ICT Silver Bullet Model Explained Over Live Price Action

Summary

In this video, the trader demonstrates how to apply the Silver Bullet strategy using fair value gaps and order blocks in Forex trading. They walk through a live trade on the NASDAQ, detailing their thought process and technical analysis for the setup. Key concepts like liquidity drawing, the importance of wicks, and efficient market behavior are explained. The trader highlights the significance of price action, order flow, and entry points for maximizing profits while managing risk with precise stop-loss placement. The video offers valuable insights for traders aiming to refine their strategies with ICT concepts.

Takeaways

• 😀 A Silver Bullet trade involves using a Fair Value Gap (FVG) to identify liquidity targets above the market's current price.
• 😀 The speaker is actively trading on the NASDAQ and focuses on identifying price movement towards buy-side liquidity resting above key levels.
• 😀 The main strategy for this trade is using a specific FVG as an entry point, targeting liquidity above, and placing a stop below the candle within the gap.
• 😀 The Silver Bullet trade is supported by analysis on the 15-minute time frame, where the market's liquidity draw is identified as higher, indicating a bullish trend.
• 😀 A key concept in this strategy is 'consequent encroachment' (CE), which refers to the midpoint of a wick and serves as an important price level to watch.
• 😀 The speaker uses a combination of ICT (Inner Circle Trader) concepts, such as identifying bullish order blocks and smart money movements, to guide trade decisions.
• 😀 The analysis includes observing multiple drives lower, which take out sell stops and create a liquidity void that smart money can fill.
• 😀 The market behavior is framed as a sequence of sell stops being triggered, followed by buy stops being targeted, forming the basis for the trade's liquidity run.
• 😀 The trade's execution follows a rule of not being greedy—partial profits are taken at reasonable levels (e.g., previous highs) to minimize risk from potential retraces.
• 😀 The speaker emphasizes speed in price movement after the entry and focuses on identifying the quick execution of liquidity targets to confirm a successful trade.
• 😀 The overall strategy is to trade in alignment with smart money movements, using fair value gaps and liquidity points to predict where the market is likely to go next.

Q & A

What is the Silver Bullet trade and how is it executed?

The Silver Bullet trade involves entering a trade when price taps into a fair value gap (FVG) and targets liquidity resting above that gap. The strategy is based on the idea that the market will react to these gaps by pushing toward liquidity, making it a long position in most cases.

Why is the 302 fair value gap important in this trade?

The 302 fair value gap is significant because it represents an area where price action is expected to reverse or deliver, based on the belief that price will move towards liquidity above it. It's identified as a key point where the market is likely to react and start moving upward.

What is the role of the 'stop' in the trade setup?

The stop is placed below the second candle of the fair value gap. This is to protect the position in case the market reverses. By placing the stop below the gap, the trader minimizes risk if price action does not deliver as expected.

What does 'engineering liquidity' mean in the context of this strategy?

'Engineering liquidity' refers to the idea that the market creates an imbalance, such as relative equal lows or highs, which may attract price to that level. In this case, the trader is anticipating that these relative equal lows will remain intact while targeting liquidity above.

Why is it important to observe the 15-minute timeframe?

The 15-minute timeframe helps to identify the overall market structure and draw liquidity. By analyzing larger timeframes, traders can spot significant price levels, such as buy stops above, that are crucial for predicting price movements.

What is meant by 'consequent encroachment' or CE of a wick?

Consequent encroachment (CE) refers to the midpoint of a wick, which is considered an important level. This midpoint is often seen as a significant price level that can act as support or resistance in price movements.

How does the trader identify bullish order blocks?

Bullish order blocks are identified when a price movement takes out sell-side liquidity and creates an imbalance. These are areas where price is likely to respect and reverse, typically showing a strong shift in price action once these areas are tested.

What is the significance of the 'old low' in the context of a high resistance liquidity run?

The 'old low' is a point where sell-side liquidity was previously trapped. In a high resistance liquidity run, the market may take out this low and then retrace quickly, targeting a deeper retrace back into an order block or previous high, before reversing direction.

Why does the trader not want to be too greedy with exits?

The trader avoids being too greedy with exits because the market can quickly reverse, especially in high resistance liquidity runs. By targeting easier points, like previous highs, the trader reduces the risk of getting caught in a deeper retracement that may erase potential gains.

What is the importance of the 30-second timeframe in this strategy?

The 30-second timeframe is used for pinpointing precise entries within the fair value gap. It helps the trader to capture the immediate market movement once price taps into the gap and begins to move toward the identified liquidity target.