LOGIC FOR

TRADING
FIND CLARITY IN THE MARKETS

INTRODUCTION
101

PRESENTED BY @ADEZXBT
LOGIC FOR
TRADING

TABLE OF CONTENT
These are the sections and main pages.

1.INTRODUCTION TO LOGIC 2. INTRODUCING MODUS PONENS

Page 4 - Page 11 Page 12 - Page 15

3.FREQUENT MISTAKES IN 4. UNDERSTANDING ALL MODELS

LOGICAL REASONING
Page 17
Page 16
4.1BUILDING A TRADING SYSTEM
STEP BY STEP

Page 18-38

BRINGING IT ALL TOGETHER CLOSING THOUGHTS

Page 43-49 Page 50-52

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BY THE END OF THIS GUIDE

By the time you finish this PDF, you’ll have mastered the basics of propositional logic and
learned how to apply it to trading. The concepts are simple, the application is straightforward,
and everything you’ll learn is focused on helping you trade and think more effectively.

You’ll also understand how a trading model is built, how to learn different models, and
even how to construct your own. Additionally, you’ll gain the tools to learn my model,
Kane’s, TTrades’, MMXM’s, or any other profitable trader’s model with verified payments
and live trading records.

This PDF is designed to provide you with the foundational knowledge and practical steps
necessary to confidently develop and refine your approach to trading.

Trading isn’t about being right all the time—it’s about

using logical, repeatable rules to stack the odds in your
favor.

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KNOWLEDGE YOU SHOULD HAVE BEFORE READING THIS

GUIDE

This guide was created so anyone can extract value from it, whether you’re a
profitable trader or a beginner. However, to fully understand everything here, you
should ideally have a basic understanding of price action. Yes, that’s all you need to
know!

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INTRODUCTION
ABOUT LOGIC AND WHY IT MATTERS

Logic is a field of study rooted in philosophy and mathematics that helps us understand the
structure of reasoning. It provides the tools to evaluate whether an idea, statement, or
argument is valid and makes sense.

In simple terms, logic is about organizing thoughts and information in a clear and consistent
way. Imagine it as a set of rules or a guide that helps you think more effectively and make
better decisions—whether you're solving a problem, making a prediction, or analyzing data.

In trading, logic becomes a critical skill. It allows us to focus on what truly matters by cutting
through emotions and uncertainty. By using logical principles, traders can make decisions
based on probabilities and evidence rather than gut feelings or impulsive reactions. This
creates a more structured approach to analyzing markets, making the process clearer and
less overwhelming.

"Logic is the trader’s compass—it cuts through uncertainty, guides your

decisions, and leads you to consistent success."

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LOGIC IN MATHEMATICS
AND ITS APPLICATION TO TRADING

Over the centuries, mathematicians and philosophers have developed systems of

logic to establish universal truths and draw conclusions based on rules.

In mathematics, logic often takes the form of formulas that help us structure and
analyze relationships between ideas.

For this PDF, we’ll focus on a specific type of logic known as propositional logic,
which is simple, effective, and perfectly suited for trading. Within this system, there’s
a powerful rule of reasoning called modus ponens, and it will form the backbone of
how we approach market analysis.

But before diving into the modus ponens formula and its application, we need to
understand the vocabulary of logic.

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LOGIC VOCABULARY

To build a trading system based on logic, we first need to understand the basic terms
that form the foundation of logical reasoning. These concepts are simple but powerful
tools to structure your analysis and decision-making.

2.1 Premises
A premise is a statement or fact that provides the foundation for a conclusion. In
trading, premises are observations or conditions that we believe to be true about the
market.

Example in Trading:
Premise 1: Price moves from one liquidity zone to another.
Premise 2: High-timeframe levels act as magnets for price.

These premises form the basis for the rules we will create later.

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INFERENCES

2.2 Inferences

An inference is the logical connection between premises and conclusions. It’s how we
derive what might happen next based on the information we have.

Example in Trading:
If price rejects a high-timeframe level (Premise),
Then it is likely to move toward the next liquidity point (Conclusion).

Inferences allow us to turn market observations into actionable rules.

2.3 Logical Statements

Logical statements connect premises and inferences into a clear rule. The most
common form is the if-then structure:
If Condition A is true, then Outcome B is likely to happen.

Example in Trading:

If price breaks a Fair Value Gap (FVG) with volume,

Then it will likely expand to the next liquidity point.

By using premises, inferences, and logical statements, we create a framework to

organize information and make decisions based on probabilities—not emotions.

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PREMISE VALIDITY

2.4 How Do We Define What’s True in Trading?

Now, an important question arises: How do we define what’s true and what’s not?
How do we decide which premises to use as the foundation of a trading system?

For example, if someone claims that price will react from a Fair Value Gap (FVG), how
do we determine if that statement is true? The answer lies in data.

Reliable, well-tested data is the backbone of any robust trading system. Only through
observation and analysis of historical data can we validate our premises and ensure
our logic is built on facts—not assumptions.

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DATA SOURCES FOR PREMISES

To validate premises and build a strong logical foundation for your trading system,
reliable data is essential. There are several methods to collect and analyze this
data:

Modern Platforms:

Advanced tools like Edgeful or Rise Analytics provide objective and detailed
insights into market behavior. These platforms enable you to test ideas quickly and
identify patterns that align with your premises.

Backtesting and Journaling:

The traditional approach involves testing strategies on historical data and

meticulously documenting the results. This process helps traders develop a deeper
understanding of how markets react under different conditions and builds
confidence in their premises.

Historically, traders relied on handwritten journals or books, often learning through

trial and error. Today, while information is more accessible, the abundance of
misinformation—often shared by "traders" who don’t trade for a living—makes
finding reliable insights more challenging. That’s why using trustworthy sources
and conducting your own analysis is critical to success.

You can find access to a complete Journal here

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About Professors:

The last source of information worth considering is good professors.

Think of it this way: when you hire a doctor, you usually check their credentials to
verify they have the proper qualifications. For traders, the closest equivalent is a
prop firm certificate, which demonstrates the ability to trade successfully under fair
and specific conditions.

If you’re planning to learn a strategy from someone, always ensure they have prop
firm certifications to back up their knowledge and skills. However, having
certifications isn’t enough. One common issue is that some professors lack a solid
foundation in logic, relying instead on intuition rather than clearly defined rules they
can teach.

Additionally, even professors who do use logic might struggle to communicate their
knowledge effectively, especially if they don’t consider that you may lack a logical
foundation to begin with. To find the right mentor, look for someone who
understands logic, follows a clear step-by-step model with well-defined rules, and
is capable of teaching it in a way that you can understand.

At the end of this guide, I’ll share specific criteria for building a model and outline
the components you should focus on to ensure your rules are clear and actionable.

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SECTION SUMMARY

You now have a solid foundation to grasp the formula I’m about to introduce. Don’t
worry—there’s no need to feel intimidated. You’ll soon see just how simple it really
is!

The most important takeaway here is learning to validate your premises and
determine if they are true. It’s all too common to see traders flaunting big PnL
numbers, luxury cars, and rebranding well-known strategies with flashy names like
CRT. A prime example of this is individuals like Romeo—people who speak to you
as if they’re intellectually superior, making you feel as though they’re gatekeeping
some hidden market secret. You might even find yourself drawn to these people.

But I urge you to think critically and clearly. As the renowned mathematician and
philosopher Sir Bertrand Russell once said:
“When you are studying any matter or considering any philosophy, ask yourself
only: what are the facts, and what is the truth that the facts reveal?”

I know it’s tempting to believe that every strategy you come across will make you
rich, that the cars and millions being flaunted are real. But don’t let appearances
mislead you. Ask for proof. Request certificates, payouts, live trading , and a track
record if posslble. If someone truly has nothing to hide, they’ll provide this
evidence willingly.

Believe in facts, not in self-proclaimed “gatekeepers” who claim to possess secret

strategies.

If you believe in facts and data, a new world opens up to your understanding. With
a proper framework for drawing conclusions (Logic) you’re already millions of
steps ahead of the majority of people.

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INTRODUCING MODUS PONENS

Now, at this point, you should already understand what premises are, the importance
of having correct premises based on reliable data, and what inferences are.

This knowledge gives you the foundation to explore one of the most fundamental
logical principles for trading: Modus Ponens.

Modus Ponens is a basic form of reasoning that allows us to draw a conclusion

if certain conditions are met. It’s represented by the following formula:

P⟹Q (If P, then Q)

P (The condition P is true)

Q (Therefore, QQ must also be true)

What This Means:

P represents the premise or condition (the "if" part).

Q represents the outcome or conclusion (the "then" part).

In simpler terms:

If we know that P implies Q, and we observe that P is true, we can confidently

conclude that Q is also true.

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MODUS PONENS WITH REAL LIFE EXAMPLES

Start with relatable scenarios to make Modus Ponens easy to grasp before
transitioning into trading.

Example 1: Weather and Umbrella

• Premise: If it rains (P), then I will carry an umbrella (Q).

• Observation: It’s raining (P is true).
• Conclusion: Therefore, I will carry an umbrella (Q is true).

Example 2: Exam Preparation

• Premise: If I study (P), I will pass the exam (Q).

• Observation: I studied (P is true).
• Conclusion: I will pass the exam (Q is true).

If you’ve understood this, congrats! You’ve just tapped into the core of critical
thinking and the logic behind how computers and coding actually work.

The if-then structure we’ve covered isn’t just theory—it’s the foundation of
algorithms, software, and so much of the tech we rely on every day. By getting this
down, you’ve learned how to spot cause-and-effect patterns and apply logic to real-
world problems. And honestly, this is just the start—get ready to see things in a
whole new way!

Now, it’s time to implement this into trading.

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MODUS PONENS WITH TRADING

At the end of this guide, I will share the premises I use, the reasoning behind
them, and my entire model. These are just examples of logical reasoning in
action.

Connect the logic to practical trading scenarios. Here’s a simple flow:

Trading Example 1: Fair Value Gaps (FVG)

• Premise (P⟹Q): If price enters a daily Fair Value Gap (P), then it is likely to react and
move in the opposite direction (Q).
• Observation: Price enters a daily Fair Value Gap (P is true).
• Conclusion: It is likely to move in the opposite direction (Q is true).

Trading Example 2: Breakout Strategy

• Premise (P⟹Q): If price breaks a key resistance level with increasing volume (P),
then it will likely continue to trend upward (Q).
• Observation: Price breaks resistance with high volume (P is true).
• Conclusion: The trend is likely to continue upward (Q is true).

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3. Exercises to Reinforce Understanding

In this section, we’ll go through some exercises together. It’s crucial that you
maintain an active approach to learning while reading this guide. Take notes, put the
knowledge into action, and engage with the material fully.

Have you ever attended a math class where you felt like you understood everything
during the lesson, but the moment you tried to solve the exercises, you couldn’t
figure it out? That’s because passive learning isn’t enough—active engagement is
key. So, as you go through this guide, make sure you’re actively studying, applying
the concepts, and testing your understanding. Let’s get started!

Create engaging exercises where users identify premises and draw conclusions.

Exercise 1: Fill in the Blanks

• Premise: If the market is in a strong uptrend (P), then pullbacks to the 50 EMA are
good buying opportunities (Q).
• Observation: The market is in a strong uptrend and pulls back to the 50 EMA (P is
true).
• Question: What is the logical conclusion?

Exercise 2: True or False?

• Statement 1: If a trader follows a consistent risk management plan (P), they will
avoid large drawdowns (Q).
• Observation: The trader follows the risk management plan (P is true).
• Conclusion: They will avoid large drawdowns (Q is true).
• Answer: True/False? Why?

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FREQUENT MISTAKES IN LOGICAL REASONING

To build a robust logical system, it’s crucial to recognize the common mistakes
people make when applying logical reasoning. One frequent error is
overgeneralization.

For example, you might expect price to react to a Fair Value Gap (FVG) and take it
as a fact that this always happens. In reality, price doesn’t consistently react to an
FVG. Assuming it does leads to flawed decision-making because the premise isn’t
universally true.

Another mistake is failing to consider all relevant factors. Markets are influenced
by countless variables, and ignoring these can result in oversimplified conclusions
that don’t hold up under real-world conditions.

And also, one of the biggest and key logical mistakes people make is assuming
that because something failed once, it doesn’t work. You should backtest at least
around a hundred trades of a model to gather significant data on how it performs.
No model has a 100% win rate—failures are simply part of a profitable system.

In the next section, I’ll show you how to build a proper trading system that
accounts for all factors and avoids these pitfalls.

We’re going to build arguments using logic and connect them to create an overall
model that works seamlessly, like a perfectly aligned set of gears in motion.

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UNDERSTANDING ALL MODELS

The foundation of any successful trading model lies in its key elements—the
components that all models share, regardless of the strategy. Whether it’s EMAs,
MMXM, ICT, or any other system, they fundamentally operate on the same principles.

While I won’t go too deeply into why these indicators are often just variations of the
same formulas presented in different ways, we will focus on identifying the core
elements common to all profitable models. I’ll refer to these as the Essentials or Key
Components.

In the following pages, we’ll delve into these core components that unify all successful
trading models. Equally important, we’ll explore the minor characteristics that distinguish
one model from another. To illustrate this, I’ll use examples of well-known models such
as the Unicorn Model and the Fractal Model.

Finally, I’ll guide you through the specific model I use, demonstrating how to apply its
logical structure to elevate your own trading.

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BUILDING A TRADING SYSTEM STEP BY STEP

Now that we’ve explored premises and inferences and how they merge to form the
foundation of logical trading, it’s time to move into building a complete trading system.
This involves selecting reliable premises and combining them systematically to create
a top-down model—a system with consistent timeframes, clear rules, and precise
entry models.

To make the process structured and easy to follow, I’ve broken it down into key
Essential Components (which in logic are our premises—things we accept as true)
that every profitable model should include:

In the next sections, we’ll cover each concept in depth separately.

Liquidity Piece

This is where we identify high-timeframe liquidity points, such as swings and

FVGs. These levels represent areas of liquidity where price is naturally drawn,
acting as magnets for price movement.

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Timeframes Piece

Correlated timeframes are the backbone of any robust trading system. This section
focuses on how to align multiple timeframes to analyze market behavior effectively.
By understanding the relationship between different timeframes, you’ll gain clarity
and precision in your trades.

It is also important to emphasize and take note that maintaining consistent

timeframes will lead to consistent losses and consistent wins, which is essential for
achieving clean, long-term results.

Structural Piece

This piece involves entry models based on specific price behaviors, such as
reversals, continuations, or breakout structures. The goal here is to use the market’s
structure to pinpoint optimal entry and exit points. I’ll demonstrate how to build
simple, logical rules around structure to maximize your trading edge.

(This type of entry is the CISD entry, which I use. We will cover my
recommendations in detail in the in-depth guide on entry models.)

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Timing Piece

The hours you trade play a significant role in determining your success. Certain times
of the day offer greater volatility and better opportunities, while others are less
favorable. This section highlights how to integrate timing into your system, ensuring
that you trade during hours that align with your strategy.

And again, consistent hours will lead to consistent results.

Risk Management Piece

No trading system is complete without a robust risk management framework. This

piece ensures that your capital is protected while maximizing your potential returns.
The key elements of risk management include:
• Position Sizing: Adjusting the size of your trades based on account size and risk
tolerance.
• Drawdown Limits: Setting clear rules to limit your losses and protect your account.
• Trade Management: Having predefined stop-loss levels and trailing stops to secure
profits.

Risk management isn’t just about avoiding losses—it’s about creating consistency and
longevity in your trading career.

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DIVING DEEPER ON PREVIOUS CONCEPTS

In this section, we’ll focus on creating logical rules for the key components we
discussed earlier. These rules form the foundation of a robust trading system,
providing structure and consistency to your approach. We’ll begin with Liquidity—a
fundamental concept that explains the natural flow of price.

Logic is the cornerstone of this framework, and for transparency, I’ll present the full
reasoning behind each premise. This includes the data or explanation of why a
concept works and why I accept it as true, this is one of the most important parts of
the PDF

At the end, I’ll translate these ideas into clear IF-THEN rules that you can apply
directly to your trading.

Please be patience, at the end everything will fit smootly one to another

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LIQUIDITY

One of the most fundamental premises in trading is that price moves between ERL
(External Range Liquidity in the form of swings) and IRL (Internal range liquidity in
the form of FVGs). This concept simplifies market behavior into logical movements
between liquidity zones, such as swings and gap

To simplify this, we can understand it like this: price moves from swing
highs to FVGs and from FVGs to swings (with one exception that we will
cover in the following pages).
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LIQUIDITY PREMISE VALIDITY

Price moves between swings and Fair Value Gaps (FVGs) due to the underlying
mechanics of liquidity and market efficiency. Swings and FVGs represent liquidity
zones, where institutional players place large orders. As price approaches a swing
high or low, it triggers stop-loss and pending limit orders, providing the liquidity
needed for institutions to execute trades without significant slippage.

FVGs, on the other hand, are imbalances created when price moves rapidly in one
direction, leaving behind unfilled buy or sell orders. These gaps represent
inefficiencies in the market’s supply and demand. Since markets naturally aim for
efficiency, price often revisits these gaps to rebalance unfilled orders.

Swings also act as stop-hunting levels, where price moves to collect liquidity from
stop-losses placed by retail traders. This provides the fuel needed for large players
to enter or exit positions efficiently.

In essence, price is naturally drawn to these areas because they provide the
liquidity and balance required for efficient market operations.

On my YouTube channel, you’ll find a video that goes into more depth about
this topic.

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LIQUIDITY EXAMPLES AND RULES

Liquidity defines the behavior of price as it seeks specific points in the market. We
focus on two types:

ERL (External Range Liquidity): Swing Highs and Swing Lows that act as
external liquidity targets.
IRL (Internal Range Liquidity): Fair Value Gaps (FVGs) or imbalances within
the range where price reacts in the short term.

Rules:
IF price forms an LTF reversal at an IRL, THEN it will draw towards the nearest
ERL.
IF price violates an IRL, THEN it will draw to the ERL that created the IRL.
IF price forms a reversal at an ERL, THEN it will draw back towards the nearest
IRL.

Practical Application:
Mark ERLs and IRLs on daily, 4H, or 1H charts.
Watch for reversals or violations at these levels using timeframe alignment and
structural confirmation (Next steps)

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ORGANIZING TIMEFRAMES

Timeframes have a direct correlation because price behavior on lower timeframes

reflects the broader context established by higher timeframes.

We’ll structure this into three levels of timeframes and explain how to use them
effectively to build a clear narrative and define entries. Remember for the future pages
that we can enter trades upon confirmation at the second level (Mid TimeFrame
Structure), while the third level will be used EXCLUSIVELY for session-based
strategies.

HTF Key Levels (Our Narrative)

This level corresponds to the higher timeframes that define our market narrative and
the key levels where larger market participants operate. At this level, we identify the
most significant liquidity points.

The timeframes we use here are

Monthly, Weekly and Daily

Each of these timeframes will be treated as a single segment and will branch into
smaller ones. Each of these develops in a different way, as we will see at the end.

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Mid Timeframes (Transition and Confirmation)

The mid timeframes are the transition point where a trend shift in HTF begins to
reflect on lower timeframes. This is where we look for structural shifts to confirm
entries. The mid timeframes vary depending on the HTF you are using as your
reference:

• For the Monthly, we use the Daily as the mid timeframe.

• For the Weekly, we use the H4 as the mid timeframe.
• For the Daily, we use the H1 as the mid timeframe.

3. Session-Based Timeframes

The session-based timeframes are used for precise intraday entries and managing
trades within specific trading sessions. The correlations here are:

• For H4, use M15 for intraday setups.

• For H1, use M5 for precision entries.
• For M15, use M1 for scalping or session-focused strategies.

Here, we need to have an established HTF DOL, with price already moving
from the IRL to the ERL or ERL to IRL.

The H4, H1, and M15 timeframes should already be confirmed as bullish, meaning
the inflection point should have already occurred. Our approach is to treat the H4,
H1, and M15 as if they were HTF charts and position ourselves within this bullish
structure by using LTF during sessions.

In another PDF, I’ll cover this concept in more depth and provide a detailed
explanation.

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THE CURVE: ONE PERSPECTIVE TO VIEW IT FROM

This transition point is where the price action reverses and where our mid-timeframe
structure aligns with the H4

Have you ever asked yourself at what point the HTF structure decides it’s a good
time to reverse? Well, it happens at HTF key levels and mid-timeframe shifts

Remember, every HTF retracement will be contained within a mid-timeframe

reversal or shift.

This transition or inflection point is where we observe an MTF shift within

our HTF array.

I’ll provide an example in the next page to show how this looks on real charts.

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EXAMPLE OF THE CURVE

This is a clean example I shared live in the Discord group I trade in,
@TheLabTrading. Here, we have a monthly array this is our HTF Timeframe, and
I use the mid-timeframe structure, which is the daily timeframe for the Monthly
Levels, as my entry trigger.

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LIST OF CRITERIA FOR TIMEFRAMES

Here is a list of criteria related to the timeframes, as outlined in one of my

previous PDFs.

Here, I’m using the Daily, H1, and M5 as an example, as these are the ones I use the
majority of the time. However, you can adjust this by replacing the Daily with the
Weekly, the H1 with the H4, and the M5 with the M15.

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FRACTALS FOR TIMEFRAME ALIGNMENT

This are some fractals that might help you to visualize more this timeframes
correalation

Here, I’m using the MMXM perspective, but I want you to focus on timeframe
alignment, IRL /ERL are our HTF POI (Daily, Weekly, Monthly) and the ITM occurs
here, this is where the trend shift.
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TIMEFRAME CONNECTIONS

At this point, you should already see the connections these timeframes create and
understand that having an HTF DOL is the MOST important factor and the
foundation where every analysis begins.

If you ever feel unsure about how to approach a blank chart, follow a structured
order: start with the yearly, then move to the monthly, weekly, and finally the
daily.

Once you’ve analyzed these, select the one that feels the cleanest and clearest to
you, and only trade when you observe a mid-timeframe structure aligning with your
liquidity POI.

For instance, if we’re trading at ATH (All-Time Highs) on indices, which happens
often, a new ATH will continue to act as our DOL. If you have any questions about
trading at ATH or would like me to explore this topic further, feel free to share your
feedback or comments

Additionally, you can check out one of my YouTube videos titled Building a
Trading Narrative, where I demonstrate these concepts live.

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TIMEFRAME PREMISE VALIDITY

How can I know if timeframes are truly correlated?

The reason I consider this true is based on observation, experience, and MMXM
teachings, as it’s difficult to obtain concrete data for this. In the end, we can be
somewhat flexible with timeframes, but it’s crucial to ensure as many of them as
possible are aligned in the same direction to confidently trigger a trade.

I implore you not to believe me or anyone else—do the backtesting and test it for
yourself. See if you can gain more clarity when you work with a consistent structure.
As mentioned before, you’ll notice consistent losses and consistent wins, which is the
foundation for most strategies. Even oscillators or EMAs, for example, work this way:
you select an HTF EMA and use the LTF EMAs to identify shift trends.

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CHOOSE A TRADING PROFILE

Just like we use logic to build rules, we must also use logic and rationality to
determine the type of trader we want to be. You can’t aim to be a scalper in every
NY session if your real-life schedule doesn’t allow it. Trying to trade while working
might not be the best idea either. Just like we collect data from empirical
observations in the market, we need to do the same with our personal lives.

Ask yourself: What aligns with my current life? Not what you aspire to become, but
what fits your reality and what you can currently do.

Personally, I do have the time to scalp and be in the market all day, but I prefer to
spend most of my time studying, reading, or spending quality time with my loved
ones. I scalped for many years to accelerate my progress. Now, I only scalp during
the NY session for 1-2 hours from Monday to Friday. My main focus is on higher
timeframes (HTF), so I prioritize intraday BTC trades, analyzing from the daily to H1
timeframes.

Let me help in the next page to help you find a trading profile that fits your lifestyle
and aligns with your goals.

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What timeframe alignment should I use?

1.1

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As stated in the scalper profile, the most important thing is to select a style that fits
your time and the reality of your life. You can’t swing trade unless you’re using
funded accounts or have enough capital to support it. You can’t scalp if you don’t
have the time to be present during the NY or LN kill zones.

You can’t day trade if you dislike setting alarms and responding to them at any
hour of the day. Be rational and choose a style that aligns with your current reality,
not what you wish it to be.

And please, don’t let yourself be influenced by people who say, “If you get angry
easily, don’t scalp.” We’re grown-ups—learn how to control yourself. If you
struggle with emotional control, seek help from someone with proper credentials,
like a psychologist also trained in neuropsychology Get studies and unless you
have a genetic condition, work on treating and improving yourself before trading
anything with professionals . Our brains are far more capable than most people
believe, and with effort, you can develop the mental discipline required for any
trading style.

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LOGICAL RULES FOR TIMEFRAMES

1. Top-Down Analysis Rule

• IF a trend or liquidity zone is identified on the Higher Timeframe (HTF),
• THEN use the Mid-Level Timeframe (MTF) and Lower Timeframe (LTF) to refine
and execute trades within that context.

2. Confluence Rule
• IF multiple timeframes align (e.g., HTF shows bullish structure, MTF confirms a
reversal, and LTF triggers a precise entry),
• THEN the probability of success increases significantly.

3. Confirmation Rule
• IF price reacts to a key liquidity zone on the HTF,
• THEN wait for confirmation on the MTF or LTF (e.g., a break of structure or a
reversal pattern) before executing a trade.

4. Context Rule
• IF there’s a conflict between timeframes (e.g., HTF is bullish but LTF shows a
bearish pullback),
• THEN prioritize the HTF as the dominant context, and use the smaller timeframe
setups cautiously or as retracement trades.

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STRUCTURE - ENTRY MODELS

Structure refers to the type of entry model you’ll use to time and execute trades with
precision. By this point, we’ve covered timeframesand liquidity, and now we’ll focus
on entry models.

For this section, I’ll introduce the entry model I’ve found most successful through trial
and error and extensive backtesting: CISD (Change in the State of Delivery). If
you’re unfamiliar with this concept, you can find more information about it on my
YouTube channel.

“This is the key for reversals "video

In this guide, I apply the CISD model primarily on the H1 timeframe as my

intermediate timeframe. For example, if the Daily timeframe is my HTF, I’ll look for
CISD formations on H1 to refine my entries.

This is an ICT teaching I accept as true: Orderblocks are a real and valid concept.
For practical reasons, I won’t go too deep into the specifics of orderblocks here.
However, I consider CISD (Change in the State of Delivery) as the activation of the
orderblock, serving as the first confirmation that validates its relevance.

This exemplifies the CISD entry, a well-known type of entry strategy.

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LOGICAL RULE FOR ENTRY MODEL USING CISD

• IF price hits an IRL and forms a CISD on the lower timeframe,

• THEN execute a long position targeting the opposing ERL.

• IF price hits an ERL and forms a CISD on the lower timeframe,

• THEN execute a short position targeting the opposing IRL.

In this example, you can see the CISD entry in action with the IRL transitioning to the
ERL on the chart. I selected the IRL from a higher timeframe because it overlapped with
the OB/CISD, which makes it a stronger entry. The more confluences you have, the
stronger the CISD becomes. As mentioned before, you can see this in action in my
YouTube video for further clarification.

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ABOUT MY ENTRY MODEL AND ALL ENTRY MODELS

Entry models like CISD are the bridge between analysis and execution. By
consistently identifying structural shifts on lower timeframes at liquidity points, you
establish a logical and repeatable process for precise trade execution.

For example, the Unicorn Model uses a different entry model compared to CISD. It
relies on breakers and Fair Value Gaps (FVGs) as confirmation. A breaker is
essentially a structural shift validated by both body and wick breaks, and trades are
only executed when an FVG is present. By simply changing this small detail in the
entry criteria, you create an entirely different model

Let’s take the fractal model from TTrades as an example. This model is based on
raiding liquidity first and THEN forming a CISD.

The entry is executed when a candle closes above a previous candle of the same
timeframe, such as previous day highs aligning with a monthly key level and combined
with an H1 CISD.

A critical aspect of this model is to only enter after the daily candle closes to confirm
the move. This ensures alignment with the broader structure and minimizes the risk of
false signals. However, in my personal approach, I often enter after the first CISD,
anticipating the daily close. This is because I primarily trade cryptos, which are
extremely volatile, and waiting for the daily close might mean missing a significant part
of the move. Anticipating the close allows me to capitalize on volatility while
maintaining a logical structure.

But can you see the commonality? All models rely on timeframe correlation and HTF
liquidity raids, which are the essential components that underpin most profitable
trading systems.

Next, we’ll explore timing and risk management, two critical components for optimizing
trade performance and maintaining system consistency. Let’s continue building!

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TIMING
Executing Trades at the Right Hours

Timing is a crucial component of any trading system. Certain hours of the day
consistently offer higher volatility and better opportunities. Platforms like Edgeful
provide empirical data showing that specific time windows, such as Killzones, are
statistically the most active and productive for forming daily highs and lows and
big ranges.

By analyzing historical data from currency pairs or other assets, we can observe
that volatility peaks during these sessions. This makes Killzones critical for
aligning trades with liquidity and directional market moves.

For crypto, I’ve personally found that there are broader time windows where price
often forms the daily highs and lows. To explore this concept in more detail, feel
free to consult the rest of my material.

Logical Rules for Timing

Killzone Rule

• IF Killzones are the highest-probability hours to form daily highs and lows or
biggest ranges

• THEN focus your trade entries exclusively within these time windows to
maximize your edge.

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RISK MANAGMENT

Risk Management - Protecting Your Capital

Risk management is the backbone of any successful trading system. Even the
most effective strategies will fail without proper risk management. This step
focuses on protecting your capital, ensuring you can trade consistently over the
long term, and avoiding catastrophic losses.

While there are no universal rules that apply to every trader, your risk tolerance
should align with the conviction you have in each trade. The more criteria your
trade meets, the higher your confidence might be—but discipline is still key. Here
are some of the rules I personally follow:

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LOGICAL RULES FOR RISK MANAGMENT

Rules for Risk Management

1. Position Sizing Rule

• IF the calculated position size risks more than 2% of your account,
• THEN reduce the position size to stay within the limit.
2. Conviction-Based Risk Rule
• IF the trade meets most or all of your criteria (e.g., Daily bias, Killzone timing, liquidity
alignment),
• THEN consider increasing risk slightly (e.g., 1.5-2%) but never exceed your
maximum risk tolerance.
3. Risk-to-Reward Rule
• IF a trade does not meet the minimum reward-to-risk ratio of 2:1,
• THEN do not take the trade.
4. Drawdown Protection Rule
• IF your account drawdown exceeds 5-10%,
• THEN stop trading, review your trades, and adjust your approach before resuming.

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BRINGING IT ALL TOGETHER

Now, let’s summarize everything we’ve covered. By now, you know the key
components that every logical trading model has, how to think correctly, how to
create rules, and some of the rules I personally follow. Let’s recap and organize
this knowledge:

The Core Components

• HTF Liquidity Draw: Identify where liquidity is accumulating on the higher
timeframe (e.g., Daily or Weekly). This gives you the directional bias.

• Entry Models: Choose an entry model that aligns with your style and testing,
such as:
• The Fractal Model
• The Unicorn Model
• The CISD Model (Change in the State of Delivery)

Timing Matters:
If you’re trading on lower timeframes (e.g., M5), ensure you’re executing during
the correct Killzones or times of heightened volatility.

Timeframes are correlated:

For M5, the structure is built from H1 and Daily charts.

Rational Thinking and Rule Creation:

You’ve learned how to think logically and organize information into actionable
rules.

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LIST OF CRITERIA FOR A TOP-DOWN MODEL

To trade effectively, you need to combine all these elements into a cohesive
strategy:
1. Start with a HTF Bias: Use liquidity draws to determine the likely direction of the
market.
2. Identify Entry Opportunities: Look for your chosen entry model, whether it’s
CISD, SMT, or a combination, at critical liquidity points.
3. Time Your Trades: Only execute trades during key hours (e.g., NY Killzone).
4. Follow Your Rules: Consistently apply your rules to avoid emotional or
impulsive decisions.

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DIAGRAMS FOR A CLEANER AND LOGICAL WORKSPACE

I recommend creating diagrams of your trading strategies to ensure

you only execute trades when the criteria are met. This will help
you maintain a cleaner workflow. Print the diagram and keep it on
your desk as a reminder to execute trades only when all conditions
are satisfied.
}
I’ll give you one example—this is the rule I follow for my model. On
the following pages, I’ll share some printable diagrams you can use
to follow it.

RULES OF MY MODEL

Here’s the most important argument I’ve built:

• IF price hits a HTF Array and forms a CISD on the Intermediate Timeframe
(e.g., H1 or H4),
• AND forms a CISD on the Lower Timeframe inside an H1 ERL or IRL (e.g.,
M5),
• AND this happens during a Key Hour (e.g., Killzone),
• THEN I’ll execute the trade.

This is the essence of my trading model: combining liquidity, structure,

timing, and logic into a clear and repeatable framework.

For a swing or intraday I just enter on the first H4 / H1 CISD

To this I often add SMT to add size

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SWING AND INTRADAY DIAGRAM

This is the one I use for my intraday entries. I have different types
of entry models, but this is the main one I rely on.

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DAILY BIAS DIAGRAM FOR LTF ENTRIES

In the next PDF, I’ll cover more in-depth diagrams and the exact method to
trade LTF but this is the one I use where my bias start.

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ECONOMIC CALENDAR DIAGRAM

This one and the previous one are mostly used for scalping. As you
can see, I treat my ITM as the HTF structure and enter on the LTF.

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BUILDING CONFIDENCE IN YOUR SYSTEM

It’s important that you backtest all the pieces I’m about to present. You can find
supporting data on the discord I trade in and YouTube channel, as well as the
sources I’ve recommended.

The only way to build true confidence in this system is by backtesting it yourself and
seeing firsthand that it works.
Without doing this, you might be tempted to take it as something indubitable—an
absolute truth—but that’s not the mindset of a successful trader. I encourage you to
always backtest the system and its components. Trust data, not people.

Additional Resources
You can explore all these concepts in greater depth in my other guides, where I
cover topics like time alignments, Killzones, and correlated timeframes in detail.
These resources will help you deepen your understanding and refine your
application of this system.

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CLOSING THOUGHTS

Trading with Logic and Confidence

Let’s be honest—trading isn’t easy. We’re human, and our emotions often get in the
way. Fear, greed, and doubt creep in when things don’t go as planned. It’s completely
normal to feel this way, but it’s also why many traders struggle to stay consistent.
The truth is, we don’t need to be perfect to succeed. What we need is a process we
can trust—a logical framework that guides our decisions, even when our emotions try
to pull us off course.

Why We Stray from Logic:

We overthink and second-guess ourselves.
We chase quick wins instead of focusing on the bigger picture.
We let emotions take control in moments of uncertainty.

How to Stick to Logic:

This system isn’t about eliminating losses; it’s about creating consistency and
accepting them as part of the system. Every layer, rule, and step is designed to help
you make better decisions over time.

Build Your Confidence:

Confidence doesn’t come from blind faith; it comes from experience. Backtest this
system, journal your trades, and see how logical rules can outperform emotions.

Be Kind to Yourself:
You’re not a robot. Mistakes will happen, and that’s okay. What matters is that you stay
committed to the process and learn from every experience.

Remember:

"Trading isn’t about being perfect; it’s about showing up, following your plan, and
letting logic guide you. Over time, this approach won’t just make you a better trader—
it’ll help you trust yourself."

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WHATS NEXT FOR YOU?

As part of this educational material, I’ve written a letter covering everything you should
know about trading. As many of you are already aware, my studies and work in real
life are closely related to philosophy—not the watered-down version from social
media, but real philosophy grounded in science and critical thinking. This past year, I
had the opportunity to take classes from some of the best professors in the world from
Cambridge and other universities, which significantly broadened my perspective on
life, this space, and trading as a discipline.

If you’re interested in my take on groups, paid education, free education,

communities, content creators, traders, influencers, how to trade for a living, balancing
trading with life, the ultimate goal of trading, what to do next if you’re already rich, and
how to create a realistic plan to achieve success if you’re not rich yet, then this letter is
for you.

Additionally, I’ve included insights on how to learn anything—not just trading, along
with teachings about life, about my experiences and the reason Im here.

Give it a read, I’m confident it will open your perspective and inspire you to think
differently.

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THE LAB

You can find me trading all my models live every day inside the lab.

https://x.com/TheLabTrading

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