Original subtitles

One of my focuses is less than six February, 2017.

ICT mentorship swing trading's.

Our topic for this month is teaching is going to be focused on reducing

risk and maximizing potential reward.

Swing set up.

Okay.

Reducing risk is begins with knowing your maximum risk purchase set up or trade.

You should not allow high risk percent portrayed.

This equates to gambling, obviously, and professionals.

When they're trading, they look to frame, set us with low risk and high reward.

Now with swing trades, we're only focusing on framing the monthly and weekly levels.

Ideally.

So when we look at monthly and weekly levels, that it means the

PD arrays for a premium, we're looking to sell those levels.

That means we're looking for bears, shorter blocks, bearish liquidity,

voids the trade up into the sell short, optimal trade entries.

Bearish.

Uh, fair value gaps.

Um, we're looking for old highs, the short of false break above

we're looking for rejection blocks candles that have real long wicks.

We're going, gonna look to try to sell above the bodies of those candles.

We're gonna be looking to sell it old lows and old highs either.

Or that same thing is seen as a premium or obviously everything in reverse.

We're looking for a.

Mitigation blocks breakers.

Well, shorter blocks voids below us or lows and old highs and rejection

blocks with candles to have long wicks.

We'll S we'll look for cell stops below the bodies of those

candidates before I rejection block, and by only framing trades along

those monthly and weekly levels.

Now, again, I elect to use order blocks in the teachings because to make the video.

With every possible scenario, it would be ridiculous in terms of length, but you're

looking for, in terms of the PD array, matrix, everything above you, you go in

the order that that matrix shows you.

And again, there may not be a void.

There may not be a fair value gap, but as you progress through that list from the

bottom up for premium PDRs, and from that list top down for the discount PD, right?

That's the order in which you hunt the current range of trading him by

using those levels or those arrays on the monthly and weekly charts,

it will give you the context of what you're going to be trading off of.

If we see the market is going to give us a mopping weekly level for

bearishness, we're going to be looking for monthly discount arrays to reach into.

And we're going to be looking for the very first one in the list

that may be a mitigation block.

It may be a Bush breaker.

It may be a liquidity void it's below us, again, anything in terms

of the discount PDRs, that will be our objective on the monthly chart.

So you're framing the trade on the monthly and you're framing

the objective on the monthly.

So you're in looking for massive amounts of range.

So even though.

These ranges are huge.

Many times traders.

If they are trying to trade big moves like this, they still maximize their

leverage and he still maximize their risk.

And there's no reason to do that.

Don't try to put too much risk on your trade and try to get

rich in a handful of trades.

It doesn't work.

Don't try to double your account every single month.

It's not, it's not necessary.

And especially for some of you that are in his mentorship that

are aspiring to be fund managers, you simply don't want to do.

You want to keep your risk really, really small, because that sells your

business model to a potential clients.

When they see how very low your risk is and how consistently

you're pulling in returns.

And as we're going to outline in this teaching, how we're going to

get those returns to be really big in relationship to the risk that.

Again, looking at higher timeframe, PDRs and using for our entries.

This is going to permit your setups to have tighter stops now.

Obviously, if we go into later teachings in this mentorship, you'll

be able to reduce the risk even more than we're going to outline in here.

But for the average, Jonas, you know, operating a business or working a job,

a desk jockey, someone has no real free time to be in here day trading every day.

You don't need anything less than a.

I think if you can't check your phone a couple times throughout the day and

you don't need a whole lot of time checking it, but you just need to be

able to have access to a four hour chart.

And many times you're going to see that the setups ACCE are around,

uh, the, the close of the day.

You'll be able to do a lot of these trades framed the day before or the night before.

So it's not like you have to be in here every five minute basis

and checking it all the time.

By using the hard timeframe arrays as we discussed a moment ago in reference

to the monthly and weekly levels.

If we are looking for that, the frame, our trade, think about the massive

rains that could potentially be there.

And then we're going to reduce down to a four hour timeframe to frame

the entry by doing so we remove all the necessity, have a big, huge stop.

As we discussed in the position trading methods in January.

We were framing an entirely on a daily chart.

Now I'm not going to rehash the entry techniques that was taught in January.

I'm going to refer to you back to that same limit order and buying.

I want to start.

So I'm going to stop those entry patterns or those entry techniques.

They're going to be applicable to your swing trading.

Okay.

So just go refer back to those previous lessons that we don't have to do a lot

of rehash, but those same entry patterns.

Used with your swing trades on a four-hour basis.

Those patterns for entry can help you reduce your risk.

Now, if we are focusing on these maximum timeframes, monthly and weekly, and

that's giving us the context for our trade again, the range is being very large.

Monthly ranges can be several hundred pips.

Weekly range could be a couple hundred pips daily, a hundred pits or so.

By having a four hour, it reduces the ranges to a smaller, more

conservative number in terms of what we can frame our risk around.

Use nothing less than three to one reward to risk ratios.

Now I say this as a reminder, but you're going to absolutely have a

difficult time having trades with just three to one using this criteria.

In many times, it's going to be five to one, 10 to one is not unheard of.

And we'll show an example in this teaching and actually give you a homework

to go in and look for other ones.

Three.

Oh one is easy.

And when you treat with reward to risk ratio conditions, you only

need to be accurate 30% of the time to be profitable, nothing

about you can lose 70% of the time.

If you're trading with three to one reward, the risk, imagine being wrong.

70% of the time and only right.

30% of the time and still being net positive, being profit.

Being wrong that many times.

Now, if you compound that with the fact that you can get with five to

one, 10 to one reward, the risk, how many times can you afford

to be wrong in those conditions?

You could be wrong a lot and still be extremely profitable.

Now leverage is your holy grail and swing trading.

Okay.

You're going to look to control your leverage and you're not trying to maximize

it just because your broker's trying to give you 50 to one in the states.

And who knows where you're at in the, in the globe where they're trying to

give you a hundred percent or more.

I don't know.

I don't keep up with anymore.

In terms of who allows, what brokerage firm did you give that type of unheard

of leveraging, but I'm going to be Frank.

Uh, you don't need that much, you know, and futures is about 10 to one generally.

It's that the, uh, the leverage you get when you're trading commodities,

uh, Forex in states, we have a maximum leverage benchmark at 50 to one, and

you don't need that to get wealthy.

You certainly don't need that to get wealthy, um, in

a very short period of time.

And I'm not trying to define it in terms of late weeks or months,

but you can certainly get there before your 401k would give.

All right.

So maximizing the reward.

Okay.

This is obviously what everybody does when they're trying to trade to try

to get the most bang for their buck.

Well, the key is only trade on higher timeframe, monthly and weekly level.

We already said this, but I have to keep beating it in your head because you're so

interested in these lower timeframes, not so much now because we've been spending

such a long time on the hard time frames, and you've seen the importance of it.

But these higher timeframe levels, they are exactly what you're

looking for in relationship to smart money place, smart money.

Can't see the five minute order block.

Okay.

The algorithm is this allowing the price to get down to those levels.

And then you're getting responsiveness off that off based on limit orders.

But those responses are really patterned off of a higher timeframe.

That means a daily, a weekly or a monthly, and they layer their orders

just above or just below these levels.

They don't all have the set entry order at the same price.

So when we have these daily levels or four hour levels, there's going

to be a specific level in mind.

For instance can be the big figure.

It could be a 20 level, it could be a 80 level or 50 level, but just above,

it would be, for instance, if we're looking at the, uh, mid figure level

and we're attracting some bullishness, it could be a bullet shorter block

that forms at the 60 level, which is just 10 pips above the mid figure.

But overall they're averaging in and at 50 as a whole, but you

can see order start building.

With the lower timeframes as we'll talk about when we get into short term

trading and day trading and scalping, but we don't necessarily need any

of that to get involved with these types of trades using a four hour.

So timing for our entry on hard timeframe levels that offers

the maximum are multiples.

Now what's at our multiple that's your reward.

On the, the risk that you're associating to that trade.

So if you're trying to get a multiple of say five or get five are on your

trade, you're trying to get $5 for $1.

So if we're framing our trades with nothing less than three to one, and again,

it's very, very hard to find a three to one trade on these types of setups.

Many times it's like I said, five or higher, sometimes 10, 12, even 15 to one.

In some instances, if you look hard and you wait for the setups to

come, believe me, they are there.

But having these are multiples, that's what professionals do.

We put very little money at.

To get huge price moves, massive price moves in relationship to the overall

risk that we put to our account.

Now, higher timeframe levels to offer ranges of 200 to 500 pips.

They can yield up to 10 R wins.

That means, imagine you put a dollar up, you're gonna get $10 back for that.

How many times do you need to do that over the course of a year, if you're managing

funds to return a return of, I don't know, 20%, 30% where everybody goes as static

as, uh, you know, the industry standard.

If you can hit that me and you're killing it, you don't

have to do very much to do that.

And that's why I'm trying to stress that if you think you have to trade a lot to do

very wellness business, you are mistaken.

Because you can manage other people's money and get a great

deal of money doing that.

And you very little trading the public to the uninformed money

that place funds in your hands.

They're basically uneducated.

They assume for general principle that you're in here every day, like a.

Basically like you've been doing before you joined us mentorship every single day,

scouring over into the charts, working your rear end off to get very little.

So if your clients think that you have that work ethic and you're

working very, very hard when you're really not working all that hard,

that's why these fund managers live the lifestyle they have because they

do very little to get what returns.

They put very little risk in there because they don't want to scare the

clients away with a lot of drawdown.

But if they take big, massive moves out of the marketplace with very

small risk, it looks amazing on paper and it compounds the bottom line.

And it's a very handsome reward over the year.

Now, granted, some of you are probably thinking I don't want 30%, Michael.

That's just simply not enough.

I need more than that per year.

Let me tell you something.

When you have $10 million and you're missing.

And you show a 30% return.

Believe me, you don't just keep $10 million.

People will start knocking on your door, beating your door down,

ringing your phone off the hook.

Please take my money.

Large, big buyers, large investors will be beating your door down to get

ahold of you so you can manage them.

And remember there's typically one to two swing trades per every four to six weeks.

So about a month and a half or so, about a month, month and a half generally, you're

gonna get one, maybe two swing trades.

The second one is just basically, usually beginning around that

time, but the frequency is about one every four to six weeks.

And that's a pretty safe assumption.

And if you look at the, the timeframe on a daily chart, you'll see that

that's pretty much the average.

So that means, okay.

Presented a lot of time to prepare for these trades.

You're not over the charts.

Every five minutes.

You don't have to be there every single day.

Either.

You can miss a day.

If you have to, you have a life, you have a business you're on you.

You got to do a business trip or whatever.

You can still swing trade.

You don't need to do a whole lot to do this by removing high

leverage and coupling higher timeframe setups with high RS.

This is key.

So if you can remove the high level.

We're not trading with 50 to one.

We're not trading with a hundred to one, 200 to one or 401.

If they even still allow that anymore, by removing the high

leverage, you can actually trade with just three to one leverage.

That means if you have a $10,000 account, you're only trading with three.

Mm.

And I know it probably just blew your mind.

What?

I didn't come here to learn that.

Sure.

You did.

You came here to learn and be profitable and have risk

managed, low risk, high reward.

The way you answered that equation is number one.

You have to remove your leverage.

Your leverage is going to kill you when you build your positions

up to the point where you can eventually trade at a larger.

Size and say, you get into $2 million mark.

You can start considering going into, and you really should

consider going into prime.

Brokerage prime brokerage will not allow you to leverage your D leverage.

So that means whatever you have on deposit, that's the

maximum you're going to do.

And then frankly, you're not even going to trade with that leverage either.

You're going to actually be under leveraged.

In other words, if you have a million dollars on deposit, you're

not trading with a million dollars.

Many times you're trading with a half a million dollars and then it probably

sounds counterproductive, but you're actually doing very well when you have

those seven digits and you don't need very much return to keep doing very well.

And again, at that moment, at that point, you don't want to risk anything.

You want to keep your risk very small and still allow your big profits

in terms of reward to pan out.

Now, if you consider that leverage the 3d.

Okay.

And you're looking for setups that pay out as high as 10 are.

You can, it can get up to 15%.

So if you're risking one and a half percent on your equity per trade,

and you get a reward of 10 for $1, you're making upwards of 15% on that

one transaction or that one trade.

How many of those do you need for.

Now, these are math.

Say you're getting an average of six really choice swing trades per year.

And I already know some of you thinking, man, this is not active enough.

I need to be doing something more.

Now you don't.

No, you don't.

Well, who says you have to do more.

You're here to learn how to be profitable.

So if you can have a life, do other things outside of trading and still do

exceptionally well, think about it 15%.

If you manage funds.

Okay.

And you're risking one and a half percent risk, and you're using three

to one leverage and you're using an average of 50, 50 pips per stop.

Okay.

When you do that, focusing on just six swings per year alone, and that, that

set up an offering of 10 reward to risk for $1, you get back 10, if you do

that, you're more than doubling that.

I think about that for a second folks.

If you can look for setups that yield 10 to one, and believe me, when you

go through the homework that I'm going to give you in this teaching, you're

going to see just how easy tend to one multiples are defined in swing trading.

If you just take six of them per year, six trades, that's it.

Six trades risking one and a half hours.

Using three to one leverage and about a 50 PIP stop.

You're more than doubling your equity every single year.

Now that's not doubling your money every single month.

It's not getting 25% every week.

It's not getting 15% on your day trades.

It's being very, very conservative.

Very low-frequency.

The opportunity for draw down is very, very low because your frequency

is low and your risk is already predefined at one and a half percent.

You know what you're looking for?

There's a frequency of about one trade every four to six weeks.

And you're looking for ideal setups around a monthly and or a weekly

level by framing these ideas and hunting setups that offer 10.

This will give you the context and framework to double your equity

or your managed fund equity in the course of just six trades

per year, you don't have to rush.

You don't have to take every single swing trade.

If it doesn't look right, just wait.

There's something, setting up something, you know, every four to six weeks, there's

some kind of trade that offers you an opportunity to do something in the market.

But if you're framing the setups on a monthly and or weekly level, these can

offer huge multiples of reward to risk.

All right.

We're gonna take a look at an example here and start giving you some ideas,

how you can flush this out about maximizing reward and reducing risk.

And this example, we're gonna be looking at the.

And I want to take a look at this high here.

The high was born in 2011 in April, and we're using an old, monthly

high, so we're high in the range.

So we're deep, deep, deep in terms of the premium in relationship to

an old high back in 2009 October, we've defined the bare shorter

block, which is the last up candle.

And.

And we've defined the mean threshold of that last up candle as well.

We extended that out in time and we got to April and March of

2011, where we hit those levels.

And we're going to now take that idea and reduce it down to a lower timeframe,

executable timeframe of four hours.

I want you to take a look at this down candle here.

Okay.

So now we're actually going to start looking at the monthly PDF.

So we're trading off of a level of premium of a bare shorter block and focusing

on the mean threshold and below that level would be this old high that will

be the very first discount PDA member.

It's an old high that could be a potential discount PD.

So we have a down candle here, which is an old high that's left or two

left of the entry technique or pattern that we're looking to trade short at.

And that's this level here.

So all we're looking for is the range between that down candles high and

entering up at that means threshold from the order block from October, 2000.

And we're going to say that that levels 1 42 80

drop down into a four-hour timeframe at the same level, uh, going into may, we

can see price trades up into that level.

And we have the mean threshold and bear's sort block noted here, and we

have 1 48 65 is the main threshold.

And I want you to look very closely.

We can see here, we have a, a bare shoulder block last up

candle rate for the down move.

And it's highlight with the arrow above and below it plenty.

And we split the candle and half at the main threshold as well.

And we delineated the low on that for the bare shorter block.

We're going to assume that we're going to use the four hour for our entry.

We're going, looking to go short and we're using.

The mean threshold on the monthly candle.

And it's also the opening of that bullish candle that makes the high,

and we're going to risk a stop.

One PIP above the highest high that candle.

Can we have a 70 PIP stop loss?

The blue shaded area is our potential reward.

The horizontal line.

That's a delineating 1 42 80.

That's that old, monthly high.

This comes to a reward range of 585 pips.

So we're risking 70 pips and there's some of you you're cringing by now.

70 pips.

I can't handle 70 pips, 70 pips.

To make 585 pips.

And you can see that, that monthly, old high, that again is the first

discount PDA rate that we would come to from that high at 1 49, 20 or so.

So basically what we have there is an eight to one reward, right?

So for every $1 we're risking, we're getting a potential

of $8 back as a reward.

So in essence, what we can see here, just in this trade framework, we have

the potential in just one trade to make as high as 12 and a half percent return.

Now that's an amazing amount of money in the amount of percentage for one trade.

And the amount of risk is my Newt compared to the reward.

It's framed on a monthly.

And the objective to take profit is framed only monthly level.

So by framing the PD erase and using the PD array matrix properly, we

can frame trades that have enormous amount of reward, the risk potential.

Again, I'll give you another scenario.

This is going to be homework.

Okay.

Now we're going to focus on this high here or last bullish

candle rate for the down move.

And we're going to be looking at that candle.

As a potential shortnesses for homework.

And I want you to look at the bullshit order block, the last up candle, that

opening price that comes in, we're going to round it to a level of 1 41 55.

I want you to go into your charts on the Euro dollar and use a four hour

timeframe and use the entry techniques that I taught in the position.

Trading concepts for January's content.

Go into the.

Four hour timeframe as price hit that 1 41 55 level.

Okay.

Study down on a four hour and use the entry techniques that I taught

you in January for position trading.

Where would you look to take profits at the first one?

You're going to be looking for the means threshold of that last down

candle in 2010, that we've already traded there once, but I want you

to consider that as your first.

And then you consider the down candle in October that same candles

low, it has equal loads with the green candle to the right of it.

Same here.

That would be your objective looking for an opportunity for a low end swing trade.

So again, we're looking for the opportunities to be short at that 1 41 55.

Using the entry technique that I taught you for position trading in January.

And I want to see the homework shared on the forum.

You can do it in one chart, this poster for our chart and put

it in our February questions in the answer section on our forum.

And I like to see some real interaction this time.

So that means the, I knew that a lot of people doing the homework don't copy.

Everybody's answer.

Don't read through the form first to see what everyone else is doing.

There's no wrong answer.

Just it's again, it's for interactive purposes and for study,

and also for feedback for me is that I can get a collective view

of what you're all dealing with.

The content.

I believe that you'll find it.

There's a setup there as well.

And the reward again here is.

Well, if you consider it's 1 35 as a potential area, as a downside

objective, I mean, 1 41 55, if that's the price you get, and it's probably

gonna be higher than that, that you would use to get entry for a short,

that is over 650 pips for one setup.

So if you can frame your trade with a 60 PIP stop loss, you could find a 10.

To one reward to risk scenario on this trade here, premium PD PDRs, and

then using the monthly discount PD arrays, as we noted here, but to meet

threshold of the last down candle in October, 2010, or are we November?

Actually, probably the downside objective is again, several hundred pips.

So suddenly you start doing these things and you start applying it.

Don't stop here with this example.

For the remainder of the weekend, go through and try to find five examples

somewhere else in another payer, it doesn't matter where at it doesn't

matter what time of year go in and look for a scenario, just using a

monthly and or weekly scenario and frame out a couple of trades, how to

find five that yield at least five to one reward, the risk scenario.

So you have really two homeworks.

Yeah.

The one that I'm giving you here, and then you have a secondary.

We had to look for five scenarios using only a monthly or weekly PDA Ray for

premium or discount, and try to find X listed like this, try to find four, two

buys and two sells using this criteria to frame out swing trades and look for five

to one payouts or potential to pay out.

And obviously you have the benefit of hindsight, and that goes without

saying, but this is how you study it.

This is how you get in there.

And you get excited about seeing how powerful it is.

And how infrequent you need to worry about trading.

You don't have to worry about trading all the time.

You can get in massive amount of return on your equity and doing very

little work, putting very little risk exposure to your account.

So hopefully you found this insightful until next lesson.

I wish you good luck and good trading.