Mastering Trade Management Techniques

Oct 13, 2024

Lesson 8: ICT Mentorship - Trade Management

Introduction

  • Focus: Possession Trade Management
  • Context: Bullish and Bearish market conditions
  • Seasonal tendencies as a guide, not a certainty

Bullish Market Conditions

Seasonal Tendencies

  • Analyze potential bullish seasonal tendencies
  • Not guaranteed outcomes, but historical tendencies

Intermarket Analysis

  • Confirmations needed for bullish technical picture
  • Look at interest rate yields (increasing yields = positive for currency)
  • Blend analysis of stock market, interest rates, commodities, and currencies
  • Look for 3 out of 4 confirmations to validate trade idea

Premium Discount Array (PDA)

  • Use monthly and weekly charts to identify institutional reference points
  • Frame bullish setups using daily PDAs (order blocks, gaps, old highs/lows)

Trade Execution

  • Decide between buy on a stop or buy on a limit
  • Risk management: No more than 1% of account
  • Trailing stop loss: Below the lowest low in the last 40 trading days

Bearish Market Conditions

  • Similar process as bullish, with reverse logic
  • Focus on potential bearish seasonal tendencies

Trade Setup

  • Confirmations from intermarket analysis
  • Use daily PDAs to frame bearish setups (order blocks, voids, old highs)
  • Decide between sell on a stop or sell on a limit

Risk Management

  • Trailing stop loss: Above the highest high in the last 40 trading days

Long-term Trade Management

Stop Loss Strategy

  • Begin with a wide stop loss (40 trading days)
  • Adjust as trade matures, reduce to 20 trading days once 50% of range is reached
  • Key: Allow market room to maneuver and avoid premature stop-outs

Example: Japanese Yen

  • Weekly chart analysis ā€“ range and structure
  • Execution strategy on daily chart, managing risk with trailing stop
  • Emphasis on patience and discipline in long-term setups

Conclusion

  • Reiterate the balance of seasonal tendencies, technical analysis, and risk management
  • Importance of wide stops and patience in long-term trading
  • Always align strategies with comprehensive analysis