ICT Mentorship Core Content - Month 03 - Timeframe Selection & Defining Setups

Summary

In this video, the speaker shares insights on three primary trading setups—order blocks, turtle soup setups, and liquidity voids. They emphasize focusing on price action and market structure, using these setups across all timeframes. The speaker highlights the importance of consistency and patience, encouraging traders to select a model that resonates with them. By understanding these patterns, traders can confidently navigate various market conditions, mastering their approach with discipline. The video also emphasizes the significance of not comparing oneself to others, but finding one's own trading style and pattern.

Takeaways

• 😀 The speaker emphasizes the importance of having a defined trading model based on individual preferences, using specific setups like range trading, order blocks, and stop runs.
• 😀 Trading within a range can be highly effective if the market forms a liquidity void, where price comes back into the range and then expands.
• 😀 Traders should learn how to identify key patterns such as turtle soup (false breakouts) and order blocks to successfully trade price action.
• 😀 Only a few setups are needed to succeed, and the speaker highlights three core setups: trading inside a range, selling at a bearish order block, and selling at a previous high for stop runs.
• 😀 Not every trader should force themselves to trade in one particular style, like order blocks or turtle soup; instead, they should focus on the setup that best suits them.
• 😀 The concept of 'order blocks' is explained as important price levels that serve as key areas for potential trades, either as breaks or pullbacks.
• 😀 The speaker uses the 'optimal trade entry' method, pulling a Fibonacci retracement to determine the most favorable points for short entries, such as the 79% level.
• 😀 The importance of time frame selection is emphasized, where traders should apply their defined setups on various time frames for consistent results.
• 😀 The speaker advises against comparing notes with others as a way to define trading style, stressing that the journey is personal and based on one's own analysis.
• 😀 Successful trading is not about chasing large profits but about identifying known ranges and working within those boundaries, ensuring discipline and clarity in every trade.

Q & A

What is the concept of 'turtle soup' in trading?

Turtle soup refers to a false breakout where price moves above a previous high or below a previous low, triggering stop orders, only to reverse quickly after. This pattern offers an opportunity to trade the market as it corrects itself after the false break.

What is a 'breaker' in trading and how does it work?

A breaker is a down candle that appears before an up move, typically just before a short-term high is surpassed. When price returns to this level, it acts as a potential area to enter a short trade as the market tends to reverse or correct at that level.

How does the Fibonacci retracement tool help in identifying trade entries?

The Fibonacci retracement tool is used to measure the potential pullback levels after a significant price move. A 79% retracement level, for example, is considered an optimal point for entering a short trade if the market is expected to reverse from that level.

What are 'order blocks' and how are they used in trading?

Order blocks are significant price levels, typically marked by a large candle that leads to a major price movement. In a bearish context, a bearish order block is identified just before a downward move, and traders can sell when the price returns to this level.

What is meant by 'trading inside a range'?

Trading inside a range refers to taking trades within a defined range of price movement. Traders look for price to return to a previous high or low within that range and trade it accordingly, without expecting a breakout or trend continuation.

What is the importance of having a defined trading setup?

Having a defined trading setup is crucial because it helps traders focus on specific patterns and setups they understand well, leading to more disciplined and consistent trading. It removes unnecessary complexity and allows traders to make decisions based on a clear strategy.

Why is it important to understand liquidity voids in trading?

Liquidity voids are gaps in the market where little trading activity has occurred. When price returns to these voids, traders can expect significant price movement as the market fills the void, offering potential trade opportunities.

What does the speaker mean by 'expansion out of consolidation'?

Expansion out of consolidation refers to the price movement that occurs after a period of range-bound trading. Once price breaks out of the consolidation zone, it typically continues in the direction of the breakout, providing an opportunity to enter a trend-following trade.

How do traders decide which setup to trade when faced with multiple options?

Traders should focus on the setups they are most comfortable with and that align with their understanding of the market. If they are unsure about which setup to choose, they should stick to the ones they know best and not force trades based on setups they are not confident in.

How can traders handle frustration when comparing their performance to others?

Traders should avoid comparing their performance with others and instead focus on their personal trading journey. Understanding that each trader may have different strengths and preferences, it is important to refine your own strategy and stick with what works for you.