This Stupid ICT Trading Strategy Makes $1,000 Everyday!

Summary

In this video, the trader shares a live trading strategy, revealing a model based on higher and lower time frames, price action, and SMT (Smart Money Technique) divergence. Key steps include marking fair value gaps, looking for SMT divergence, and waiting for confirmation using price action like a W-shape inversion. The strategy emphasizes trading with the higher time frame's order flow, utilizing key liquidity levels and risk management techniques like break-even and partial profits. With real-world examples, the trader demonstrates how this model consistently leads to profitable trades.

Takeaways

• 😀 Trading success comes down to a simple, repeatable model: marking higher time frame FVGs and confirming with lower time frame entries.
• 😀 The core of the strategy involves identifying a higher time frame fair value gap (FVG) and waiting for price to tap into it before looking for entry signals.
• 😀 SMT (Smart Money Tool) divergence between NQ and ES is crucial for confirming entry points. A divergence occurs when NQ makes a new low but ES fails to do so.
• 😀 After identifying SMT divergence, look for a W-shape inversion on the 1-minute chart as the key signal to enter a trade.
• 😀 Risk management is vital: always place stops below the bodies of the candles, not the wicks, to avoid unnecessary risk.
• 😀 Once price reaches the nearest liquidity level, move stops to break even to protect profits.
• 😀 Take partial profits at a 0.7:1 risk-to-reward (RR) ratio to lock in some gains before the final target is reached.
• 😀 The final target for most trades is a 1:2 RR, though in some cases, the target could be adjusted based on liquidity levels or key price zones.
• 😀 Ensure that both the SMT divergence and W-shape inversion are confirmed before taking any trades, as these are critical to the setup.
• 😀 Stick to the strategy's rules and avoid overtrading. Only take two trades per day to prevent revenge trading and impulsive decisions.

Q & A

What is the primary trading model discussed in the video?

The primary trading model involves marking out a higher time frame Fair Value Gap (FVG), waiting for price to reach that gap, then looking for a lower time frame confirmation (such as SMT divergence or a market structure shift) before entering a trade.

What is SMT divergence, and why is it important in this strategy?

SMT divergence occurs when price on one index (NQ) creates a lower low, but the other index (ES) fails to do so. This divergence acts as a signal for potential price reversal, which is essential for confirming trade setups in this strategy.

What is the significance of the 'W-shape inversion' mentioned in the video?

The W-shape inversion is a pattern where price quickly recovers after a downward move, indicating a strong reversal. This pattern confirms the trade setup when price moves back above a Fair Value Gap (FVG), signaling a high-probability trade.

How does the speaker recommend handling risk management?

The speaker recommends setting a stop loss below the candle bodies (not the wicks) after entering a trade. Once the price reaches the nearest liquidity level (recent high), the stop loss should be moved to break-even. Additionally, 30% of the position should be closed at 0.7 risk-to-reward (RR), and the remainder can be held for higher RR, typically 1:2.

What role do Fair Value Gaps (FVG) play in this trading strategy?

Fair Value Gaps (FVG) are key to this strategy. The 15-minute FVG is used to mark potential entry zones before the market opens. Once price reaches these levels, the strategy looks for further confirmation from lower time frames (such as 1-minute) to enter the trade.

What happens if the nearest liquidity level is reached before entering a trade?

If the nearest liquidity level is reached before entering the trade, the setup becomes invalid. The strategy requires waiting for price action to confirm the trade after the liquidity level has been tested, ensuring the trade has a higher probability of success.

Why does the speaker emphasize waiting for both Fair Value Gaps to be inverted before entering a trade?

The speaker emphasizes waiting for both Fair Value Gaps to be inverted to increase the likelihood of a successful trade. Entering the trade only after both gaps are reversed ensures a more reliable setup, minimizing the risk of entering during weak or indecisive market movements.

What should traders do when they achieve a 0.7 risk-to-reward (RR) ratio?

At a 0.7 RR, the trader should take 30% of the position off as partial profit. This is part of the strategy's risk management, which helps lock in some gains while allowing the remaining position to run for a higher reward target.

How does the strategy handle multiple trades during the day?

The strategy limits traders to a maximum of two trades per day to prevent overtrading and revenge trading. This rule helps maintain focus and discipline, ensuring that trades are taken only when the setup is ideal.

Why does the speaker use both NQ and ES for this strategy?

The speaker uses both NQ (Nasdaq) and ES (S&P 500) to look for SMT divergence. While the trade is based on NQ, the speaker checks for price action on ES to identify divergence, which serves as a confirmation for the trade setup.