TLDR;
This video features an interview with Jadecap (Kyle), a successful trader, who shares his intraday trading strategy focused on liquidity and volatility. He emphasizes understanding market dynamics, identifying weak hands, and utilizing time windows for optimal trading. The discussion covers key concepts like fair value gaps, Asian and London range liquidity, and the importance of data collection and risk management.
- Intraday liquidity and volatility are key
- Focus on identifying weak hands
- Time windows are important for intraday trading
Intro [0:00]
The Chart Fanatics channel introduces a special guest, Jadecap (Kyle), who recently achieved a record payout at Apex, surpassing Trader Kane. Jadecap has accumulated over $4.5 million in total payouts and is considered a future market wizard. The episode will focus on breaking down the strategy that enabled his success.
Intraday Liquidity and Volatility [1:36]
Jadecap focuses on intraday liquidity and volatility, explaining how markets operate based on historical floor trading practices. Traders on the floor could observe order flow, stops, and limits, with intraday highs and lows serving as key reference points. He looks at the previous three days' highs and lows to identify potential areas where orders accumulate.
Trading Strategy [3:28]
Jadecap waits for highs or lows to be breached, then anticipates either a continuation of the trend or a reversal. He emphasizes patience and observing the market's reaction after these levels are triggered, rather than anticipating the outcome. Trading on higher time frames (15-minute to hourly) provides more reliable information compared to lower time frames.
Market Dynamics and Order Flow [6:21]
The discussion shifts to how market dynamics have changed with electronic trading, making it harder to see order flow. Jadecap aims to identify where "weak hands" will fold, seeking to capitalize on their losses. He uses homework lessons for his students, focusing on swing failures and closures above or below previous day's highs or lows.
Session Liquidity [10:35]
Jadecap uses session liquidity, particularly Asian and London ranges, to refine his strategy. In an uptrending market, he looks for the Asian range low or London low to be taken out before going long in New York. He sets alerts at these levels to monitor potential setups.
Inefficiency and Liquidity [13:31]
Jadecap, influenced by ICT trading principles, believes markets move towards inefficiency or liquidity. He seeks to determine the "draw on liquidity," using fair value gaps, double tops, or double bottoms. He aims to predict the next daily candle, focusing on high time frame levels and Asian range breakouts.
Lower Time Frame Execution [17:45]
Lower time frames (1-hour or 15-minute) are used for execution, looking for market structure shifts, fair value gaps, liquidity raids, or breakers. He uses wider stops, often based on the previous day's low, to avoid being stopped out prematurely.
Mindset and Market Conditions [19:30]
Jadecap's mindset varies based on market conditions. In certain environments, he holds positions longer, while in others, he focuses on intraday models. He extracts more profit by closing positions and re-entering with more capital, compounding gains faster.
Swing Points and Fair Value Gaps [21:31]
The discussion covers swing points and using fair value gaps for entries, emphasizing the importance of context. The location of the fair value gap within the overall range matters, as well as the amount of liquidity remaining below or above it.
Technical Analysis and Time Windows [27:29]
Technical analysis plays a significant role on lower time frames, requiring experience and repetition. The time aspect of each day is crucial, with intraday lows and highs often occurring around the same times (9:30 to 10:30 a.m. EST for index markets). Operating during optimal time windows is essential for profitability.
Midnight Open and Kill Zones [30:20]
Jadecap's strategy is based on the midnight open, using the Asian range to plot standard deviations. He sometimes enters trades during the Asian session if a large move is anticipated, rather than waiting for the perfect price.
Targets and Risk Management [34:50]
Jadecap often exits trades based on time rather than waiting for full targets, due to his short-term intraday approach. He prioritizes taking profits off the table, considering the potential for the market to reverse. He uses the full target as a draw, taking something off before it gets to that level.
Double Tops and Bottoms [42:34]
The discussion touches on double tops and bottoms, noting that while they eventually get taken out, the timing and narrative are crucial. The markets can remain irrational longer than traders can remain solvent, emphasizing the need to protect the downside.
Pros and Cons of the Strategy [43:35]
The pros of the strategy include a great understanding of market liquidity and volatility, its fractal nature, and its applicability across multiple assets. Cons include the time required to collect and understand data, the importance of timing, the layers of top-down analysis, and the discretionary nature of the approach.
Market Context and Patience [48:15]
Market context is essential, with charts needing to tell a story. Jadecap emphasizes sitting still when the market's direction is unclear. Patience is crucial, waiting for the trade signal after having an idea.
Chart Examples: NASDAQ [57:06]
Jadecap provides chart examples of NASDAQ, focusing on previous day's highs, Asian range, and fair value gaps. He highlights the importance of exiting trades based on time, especially around 12:15, where intraday lows often form.
Intraday Price Action and Liquidity [1:00:14]
He analyzes intraday price action, looking for bearish or bullish candles to determine potential short or long positions. He emphasizes the importance of timing and understanding session liquidity, particularly for London traders needing to take profits before the New York session.
Higher Time Frame Analysis [1:04:55]
Higher time frame analysis is crucial for determining the overall trend. Jadecap uses daily candles to identify gaps and potential targets. He stresses the importance of waiting for a clear bias and avoiding trying to pick tops and bottoms.
Trade Examples: ENQ Long [1:08:43]
Jadecap shares a trade example of a long position on ENQ based on a five-minute fair value gap. He targeted the Asian range high, aiming for a one to one and a half risk-to-reward ratio. He emphasizes the importance of seeing a bearish candle when going long to get a good fill.
Scaling and Risk Management [1:10:06]
He discusses scaling into trades and adjusting stops to manage risk. He never adds to a trade without moving the stop loss and taking risk off the table. Trade management and risk management are key to adding edge to any trading system.
Trade Examples: Short Position [1:14:05]
Another trade example involves a short position based on a sell-side imbalance and SMT divergence with ES. He adjusted his stop to take half his risk off the table. He uses the analogy of a bus trip to Denver to illustrate the importance of sticking to the plan, even if there are unexpected stops along the way.
Multi-Asset Monitoring and Passion [1:19:38]
Jadecap monitors multiple assets, including gold, bonds, yields, and currencies, to gain a broader understanding of market dynamics. He emphasizes the importance of passion for trading and continuous learning.
Euro and Quarterly Charts [1:22:52]
The discussion shifts to Euro and the use of quarterly charts. He looks at the previous quarter's close to determine potential targets for the current quarter. He emphasizes the importance of timing and risk management, preferring to take multiple small losses trying to go long rather than shorting into a bullish trend.
Trade Statistics and Mindset [1:25:39]
Jadecap shares his trade statistics, emphasizing that the average win-to-loss ratio is the most important metric. He keeps losses small and winners big by adjusting stops aggressively and adding to trades when possible. He stresses the importance of visualizing stop losses and accepting that mistakes will happen.