TLDR;
This video features Tanya Trades, an ICT live streamer, discussing strategies for identifying high and low probability trading days. She emphasizes understanding market phases—accumulation, manipulation, and distribution—to improve trading outcomes. Tanya also shares a checklist for assessing market conditions and provides real-world examples of successful trades.
- Focus on trading during the distribution phase for higher probability wins.
- Avoid low probability days, such as those with no major news events or days before high-impact news.
- Use a checklist to assess market conditions, including economic calendar events, market correlation, draw on liquidity, and displacements.
Introduction [0:00]
Tanya Trades discusses the importance of identifying high and low probability trading days to optimize trading strategies and capital preservation. The main goal is to teach viewers how to recognize market conditions that favor profitability and how to avoid situations that lead to losses.
Understanding Market Phases: Accumulation, Manipulation, and Distribution (AMD) [1:53]
Tanya explains that the market moves in three phases: accumulation, manipulation, and distribution (AMD). Accumulation involves prices moving sideways, which is hard to trade. Manipulation is a move to create liquidity, often to the downside. Distribution is when price moves towards a point of interest, typically towards liquidity. Tanya prefers to trade during the distribution phase because it's the easiest to trade, as price is usually moving towards a clear draw on liquidity.
Identifying Low Probability Trading Days [3:44]
Tanya identifies several characteristics of low probability trading days. These include days with no red folder news events, bank holidays, or the day after a holiday with no news. She also advises caution on the day before high-impact news events like FOMC or NFP, as price often accumulates before a manipulation move. Trading during these times can lead to being manipulated out of positions.
Characteristics of Accumulation Days [6:14]
Tanya describes accumulation days as often following a large expansion day, where price has hit a significant monthly or weekly liquidity pool. After such distribution, price typically returns to accumulation, engaging in price discovery. She advises caution during these times, suggesting watching price action and potentially looking for a reprice to the 50% level of the previous leg, but primarily waiting for the next clear setup.
Navigating Jagged Price Action and Conflicting Time Frames [8:43]
Tanya discusses the challenges of trading when price action has jagged ends on both the upside and downside, indicating a lack of clear direction. She advises staying out of the market when price is bouncing between different PD arrays (premium discount arrays) without a clear direction. It's crucial to wait for a displacement above a swing high to confirm a directional move. Conflicting biases across different time frames can make it difficult to determine the correct bias, making it best to wait for more clarity.
Recognizing Accumulation Through Lack of Displacement [14:22]
Tanya explains that accumulation can be identified by a lack of displacement over swing highs and lows. Price action often involves wicks below lows and above highs without significant movement through these levels, resembling barcode action on the 4-hour or hourly chart. She advises waiting for a clear displacement, such as a fair value gap (FVG) forming on the hourly chart above a high, to confirm a directional move.
Trading in Accumulation: Risks and Strategies [16:18]
Tanya advises beginner to intermediate traders to avoid trading during accumulation due to its complexity. While it is possible to trade in accumulation by using smaller time frames, it often results in being stopped out multiple times. She suggests limiting oneself to two losses during a session and reassessing if the draw on liquidity is unclear or if the market is in a "seek and destroy" environment, characterized by price taking out highs and lows without clear direction.
Manipulation Phase and Turtle Soup Entries [21:45]
Tanya explains that some traders attempt to trade the manipulation phase, anticipating moves after liquidity is taken. However, she prefers to wait for confirmation before entering. She mentions "turtle soup" entries, where traders buy after a false breakdown, anticipating a move higher. Tanya prefers to wait for confirmation of distribution, which she considers the easiest part to trade, especially after recognizing the manipulation phase.
High Probability Distribution Days [23:03]
Tanya identifies high probability trading days as those with red folder events, such as CPI, NFP, PPI, and GDP. She prefers trading the New York session after the CPI release. These days offer more confirmation and potential for larger wins due to the market being in distribution mode.
Identifying Draw on Liquidity During Distribution [25:00]
Tanya explains how to identify the draw on liquidity during distribution days. She looks for price being jagged on one end, such as a daily fair value gap after taking out a previous day's high. A 15-minute time frame shift followed by a retracement into a 15-minute fair value gap can provide an entry point. She often targets short-term lows with liquidity beneath them, especially if a previous imbalance hasn't been completely rebalanced.
Pros and Cons of Trading Based on Market Phases [30:30]
The pros of this strategy include having a checklist to assess market conditions each morning, helping to determine if it's a high or low probability day. A con is the potential for FOMO (fear of missing out) if price continues without manipulation or retracement. Another pro is the ability to anticipate difficult or potentially profitable days. A con is that the strategy might not always present an entry, especially for retracement traders.
Trading Checklist [37:43]
Tanya outlines a checklist for traders to use each morning:
- Check the Economic Calendar: Identify any red folder news events.
- Market Correlation: Ensure that markets like NASDAQ and S&P 500 are correlated in structure.
- Draw on Liquidity: Determine where the market is likely heading based on structures like equal highs or imbalances on higher time frames.
- Displacements: Look for energetic shifts in structure, where highs are taken out with displacements and fair value gaps are respected on higher time frames.
Example 1: CPI Day Trade [49:14]
Tanya walks through a successful CPI day trade, identifying the accumulation phase, manipulation leg, and waiting for confirmation by breaking a swing low with a fair value gap. She waited for a retracement to enter short, targeting distribution to take profits.
Example 2: PPI Day Trade [54:24]
Tanya reviews a bullish trade on a PPI news day. After a wick below previous lows, she waited for bullishness before the New York session. She looked for a retracement to 50% of the leg and identified an hourly fair value gap in a premium. After a 15-minute sweep of liquidity, she entered long, targeting upside liquidity.
Example 3: GDP Day Trade [1:01:30]
Tanya analyzes a GDP day trade where the market wicked both sides initially. She waited for a clean structure break to the downside after the market took out a daily liquidity level. After a displacement to the downside, she targeted equal lows from pre-market, demonstrating the importance of patience and waiting for clear market structure.