ICT Mentorship Core Content - Month 06 - Classic Swing Trading Approach 

Okay, folks, we're looking at lesson three for the February 2017 content for the ICT mentorship. We're dealing specifically with classic swing trading approach. When defining market conditions, we think in terms of where the price can reach for both in an upward and downward direction. This is the foundation to determining likely market direction.

The PD arrays that have been traded to or executed on most recently indicate the opposite PD array spectrum will be reached for. If discount arrays have provided support for price, probabilities increase that the premium arrays will be sought after above the market price. If premium arrays have provided resistance for price, probabilities increase that discount arrays will be sought below the market price.

Okay, assume this is the market price. This could be in any asset class; it doesn't make a difference. But we're going to specifically talk about, let's say, the Swiss Franc, and we're looking at a monthly chart. What we do is, in reference to the current market price, we define the range that we're presently in, and we look for the nearest bearish mitigation block above us and the nearest bullish mitigation block below us. Now, again, these arrays may not exist in current price action, but this is the spectrum you look through above and below the marketplace in this order.

Above you, you look and see if there's any bearish breakers that have not yet been traded up to, and you look below you for any bullish breakers that have not been traded to. Above you, you look for liquidity voids where prices quickly drawn lower or repriced aggressively fast, leaving a big range of only downside delivery, and conversely, you would look for any liquidity voids below you where price has shown a strong willingness to rally quickly, leaving a poor wake of only buy-side delivery in price. In other words, big ranges up and above current market price, you would look for any fair value gaps. And below you, any fair value gaps, you look for the nearest bearish order block above you, and below you, you'd look for the nearest bullish order block. And you would look for the candles that have wicks at short-term highs. Any candle that has wicks above it, we would be noting the bodies of the candle because there would be liquidity resting just above the bodies of the candle. And below the candles that have wicks, you would look at the candles' bodies and below it, it would have liquidity below it, and they would be rejection blocks, respectively. And you would look at the old high or any historical low that were below, and you would look for any old low or any historical high that were above, framing the PD arrays above market price is in the premium spectrum, and the arrays below market price are in the discount spectrum. What you're doing is you're going to be looking at the monthly, the weekly, the daily, and the four-hour the same way as I'm outlining here.

So when we are referring to determining the premium arrays and determining the discount arrays, this is what we're referring to, okay? This is the PD array matrix, and every array above market price is the premium spectrum, and every array below current market action is the discount spectrum. What you're looking for is which side of the marketplace has most recently shown a displacement? Where has price moved away from? Has it moved away from the price levels aggressively? Was there speed involved? Was there large ranges indicating that there's been a massive push by smart money? Because we understand that that entity has more money than us collectively, and it's their business. So if they push price around on these higher timeframe charts, there's a great deal of probability that that direction is most likely going to be at least tradable in the same direction.

Okay, higher timeframe sequence. When we're looking at shorting opportunities, okay, in my free tutorials, you've always heard me refer to sell and buy programs, okay? And what is a sell program? Well, it first starts with a monthly chart, and we look for the market to move away from a resistance level. That could be a bearish order block; it could be trading away from an old high; it could be trading away from a historical low as resistance. But when that timeframe is indicating that it wants to go lower, it wants to trade lower, that is a sell program, okay? So we look for monthly charts to go into a sell program or come out of a premium spectrum.

And we would look for the same thing to occur in the weekly chart. So we would look for premium arrays in the weekly chart to indicate that the price wants to reach for the discount arrays below us. So that would create a sell program on the weekly chart. This continues into the daily chart. You'd look for premium arrays to cause a sell program or bearish prices for the daily. And then for executable timeframe for swing trading, it's the four-hour chart. You would look for the same thing as well on the four-hour; you would look for premium arrays to look for price to reject or resist going higher and expand lower seeking discount spectrum PD arrays. So for ideal shorting conditions and opportunities, we look for the monthly, weekly, daily, and four-hour to be in alignment with price moving away from premium PD arrays. And the opposite is said for buying opportunities. We look for the monthly chart to be in a buy program, that means it's moving away from discount arrays and seeking to move higher to reach up into premium arrays. This would be a buy program on the monthly chart. And on the weekly chart, you will be looking for price finding sensitivity at discount arrays, moving price into a buy program. So you would expect to see the weekly chart to be moving higher or trading higher. The daily chart also, when it's finding support at discount arrays, we would expect to see price moving higher on the daily chart. And on the four-hour executable timeframe, we would be looking for sensitivity in the discount arrays for buying opportunities. So that way, we would get in sync with the monthly, weekly, daily, and four-hour all being in sync for bullish or buy program opportunities.

When we're swing trading, the easiest and the most probable direction setups are when all monthly, weekly, daily, and four-hour are in alignment.

So when we have the monthly that's bullish, the weekly that's bullish, and the daily that's bullish, and the four-hour trades down into a discount and find support at, for instance, let's just say a bullish order block, that's a high probability condition. Because you have the monthly, weekly, and daily in sync with your existing uptrend, so its bullish undertones are going to be supporting the idea on a four-hour chart. If you're looking for bullish order blocks or buying below an old low, scooping up sell stops just like a market maker would, or trading back down into a liquidity void, for instance, like an optimal trade entry for a fair value trade going back into a fair value gap, same thing. All these ideas are going to be supported with the notion that monthly, weekly, and daily are already bullish, and therefore the four-hour should be in agreement with it, and your buying opportunity should be high probability.

And the reverse is said for bearish opportunities when the monthly, weekly, and daily are moving lower and they're in sell programs. When you see the four-hour go up into premium PD arrays, bear shorter blocks, bearish liquidity voids, bear's good value gaps, bearish breakers, or trading above an old high to run out buy stops, those conditions are high probability because you have the monthly, weekly, and daily in sync looking for lower prices, and those higher time frames are going to draw heavily on that lower time frame four-hour chart. So those probabilities shift to a great deal of favor for you as the trader that wants to go short in those conditions.

Okay, so for classic swing trading approach, the general concept is what we're going to refer to here now. I've given you a sample idea, okay, and I'm going to give you PDF files in August that give you different scenarios that really completely outline everything in a flowchart format. So certain conditions will lead you to certain decision points, and once you get to those decision points, you have to wait for price to either confirm or negate the opportunity. But for instance, for this simple classic trading approach model that we're outlining here, market is already going to be predisposed or poised to trade higher on a higher time frame. Now, this could be arrived at and determined by your analysis in the form of looking at the seasonal interest rate-driven, obviously this would always be involved in your trading commitment of Traders report or data. In other words, large commercial traders, are they net long on Swiss Franc? And if that's the case and their trend of their hedging program has indicated they have been buying long term and every time it goes to a net long position or if they aggressively lessen their short positions on the COT, Commitment of Traders report or line graph, when that occurs, that would be supportive of bullish prices for Swiss Franc.

And/or inter-market analysis supports the bullishness. Now, this could be in the form of SMT divergence, it could be market structure, you just need a few things on a macro scale to support the idea that on a higher time frame, prices should be trading higher. You don't need everything in agreement, you just need a small sample size of a few things in agreement, supposing that the higher time frame direction should be bullish. When you have a few things in your favor that's indicating that's the case, and at least the interest rates, I think that's the highest probability of one in your favor. So if you have interest rates, for instance, like the interest rate differential, for instance, like the most recently in our mentorship, we've indicated that the New Zealand Dollar and the Australian Dollar because of their interest rate being the highest among all the other currencies and countries around the world that's traded in the Forex, the differential between those currencies to other currencies, they have the higher interest rates. So therefore, the yield is going to be higher on those countries and their currencies. So more people are going to be more likely to buy those currencies than they are to sell them because the differential between the interest rate that's available. But let's assume for a moment we've already arrived at whatever combination of conditions that you're using to employ with your higher time frame fundamental, I kept using like my fingers to make quotations here, your fundamental outlook on price on a higher time frame, and it's in agreement with a measure of inter-market analysis, okay, supporting that bullishness.

The market will rally higher and then were we waiting for a retracement. We had to take our hands and sit on them until we wait for the retracement to come to fruition. Once that retracement occurs, then we have the stage for the setup to occur. So in other words, we have a condition in the marketplace that outlines bullishness long term, and then we wait for markets that have these conditions to already, we want to see them rally, okay? This is the highest probable direction type trading for swing trading, and when the market rallies, okay, or it shows displacement as an impulse price when it moves away from some specific price level, maybe it's a level we were anticipating some port to come in or we were waiting for an old low to not see if further slides lower in price, maybe we're looking for a turtle soup buy and always a false break below an old low but we don't really want to buy that yet, we just haven't built up our confidence yet or we're not as astute in price action as we would hope to be at our current development stages, so we're going to wait and see if price is going to give us clues and confidence that it has made a low and it ran out to stop and then it starts to go higher. When that rally occurs, we just simply wait for a retracement. Once that retracement occurs, then you have a stage at which the market will be setting up a condition that permits you to take a trade entry. So there is a condition first, then there's the stage portion of taking the trade, and then there's the execution when the market expands up to higher prices, that's what you're trying to profit on. So the normal procedure is you're looking for a market that's predisposed to go higher, you have higher time frame macro ideas behind the idea that markets should go higher, the market has to rally first in order to have to be displacement. Market creates an impulse price swing when that impulse price swing occurs, we wait for the retracement. So in other words, that's just okay, for instance, we're looking at the marketplace and we think that Swiss Franc should be rallying from this point of origin, when we see price move higher, we know that there is a displacement there, so we have an impulse price swing. Now, in this entire rally, during this time, the public or less informed traders or reactionary traders are going to be dog-piling on this thing. We do not do that, we wait. We look for conditions in the marketplace while it's rallying up where it could offer resistance, and this is going to be in the form of premium arrays, in other words, it could be a bear shorter block, a breaker mitigation block, void fair value gap, old high, old low, something to that effect that we wait and we anticipate the market to start topping out and eventually giving us a retracement. We're not trying to time the retracement, but during this small retracement back, if this

is a monthly chart or a weekly chart, that red area of retracement, that could be a counter-trend opportunity. Now, I'm not teaching that for swing trading here, but you will be given those ideas in August during the PDF portion of our time together so you'll have a when to counter-trend swing trade, and it would be basically during this periods shown graphically in the move in red, so you would be taking shorts there, but we're looking primarily to look for high probability long entries. So when the retracement occurs, what we're looking for is we're looking for specific levels, specific price levels at which we would expect and anticipate sensitivity for bullish by opportunities during that retracement. We're hunting, we're looking for things that line up for us to get in sync with the long-term analysis that we've arrived at that we believe that the higher time frame is going to be moving up or bullish from where we're at now, and eventually price, we're anticipating this portion, this is going to be the expansion swing. In other words, this portion is where price reaches for some higher time frame resistance level of some sort. We have our range defined by our point of origin and the intermediate-term high prior to the retracement. Once you identify there's two markers, what you're doing is all you're doing is making that range defined in terms of discount to premium. Everything below that high down to the point of origin is going to be referred to as your discount PD array matrix. Inside that range, you're going to be looking for all of the things we looked for and mapped out for the discount matrix. First thing you would look for is, is there any mitigation blocks? Is there any bullish breakers? Is there any liquidity voids? Is there any fair value gaps? Is there a bullish order block? Is there any candles that have long wicks so we can look for the market to seek liquidity below the bodies of those candles? And ultimately, what's the ultimate low and/or is there a historical high that we may find support at? All those ideas are going to be looked inside of the impulse swing from the point of origin all the way through the impulse swing that makes that intermediate-term high right before it retraces. Inside the impulse swing, we're looking for all those PD arrays on a discount basis. We're looking to map out what levels would be indicative of having a strong likelihood to buy or where we would see institutional order flow step in and start sending price higher again. Once you do this, you've already outlined what it is you're looking for. You'll know what price leverage you're looking for, and that's how you map out your discount array Matrix.

Foreign trade procedure: Okay, what you're going to be doing is on the monthly and weekly, you're looking for the 9 to 18-month Market profile. Are we in a trending environment or are we in a range-bound consolidation? And if we're in a consolidation, what you're looking for is a market that leaves a consolidation aggressively. In other words, it moves out of a small trading range and moves aggressively higher. Well, on a monthly or weekly chart, that shows there's displacement. We've got to start following that marketplace because it's most likely going to want to trend, and we have to be looking for those opportunities to come to fruition.

Really determine the monthly PD arrays, and we're going to refer to the active discount arrays in order. Since we're looking at bullish markets here, we're going to be looking at what active discount arrays full shorter blocks, liquidity voids below the marketplace, fair value gaps underneath the market price, where's the old lows at, bullish breakers, bullish mitigation blocks. Now, if the market shows the monthly discount array is supporting price, you've got to determine now where are the premium arrays on the monthly. And when monthly discount arrays are active, that means you're hunting and you know which ones they are.

You're going to be moving down into the weekly chart and transpose those monthly levels over to your weekly chart. Then you're going to determine your weekly PD arrays and you're going to refer specifically to the active discount arrays on your weekly chart. If weekly discount arrays are supporting price, determine the premium arrays on the weekly chart as well. And when the weekly discount arrays are active, in other words, you've already defined where the bullish discount weekly chart bullish order blocks, liquidity voids that are bullish, bullish breakers, bullish mitigation blocks, old lows, fair value gaps below the marketplace, once you arrive at them, you want to transpose those to your daily chart.

Okay, then you're going to determine your daily discount arrays and you're going to refer to the active discount arrays on your daily, defining each on that daily timeframe. And once you understand where the daily discount arrays are, they're active, you know which ones are not. There may not be a void, there may not be a breaker, but whichever ones are active in the discount spectrum, you take those and you transpose those over to a four-hour chart. Then you're going to determine your four-hour discount arrays, labeling which ones are in the discount. In other words, they may not be breakers, they may not be a void, it may not be a gap, but there are old lows, there are bullish order blocks, and those need to be defined. You're going to be referring to the active discount arrays on that timeframe as well.

Now what you're doing is you're going to buy all four-hour discount arrays. In other words, every bull shoulder block, every bullish breaker, every mitigation block that's bullish, every old low that's violated, we look to see some buying opportunity. That could be a turtle soup long entry, every rejection block below candles have wicks, we look for price to go just below the bodies of the candles and we'll trade right below that like a turtle soup. It doesn't need to go through the wicks. And when we take these long entries, we look to scale out at daily, weekly, and monthly premium arrays that's already been defined and transposed to our four-hour chart.

The ideal scenario is that we look to trade setups that offer at least three and preferably more times the range between your entry and the closest premium array from all time frames. So if you're looking for a trade that you think that the monthly has the range to go higher and it's in a buy program, if you're taking an entry on a four-hour, you're really trying to aim for that monthly level, but you don't hold everything for that monthly level. You're going to take something off at the premium arrays on the four-hour chart and at the daily chart and at the weekly chart. And as you get closer and closer to that premium range on the monthly and weekly, you want to have very small portions of your position on and have already taken profits along the way.

Set up failure protocol: Now if the buy set up on the four-hour discount array fails you and the trade results in a loss, don't worry about it, don't freak out and don't panic, okay? All you're going to do is simply look for a lower priced four-hour discount array to buy at. Now if the four-hour chart has no more discount arrays to buy at, you're going to refer to the daily, the weekly, and the monthly discount arrays to buy at a lower price. At the lower discount array, you're going to buy at 50% of the position size of the initial trade or the previous failed trade that you just utilized. You do not try to win all of the lost equity back in the subsequent trade. It may take a few trades to get back that loss. Do not rush, do not force it. Always confirm lower timeframe four-hour premium arrays give way or fail as price moves in your favor.

In new discount arrays support price as it moves toward the premium arrays on the higher timeframe. In other words, you're going to be looking for bearish breakers, you're going to be looking for bearish mitigation blocks to give way. In other words, they shouldn't hold price back, you should just be going right through those. You should be going through up candles which would be noted as potential bearish order blocks. And you're not going through old highs and coming back with deep retracements, you're going through old highs and you're expanding higher. That is a clear indication you have a strong trade on your side and you have institutional overflow behind you.

Alright, so let's take a look at the swing trade progression. Let's just say for instance, this is a monthly chart, okay? As you have a first impulse swing, then there's a retracement. If you're in a bullish market environment, you would expect another expansion price swing and then a retracement and another impulse price swing, then a retracement and another expansion swing but all along making higher highs and higher lows. That's a normal classic textbook trend that would be deemed bullish by anyone's standards. But what we look for to say this is a weekly chart, okay? This could be done on a monthly too but let's just for instance refer to this as a condition that's in our weekly chart.

If we look at the first impulse swing to the left inside that impulse swing, our daily chart, it may have a smaller impulse swing with a deep retracement and another secondary expansion swing. You won't see it on the weekly sometimes but if you break the weekly chart impulse swing down and look deeper, you'll see two stages sometimes in the daily chart, the expansion swing that occurs later in this example inside that expansion swing, the same thing is seen if this is a daily chart, we're looking inside that expansion swing inside that on a

daily chart because price is fractal, you would see subsequently smaller price swings, impulse swing retracement expansion swing and the impulse swing that occurs on the right side of our charts here. Inside that impulse swing, if this was a weekly chart, that would be a daily chart that could have a impulse swing, smaller daily retracement, and then an expansive price swing. And then the second or last expansion swing on a larger price move. Inside that expansion swing, there will be smaller impulse swings with retracements and a lower timeframe expansion swing. So, everything in price is fractal.

The very first impulse swing on the daily would have a smaller impulse swing, retracement, and expansion. And then the daily chart's expansion price swing would have, in itself, a smaller impulse swing, retracement, and expansion. And that would be seen on the four-hour chart.

So, the larger impulse swing initially on the left-hand side, this could represent the weekly range or weekly chart's impulse swing. And in a smaller range inside of that weekly could be seen with a daily impulse swing, retracement, and expansion. And then that daily, each individual price swing higher up would have four-hour impulse swings, retracements, and expansions. This is seen for every price swing along the spectrum from monthly, weekly, daily, and four-hour.

Now with this information, we can see that there are discount arrays in each one of these price swings. If you're buying at any one of these and they fail, you just simply drop down into the next higher timeframe discount array and you would look for ideas inside of that to be a buyer to be in sync with the larger monthly and or weekly macro uptrend.

So we look at price on a fractal basis, but we also look at it in terms of defining in terms of PD arrays. In other words, premium to discount. When price pulls back and the algorithm gets back into these discount arrays, it will look to seek that liquidity below the market price to allow traders at the bank level to populate those levels with orders and then the market will take off.

Okay, for bearish markets, the general concept is we have a market that's poised or predisposed to trade lower on a higher timeframe. And again, I use the same defining terms we did with the bullish market conditions. It may be a seasonal tendency that supposes the market should be bearish or that asset class you're trading should be having some bearish price activity seasonally long-term and consistently showing that repeats a lot more than it does trade higher. That seasonal tendency should have an influence on price, not by itself, not fantasy, and that's not a beyond-all, but we use it as a supporting idea or as I said, a roadmap if you will.

Obviously, interest rates would be a strong deciding factor here on a macro level. And then maybe commitment administrators, their commercial positions are heavily that short. So, therefore, we're looking for continuation or they have been hedging over the last six or the nine months or so. On the weekly chart, you can see how they have worked priced lower every time they went net short, they pulled price heavily lower in a downtrend. And then maybe now your market you're trading has them as commercial traders being heavily net short. If that's the case, then you have seasonal tendencies on your side, then you have interest rates on your side that would be drawing price lower. And the commitment traders report with a heavily net short position by the commercials. Commercials are large hedgers and we'll talk about that when we get into commodities.

The inter-market analysis supports the idea too, this is institutional market structure. This is S.T. divergence, those ideas. The market will have a decline lower, okay, and it moves away from a point of origin. We may have already expected that move lower or we may be surprised by that move. It doesn't make a difference, we look for displacement. That first price swing is the impulse price swing, that's what's drawing price away from a level that we either expected to see bearishness or again if we're surprised by something we didn't expect, now we have to say, "Okay, well what's going on in here? Is there going to be a retracement?" The market goes in the retracement, and if we go and look at the higher timeframe or something changes that we didn't notice before or it's a pair that we just caught our eye, we are seeing the impulse price swing and now we have the retracement. We're expecting or anticipating the expansion price swing, that's where we look to profit. But we have to go into the marketplace during that retracement, okay? We're going to be studying price and defining in terms of PD arrays.

So we go back to the point of origin and the short-term low, we saw price bounce at. The causes that retracement to come to fruition, we then take the low at the short-term low and all the way up to the point of origin, and we define that in the terms of premium PD array matrix. In other words, this is where all the bearish order blocks, bearish liquidity voids, bearish breakers, bearish mitigation blocks, bear value gaps, old highs to sell above, and rejection blocks, which are candles that have long wicks. And we look to sell just above the bodies of the candles when we're bearish.

What we do is we go into the marketplace and we do this on a monthly, a weekly, daily, and four-hour. So we define and determine all of the premium arrays for all those timeframes and we transpose them over to the lower timeframe.

Okay, the swing trade procedure. Again, you're going to determine the 9 to 18-month Market profile. Preferably, you want to see price moving out of the consolidation, not being in a range. You want to see it wanting to trend. The more likely the market is trending and trending lower, the higher the probabilities that you're going to get a nice swing trade on a short side. You're going to determine the monthly PD arrays and you're going to refer to the most active premium arrays. That means on a monthly chart, did we just recently move away from that point of origin? Was that a bearish order block? Was that an old high? Was it an old historical low that acted as resistance? What was the framework that caused that move?

And if the monthly premium arrays are resisting price, we determine now the discount arrays on the monthly chart. So in other words, where should price reach down to? And when the monthly premium arrays are active in order to be defined what they are on the monthly levels. We move those levels to the weekly chart. Then we take the same thing we apply to the weekly, we break down the PD arrays in a premium basis and then we refer to all of the active, what would be seen as premium arrays on the weekly chart. If the weekly premium array is resisting price, we determine where the discount rates are on the weekly chart. So we're defining our range in terms of premium to discount on the weekly as well. When the weekly premium arrays are active in order to define what they are, if there's bear shorter blocks, if there's Breakers that are bearish, old highs, where they're at, where the rejection block would be, any fair value gaps above you. That is transposed to the daily chart.

Then you're going to determine the daily premium arrays. You're going to refer to the most active premium arrays on the daily. In other words, is there bearish breaker on the daily chart?

Is there mitigation blocks above us on the daily chart? Is there fair value gaps or voids? Where's the old highs at? Is there any candles that have long wicks on them? We're going to be focusing on the bodies of the candles just to pierce above that just to do a turtle soup idea. Then you're going to take those. And when that's active, you're going to take those premium arrays on the daily chart and you're going to move them over to your four-hour chart and transpose those.

Then you're going to do the same thing on your four-hour chart. You can determine where the premium arrays are, bear shorter blocks, old highs, bearish Breakers, mitigation blocks that are above you. All those premium arrays, you're going to take them and determine which occur or appear in the four-hour. And then you're going to refer to the active premium arrays for that timeframe only. So otherwise, you're going to only focus on the ones that are in the four-hour chart because there may not be a breaker it's bearish, there may not be any mitigation blocks in the current range that you're looking at for our chart but whatever ones that are active in your current market environment, that's what you take and you label those for your four-hour chart.

You're going to sell every four-hour premium array. It means bear shorter block, bearish breaker, mitigation block, trade back up into fair value closing a range or fair value gap, or you'll sell short and old high or a candle that's bold, which is a very short little Wick at the top. You'll look for the price to trade through that high. The key is, is you want to look for price to not go through the Wicks many times and that's the rejection block. When you see the long wicked candles and you're bearish, the price probably won't go above the Wicks many times, will just go above the body to the candles and then fail there, that's the rejection block. You'll sell all those on a four-hour basis and any level that's been transposed from the daily, the weekly, in the monthly as well.

As you sell short, you're going to be looking to take profits at the daily, the weekly, and the monthly discount arrays. In other words, all the bullish ideas that would support price as you reach them and price is moving in your favor to the daily and the weekly in the monthly. You're going to be scaling out as you get to those and the more you get to the monthly and weekly discount range on those timeframes, the less likely price will continue going lower and you want to be at your smallest portion of your trades at that time. You don't want to be holding your biggest portion then because if price retraces or reverses altogether, you give back a lot of open profits and it's never fun.

Okay, you're going to look to trade setups that offer at least three, preferably more times than the range between your entry and the closest discount array on all timeframes. So you're basically framing your risk to reward to be at least for one dollar risk, you're trying to make three dollars or more preferably. You only look for scenarios between you and I you want to look for things that have like five to one reward the risk.

Set up failure protocol. It's a cell setup on the four-hour premium array fails and the trade results in a loss. All you have to do is don't panic, accept the loss, but now you're just going to simply look for the higher priced four-hour premium array to sell at. In other words, you may be sold short at what you thought was a mitigation block and it just ran right on through you, go to the next premium array and you look to sell it again. Again, we're focusing on monthly, weekly, and daily conditions that are bearish. So if we're executing on a four-hour, you may get stopped out on your initial trade, not always, but sometimes you will. If that happens, you just simply go up to the next higher priced premium array. In other words, there may be a bear shorter block, it needs to trade to. It may need to trade through an old high. You take every single one of them.

If the hour chart has no more premium arrays to sell at, refer to the daily, weekly, and monthly premium arrays to sell at a higher price than you currently have. At the higher premium array, you're going to sell with 50% of the position size that you used from your initial trade or previous failed trade that you utilized. Do not try to win all the lost equity back in the subsequent trade. Get what you can get from the trade, don't try to force it all back. If the trade only pans out and it slips to less probability and you have 60% of what you lost, be happy with the 60%, it's at least you're mitigating the losses.

Always confirm lower timeframe four-hour discount arrays give way or fail as price moves in your favor and new premium arrays resist price as it moves towards discount arrays on the higher timeframe charts. In other words, basically what this means is you want to be looking for bullish order blocks or down candles to be broken, every support level be broken. You want to see new resistance levels found at old up candles. And as long as you keep seeing that, you're seeing institutional sponsorship on your side and that's a great condition to be in when you're short.

So now we're going to take a look at some specific setups that we can use with this idea for swing trading. I'll see you in lesson number four.