Super Easy ICT Trading Strategy 5m
Summary
TLDRThis video outlines a simple trading strategy focusing on the first available trade post 7:00 a.m. UTC, emphasizing risk management. It details the importance of identifying fair value gaps coinciding with support or resistance levels for entry points, aiming for a 2:1 risk-reward ratio, and adjusting stops to break-even upon reaching a 1:1 risk. The presenter advises against trading post 5:00 p.m. UTC due to reduced liquidity and shares examples to illustrate the strategy's application, while cautioning about the influence of news on price movements.
Takeaways
- 📈 Trading involves risk and most traders lose money, so it's crucial to have good risk management in place.
- ⏰ The strategy focuses on taking the first available trade after 7:00 a.m. UTC plus one time and avoiding subsequent opportunities to maintain higher odds of success.
- 📊 To identify potential trades, plot the previous daily high and low on the chart, either manually or using an indicator.
- 🔍 Look for a 'fair value gap' which occurs when there is no overlap between the top of one candle and the bottom of the next, indicating a potential area for price action.
- 🚫 Avoid taking trades that occur too late in the day, specifically after 5:00 UTC plus one, as volume dries up and the chance of hitting the profit target decreases.
- 🔄 The strategy involves taking trades when the price breaks through the previous daily high or low and then comes back within the fair value gap.
- 🎯 Prefer fair value gaps that coincide with additional support or resistance levels, such as the previous daily high or low, for stronger trade setups.
- 💰 Use a 2:1 risk-to-reward ratio for trades, and if the trade reaches a 1:1 risk level, move the stop to break even to secure profits.
- 📉 In cases where the price breaks through a level but doesn't provide a fair value gap, or if the gap is too small or weak, it's safer to avoid the trade.
- 📝 It's important to monitor trades closely and adjust stop-loss orders to break even when the trade is at risk of losing the initial investment.
- 🛑 The presenter emphasizes the importance of sticking to the rules, as no trading strategy has a 100% win rate, and encourages viewers to do their own research and potentially adapt the strategy to their preferences.
Q & A
What is the main topic of the video script?
-The main topic of the video script is a simple trading strategy that can be implemented by viewers, with a focus on risk management and specific rules for identifying trades.
Why does the speaker emphasize the importance of risk management in trading?
-The speaker emphasizes risk management because trading is inherently risky, and most traders lose money. Good risk management is crucial to minimize losses and protect the trader's capital.
What is the first rule of the trading strategy discussed in the script?
-The first rule is to only take the first available trade after 7:00 a.m. UTC plus one time, and not to take subsequent opportunities as the odds of success decrease with each passing opportunity.
How does the speaker define a 'fair value gap' in the context of trading?
-A 'fair value gap' is defined as a gap created between two candles when the top of one candle and the bottom of the next do not overlap, indicating a potential area for price to bounce or reverse.
What is the significance of the previous daily high and low in the trading strategy?
-The previous daily high and low are significant because they serve as reference points for identifying potential trade entries and exits. They also provide additional support or resistance levels that can validate trade setups.
What is the recommended risk-to-reward ratio for this trading strategy?
-The recommended risk-to-reward ratio for this trading strategy is 2:1, meaning for every unit of risk, the trader aims to gain two units of profit.
What should a trader do if the trade reaches a 1:1 risk-to-reward ratio?
-If the trade reaches a 1:1 risk-to-reward ratio, the trader should move their stop-loss order to break-even, ensuring that they will not lose money on the trade if the market moves against them.
Why is it not advisable to take trades after 5:00 UTC plus one time according to the script?
-It is not advisable to take trades after 5:00 UTC plus one time because the volume in the market tends to dry up later in the day, reducing the likelihood of the price reaching the profit target.
What is the importance of the 'retest' in the context of the trading strategy?
-A 'retest' is important because it provides a second opportunity to enter a trade after the price has broken through a significant level (like the previous daily high or low) and then returns to test that level again, potentially offering a safer entry point.
How does the speaker suggest handling trades that result in a loss?
-The speaker suggests sticking to the rules of risk management, such as moving the stop-loss to break-even at a 1:1 risk-to-reward ratio if the trade moves against the trader, and accepting that not all trades will be winners.
What does the speaker mean by 'cherry picking' trades?
-Cherry picking refers to the practice of selectively choosing only the most favorable or successful trades to showcase, often ignoring or not discussing the less successful ones. The speaker clarifies that they did not cherry pick the trades in the script.
Outlines
📈 Introduction to a Simple Trading Strategy
The speaker introduces a basic trading strategy that can be implemented with a strong emphasis on the inherent risks of trading and the importance of risk management. The strategy involves taking the first available trade opportunity after 7:00 a.m. UTC, with the rule of not taking subsequent opportunities to avoid diminishing chances of success. The speaker also explains the method of marking the previous day's high and low on the chart, either manually or using an indicator, and how to identify valid trade setups based on price action relative to these levels.
📉 Trade Execution and Risk Management
This paragraph delves into the specifics of executing the trade, including identifying fair value gaps and additional support or resistance levels that coincide with the gap. The speaker advises on the placement of stop-loss orders and the strategy's risk-reward ratio of 2:1. It also discusses the importance of not taking trades too late in the trading day and the potential for retesting fair value gaps, with examples provided to illustrate different scenarios and outcomes.
🚫 Avoiding Late and News-Driven Trades
The speaker warns against taking trades that occur late in the trading session, particularly after 5:00 UTC, as these have a lower chance of reaching the profit target due to reduced trading volume. Additionally, the paragraph addresses the unpredictability of trades influenced by news events, which can lead to erratic price movements that are not suitable for the described strategy. The speaker emphasizes the importance of adhering to the strategy's rules and avoiding trades that do not meet the specified criteria.
🔄 Trade Adjustments and Break-Even Opportunities
In this section, the speaker discusses the strategy's approach to adjusting trades once the risk reaches a 1:1 ratio, suggesting moving the stop-loss to break-even to secure profits. The paragraph includes examples of trades that did not go as planned and how to manage them effectively. It also highlights the importance of protecting the trading account and the strategy's potential for both wins and losses, emphasizing the need for careful trade selection and management.
🛑 Final Strategy Review and Future Demonstrations
The speaker concludes by summarizing the key points of the trading strategy, reiterating the rules and conditions for executing trades. They also address potential concerns about cherry-picking trades and assure viewers that the examples provided are representative of the strategy's performance. The speaker expresses intentions to demonstrate the strategy through live trades or pre-recorded examples in future videos, encouraging viewers to like, comment, and subscribe for updates.
Mindmap
Keywords
💡Trading Strategy
💡Risk Management
💡UTC Time
💡Daily High and Low
💡Fair Value Gap
💡Support and Resistance Levels
💡Risk-Reward Ratio
💡Break-Even Stop
💡Swing Low and High
💡Price Break
💡Retest
Highlights
Trading is risky and most traders lose money, emphasizing the importance of good risk management.
The strategy involves taking the first available trade after 7:00 a.m. UTC plus one time, avoiding subsequent opportunities for better odds.
Using indicators to plot previous daily high and low on the chart for easier trade identification.
The importance of waiting for the price to break the previous daily high or low after 7:00 a.m. to validate a trade.
The concept of a 'fair value Gap' as a key element in identifying potential trade opportunities.
Fair value Gaps must coincide with another level, such as previous daily high or low, for added support or resistance.
Taking trades at the closest part of the fair value Gap to ensure timely entry.
Setting a stop under the recent swing low and aiming for a 2 to 1 risk-reward ratio.
Moving the stop to break-even once the trade reaches a risk of one to one to secure profits.
Avoiding trades that occur too late in the day, specifically after 5:00 UTC plus one time, due to reduced volume and chances of hitting the profit target.
Retesting trades where price breaks and pops back up into the fair value Gap, although riskier.
The necessity to wait for the price to be below the previous daily low at 7:00 a.m. for a valid trade setup.
Ignoring news-driven spikes as they can lead to unpredictable price movements and are not suitable for this strategy.
The strategy's performance with four winners and two losers, demonstrating a 2:1 risk-reward ratio.
The importance of sticking to the rules and not cherry-picking trades for consistency in strategy application.
The potential for live trades or pre-recorded trade demonstrations to showcase the strategy's practical application.
Encouraging viewers to like, comment, and subscribe for updates on live trade demonstrations.
Transcripts
okay welcome back to the channel today
we're going to go over a simple trading
strategy that you can Implement today if
you choose to now I just want to start
by saying that trading is risky most
Traders lose money and if you choose to
do this trading strategy that's on you
the number one thing you should always
have in trading is good risk management
okay now we've gone over that let's go
over the
rules okay so the rules are simple we
are only looking to take the first
available trade after 7:00 a.m. UTC plus
one time so if you miss the first
opportunity that's it you're done okay
on that pair anyway don't take the
second opportunity or the third or the
fourth because um every time that
happens your odds of it being a winner
get lower and lower and lower I mean
that's that's what I found in my testing
okay so you do your own testing that's
up to you but for me personally it's the
first trade or no trade okay so let's
hop back over to the
Chart we want
to plot the previous daily
High and the previous daily
low now if you don't want to do that
manually you can just add an indicator
to your chart like so and so this line
represents the previous day daily high
this line represents the previous daily
low there's a candle there once you've
got those in place you're then ready to
start looking for your trade of the day
so we'll just do a load of examples uh
we'll just go
back beginning of June um start
here
so
basically the start of the day is there
7: a.m.
so we want price to break through the
previous daily low or high as you can
see here this red line is the previous
daily low price has broken through
it now as long as it's done it um if
it's done it in the Asian session or
this this area here it doesn't matter if
it's come down gone back up you can
ignore everything that's happened in
that
session as long as that 7: a.m. or after
7: a.m. it has broken through and it has
come back above or back below whichever
way you're trading then it's valid okay
so just because it broke below before
7:00 a.m. that doesn't matter 7 a.m.
where is it right now it is below the
previous daily low and that's fine
that's valid for this setup now what
we're looking for is it to come back
above and close
above the previous daily low so it's
broken down it can Wick down as well
that's fine but as long as it closes
back above which it has done here then
we are looking for a fair value Gap okay
what's a fair value Gap that's
when I'll just show you it so this
candle this candle and this candle have
created a gap okay because the top of
this candle and the bottom of this
candle are not overlapping which means
that it has
created this this gap which is called a
fair value Gap okay an example of
somewhere that's not a fair value Gap
would be here this one this one and this
one there's no Gap because the Wicks are
overlapping each bar is
overlapping over here there's a fair
value Gap over here there's a fair value
Gap so we draw that in
okay now what we're looking for is price
to come back into the fair value Gap so
we don't just want to take any fair
value Gap we want to take a fair value
Gap that also has another it coincides
with another level so there's two um
reasons for price to bounce here so
first you got this fair value Gap second
you have this level here okay okay this
level
here will act as support okay so there's
two reasons for price to bounce here now
we will take the trade at
the um closest part of the fair value
Gap so the trade doesn't go without us
so that'll be here we then want to move
our stop
under the recent swing low and we're
going for 2 to one risk reward
okay so there we go simple that's it
there's that that's all there is to this
strategy simple anyone can do it it's up
to you if you do it the risk is on you
like I said everyone should do their own
research but that's it that's as simple
as it as it gets now there is a couple
of other rules if for example price um
once it reaches a risk of one to one one
you can then move your stop to break
even okay so now you are safe in this
trade okay you can't lose um so here
here it hit one risk of one to one it
didn't come back down and stop us out it
carried on going to the profit
Target and we got our full
profit okay so we'll just go over some
more trades um let's go on to the next
day
so nothing happened there you see it
didn't break above it didn't break below
so there's no trades on on that
day and also you don't want to take any
trades that are that are too late in the
day so really
5:00 UTC plus one time is too late in
the day not that there's a trade there
but if there was a trade there that's
just too late okay volume is drying up
you know price
just there's less chance of it hitting
your profit Target so we the earlier the
earlier in the day the better but just
avoid taking any after five UTC plus one
time so okay so what you can do is you
can take a
trade if it's above and comes down and
Pops back out for a retest you can take
a trade there it's riskier but you can
do it so for example um in this one fair
value Gap is
here you can see L price came up it came
back down there was no fair value gap
for it coming back down but it's popped
back up it provided a fair value gap
which also has the previous daily high
as a support level now okay so you can
you've got two things there now it would
have triggered you in here you could
have also gone with this fair value Gap
if you were afraid that price was going
to go about you but it's better to do
the safer option so if there's two
levels on this fair value Gap but
there's not two levels on this one just
go with the one with two so we put our
stop below and then we go for our risk
of 2 to one and that's it done right we
move
on okay so on this day um price has
broken above and it's come back
below before 7 a.m. Okay so
this is void this it would have to be 7
a.m. and still be above it for it to to
count okay so although it's come down
right and there's a fair value Gap there
and this is after 7 a.m. and you could
get in there it's more risky doing it
like that okay this one would have
worked out but it's more risky okay so
the real move is here it's broken back
up and it's come back down now there's a
fair value Gap here with um resistance
here and the top of this would be
resistance to so this would be a really
good one there's also a fair value Gap
here which you could
use like that and you could there could
be an argument here to say that um
because this here
was uh
resistance for price okay price was
wicking away from this so you could say
oh okay it's going to use that as
resistance again you could say that
personally I'd say that's a little a
little weak but you could use it and
that one and that one would have worked
anyway so but I would have said okay
this fair value Gap is stronger I would
have gone for this one let's move
on okay
right let's see if there's one
here price has broken up it's come back
down there's no fair value Gap there's
no fair value
Gap there's a small fair value Gap
here okay where is it uh
here okay you've got this area uh the
previous daily high as
resistance now you can put it above the
recent swing high or you can play it
safer and go uh one further than that I
would put it here because that's that's
a
decent size recent swing high if it has
come up here then you're probably
wrong okay so then you want to bring it
down 2 to
one now obviously the trade has um come
against us I would say
from here so you've risked one to one
now remember what I
said you then put the trade to break
even at this point if the if it gets to
risk of one to one you want to bring it
to break even okay now in this instance
had you have used this swing
High
you just missed out on bringing your
stop to break even however if you were
monitoring this and price had come this
close to it just put your stop to break
even you don't need to wait to the PIP
okay if it's really close just put your
stop to break even
okay you always want to protect the
account like I I always I always say
that in my videos protect the account
okay um okay this one it's come up it's
come down it hasn't come back below so
we'll just leave
that uh
okay uh 7
a.m.
okay price has come
down where's the
time 7
a.m. now it has provided a fair value
Gap and it's at a great area
however it wasn't
below the previous daily low at 7 a.m.
which means that we have to wait for it
to break again okay so now it's broken
through and you could say all right okay
this is
um this is the move this wouldn't be the
move okay this is
130 that that kind of move is likely
news and if if it's news then it's going
to price won't um
price will do whatever it wants at that
point okay if news has pushed it up like
this a spike it's just going to spike up
Spike down Spike up Spike down this it's
not going to play out as it usually does
so we leave it okay we move on to the
next
day
okay now it's come up and like I say you
can play these ones where price breaks
up retests comes back up goes into to
the fair value Gap and comes down I
wouldn't particularly play these ones
because if price has moved this high up
okay it's exhausted Itself by the time
it gets up
here if you're looking for this to go
higher the odds are against you okay you
don't really want to play those ones
where um if price is already out of here
in the morning and it's coming down then
yeah sure you can take the trade but if
price has moved up through the day right
and it's just reached it it's not wise
to to do another um to take the trade
higher okay because it'll be exhausted
so I wouldn't do that okay but if you
wanted to do it then this
trade you have
your fair value Gap here it has a good
line there it also has this down here
so you could put the trade there go
underneath the swing here and then go
for your two: one or in this case it
would be one to one and then break even
that candle might have even got you out
I'm not sure but yeah that that's what
would have happened there so we move on
we
move okay here's another
example price has come down it's broken
through it's come up it's come back
down now it's given us fair value Gap
the other thing as well is um the fair
value Gap needs to be um above so this
is the previous daily low so it needs to
be above if it's previous daily High it
needs to be below so here's our fair
value
Gap okay it's it has this here was
resistance so you could say that this
now is support which it looks like it
was support we want to put our trade in
here again you could go for the recent
swing low or you could go right out here
if you want to play it safe it just
makes get to the profit Target a little
bit harder if you want two to
one uh where is it there it is okay so
you'd get it
there we move move
okay price has come out it's come back
in
now if you can see this there is a fair
value Gap here it's very small but it's
there you see that
there and it's a good one because it's
got the previous daily high as
resistance so you'd want to put your
trade in
it' be triggered
here recent swing
high risk of two to
one okay and we move
on okay here again what times that
230 okay so this is what I mean by it's
already out and way above the previous
daily high and now it's coming back this
is where you could play that going back
up um where is it 910 however it's come
back through it's created a fair value
Gap
here
so let's say we would have taken
this that's a really big stop as well
this
one would be no good okay that would be
your first
loser and like I say we're risking two
to one so that's that just stays at uh a
1% risk if you like if you're ring 1% to
gain 2%
okay so that's a single loss now I move
on okay so price has broken
above it's come back no fair value Gap
it's gone above it's come back now it's
got its fair value
Gap okay but price does not come back to
this level until
here and we would have gotten whipped
out and that's pretty much all there is
to it so that would have
been one loss
two 2
one two
two that's a break
even that's another Break
Even
32
42 okay so four winners two losers at a
2: one risk reward
so if you were risk if you were risking
100 to make 200 then you'd have made 800
and lost 200 you'd be up
600 and that's pretty much all there is
to it if we go back over to the rules so
we're looking at taking the first trade
after 7 a.m. UTC plus one time if it's
missed then don't take the second
opportunity or the third or the fourth
because your odds are lower and lower as
the day goes on the fair value Gap must
be below the previous daily high or
above the previous daily
low um so if a fair value Gap forms but
it's above the previous daily High don't
take it and if it's below the previous
daily low don't take it you want to use
those
lines as extra support and resistance
for your trade okay now it's like I said
it's better to take a fair value Gap
that coincides with one additional level
which could be the previous daily high
or low so just gives that
extra um resistance or support to make
price bounce the way you want it and we
we risk 2: one and if it reaches 1 to
one we move our stop to break
even
okay and that's pretty much it
so and I know what you're thinking oh
did he cherry pick these trades no I
didn't no I didn't at all in fact I'll
I'll I'll just scroll in the chart now
we'll just pick an
area uh
actually this probably isn't a good area
because
news yeah news is spiked and spiked down
so that's yeah I wouldn't play news like
this um cuz like I say what time's that
2:30 oh that's the open and that's
probably news and that could be news as
well actually so you know you is there a
fair value
cap uh I don't even think it's there's
not a fair value Gap there anyway but if
there was I wouldn't play that
so
um okay what time is that seven where's
okay so it's gone seven so price comes
below breaks
through no fair value Gap now there's a
fair value Gap
okay put our order in 2:
one and that's all there is to it okay
we've got our fair value Gap we've got
our previous daily low as extra
resistance now in this case it did come
through and then Wick off the bottom but
that's why you stick your stop below the
recent swing low okay
and that's uh that's all there is to it
you know stick to your rules like I said
there's no trading strategy out there
that's got 100% win rate it's up to you
if you want to run with this um tweak it
yourself put your own spin on it um if
you like this strategy please give the
video a like comment below and subscribe
too because next week I hope hopefully I
need to get the YouTube features uh
because for some reason I haven't got
the advanced features yet but hopefully
if I get them I will be putting out live
trades of me doing this strategy and so
you can uh Watch How I get on with those
um if I can't do the lives then what
I'll do is I'll pre-record my trades and
post those so you can see how they've
all played out okay so smash that like
button and as always I will see you in
the next one
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