Lesson 6: February 2017 ICT Mentorship - Swing Trading

Introduction

• Focus on reducing risk and maximizing potential reward in swing setups.
• Importance of low-risk, high-reward setups; professionals focus on this.

Reducing Risk

• Know your maximum risk per trade; avoid high risk as it equates to gambling.
• Frame setups using monthly and weekly levels (PD arrays for premiums).
  • Sell at bearish order blocks, bearish liquidity voids.
  • Short optimal trade entries, bearish fair value gaps.
  • Look for old highs to short, false breaks, rejection blocks.
  • Sell above bodies of long-wick candles; sell at old lows and highs.

Structuring Trades

• Use the PDRA Matrix for trade framing.
• Prioritize premium PD arrays from bottom up, discount PD arrays from top down.
• Contextualize trades using monthly and weekly charts for large ranges.

Risk Management

• Don't try to double your account every month; maintain low risk.
• Aspiring fund managers should keep risk low to appeal to clients.
• Use higher time frame PD arrays for tighter stops.
• Focus on entries on a four-hour time frame.
• Minimum reward to risk ratio: 3:1, aiming for even higher ratios.

Maximizing Reward

• Trade on higher time frame monthly and weekly levels.
• Smart money focuses on higher time frames; lower time frames are less visible.
• Timing entries on 4-hour charts for maximum R multiples.
• Professionals seek high R multiples by risking little for large price moves.

Example: Euro Dollar

• Use old monthly highs as premium levels to short.
• Example trade with 70 pip stop loss results in an 8:1 reward-risk ratio.

Homework

• Analyze a specific trade setup using a four-hour chart and entry techniques.
• Task: Find five examples of 5:1 reward-risk setups using monthly/weekly scenarios.

Conclusion

• Swing trading offers significant returns with minimal effort and risk.
• Emphasizes quality over quantity in trading opportunities.