YouTube Video — Transcript

Final review of the 2022 ICT mentorship focusing on E-mini S&P trading, market structure, and risk management strategies.

Ask about this video. Answers come from its transcript only — with the timestamp, so you can check them.

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Key Takeaways

Market expectations can fail, and traders must adapt without emotional bias.
Time of day and session rules are critical for identifying optimal trading opportunities.
Fair value gaps and liquidity zones are essential tools for anticipating price movements.
Risk management, including stop losses and drawdown control, is vital for long-term success.
Trading is a continuous learning process where losses are part of growth.

What the video covers

This video is the final discussion of the 2022 ICT mentorship series, analyzing the E-mini S&P September 2022 contract using hourly, 15-minute, and 5-minute charts.
The presenter reviews market reactions around Fed Chair Powell's speech and explains why expected volatility did not materialize.
Key concepts include sell-side and buy-side liquidity, fair value gaps, market structure shifts, and time-of-day trading rules.
The importance of adapting to market conditions and managing risk during high-impact news events is emphasized.
The presenter shares live trade examples, including a stopped-out trade and how to interpret price action during the New York AM and PM sessions.
Discussion includes how to use fair value gaps and order blocks to anticipate market moves and potential trade setups.
The mentorship consists of 41 videos, with this final video summarizing key teachings and encouraging disciplined trading.
Risk management techniques such as using hard stops, calculating risk percentage, and managing drawdowns are covered.
The video highlights the importance of accepting losses and learning from trades that do not go as expected.
The presenter encourages viewers to understand trading as a long-term process requiring patience and continuous learning.

Chapters

What was the main market event discussed in the video?

The video focused on market reactions to Fed Chair Powell's speech on June 23, 2022, and how expected volatility did not occur as anticipated.

How does the presenter suggest managing trades during high-impact news events?

The presenter advises caution, recommending moving away from trading if the market does not behave as expected and waiting for clearer price action, especially around lunch hours.

What are fair value gaps and why are they important in this analysis?

Fair value gaps are price zones where the market has moved quickly, leaving imbalances. They are important for identifying potential areas where price may return, offering trade opportunities.

Full Transcript — Download SRT & Markdown

Speaker A

All right, folks, welcome back. This is our review and final discussion in the free 2022 ICT mentorship for YouTube. So, this is June 23rd, 2022, and we're looking at the E-mini S&P September contract for 2022, and this is an hourly chart. So, I'm

Speaker A

cutting right to the chase here, and this morning on Twitter, I was looking at—well, I was expecting actually a little bit more volatility around the Fed Chair Powell speaking at 10 o'clock in the morning, and we didn't get a whole lot of excitement.

Speaker A

But we did get to see ICT's expectation fall short. So, that's one of the benefits of seeing it live with me: an expectation, an analysis, a call, a viewpoint, a perspective, opinion not coming to pass. Okay, and time of day

Speaker A

how I used it and how you should use it going forward, and also how it kept me from looking at an incorrect setup that would otherwise maybe be a catalyst for you having had an incorrect setup this morning, and I'll talk about

Speaker A

that in a moment. But for now, this is the framework for today. We had sell-side liquidity here. The market dropped down, took that sell side out, rallied up buy side here. I was looking for 3805 level today, and this is the reason why.

Speaker A

And I was looking at it early on in the morning. I wanted to see it run up here and hit that. If it was going to hit, I would have been watching for a potential short deform, but it didn't do it. So, that was my

Speaker A

expectation based on this high back here. We already took sell side, so I was looking for a little bit deeper run into this high here when we just went just above that short-term high there, gave up the ghost, and went lower.

Speaker A

And I had a trade that got stopped out plus two points, and I'll talk about that and get into the lower time frame. All right, so here is the 15-minute time frame, and usually I have the charts blank, and I'll ask you to

Speaker A

take a look at it. I don't want to do that tonight because I want to get to the teachings at the end to kind of bring this entire mentorship to a close. The teachings itself will end for this

Speaker A

model in this lesson. Okay, so technically there's 41 videos that make up this mentorship. So, if you take away the introductory video, it's basically what, 40 even? So, that's not bad. Hopefully, you found it insightful and helpful. But

Speaker A

looking at this morning, we had the 10 o'clock Powell event here, and the market started to run up, and we took out the buy side here. But again, I was aiming for this. This is what I wanted to see. I want to see it run up

Speaker A

here and actually took a long in here. I wanted to see it run up into that level, and I was going to do a reversal, and it didn't obviously give it to me. So, notice the time of day here.

Speaker A

This is New York index AM session operating hours or kill zone if you want to call it that, and it's 8:30 in the morning to 11.

Speaker A

Now, I can take trades after 11 o'clock, but I want to kind of stick to the rules and present you opportunities to see where following the rules you're going to miss certain opportunities. It's okay. It's fine. Now, you're going to get it wrong

Speaker A

sometimes. You watch me get something wrong today. There was no skin off my back. Nothing, you know, bad happened. I didn't get what I was looking for, and because it was late in the day, as we'll look at the

Speaker A

lower time frame in a moment, but it ran above the short-term buy side liquidity here. I wanted to run up to here, but it broke down, and I was telling myself and also made my views public on

Speaker A

Twitter that I wasn't interested, and I wasn't quite sure what it wanted to do because it was approaching that noon hour. And I took a trade, and I was out plus two. So, in other words, I was just covering expenses basically.

Speaker A

And I was wrong on the initial run. So, when I have that scenario and it's off of a Fed Chair or a high-impact news event, and it didn't pan out like I was expecting it to, in my experience, it's been better for me

Speaker A

to just move away and say, "Okay, I'm going to close the computer, and I'll come back later on and see what's going on." And I didn't want to trade any more of the morning session leading into noon. So, I had waited, and I was going to take a

Speaker A

look at what it did in lunch hour and then post lunch hour around 1:30 and see what there was opportunity to do anything then. But we have a fair value gap on the 15-minute time frame here. You see that?

Speaker A

So, the market eventually, after running the buy side here, drew all the way down, took out sell side here, overran this fair value gap here. Why did it do that? Because this is a larger one. So, if it's going to go over

Speaker A

top of this one and trade to the top of this candle, which is the low end of that fair value gap that's here, that's not noted or shown here by the respective candles, it's going to go here. That's also

Speaker A

the high end of the fair value gap here. So, it's likely to go over top of this one and run into this one. Okay, it does that as we're going into the noon lunch hour in New York until one o'clock,

Speaker A

where it makes the low of the session after closing in the fair value gap. And then the 1:30 to 4 New York local time, that's the PM session, New York index PM session or afternoon session for index

Speaker A

trading, and the market started to create a willingness to want to go higher. We'll look at a short-term shift in market structure when we get a lower time frame, but it draws all the way back up to the

Speaker A

target I was looking for in the morning. So, the expectation of going to that specific level, let me explain to you what I was looking for. I wanted to go above, hit that, and then sell off and go down to this area here

Speaker A

for a discount and then create the run and then go beyond 3805. That's all I was really looking for today. That's what I wanted to do, but it failed to get to 3805. It fell down into this area here, and I

Speaker A

knew once it broke here, I don't want to go short because I'm going into lunch hour, and I was concerned it was going to consolidate a lot and then take forever to get down into, and I don't want to hold anything

Speaker A

new into lunch. So, I'd prefer to see some kind of a stop run in the lunch hour, which is what we're seeing here. It runs down below that and into a fair value gap deep discount between low

Speaker A

high, trades down into it, and then rallies up this session here. We'll look at it on the five-minute chart so we can see obviously the initial poke above here inside this area. I was looking at a two-minute fair value gap. I mentioned that

Speaker A

on Twitter as it was forming, and it rallied up, and then once it took the short-term high out when this was a boldface bullish candle, I was thinking to myself, "Okay, it could expand up in here," and I'm watching that.

Speaker A

And I had a tweet ready to go. I'm going to sell short here and look for a run down into this level here. Never got it. Okay, and then some of you are probably going to hear this and say, "Oh yeah, sure, you sure you

Speaker A

did." I mean, it is what it is, folks. I mean, I was out there without a safety net. I told everyone what I was expecting, what I was looking for. It simply didn't pan out, and that's okay. But the market eventually breaks lower.

Speaker A

Then after we get into the lunch hour closing at one o'clock, and then I personally like to wait till 1:30 because it's a little bit more cleaner price action, the market starts to rally away, drops back down into an order block, a

Speaker A

fair value gap on a five-minute chart. Then we have a shift in market structure here on the five-minute chart, creates a small little return to a fair value gap there, rallies another fair value. It runs into it here, rallies, and

Speaker A

eventually takes up the short-term high of the day and then runs to the level I was drawing your attention to on Twitter. All right, so here's the five-minute chart zoomed in with the morning session. You see the run here on the buy side, one

Speaker A

more here, and eventually breaking down displacement, small little fair value gap here, rolls down into the fair way you got here, and then once again, you're turning back up into an imbalance, then runs down to the low end of the

Speaker A

thereby you got turning basically at the low of the session at the low end of the fair value gap at one o'clock. So, closure of lunch time hour, it creates that low right here. I

Speaker A

and this is the fair value gap i drew your attention to live and it came down into it here and inside this fairbank app is of basically drawing your attention to that as a potential long i did and i was looking

Speaker A

for a run into 3805 and it started the run took out the buy side here i mentioned the bicep would likely be a draw on liquidity it was but i wanted to see it draw up to here that's the specific level i was looking

Speaker A

for and if the market comes back down into the fairbank up again once more and then rallies above the short-term high here this right here would have been a nice opportunity for me to basically say pay the trader and me take

Speaker A

something after i tweeted that off but i didn't because i wanted this level here okay now one could argue and say oh you're being greedy or you didn't follow rules or you didn't do this and you didn't do

Speaker A

that and it's easy to arm chair quarterback someone and that's okay if you want to do that in the comment section that's fine but just know that i'm doing this real time and i'm okay with being wrong wrong

Speaker A

isn't going to ruin me um i'm not 100 but i'm generally on par better than the average bear okay we'll just say it that way without sounding like i'm bragging but once it came back down in it stopped me out

Speaker A

because i rolled my stop up to a level that i wasn't willing to weather a deeper retracement because this is the takeaway very valuable we trade down into it we get movement that's good comes back down and again complete closure of the fair value

Speaker A

gap okay that's acceptable does it start to rally away yes that's why i felt confident that it was going to go up to here because if it's going to go above here then it should just spread its wings and

Speaker A

run that 3805 level with no problem it wasn't having it the market dropped back down and didn't quite take out this short-term load with any displacement so while this fair value gap exists it's not one that i would have taken

Speaker A

because we didn't see a displacement with meaningful movement below that low so this is not a fair gap that i would have been a participant in so looking at that i'm thinking i'm not interested i'm going to close up shop

Speaker A

and there it is because i didn't get this run below here now had i seen that i may have i'm not going to go out on a limb and say absolutely but i may have if it would have shown

Speaker A

like this type of movement on this candle below that low and then we move back up into this right here then i probably would have said well i'm gonna go short and aim for this low here and then at noon if i didn't get here i

Speaker A

would just close it off and then ride out the the lunch hour so that was kind of like what was going on in my head because it was an event around pal i didn't want to give you guys a lot of

Speaker A

things to be concerned about or get lost in the commentary and plus i didn't want to be worrying about someone doing something hurting themselves i knew invariably some of you are waiting there with a live account ready to click a button because i've said

Speaker A

something okay so that weighs heavily on me when i comment on twitter so i just want you to be careful okay do it in a demo don't do it a live account but we had another fair value gap in

Speaker A

here it trades up into that nice closure perfectly and runs down to the top of the fair value gap on that 15 minute time frame one more little bounce in then rolls over and goes deeper into the fair value cap

Speaker A

all right here is the afternoon session and this is where we're gonna be doing the bulk of the discussion on the reading course in this video and i'll frame the logic around risk management and stop loss management and that'll complete the model the roles

Speaker A

i'm going to give you are static they they're always the same so that way you know once you put a position on your demo account where is your stop how much are you risking when do you move your stop

Speaker A

okay and this is the rule that i use and sometimes um you've seen me show trades where i get in and i'm not really trying to move my stop-loss i'm taking partials along the way but i'm not really trying to

Speaker A

rush my stop-loss up i'm going to show you the rules i follow so that way it makes sense to you and it'll help you also trust taking partials letting that become a better way of managing a position in trade

Speaker A

and not be fearful about being stopped out because the stop loss is there to do its job you pay it well to do that but if you're worrying about that stop loss being tripped versus following along in price action continuously measuring

Speaker A

whether or not price is giving you what you're expecting in terms of bullishness or bearishness is the institutional order flow still bullish if you're long or is it still bearish when you're you know short those types of things are more important

Speaker A

than worrying about whether you're getting stopped out or not that's not to minimize obviously the the risk that's respected obviously you should be respecting the risk by actually putting a hard stop in but if you don't put a hard stop in you're not

Speaker A

really respecting the risk what you're saying is is i'm risking this trade because i believe i'm right but if i'm wrong i'll figure out where i'm wrong when it gets there you don't want to do that okay so anyway

Speaker A

we'll close that portion of the discussion at the end of the video but here it's a two-minute chart showing the afternoon or pm session for index futures and you can see we traded down into this is showing a weird time because

Speaker A

it's two minutes but this is the one o'clock hour it hits the low and then starts to rally up short term shift in market structure here key time of day 130 it trades back down into an order block last down closed candle there is a

Speaker A

fair value gap right here i didn't note it because it's going to be too cluttered up and i'm going to be basically doing a lot of discussion in this area and i don't want it to be over lapped with too many things

Speaker A

to me navigating so this is the 50 minute fair value gap and it's trading down to an order block after a shift in market structure after trading down and closing in a 15 minute time frame fair egg gap

Speaker A

and then it trades into an optimal trade entry which is the flagship pattern of this youtube channel fair value gap with an overblock and optimal trade entry is the gold standard of the ict pattern that's taught on this

Speaker A

youtube channel this is where you can be long and expect price to reach for here and here okay so we have objectives in here where we can look for this imbalance here bicep liquidity here by side liquidity here

Speaker A

and we'll watch then see it does it continuously march higher so we have a run from here to the short term high then we have this fair value got here that runs here up into the 3805 level so

Speaker A

this pm session i was long in and i'm not going to try to build the case to outline everything because i want to give you what's salient to close this mentorship and show you how to use stop placement risk management

Speaker A

and give you a working example i know some of you like to see did i really take a trade yeah i was trading today so you can see here a live account and 1 975 okay back to the lesson

Speaker A

and you'll see what it means to go through the process of determining risk management and stop loss placement and when you move your stop all right so we're zoomed in here and looking at the five-minute chart and again that's the fair value gap

Speaker A

we're going to be using here the frame it so if you're looking at the idea of you trade it down into that very value gap does it show willingness to go higher yes is there a short term shift in

Speaker A

market structure yes is there a gap yes down close candle to the left of it yes drops down in bullish order block optimal trade entry in other words that would be a 62 to 70 tracement level less than equilibrium relative to the high

Speaker A

and the low respectively so we would be looking for a limit order to be at 37 54 75 we'll use that okay so one quarter point less than this candle's low so that would be our hypothetical limit order to buy

Speaker A

going long and we use the low here for our stop loss so 37 45 0.75 essentially nine points of risk okay so we'll come back that in a couple minutes but for now what will be reaching for what would be

Speaker A

the draw on liquidity from this high down to that low we want to get to a premium level 50 is about right in here eyeballing it and we don't need to have a fib on that you should do it for yourself

Speaker A

but then we have this imbalance here so the first low hanging fruit objective would be this candle's high that's 37 80 and a quarter so we're looking at about 25 and a half handles of potential points profit per contract so we're risking nine

Speaker A

points to make 25 and a half not bad it's better than two and a half r so you're gonna risk one dollar to make two dollars and fifty cents basically and that's on a run from here to here

Speaker A

we don't need to know if it's going to go up to here yet okay this right here is one trade from here to here then it creates another opportunity in here where it can run from here to here

Speaker A

and we'll talk about that when it gets into the discussion on risk management and trade management all right so risk management anytime you're trying to consider what lot size or how much you're supposed to be trading or whatever

Speaker A

there are free tools if you google them okay it's amazing how many folks ask me and other educators out there the most simplest questions that are answered just by a google search okay i know it feels easier i think it's a matter of

Speaker A

just getting a personal response from the educator or whoever it is you'd be asking and it's not possible for me to go through every single person's question and reply to them so hopefully you understand that there's just simply no

Speaker A

way for me to do that i don't have enough time in the day to do that nobody really does but simple things like lot size calculators okay you can do a google search on that and there are some

Speaker A

wonderful free applications and tools that will make that known to you by you just plugging in how much money you have in your account what risk percentage are you trying to use what size stop-loss are you going to use

Speaker A

and it'll tell you how much leverage if you're trading forex or you know what your lot size should be for futures now i understand that's probably not the response that you want because you want to have a interactive experience with

Speaker A

your educator or mentor but these are really basic types of things that could be learned and understood and found the solution to by simply doing a little bit of the legwork yourself with that said i'm going to give you one

Speaker A

example here and just kind of like walk it out for you assuming you had ten thousand dollars in your trading index futures and you are using this trade idea that i'm outlining here that i was monitoring in the afternoon session

Speaker A

ten thousand dollars is equity you want to take one percent risk per trade so you're gonna take that ten thousand dollars times it by point zero one that's going to give you a figure of one hundred that's one hundred dollars that's what

Speaker A

one percent of ten thousand dollars is that means that's the total amount of risk that you're willing to assume we determined from the hypothetical entry of your demo account at 37.54 and three quarters and a stop at 45 and three quarters that's nine points

Speaker A

or nine handles okay that's what that nine is so we're taking the dollar amount which is the one percent of our equity giving us hundred dollars or one percent of ten thousand dollars total movement that we're willing to

Speaker A

absorb as a risk or a stop loss is nine points so we take nine divide that into one hundred that gives us eleven okay 11 times we can get the figure 9.

Speaker A

that 11 if we're going to trade a mini or e-mini futures contract on the s p the multiplier per contract is 50 bucks so divide 50 into 11. you can't so you right away you know you can't trade a

Speaker A

mini if you're gonna be risking one percent so you have to drop down into the micros so now we have 11 with a multiple of five so micro lot on e-mini micro instead of fifty dollars per point it's five dollars per point

Speaker A

so how many fives can you go into 11 with it two so you can do two micro lots now this might not be for you because when i do risk management i don't really factor in commissions i'll just do the math like this so you

Speaker A

might look at that and say well what about commissions that might not allow me to do one percent if you're going to be very hard-lined about the risk management and i get it some of you should be like that in the beginning

Speaker A

but as you get more experience you'll start thinking oh you know the covered costs of commissions and such over time it's fine i'll work that out but for risk management just for the entry to stop loss not factoring

Speaker A

commission costs and fees with your broker or spread okay all those ideas need to be considered but we're going to assume that they're not going to be considered for this example you have to figure that out on your own if that's how you're going to

Speaker A

do your risk management but for me i don't ever factor in the cost because costs are always going to be they're like taxes you can't avoid them so just you eat it okay so you can do two micro lots

Speaker A

at five dollars per point making profit or taking in drawdown or loss per point fluctuation so if we're buying at 37.54 in three quarters and we're risking nine points how much money is that ninety dollars risk so we're under

Speaker A

one percent so we're not even risking a full one percent our target is 25 and a half points or 255 dollars because two micro at five dollars at the multiplier of each point two times five is ten so you're making

Speaker A

10 dollars per point because you're holding 2 micros so 25 and a half points here at 10 total multiplier based on the two micro lots which would be basically two and a quarter percent return so you're gonna risk one percent to make

Speaker A

two and a quarter percent on one intraday scalp here and then you have another one here and if you were trying to do shorts over here you could have done something equivalent to that as well so it's not hard to make

Speaker A

one to three to five percent in one day with intraday price swings the problem is you're going to get over excited and think that you can do every single fluctuation in price action and these types of movements while they're

Speaker A

exciting when you do the math on them and you see the potential a lot of times people say well one percent i can't make money with one percent man you can make a lot of money with one percent okay

Speaker A

if you if you can make one percent a day that's enormous because that compounds over time and it's not a matter of saying well if i make one percent a day and i do that monday through friday that means i

Speaker A

need five percent of the end of the week or 20 for the month correct that's what most of you are probably thinking right now when in fact you're actually able to get 22 a month because of the effects of compounding if you do one

Speaker A

percent per day trading monday through friday four weeks average per month one could make 22 percent a month now 22 percent a month is phenomenal like that's ridiculous rates of return professional money managers and fund managers don't try to do that for a

Speaker A

whole year some of them do anywhere between 12 to 15 percent a year and they call that an ex stellar year and if they make 20 or more you know that's a blockbuster year and their parade around in front of

Speaker A

their clients thing exceed that type of return and bolster their confidence to put more money in that's usually when they'll say hey you want to allocate more money because they get paid to do that well one percent is in my opinion obviously you know it's

Speaker A

not going to be the case for a new student or a new trader but my opinion one percent every single day is unrealistic but for a seasoned trader one percent average per day is really easy but you're gonna have to get the

Speaker A

experience to do that and again that also equates to the average of one percent so in other words if i have one trade a week and i make five percent that's equivalent to one percent a day for the week i'm not going to sit in

Speaker A

front of the charts to try to make one percent each day it's it's not reasonable for me i have things i have to take care of i have businesses to run and family to tend to and i can find setups that

Speaker A

i can frame and make you know five percent on one set up or first partial of a trade so it's a matter how you're gonna form fit this for yourself okay and obviously the best scenario would be if you're going

Speaker A

to be eventually getting to the point where you can risk two percent you can do this framework for one limit order to be buying at 37 54 and three quarters use to stop as explained here and do a second order the same way but

Speaker A

don't use this as your profit objective use this short term high here or the target i was outlining 3805 and a half and then you would be able to get a run from here to here on one that

Speaker A

would close out and then the second one would hopefully run up in here and get the daily range and you can do obviously better than you need two and a quarter percent just on this one you'd have two and a quarter

Speaker A

twice because the one that you bought down i'm sorry the one you bought here they got out here that's your banked two and a quarter percent hypothetically then the second one would be running here and then rolling through that level up to here so

Speaker A

you could be making as much as four and a half percent more on the second position so what are you really making six and three quarter percent one day two orders one trade and a lot of you guys are trying to do

Speaker A

those funded account challenges and they give you like you got to make 10 to do this and that if you learn how to trade and you learn what i'm teaching you folks listen those numbers are achievable but you have to know what you're doing

Speaker A

and also how to weather drawdown drawdown would be having your account reduced from either its starting balance or after you've made equity increases you start taking losses that's drawdown well that drawdown has to be managed so if you have a trade

Speaker A

and for instance say you took this hypothetical trade here with one order and you got in at that 37 54 and three quarters and you got stopped out down here okay you would have taken less than one percent loss

Speaker A

so your next trade you should do half of one percent why because number one you have emotions psychological impact of taking a loss you're going to be most likely wanting to have revenge and you're probably going to want to do

Speaker A

more leverage than you should and you're probably going to want to get it faster than you should in other words being patient is not going to be the right thing for you you're going to feel like impatience is

Speaker A

eating at you so therefore you have to get right back in there and try to get your money back and that is a loser's cycle gambler's mentality so by reducing the risk on your next trade once you take a loss

Speaker A

then you have to make back fifty percent of what you lost so in this case if you would have got stopped down here we'll just round it to a hundred dollars with commission you have to make fifty dollars

Speaker A

back before you can go back to your full one percent risk and that's it's easy that's easy to do it's not easy to follow this logic so what happens if you take that second trade and risking a half of one percent

Speaker A

and that trade gets knocked out to a loss what size you use on your next trade one quarter of one percent and that's obviously the lowest you can go with so you have to determine what your risk is

Speaker A

and it's going to obviously reduce the number of trades you can take that's why i tell everyone you know there's a lot of you out here that are starting on a shoestring meaning you don't have a lot of money

Speaker A

and you're trying to speculate with live funds with a fifty dollar account or a hundred dollar account and i get it i understand it's hard if you don't come for money if you don't have the resources where you are you know

Speaker A

globally it feels like you're out of reach learn the skill set okay i promise you if you learn the skill set you can do funded account type things as a venture or find partners that'll come in with you you don't need the money it

Speaker A

doesn't have to be your money you can make a lot of money with other people's money but funded accounts provide a way for you to go in with a very small amount of money and you learn the skills that i'm laying

Speaker A

down here in public you can walk right into anyone's funded account challenges okay if you want to call it a challenge and just walk right through it and take it over and then secure whatever size account you're trying to go for

Speaker A

and then trade it soberly you aim for 10 a month 15 a month and just make that and stop don't try to push it don't try to get rich real quick you want that 10 to 15 a month

Speaker A

coming into your hands after the split that you do with whatever that account is when you're registered with whatever funded account company that's helping you find the scratch to get started but knowing how to manage that drawdown will keep you from going into obviously

Speaker A

blowing your account it'll control the equity drawdown it won't be a sharp jagged falling off a cliff it'll be you run up to new equity highs and you have a losing trade which is reasonable everybody has a losing trade you might

Speaker A

have a series of losing trades but if you take a one percent loss and then you take another loss at half of one percent you take another loss at a quarter of one percent you're only down one and three quarters

Speaker A

percent that's not a lot of drawdown but you've now taken three losing consecutive trades that's easy to come back from versus taking one percent loss then saying okay i'm gonna double up and try to make it back with two percent

Speaker A

risk because i don't have to just get half the position movement i took as a loss and then you take a full two percent loss now you're down three percent on two trades then you go and again thinking well i'm gonna do it again with

Speaker A

two percent or worse you go higher risking three percent or four percent and then you don't use a stop or you move your stop opening it up with more risk and then suddenly it's very easy to fall into ten percent draw down

Speaker A

and then it becomes a psychological wrestling match where now you feel embarrassed you're shamed you feel like you have to have it back otherwise you're a failure when professional money managers they don't care about being in drawdown they care about managing their

Speaker A

expectations and the discipline that's required to operate and engage they are not allowed to touch their account when they're highly charged or emotional so that's all part of risk management it's not just the numbers game it's a psychological game too but you have to

Speaker A

manage that and quell that whole desire to get right back to where you were before you took that loss that feeling comes because you are an infant in this industry and that's not a knock against you okay it's the truth if you were working with

Speaker A

me one-on-one and i was standing in the same room with you i would say it to your face you're an infant if you think like that it's infantile to think that way it's not a rude comment it's the facts

Speaker A

because you want to get your toy that was taken from you back right away and you don't need it back right away when you have a loss or if you go through drawdown the professional money management views it as it's a loan that

Speaker A

you're going to collect interest on when a bank lends out money is it crying about how it had to give out your down payment for a home or your boat loan or some other purchase that you made a loan with them with are you are

Speaker A

they upset about giving you that big lump of money no no are they expecting to get it back right away no no in fact they don't want you to take it and pay it off real quick because that's their business model they

Speaker A

want to lend out the money and get as much interest as possible so while we don't want to leave drawdown in long periods out there we look at or at least i look at when i take a loss if i

Speaker A

go into drawdown it's just alone i know i know i'm going to get interest on it because my career isn't going to be framed by the last five trades or the last five weeks or the last five months or last five years

Speaker A

i have a long-term view and that's the problem with being an infant in this industry it's too easy for you to want to quit because you don't see past what's happened to you right now or what happened to you last week or the

Speaker A

last trade and that last trade that one singular event you've made such a monumental experience out of and it's make it or break it every single trade is a make it or break it i've read two people one on twitter and

Speaker A

one on the comment section of the videos i have and they're basically saying yeah i think i'm packing in i can't do this and if that's true congratulations you you found where your breaking point is and you're not willing to go any further

Speaker A

into that and if you know yourself well godspeed but there's a lot of folks that get frustrated and if you're going to quit you're not going to post it on the internet you're not okay i believe these individuals that do that

Speaker A

they just want to be encouraged like don't don't stop me that's it's a cry for help because honestly if i would have had that as a medium when i was coming up i would have went on the internet and

Speaker A

said help i'm gonna quit somebody stopped me from quitting i'm gonna walk out the door it's kind of like a relationship when your lady wants to leave she's like i'm leaving you and she really doesn't want to leave she just wants to see what your

Speaker A

reaction is going to be as you see her walking towards the door or grabbing a couple things of her clothing if she's going to leave she ain't telling you you're going to come home and her stuff is gone

Speaker A

and if you're going to quit this industry you're not going to talk about it you just ain't going to be here anymore so again roll your sleeves up just understand this is what it's like to be a trader

Speaker A

you're going to be in periods where it's very difficult and no matter what you do what you follow what i taught you what somebody else taught you whatever worked in the past you are going to encounter losing trades plural

Speaker A

you're going to do it wrong you're going to have an expectation in the marketplace it isn't going to pan out like you thought guess what that means you may take a monetary loss and that's a tax on success

Speaker A

you have to pay it nobody gets around that nobody gets around it and some of you in here for whatever reason think that you're going to stroll right on in here because you're going to be the exception to the rule and guess what folks i'm

Speaker A

promising you you aren't that special if i wasn't that special nobody's exempt from it you all we all every single speculator has to pay their toll and occasionally guess what the ferryman's got his bony hand holding out waiting for you to drop whatever the

Speaker A

next sacrifice of your losing trades gonna be and you have control of how bad that's going to be you limit it but you have to do the math and stick to it otherwise if you trade willy-nilly whatever happens i don't really use a

Speaker A

hard stop but i know when i want to get out i hate hearing traders say that that's so disappointing to hear because really what that is communicating is you really don't have it together if you don't know where to place a stop

Speaker A

loss you really don't know what you're doing you don't so with this model i've removed that guess that mystery your hard stop needs to be placed period if it gets hit it's done you a favor period but if it does you that favor of

Speaker A

protecting and limiting risk it's your job as the trader to listen to the analyst next trade it provides you'll have to manage the trade with less risk because you have a task now you have to come out of drawdown

Speaker A

no matter what the drawdown is you have to come back incrementally so let's assume you do a two percent risk trade and you lose the full two percent your next trade you could only risk one percent and it would be basically what

Speaker A

i'm showing you here with one contract or one limit order not contract it would be the equivalent of if you're doing two percent you would be doing basically four micro lots entering at 37 54 and three quarters hypothetical entry on the demo and your

Speaker A

stop loss at 37 45 and three quarters nine points risk across four micro lots twenty dollars per point okay so if you take that full loss at two percent your next trade you can only do what's being shown here

Speaker A

one percent risk and you've got to determine where is your trade defined in terms of points or pips if it's 4x how much of a stop loss do you need in this case we're using this factor here okay nine that's the number of points

Speaker A

that's required for the stop for this particular trade not every trade is going to require a static nine point stop sometimes you can do a stop you know with five points it's hard i'm not suggesting that you should be trying to do that but other

Speaker A

trades are going to require you to do what more than nine might be 10 might be 12 points so you have to consider what that's going to do for you in terms of risk management and eventually you may get to the point where you lose

Speaker A

so much in drawdown that you really can't technically do one micro even if you have the margin to cover it so that's why it's important for you to be very diligent about managing your risk and controlling drawdown don't think oh

Speaker A

well you know i'm gonna start off with one percent and then once you make a trade and it's easy think well i can do three percent because if i can do three percent risk and i get a multiple

Speaker A

of five r hmm i can make 15 one trade and what if i do that every day even better what if i do that in the morning session and in the afternoon and if i can do that why not lose sleep and trade london

Speaker A

too well that's 45 in one day good grief i could probably quit my job next sunday i did that kind of stuff folks it doesn't work like that doesn't work like that at all so you have to use low threshold

Speaker A

objectives and work your way up from that your career is not going to be 10 trades and you made it no longevity controlled risk impeccable risk management that's how you get here that's how you arrive at consistently profitable and

Speaker A

losing trades don't mean anything despite anybody watching you if you do it publicly a losing trade is nothing but a tax on success that's it all right stop management this is going to close the mentorship in terms of the teachings and past this

Speaker A

video i'll be doing obviously reviews and topical studies when i feel led to do so but as far as the model itself and the mentorship okay for youtube this free series i did this is done and you'll have everything

Speaker A

that you need here every i'm confident in saying that what has been provided to you after this discussion here you have enough and obviously the things i taught you on youtube channel and other lessons and maybe other future lessons i make do

Speaker A

they'll just be amplifications and help you refine what this has already given you freely but stop management okay when you place your stop loss down here when can you and when do i move my stop-loss well you have to determine where you're getting

Speaker A

in at and where you're trying to get as a target so that's your range from 37 54 and three-quarters to 37 80 and a quarter so technically 25 and a half points okay so what is that 12 and three quarters

Speaker A

points something like that let's round it to 12 and a half points if we see price move 12 and a half half points above the entry point that you entered at if it moves twelve and a half points your stop loss can move 25

Speaker A

percent up from where what's 25 of what range where your stop loss is and your entry so split that range in terms of points if this goes up 12 and a half points which would be 50 of the expected range

Speaker A

then your stop loss can be reduced or trimmed down to 25 so it's going to give you that little bit of a cookie that feel good moment you trimmed some of the risk you're not jamming it up up above to

Speaker A

break even because you're going to worry about it you're just moving a little bit now when price moves to 75 percent of the expected targeted range and it means from your entry to here if it moves 75 of that then the stop goes to break even

Speaker A

period there's your systematic movement of your stop-loss you're not jamming it to break even you're not gonna be worried about getting stopped out you're gonna be more likely to be watching does it still keep reaching for your objective

Speaker A

do down closed candles keep supporting price does it run below short-term loan and run higher with a lot of energy because it took short-term sales stops out is it dropping down to a fair value gap and re-accumulating and sending another

Speaker A

higher price leg higher that's what you're watching that's the things that you're looking for and as long as it's doing those things collectively or individually you are one side that means you're on the right side of the market and keep holding for your

Speaker A

position to hit target if you are doing multiple positions say you're doing competition level leverage and for me that's anywhere between the range of three percent to four and a half percent then you're going to be looking to take

Speaker A

partials okay and that partial might be you know once it goes 20 points in your favor you have a static number it always hits 15 or 20.

Speaker A

once it does that you no matter what you're doing you take something off okay that's something you might want to incorporate in your own trading model as well but that part is for you to determine don't let me give you static

Speaker A

rules that are considered you know cast in stone ironclad can't change it you know i hate doing it with my students because it takes away the uniqueness the individualism that you're bringing as the trader to your own model

Speaker A

so these are just basic foundational points that i think will serve you well but you're going to obviously evolve and come up with better ways that meet your expectations and also fit your personality okay so i think that's going to be it and i

Speaker A

absolutely want to congratulate all of you that if you've gone through every single one of these videos if you've done the work and back testing and looking at things and studying and you're convinced that the pattern's really there

Speaker A

kudos to you okay for those that have not got it yet my encouragement is for you to keep doing it and i promise it won't take you long in fact if you just started and you just found this channel

Speaker A

i promise you if you give it six months you'll see things that you never saw before but at the end of one full year because it might take some of you to do that you'll have it you'll understand what

Speaker A

you're looking for doesn't mean you're going to be trading every single day it doesn't mean you're going to know the bias every single day doesn't mean you're not going to have losing trades it means that you're going to know what you're doing and even

Speaker A

though you may have short term hardships with being stopped out or missing moves or reading it wrong you still will have enough faith in this model because you know it will repeat in the future more times than it fails

Speaker A

and i'm challenging you to determine whether that statement is true or not until next time good luck and good trade

Topics:ICT mentorshipE-mini S&Ptrading reviewmarket structurefair value gaprisk managementFed Chair Powellliquidity zonestrading psychologyprice action

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