ICT - Mastering High Probability Scalping Vol. 3 of 3
Summary
TLDRIn 'Mastering High-Probability Scalping, Volume 3,' the focus is on previous day liquidity runs and price action analysis. The video covers the 'Power 3' concept: accumulation, manipulation, and distribution phases. It provides strategies for confirming daily bias and timing trades during the New York session, emphasizing waiting for optimal retracement levels. The importance of money management and setting appropriate risk levels is highlighted. The video also addresses when to expect reversals and the significance of 60-minute chart reference points. Practical examples and advice on developing trading skills through experience are included.
Takeaways
- π The 'Power of 3' in trading consists of accumulation, manipulation, and distribution phases.
- π A bullish daily bias is confirmed by bullishness in the London session, rejecting attempts to go lower.
- π Optimal long entries are typically between 7:00 a.m. and 9:00 a.m. New York time, targeting retracements of at least 20 pips.
- π For bearish setups, confirm a bearish London session with a rejection of the midnight opening price and a move of at least 30 pips lower.
- π Optimal short entries are also between 7:00 a.m. and 9:00 a.m. New York time, with at least a 20 pips retracement.
- π A 60-minute chart can help anticipate reversals at obvious old highs or lows, but sometimes price won't respect these levels.
- π° Implement strict risk controls, such as risking 1% per setup and gradually increasing to 2% if it suits your risk tolerance.
- π Use Fibonacci levels for entry and target points, and adjust your stop-loss and take partial profits based on these levels.
- π Expect to encounter losses and stopped-out trades, and manage them with a disciplined approach.
- π Study and experience are key to mastering trading, and there is no rigid rule for exits; it requires ongoing learning and adaptation.
Q & A
What are the three components of generic price action referred to as 'Power 3'?
-The three components of generic price action referred to as 'Power 3' are the accumulation phase, the manipulation stage, and the distribution phase. The accumulation phase involves accumulating long or short positions, the manipulation stage involves price moving in the opposite direction of the intended future direction, and the distribution phase involves price expanding in the intended direction.
How do you confirm a bullish daily bias using the London session?
-To confirm a bullish daily bias using the London session, you should see a measure of bullishness after an attempt to go lower is rejected, resulting in a price rally. This confirmation, combined with a bullish daily bias, suggests the London session was indeed bullish.
What is the optimal time frame to look for long entries in the New York session?
-The optimal time frame to look for long entries in the New York session is between 7:00 a.m. and 9:00 a.m. New York time. During this period, you should wait for a price retracement lower, typically from a swing high intraday.
What is the significance of a 20 pips retracement for a long entry setup?
-A 20 pips retracement is significant for a long entry setup because it is considered an optimal trade entry. If a retracement of at least 20 pips forms by 9:00 a.m., it indicates a good entry point for a long position. If no such retracement occurs, it is advisable to avoid taking trades.
What criteria should be met for a bearish daily bias in the New York session?
-For a bearish daily bias in the New York session, price should move above the opening price at midnight New York time and then reject that level, trading at least 25 to 30 pips lower during the London session. This indicates a continuation of bearishness into the New York session.
How should you approach retracement levels for short entries in the New York session?
-For short entries in the New York session, you should look for a retracement higher of at least 20 pips after 7:00 a.m. New York time. Enter at the 62% retracement level as price rallies higher, and anticipate a retest of the intraday low or the previous day's low.
What is the role of the 60-minute chart in identifying potential reversals?
-The 60-minute chart helps identify potential reversals by showing old highs or lows that have previously caused price to reverse. If price reaches one of these levels, it is likely to encounter resistance or support and potentially reverse direction.
Why is it important to implement strict risk controls in trading?
-Implementing strict risk controls is important because it protects your trading account from significant losses. By limiting risk to 1-2% of your total account equity per trade, you can manage losses effectively and ensure responsible equity growth.
What is the recommended risk percentage per trade for new traders?
-For new traders, it is recommended to risk 1% of their total account equity per trade. Gradually, as they gain experience and if it meets their risk tolerance, they can work their way up to 2% per trade.
What should you do if a trade encounters a significant reference point on the 60-minute chart?
-If a trade encounters a significant reference point on the 60-minute chart, such as an old high or low, it is advisable to be very cautious. Either avoid the trade, be very nimble about exiting, or expect a potential reversal at that level.
Outlines
π Introduction to High-Probability Scalping
In this final volume of 'Mastering High-Probability Scalping,' the focus is on previous day bank liquidity runs. The speaker introduces 'Power 3,' which includes the accumulation phase, manipulation stage, and distribution. Key concepts discussed include confirming the daily bias, especially during the London and New York sessions, and strategies for entering long trades during bullish conditions.
π Bearish London Session Strategy
The discussion shifts to identifying bearish trends in the London session and how to prepare for the New York session. The speaker outlines the importance of observing price movements relative to the midnight New York time opening and how retracements of at least 20 pips can signal potential short entries. Key tips include waiting for the 62% retracement level and targeting previous lows.
π Anticipating Reversals
This paragraph delves into recognizing potential reversals by observing old highs or lows on an hourly chart. The speaker emphasizes the unpredictability of whether these levels will hold and the importance of being prepared for both outcomes. The advice includes being cautious with trades near these levels and learning from experience to manage trades effectively.
π Money Management and Real-World Example
Here, the focus is on money management principles and using Fibonacci retracements for setting up trades. The speaker explains risk control by limiting risk to 1% of account equity and gradually increasing it to 2%. A real-world example involving GBP/USD is provided to illustrate these concepts in action, highlighting the importance of strict risk management and taking partial profits.
π― Personal Approach to Taking Profits
The speaker discusses their personal approach to taking profits, stressing the importance of adapting to market conditions rather than following a rigid plan. The narrative includes insights on scaling out of positions and the challenges of perfecting exit strategies. Emphasis is placed on the necessity of experience and adapting strategies based on market behavior and personal comfort.
π Conclusion and Practical Advice
In the conclusion, the speaker recaps the key strategies for identifying high-probability setups and emphasizes the importance of simplicity, focusing on open, high, low, and close prices. The final advice encourages traders to study market conditions, avoid overcomplicating charts with indicators, and continuously refine their approach through experience and feedback.
Mindmap
Keywords
π‘Accumulation Phase
π‘Manipulation Stage
π‘Distribution
π‘Daily Bias
π‘Optimal Trade Entry
π‘Retracement
π‘Power 3
π‘Fibonacci Retracement
π‘London Session
π‘New York Session
Highlights
This is the last volume, Volume 3 of Mastering High Probability Scalping.
Focus is on previous day bank liquidity runs.
Key concept: Power 3 - accumulation, manipulation, and distribution phases.
Daily bias confirmation during the London session.
Long entries between 7:00 a.m. and 9:00 a.m. New York time.
Look for at least a 20 pip retracement before taking a long trade.
Ideal entry at the 62% retracement Fibonacci level.
Targeting the high of the day or previous day's high.
For bearish setups, confirm a rejection above midnight New York opening price.
Waiting for retracements of at least 20 pips for shorts after 7:00 a.m.
Use old highs and lows on the 60-minute chart for potential reversals.
Importance of strict risk controls and money management.
Recommended risk is 1% of total account equity per setup, up to 2%.
Partial profit-taking to reduce risk and secure gains.
Experience and tape reading are crucial for successful trading.
Understanding that not all trades will be successful.
Use open, high, low, and close as primary indicators.
Focus on consistent, high-probability setups rather than frequent trades.
Transcripts
okay folks welcome back this is the last
volume volume 3 of mastering high
probability scalping and this is dealing
specifically with previous day bank
liquidity runs all right for some of you
this is gonna be a little bit of a
rehash but it's necessary so my dispose
of this whenever I refer to power 3 what
I'm referring to is the three components
that make up generic price action that's
the accumulation phase where long or
short positions are accumulated then a
manipulation stage where price goes the
opposite direction to what the intended
future direction will actually be
and then there's an arranged expansion
and then a distribution
we use this concept is when the daily
bias is bullish we're gonna be
confirming the London session was in
fact bullish that means did we see a
measure of bullishness after a attempt
to go lower was rejected and price has
seen a rally this would be enough for me
coupled with the daily bias being
bullish
then you said leave wait until 7:00 a.m.
New York time to stock your long entry
between 7:00 a.m. and 9:00 a.m. New York
time typically the setup will form
after 7:00 a.m. New York time you're
going to be waiting for a price
retracement lower
New York session will retrace typically
from a swing high intraday that was
formed for the daily high or a
short-term high during the London
session
ideally you wanna be selecting
retracements of at least 20 pips are
lower
if no retracement of 20 pips forms by
9:00 a.m.
walk that means cut they don't try to
take any trades if you are exceedingly
bullish if you see a retracement of 10
to 15 pips sometimes this is enough
during this key time of day or a optimal
train entry long
you
if it does form enter on the 62 percent
retracement fib as it drops lower
you
expect price to retest the high of the
day or the previous day's high and then
look for targets one two and symmetrical
price swing on the FIB
as you see here's an example and I have
a vertical line here this is delineating
seven o'clock in the morning New York
time or the beginning of the New York
session and price creates a bounce in
the pre New York session but it's an
exceedingly large retracement and I'll
talk more about that when we mentioned
how the time or anticipate reversals
but after 7:00 a.m. which is that
vertical line we have a retracement of
20 pips actually it's a little bit more
than 20 pips here but this is a really
good set up but price trades down into
the optimal trade entry and a beautiful
market run
you
now looking at power 3 again we're
looking at the accumulation phase in
this case would be the accumulation of
short positions in a manipulation phase
where a price runs up higher during
London knocking out individuals that
would already be short and putting those
individuals on the wrong side trying to
glue long and then a nice move lower if
we see this occurring while at the same
time the daily bias is bearish this is
good and again to confirm them on the
session being bearish we want to see
price move above the opening price at
midnight New York time if that occurs
and price rejects that goes lower and
trades 25 to 30 pips lower at least
minimum for the London session
that would indicate at least the
expectation that New York sessions
should present a continuation idea or
bearishness now obviously you want a
little bit more movement beyond 30 pips
or so for the London session but
nonetheless you want to see that if
you're staying up and you don't want to
trade London teaching primarily the New
York session for the scalping model but
if you see the reasons that would
justify a bearish London session that
means again primarily with an open at
midnight New York time and attempt to
rally and rejecting that and trading
significantly off that now again what's
significant yeah 30 pips or more and
going into the New York session I want
to I want to dissapoint criteria when
are we waiting for 7:00 a.m. New York
time to stock our short position between
7:00 a.m. and 9:00 a.m. New York time it
usually will form after 7:00 a.m. New
York time really waiting for a
retracement
New York session will typically retrace
from a swing low
now what's swing low the swing low that
was formed in the London decline the
initial decline once it starts to
retrace when we were looking for a price
to move higher
ideally when we selecting retracements
of at least 20 pips or more as it
retraces higher if their retracement of
20 pips forms by 9:00 a.m. we're gonna
be cutting bait or basically walking and
we'll be looking for another opportunity
the following day
if it does form we're looking to enter
at the 62% recent level as rallies up
again important that we want to be
selling short as price goes higher
we'll be anticipating an expecting price
to retest the low of the day
or the previous day's low
and or targets one two and eventually
symmetrical price swinging on the fit
here's an example here and again the
vertical line delineates the 7 a.m.
marker for the New York session so
immediately after that we were gonna be
on watch for a retracement higher of at
least 20 pips now again if you're having
very strong convictions about the market
being very bearish you can anticipate a
optimal trade entry form at 15 pips or
so you can get real aggressive if you're
gonna 5-minute chart and take 10 pip
retracements if you're extremely bearish
but that's gonna be for folks that have
done this for a while and has developed
a measurable amount of experience I
guess I'm looking for the word that
would best suit it but experience is
going to dictate that but to avoid false
setups it's better to wait for at least
the 20 pips move higher in this case for
a short frost little trade injury but
the key is waiting for a 20 pip rally
after 7:00 a.m. New York time while the
New York session is anticipating a
continuation lower of what was seen in
London so in other words if we're
looking for bearishness to continue from
a weak sell-off in overnight trading in
London we'll be looking for a
retracement after 7:00 a.m. New York
time to get a short-term a revolt
condition and that's going to be
capitalized on by an optimal trade entry
short trading short at 62% recent level
and then looking for the intraday low
that was formed to be retested and/or
the previous day's low and then after
that we would be looking for again
targets 1 2 and symmetrical price swing
on the fib know if you don't know what
those levels are on your fib and you're
watching this video for the first time
and having never seen any of my other
work if you go and look at my youtube
channel inner circle trader it will
obviously show you a optimal trade entry
primer and I'll show you how in that
video how to set your Fibonacci up so
you can see the levels I'm referring to
you
okay when to expect reversals when the
hourly or 60-minute chart
trades to an obvious old high or old low
that has shown a clear willingness to
reverse price before in the past okay
when it's obviously seen a reaction that
pushes price the opposite direction once
it's been traded to it this is most
likely going to repeat itself
now sometimes price will not respect and
hold high or low and these generic
support resistance levels will give way
and we never really know for sure so I
know what you're going to ask me is how
do I know if the old low or high is
going to hold price and cause it to
reject and go lower or higher and the
answer to that question is I don't know
that
think about that it's probably
unsettling I'm now I know some of you
want to have that answer and I wasted
years believing I would find it and I
found out you don't need to know that
sometimes you're gonna mess up sometimes
it's gonna be wrong and sometimes you're
get stopped out and it is what it is you
cannot escape it you're going to lose
money you're going to lose on trades and
there's no reason to worry about
now it's far better to expect them to
cause a reaction than not to why because
there's plenty of moves and price swings
between these key timeframes and higher
time frame price points that you
shouldn't have to worry about it
so there's a plethora of setups that
will be forming between these 60-minute
reversal points are old highs and lows
to not have to worry about it so here's
a little bit of logic for you if you
knew you're about to take a trade and
it's going to quickly encounter one of
these reference points on a 60-minute
chart an old high an old low where it's
shown classic support resistance
characteristics maybe that's a trait you
don't want to take or if you're going to
do it be very very nimble about where
you're getting out at don't anticipate a
run through that low or that old high in
this example here and this is real-world
examples I've done this actual trade
based on what I'm showing you here this
week it's the time of this recording
which others and individuals have called
me on Twitter they know exactly what I'm
talking about and you can go look at my
Twitter you'll see it for November 10th
2017 so we have a old low on an hourly
chart here for British Pound USD and as
price trades back down to it you would
anticipate a measurable bounce or
potential reversal so that means we
don't really want to be selling short
around that time because it may
encounter some measure of bullishness or
at least an unwillingness to go lower so
we used allotted that we may anticipate
a rally higher we can look for off the
maternity Long's in a new york session
on a reversal basis not a continuation
of what has been seen overnight in
London so eventually if we see that
60-minute chart
move higher and in break a market
structure as we've seen here then we can
look for the following day to do a
standard classic by day which you'll
learn about my tutorials and the market
trades down gives an optimal trade entry
long at the London open and like myself
here I was only 7 pips away for 50/50 if
you're using the spread from the very
low today calling
about a 80 pip move or so intraday and
very very nice run as a result of it but
the 60 minute charts going to help you
say it and filter when the market much
likely will reverse ok money management
while you develop and practice in your
demo camp it's important for you to
implement strict risk controls no no
this isn't fun isn't sound fascinating
it's not sexy but it really is your only
protection and in this business you need
everything you can to protect yourself
many times from yourself and if you want
to see what can be accomplished you need
to use how money management now for this
and many of my teachings you're gonna
see me preaching consider one percent
per setup that means one percent of your
total account equity and gradually
working your way up to 2 percent if this
meets your risk tolerance now I'm not
trying to talk you into these
percentages many times some of you whack
see elect to go with less than 1% and
there's nothing wrong with that some of
you want to be Cowboys and we'll treat
larger than 2% but my advice is if
you've not been profitable for at least
side 5 years minimum
I wouldn't even venture above 2% it's
just not worth it you know it's
important not to try to swing for
homeruns or take larger risk to try to
grow your account faster it's not
necessary it's reckless and you
shouldn't try to do it at all over
leverage will impede your development
and drastically decrease your chances of
seeing responsible equity growth as well
so if you look at a set as we have here
this is again it's a setup actually took
today in the market at November 10th
2017 in British Pound USD the London
setup I used and this is a London setup
so I'm not really teaching the
application in a New York setup but it's
the same principle if we are looking for
an auto trade entry long and this assume
for a moment we were trying to buy at
one-thirty one-twenty our stop loss
relative to the optimal trade entry
pattern and fib would be at 131 big
figures so we have a
PIPP range between entry to stop loss
from a risk base if we had an account of
say $1,000 already modest account and
having 1% of that our risk in dollar
terms would be a total of $10 less
commission and whatever it is that you
would be paying for your broker now that
$10 with 20 pips you divide that $10 by
20 pips and it gives you a multiple or
in this case your demo leverage would be
5 micro lots okay or about 50 cents per
pip by having this we know that
should not see a larger loss than 1% nor
$10 we took the loss our account with
drop down to 990 hours give or take
whatever Commission's your broker may or
may not charge
if we're trying to trade with this model
okay obviously you've seen many
instances where I've shown help taking
partial profits can remove that number
one barrier of being able to hold on to
the trade because you want to make a
profit you're afraid to take a loss and
you want to make money by taking partial
profits and in this case it'd be at 1:30
1:45
I'm sorry 130 154 would be our first
profit objective
by taking something off it removes that
insatiable desire to be right you've
taken something off you've reduced risk
but you also gave yourself that little
cookie that little pat on the back you
did something good and at this moment
you can choose to do that or if it
trades up to target one on your fib that
would be in this case 130 169 at that
moment then you can move your stop-loss
to break-even and take no partial and
then try to reach for target 2 and at
that point take a portion of the trade
off and then move to stop-loss just
below 130 154 or where would your top of
your fib would be we've anchored it on
the high point now you can move your
stop-loss just below that and then again
consider taking partial profits at the
symmetrical price wing and maybe leave a
little piece on go further or collapse
it entirely at the symmetrical price
wing the
Effects of money management and the
rules I have I've never been
I guess so rigid in the way I do it I
trade more or less within impulse with
what I feel the markets telling me and
it's hard to digest that and it's all
based on tape reading and tape reading
is you know that's an experiential thing
it's you can't you can't really teach it
you can't say here's what here's what
you do it's something you have to learn
by spending years nine days nine four
hours it's not a couple months years of
watching price action I've said many
times now and I'm a dinosaur I'm over 25
years doing this now so there's a lot of
experience and things I've seen that
tend to repeat themselves over and over
and over again in price and I'm very
rarely ever shocked or surprised by what
I see in price because it's usually the
same type of thing over and over again
but you would think with 25 years plus
doing it I would have a rigid exit
strategy and the closest thing I've got
is using these fibs and what I feel from
the marketplace now some of you will
take this insight that I've shared with
you and build a really strong rigid rule
based idea about when you take profits
and I've actually asked my own
mentorship students if they are able to
come out with something I would love to
be able to see that because I have
always been very honest and said that my
weakest point in my treating is the
exits I'm never satisfied with them
because I'm trying to crack that as like
entries I got like dialed in I knew what
I'm looking for but exits I'm always
looking for a way to improve that
because think about it that's how we get
paid so there's no real hard and fast
rule based you know routine that I do
they always follow it does you know how
much do I take off if I have ten Lots on
you know how many Lots do I take off it
first scale out how many do I take it
target one there's many times where I
won't take anything off at first profit
I'll wait for target one and I'll take
half off there and then I'll take
another portion off at target two and
then I'll have something on four
symmetrical price
and then if there's time left in a day
I'll leave another portion on for that
so it's all a matter of what I see and
feel in the marketplace and I know that
probably doesn't satisfy some of you
you're gonna assume and almost feel like
you shoot you're in a position where you
can demand that I tell you exactly what
I'm doing all the time and this is one
of those I just can't do that I don't
think it's really
a set in stone process that would be so
beneficial for you that you know if you
do it this way all the time
it's good enough I've not seen that
among experience so taking profits I
think it's something that's personal you
need to know what you're going to do and
you're gonna spend the rest of your life
you mastering that and never arriving at
mastery so that's gonna be it for this
volume I've covered a really good
approach to breaking down how the finest
setups the currency period you're
probably following if you're just
looking at one it's not going to give
you a set up every single day but if you
have a nice handful of pairs that you
know you're looking for specific
conditions as we outlined it will give
you a set up a couple times a week and
that's all you need you only need 23
pips a week at two percent risk and you
can double your account every single
calendar year by compounding six percent
return six percent a month is not a lot
it's very easy to get to but you have to
know you're looking for first and
hopefully in these three volumes in this
series it's been short enough and
concise enough for you to at least see
what it is that I can point to in a
chart and you can see it too and how it
repeats itself just consistency there's
continuity there is high probability and
it up except for that rule based ideas
that's lacking on the exits because it's
more or less you know you you're gonna
be winging it okay and I wish I could be
stronger in my approach to teaching that
but this is really no way for me to
formulate a always this is the way it's
done I got levels I like and based on
what I see in market action in time of
day because of my experience that'll
tell me what I want to do and it won't
always be the best way of doing it
sometimes it just takes off and goes on
and on and I won't be a part of that
move or sometimes I'm holding for
something like that and it doesn't
really run it just goes to target one or
maybe it goes up to first profit and I
didn't take anything off there and it
comes back and hits me on my stop so
there's things that you're gonna have to
blur
by experience and I can't teach T no one
else is gonna be able to see either and
you just have to accept that you know
there's gonna be things that you're not
gonna get answers to in trading that
you'll find the closest thing to
answering it by your own discovery and
be excited about that you don't don't
think that you have to know everything
right now because you don't there's a
lot of things that you're doing or about
to do or the way you think that's going
to be the impediment when you'd be
coming consistent or profitable at all
the person you sit sit and stare at in
the mirror that person is your biggest
enemy right now because they're telling
you all the good things and they're
trying to tell you not
to talk to yourself when you're doing it
wrong okay you need your conscious needs
to be
we need to be sensitive to your
conscience okay if you know what you're
doing is wrong even in a demo account
you need to stop in dis get yourself out
of the marketplace if you're not gonna
be focused and organized don't bother
with it okay but hopefully you've seen
enough with these three videos that I've
given you a way to go into the markets
every single day treating day and look
for opportunities even if it's in
hindsight it's beneficial to study it
but there's something that is specific
that now you can go into price action
and now seek it so many folks when they
first start they put all these
indicators on a chart and all these
things okay to distract themselves away
from the open high low and close and
open high low and close is the four best
indicators you're ever going to find in
price action its price so hopefully you
found this insightful hopefully you
enjoyed it
I'd love to have your feedback and one
twitter at IM ICT and until next time I
wish you good luck and good trading
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