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Okay, folks, welcome back.
All right, so we're going to be revisiting model number one.
And as we go through each year, we will revisit these individual models,
and I'll give you an amplification and a further refinement
on what you should be applying to the foundational study.
So in other words, each price action model has its individual foundational premise.
Now, that's not the entire, I guess, nuts and bolts approach to it.
It's just what is it that makes you want to engage price with that style or
particular model?
Obviously, things can be refined and tweaked using the material from the mentorship
and by way of experience using it.
But it's not important initially, once you complete the mentorship core content,
to throw everything into your model.
As you can see, when I do my analysis, I don't bring in every possible tool.
You don't see me doing SMT overlays, you don't do any comparative relationships
with Intermarket.
I'm just taking small pieces because I don't want to communicate the assumption
that you have to have everything in your model.
You don't.
There are tools that are very useful that I refer to when it's applicable.
The necessity for everything being in every model is not the case.
And I believe that's the reason why most people have hardships with the content
because they're trying to fit every possible thing that you've learned about into
their trading plan.
And I had several members in the first group and now the second group of completed
charter members.
In other words, those individuals that completed 12 months, they have sent me their
trading plan
and one gentleman had a 115-page trading plan.
Admittedly, as I told him in his email, and with no disrespect intended,
it's no way I could sit down and read that.
I mean, I guess I could eventually, but my trading plan literally is on a back of a
business card.
And if you remember back on BabyPips, I gave you that.
It was the article, here's my card.
And you want to be able to put everything that you do with your model,
you need to be able to write it on the back of a business card.
Now, obviously that assumes a great deal of abbreviated understanding.
In other words, we don't have to say every possible tool, what specific things
we're looking at.
If we just say, I'm looking at hard timeframe institutional order flow
and I want to trade into inefficiencies and trade out of the position with external
range liquidity.
I want to do that on a scalping basis and I want to do it primarily on Monday,
Tuesdays,
and or Wednesdays with an occasional Thursday,
leaving some portion of the positions on when profitable to capture the larger
range.
Even though I start to trade as a scalper,
I always leave a leader in that way if there's an expansion that was unexpected
or if I get quote unquote lucky, it helps pay for all of these little dings and
mistakes that I will make in my trading.
Now I can say all that on the back of a business card.
That's a trading model. Now, obviously risk parameters, how much are you risking?
What's your account size? All that's something that you work out on a personal
level.
But if everyone understood what was taught in mentorship, what I just outlined is a
complete and sound trading plan or model.
Now, obviously, you have to understand what institutional order flow is as we
define it here
and what we're looking for for external range liquidity for targeting basis.
So when you understand that, it makes the overall process a lot easier and more
concise.
And it doesn't need to be a Ph.D. level outline in terms of a trading plan because
you really want your trading to be simplified.
And I give you the content and understanding because this is what is necessary by
way of utilizing experience,
when to refer to certain things, when not to worry about them at all.
And as you can see, we have survived without COT data.
While the government shut down, we were looking at things in price action that
still didn't have any influence
whether or not we saw bullish embarrassness on the commercial positions in our
pairs or the underlying futures markets for those pairs.
So do you need to worry about whether or not I approve of your model once it's
fleshed out?
No, because you're going to grow comfortable with whatever tools that you work
together as a price action model for yourself.
Obviously, if it's utilizing my concepts and my teachings, I'm going to indirectly
approve it because you're using my content.
But you don't need to send me emails with your complete trading plan because I'm
not going to shoot holes in it.
I'm not going to give you a high five and say that's the winning one because you
have to utilize it and then it will tell you whether or not it's a good plan.
It doesn't matter what I say in an email or if I say verbally or in a tweet
response, anything like that.
It does not matter what ICT or anyone else says if you find consistency with the
model.
Do not look outwardly for approval.
You will find the approval with the utilization of it and its sample size and the
data you get from studying it and using going forward data, not just looking
backwards.
OK, so that's the part that's hard.
Now the chart of memories that arrived here. This is the hard part.
You went through the easy part. It seemed like a hard.
It's a lot of stuff to study. You got to go back and look at it. But this is the
hard part.
You got to sit down and start fleshing out what you are going to do.
Now we talked about in Model 1's foundational study the utilization of swing points
and waiting for swing highs and swing lows to form and buying when a swing high is
broken and selling short when a swing low is broken.
That is the underlying simplest way to keep people that are completely new to
trading on the right side of long term institutional overflow.
There's going to be times when that is not going to be as precise.
And that's what you saw on the free tutorial level and baby pip stuff.
It's a good training wheel to start people with and that's how we started the
initial model.
This particular teaching and for our installment for 2019 is going to refine the
study of what we're seeing in price and it will precede the formation of the swing
points.
So it's not a matter of we're waiting around for a swing point to form anymore.
Now we understand that the swing point will form at the ideal location, i.e. the
lowest you can buy in a swing low before a rally.
That's the ideal entry point.
So while I try to teach new students to price action, a comfortable level of
looking for the overall draw on liquidity on a hard time frame and or institutional
overflow on that time frame.
I.e. weekly or daily.
For scalping, you want to be able to get in there right when it's feeling the most
bearish and or most bullish in respect to buying and selling.
If you look at the New Zealand dollar, this is a daily chart of this particular
pair and we're looking at the elements of premium to discount.
So you want to be able to utilize the PDRA matrix in deference to where we are
relative to a premium or discount.
We start our analysis on a daily chart and we don't require at this point now
because you're going through core content and the first members have gone through a
full year of looking at the foundational study and applying it to their charts.
The next level and the new charter members have the benefit of not having to go
through that first year.
So you get a kind of an advantage over the first group here because they had to use
a full calendar year before coming to this lesson.
So it is what it is.
There's other ways I could have done it, but without pulling my hair out, it's
going to do it this way and deliver it this way.
So when we look at price action, what we're looking for on a higher time frame is
where price is in terms of the premium or discount range or matrix.
So when we look at price like this, this huge dynamic up close candle, there was a
lot of displacement in here.
It caused a buy side imbalance, sell side inefficiency that was essentially cleaned
up with this drop down in here.
We don't need this to frame it, but it helps.
It helps when this low forms and rallies back through this swing high in here.
Once that's broken, market structure is essentially bullish, even though it's
traded all the way back down to here.
It's bullish. Why? Because we had a larger PDRA matrix being the low to high.
We trade all the way down to a discount there.
Then we rallied through, broke a swing high, institution order flow bullish until
it reached a measure of premium that required a retracement lower.
We have a bearish order block. We also have a bearish order block in here that was
recapitalized in here.
Trades softer. In other words, there's a retracement in here.
The original model's foundational presentation talked about having the optimal
trade entry for the New York Open.
Nothing has changed. We're still utilizing that same model here.
But what are we looking at? What are we seeing in here?
We're seeing the underlying pattern that sets up key institutional volatility.
I'll show you what that looks like here in a second. Let me pull this up.
When we are in a premium and the market has traded up into some measure of a
premium array,
what we're looking for in price action, we're not trying to second guess or guess
where the swing highs and swing lows are going to form.
We're anticipating them.
So what we're looking for is an underlying market structure that is highly probable
to present large injections of volatility in a directional bias.
So what that looks like is here if we have a premium and we're in a market that has
traded up.
So we are, by our definition, overbought. We don't need indicators to do that.
But relative to the present range that we're dealing in, using basically month five
content,
the way we define our underlying market structure so we have a high probability
scenario for bearishness,
we want to see a high that's rated. Once that high is rated,
those stops have been taken and or they've engineered buy side liquidity for false
breakouts.
There are traders that are trapped up here. OK, so they have now someone on the
other end of their position.
So their counterparty offering buy side liquidity. But to do that, they have to be
a seller.
So they're offering sell side liquidity. As price drops down, if they have a sweet
entry place up here,
why would they let their book go to a lesser profit or lose that profit once we're
in a premium?
Any retracements back up are going to be shallow. OK, so we don't necessarily need
a run all the way back up to here.
Like we'd see a high to low and then a 62 to 79 percent retracement level optimal
trade entry.
That's why they never work, because if it does go up there, this is going to get
ran out and this is going to be a continuation higher.
OK, so when we're looking at and you'll have to have a loss there because I know
some of you are probably thinking,
OK, well, what if we see this pattern here and we get stopped out? Then you had a
trade that got stopped out.
You don't learn 100 percent trading here. You learn high probability.
So the context is when we're looking for shorts, we want to see the underlying
price structure do this.
We have a high, run the high, break down, a short term low is taken out and then we
trade back up into here.
Essentially, it's the breaker. The swing points are not necessary. In other words,
we don't wait for them.
We want to trade at the level 10, 20, 30 pips above the high short if we can get
some overlapping analysis ideas to support that time of day, day of week.
And then in here, we want to be trading as price returns back to the breaker, not
waiting for the swing high to form.
Now, when you do this style of trading, you'll see that you'll get the better entry
points.
And you can wait for the swing points to form to support the idea.
OK, so there's a difference, much like when I first learned about the opening price
by way of Larry Williams.
He wanted to be a buyer after price rally above the opening price a certain degree.
I want to be buying below the opening price at the opening price or below.
Ideally, that's high probability. Well, much like I taught in the foundational
premise to Model 1,
we now have the higher form of it without requiring the swing points.
Everything is reversed more below the equilibrium of the current dealing range if
we're in a discount.
The ideal scenario for buying is we want to see a low that's violated.
OK, once they run those sell side liquidity, they engineer breakout artists.
I'm going to sell short on breakout and or sell side liquidity on assumed long
positions in here.
They're going to have a sell stop right here, protecting that position and price
goes down in there.
They play counterparty. Big displacement.
Breaks the high market structure now is bullish. Return back to the breaker.
This is the highest form of market structure in terms of probability that you're
going to find.
If you just stick to situations like this, it doesn't mean you're not going to have
losing trades.
It doesn't mean you're not going to do it wrong.
It means that in a 90% bracket, the highest probable points of entry are going to
have this market structure here
or this market structure here relative to the current dealing range.
OK, and if you start that dealing range from a higher time frame, i.e. the daily
chart,
because most of the banking or interbank deals that take place by way of technical
analysis and trading,
they're all formed on a daily relative to open high long close and the last 20
trading days,
the last 40 trading days and the last 60 trading days.
If the data range is dynamic, it always moves as we go forward in the calendar.
Everything just goes back 20, 40, 60.
I do not count Sundays as a reminder, and that's what these S's are delineating
here.
So if we're looking at price action right here, OK, so we had this scenario.
We are in a discount. Let me show you what it looks like.
We have the range. When we're looking at ranges, we have to incorporate the WIX.
If we're doing optimal trade entries, we'd only use the bodies of the candles to
get the core volume.
Low to high. Here's 50.
So we are in a discount.
We closed in a liquidity void down into a discount.
The price rallies through. This swing high is what I would look at, but you can use
this one.
There's no difference inside this area here.
Whichever swing high, whichever one you choose, that one has to be broken.
Once it's broken to the upside, we wait for it to come back in to that same area.
That's this. Here's the low, previous low right there.
We have a little bit of a run. We drop down.
We're in a deep discount relative to the dealing range on a daily from this low to
this high.
Then price rallies. We can be a buyer down here.
There's nothing wrong with doing that.
But if you're looking for confirmation, but not waiting for swing points to form,
you wait for this.
We want to see the displacement. It shows energy.
Up here, there may be an instance where it doesn't get back down here, and that's
OK.
Because we're only interested in buying back down here. Why?
Because there's a bullish order block at that point. It's a bullish breaker at that
point.
We also return back to what level? The 50%. Now we're back at equilibrium or
discount.
The probabilities increase when we use the PDA rate matrix that we learned about in
month number 5.
Once we apply that concept, then suddenly all the swing points that form are going
to be energetic.
We want to see the swing points create movement.
That's what unlocks market structure.
This over here, relative to premium to discount, and this overall price structure.
Now, if you think about what I've taught you, I taught you breakers in the free
tutorials.
I taught you order blocks in the free tutorials. I taught you market structure
breaks in the tutorials.