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This Boring ICT Strategy Made Me $6,000 In Under An Hour
TJR
Overview
This video explains a specific ICT (Inner Circle Trader) strategy used to achieve a significant profit in a short amount of time. It details a top-down analysis approach, starting with identifying the daily bias, then scaling down to hourly and even one-minute timeframes. The strategy emphasizes recognizing liquidity sweeps, SMT divergence, and fair value gaps as key confirmation signals for entering trades. The presenter walks through a recent trade example, highlighting how these elements aligned to create a profitable short trade, and encourages viewers to apply the learned concepts.
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Chapters
- Start with a top-down analysis to determine the overall market direction (daily bias).
- Identify if the market is overbought or oversold to anticipate potential reversals or continuations.
- Look for 'liquidity sweeps' where price moves significantly to take out previous highs or lows, indicating potential profit-taking or setup for a move.
- The goal is to find equilibrium within a price range to anticipate where price might seek to return.
Establishing a clear daily bias helps traders align their short-term trades with the larger market trend, increasing the probability of success.
On June 6th, the market was significantly overbought, suggesting a bearish bias, and had just swept daily highs, reinforcing the idea that price might move lower.
- Scale down to the hourly timeframe for more specific signals.
- Recognize SMT (Smart Money Tool) divergence between correlated assets like ES (S&P 500) and NQ (Nasdaq).
- SMT divergence occurs when one asset makes a higher high while a correlated asset makes a lower high, signaling a potential reversal.
- A liquidity sweep at market open on the hourly chart, combined with SMT divergence, strongly suggests a bearish move.
SMT divergence provides a powerful confirmation signal by showing a disconnect in strength between related markets, often preceding significant price moves.
ES made a higher high, but NQ made a lower high at the same time, indicating weakness in NQ and a bearish bias for the overall market.
- Further scale down to the 1-minute timeframe for precise entry.
- Look for a third confluence, such as an invalidated fair value gap (FVG) or an inverse FVG, to confirm the trade direction.
- An inverse FVG that gets broken signals a potential move in the opposite direction.
- Entry is confirmed when price retests a bearish fair value gap after the initial setup.
The 1-minute chart allows for pinpoint entries, minimizing risk by placing stops tightly and maximizing reward by entering at the optimal moment.
After the SMT divergence and liquidity sweep, an inverse fair value gap formed and was then broken, followed by price retesting a bearish fair value gap, providing a clear entry signal for a short trade.
- Identify key levels for profit targets, including recent lows (15-minute lows) and significant higher timeframe lows.
- Consider managing the trade by taking partial profits at the first target.
- Allow the remaining portion of the trade to run to a more significant liquidity target for maximum profit.
- The success of the trade is validated by observing how correlated assets (like NQ) took out both immediate and higher timeframe lows.
Effective trade management, including setting realistic profit targets and partial exits, is crucial for securing gains and letting profitable trades run.
One contract was managed at the 15-minute lows, while the rest of the position was held until price reached significant higher timeframe lows, demonstrating a successful multi-target approach.
Key takeaways
- A top-down analysis approach, starting with daily bias, is essential for aligning trades with the broader market direction.
- Liquidity sweeps are critical signals that indicate potential turning points or areas where price might move towards.
- SMT divergence between correlated assets like ES and NQ can provide strong confirmation for bearish or bullish biases.
- Fair value gaps (FVGs) and their invalidation (inverse FVGs) offer valuable confirmation signals for trade entries.
- Combining multiple confluences (liquidity sweep, SMT divergence, FVG confirmation) significantly increases trade probability.
- Effective trade management involves setting clear profit targets and potentially taking partial profits while letting the rest run.
- Understanding these ICT concepts allows for precise entries and exits, potentially leading to significant profits in short timeframes.
Key terms
ICT (Inner Circle Trader)Top-Down AnalysisDaily BiasLiquidity SweepOverbought/OversoldEquilibriumSMT DivergenceFair Value Gap (FVG)Inverse Fair Value GapConfluence
Test your understanding
- How does identifying the daily bias using top-down analysis improve trading decisions?
- What is SMT divergence, and how can it be used to confirm a bearish bias on the hourly chart?
- What are the key confirmations to look for on the 1-minute chart before executing a trade based on this strategy?
- Why is it important to consider both short-term and long-term liquidity targets when managing a trade?
- How can a trader use the concept of fair value gaps to identify potential entry or exit points?