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Month 1 Core Content - Elements of A Trade Setup
Month 1 Core Content - Elements of A Trade Setup
If you have been following me on YouTube lately, you know that I help Traders reach their full
trading potential.
The aim is to be the bridge between who Traders currently are and who they want to become.
With that being said, the concepts mentioned in belong to "The Inner Circle Trader".
https://www.youtube.com/c/InnerCircleTrader
All the information within this PDF can be found on The Inner Circle Trader's YouTube Channel.
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2 Things Make Up a Trade Setup:
1. Context/Framework behind the IDEA (Reasons that build the trade)
The 4 principles that build Context/Framework behind a trade is Expansion, Retracement, Reversal and
Consolidation (Accumulation).
→ One of these will give you that Context and Framework to build a setup around based on the current
market conditions.
2. We then pair the given Context/Framework of the current market, with its
own Reference Point in Institutional Order Flow.
→ Expansion is paired Order Blocks
It’s important to ask yourself: “What characteristics in Price Action are we trading in?”
→ From there you pair 1 of the 4 Elements with its respected Reference Point in Institutional Order Flow.
Expansion, Retracement and Reversal will offer the Highest Probability of Trading.
→ Take action on these characteristics by coupling it with it’s respected Reference point in Institutional Order
Flow.
→ i.e - Pairing retracements (Context & Framework) with Imbalances (Ref. Point).
Since the market is solely manipulated by
IPDA, the Fingerprints are easy to spot.
The clues/ ngerprints will be written within Price Action!
• Retracement
• Reversal
• Consolidation (Accumulation)
Framework/Context: Expansion
Reference Point in Institutional Order Flow: Order Block
This shows a willingness from the Market Makers too reprice to the next objective.
If markets start from a Consolidation, a Displacement will be used to break out of the Consolidation.
Price will then print an Order Block whilst breaking out of the Consolidation.
The Order Block will be found near or at the Equilibrium of the Consolidation.
Framework/Context: Retracement
Reference Point in Institutional Order Flow: FVG/Imbalance
Retracement is when price retraces back within the price range formed by the Displacement.
Retracements inside of a price range seek areas that were not e ciently traded.
Fair Value Gaps and Imbalances show us areas that were not e ciently traded.
When thinking of retracements, you should instantly think of Fair Value Gaps/Imbalances
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Framework/Context: Reversal
Reference Point in Institutional Order Flow: Liquidity Pool
Reversal is when Price completely reverses its current trend established.
Liquidity Pool
I.e - Asian Low
Reversal
Framework/Context: Consolidation
Reference Point in Institutional Order Flow: Equilibrium
Consolidations occur when the price is constricted by a trading range and has no willingness to break out yet.
Consolidations show us that the Market Makers are building liquidity above and below the market.
Be patient and look for a Displacement away from the Equilibrium price point of the Consolidation.
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