ICT Mentorship 2023 - Evolving ICT Silver Bullet Example

Summary

In this trading strategy, the trader outlines a methodical approach to shorting the market, using a 'Silver Bullet' entry point. The strategy focuses on setting a limit order, managing risk with a stop loss, and adjusting trade parameters based on real-time price action. Key moments include targeting a fair value gap and using evolving market data to refine entry and exit points. The trader emphasizes patience, risk management, and scaling into the position, aiming for a balanced profit while minimizing potential losses. The trade ultimately progresses with multiple exits to lock in gains.

Takeaways

• 😀 The trader is analyzing the market for potential sell signals, focusing on a Silver Bullet strategy around a fair value gap.
• 😀 A limit order is placed just above the current price, with a stop loss set slightly above the target figure to manage risk.
• 😀 The trader is planning to enter with 10 contracts, working the trade incrementally rather than using a market order.
• 😀 The trader acknowledges the risk of missing the trade but prefers to wait for confirmation rather than chasing the move.
• 😀 The focus is on identifying a fair value gap that can potentially lead to a profitable move, with a careful watch on the price action.
• 😀 The trader evaluates the potential for price to retrace and adjust the strategy accordingly, adapting the Silver Bullet based on the evolving market.
• 😀 A trade below 4203 would invalidate the current setup, leading to the cancellation of the entire trade.
• 😀 The trader expects a shallow drop below a key level (4201) but is unsure if the price will return to the identified fair value gap.
• 😀 There’s a focus on managing the trade dynamically, adjusting stop losses and take profit levels based on price movement and market structure.
• 😀 The trader uses a layered exit strategy, aiming to lock in profits progressively and reduce risk as the price moves in their favor.
• 😀 The overall goal is to align with institutional order flow, expecting the price to retrace to a new week opening gap high and eventually sink lower.

Q & A

What is the main goal of the trader in the script?

The trader is aiming to enter a short position based on a specific price level, utilizing a strategy called 'Silver Bullet.' The goal is to capitalize on price movement within a fair value gap and adjust the position dynamically as market conditions evolve.

What does the trader mean by 'Silver Bullet'?

'Silver Bullet' refers to a precise trading strategy where the trader identifies specific price levels to enter and exit a trade. It evolves based on market conditions and liquidity, aiming for optimal risk-to-reward setups.

How does the trader handle the risk of missing a trade?

The trader acknowledges the risk of missing the trade but prefers to let the market move without chasing it. If the price does not meet their criteria, they are willing to let the opportunity pass rather than taking on higher risk.

What role does the 'fair value gap' play in the trader's strategy?

The fair value gap represents a price range where the market is expected to return. The trader uses it to guide entry and exit points, ensuring the trades align with expected market behavior and institutional order flow.

Why does the trader adjust the stop loss to a more favorable position?

The trader adjusts the stop loss to reduce the risk as the market moves in their favor. By tightening the stop, they aim to protect profits and minimize potential losses if the price moves against the position.

What is the significance of the 4203 price level in the trade?

4203 is a key price level the trader targets for entry. It is part of the trader's fair value gap and is expected to be a potential turning point where price action may align with their short position.

How does the trader manage the position as the trade evolves?

As the trade progresses, the trader actively monitors the price action and adjusts the position accordingly. This includes taking partial profits at key levels, such as 4193.5, and making stop loss adjustments to lock in profits.

What does the trader mean by 'layering' in their exit strategy?

Layering refers to taking partial profits at multiple levels rather than exiting the entire position at once. This approach helps to manage risk and secure profits progressively as the trade moves in the desired direction.

What does the trader expect to happen if the price reaches the new week opening gap high?

The trader expects that if the price reaches the new week opening gap high, it will trigger a further price move lower, potentially confirming the trade and aligning with institutional order flow.

How does the trader ensure they are aligned with institutional order flow?

The trader analyzes price action, fair value gaps, and liquidity draws to align with institutional order flow. By entering the trade at strategic price levels, the trader aims to be in sync with larger market participants' intentions.