Profitable Crypto Strategy: Entry Model 1
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In this PDF I teach this Entry Model 1 step by step. We can call it a Swing Strategy. It's entirely based on ICT's 2022 YouTube
Mentorship model. I've modified it very slightly for trading crypto and backtested it with years of data. Let's get into it!
This model uses two timeframes: 4h & 15min. The example looks at a profitable short. Detailed instructions and definitions are on
every diagram.
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Note: Any FVG that forms before the 15m swing low is traded through can also be a valid
FVG. The FVG does not have to be created by the same candle that breaks the 15m
swing low, but it ideally it should be above the 15m swing low.
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Further Clarifications: Q & A
Why do I use the 4h/15m timeframes? Are other timeframes also valid?
I’ve found that the 4h/15m timeframe combination offers a great balance of win rate and frequency of occurring. But I also use this
strategy on other timeframes, and you can experiment for yourself. Timeframes I use include: 1D/ 1h, 2h/5m, 1h/5m, 15m/5m, 15m/
1m.
What is the win rate of this strategy?
The answer to this question, no matter what strategy you use, varies based on many factors, including:
• What R:R (risk/reward) ratio are you using? A 2:1 R:R has a higher win rate than a 5:1, for example.
• What timeframe are you using? The lower the timeframe, the lower the win rate. The higher the timeframe, the higher the win rate.
• Are you trading with or against the macro-trend? If we are in a macro downtrend, shorts have a higher probability of profitability
than longs. The opposite for a bull market. In a ranging market, both shorts and longs have a good chance.
• When are you moving your stop loss to break even? This is an art in itself—obviously the sooner you move it to break even, the
higher your win rate might be, but also a higher chance that you get stopped at break even before the trade goes to your target.
• Are you taking partial profits? It’s a good idea to take partial profits.
So as you can see, the answer is not so simple. Having said that, I have found that the win rate of this strategy, using the 4h/15m
timeframe and an R:R of 2:1, is around 40% for $btc. This is just by taking the trade no matter when the setup occurs, without being
discretionary. When you start taking partial profits and moving your stop loss, that % increases. This is to say—based on historical
data, if you use this strategy and practice proper risk management, you will be profitable.
To give you an idea of what returns can look like, here is a
hypothetical return over 100 trades, risking 1% per trade,
with a fixed R:R of 2:1.
Again, this all varies based on a number of factors, and you
should never risk money that you cannot afford to lose.
Nothing in this document is financial advice.
Do you use other indicators for this strategy, such as moving averages?
I do not. All the information you need is in the candles themselves, and the fibonacci tool. Of course, you can always try indicators for
more confluence!
Does this setup have to form during a specific session/time of day to work?
In my experience, for crypto, no it does not. Of course, ICT recommends only to trade during certain hours of the day, but he focuses a
lot on very low timeframes. I find that if you are waiting for a 4h swing break, and your confirmation is on the 15m timeframe, time of
day is not as important (for crypto).
Can you use this strategy on every crypto pair?
You can use this strategy on every pair across all markets. I’ve backtested it with many coins and they all have positive results. But I
like to stick to high cap markets because they are more orderly in their delivery (fewer scam wicks). In crypto, that means $btc and
$eth, and a few other big coins such as $sol.
What if there is more than one FVG?
In this version of the strategy, you use the one closest to the 0.5 fib (as long as part of the FVG is at least at the 0.5 level).
How long should I wait for price to return to the FVG and enter the trade?
Let’s imagine that conditions form to enter a long, but price does not return to the FVG before reaching our targets. If that happens I
will cancel the long. This is because the target for this strategy is internal liquidity, and sometimes external liquidity (4h swings). If all
of this liquidity is taken before I have the chance to enter the trade, then it does not make sense to enter the trade anymore, because the
targets have already been reached. This is why you must know what your targets are before you enter the trade
What counts as a valid 4h swing high (or swing low if wanting to long)?
In principle, any swing high that has not already been traded through after it forms is valid. But all “steps” must present themselves in
order to take the trade, no matter what.
How do you backtest a strategy?
There are two ways: manually, or with a bot. Manually, you just look at a lot of past price action for examples of the pattern, and see if
the trades would’ve won or not. This is very good for improving. With a bot, you program it to find all instances of the pattern for you
and gather the data. It’s great to test a strategy across multiple pairs/markets.
Can I use this for longs as well?
Of course! You just modify the steps for longs. It looks like this for longs:
Step 1: A 4h swing low is formed.
Step 2: Price trades through the 4h swing low.
Step 3: Mark the last 15m swing high that formed before price traded through the 4h swing low.
Step 4: Price trades through the 15m swing high and a 15m candle body closes below it.
Step 5: The candle that trades through the 15m swing high also creates a FVG, or leaves one below it. The FVG does not have to be
created by the same candle that breaks the 15m swing high, but it ideally the FVG should be below the 15m swing high.
Step 6: Price trades back into the FVG
Step 7: Price retraces to at least the 0.5 fib level
Step 8: Enter the trade when price is in the FVG and above the 0.5 fib
Step 9: Place your stop loss below the swing low (this should be done at the same time you enter the trade)
Steps 10, 11, 12: Take profits!
Can you include some examples of longs?
Yep! Here are a couple:
Long example 1:
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Long example 2:
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Well, that’s all for now! If you enjoyed this, give me a follow on twitter @resistanceflip. All likes and retweets help immensely. I will
release more entry models in the future.
-Rez
