
  4. Market Makers will send price below the range to neutralize Sell Stops.
38
Q

What retail traders think when price goes into a range?

A

Retail Traders when price goes into consolidation will have Buy orders above the high & Sell orders below the low.

Actually when market breaks below the consolidaiton those Sell Stops are used to be paired with long orders. Who is buying? Smart Money.

Below the price market takes Sell Stops & then they are going to expand price for the Buy Stops. Expand for Liquidity (into BSL) here they are going to be exiting their long positions. Buy stops are in this case used to scale out or take profits.

39
Q

How should my thinking be when price is in consolidation.

A

My thought process should be if they are taking the market below this short term consolidation they are most likely going to take price higher.

If the market is bullish taking the price below old low is just to accumulate more longs (absorb more sell stops). SM ha to then get out of the positions above the high.

40
Q

Why will IPDA take price into expansion.

A

Algo (IPDA) will expand price higher to seek liquidty above highs and below lows.

41
Q

How does the market seek liquidity??

A

The market will se will always seek liquidity & where is the most recent untappable liquidity with the least resistance of getting to it. That will be my BIAS.

Think like a MM where are the buyers & where are the sellers?? Above old highs or old lows. That is liquidity.

Studying when they go into consolidation, what side of the market they reaching for & where is the market going after it happens.

42
Q

How can I anticipate price trading after it goes into consolidation and HTF is bullish?

A

Market goes into consolidation and FIRST seeking SSL below the consolidation low. Then market runs higher while HTF is bullish.

Market Makers are building a buy model. The move below consolidation (when HTF bullish) are always going to be seen as False BOS.

False Break in market structure to trick retail traders or knock them out.

Look at the ranges & when they break below the range low & if I see willingness to rally after that it gives me a clue that they are buying.

Once in consolidation price breaks below old low anticipate that ot be FALSE BOS (when HTF Bullish) & the market will be repriced higher once position is accumulated.

43
Q

What is measured move?

A

Basically measuring the impulse Price Swing and anticipating the Expansion swing will be the same length.

44
Q

What Timeframes should I use in my trading?

A
  • Monthly chart: Position trading can help me with analysis & direction. BASE for long term position trading
  • Weekly Chart: Swing Trading. 1 to 3 trades per quarter of the year.
  • Daily Chart: Short Term Trading -> The Best chart because it gives me Bank Levels and Framework for Short Term Trading. Points for IOF, FVG, Liquidity Voids etc.
  • 4h or Less: Day Trading a lot of concept related to time of the day. And on 4h or less I should be looking for chart that produces FVGs.
45
Q

How can I define setups for my model?

A

In price there are generic signatures that repeat on EVERY TF.
* Trend Trader: Trading in the direction of M & W TF.
* Swing Trader: Trading the Daily Chart intermediate term price ection. Patience is required. Huge payouts but it requires TIME.
* Contrarian Trader: Trading reversal patterns at Market Extremes. After market hits a HTF PD array markc could create reversal.
* Short Term Trading: Trading the weekly range for 1 to 5 days in direction.
* Day Trader: Intraday Swing Trading with exits by 2PM NY Time.

46
Q

On which TF should I start analysis to determine BIAS?

A

I should always start on the Daily Chart (HTF) because IOF reference points can be found there & it will alos give me directional BIAS.

BIAS is going to be found on the Daily Chart & I need to learn to trust it.

47
Q

What role does Monthly chart play in my analysis?

A
  • long term Price Action reference points
  • Setups take long time to pan out and to play out
  • Trading most recenet setup cna yield low risk & high reward
  • When I have direction of the Monthly chart then I will have the setups with the lowest risk.
48
Q

How can I know that there is someone with money trying to move market?

A

There is somebody in the marketplace with money that wants to move markets around and sign of that is expansion after consolidation, Mowing away from a level.

Before price will move it should go into small consolidation (range contraction). Consolidation -> Expansion.

Consolidation is the seed and how many trees (expansions) can that one apple seed produce.

49
Q

How is Smart Money going to accumulate their positions?

A

By holding price in consolidation first to allow banks to build a position. Once the position has been build first there is going to be that false break in the wrong direction (trick dumb money into buying or selling) and then price will go in the intended direction.

How big the expansion is away from consolidation is my indication of how big the SM position was.

Look for the Institutional Reference points that are inside or around the consolidation. (consolidation where SM is buying or selling)

50
Q

Once price exits the consolidation where is it most likely going to trade next?

A

Liquidity. As Expansions are going to be attacking the liquidity pools. Old high, old low, liquidity void or FVG. On HTF large funds Stop Losses are going to be attacked and that is where SM is going to trade.

51
Q

What role does Weekly chart play in my analysis?

A
  • Intermediate Chart Perspective: intermediate term scale of monthly TF.
  • The monthly levels could be refined on the weekly TF.
52
Q

What role does Daily chart play in my analysis?

A

I can see my ITHs and ITLs but also STHs and STLs to frame my short term trades.

53
Q

What insight can I gain from Swing Grades levels?

A

The range is defined from a known high to a known low.

The Swing Grade levels are 25%, 50% and 75%. That are ares where thee makret should see new setups form based on the graded price swing.

As price is trading to swing grade levels I can anticipate setups to form there (in close proximity.

The setup at the graded price swing level is going to be paired with some PD array.

54
Q

What are ICT three primary patterns?

A
  • Entry at FVG
  • Entry at OB or BRK
  • Turtle Soup

They always exist on all TFs.

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