Lesson 6: February 2017 ICT Mentorship

Topic: Swing Trading

Objective: Focus on reducing risk and maximizing potential reward in swing setups.

Key Points:

• Risk Management:

  • Understand maximum risk per trade to avoid gambling.
  • Frame setups with low risk and high reward.

• Monthly and Weekly Levels:

  • Focus on these levels to frame trades.
  • Sell setups include bearish order blocks, bearish liquidity voids, optimal trade entries.
  • Look for rejection blocks (candles with long wicks), sell above these levels.
  • Buy setups in reverse: mitigation blocks, bullish order blocks, voids below.

• Framing Trades:

  • Use order blocks for context.
  • Check PD arrays (premium and discount) for trade decisions.
  • Monthly and weekly levels give trade context.

• Using Lower Timeframes:

  • Lower timeframes reduce stop loss sizes.
  • Example: Use 4-hour entries for tighter stops.

• Reward to Risk Ratios:

  • Minimum 3:1 ratio recommended.
  • Higher ratios (5:1, 10:1) possible, allowing low accuracy (30%) to still be profitable.

• Leverage Control:

  • Avoid maximizing leverage (e.g., don’t use 50:1 if unnecessary).

Maximizing Reward:

• Higher Timeframe Trading:

  • Use only monthly and weekly levels.
  • Look for smart money plays on these timeframes.
  • Layer orders just above/below key levels (e.g., daily, weekly, monthly).

• R Multiples:

  • Reward multiples (e.g., 5R) mean $5 for $1 risk.
  • Higher timeframes can offer large R multiples.

• Examples and Homework:

  • Example: Eurodollar analysis, using monthly high for setups.
  • Homework: Find setups with 5:1 reward to risk across different pairs.

Trading Strategy:

• Frequency:

  • Expect 1-2 swing trades every 4-6 weeks.
  • Focus on quality, not quantity of trades.

• Leverage and Positioning:

  • Use 3:1 leverage as a guideline.
  • Manage risk carefully to attract potential clients as a fund manager.

Conclusion:

• Focus on high-reward setups with low risk.
• Engage in specific homework to apply teachings.
• Aim to double equity with minimal trading by adhering to strategy.