ICT Month 10 | 2016 Flashcards
1
Q
What does the COT Data tell me?
A
It helps me visually see the hedging programs by the commercial Traders.
2
Q
What hedging programs are there that exist?
A
- 4 Year
- 3 Year
- 2 Year
- 12 Months
- 6 Months
3
Q
How can I find short term hedging programs held by commercials.
A
Short term buy program can be found by looking back 12M or 6M and then breaking the chart based on the highest and lowest reading by the commercials and calibrating my new 0 line.
Basically dividing the range into premium and discount.
4
Q
When COT data is suggesting commercials are bearish what am I waiting for?
A
When commercials are net short, I am still waiting for the Institutional Order Flow to get in sync. Price will tell me everything by itself.
Just because they are net short that does not mean I should go sell I have to WAIT for Institutional Order Flow to get in sync.
Anything above 0 obviously bullish. And below 0 clearly bearish But I can do both, sell above the 0 line and buy below the 0 line BECUASE I still have to focus on Institutional Price Action or basically what is price telling me on HTF. I can see buy programs kick in inside of a hedging program.
5
Q
Where are Buy and Sell Program taking place in regards to 0 line?
A
Buy program above 0 line. Sell program below 0 line.
Commercials are going to be hedging early, BUT they make the highs and the lows in the market place by doing that.
But I have to consider what is Institutional Order Flow telling me. Primary focusing on the range, what is the range of the last 6 months.
6
Q
When analysing the market how should I approach the COT data?
A
COT gives me the Buy and Sell program that they are operating in, and inside of that programs there are hedging programs that go on, because SM nature is to lock in prices of manufacturing, etc.
Determine the last 12 months to 6 months range. What is the highest high and lowest low. Determine new 0 point. But remember the Institutional Order Flow is still more important that COT data.
If we get to 4 year 2 year or 1 year extreme there is generally a reversal coming.
7
Q
What does mean commercials below 0 line?
A
that is Sell program - does not mean I can not be buying, I have to look at the hedging that commercials have done
8
Q
What does mean commercials above 0 line
A
that is Buy program - does not mean I can not se selling , I have to look at the hedging that commercials have done.
9
Q
How to Blend the IOF and Commercial Hedging?
A
- If Institutional Order Flow is bullish - blend Discount PD Arrays and 12 - 6 Month net long commercial readings for Long Traders
- If Institutional Order Flow is bearish - blend Premium PD Arrays and 12 to 6 Month net Short Commercial readings for Short Traders.
The best conditions are seen when Both Net Zero agree with institutional order Flow and PD array matrix confluence.
10
Q
When dealing with commercials which are the 2 main camps?
A
Agricultural and Financial.
11
Q
What is Institutionally Sponsored Rally?
A
The DXY is the KING, what the DYX does sets the stage for everything else
* IF DXY lower commodities go higher
* IF DXY higher commodities go lower
Meaning when looking at institutionally sponsored rallies I look for market that has failed to go lower at the time when DXY would be expected to go lower - basically looking for SMT between DXY and commodities.
The market tends to trade higher energetically as a Leader Market and establishes the underlying direction opposite to DXY.
Short Term Highs are seen broken and declines are shallow in nature. The upswings and up closing candles are typically much larger than those that close lower or move lower.
Key Focal Point is Failure To Trade lower - SMT with the DXY!!!! Focus on those that make SMT with DXY. IF I see that → confirmation of professional confirmation [institutional buying]
12
Q
What is Sympathetic Rally?
A
The market tends to trade higher in symmetry to the Leader Market that establishes the underlying direction.
While these markets are potentially profitable our aim is to focus on the Leadership Market for the strongest rallies.
Short Term Highs are seen broken and declines are shallow in nature. The upswings and up closing candles are typically much larger than those that close lower or move lower.
One of the commodities might fail to make a lower low when DXY is starting to go lower and when it does that it is SHOWING leadership [SMT with DXY] → I want to focus on those and not on sympathetic Rally. I want to buy the relative strength leader.
Described with example: Commodity makes a lower low while DXY makes a higher higher. → ideally I do not want to be focusing on these commodities as they are not going to trade that much higher and with that much magnitude.
13
Q
What is Institutionally Sponsored Decline?
A
The market tends to trade lower energetically as a Leader Market and establishes the underlying direction opposite to DXY.
Short Term Lows are seen broken and rallies are shallow in nature. The downswings and down closing candles are typically much larger than those that close higher or move higher.
Key is to focus on Failure to trade higher - SMT divergence. Meaning DXY is bullish and it is about to rally making Lower Low then I want to look at commodities that fail to make a higher high → SMT that is key.
14
Q
What is Sympathetic Decline?
A
The market tends to trade lower in symmetry to the leader market that establishes the underlying downside direction.
Short Term Lows are seen broken and rallies are shallow in nature. The downswings and down closing candles are typically much larger than those that close higher or move higher.
Ideally focusing on those that are really weak [SMT with DXY] because they are much more going to go lower. The way I determine that which one I should be selling short I determine that by looking at the highs.
15
Q
What is Seasonal Tendency?
A
Seasonal tendencies are not be all end ALL. It is like a roadmap what should normally be seen in price action that time of the year. NORMALLY not it WILL happen but just something to anticipate.
I have to also have to have other reasons to pair it with seasonal tendency. If market is not trading with seasonal tendency. Meaning seasonal tendency is bullish but my pair is BEARISH that is telling me that seasonal influences have no impact on price and that means the trend is STRONG and it should trade lower.
Looking at the 40 year and 15 year seasonal tendency. Ideally I want them moving in the same direction.
If the IOF is pointing in the same direction that is when I could be anticipating nice trades to occur.
IDEAL trades when Seasonal Tendency and IOF Are in agreement.
16
Q
What is carrying charge market?
A
I look at the closing price [last] in this case. Cash market is usually listed first and then immediately below it is nearby contract delivery month.
The contract after the nearby contract is referred to the next month out.
If there is lsat price increasing there is Carrying Charge Market. If todays price is 940 on nearby contract. Then on Next month in August there should be increase in price to 943.
July: 940-0 (nearby contract)
Aug: 943-4 (next month out)
Sep: 943-4 (month after next month out)
Nov: 945-4
That is increase in price and that is carrying Charge Market. Those commodities are less likely going to see agressive move or repricing higher.
17
Q
What is premium market [when referring to commodities]?
A
Aug: 154.800 (nearby contract)
Sep: 154.800 (next month out)
Oct: 152.775 (month after next month out)
Nov: 151.275
I can see the price of Last decreasing and that is very strong PREMIUM market.
but what does that mean? There is something fundamentally strong about this commodity, the demand is high and the supply is short.
There is clear obvious Premium seen and that is seen by Todays price being higher than that of the next month out and the future months
If the future months have the lower price than the nearby month that is a Premium Market. This promotes the idea of commercial BULL markets.
Commercials will be looking to take delivery of it as they have to have it when it is short supply of it. Meaning if they are ready to pay premium price for it now, than there is something fundamentally going on that they have to get this commodity right now.
Premium:nearby month selling at the higher price than the next month out
18
Q
What is commercial bull market when looking at commodities?
A
Parabolic run quickly higher, with speed and magnitude, that is usually a signature of Premium Based market.
19
Q
What does it mean creating a “SPREAD chart” on commodities.
A
Once the nearby contract is opened of the commodity I should create a spread chart.
Spread chart is the difference plotted between the nearby contract and the next month out of the certain commodity. (doing it on barchart.com)
Doing the spread on the nearby to the next month out!!!! It has to be the minus symbol as that is going to give me the difference.
20
Q
What to focus when creating “SPREAD chart” on commodities?
A
I should be focusing on the 0 line as that is representing the amount of spread.
Anything above the 0 line represents the amount of spread that the nearby contract is trading above the next month out.
The larger the spread the stronger the likelihood of commercial bull market or parabolic move higher.
21
Q
To which commodity I should compare the spread chart?
A
Compare the spread chart to the nearby contract month.
For example: If I am looking to trade Live Cattle (LE) because I see it has a nice Premium market (fundamentally strong). Then I do the spread chart on the nearby contract (example June) to the next month contract (Aug) (going on barchart.com -> creating spread -> plotting the difference). Once I have the Spread Chart created I overlay it with the Nearby contract of Live Cattle (LE) AND then compare the lows and look for SMT, because PRICE IS PRICE. Look for the SMT between nearby contract and the spread - SPREAD DIVERGENCE
BUT STILL this is not clear indication to BUY I have to have atleast IOF in sync.
Bullish IOF is the stage then the SMT Spread divergence is just my buy trigger
22
Q
What is bullish Spread Divergence?
A
The Spread divergence is the SMT between Nearby contract of the commodity and the Spread Chart.
that SPREAD divergence is only seen when institutions are coming in and buying a lot of commodity QUICKLY, aggressively and massively.
Bullish spread divergence between nearby and next month out it gives me strong willingness to support buying. I could be a buyer at any bullish PD array.
I have to see Spread Divergence that IS the confirmation of Institutional BUYING while IOF is suggesting higher prices.
This SM tool works in all commodities.
23
Q
What if I see bearish Spread Divergence when buying commodity?
A
if I see bearish divergence - meaning spread making LH while price making higher high - that would be indication that I should look for reasons to trail my SL or just take out the position AND wait for new buy signal.
24
Q
What is Open Interest?
A
Open Interest is the total number of outstanding contracts that are held by the market participants at the end of each trading day. Where volume measures the pressure or intensity behind a price trend, open interest measures the flow of money into the futures market.
For each seller of a futures contract there must be a buyer of that contract. Thus a seller and a buyer combine create only one contract. Therefore, to determine the total Open interest for any given market we only need to know the totals from one side or the other, buyers or sellers, not the sum of both.
25
How can the change in Open Interest be sign for bullish or bearish market in TRENDING CONDITIONS (4 points)?
* If prices are in an uptrend and Open Interest is rising, this is bullish sign.
* If prices are in a downtrend and Open Interest is rising, this is a bearish sign.
* If prices are in an uptrend and Open Interest is falling, this is bearish sign.
* If prices are in a downtrend and Open Interest is falling, this is a bullish sign.
26
If prices are in an uptrend and Open Interest is rising, this is bullish sign. What does that mean?
There are shorts who are being stopped out, but new sellers are taking their place. As the market continues to rise, the longs get stronger and the shorts get weaker.
27
If prices are in a downtrend and Open Interest is rising, this is a bearish sign. What does that mean?
Weak longs are being stopped out, but new buyers are taking their place. As the market continues to fall, the shorts get stronger and the longs get weaker. Put another way - as long as the Open Interest is increasing in major trend, it will have the necessary sponsorship to continue.
28
If prices are in an uptrend and Open Interest is falling, this is bearish sign. What does that mean?
The old longs, the “smart money” are banking gains as they are liquidating. They are replaced by new buyers who will not be as strong on balance, but the declining open interest is an indication the weak shorts are also exiting. They will be replaced by new shorts who are stronger than the old shorts were.
29
If prices are in a downtrend and Open Interest is falling, this is a bullish sign. What does that mean?
Smart Money, the shorts are covering or liquidating profitable shorts. They will be replaced by new shorts not as strong as they were, but the declining Open Interest indicates the squeezed longs are bailing. They will be replaced by new longs who were not as weakened by the lower prices as the old longs were. Put another way - when supply of losers is exhausted the downtrend ends.
30
How can the change in Open Interest be sign for bullish or bearish market in CONSOLIDATING CONDITIONS (4 points)?
* If Prices are in consolidation and Open Interest is rising, this is a bearish sign.
* If prices are in consolidation and Open Interest is falling, this is a bullish sign.
31
If Prices are in consolidation and Open Interest is rising, this is a bearish sign. What does that mean?
The reason is the “street money” plays the long side. Rising Open Interest in a trading range suggests the Commercial Hedgers and Professionals are taking the short side, and the uninformed speculators will likely fail victim to the downside break in price.
What causes open interest? if the commercials hedgers are the liquidity provider and they offer, the commodity for purchase for trading if they are willing to sell a lot of it that means they do not believe the price is going to go higher otherwise they would hold out and wait for higher prices.
If the open interest is rising they expect prices are NOT going to increase because on balance they are larger as a supplier or seller of commodity than they are a buyer. So open interest increasing provides a measure of their willingness to be a heavy seller. If OI is high that means they have high interest on seeing lower prices.
Open Interest increased while price stayed in a range price will most likely break down and the commercials will be the indication of that.
I want to couple that with COT program → what the commercials are doing they should be net short or increasing their short selling.
**Conversely we want to look for Long Term or HTF Resistance levels in Price to anticipate this Open Interest concept. In times where Price is trading at a Key resistance level on a HTF basis - Open Interest will rise while Price is consolidating at or near the HTF Resistance or Premium Array as we outline Institutional Reference Points. This will be Bearish and anticipate a down swing in Price.**
32
If prices are in consolidation and Open Interest is falling, this is a bullish sign. What does that mean?
The reason is the commercials hedgers who are most likely shorting - are covering. The “street money” will be shorting and or expecting a breakout lower in price.
**Ideally we want to look for Long Term or HTF levels in Price to anticipate Open Interest concept. In times where price is trading at a Key support on HTF basis - Open Interest will drop while price is consolidating at or near the HTF Support or Discount Array as we outline Institutional Reference Points. This will be bullish and anticipate an up swing in price.**
33
Summarize Open Interest Concept with HTF Key Levels...
**Ideally we want to look for Long Term or HTF levels in Price to anticipate Open Interest concept. In times where price is trading at a Key support on HTF basis - Open Interest will drop while price is consolidating at or near the HTF Support or Discount Array as we outline Institutional Reference Points. This will be bullish and anticipate an up swing in price.**
**Conversely we want to look for Long Term or HTF Resistance levels in Price to anticipate this Open Interest concept. In times where Price is trading at a Key resistance level on a HTF basis - Open Interest will rise while Price is consolidating at or near the HTF Resistance or Premium Array as we outline Institutional Reference Points. This will be Bearish and anticipate a down swing in Price.**
34
When is the Opening Range On Bonds and what are its characteristics?
The Opening Range between 8AM and 9AM tends to create Bond Market High or Low of the Day. It can be a run on Stops or Fair Value setup. It is the location Liquidity Pools behind around for Stock Market Open raids.
Highest Volume: 8AM to 9:30AM NY Time
True Day: 8AM to 15:00 NY time.
35
What is 8:20 CME Opening?
8:20 is CME opening. → strong influx of New York traders coming in. London traders are still awake looking to take some trading.
36
When does ICT anticipate signals to form on Bond market intraday?
ICT likes to see signals form at 8:20 to AFTER. They can occur as early as 8AM but generally ICT likes to see signals occur between 8AM and 8:30AM but basically the target time is 8:20AM or CME opening.
37
What are some characteristics of Bond Market?
* ICT likes the bond market because it DOES NOT Have a LOT of manipulation. There is still a manipulation but generally the LEAST manipulation is on the BOND market.
* Bond market is highly liquid really nice when trending. When it moves in trend it generally stay in that direction. When in consolidation it can be a little choppy but if I know what I am looking for [turtle soup, FVG] using EQ ideas there is no reason why I would NOT be able to trade
* Bond Market generally DOES not have a LARGE daily range. so if I can capture between 5 to 8 ticks there is nothing wrong with that.
* It has respect of Liquidity pools, Liquidity Gaps, FVG it follows the same thing as forex but it will not have that many spikes up or lower. it will still sometime run my stop I still can fail the bond market.
38
What are the sessions in Bond Market?
* London: 2AM to 5AM
* New York AM Session: 8AM to 12:00
* New York PM Session: 12:00 to 15:00
39
What are some of the key points in regarding to bond AM and PM Session?
AM Session has advantage because it will generally see the largest Volume of the day, it will generally form the high or low of the New York Session OR the total range of the True day for treasury Bonds.
PM session will generally have continuation or Reversal and the other thing is consolidation.
More often or not the AM session is going to have a bigger move than PM session on bonds.
**Primary ICT Trading window when focusing on Commodities was from 8:20 to 11AM NY session in the morning when he was trading the ES, YM NQ and the Bond Market. That was his work day.**
PM session is from 12:00 to 15:00
40
What are some of the characteristics of Bond Trending days?
**Trending Days can see the complete trading day be one sided in both AM & PM Sessions → meaning AM and PM in tandem; those both sessions in Tandem create the Daily Range.**
*Trending days can also start with one of the sessions being the PM session. On late FOMC event where the move higher starts in PM session and then continues higher during the next Trading session [the runner]*
41
What are some of the characteristics of Bond Consolidation days?
**Consolidation Days can see opposing directions in the AM & PM sessions. Or it can see one session produce a swing and the other be quiet or consolidate.**
42
What is typical for London Session in Bond Markets?
London: 2AM to 5AM → London Session. I can refer to what overnight price trading has done. Where are our overnight stops, liquidity voids, FVGs any measure of PD array I can find it during this time.
Not actively trading the London session but I refer to it always between 2AM to 5AM.
*If the majority of the daily move has been fulfilled by the AM session and we are going flat before NY lunch I can avoid trading the PM Session.*
43
What is typical for AM Session in Bond Markets?
The AM session: Morning trend defined from 8AM to 12:00 session can end early around 11AM which is traditional London Closed time period [in europe], but does not mean that the trading day is over, I am just going to see reduction in Volume. A lot of European traders are going to close up shops and I am left with American traders only. 12:00 ends the AM session but the AM session can also end at 11AM
**But I am also referring to New York Lunch from 11:00 to 13:00.**
If the majority of the daily move has been fulfilled by the AM session and we are going flat before NY lunch I can avoid trading the PM Session.
44
What is typical for PM session in Bond Markets?
PM Session: 12:00 to 15:00. Generally if I have a runner [markets made a significant high or low in morning session] I can anticipate continuation of around equal distance [measured move] as in morning session AND what ever happens in Morning session [AM] is generally seen in quicker terms or less time in the PM session. IF there is large degree of Average Daily Range as seen in AM session that means the PM session will be rather small.
45
How is PO3 defined on Bonds Market?
Traditional Power 3 on this day just defined on the rules of Bonds true day starting at 8AM.
46
What are some of the early signs for Consolidaiton day in Bond Market?
**Overnight Price Action:** Can be trending or Rangebound - [no specific indication]
*What ever takes place in London does not have any future weight for the AM NY session. The market could be making a move overnight and then simply during the NY session just go dead.*
**NY Session News:** Lack of Noteworthy Reports Due → *meaning if there is no NEWS during NY session that could be one indication for “dead market”.*
**Economic Calendar:** High To Medium Impact US Reports Due to release on another trading day later in the week. - *this is going to promote the idea of consolidation day. Example: FOMC creates high volatility day, if there is lack of High Impact News during AM session and FOMC is the only High Impact news event then generally is going to be consolidation day [prior to it] AM consolidation and then dynamic moves in PM.*
47
When to anticipate Consolidaitons (in all markets)? IMPORTANT!!!
- **After a HTF Premium or Discount array is met → VERY IMPORTANT!!!**
- if price traded from Discount Array higher to Premium Array one of two things can happen.
1. It can PAUSE and go into consolidation waiting for another point that could continue higher.
2. It can retrace after that consolidation at the Premium Array.
3. It can all together have a reversal.
- When price hits HTF PD array [premium] once it hits that Premium generally what will happen is profit taking will come in and there is going to be a pause in advancement higher in price. IT may not require retracement BUT it may PAUSE in there.
- When HTF Premium Array hit I can anticipate a point at which market is going to consolidate.
- When price hits our Premium or Discount Arrays on HTF It can go into the pause and that does not mean it is the end of the move. It can PAUSE and then all together continue in the same direction as before.
- **At EQ of a HTF Price Swing - Mid Point = Pause [at 50%] → VERY IMPORTANT**
- I can anticipate a PAUSE at the EQ [Fair Value] of a HTF Price Swing.
- The market move from consolidation to expansion to consolidation to expansion. → inside of that there are going to be retracements or reversals.
- CONSOLIDATION is going to be the most dominant condition when looking at the price action. There is going to be consolidation before price makes it next move higher or lower.
- IF it has met by Premium or Discount HTF PDA or hits EQ of the HTF Price swing or Measured move → PRICE can consolidate at that mid point.
- OR if price retraces back to EQ price point DO NOT always anticipate an immediate response in price because it can stay around EQ BECAUSE HTF required the larger traders to work on that HTF. Meaning they are going to work that level [EQ] more than just one time.
- **Bank Holiday in the US**
- Obviously impact on the market will cause consolidation days
- **Ahead of holidays in the US**
- Ahead 4th of July most likely
- **Bond Auction day before and AM session Day of.**
- If there is Bond Auction on Economic Calendar, the day before Bond Auction there could be consolidation day. AND the day OF Bond Auction day the AM session is generally consolidation.
48
If there is consolidaiton in Bond market what can I anticipate in other markets?
If there is going to be a consolidation day on Bonds then I can anticipate the same thing in other asset classes.
Because Bonds Volatility Unlock Volatility in all other asset classes.
49
When I have consolidation days.... what to do?
**Scalping AM Session: 5-10 ticks - If opening range is small**
- Small means 12 ticks or less. And then generally I will have expansion of some kind And it might just blow out previous overnight high or low.
- If I get that small opening range on consolidation days that will allow that little bit of volatility squeeze and then finally it will snap.
**Scalping PM Session: 5 - 10 ticks - IF AM has NOT ran stops.**
- On consolidation days ONLY trade the PM Session if the AM session has not yet ran a stop run, meaning if the liquidity pool is still pending.
- Once the stops are taken do not be greedy as it is consolidation days.
- When consolidation day rather do my trading in the AM session.
**Avoid Trading AM session: On Bond Auction Days.**
- Market is usually on hold waiting for auction to come
**Avoid Trading PM Session: On Interest Rate Drivers**
- Usually at 14:00, just avoid it.
**Focus on Trading When: HTF PD Arrays are met.**
- When price reaches a Premium Array on a market that has been going up for a while [seasonal tendency is also bullish]. **When HTF Premium array is have to anticipate some measure of “pause” or consolidation that is when I shift our gears and do not think big moves and adapt to that what price action is telling me. When HTF PD array is met anticipate consolidation and rather operate in scalpers mentality or move to sidelines.**
- **That consolidation on Bonds is also going to translate into small movements in all other asset classes by having this idea it removes that desire to be doing a whole lot**
**Recall Small Ranges Precede Large Ranges on the Daily.**
- It can be frustrating if I anticipate consolidation days but always remember that consolidations are going to be create big ranges.
- Consolidation give me time to study where the next move is going to happen and which liquidity is going to attack.
- **The next move out of the consolidation is most likely going to come in the heels of a large range expansion so consolidation days are big sings that the big opportunity is coming.**
- **SMALL RANGES → BIG RANGES.**
**Always allow limit exits that exceed my targets - BONUS**
- IDK for certain that market is going to stay in small consolidation range. So when ICT anticipates trading in consolidation he will have larger limits than he is trying to make and manage those positions accordingly.
**Keep overnight short term highs and lows in mind for LRLR**
- London Session high and London Session low in this cases are going to be ideal for this. Even the STH and STL that is where the market is going to reach on Consolidation days during the NY Session.
**Unless PM Session News Drivers Due Out → consolidation days typically offer setups in AM session most of the time. Avoid “Forcing” PM session Trades Routinely.**
*When Daily is consolidation most of my trading should be done in the AM session. When in small range or consolidation avoid PM trading. ON consolidation days all of my trading should be DONE before 12:00 preferably by 11:00*
50
What is the Bond Market Relationship to any other market?? !!!!!
Study the bond market as it is connected to Forex market and all other markets. If the Bond markets are going to be in consolidation then most likely all other markets are also going to be in consolidation.
There is going to be move out of the consolidation and when it leaves consolidation it tends to be trending environment. **The longer the consolidation it will have a protraction stage where it moves in a trend [easy trading]**
Consolidation → Expansion.
**After the consolidation there are always going to be some really nice trading days.**
During consolidation periods the SM is setting up the next big move. And IF I understand that principle on Bond market it is going to have a direct impact on all the other asset classes.
**The Bond market speaks volumes when it is in consolidation! And when it is NOT in consolidation it allows all the other markets to MOVE more easily and more efficiently.**
51
When I have consolidaiton days... on Bond market what to do?
**Scalping AM Session: 5-10 ticks - If opening range is small**
- Small means 12 ticks or less. And then generally I will have expansion of some kind And it might just blow out previous overnight high or low.
- If I get that small opening range on consolidation days that will allow that little bit of volatility squeeze and then finally it will snap.
**Scalping PM Session: 5 - 10 ticks - IF AM has NOT ran stops.**
- On consolidation days ONLY trade the PM Session if the AM session has not yet ran a stop run, meaning if the liquidity pool is still pending.
- Once the stops are taken do not be greedy as it is consolidation days.
- When consolidation day rather do my trading in the AM session.
**Avoid Trading AM session: On Bond Auction Days.**
- Market is usually on hold waiting for auction to come
**Avoid Trading PM Session: On Interest Rate Drivers**
- Usually at 14:00, just avoid it.
**Focus on Trading When: HTF PD Arrays are met.**
- When price reaches a Premium Array on a market that has been going up for a while [seasonal tendency is also bullish]. **When HTF Premium array is have to anticipate some measure of “pause” or consolidation that is when I shift our gears and do not think big moves and adapt to that what price action is telling me. When HTF PD array is met anticipate consolidation and rather operate in scalpers mentality or move to sidelines.**
- **That consolidation on Bonds is also going to translate into small movements in all other asset classes by having this idea it removes that desire to be doing a whole lot**
**Recall Small Ranges Precede Large Ranges on the Daily.**
- It can be frustrating if I anticipate consolidation days but always remember that consolidations are going to be create big ranges.
- Consolidation give me time to study where the next move is going to happen and which liquidity is going to attack.
- **The next move out of the consolidation is most likely going to come in the heels of a large range expansion so consolidation days are big sings that the big opportunity is coming.**
- **SMALL RANGES → BIG RANGES.**
**Always allow limit exits that exceed my targets - BONUS**
- IDK for certain that market is going to stay in small consolidation range. So when ICT anticipates trading in consolidation he will have larger limits than he is trying to make and manage those positions accordingly.
**Keep overnight short term highs and lows in mind for LRLR**
- London Session high and London Session low in this cases are going to be ideal for this. Even the STH and STL that is where the market is going to reach on Consolidation days during the NY Session.
**Unless PM Session News Drivers Due Out → consolidation days typically offer setups in AM session most of the time. Avoid “Forcing” PM session Trades Routinely.**
*When Daily is consolidation most of my trading should be done in the AM session. When in small range or consolidation avoid PM trading. ON consolidation days all of my trading should be DONE before 12:00 preferably by 11:00*
52
What are some of the characteristics for Bond Trending Days?
**Overnight Price Action:** Can be trending or Rangebound
**New York Session News:** Volatility Injection. → *Meaning there are some news coming out during the NY session.*
**Economic Calendar:** High to Medium Impact US Reports Due to Release at 8:30AM NY time.
**Formation Characteristics:**
- After small range day or series of small range days
- Directionally driven by Daily PD array Matrix
- Liquidity Seeking Movement PD Array & Order Flow
53
What is volatility filter going to tell me [smaller ranges]
*Looking for volatility filter where ranges get smaller on the Daily chart and if the daily chart is showing previous day being small compared to older days OR price has contracted over a series of days [it is trading in small candles on D TF] that is promotion of range expansion.*
*If the small ranges have traded into Discount Array and the Economic calendar calling for High to Medium News Impact at 8:30AM [volatility injection] that is stage set for an expansion from discount to premiu.*
*The reverse is seen when smaller ranges on D TF and price has traded into the Premium Array on the Daily TF and again volatility injection anticipate at 8:30AM when I see those days I can anticipate expansion lower from Premium Array.*
54
If I am trading the EURUSD to which other markets should I be comparing it
* DXY and GU -> correlated SMT
* ZB, ZN ZF -> if they make a SMT that unlocks volatility in other markets.
*When looking for trades I have to have sponsorship by the way of interest rate markets [ZB, ZN, ZF], that is why it is important to follow the bond market. Compare them. Focus primary on D TF, 4h TF and 2h TF that will give me really good feel what PA is most likely going to do in the Treasury Bonds.*
**Bonds are going to set a stage for expansions in the Forex market.**
I can not get explosive price action without the participation in the interest rate. The key is knowing the interest rates. If I follow the bond the market it unlocks everything. And prior to any expansion higher or lower there is always going to be some measure of consolidation.
55
At what times am I looking for SMT to form?
At times when there is Manipulation expected and that would be defined by the economic calendar.
56
What is SMT?
SMT is sign of professional accumulation and indication of SM entering the market.
And right after the SMT [professional accumulation] there should be displacement higher or lower.
57
What kind of force is Bond Price going to have on other markets?
If bonds are going to be held in consolidation then all other classes are most likely also be held in consolidaiton.
If Bond markets start to expand it is a sign that forex markets and all other asset classes are going to enter expansion phase.
**When Bond market declining Interest Rates increasing which is going to cause the DXY to rally and Foreign currency is going to decline.**
Index ES and NQ those are also allowed to move because of Bonds moving.
58
What are some of the characteristics Opening Range concept on ES NQ YM?
- highest volume between 9:30 and 10:00
- True day 9.30 till 4PM
- Opening Range: 9:30 - 10:30
The opening range between 9:30 and 10:30 AM tends to create Market high or low for the Day. It can be run on stops or a fair value setup.
59
What are some of the charecteristics of AM Trend on Index Futures?
- Traditional Overnight sessions: London
- What was seen in London
- New York AM Session is defined 9:30AM to 12:00
- The True Day High or Low will tend to form in between 9:30 and 12:00
- Between the Open [9:30] and Noon there is typically a trend or price swing daily [AM Trend]
- The AM trend can be continuation of overnight direction or a outright reversal of direction right from the Open
- Th AM Trend can end at 10:30 AM to 11AM but anticipate it to continue up to Noon “New York Lunch Hour”
60
When am I anticipating Index SMT for the Morning session to occur?
Compare relative highs and lows that are formed between 5AM and 9:30 AM
#SMT is basically crack in correlation and confirming there is SMT [Smart Money is in the market] → large flows of money are coming in.
I could be buying two on internal and one on external [turtle soup] going long.
61
What are some of the charecteristics of PM Trend on Index Futures?
- After the noon New York Lunch Hour
- **New York PM Session: 13:00 to 16:00**
- The true day high or low will tend to form between 15:00 to 16:00 [last hour of trading]
- Between 13:00 to 16:00 New York time there is typically a trend or price swing daily [PM trend]
- The PM trend can be continuation of the AM trend direction or an intraday reversal into the Close.
- Measured Moves in the Afternoon tend to be faster than AM.
- Typically 2PM NY time sees the move begin
62
What should I anticipate on Index futures during 12:00 to 13:00?
**Anticipate some measure of consolidation or retracement during 12:00 to 13:00 [lunch hour]**
63
When am I anticipating Index SMT for the PM session to occur?
Same thing for the PM session
- **Between 12:00 and 15:00 NY time relative highs and lows should be compared [NQ, YM, ES]**
If IOF is bullish = COMPARE the lows
- One index will fail to confirm a lower low in all three [SMT] that is bullish.
If IOF is bearish = COMPAR the highs
- One Index will fail to confirm Higher High in all three.
64
What are the profiles for the daily range that could be playing out on Index Futures?
* Two Session Up Close
* Two Session Down Close
* AM Rally PM Reversal
* AM Decline PM Reversal
* Consolidaiton AM Rally PM Decline
* Consolidation AM Decline PM Rally
65
What are characteristics of "Two Session Up Close" day profile on index futures?
IOF: Bullish
**AM trend:** Returns to a Discount Array then rally
Lunch hour: consolidates with shallow retracement.
**PM Trend:**
- Returns to lunch hour lows [Sell Stops]
- Drop into a FVG Discount array then rallies into close.
**Measured move event meaning AM trend is same length as PM trend.**
Nothing if FIX.
66
What are characteristics of "Two Session Down Close" day profile on index futures?
IOF: Bearish [DTF, 4h TF]
**AM trend:** Returns to a Premium Array then declines
Lunch hour: consolidates with shallow retracement.
**PM Trend:**
- Returns to lunch hour high [Buy Stops]
- Drop into a FVG Premium array then declines into close.
There is no need for the entire lunch hour to consolidate price can just continue trading lower.
67
What are characteristics of "AM Rally PM Decline" day profile on index futures?
IOF: Bull - Under a HTF Premium PDA [4h or DTF] → premium PDA array and AM session starts bullish until the HTF PD array is met that is what causes the PM reversal.
AM Trend - returns to a discount array then rallies
Lunch Hour: consolidates with shallow retracements
PM Trend (can do one of two things)
- Runs the Lunch hour high - then reverses into Close
- Runs the Intraday high - then reverses into close.
PM trend can resume higher if AM session Discount is HTF Discount Array [re-accumulation at the PD array and then continuation higher]
68
What are characteristics of "AM Decline PM Rally" day profile on index futures?
IOF: Bull - Above a HTF Discount PDA [4h or DTF]
AM Trend - returns to a premium array then declines
Lunch Hour: consolidates with shallow retracements
PM Trend:
- Runs the Lunch hour low - then reverses into Close
- Runs the Intraday low - then reverses into close.
PM Trend can resume lower if AM session PREMIUM array is HTF Premium array then the PM can create a high there and then go lower resuming lower. If that is not the case HTF Premium Array on 4h or D TF then I can anticipate price running higher.
69
What are characteristics of "Consolidation AM Rally PM Decline" day profile on index futures?
**AM Trend:**
- Returns to discount array then rally
- Expands higher from EQ to run London Buy Stops
**Lunch Hour: consolidates with shallow retracements**
**PM Trend:**
- Runs the Lunch hour high -then reaches for the Day Sell Stops
- Runs the Intraday High - then reverses for ID\ London Sell Stops.
Which is the HTF Premium Array from that is price going to decline.
70
What are characteristics of "Consolidation AM Decline PM Rally" day profile on index futures?
**AM Trend:**
- Returns to Premium array then decline
- Expands lower from EQ to run London Sell Stops [after opening range]
**Lunch Hour: consolidates with shallow retracements**
**PM Trend:**
- Runs the Lunch hour low -then reaches for the Day Buy Stops
- Runs the Intraday low - then reverses for intra day \ London Buy Stops.
Which is the HTF Discount Array from that is price going to higher.
If AM session trades down into discount PD array then NY PM session will only look for Lunch lows to run out.
IF AM session does not trade into the HTF Discount PD array then NY PM session will look to run out the intra day lows.
PM Trend can simply consolidate into close after Lunch Hour.
**This is not seek and destroy it is simply consolidation.**
**On the intraday is all about liquidity and where the stops are.**
71
How would the trade setups in "Two Session Up Close" day profile on index futures look like?
When AM trend returns into Discount array looking for SMT on the lows. Comparing the lows from London session into 9:30 AM.
AM is going to have expansion higher into HTF PDA but generally I should hold till 10:30 to 11AM with the idea that should expand into lunch hour.
When in lunch hour it could come back for the lows or return back into OB or FVG. Lunch hour lows and the lows that form after 13:00 should be compared for SMT. Looking for the indices to make a SMT and that is confirmation of professional accumulation
As going into close relying on time of the day to make the high of the day.
As I get to the closing hour day is going to expand and I should be holding that. If looking as ES and I am long and it is 14:00 then I should hold for the 16:00 closing higher to catch the maximum potential. I want for time of day to get into the HTF PD array. The more I hold for the close the more opportunity for me to make a profit.
**The AM and PM session highs are most likely going to be 15min or 1h PDA.**
I am aiming for that for BOTH sessions.
Price can retrace after forming a high in AM session and then expand for the higher PDA.
72
How would the trade setups in "Two Session down close" day profile on index futures look like?
AM session when it trades into Premium Array compare the highs [5AM to 9:30AM] looking for Index SMT.
Price should decline lower till 10:30 to 11AM as it gets closer to 11AM it is more likelihood for consolidation or pause.
During Lunch looking at the highs comparing them for SMT on the highs. And this could be return back to FVG or OB and then go lower OR run the lunch high for BSL and then reject → drop lower. Looking at the highs during lunch hour and looking at the high that forms post lunch [there is always going to be some high forming after lunch] for the SMT that is weakness.
After 13:00 then immediately look for SMT on the highs into the FVG or OB or Run above STH [lunch high] for selling short.
PM session hold until 15:00 [at least] but ideal to hold till 16:00
**AM and PM session lows are many times going to be lined up with 15min to 1h PDA.**
PM session can many times happen as 2 stage decline. If it does not do that logical bounce at 15min or 1h PDA HOLD for it to break another leg lower.
73
How would the trade setups in "AM Rally PM Reversal" day profile on index futures look like?
AM look the lows and compare them for SMT [5AM to 9:30AM]. SMT on the lows is signal to be a buyer.
Price should expand higher till 10:30 to 11AM. Ahead of 12:00 there should be retracement.
After lunch [13:00] I would look for rally to sell into and compare the highs for the SMT [indication to be a seller]. Hold the short until I get to Time of day and Price [discount array in PM session that caused the rally] → if it blends with the HTF Discount Array anticipate a bounce.
IF AM session Discount Array is NOT HTF Discount Array then look for continuation lower.
**PM high is going to be 15min to 1h Premium Array. AM session high is going to be just below the 15min - 1h Premium Array.**
AM session creating lower high and it is below 1h to 15min Premium array, then anticipate PM session to be a stop hunt above the AM high.
That 15min - 1h PDA array should be nested with the HTF 4h or D TF array.
74
How would the trade setups in "Consolidation AM Decline PM Rally" day profile on index futures look like?
When market makes initial run higher into the Premium Array, compare the highs for SMT → confirmation for sell. Ideally hold till 10:30 and into 11AM. Anticipate consolidation after 11AM going into lunch hour.
Compare the lows after 13:00 for SMT and that is confirmation for expansion higher. Looking for Time of Day to anticipate expansion that is going to end early that will be later on be decline into the close. Around 14:00 it would create that high in PM Session high.
AM Session low is many times 15min or 1h Discount Array. PM session low many times also 15min to 1h Discount Array.
PM low could run the Lunch low or intraday low [AM low]. If the AM session bounces into the lunch of of a HTF nested level that is seen also on 15min or 1h TF then DO NOT anticipate AM low taken out in the PM session.
BUT if the AM session low is forming just ABOVE HTF Discount Array then anticipate a lower run on the intraday low during the PM session and then run higher.
PM high is seen with 15min to 1h Premium Array and anticipate no further rally but retracement back to the EQ.
75
How would the trade setups in "Consolidation AM Rally PM Decline" day profile on index futures look like?
AM compare the lows [5AM to 9:30AM] for SMT → indication of SM buying.
Hold for minimum 10:30 to 11:00 NY time, after that anticipate some measure of consolidation or retracement into lunch hour.
After 13:00 anticipate some measure of rally, compare the highs for SMT across averages. Hold for the 14:00 looking for a run into lows.
AM high will be 15min to 1h Premium Array.
PM high will be 15min to 1h Premium Array. PM can run lunch high IF the AM session high forms at HTF array [4h or D TF] Premium. If the AM session does NOT form at HTF Premium Array [4h or D TF] anticipate PM session to take out the AM session high and tap into HTF PD array.
PM low reaching into 14:00 is many times gonna be a 15min to h Discount Array.
76
When it comes to Stocks Trading why should I look at YM Seasonal tendency and which three divisions of the year are there?
It is 30 stocks, blue chip companies. If they are doing great then ES is going doing great. NQ is heavy in tech.
YM is closely mirrored to the ES seasonal tendency. Always refer to this Seasonal Tendency as it is the most accurate. Also using YM seasonal with ES seasonal.
**Three divisions in the year when it comes to Stock Trading.**
- First segment: First half of the year there is generally high volatility but directionally driven → bullish
- Second Segment: last quarter of the year → generally bullish because it is connected with holidays and year end spending has to come in. A lot of magnitude and velocity why price should go higher. A lot of spending during this time of the year.
- Middle Segment: Low Magnitude Period. Begins in May ends in October. May to October there is a lot less directionally driven markets. Look for a range and less volatility but trade with less leverage.
77
How can I break YM Seasonal Tendency down to Monthly Bias.
Broken down month by month.
- January - Bearish
- February - Bullish
- March - Consolidation
- April - Bullish
- May - Bearish
- June - Consolidation ending Bearish
- July - Bullish into Mid Year High
- August - Consolidation
- September - 1st half bullish - 2nd half bearish
- October - Bullish [usually seasonal low formed]
- November - Bullish
- December - Bullish [Santa Clause rally]
March, June, August those are rather low probability months, Not ideal for trading. IF IOF HTF bullish then the best thing is to trade bullish Months.
IF bearish IOF then best trades are going to be occur in bearish MONTHS
IF bullish IOF then best trades are going to be occur in bullish MONTHS
78
When I am looking at Seasonal tendency and Long Term Seasonal, Middle Term Seasonal and Short Term Seasonal are pointing in the same direction, what is that indicating in terms of historical data?
EXAMPLE: based on looking at the 5Yr, 15Yr and 20Yr seasonal tendencies and I can see that they are pretty much very closely correlated.
IF they are very correlated and in tandem that should give me more confidence when looking at seasonal tendency. Speaks consistency for probabilities are historically speaking.
79
When price is in consolidation what am I looking for in terms of price signs?
I am looking for price to indicate me if it wants to break higher or lower.
80
How can I build Buy Watchlist when lookings at stocks?
Filter 1: The stock market should rally higher.
Filter 2: During Bullish Months - select higher low stocks.
February to May months are ideal Long Setups.
The October to January months are ideal Long Swing Setups
Majority of index stocks will rise with the Major Market. In high tide all boats rise meaning YM will rise with it stocks.
Stocks that are trending Higher on Weekly prior to our condition looking to be a buyer - area ideal.
Avoid Safe Stocks like VZ, GE and KO.
Strong stocks will have obvious Bullish Structure.
***Discount Arrays with Index SMT will highlight companies that are under heavy Accumulation during Seasonally Bullish Months.***
*Try to narrow the selection to 2 to 4 companies during your Stock Selection process.*
**Leadership Stocks that are aggressively bought by Institutions will be found to fail to drop lower during Bullish Months when the three major Stock Indices decline until one fails to post a lower low comparably.**
*During seasonal bullish tendency focus when three averages [NQ, YM and ES] are making lows. One of those averages will fail to make a lower low that is SIGNAL that the trend is changing to bullish!!!*
At that same time look for STOCKS that make higher lows because those are institutionally being bought.
81
Which stocks should I pick when building a buylist in bullish seasonal?
Looking at the stocks that make higher low when market is bullish indicating SM accumulation.
Green line is YM. Focusing on the stocks that are making higher lows.
AAPL creating HL, while YM created a lower Low. APPL showing strength only occurring when large institutions come into market that is indication of a lot of buying. Price traded then higher from February into May.
Bullish February to May. The SMT between AAPL and YM in January confirms the buying.
82
How can I build Sell Watchlist when lookings at stocks?
**Filter 1:** The Stock Market should decline.
**Filter 2:** During Bearish Markets - select lower high stocks [SMT with YM on the highs making failure swing]
The months of January, May - July are ideal Short Swing Setups.
Majority of index stocks will decline with the Major Market.
Stock that are trending Lower on the weekly prior are ideal.
Avoid “Safe Stocks” like VZ, GE and KO.
Weak Stocks will have obvious Bearish Structure.
**The Premium Array with Index SMT will highlight companies that area under heavy Distribution during Seasonally Bearish months.**
Try to narrow the selection 2 to 4 companies during your Stock Selection process.
**Leadership Stocks that are aggressively sold by Institutions will be found to fail to rally higher during Bearish Months when the three major Stock Indices rally until one fails to post a higher high comparably.**
January generally bearish. Primary focusing on May high thru the month of July [Beginning of May to the first of August]
Primary focusing on index SMT divergence.
**Bearish Seasonal tendency + heavy distribution seen by SMT + bearish IOF = PILL TO SUCESS**
83
What is the meaning behind CANSLIM?
* C - Current Earnings
* A - Annual Earnings
* N - The New Factor
* S - Supply and Demand
* L - Leader vs Laggard
* I - Institutional Sponsorship
* M - Market Direction
CANSLI - Fundamental
M - Technical Bias
84
What is Meaning behind C in CANSLIM?
Current Earnings: Looking for stocks that have earnings growth of more than 25%. Earnings should also accelerate over the last three quarters. Increase building is ideal.
85
What is Meaning behind A in CANSLIM?
Annual Earnings - growth of minimum 25% over the last three years
86
What is Meaning behind N in CANSLIM?
The New Factor: The biggest winners always had something new. New product, new service, new condition, new leadership. Look for newer companies. 75% of them went public withing the last 8 years.
Social Media apps were the big boom. Facebook at that time was new Idea new Company which meant it was ready for this.
New horizon opportunities. May not any new companies coming up, look for companies with new products. Like AAPL they come with new IPhone each year that is great. Change in management can also be good for buying.
Simply google search could help me determine if the stock has anything new. New idea, new product something that is going to attract new investors and institutions. And who has more money? Institutions or Investors.
**Anything new is going to attract new money.**
87
What is Meaning behind S in CANSLIM?
Supply and Deamand: Look for stock that is well valued. ICT has to see stock over 20$ and it has to be reasonable FLOAT [amount of shares that could be purchased].
Look at the idea of buying a stock that has a ton of FLOAT compare with a STOCK that has less shares that could be purchased WITH the same idea management, same products. If SM is going to buy that one with less shares it is going to be easier for them to price because it is less of a Supply and Demand factor.
88
What is Meaning behind L in CANSLIM?
Leader vs Lagger: Consider buying high and selling higher → that is LRLR basically. It moved from discount array and it reaching for LRLR buyside liquidity. Look for Leader not for lagger.
**The strong got stronger in Stocks→ focusing on the stocks that are leading - can be confirmed by the SMT and avoid the laggers.**
89
What is Meaning behind I in CANSLIM?
Institutional Sponsorship: - The way it can be tracked in stock is by Mutual funds, pension funds and banks → big players that drive the market and present 80% of trading.
**Suggest buying stocks that have at least 10 Mutual Funds.**
90
What is Meaning behind M in CANSLIM?
Market Direction: Trading in sync with the market as they follow the market.
**SMT is all I ever need for technical analysis for stocks - DOW THEORY. Simple stuff - Quarterly Shifts with Seasonal Tendency.**
91
What is a key Indicator or Key Smart Money Tool
**Divergence [SMT] is key for smart money accumulation and distribution → professional footprint**
When selecting stocks to trade that is a going to be a key tool.
91
What does it mean decoupling in asset classes?
They can decouple [asset classes] or WORK in harmony. **IF there is decopling [bond market goes higher, (RISK OFF) market goes to buying bonds]. when bond market going lower (RISK ON scenario) → buying of stocks, foreign currency.**
**If markets have decoupling that is saying me that SM is NOT willing to make large contributions to one side of the market or another OR they are waiting on SOMETHING.**
**When they are not in symmetry that is usually hard trading.**
92
In reference to Multi - Asset Analysis when it is going to be easy trading and when hard trading.
* When 4 classes in sync → easy trading.
* When 4 classes NOT in sync → hard trading SM could be waiting and NOT ready to invest.
*When markets are efficient then they create BIG market moves which are easy to see.*
