How To Stop Fakeouts using ICT

Summary

This video teaches a simple, practical method to avoid getting faked out in trades by combining market structure with higher-timeframe price decision areas (PDAs). The presenter explains how to check alignment across multiple timeframes — daily, 4H, 1H, 15m, 5m, and 1m — and to wait for lower-timeframe structure (often the 5-minute) to flip before entering. Using examples of order blocks and fair value gaps, the lesson shows that trades become high-probability only when multiple frames align and higher-timeframe PDAs are respected. The result: fewer stop-outs, clearer entries, and more consistent trading outcomes.

Takeaways

• 😀 Understand the concept of 'getting faked out' in trading, where market structure shifts seem promising but result in losses.
• 😀 Apply a simple principle to stop getting faked out—using market structure in combination with higher time frame PDAs (Price Delivery Areas).
• 😀 Recognize the importance of market structure across multiple time frames (daily, 4-hour, 1-hour, 15-minute, 5-minute, and 1-minute).
• 😀 Higher time frame PDAs, such as order blocks, are key to understanding market behavior and potential reversals.
• 😀 If the higher time frame structure is bullish but lower time frames are bearish, wait for alignment across all time frames before entering a trade.
• 😀 Market structure alignment across multiple time frames increases the probability of successful trades.
• 😀 A fair value gap (FVG) is the space between the first and third candles of an impulsive move, signaling potential trade opportunities.
• 😀 To avoid fakeouts, monitor the market closely when the 5-minute structure is not aligned with the higher time frames. A shift to bullish on the 5-minute increases trade confidence.
• 😀 Understand the concept of displacement (momentum) in the market—when price moves decisively after respecting a higher time frame level.
• 😀 In high probability trades, all time frames should show alignment (e.g., daily, 4-hour, 1-hour, 15-minute, 5-minute, and 1-minute). When all time frames are aligned, the trade is more likely to succeed.
• 😀 Avoid taking trades where only one time frame is aligned with your direction, as this can lead to false signals and increased likelihood of getting faked out.

Q & A

What is the primary reason traders get faked out in their trades, according to the script?

The primary reason traders get faked out is due to misunderstanding market structure and failing to align it across multiple time frames. This misalignment increases the chances of false signals and bad entries.

What principle does the video suggest to avoid getting faked out during trades?

The principle involves using market structure combined with a higher time frame PDA (Price Delivery Array), such as order blocks and fair value gaps. This helps traders identify high-probability trade setups.

What is a higher time frame PDA, and why is it important?

A higher time frame PDA refers to significant price areas on larger time frames, such as order blocks or fair value gaps. These areas provide a better understanding of where price is likely to react, which increases the chances of successful trades.

What is an order block in trading?

An order block is a key price level marked by a down-close candle in an uptrend or an up-close candle in a downtrend. It represents an area where institutions might have placed large orders, indicating potential future support or resistance.

How does aligning multiple time frames help in identifying high-probability trades?

By analyzing the same market structure across multiple time frames (e.g., daily, 4-hour, 1-hour, etc.), traders can determine if their trade direction is supported across several levels. When most time frames align, the trade becomes a higher-probability setup.

Why is the 15-minute time frame particularly important in the video’s strategy?

The 15-minute time frame acts as a critical indicator. If this shorter time frame shows a bearish structure while higher time frames remain bullish, it may signal a potential fake-out. Understanding when this time frame flips to bullish can improve the likelihood of a successful trade.

What role does the 5-minute chart play in determining whether a trade will succeed?

The 5-minute chart provides insights into smaller, more granular market movements. It helps traders confirm if the price action on higher time frames (like the 1-hour or 15-minute) is genuinely reflecting the direction of the trade or if it's just a temporary pullback or fake-out.

What is a fair value gap, and how does it influence trading decisions?

A fair value gap occurs between the first and third candles of an impulsive move, where there is a gap in price action. This gap indicates a potential area of interest, and when price returns to this level, it can create a high-probability setup for traders looking to take advantage of price reactions.

What strategy does the video recommend when market structure and time frame alignment don't match?

When there’s misalignment, particularly with lower time frames being bearish while higher ones are bullish, the video recommends waiting for confirmation, such as a bullish shift on the 5-minute chart, to increase the probability of a successful trade.

How does the video explain the importance of market structure confirmation in trading?

Market structure confirmation is crucial because it ensures that a trade aligns with the overall market trend, supported by multiple time frames. This minimizes the risk of getting faked out and increases the likelihood of a profitable trade.