How to Use ICT HTF Bias

Summary

In this video, the speaker delves into the importance of higher time frame bias when trading with ICT concepts. Emphasizing the use of 4-hour or 60-minute charts for intraday setups, the video explains that aligning trades with market direction significantly increases trade accuracy. The speaker highlights the crucial steps of identifying liquidity runs, changes in market structure, and using lower time frames for precise entry points. They also stress avoiding 50/50 trades by ensuring alignment with the market’s liquidity draw and provide insights into effective setups during the New York trading sessions, reinforcing the value of repetition and consistent practice in mastering ICT trading techniques.

Takeaways

• 😀 You don’t need to rely on a daily or weekly chart for your higher time frame bias. A 60-minute chart or even a 15-minute chart can serve as your higher time frame.
• 😀 Knowing where price is headed (higher or lower) is essential for successful trades. Without this, you're just making random trades.
• 😀 Liquidity plays a critical role. If you don't understand liquidity (sell side or buy side), your trade setups will be less effective.
• 😀 A higher time frame bias, such as on the 1-hour or 4-hour chart, is crucial to avoid 50/50 trades and align yourself with the overall trend.
• 😀 Look for a change in state delivery when price runs out liquidity. This is a sign of potential direction and entry points.
• 😀 The biggest mistake many ICT traders make is failing to consider where price is heading, which results in them taking trades that aren’t aligned with the market’s direction.
• 😀 Focus on specific times (such as the New York Kill Zone) when liquidity is more likely to be purged, which leads to higher probability setups.
• 😀 Don't just blindly trade patterns. ICT focuses on understanding market dynamics, such as liquidity and order flow, rather than relying on traditional pattern trading.
• 😀 When hunting for setups, always consider the draw on liquidity—whether it’s targeting buy side or sell side liquidity.
• 😀 Mastery comes from repetition. Understand that setups repeat daily, and success comes from consistently identifying where price is likely to move and when to enter a trade.

Q & A

What is the main concept emphasized in the video regarding higher time frame bias?

The main concept is that traders do not need to use daily or weekly charts for higher time frame bias. Instead, they can use the 4-hour or 60-minute charts to determine the market's direction. This approach offers greater flexibility and opportunities for intraday traders.

Why is it crucial to know the higher time frame bias before looking for setups on lower time frames?

Knowing the higher time frame bias gives traders a directional view of where price is likely to go. Without understanding this bias, entering trades on lower time frames becomes a 50/50 gamble, as the trader would be unaware of the overall market flow.

What is meant by 'liquidity' in the context of the video, and why is it important?

Liquidity refers to areas where price has recently taken out stops, such as buy or sell stops. It is important because liquidity zones indicate where price is likely to reverse or continue its move. Identifying these areas helps traders make more accurate decisions on where to hunt for setups.

What is the role of 'change in the state delivery' when analyzing price action?

A change in the state delivery occurs when price breaks above a series of consecutive down-closed candles (for bullish setups) or breaks below up-closed candles (for bearish setups). This indicates a shift in market sentiment and provides a signal for potential trade setups.

How does understanding the concept of fair value gaps help in trading?

Fair value gaps represent areas where price has moved too quickly, leaving behind imbalances. These gaps can act as areas of support or resistance. Identifying these gaps helps traders spot potential entry points when the price returns to fill them, aligning with the overall bias.

What is a 'bullish order block' and how is it used in the strategy?

A bullish order block is a price level where price has previously reversed upwards, marked by a significant down-close candle. Once price breaks above this order block and forms a fair value gap, it signals a potential continuation in the bullish direction.

Why does the video stress the importance of trading during the New York session?

The New York session is emphasized because it offers high liquidity and a clear time frame for finding setups. During this session, price movements tend to follow predictable patterns, and traders can align their trades with the liquidity draw, increasing the chances of success.

What is a 'turtle soup' setup, and how does it relate to the trading strategy?

A 'turtle soup' setup occurs when price runs below an old low (sell side liquidity) or above an old high (buy side liquidity) and then reverses. Traders look for these setups to enter in the opposite direction, often using tight stop losses and targeting high probability price moves.

What is the significance of 'order flow' in trading, according to the video?

Order flow refers to the general market direction, whether it is bullish or bearish. Understanding order flow helps traders identify the dominant market trend. For instance, when price breaks through bearish order flow, it signals a possible bullish shift, allowing traders to position themselves accordingly.

How can traders avoid common mistakes when using ICT strategies?

To avoid mistakes, traders must ensure they align with the market's liquidity draw. Many traders fail because they do not understand where price is likely to go (liquidity draw), resulting in 50/50 trades. A solid understanding of where price is heading and focusing on specific setups at key liquidity levels can lead to more consistent success.