okay folks welcome back this is the ICT mentorship price action model number 12 it's a scalping model and its focus is 20 Pips per trade okay see I price action model number 12 a scalping model 20 Pips per trade the stage used for this model is a daily range expansion order blocks and fair value Gap is the setup internal range to 20 pip price runs is the pattern all right so the daily range expansion what we're going to be focusing on is the identification of the likely or most probable direction of the current daily bar or candle we're going to be focusing on order blocks coupled with a fair value Gap now right away You're already thinking oh I've heard this before Michael no we're going to be waiting for an order block to form then an expansion swing to unfold so what we're doing is is we're waiting for that order block to facilitate a expansion swing so while we qualify valid order blocks or high probability order blocks with fair value gaps sometimes an order block will form a down closed candle near a an important key level from a higher time frame level and that down closed candle may not necessarily have a fair value Gap so we're filtering that with any down closed candle that was at the beginning of a initial expansion price swing then it has to be retested okay that order block gets traded down into then after that takes place the expansion swing that unfolds after the retest of the order block we are then looking for the fair value Gap and again internal range liquidity we're going to us alizing that in the form of internal range liquidity pools to facilitate an entry in the direction of a simple 20 pip price run now right away your mind's probably thinking okay all you're doing is talking about the same thing you've already talked about in recent months before I get into it I want you to understand certain things here I've taught you how to qualify in my definition a high probability order block they are coupled with a fair value Gap linked directly to the candle this model is not suggesting that at all what we're doing is showing you how to find fair value gaps in the middle of price runs that are not directly related to or close to necessarily a order block the question is is what Gap do I use I'm getting that question all the time and I promised everybody would come to you if you just waited okay there's a lot of other things we're going to build on but this is one simple measure now it right away your mind should be turning this isn't limited to a scalping model while I am presenting it in a scalper's presentation it's not limited to that it's not certainly at all limited to 20 Pips if you scale this up to larger time frames the model will deliver larger pip huls okay or the profit margins will increase in terms of Pips relative to the time frame you're looking at it okay so our first example here in this very very brief model because there is really not a lot to talk about because everything I'm going to say here you've already learned in the core content so this is the euro dollar okay and the model is built on for scalping 5 minute charts okay okay so we're looking for a directional bias I've already taught you how to do that uh when the bias is bullish in this case for the euro dollar we could see a bullish order block here now notice this down close candle right before this big move here there's really an absence of any fair value Gap now does that make that a low probability order block well in terms of my definition yes now will I be wrong yes and that's okay why am I okay with being wrong because I know this model will give me the entry patterns that I'm looking for that won't give me the fair value Gap in an Ideal World we want to see this down closed candle create some kind of a gap here there isn't one because this comes down closes any likelihood of a gap so this one here won't necessarily have my attention right away what would I be waiting for this model Watch What Happens the price comes back down slams into the order block this down closed candle the last upper portion okay in other words the highest portion of the candle or the high to the midpoint or mean threshold is what I'm highlighting here now in full order block Theory we would use the entire candle but I like to use the upper portion because that's where the most sensitivity is going to be so price trades down into it even at this moment here I don't have to be a buyer in fact I don't want to be a buyer there with this model what am I waiting for I'm waiting for the order block to prove there is expansion okay so there's an expansion swing here taking price higher inside this price swing there's a fair value Gap right here one single pass through one candle previous candle's High next candle's low there's your fair value Gap this candle's low is what we frame the fair value gaps high so all it needs to do is trade to this price or lower and we could add the spread and we can be a buyer there this is what happens here this is the order block fair value Gap coupled for this model notice the distinction here this down closed candle can't be referred to an order Block in the that what I taught as a high probability down closed candle with a fair value Gap above it okay that would be the ideal high probability order block this order block or down closed candle has the Gap inside of the candle see difference okay so the distinction is we want to see price show un willingness to want to Rally why is this pattern powerful why is it even being mentioned why does it have its own mod model the reason is this smart money bought down here I may have missed that you're going to miss it okay price comes back down into it I may not still see it here but if I see price react and it creates expansion move here I can see that the narrative is okay they bought here off the order block they did a huge accumulation of orders here this one I may have missed this one I won't miss the expansion move I go inside of this range here and find where's the fair value Gap well there it is which Gap do I buy that one using model number 12 this is what you're looking for Price drops down into the fair value Gap here we know that there's a displacement here and there's a displacement here they have kept price in a relatively small range small ranges bring what large ranges as a scalper intraday you want volatility you want directional impulse this is what you're looking for coupling both order block expansion swing then fair value Gap formation by the top of the gap or in this case the low of this candle here you have a little bit of draw down not much at all I mean very very very modest very modest draw down we're talking like one or two Pips okay if if you're adding that minus the spread M you obviously price runs the Shaded area is 20 Pips now this uh price point if you look at it it actually went higher in the day the only thing I'm showing is a 20 pip run for illustrative purposes look at another example here after buying that low you can see very very nice handsome price action another euro dollar you see price comes down that last down closed candle no fair value Gap to to speak of in here price creates a impulse swing I may miss it I may second guess this I don't know what's going on it's got double bottom formation here we know there's a likelihood of what a potential stop run so I'm not having this really on my radar yet but Watch What Happens price drops down into the order block and then we have expansion okay so we have the expansion swing in here my IE goes inside this range and I want to see where's the fair value G there's the fair value Gap and yes in this sense we do have the high probability order block with the down closed candle with a fair value Gap so right away you know this is the likelihood of a potential bullish order block but if you would use that theory would you have gotten filed on this it never got down there but Model 12 gives you the entry pattern fair value Gap here there's your entry at this candles low or just below it plus spread beautiful 20 pip expansion and well beyond and I left this over here just for uh context relative equal highs and you can you can incorporate other models take profits that you know to use for additional p u pip objectives don't limit it to so many Pips so obviously if you can get 20 Pips bank that take 80% off and then look for other models to over that with Target Theory so wherever price may lead to relative to what you've learned in other models in the core content look for those as additional runs for liquidity but this model specifically is dealing with 20 pit runs you're not trying to get the absolute low you're not trying to get the absolute High all you want is bread and butter give me 20 Pips thank you very much next example here is the guppy which is pound y up Clos candles here all one order block price trades down comes right back up into the order block and then we have the proof in the price swing we have an expansion price swing lower so my eye looks inside this range here where's the fair value got this one down here is too low it's it's not enough for me to want to chase that cuz we're too far extended last two up Clos candles in here they made more want to make a run up into these up closed candles in the form of bearish order block so I would never want to look for like this here as a fair value Gap I would want to look for this price High down to the low think in terms of your PD array Matrix the high to this low split it in half it has to go above or at the 50% level to get to a equilibrium or premium level that would be filtered for this right here the fair value Gap is here so fair value Gap and this candle's high or just above it would be your fill right in here and the Shaded area constitutes a 20 pip run factoring spread and slippage or whatever the point is is all you're looking for is that 20 pip bread and butter setup bearish order block hits it expansion price s we're looking for the fair value Gap then that's the protocol so we're not forcing uh a perception of okay I want to look for every potential fair value Gap and I'm going to trade it no you do not want to do that and if you've tried doing it recently since you've learned about fair value gaps you've probably encountered that conundrum so some of the algorithmic theory that we'll cover in 2020 are things like this where certain things have to happen in a series of or specific order then an outcome should be reasonably expected okay so it helps you have more prognostication it gives you perception it gives you depth of understanding about what you're seeing in terms of price action at the moment and not just guessing because there is a a logical theory behind why and where price reacts And Trades from this actually has another example here that I didn't have but as I'm talking to you I'm looking at it right now I went right to it we have the last two up Clos candles here price trades down away and comes right back up into the bearish order block then we have what then we have a an expansion swing fair value got right there there's your fill think above this range here the Shaded area 20 Pips from here to here there's 20 Pips okay it's right there I didn't include it because I wasn't looking for that one in the same day but the same day it gives it to you again same pattern same concept you look at an order block or you can wait and catch it after in other words you're not always going to need to anticipate these setups many times you're going to catch it after it does this where it starts to run this is the reason why I say we don't chase price we do not do it because there's going to a procedure that will allow you to get into the marketplace at a fair value hence fair value Gap and that's what's happening here now how far into the fair value Gap it goes is going to be dependent on your broker and that's the reason why this pattern is set to trading at the low of the fair value gap for shorts and at the high for Longs okay because every spread is going to be different every broker going to be slightly different some Brokers may come all the way up and fill in this Gap some of them may go up to consequent encroachment some may just tap where the Gap is well in this case a fair value Gap that's bearish it would be the low the Gap that's what you're looking for for your entry that may be all it does and it never fills that Gap so that's the reason why I create these models in in the way I I have because it's meant for you to get a fill with your demo so that way you can build experience and not miss a lot of the price swings whenever we're trading fair value gaps we allocate the underlying risk that would be associated with The Gap filling okay so our our our stop would be above here but we are allowing with money management to endure if you will any closure of that Gap so that's going to be factored in granted that's a default when you're using the stop up here but it's not the same thing from mentally seeing it happen when you're in the trade you get short here but it comes up and fills the Gap you're going to be afraid you're going to feel fearful that it's going to keep on running you just got to stick to the protocol and trust that the Stop's going to do its job and the Gap may just close and that's all there is or it may go to consequent encouragement and that's all there is okay our last example this is cable uh we have the last up Clos candle bearish order block we have price created an Impulse price swing price comes back trades into the order block here now we want to see what we want to see the expansion price swing here the impulse price swing is the initial displacement the retracement is the retest of the order block then the expansion move where price really starts to get accelerated this is where we do not Chase it we just simply wait for the fair value Gap to form we have a fair value Gap right here right here okay and with that fair value Gap we wait for price to come back up into this candle High which is the fair value gaps low your short entry is there and 20 Pips is just the Shaded area and it does a whole lot more obviously here when we look at this model it's one thing to say okay there's a fair value Gap here's an order block okay I want you to go back and look at examples of every potential pair that you are considering in your career right now you know you may have just a few because I've told you so but eventually some of you are going to get really comfortable with looking through a larger portfolio and other asset classes and you'll start to see this pattern form on higher time frames and this could be your bread and set up for like a 15-minute time frame and doing intraday swings it's not limited to a 5-minute chart remember price is fractal it allows you to do it in every time frame this pattern still works on daily charts too so if you're a position Trader or a long-term swing Trader it's it exists there as well okay so don't think that I'm just giving you another day trader another scalping technique and I can't ever use that Michael why you wasting my time with this every one of these models are scalable you can expand them or reduce them to lower time frames down to a one minute chart it's completely up to you but the theory behind it and the narrative that's used is the same okay now in closing some of the things that make these setups better or higher probability is obviously within a Kill Zone within institutional order flow that's directionally derived in other words what is the directional bias in institutional orderflow in a daily chart if you're trading in that direction and inside of a Kill Zone and this pattern forms man is it a loaded deal it's just one of those easy low hanging fruit setups it's a very very easy model to find a setup with and it's one of those models that are very forgiving because some of you are complaining that and I'm not saying it's a bad thing it's normal for you to say I I can't see this real time well this is one of those very forgiving models where it kind of like acts like a crutch okay or training wheels there is an order block there you may have missed it and it retrodesign that's your entry technique your pattern and then trade it and take 20 Pips out now how would you use this with a larger uh price action model or a larger time frame model uh you just don't look for that 20 Pips you just look for simple opposing PD arrays that means if you're bearish you're going to be looking for the very next discount array that will allow you or facilitate a healthy profit margin what is that well I don't know what your stops going to be they're all going to be different obviously you can see that every one of these setups here has a different scale in terms of pip per stop loss so if your model is going to force you to be a 5 to one setup Trader then obviously you know you want to consider that and where your scalings are going to be uh that's going to obviously skew the 5 to one modeling or gearing that you're you're trying to employ but you always want to find some way to create some first level of scaling this model is a one shot entry give me 20 Pips and leave a very very small portion on that's how I'm presenting it here so if you were scaling um say say you did the one standard lot in the form of 10 minis you could take eight of those minis off at 20 Pips whenever you get first profit in the scalping model leave two Minis on to see if you can get anything else additional price movement for the next PD array whether it be you know premium array when you're going long or discount array when you're going short don't try to make more of this model than I just told you it's very very simple it's very easy and like I said it's very forgiving because it allows you to you Miss the boat okay on the ideal entry because the ideal entry would be selling up here okay or selling up here on the first fair value Gap right in here so that fair value Gap gets closed you can sell short but then you have to encounter all this consolidation till you get to the bearish order block retest there's a short optimal trade entry price expansion beautiful uh symmetrical price swing then another retrace back into now the fair value got price runs again standard low how many Pips below that do all your projections 10 15 you know you know the model and you can get the low here so you can take 20 off 20 Pips off here with eight of the 10 Minis on a one standard lot get ing but two minis would be on board to capture all the remaining portion here so you can you can expand this model also to use as entering a larger term price move you can actually use this to use additional entry uh technique other words if you have a larger price swing say say for whatever reason maybe you were lucky enough to get short up here you can use this model to add to an existing position okay so don't think that it's limited to a scalping model it's you're there's so many ways you can use these models and they'll dovetail once you get to know what what all of them can do over time and when you can plug and play certain ones obviously this pattern here is very very specific it requires you to do certain things in terms of waiting and the price has to prove itself to you and a lot of you may really resonate with this one because it's a very easy model very very easy it's highly Visual and it's principle based and even in its core Bare Bones you know just a skeleton with no more flesh added to it like we'll do in 2020 we start going back through these again and creating more of a trading plan type thing whereas right now I'm just giving you an idea okay it's a model to to discern where you are in one of these models and you can build on it flesh it out by itself I've given you enough to be a trading plan everything I just explained to you in concert with what I've taught you about money management and take profits and how to work within the pdra matrix it's you have a you have the entire trading plan right there the only thing I haven't done is go by step by step using the the criteria that creates a trading plan I'm just having a conversation with you like I'm assuming because you have experience with me now and you have experience in the market I can say what I've said to you and you can take that information and say okay I know exactly what he means by all that and I'm going to formulate a trading plan don't be discouraged if you don't feel that way that's okay because that's what the next round of going through these price action models is going to do we're actually going to sit down and put detail behind everything what is it we're supposed to be doing with all these individual models once that's done and you go back through them all collectively at the end of next year you'll feel much more confident about your understanding about price action as a whole and this is just going to be one small little facet in the greater hole of your understanding as it comes to price action so hopefully you found this insightful until I'll talk to you next time wish you good luck and good Trading