Overview
This lecture introduces the essentials of the ICT day trading model, focusing on capturing a significant portion of the daily price range using higher timeframe direction, PD arrays, and time-based setups.
ICT Day Trading Model Overview
- The goal is to capture 65-70% of the daily price range within a single trading day.
- Day trading does not mean trading every day; not all days are suitable for trading.
- Typically, there are two main setup opportunities per trading day.
- Directional bias, based on higher timeframe order flow, is crucial for successful day trading.
- Use small stop-losses allowed by the model to minimize risk and maximize risk-to-reward ratios.
Daily Range and PD Arrays
- Daily range expectation is based on the average of the previous five days.
- PD arrays (premium and discount price levels) are foundational to all ICT day trades.
- FOMC and Non-Farm Payroll days should generally be avoided; these are no-trade days.
Time and Session Frameworks
- Most day trades occur during key session windows: London open (1-5am NY), New York open, London close, New York close, Asian open, and London lunch.
- The best opportunities are usually during the London and New York sessions.
- Avoid trading New York open if London has already achieved 80% of average daily range.
Day of Week Characteristics
- Sunday: Typically too small of a range; combine with Monday if your broker doesn't give Sunday data.
- Monday: Usually a small range unless price trades into a PD array, which can set the week's high or low.
- Tuesday: Often creates the week’s low (bullish context) or high (bearish context) in London.
- Wednesday: Ideal for day trading, provides mid-week clarity.
- Thursday: Good setups but watch for potential reversals.
- Friday: Smaller range unless weekly objectives remain unmet, which can cause surprise moves.
Weekly Range Framework
- Note the Sunday (or Monday) opening price; draw it through the week on your hourly chart.
- If price remains below Sunday’s open during a bearish week, look for short trades.
- If price remains above Sunday’s open during a bullish week, look for long trades.
- Reversals can occur if price crosses back over the Sunday open, especially on Thursdays.
- Always blend Sunday’s opening price with PD arrays to dictate bias.
Case Studies & Application
- Use daily PD arrays (rejection blocks, order blocks, fair value gaps, liquidity voids) to confirm trade direction.
- Avoid trading against PD arrays; respect support at discounts and resistance at premiums.
- Examples showed how to combine Sunday’s open and PD arrays to identify high-probability setups.
Key Terms & Definitions
- Day Trading — Trading to profit from intraday price movements, targeting a portion of the daily range.
- PD Array — Price Delivery Array; key support/resistance levels where price may reverse or expand.
- Directional Bias — Expectation of price direction based on higher timeframe structure.
- Stop Loss — A protective order to limit potential trading losses.
- Kill Zone — Specific time windows when high-probability trades often occur (e.g., London open).
- Order Block — A key area of price where institutional orders cluster, acting as support/resistance.
- Fair Value Gap — Price imbalance or inefficiency, often acting as magnets for price.
Action Items / Next Steps
- Review and label PD arrays on your daily charts.
- Draw and track the weekly opening price through Thursday on your hourly charts.
- Observe the daily sessions to identify optimal trading windows.
- Prepare for the next lesson, building on these foundational rules and examples.