If you’re searching for a straightforward trading method that doesn’t tie you to your screen all day, the ICT Silver Bullet Strategy might be perfect for you. Michael Huddleston, also known as The Inner Circle Trader (ICT), developed this strategy to focus on specific times during the trading day and capture quick, short-term market moves.
What Is the ICT Silver Bullet Strategy?
The ICT Silver Bullet Strategy is a time-based trading approach that relies on understanding liquidity and fair value gaps in the market. In simple terms, it seeks moments when the price is likely to move rapidly in a predictable direction. This strategy is ideal for scalpers traders who aim to make small profits from quick trades.
When Does the ICT Silver Bullet Occur?
One of the best aspects of this strategy is that it only requires your attention during three specific one-hour windows each day, all based on New York local time. These times are:
- London Session Open Silver Bullet: 3:00 AM to 4:00 AM
- New York AM Session Silver Bullet: 10:00 AM to 11:00 AM
- New York PM Session Silver Bullet: 2:00 PM to 3:00 PM
By focusing on these periods, you can plan your trading around your schedule and avoid the need to monitor the markets constantly.
How Does the Strategy Work?
At its core, the ICT Silver Bullet Strategy is about understanding why prices move. Prices often shift to balance out any imbalances or to target areas where many orders are sitting this is known as liquidity.
To apply this strategy, start by identifying key liquidity areas. Before your chosen one-hour window begins, look at the 15-minute chart to find the nearest areas where buy or sell orders might be clustered, usually at previous highs or lows.
Next, observe price movement. If the price has just taken out liquidity on one side for example, it moved above a previous high it might now move to grab liquidity on the other side, such as moving down to a previous low. During your one-hour window, switch to a lower time frame like the 1-minute or 3-minute chart and look for a market structure shift. This is a change in the market’s direction that aligns with the next target area of liquidity.
After the market shifts, find the Fair Value Gap (FVG). This gap occurs in the price action when the market moves too quickly and doesn’t allow for trading at certain price levels. When the price retraces to fill the Fair Value Gap, that’s your opportunity to enter the trade. By entering at this point, you position yourself where the price is likely to resume its move toward the next liquidity area.
Choosing the Right Time Frame
Use the 15-minute chart to spot the bigger picture and key levels, but execute your trades on lower time frames like the 1-minute or 3-minute charts. This approach allows you to get precise entry and exit points, which is crucial for a scalping strategy.
Best Markets for the Strategy
Traders initially tested the ICT Silver Bullet Strategy on indices like the NASDAQ (NQ Futures) and the S&P 500 (E-mini). However, many have found success applying it to major forex pairs like GBP/USD and EUR/USD, as well as commodities like gold (XAU/USD). These markets tend to have enough volatility during the specified times to make the strategy effective.
Which Session Is Best?
All three sessions offer opportunities, but many traders prefer the New York AM Session Silver Bullet from 10:00 AM to 11:00 AM. This period often has higher volatility because it overlaps with the end of the London session and includes the New York Stock Exchange opening. Increased volatility can lead to bigger price moves, which is ideal for this strategy.
An Example Trade
Let’s walk through an example using gold (XAU/USD) during the New York AM Session. Before the session starts, you notice on the 15-minute chart that the price has just moved above a previous high this is buy-side liquidity. This suggests that the price might now move downward to target sell-side liquidity.
In the chart below, you’ll see the XAU/USD 5-minute timeframe, where the price moves above the relative equal highs and the Asian session high after 10:00 AM.
During the session, you switch to the 3-minute chart and see the market shift downward, indicating that sellers are taking control. After this shift, a Fair Value Gap appears where the price dropped quickly. When the price retraces back into the Fair Value Gap, you enter a sell trade.
You place your stop-loss just above the high that created the Fair Value Gap and aim for the next area of sell-side liquidity as your take-profit target. The price moves down as anticipated, reaches your take-profit level, and results in a successful trade.
Remember, while the setup occurs within the one-hour window, the trade itself may take longer to reach your target. Patience is important.
Understanding Daylight Saving Time
Daylight Saving Time (DST) can affect the timing of the sessions, especially if you’re in a region that doesn’t observe DST. To avoid confusion, always base your session times on New York local time. When New York shifts its clocks forward or backward, adjust your local trading times accordingly.
Final Thoughts
The ICT Silver Bullet Strategy offers a structured approach to trading that can be especially appealing if you prefer not to spend all day in front of your charts. By focusing on specific times and using clear criteria for entering trades, you add a powerful tool to your trading arsenal. Whether you’re new to trading or have years of experience, this strategy can help you make consistent gains by capturing short-term market movements.
Frequently Asked Questions (FAQs)
Yes, it is! The strategy is straightforward and doesn’t require complex indicators or extensive market analysis. However, it’s crucial for beginners to spend time learning how to identify liquidity areas, market structure shifts, and Fair Value Gaps. Practicing on a demo account before trading with real money is highly recommended.
No special software is needed. All you require is a trading platform that allows you to view candlestick charts and switch between different time frames. You can identify the key components of the strategy liquidity areas, market structure shifts, and Fair Value Gaps using standard charting tools.
Absolutely! You can apply the ICT Silver Bullet Strategy to various markets, including forex pairs, indices, and commodities like gold and oil. The important factor is that the instrument has sufficient liquidity and volatility during the specified trading sessions to produce the desired price movements.
Risk management is critical. Since you’re aiming for short-term moves, it’s essential to set a stop-loss to protect your capital if the market doesn’t move as expected. A common practice is to risk only a small percentage of your trading account on each trade, such as 1% or 2%. This way, a few losing trades won’t significantly impact your overall capital.
Common mistakes include entering trades outside of the specified time windows, misidentifying key liquidity areas, and neglecting to wait for a proper market structure shift and Fair Value Gap. Patience and sticking to the strategy’s rules are vital. Also, avoid over-leveraging your trades; always adhere to your risk management plan.