About this video

• Video Title: Episode 5: Here's Everything | ICC ➔ Matrix
• Channel: Wick Sauce Ro
• Speakers: Not explicitly stated in the transcript.
• Duration: 04:56:30

Overview

This video discusses various trading strategies and concepts, focusing on the importance of understanding market structure, time frames, and personal trading psychology. The speaker emphasizes how different trading styles like scalping, intraday trading, and swing trading are interconnected and how a trader's personality influences their choice of strategy. The video also touches upon risk management, the principle of diminishing marginal returns, and the foundational elements of identifying trading opportunities.

Key takeaways

• Scalping vs. Intraday vs. Swing Trading: The video differentiates between these trading styles, highlighting that scalping focuses on short-term profits with high frequency, intraday trading aims to capture a piece of the day's move, and swing trading involves holding positions for longer durations.
• The Importance of Lower Time Frames: The speaker argues that understanding lower time frames is crucial, as they form the building blocks for higher time frames, and that the market's momentum often trickles up from these smaller increments.
• Trading Psychology: A significant portion of the video is dedicated to the role of psychology in trading, discussing issues like impatience, greed, overconfidence, and the need for discipline to execute strategies effectively.
• Strategy Alignment: The speaker stresses that a trading strategy should align with a trader's personality and risk tolerance to ensure consistency and long-term success.
• Market Structure and Ranges: The concept of identifying market structure through highs and lows, and how these form ranges, is explained as a fundamental aspect of trading that can be applied across different time frames.
• Pillars of Profitability: The video introduces a framework for profitability based on win rate, risk-to-reward ratio, and trade frequency, suggesting that traders operate within these parameters.
• The "Person vs. Strategy" Concept: The speaker emphasizes the importance of understanding oneself as a trader and matching that with a suitable strategy, as opposed to blindly following a strategy without considering personal compatibility.

Here's a step-by-step method to trade based on the speaker's suggestions in the video:

I. Understand Your Personal Trading Profile:

1. Self-Assessment: Honestly evaluate your personality traits relevant to trading:

   • Patience: Are you naturally patient, or do you seek quick results?
   • Risk Tolerance: Are you risk-averse, or do you have a high tolerance for risk and enjoy taking chances?
   • Attention to Detail: Do you enjoy analyzing intricate details and putting pieces together, or do you prefer a more straightforward approach?
   • Emotional Regulation: How well do you manage emotions like impatience, greed, and fear during trading?

2. Strategy Alignment: Based on your self-assessment, determine which trading style best suits you:

   • Scalping: If you're naturally a high-risk taker, have high frequency and win rates, and are comfortable with lower risk-to-reward ratios, scalping might be ideal.
   • Intraday Trading: If you prefer a balance between frequency and reward, and have moderate patience and risk tolerance.
   • Swing Trading: If you are more patient, risk-averse, and prefer lower trade frequency with higher risk-to-reward ratios.

II. Master Market Structure and Range Identification:

1. Identify Trends and Ranges: On any chosen time frame, mark out the highest highs and lowest lows of trends. This forms your primary "ranges."
   • External Levels: Focus on the absolute highest highs and lowest lows of significant trends.
   • Internal Levels: Within these major trends, identify smaller, significant highs and lows that form internal ranges or trends.
2. Recognize the "Breakout" Areas: Pay close attention to the specific highs or lows that led to a significant shift in market direction (e.g., breaking out of a bearish range to start an uptrend, or vice-versa). These are often key areas of interest.
3. Utilize Time Frame Confluence: Understand that market structure principles apply across all time frames. What looks like a trend on a higher time frame is composed of smaller trends and ranges on lower time frames. Use higher time frames to identify the "big picture" ranges and then scale down to lower time frames for more granular analysis of the immediate price action leading to those key levels.
4. Focus on Imbalances (Gaps/Order Blocks):
   • Identify Imbalances: Look for areas where price moved very quickly, leaving gaps between candles (e.g., bullish candles with no bearish candle in between). These are areas of high interest.
   • Identify Order Blocks: These are specific ranges or candles that were significant in causing a shift in market structure. They are often identified by their position relative to price action (e.g., the last down candle before a strong bullish move that broke structure).
   • Balance vs. Imbalance: Understand that "balanced" areas have overlapping buyers and sellers, while "imbalanced" areas have predominantly one or the other, indicating a strong directional move. Prioritize trading from imbalanced areas.
   • 50% Level: Recognize that the 50% level within a significant range or imbalance area is often a key price point for market reaction. Buyers tend to be more active below 50% (discount) and sellers above 50% (premium).

III. Execute Trades Based on Your Chosen Style and Strategy:

1. For Scalping (High Frequency, Lower RR):

   • Entry: Focus on identifying immediate, short-term ranges or imbalances on very low time frames (e.g., 1-minute, 3-minute, 5-minute charts).
   • Execution: Aim for quick entries and exits, often targeting small profits. Be comfortable with potentially lower risk-to-reward ratios but compensate with a high win rate and high trade frequency.
   • Risk Management: Manage risk tightly, as frequent trading can lead to rapid losses if not controlled.
   • Example: Enter a trade based on a clear micro-imbalance or a break of a very short-term range, aiming for a quick move.

2. For Intraday Trading (Moderate Frequency, Moderate RR):

   • Entry: Use higher time frames (e.g., 1-hour, 4-hour) to identify key ranges and imbalances, then look for confirmation or entry signals on lower time frames (e.g., 15-minute).
   • Execution: Aim to capture a more significant portion of the day's price movement. Entries might be based on a retest of a key level or a confirmation of market structure shift.
   • Risk Management: Balance the risk-to-reward ratio more carefully than scalping, aiming for trades where the potential reward justifies the risk.

3. For Swing Trading (Low Frequency, Higher RR):

   • Entry: Primarily use higher time frames (e.g., Daily, Weekly, Monthly) to identify major trends, ranges, and significant imbalances or order blocks.
   • Execution: Wait for patience and significant setups. Entries are less frequent but aim for larger price movements.
   • Risk Management: Employ stricter risk management, as fewer trades mean each one carries more weight. Aim for higher risk-to-reward ratios (e.g., 1:3, 1:5 or higher).

IV. Key Principles to Remember:

• "Indications are Trends": What looks like a mere indication on a higher time frame is actually a trend on a lower time frame.
• "The Market Must Come to Your Levels": Be patient and wait for price to reach your identified areas of interest rather than chasing the market.
• "Everything is Fractal": The same patterns and principles of market structure apply regardless of the time frame.
• "Don't Fight Your Nature": Choose a strategy that aligns with your innate personality and risk tolerance to trade consistently. Trying to force a strategy that goes against your nature will likely lead to psychological struggles and poor execution.
• "Decrease Risk as Your Account Grows": As your capital increases, gradually reduce the percentage of your account risked per trade to preserve capital and ensure long-term stability.
• "The Holy Grail is Perspective": Ultimately, the ability to perceive market structure and price action accurately across different time frames is the key to successful trading.

This step-by-step method synthesizes the speaker's advice, moving from self-understanding and strategy selection to the practical application of market analysis and trade execution.

The speaker emphasizes that "The Holy Grail is Perspective," meaning the ability to accurately perceive market structure and price action across different time frames is paramount for successful trading. Here's why and how this works:

Why Accurately Perceiving Market Structure and Price Action Across Time Frames is Key:

1. Understanding the "Big Picture" vs. "Immediate Action":

   • Higher Time Frames (e.g., Weekly, Monthly, Yearly): Provide the broader context of the market. They reveal the dominant trends, major support and resistance levels, and the overall direction of institutional money flow. This "big picture" perspective helps identify where the market is likely heading in the longer term and defines significant ranges and potential turning points.
   • Lower Time Frames (e.g., 1-Minute, 5-Minute, 15-Minute, 1-Hour): Show the immediate price action, the short-term trends, and the microstructure of the market. These time frames reveal how the larger trends are playing out in real-time and offer precise entry and exit points.
   • The Synergy: By analyzing both, traders can understand why a price movement is occurring within the larger context. For example, a small bullish candle on a daily chart might be part of a much larger downtrend, or it could be the start of a significant reversal indicated by higher time frame analysis. Accurately perceiving this connection prevents misinterpreting short-term noise as a major trend change.

2. Identifying Valid Trade Setups (Probabilities):

   • Higher Time Frames Validate: Major trading strategies (like ICT concepts, order blocks, fair value gaps, etc.) are often identified and validated on higher time frames. These levels represent significant areas where large market participants (institutions) have historically shown interest.
   • Lower Time Frames Refine Entries: While higher time frames show where to look, lower time frames reveal when to enter. A large order block on a daily chart might contain smaller, more precise entry zones on a 15-minute or 5-minute chart that align with the overall higher time frame direction. This reduces risk and improves the risk-to-reward ratio.
   • Example: A trader might identify a significant bullish order block on the weekly chart. They would then drop to the 15-minute chart to look for a specific entry pattern (like a break of structure or a small imbalance) within that order block that confirms the continuation of the anticipated move.

3. Adapting to Market Dynamics:

   • Context is Crucial: Market conditions change. What was a strong trend might become range-bound, or a pattern that worked yesterday might not work today. By constantly analyzing price action across time frames, traders can adapt their approach.
   • Spotting Shifts: A trader attuned to market structure across time frames can better identify when a trend is likely to reverse or when a range is about to break, allowing them to adjust their strategy accordingly.

4. Improving Decision-Making and Reducing Subjectivity:

   • Objective Levels: Market structure analysis, when done consistently across time frames, provides objective levels of support, resistance, and potential turning points. This reduces reliance on gut feelings or random indicators.
   • Confirming Bias: Higher time frame analysis can establish a bias (bullish or bearish), and lower time frame analysis can provide confirmation or refine the entry based on that bias. This layered approach builds conviction in a trade.

How to Achieve This Accuracy:

1. Start with Higher Time Frames: Begin by analyzing the monthly, weekly, and daily charts to understand the dominant trend, identify major ranges, and mark key swing highs and lows. These are your primary areas of interest.
2. Scale Down Incrementally: Once you have identified key levels and ranges on higher time frames, move to successively lower time frames (e.g., 4-hour, 1-hour, 15-minute) to find the specific price action that led to the breaks or confirmations of those higher time frame levels.
3. Identify Fractal Nature: Recognize that the patterns of highs, lows, ranges, and breaks occur on all time frames. The same principles of market structure apply whether you're looking at a yearly chart or a 15-minute chart, just at different scales.
4. Look for the "Why": Don't just mark levels; understand what price action led to those levels being significant. What specific candle formation, range break, or imbalance occurred? This helps in validating the importance of a level.
5. Connect the Dots: The ultimate goal is to see how the price action on lower time frames correlates with the structure identified on higher time frames. When these align, it provides a much higher probability trading setup.
6. Practice Consistency: Regularly practicing this multi-time frame analysis, even on lower time frames, helps in developing the "eyes" to perceive these structures and patterns consistently, which is what the speaker refers to as building perspective.

In essence, accurately perceiving market structure and price action across different time frames allows a trader to understand the underlying forces driving the market, identify high-probability trade setups, manage risk effectively, and adapt to changing market conditions – all of which are crucial for long-term success.

Here's a step-by-step process for trading using ICC and Wick Sauce 2.0, based on the speaker's explanations:

I. Understanding the Core Concepts (Prerequisites):

• Market Structure: Recognize that markets move in trends, which are characterized by higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend). These form "ranges."
• Fractal Nature: Understand that these trends and ranges exist on all time frames. What constitutes a trend on a higher time frame is made up of smaller trends and ranges on lower time frames.
• Imbalance and Balance:
  • Imbalance: Areas where price moved rapidly in one direction, leaving a "gap" between the high of one candle and the low of another (or vice-versa), indicating a strong imbalance of buyers or sellers. These are prime areas of interest for potential future price targets or entries.
  • Balance: Areas where buyers and sellers were more evenly matched, often represented by overlapping price ranges.
• Order Blocks: These are specific candles or ranges that were significant in causing a shift in market structure or a strong move. They often represent institutional activity.
• Liquidity: Price levels where a large number of stop losses are likely to be clustered (e.g., swing highs/lows, previous day highs/lows). Markets often seek to sweep this liquidity before continuing in a direction.

II. Trading ICC (Internal Structure Breakout / Break and Retest):

1. Identify the Dominant Trend/Range on a Higher Time Frame: Start by looking at a higher time frame (e.g., Daily, Weekly, Monthly) to understand the overall market direction and identify major support/resistance levels or significant ranges.
2. Find the "Trend-Defining" Structure: Within that dominant trend, identify the key swing highs and lows that define the trend.
   • For a Downtrend: Look for lower highs and lower lows. The "internal market structure" consists of these smaller peaks and troughs.
   • For an Uptrend: Look for higher highs and higher lows.
3. Wait for a Break of Structure: A key element of ICC is waiting for price to break through a significant internal high (in a downtrend) or low (in an uptrend). This break signifies a potential shift or continuation.
4. Identify the "Area Responsible for the Break": Once a break of structure occurs, look back at the price action that immediately preceded and caused that break. This area often contains imbalances or order blocks.
   • The "Order Block" or "Gap": This is typically the last opposing candle before the strong move that caused the break. For example, in a bullish breakout after a downtrend, it might be the last bearish candle before the strong upward move.
5. Wait for a Retest (Correction Phase): After the break, anticipate price to pull back or "correct" into the identified "area responsible for the break" (the order block or imbalance).
   • Correction Definition: A true correction requires lower highs and lower lows in a downtrend, or higher lows and higher highs in an uptrend. Price moving sideways or making a single higher high (in a downtrend) is not a correction.
6. Enter the Trade:
   • Buy Setup (after downtrend break): Wait for price to enter the identified bullish order block or imbalance zone. Look for confirmation, such as price holding above 50% of the zone or showing signs of rejection of lower levels. Your stop loss would typically be placed below the wick of the order block or the relevant low.
   • Sell Setup (after uptrend break): Wait for price to enter the identified bearish order block or imbalance zone. Look for confirmation, such as price failing to break significantly above 50% of the zone or showing signs of rejection of higher levels. Your stop loss would typically be placed above the wick of the order block or the relevant high.
7. Manage the Trade: Decide whether to scalp for quick profits or hold for a larger intraday or swing move based on your trading plan and risk management.

III. Trading Wick Sauce 2.0 (Focus on Imbalances and Precision):

1. Identify Significant Wicks/Swings: On a chosen time frame (the speaker often uses 1-hour or lower, but the principle applies higher up), look for "alone" swing points – candles that are significant highs or lows with no other candles immediately surrounding them that are higher or lower, respectively.
2. Find the Imbalance (Gap): Identify the "gap" or imbalance created by these significant wicks/swings. This is where price moved rapidly, leaving an area without much opposing price action.
3. Determine the 50% Level: Locate the midpoint of the identified imbalance zone. This 50% level is crucial.
4. Wait for Price Action at the Imbalance:
   • For a Bullish Setup: Look for price to come down into the imbalance zone. The ideal scenario is for price to sweep liquidity below the zone (manipulation) and then move back up, ideally closing above the 50% level, or at least showing strong buying pressure within the imbalance.
   • For a Bearish Setup: Look for price to move up into the imbalance zone. The ideal scenario is for price to sweep liquidity above the zone and then move down, ideally closing below the 50% level, or showing strong selling pressure within the zone.
5. Enter the Trade:
   • Buy: Enter when price shows strength within the imbalance, ideally after a liquidity sweep, and preferably at or below the 50% level. Place your stop loss below the significant low or wick that defined the imbalance.
   • Sell: Enter when price shows weakness within the imbalance, ideally after a liquidity sweep, and preferably at or above the 50% level. Place your stop loss above the significant high or wick that defined the imbalance.
6. Consider Psychological Alignment: Wick Sauce 2.0, especially when applied on lower time frames, requires a trader who is comfortable with rapid entries and exits, high frequency, and potentially lower risk-to-reward ratios, as the focus is on catching immediate inefficiencies. The speaker notes his own preference for this due to his natural inclination towards higher risk and frequency.

IV. Integrating Wick Sauce 1.0 Concepts (Optional Refinement):

• Wick Sauce 1.0: This involves waiting for price to confirm a shift in market structure (e.g., breaking out of a bearish range to the upside) before entering. It's about waiting for more confirmation than Wick Sauce 2.0.
• Wick Sauce 1.5: A simpler version where you enter at the 50% level of an imbalance without waiting for explicit confirmation of a shift, accepting the inherent risk.
• Wick Sauce 2.0: This is described as using the same principles but applying them to identify the precise imbalance/gap that led to a significant market move, often refining entries further. The speaker notes this is his preferred approach for scalping due to its focus on inefficiencies and potential for quick profits.

V. General Trading Advice:

• Risk Management is Paramount: Always know your risk per trade (e.g., 1-2% of your capital, or a fixed dollar amount) and ensure your stop loss is placed appropriately. Do not over-leverage, especially with small accounts.
• Patience and Discipline: Trading requires patience to wait for the right setups and discipline to stick to your plan, especially when managing trades or dealing with losses.
• Trade Your Profile: Choose a strategy (scalping, intraday, swing) that aligns with your personality. If you are naturally a scalper, forcing yourself to swing trade might lead to frustration and poor execution.
• Continuous Learning: The market is always evolving. Stay curious, keep refining your understanding of market structure, and adapt your approach as needed.
• Use Demo Trading: If you are new, practice these concepts extensively on a demo account before risking real capital.