What is ICT trading strategy Model 4? The best Forex Position strategy (2024)

In the intricate world of forex trading, the quest for a reliable and effective strategy is paramount for traders aspiring to navigate the turbulent waters of the market. A profound understanding of various trading approaches not only elevates a trader’s skill set but also arms them with the necessary tools to maximize their potential gains and minimize risks. Among the plethora of strategies available, one that stands out for its unique blend of market analysis and timing is the ICT Price Action Model Number Four, focusing on position trading with an emphasis on quarterly shiftsIn the context of forex trading, particularly for Inner Circle Trader (ICT) methodologies, a Quarterly Shift signifies a crucial period... More and seasonal tendencies. This approach, blending the strategic alignment of trading activities with quarterly shifts in major currencies and seasonal market trends, offers a nuanced perspective on the market, making it a topic of interest for both novice and seasoned traders.

Delving into the ICT Price Action Model Number Four, it’s crucial to dissect its components to understand its efficacy fully. This model operates by identifying potential shifts at the quarterly level in major currencies, which is then complemented by identifiable seasonal market tendencies.

A key element in this strategy is the utilization of SMTSMT, which stands for Smart Money Tool or Smart Money Technique, is a method used to identify divergences between closely... More (Smart Money Tool) Divergence and Commitment of TradersThe Commitments of Traders (COT) report is a weekly publication by the Commodity Futures Trading Commission (CFTC) that provides a... More (COT) hedging program, which together form a robust framework for predicting and capitalizing on market movements. The model’s reliance on a confluence of indicators, including a net data range and a comprehensive analysis of commercial traders’ net positions over a six-month period, showcases its comprehensive approach to market analysis. Understanding this strategy’s intricacies not only enhances a trader’s market insight but also equips them with a powerful tool in their trading arsenal.

What is the ICT Price Action Model Number Four in Position Trading?

ICT Model 4 Position Trading is a comprehensive trading strategy that focuses on leveraging the interplay between quarterly market shifts and seasonal trends in the forex market. This model, part of the ICT (Inner Circle Trader) methodology, is designed to capitalize on long-term market movements, distinguishing itself from short-term, speculative trading strategies.

The ICT Price Action Model Number Four focuses on position trading, emphasizing quarterly shifts and seasonal tendencies. This model is about strategically aligning trading activities with the anticipated effects of quarterly shifts in major currencies, complemented by seasonal market trends.

At the heart of ICT Model 4 Position Trading lies a detailed analysis of market behavior over extended periods. This model scrutinizes the quarterly shifts in major currency pairs, which are pivotal moments that can indicate significant changes in market trends. These quarterly shifts are often influenced by macroeconomic factors, financial reports, and global economic events, making them critical points for traders to observe. Discover more about ICT Forex Trading Market Structure and Smart Money Techniques

How Does the Quarterly Shift and Seasonal Tendencies Model Work?

This model operates by identifying potential shifts at the quarterly level in major currencies, coupled with identifiable seasonal market tendencies. It leverages a combination of SMT (Smart Money Tool) Divergence and Commitment of Traders (COT) hedging program. The aim is to exploit external range liquidity, focusing on the confluence of various indicators including a net data range of 20-60 days on the daily chart and a 6-month lookback on commercial traders’ net positions.

👉 DISCOVER THE SEASONAL TENDENCIES

What is the Significance of SMT Divergence in this Model?

SMT Divergence is crucial in this model as it helps in identifying discrepancies between a currency pair (like GBP/USD) and a correlated pair or the US Dollar Index (USDX). This divergence, especially when it aligns with the seasonal tendencies, provides a reliable indicator for potential market shifts.

How is the Commitment of Traders (COT) Data Utilized in this Strategy?

The COT data, particularly the positions of commercial traders, is analyzed over a 6-month period to gauge market sentiment. A net bullish or bearish position in the COT report can indicate the possible direction of the market, aligning with the quarterly and seasonal analysis.

What Role Do Liquidity Pools Play in this Trading Model?

Liquidity pools, such as equal highs or lows on the daily chart, are targeted in this model. The strategy involves anticipating market movements towards these liquidity pools, where large orders are expected to be triggered, thereby creating significant market movements.

Can This Model be Applied in Both Bullish and Bearish Scenarios?

Yes, the model is versatile and can be applied in both bullish and bearish scenarios. The approach will be mirrored depending on whether the seasonal tendency and quarterly shift indicate a bullish or bearish trend.

What is the Ideal Time Frame for Applying this Model?

The model is designed for position trading, which typically involves holding trades for several weeks to months. It requires patience and a long-term view of the market, focusing on monthly range expansions and significant price levels.

How Does One Execute Trades Using This Model?

Trade execution involves placing orders based on the last up closed candle’s open in a bearish scenario or the last down closed candle’s open in a bullish scenario. This is done when other criteria like SMT Divergence, COT data alignment, and seasonal tendencies are met. The stop loss is set at a safe distance from the entry point, acknowledging the long-term nature of the trade.