Showing posts with label Day Trading. Show all posts
Showing posts with label Day Trading. Show all posts

Thursday, February 26, 2026

All Five ICT Entry Models Explained | JadeCap

The majority of traders lose money because they enter the market at the wrong time. In this breakdown, I will explain the exact entry models I utilized to generate over one million dollars in just two years, analyzing each one step by step. Although I have been trading for 14 years, it was only in the last few that I truly refined my strategy. It took nearly a decade for me to achieve consistency; consequently, I am sharing my experience and knowledge here to help you shortcut your own journey toward becoming a profitable trader. 

ICT Entry Models: Premium/Discount—Liquidity Raids—Fair Value Gaps—Order Blocks—Breaker Blocks. 

I. Premium and Discount
The first entry model is the fundamental concept of premium and discount. We utilize the Fibonacci retracement tool to define our specific trading range by anchoring it to a swing low and a swing high if we are bullish, or a swing high and a swing low if we are bearish. This allows us to identify the 50% equilibrium level, as well as the deep discount and premium zones.

Discount, Equilibrium, and Premium Zones: S&P 500 (1 hour candles).
 
After establishing these swing points, we wait for a retracement beyond the 50% threshold—into discount for buys or premium for sells—before hunting for an entry. Our objectives are typically a Fibonacci extension outside the range or the range high/low. In a bullish scenario, we wait for price to dip into the discount zone before targeting the previous high or a specific Fibonacci extension. Conversely, in a bearish scenario, we target the previous low or the extension.
 
Discount, Equilibrium, and Premium Zones: EURUSD (15 minute candles).

Regarding execution, candle confirmation is not strictly necessary. For instance, within a bullish range, any area below the 50% mark is considered a discount and serves as a favorable entry point. This model is particularly effective for limit orders, allowing traders to execute without being anchored to their screens. We enter long via a buy limit and place the stop loss outside the range. Because a setup is not technically invalidated until the initial swing point is breached, your stop loss should remain at that level to avoid being "chopped up" by price volatility.

II. Liquidity Raids 
This entry model identifies zones where "smart money" is likely accumulating positions: liquidity raids, commonly known as "Turtle Soup." First, we identify the specific liquidity pool we expect to be raided, such as a Previous Weekly High (PWH), Previous Daily Low (PDL), or session-specific levels like the Asian range.  
 
Liquidity Raids: EURUSD (5 minute candles).

A common mistake among novice traders is entering the market the moment a level is penetrated. Instead, we wait for a candle to close back inside the range. We look for a strong rejection followed by a close above or below the previous swing point. Only then do we enter, placing our stop loss beyond the newly created swing high or low. This ensures a superior risk-to-reward ratio, as it allows the market to signal an actual intent to reverse rather than forcing us to catch a "falling knife."
 
III. Fair Value Gap (FVG)
The Fair Value Gap (FVG) is a three-candle pattern where the second candle is so impulsive that the wicks of the first and third candles do not meet, leaving an imbalance, a "gap." We wait for the market to rebalance by trading back into this zone. 
 
Bullish Fair Value Gap: EURUSD (15 minute candles).

Ideally, the entry should be executed as price moves against the desired order flow. If we are looking to go long, we buy while price is actively dipping into the gap. While many traders demand extra confirmation, the most effective entries often occur when the market looks visually "weak," as this is where you secure the best pricing. 
 
Stop-loss placement can be aggressive (at the gap's edge) or conservative (at the high/low of the first candle). I recommend the conservative approach to give the trade sufficient room to breathe.
 
IV. Order Blocks
An order block is a down-closed candle prior to a move higher or an up-closed candle prior to a move lower. High-probability order blocks are those paired with an FVG. When an FVG rests immediately above or below an order block, it validates the level as a high-probability zone for institutional activity. 
 
Order Blocks and Breaker Blocks: Gold (5 minute candles).

We enter as the market retraces into that order block, anticipating a rejection. For instance, if several consecutive candles form an order block that aligns with an FVG, the bodies of the subsequent candles should respect that level.
 
V. Breaker Blocks
The breaker block combines liquidity concepts with order blocks. It is an order block formed prior to a raid on liquidity that is subsequently broken by a decisive move. If price sweeps liquidity and then aggressively trades through the original order block, that level transitions into a "breaker." We enter on the retracement back into the breaker's range.
 
Breaker Block: EURUSD (5 minute candles).

Stop-loss placement can be complex; I tend to favor a conservative placement because breakers can produce deep wicks that may stop out aggressive traders before the trend resumes. Often, a breaker overlaps with a fair value gap; in such cases, you might utilize the 50% equilibrium of the gap or the high/low of the original order block to set your invalidation point.
 
 
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Ultimately, whether you are utilizing premium/discount, liquidity raids, or gaps, success depends on proper stop-loss placement and trade management. A stopped-out trade does not necessarily mean the setup failed—it often suggests the stop loss was too aggressive for the market's inherent volatility.
 
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Thursday, February 19, 2026

One Trading Strategy for Life: The "Daily Sweep" | JadeCap

The 'Daily Sweep' strategy changed my life forever, powering me to a world-record $2.5 million payout from Apex Trader Funding in April 2024. Before mastering this methodology, I was caught in the cycle of 'strategy hopping,' constantly jumping from one system to the next. That ended here. This approach is the last one I will ever need, and my goal today is to teach it to you in full. By the end of this, you’ll have a clear, mechanical system to help you escape the noise and finally achieve consistent profitability.
 
» Mark all hourly swing points that haven't yet been traded to from yesterday leading up to 8AM.
If we are trading beyond yesterday's price action, use the next most recent day. «
 
Step One: Identifying Hourly Swing Points
Step one is deceptively simple, yet its precise execution is mandatory for the rest of the system to work. Every morning at 8:00 a.m. EST—ninety minutes before the US equity open—I sit down to map out the field. I meticulously mark every hourly swing point from the previous day leading up to the current session. If price action has moved beyond yesterday's range, simply pull data from the next most recent day. This pre-market routine ensures that by 9:30 a.m., I have a crystal-clear map of where liquidity is resting.  

» By 9:30 a.m., I have a crystal-clear map of where liquidity is resting. «  
Higher highs and higher lows or lower highs and lower lows?
 
It is critical to perform this analysis exclusively on the one-hour timeframe. While intraday trading involves lower timeframes, we require the one-hour chart to serve as our higher timeframe anchor to guide our decision-making. In the context of the Daily Sweep model, the hourly chart provides the necessary indication of when we can begin hunting for specific setups. We do not descend into lower timeframes until we receive high-level confirmation on the hourly chart.

To understand this step, one must first master the technical definition of a swing point. A swing low is defined by a three-candle pattern where a specific candle’s low is flanked by two candles with higher lows. Once the third candle in the sequence closes at the top of the hour, the central low is officially validated as a bullish swing point. Conversely, a swing high occurs when a central candle is flanked by two candles with lower highs. Again, we must wait for the closure of the third hourly candle before that peak is confirmed as a bearish swing point.

These swing points are vital because they allow us to identify market structure. When the market creates higher highs and higher lows, it is objectively bullish; lower highs and lower lows indicate a bearish trend. In a trending market, opposing swing points will often fail as the trend continues. However, the market rarely moves in a linear fashion, and we frequently see short-term "runs" on these swing points—where the market raids a low to gather liquidity before continuing higher. As traders, we are not seeking 100% certainty; rather, we are making a high-probability educated guess, ideally with a 60% to 70% success rate, to align ourselves with the higher timeframe trend.

Step Two: The Swing Failure Pattern (SFP)
Once you have identified your major swing points, you must integrate the concept of the Swing Failure Pattern (SFP). Without this secondary layer, the identified swing points are merely arbitrary lines on a chart. An SFP occurs when the price briefly breaches a significant swing high or low but reverses rapidly, failing to sustain momentum and closing back within the previous range. This phenomenon indicates a liquidity grab or a potential trend reversal.

Bullish and Bearish Swing Failure Patterns: When price briefly breaks a significant swing high or low but quickly reverses, 
failing to sustain the move and closing back within the previous range, indicating a potential trend reversal or liquidity grab. 
Why do they work? Instead of trying to anticipate the reversal, this provides confirmation that it is actually happening. 

In the marketplace, liquidity often clusters around these swing points. Traders entering "long" positions typically place their protective stop-loss orders just below a swing low, while "short" sellers place theirs above a swing high. The SFP allows us to capitalize on the moment these stop-losses are triggered. We are looking for the market to run through a swing point and then show a definitive rejection in the opposite direction.

A key distinction must be made: the mere breach of a level is not an SFP. We require a strong closure back within the range for confirmation. For instance, if the market raids a swing low, we do not simply buy the moment the level is touched; we wait for a bullish hourly candle to close back above that previous low. This provides confirmation that the "Smart Money" has entered the market, allowing us to ride their coattails rather than attempting to front-run the move.
 
"In professional trading, you do not want to be the first person rushing through the door. Those who rush in first are often the ones who get shot. Waiting for confirmation allows you to capture the 'meat' of the move rather than obsessing over 'top-ticking' or 'bottom-ticking' the market."

My mentors at a major Chicago trading firm emphasized that this filter saves significant capital. In my earlier years, I lost thousands of dollars attempting to trade "Turtle Soups" or liquidity raids by entering as soon as a level was breached. I would often watch the price drift slightly further, trigger my stop loss, and only then move in my intended direction. By waiting for the hourly SFP closure, we ensure that the lows or highs we are trading against are protected by confirmed institutional activity.

Intraday Execution and Case Studies
Once an SFP is confirmed on the one-hour chart, you can transition to lower timeframes—such as the one-minute, five-minute, or fifteen-minute charts—to refine your entry. The goal is to anticipate that the next several hourly candles will trade in the direction indicated by the SFP.

 NASDAQ (hourly charts): Setups and Trading Examples.

Looking at the NASDAQ (NQ) as an example (charts above), we can observe this pattern nearly every day. On a typical morning, if we identify a swing low and witness an SFP at the 8:00 a.m. candle closure, we can anticipate a bullish expansion during the New York session. In one specific instance, an SFP provided a move with a 3R (three times the risk) return on the hourly chart alone. If a trader were to refine that entry on a five-minute chart with a tighter stop-loss, the reward-to-risk ratio could be significantly higher.

All Five ICT Entry Models: Premium/Discount, Liquidity Raids, 
Fair Value Gaps, Order Blocks, and Breaker Blocks. 
 
It is important to note certain market conditions, such as holiday gaps. For example, during the period surrounding Thanksgiving and Black Friday, the lack of overnight data can make SFPs "sketchy" or unreliable. In such cases, it is often prudent to wait for the market to return to normal volume. However, on standard trading days, the pattern is remarkably consistent. Whether the market is trending or ranging, plotting the previous day's swing points and waiting for a session-open SFP—during either the London or New York sessions—provides a crystal-clear roadmap.  
 

ooo00O00ooo
 
I encourage you to perform your own "homework" by backtesting this on your charts. Plot your hourly swing points, identify the swing failure patterns, and observe how the subsequent hourly candles behave. This is the exact strategy I utilized to generate millions of dollars. While many traders have access to profitable strategies, they often fail due to a lack of discipline. I struggled for ten years before I was able to make this work, but by sticking to this one clear system, you can finally overcome the cycle of inconsistency.

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Friday, August 1, 2025

The Thursday-Friday-Monday Pattern | Tom Hougaard

What happens when we start out trading on a Monday, and the previous Thursday’s high was higher than Friday’s high? Over the last 52 weeks, there were 21 instances where the price action on Friday was unable to trade above the highest point of the previous day, Thursday. I then looked at what happened on the following Monday. If there was a holiday on the Monday, I would view the price action on the Tuesday. Let me show you some examples:

When Thursday’s high was higher than Friday’s high, Monday traded below Friday's low.
 
Considering the random nature of the markets on a day by day basis, there shouldn’t be a pattern, and if there is, I have found an edge to exploit. I was surprised to find that on 20 out of the 21 occurrences, the Dow traded lower on Monday, often lower than Friday’s low. 
 
Here is how to apply this strategy:
1) Switch to the daily time frame.
2) Confirm that Friday's high is lower than Thursday's high.
3) Mark the low of the Friday candle.
4) Move to a smaller time frame for entry.
5) Wait for the price to reach a bearish fair value gap.
6.) Enter a short position, expecting the price to hit Friday's low on Monday.
7) On Monday, monitor the regular New York trading session.

I am not in the business of deluding people, so here is an example where it did not work: 
 
It did not work: Monday did not get below the lows of Friday.  
 
And here is one I traded earlier in August 2019. I went home short over the weekend –always a very risky strategy – and I was rewarded for it (this time!):


I assume you notice that there are often gaps associated with the Thursday-Friday-Monday pattern. Gaps are an inevitable part of trading life. 

  
then how often is Thursday going to trade below the low of Wednesday?
What happens to Monday if the previous Friday trades below the highs of Thursday?

 
oooo0O0oooo
 
But is that actually true: does Tom Hougaard's Thursday-Friday-Monday Pattern really has an edge? Here are the results of the respective 2003-2025 backtests for the S&P 500, Nasdaq, Dow Jones, and Russell 2000:
 
S&P 500: 472 setups; 231 wins: 48.94% win rate: No edge.                            
Nasdaq: 449 setups; 249 wins: 55.46% win rate: Slight positive edge.              
DJIA: 458 setups; 223 wins: 48.69% win rate: No edge.                            
Russell 2000: 464 setups; 258 wins: 55.60% win rate: Slight positive edge.
 
 
                            
 
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Wednesday, February 26, 2025

How Algorithms Impact Market Direction: 80% of Breakouts Fail | Richie Naso

The first thing you need to truly understand is that algorithms control the stock market; not the large institutional players, not the massive hedge funds, but price auction algorithms. Algorithms are there to create volatility and liquidity; they have no mind, they are programmed to go to technical areas, certain levels, to take out buy and sell orders. 
 
The market operates on a day-to-day basis with both premium and discount levels. When the market moves toward a premium level, the algorithms target that area to create liquidity. Conversely, when the market moves lower, the algorithms aim for the discount area to generate liquidity.
 
 Equilibrium Level and Premium -Discount Zones.

Algorithms dictate the direction of the market, especially in the near term. The mathematical equations used in these algorithms are designed by humans, based on historical data. 
 
When the market is trending lower and algorithms reach a significant technical level (support/resistance, supply/demand zones, previous highs and lows of sessions, days, weeks, months, imbalances, order blocks, 50%-levels, round numbers, option strike prices) and the market is trending lower, algorithms will activate and target that technical area. They recognize that the area is a support level. They also understand that they can manipulate investor emotions to make them believe that the market is bottoming out. 
 
Premium-Discount Zones for Short and Long Setups.

As a result, when the algorithm hits that technical area, it aims to trigger emotions that lead investors to sell or short in response to what appears to be a breakdown. These breakdowns are often referred to as "failed breakout trades," and they tend not to succeed. In fact, they fail in more than 80% of cases.

 
 » Some of the best trade setups are failed breakouts. «

Why? Because it’s a contrived effort by the mathematical logic of the algorithms, designed to make investors do exactly what the algorithms want. The goal is to get people to go short at the bottom and encourage long investors to sell their positions at the lowest point, clearing the way for an upward movement. 
 
First, shorts need to be covered. Then, longs who sold at the bottom will be motivated to buy back shares, creating another emotional impulse. Typically, this leads to a poor trade for those who sold too early.

» The goal is to get people to go long at the top. «
 
The same principle applies in both directions—whether the market is moving up or down. For instance, in a false breakdown, algorithms may manipulate the market to sell. In a false breakout, they may prompt buying. In both cases, the effect is similar: short covering and long investors buying at the wrong time. To sum it up, the algorithms exploit emotional responses. 
 
There is no support for short positions when the market is trending down, and the longs who are caught at the top are forced to sell. This creates the momentum for the market to move in the opposite direction.

 » 80% of Breakouts fail. «

This is why some of the best trades are failed breakdowns—buying against technical levels that are collapsing. This is when and where you should buy, while everyone else is being pushed out of the market. You don’t want to short a failed breakdown in a technical area, nor should you buy a breakout in such an area. Instead, you should do the opposite in these situations. 
 
» Algos do what they are programmed to do. They take no prisoners. «
 
My most successful trades, without question, occur when stop orders are triggered. People use stop orders to protect themselves from losses. This is where you should enter the market—against stop orders. If stop orders are triggered and the market has to sell down, you should buy. Conversely, if stop orders are triggered on the way up, you should sell. The key is to position yourself on the other side of stop orders.
 
To sum it up, algorithms are written by programmers, and have to be designed to go somewhere. Where do they go? To technical areas. Those algorithms are heading there, without a doubt. They aim to shake out longs and get people to go short or vice versa. 
 
So, what do the smart players do who are at the bottom of these algorithms, scooping up all this action? They feed into these people. That's the purpose of algorithms. We take advantage of what they give us. Printing money. That’s what we do. And we do it every day. 
 
You need to know the technicals, the levels, and pay attention to them. Technical areas are borders, and price history is how you identify and track them. Do multi-time frame analysis; understand what failed breakdowns and failed breakouts look like; double bottoms, double tops, pin bars, three-push-patterns, three-bar reversals, and M and W patterns, all the way down to the 1-minute chart. Find out what else VWAP, EMA (9), and Keltner can do for you.  
 
Wait for price to get to technical areas, and for reversal setups to form. Price to price, level to level, zone to zone. Don't chase trades; scale into them, as single-entry trades will kill you. Understand position management; know your stop-loss level, take-profit targets, and your R, and take what the market gives you. Consider taking partial profits and holding positions through a session close or daily close. Journal your trades; some of your best trades will be losing trades that help you learn valuable lessons. Keeping things simple is the key to success as a trader.

See also: 
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Monday, January 20, 2025

How Markets Move: The Natural Cycle of Range Change │ Larry Williams

Markets typically shift from small ranges to larger trend moves. When the market is in a large trend move, wait for it to settle into smaller ranges before getting involved. This gives more reliable setups when the market trends again. Market tops generally occur when the price closes well off its low, while market bottoms happen when the price closes near its low. Most traders get emotional during these times, buying at tops and selling at bottoms. Once you understand this, it becomes easier to make smarter trades.

Small Ranges Beget Large Ranges. Large Ranges Beget Small Ranges.

Markets move from congestion to creation (expansion), transitioning from small ranges to larger, more defined trend moves. A small range signals buildup, and a large range signals an impending trend. If I see a small net change from open to close, I know a large trend move is likely coming and am prepared to act on it. Here’s an example using the NASDAQ: Notice how volume fluctuates throughout the day: heavy volume in the morning, a dip in the middle, and a surge towards the end. 

"U" shaped intraday: Heavy volume in the morning, a dip in the middle, a surge at the end.

This pattern is consistent across markets. It’s like a freeway: traffic is heavy in the morning, dies down in the middle of the day, and picks up in the afternoon. Understanding this helps day traders identify opportunities in the morning and towards the end of the day, while avoiding the midday lull. Volume drives range, and large ranges happen at the start and end of the day. This is when short-term traders make money. We need volatility and large ranges to profit.

 There are three key cycles in market behavior: 
(1) small range/large range, (2) moving closes within ranges, and (3) closes opposite openings. 
All three cycles work equally well in any timeframe and market.
"Do yourself a big favor: Mark off all the large-range days [in the chart above], and then study the size of the ranges just
prior to explosive up-and-down days. See what I see? We are given ample warning of virtually every large-range day 
by the shrinkage of ranges a few days earlier."

The key takeaway for short-term traders is that not every day offers a high-probability trade. You need to identify days with potential for explosive moves and not expect large profits daily. It’s about finding that opportunity.

As for market tops, they usually occur when prices close near their highs, and bottoms happen when prices close near their lows. Focus on these closing patterns to determine when to buy and sell.

Trend is a function of time. The more time in a trade, the more opportunity for trend.

The most important insight in trading is that trends are the basis of all profits. Without a trend, there are no profits. But what causes trends? Trends are fundamentally a function of time—the more time you hold a trade, the more opportunity for a trend to develop. The challenge with day trading is that trends occur only about 15% of the time. Most of the time, prices are consolidating, making it difficult to catch a big trend move. Limiting yourself to a few hours of trading only targets that small window when trends are likely to occur.

 My Day Trade Secret: HTTC - Hold To The Close.

The day trader dilemma is that they have limited time to catch trends. Holding positions overnight allows you to capture longer trends and larger profits. A small bet with the potential for a big move is the key advantage of holding positions over time. 
 
 » How you know a large trend move is coming. «
 
Many day traders are afraid to hold positions overnight. However, if you do the math, you'll see that most market moves happen between the close of one day and the open of the next. Moves within the day are often smaller and less reliable. For short-term traders, the key to success is recognizing large range days and holding positions to the close. This is how you catch a big move during the day.
 
 
 » Hold To The Close. « 
S&P 500 E-mini Futures (daily bars).
 Narrow Range 4 & 7 Days and Inside Bar Narrow Range 4 & 7 Days.

 
NVIDIA (daily bars).
 Narrow Range 4 & 7 Days and Inside Bar Narrow Range 4 & 7 Days.

See also:
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