ICT W.E.N.T. Series - 4 of 5

Understanding Support and Resistance

In this section, the speaker introduces the importance of support and resistance in trading.

The Importance of Support and Resistance

• Support and resistance are crucial for gauging supply and demand factors that affect price movements.

• Even if you use an automated trading approach, it is important to incorporate support and resistance into your strategy.

• Horizontal support and resistance is more reliable than diagonal trend lines for gauging supply and demand.

Technical Analysis vs Indicators

• Price action is the framework that enables the effectiveness of indicators to be capitalized on.

• It's not enough to simply put an indicator on a chart; understanding price action is key to effectively using indicators.

Importance of Support and Resistance

In this section, the speaker discusses the importance of support and resistance in trading. He explains that understanding horizontal support and resistance levels can give traders a precursor to future probable moves in the marketplace.

Understanding Support and Resistance

• The use of moving averages and indicators is great, but there has to be context and a premise behind their use.

• Horizontal support and resistance levels give traders a precursor to future probable moves in the marketplace.

• Support and resistance is universal to all asset classes, including Forex, index trading, bonds, currencies, futures, and even Bitcoin.

• Bitcoin also follows support and resistance rules as it provides a visual representation of supply and demand.

Trading with Support and Resistance

• Utilizing horizontal support/resistance helps traders know a level in advance when price gets to that level have a plan of action to trade when price gets to that level.

• Understanding what is deemed as value is always going to be moving its dynamic. Multiple levels would be considered support/resistance based on any timeframe prices are viewed on.

• By having an understanding of where support/resistance is basis the asset class being traded gives insight into where there should be measurable indications of demand or supply.

Conclusion

The speaker emphasizes that while support/resistance is not a panacea or be-all-end-all solution for trading, it does provide traders with valuable insights into market movements.

Developing a Consistent Trading Plan

In this section, the speaker emphasizes the importance of developing a consistent trading plan based on support and resistance levels.

Understanding Support and Resistance

• Support and resistance levels are crucial for determining consistent trade setups.

• Without reference points to deem as support or resistance, there is no measurable way of determining a consistent approach.

• Looking for consistently reoccurring patterns that occur around support and resistance is the basis for finding consistent trade setups.

Controlling Your Trades

• As a trader, you can't control price, but you can control yourself.

• It's important to understand in clear terms what you do when price gets to specific price levels.

• You should be looking at price knowing full well that you are responsible for your trades.

Finding Optimal Trade Entry Patterns

• When price trades up to a key resistance level, look for signs of pausing and/or reversing.

• You want to see a quick move away from that level with measurable means of rejection.

• Many times what will happen is it'll try to run back to that level and fail. That's when optimal trade entry patterns come in.

Using Price Action-Based Study

• Using support/resistance removes all ambiguity from using indicators.

• Indicators give sentiment indicator-based views on what neophyte traders are expecting.

• If coming down to a support level and seeing folks seeing a small little bounce off that support level and it goes overbought they're gonna look to sell that because it's overbought.

Understanding Buyers and Sellers

In this section, the speaker explains how understanding the simple premise of buyers and sellers can help traders carve out a nice return over an annual basis. He also highlights the importance of having an understanding of support and resistance levels to determine where stop-losses should be placed.

Importance of Support and Resistance Levels

• Having an understanding of support and resistance levels is crucial in determining where stop-losses should be placed.

• Specialists and market makers scoop up liquidity pools where there's a pocket of orders resting just above an old high or just below an old low.

• It's common sense to put your stop-loss right below the most recent low, but it takes a very small measure of static price action to come down and tag that out if a big order comes into the marketplace.

Understanding Market Makers

• Market makers take advantage of market orders, which are candy for them because they get whatever fill they want.

• Knowing what smart money is doing is key to consistent trading. The real smart money is not the guys that are talking on forums; most of them don't know who smart money is.

The Problem with Wanting Action

In this section, the speaker discusses how traders often want to get in on trades because it doesn't seem productive until they actually put trades on. However, he emphasizes that many traders don't know how much money they're going to make or lose because they don't trade with stops or mental stops.

Trading with Stops

• Many traders don't know how much they're going to lose because they don't trade with stops or mental stops.

• The textbooks tell us to put our stop-loss right below the most recent low, but it's common for a small measure of static price action to come down and tag that out if a big order comes into the marketplace.

Importance of Support and Resistance Levels

• Having an understanding of support and resistance levels is crucial in determining where stop-losses should be placed.

Understanding Smart Money

In this section, the speaker emphasizes the importance of understanding what smart money is doing in trading. He also shares his experience dealing with people on an institutional level and how he has seen many things that he is sharing now.

Understanding Market Makers

• Market makers take advantage of market orders, which are candy for them because they get whatever fill they want.

• Knowing what smart money is doing is key to consistent trading. The real smart money is not the guys that are talking on forums; most of them don't know who smart money is.

Sharing Knowledge

• The speaker shares his knowledge because he finds gratification in being helpful to the general populace.

Understanding Support and Resistance Levels

In this section, the speaker discusses how support and resistance levels are crucial in trading. He explains that if support levels are taken out and resistance levels are respected, it is a bearish indication. The speaker emphasizes that traders should have a simple mindset when looking at price action.

Importance of Keeping Trading Simple

• Traders tend to make trading more complicated than it needs to be.

• Many traders believe that more trading equates to more success, but this is not the case.

• Successful traders are often very selective and cherry-pick their trades.

Discretionary Trading vs Systematic Trading

• The speaker is a discretionary trader who does not take every signal from his system.

• Discretionary traders use their experience and knowledge of price action to determine when setups look strong enough to trade.

• Experience cannot be learned from books or workshops; it comes from years of studying price action and analyzing real trades.

Using Support and Resistance Levels in Trading

• Support and resistance levels are the most important tools for technical traders.

• Monthly, weekly, and daily levels can help traders find profitable trades throughout the year.

• Incorporating support and resistance levels with a directional premise based on higher time frame levels can lead to net profitability for average traders.

Capitalizing on Seasonal Tendencies in Trading

In this section, the speaker discusses how he uses his understanding of seasonal tendencies in trading to capitalize on smart money moves. He emphasizes that he is not trying to hurt anyone but rather take advantage of less informed traders.

Becoming a Specialist Trader

• The speaker considers himself something of a specialist because he understands specific times of the week, months, and days where certain things come into effect in the market.

• By studying price action and analyzing real trades, traders can identify reoccurring seasonal tendencies and patterns that come into the market.

Taking Advantage of Smart Money Moves

• The speaker uses his knowledge of seasonal tendencies to capitalize on smart money moves.

• He takes the other side of less informed traders but does not feel that he needs to apologize for it since everyone signs a risk disclosure when entering the trading business.

Learning from Losing Trades

• Traders must learn from their losing trades to improve their skills and experiences.

• Without learning from losing trades, traders will be caught up in the pain factor and struggle to succeed in trading.

Understanding Levels in Trading

In this section, the speaker discusses the importance of levels in trading and how they can be used to understand how commercial traders move in and out of the market.

Importance of Quarterly Highs and Lows

• Quarterly highs and lows are crucial levels that provide a framework for understanding how commercial traders move in and out of the market.

• Commercial traders, large institutions, and banks move price to levels of disparity in orders.

Different Types of Highs and Lows

• Monthly highs and lows are based on the four-week range, while weekly highs and lows are based on the previous week's high and low.

• Daily highs and lows are based on the previous 24-hour range, while session highs and lows refer to the highest high and lowest low during specific sessions (Asian, London, New York).

Supporting Resistance Levels

• Implied support resistance levels such as Fibonacci retracements/extensions or pivot points work best when combined with natural supporting resistance levels.

• Twelve-month highs/lows can provide opportunities for defining sell signals.

Bearish Trading Strategies

The speaker discusses bearish trading strategies, including turtle soup setups and monthly highs and lows.

Turtle Soup Setup

• A false breakout that moves above the tooth is a turtle soup setup.

Monthly Highs and Lows

• Monthly highs and lows are significant price levels to be aware of. They don't set up often, but they can provide high odds setups.

• Drawing lines on old monthly highs and lows can provide opportunities for swing trades with a small sample size of pairs. This can be done with end-of-day trading while working a day job.

Weekly Highs and Lows

• Weekly highs and lows also provide opportunities for trading without needing to sit in front of charts all day. They can lead to explosive moves, such as a 300 pip move in a short span of time.

Using Previous Day's Highs and Lows for Day Trading

In this section, the speaker discusses how day traders can use previous day's highs and lows to identify potential setups. They also discuss the importance of looking at at least three days worth of data to see where key highs and lows are.

Using Previous Day's Highs and Lows

• Previous day's highs and lows are great setups for day traders.

• Look at at least three days worth of data to see where key highs and lows are.

• Asian session highs and lows are beneficial for London traders and New York traders.

• Adopted a style of the Asian range that was taught through Chris Lori's work.

Understanding Session Highs and Lows

• London session highs and lows are influential in terms of New York trading.

• If you do not understand London session highs and lows, take a couple weeks to go through previous data on your platform.

Referencing Previous Sessions

• Asian session requires references to New York session end the previous London session highs and lows.

• Always look back at least two sessions before trading.

Understanding Institutional Price Levels

In this section, the speaker discusses the concept of intraday range and institutional price levels. He explains that understanding these levels can help traders identify trading scenarios and take profits.

Institutional Price Levels

• Institutional price levels are simple to follow and involve looking at 100-point levels.

• The big figure levels are zero-zero, 50, 80, and 20.

• These levels are significant because institutional traders often have order blocks around them.

• By marking off a 300 pip range based on where the market is trading, traders can quickly identify support and resistance levels.

Benefits of Using Institutional Price Levels

• Using institutional price levels provides a quick and clean approach to identifying support and resistance.

• Traders can use these levels to look for trade setups on higher monthly, weekly, and daily charts.

• There will be enough trading patterns over the course of a month to form trade setups even if you cannot trade every day.

Trading Scenarios

• When price reaches an old level, it may be a good indication to take profits.

• Traders can use these levels to get in sync with momentum or take profits as highs or lows form for that particular day.

Significance of Institutional Trading

In this section, the speaker emphasizes the significance of institutional trading in determining support and resistance levels. He explains how banks provide liquidity for traders at specific price points.

Order Blocks

• Banks have order blocks around specific price points such as big figure levels (zero-zero), mid figures (50), 80-levels, and 20-levels.

• These psychologically sensitive price points facilitate real-world business needs based on institutional trading.

Short-term Support Resistance Level vs. Institutional Price Levels

• Many times, what traders think is a short-term support resistance level may not be enough.

• Price often goes beyond these levels and turns around at institutional price levels.

Benefits of Using Institutional Price Levels

• Using institutional price levels removes the uncertainty and emotional charge that comes with identifying support and resistance levels.

• Traders can use these levels to understand how price reacts at these levels and how their indicator-based analysis works or doesn't work.

Learning from Trading Mistakes

In this section, the speaker discusses how traders can learn more from their mistakes than from successful trades. He emphasizes the importance of desensitization to losses and consistency in trading.

Importance of Learning from Losses

• Traders can learn more from unsuccessful trades than successful ones.

• Desensitization to losses is important for traders.

• Consistency in trading is key, regardless of percentage profitability.

Selective Trading and Discretionary Methods

• Selective trading based on a trader's method or system is important.

• A high percentage rate is not necessary for making money in trading.

• Discretionary methods that rely on a trader's understanding of price action are often more effective than rigid systems.

Understanding Market Tone and Institutional Order Flow

• Anticipating market tone and institutional order flow is crucial for successful trading.

• Specific segments of price action at certain times can provide valuable insights into market trends.

• Indicator-based EAs may not be effective in identifying these trends, but discretionary methods can be useful in this regard.

Introduction to Commitment of Traders Analysis

In this section, the speaker introduces the concept of Commitment of Traders (COT) analysis and explains its importance in trading.

What is COT Analysis?

• COT analysis is a set of core principles derived from Larry Williams, a well-known trader.

• The CFTC requires large traders with reportable sizes in their trading to divulge whether they're buying or selling on a net basis on a weekly basis.

• COT analysis involves looking at three groups of traders: small speculators, large speculators, and commercials.

Why is COT Analysis Important for Forex Trading?

• Forex trading allows for tailoring risk parameters like no other asset class.

• Small speculators in forex are similar to small speculators in futures markets.

• Large hedge fund traders are usually large speculators who are right 90% of the time in trending environments but get hurt when trends reverse.

• Commercials are grouped into commercial users and suppliers and have close ties to fundamental supply and demand factors.

Conclusion

COT analysis provides insight into real institutional sponsorship on a macro level. It is an important resource for forex traders as it allows them to tailor risk parameters and gain valuable insights into market trends.

Understanding the Commitment of Traders Report

In this section, the speaker explains how banks monitor supply and demand for specific currencies and commodities. They also discuss how trained staff watch fundamental drivers in specific assets to determine if there is a high level of demand or waning demand.

The Role of Fundamentals in Trading

• Banks monitor supply and demand for specific currencies and commodities.

• Trained staff watch fundamental drivers in specific assets to determine if there is a high level of demand or waning demand.

• The speaker uses fundamentals in trading because it's based on data that provides liquidity that makes markets move like they do.

• Commercial traders are diametrically opposed to large speculators when making trades.

Using the Commitment Traders Report

• Commercials and large speculators are always moving back and forth until they reach an extreme reading on a diametrically opposed scenario.

• A 12-month or four-year extreme reading indicates a major tide change, which is important to understand.

• The commitment traders report breaks down total longs and shorts, providing net positions of net long or net short positions.

• The speaker looks at measurements of long or short positions of commercials because they are considered the smart money.

Understanding Large Commercial Traders and Large Speculators

In this section, the speaker discusses the relationship between large commercial traders and large speculators. He emphasizes that large speculators are trend-following and have a good track record of being right during long trends. However, they experience pain at major extremes highs and lows. The speaker advises against trying to pick tops and bottoms.

Trading During Big Moves

• The speaker suggests focusing on trading during the lion's portion of big moves instead of fixating on getting the highest high or lowest low.

• He shares his personal experience of not trying to pick tops in bear markets but rather selling near the highs as there are retracements.

• The speaker looks for clear indications of a reversal before going into a bull market.

Using Tools to Gauge Trends

• There are tools available to help gauge trends, but they are not 100% accurate.

• When things align with measurable sustainable macro trends based on large speculators and commercials, it is astronomical in terms of probability.

Focusing on Commercials' Net Long and Short Positions

• The speaker emphasizes that insiders should focus on commercials' net long and short positions over the last 12 months and four years.

• Extreme bullish net long positions indicate a major low forming, while extreme bearish net short positions indicate a continuation trend Fowler in a bear market.

Understanding Commitment of Traders Report Graph

• A commitment of traders report graph depicts a zero basis line above which commercials would be considered net long or bullish.

• Commercials are both hedgers and producers, so they will always be doing a business transaction. Extreme levels of net long and net short positions indicate their greed for saving money and making a profit.

Understanding Trend Changes

In this section, the speaker discusses how to anticipate reversal patterns by looking at trend changes. He emphasizes that it is important to manage equity and risk when expecting major turns in reversals of long-term trends.

Net Short Position Extreme Reading

• During the period of July and August, there was a net short position.

• In October, there was a net short position extreme reading over the last 12 months.

• Looking at trend changes provides an x-ray view to anticipate reversal patterns.

Risk Management

• Do not bet the farm simply because the data indicates a major reversal underway.

• Look for value in price action to justify the expectation that a reversal is on its way.

• If you are a 2% risk trader, typically risk less than half of your normal trade position size in environments where you're expecting major turns in reversals of long-term trends.

• Cut your risk on buys in an environment where there is a net short position extreme reading.

Commercial Accumulation Phase

• The commercials have deep pockets to absorb all that time of sitting in losing positions.

• Be very leery of betting a whole lot of money on trades that are net long in those environments.

• Once price comes down to a low of some kind and finds support level or deemed value, commercials are done buying.

Understanding Commercial Entities and Price Swings

In this section, the speaker explains how commercial entities operate in the market and how they affect price swings.

Commercial Entities' Hedging Strategy

• As prices drop, commercial entities buy more to hedge their positions.

• When prices start to move up, they liquidate their long positions collectively.

• The commercials' goal is not to make astronomical amounts of money but rather to lock in a fair price based on their collective understanding of supply and demand.

Macro Price Swings

• The smart money operates by understanding macro trends on a monthly, weekly, and daily basis.

• Minor retracements during accumulation phases are optimal buying opportunities.

• Neophyte traders often miss out on profitable trades due to fear or lack of trust in directional premise.

Importance of Directional Premise

• To consistently trade with a directional premise, one must understand macro trends and market structure.

• Commitment of Traders data can help determine net long or short positions held by commercials.

Understanding Market Structure and Institutional Order Flow

In this section, the speaker discusses how to work within market structure and institutional order flow. They explain how to identify bullish market structures and use institutional order flow to build a directional premise model.

Identifying Bullish Market Structures

• Look for indications of willingness to bounce and trade higher.

• Once there is a market structure shift bullish, look for support to be respected and resistance to be violated and broken to the upside.

• When retracements occur, don't anticipate the sky falling. Instead, look for new buying opportunities.

• Trade back into a previous existing order block foolishly finding an old resistance now turning support maintaining higher lows and higher highs.

Using Institutional Order Flow

• Use two moving averages (18 period exponential moving average and 40 period exponential moving average) on the daily chart to measure institutional order flow.

• When the 18 crosses the 40, wait for it to start opening up. This is called stacking, which measures strong momentum.

• Funds trade based on momentum, with one of the largest approaches being using institutional or flow using commitment traders fundamentally price action drivers behind why price should be expected to go higher.

• Wait for retracements back down to a known support level or resistance broken then turn support going into a previous existing order block that's bullish.

The Million Dollar Secret

• Look at the CoT graph or commitment raters report chart every week. It plots net long in that short positions of both speculators (small level large speculators or fund managers) and commercials.

• Look for trends in what commercials are doing.

Understanding Commercial Traders

In this section, the speaker discusses how to anticipate buying opportunities by analyzing the net short and long positions of commercial traders.

Analyzing Net Short and Long Positions

• Commercials moving down to a net short position can indicate a likelihood of short-term downside corrections.

• A large pre-existing net long position by commercials may result in minor price corrections during periods of net short positions.

• Establishing a trend change is more important than the level of net long positions. Confirmation in price action during retracements can lead to rallies and upside breaks in market structure.

• During retracements, it's important to stay focused on looking for net long positions rather than assuming a bear market.

Swings and Position Trades

• After 12 months of a long session, look for swings and position trades that align with macro trends.

• When commercials move back to a net long position after being at a huge net short position, it's an astronomical place for swing traders to take entries as they swing back down to a net short position.

Buying and Selling Opportunities

• During times when commercials make huge net short positions, reduce risk on your long positions and start looking for selling opportunities.

• Oversold conditions created by small increases in commercial trader's net long positions can be seen as buying opportunities.

• Trading with the trend of commercial traders is key. Ferret out 12-month extremes in their positions (short or long), which set intermediate term highs and lows in the marketplace.

Fundamental Data Reports

• Coupling this information with support resistance can lead to astronomical results when studying fundamental data reports and bank reports.

Using Price Charts to Trade

In this section, the speaker discusses the benefits of using price charts for trading and recommends a website where traders can access free chart demos.

Benefits of Using Price Charts

• The speaker recommends using price charts for trading.

• Traders can access free chart demos on a website called barchart.com.

• Traders can also try out a two-week free demo on another website that offers high-end technical charts.

• The speaker prefers to print out paper charts and mark them up with notes.

Understanding Net Long and Net Short Positions

In this section, the speaker explains how to read net long and net short positions on a chart and how commercials and large speculators interact in the marketplace.

Reading Net Long and Net Short Positions

• The zero basis line indicates whether positions are net long or net short. Anything above zero is net long, while anything below is net short.

• Commercials are represented by the heaviest black line on the chart, while large speculators are represented by another line.

• During a downtrend in prices, commercials were buying large numbers of net long positions on the Euro while large speculators were mostly with that trend all the way to its end.

Interactions between Commercials and Large Speculators

• As prices moved higher after reaching 120, commercials started liquidating their long positions. Funds assumed the other side of these long positions by selling them.

• The relationship between commercials and large speculators is a dance that gives traders insights into the marketplace.

Understanding the Trend of Commercials and Large Speculators

In this section, the speaker explains how to understand the trend of commercials and large speculators in a bull market. The speaker emphasizes that it is important to be in sync with them.

The Bull Market Trend

• Indicators work when commercials are net long.

• Large speculators are short, but it's time to get in gear with the move higher again.

• Commercials establish new long positions, indicating a bull market trend.

Diametrically Opposed Position

• Extreme largest net short position in the last 12 months indicates a high forming.

• Price comes back up to an old level of support resistance.

• Support resistance and market structure should complement analysis.

Net Long Sessions Held by Commercials

• Start expecting some level of rejection around higher level support and resistance levels.

• Key support level at 120 level is indicative of a major trend change underway.

• Understanding support resistance is central tenant to why this works.

Trading Strategies for Mega Trades

In this section, the speaker discusses how to identify and trade mega trades in the forex market. He explains that these types of trades can yield astronomical profits and are characterized by extreme net long or short positions.

Identifying Mega Trades

• Mega trades are identified by extreme net long or short positions.

• To get in sync with the trend, traders should focus on where they are at in terms of the trend rather than waiting for yearly moves.

• A clear shift in market structure occurs when price breaks down below an old low and retraces back up to it. This is a good entry point for optimal trade entry concepts.

• Harmonic trading is ideal during consolidations when the market is in training ranges. However, mega trades occur when there is a clear shift in market structure.

Trading Mega Trades

• Mega trades can yield 500+ pip moves to 1000 pips.

• When trading inside of a net long position, traders should keep their perspective in mind and be aware of potential explosive moves coming off support levels.

• Traders should spend 90% of their time looking for scenarios where there is a clear shift in market structure as these are the setups that lead to mega trades.

• The way to make astronomical explosive profits with low risk is by catching these types of moves and letting them run.

Conclusion

• The speaker has been able to call all major moves over the last four years using this strategy.

English Trading Strategies for Bullish Markets

In this section, the speaker discusses his trading strategies for bullish markets. He talks about looking for retracements, bullish harmonic patterns, optimal trade entries, and ICT reflections. He also mentions buying at the first return after a surge up and testing the waters.

Looking for Optimal Trade Entries

• The speaker looks for an intraday pullback on an hourly or four-hour basis to catch an optimal trade entry.

• He suggests buying the first return when there is a big surge up and it starts to retrace.

• The goal is to catch the first return from where we came from at that 120 level.

Trend Following Event

• The speaker describes a trend following event where we'll see the explosive portion of the trend and the longest portion of the trend unfold.

• He gives an example with Canadian dollar charts showing how he made lots of money during such events.

Understanding Market Profiling

• The speaker emphasizes understanding market profiling to work within any market environment and reap profits.

• He explains how being just a harmonic trader can kill potential profits by cutting them short.

False Break Below Old Low

• The speaker talks about turtle soup which is a false break below an old low quick rejection.

• Price rallies up here comes down and bounces where would funds and trend traders move their stop-loss to right below here right so watch what happens price rallies and comes back down takes

English Understanding Optimal Trade Entry

In this section, the speaker explains how to identify optimal trade entry points using institutional order flow and price retracements.

Identifying Optimal Trade Entry Points

• Pending orders become market orders when the price reaches a certain level, causing traders to sell to protect their positions.

• Smart money buys at market prices, knocking out other traders before taking their seat on the bus.

• Rejections and raids on liquidity pools below old lows create an environment for 90% of the best moves.

• Look for an environment where the market opens and trades lower initially for the day by that initial low moving off of the opening during London session.

• Every time the price retraces, it comes back to an order block or old support/resistance broken turn support/resistance broken turn support. Each one of those environments is an opportunity for you to be a buyer using directional premise.

• Follow a combination of ingredients and then follow the recipe to get blue-ribbon results.

Institutional Order Flow

• Optimal trade entry occurs when price fills a range from low to high right before it takes off in an explosive move. This is indicative of institutional order flow.

• When there's institutional sponsorship with lots of money at their disposal buying currency, it rallies up but has to cool down just like we saw in commitment of traders.

• Accumulation happens through liquidity by running out to old low here notice there was no other low taking out prior this is what causes exponential surge higher in price when you see that in a move up.

• Every ABCD extension or price swing or measured move always has this in it every single one of them when it comes down blows out to a low in an existing price swing up. This is when you know it's gonna happen when it violates and rejects that's it you know you're gonna get an extension.

Understanding Net Long and Short Positions

In this section, the speaker explains how to interpret net long and short positions in trading. They emphasize that it's not always as clear as we would hope, and sometimes other tools need to come into play.

Interpreting Net Long and Short Positions

• It's important to understand whether we're reducing net shorts or net longs.

• Open interest is another tool that can help us interpret price action.

• When commercials are already net long but they were coming out of the net long sessions aggressively and then they added aggressively, this is indicative of a buy.

• Increasing net long positions can indicate support for a buy.

Rapidly Reducing Net Short Positions

In this section, the speaker discusses how rapidly reducing net short positions can be useful in interpreting market trends.

Interpreting Rapidly Reducing Net Short Positions

• If commercials are heavily net short, it could indicate a fundamental reason to expect lower prices soon.

• However, if they aggressively change gears and rapidly reduce their net short position, that's telling you something fundamentally different.

• Open interest will decline if commercials are covering shorts rapidly because they are the market entity that creates the markets for us in the futures market.

Swing Trades Using Information from Daily Charts

In this section, the speaker explains how swing trades can be made using information from daily charts.

Making Swing Trades with Daily Chart Information

• When you see price surge initially and then start to retrace, focus on support resistance.

• Look for order blocks, which would be the last bearish candle before the big move. This is where smart money accumulates in down moves.

• Smart traders buy when price is dropping, so don't be afraid to grow comfortable buying when price is screaming going.

Trading Strategies Based on Commitment of Traders Report

In this section, the speaker discusses how to stay informed by focusing on the smart money and trading in the direction of the most recent 12 months commercial position. The speaker also explains how to filter out longs and shorts when commitment traders reach fresh 12 months or four-year extremes.

Trading with Smart Money

• To stay informed, focus on the smart money.

• Trade in the direction of the most recent 12 months commercial position.

• Wait for price to form intermediate-term swings.

• Use optimal trade entry patterns to enter and trade with large traders.

Filtering Longs and Shorts

• Filter out longs when commitment traders reach a fresh 12 months or four-year extreme on commercial net short positions.

• Filter out shorts when commitment traders reach a fresh 12 months or four-year extreme on commercial net long positions.

Trading with Commercials Trend

In this section, the speaker explains how to trade with commercials trend engineered by commercials. The speaker also suggests looking for seasonal tendencies that line up with net readings of what's seen in price action.

Trading with Commercials Trend

• Trade with commercials trend engineered by commercials.

• Look for seasonal tendencies that line up with net readings of what's seen in price action.

Resources for Commitment of Traders Report

In this section, the speaker recommends two resources for commitment of traders report - "The Commitments of Traders Bible" by Stephen Reis and "Trading Stocks and Commodities with Insiders Secrets of CO T Report" by Larry Williams. The speaker also suggests using bar chart time as a resource.

Recommended Resources

• "The Commitments of Traders Bible" by Stephen Reis.

• "Trading Stocks and Commodities with Insiders Secrets of CO T Report" by Larry Williams.

• Use bar chart time as a resource.

Capturing Explosive Forex Profits

In this section, the speaker explains how to capture explosive forex profits. The speaker suggests trading in the marketplace and finding big moves by using the information provided in previous sections.

Capturing Explosive Forex Profits

• Trade in the marketplace and find big moves.

• Use the information provided in previous sections.

Understanding Weekly Ranges

In this section, the speaker discusses how to use weekly ranges to facilitate a trading plan. He suggests looking at the weekly range over a 15-minute chart and noticing the recurring pattern that takes place.

Using Weekly Ranges for Trading Plan

• Look at the weekly range over a 15-minute chart and delineate the dates to give you a vertical line delineating when the days begin and end.

• Notice the reoccurring pattern that takes place in weekly ranges.

• Use this information to facilitate a trading plan by focusing on monthly, weekly, and daily charts.

• If it's positioned to move higher or expected to be bullish, expect consolidation on Monday before moving up.

• In bearish environments, expect consolidation on Monday before moving down.

The ICT London Open Kill Zone

In this section, the speaker explains what happens during Tuesday's London open session and how traders can use this information to their advantage.

The ICT London Open Kill Zone

• During Tuesday's London open session or between two o'clock and four o'clock in the morning New York time is when traders should expect rapid declines in bearish environments.

• This is known as the ICT London Open Kill Zone.

• Traders should look for an opening at midnight in New York time and expect an initial move up going into London open session around three o'clock in the morning New York time.

• The high of the day will form during this time, and if it happens to be on a Tuesday or Wednesday is London open, there is an 80% chance that that's gonna be the weekly high.

• In bullish environments, expect consolidation on Monday before moving up.

Fine-tuning Trading Plan

In this section, the speaker explains how traders can fine-tune their trading plan by using directional bias and range expectations.

Fine-tuning Trading Plan

• If you have the macro view in line and expecting directional premise to be one direction or another based on what we've discussed so far, you have a lot of the battle already won for you.

• Traders should fine-tune their trading plan by looking at range expectations.

• If the market is predisposed to move higher, then expect the market to close up on the week from Sunday's opening to Friday's close.

The Dangers of Fakeouts

In this section, the speaker warns about the dangers of fakeouts and how they can trap inexperienced traders.

Fakeouts

• Fakeouts can trap neophyte traders who buy into them.

• Traders chase prices going lower and get shell-shocked when they reverse dramatically.

• This is a common occurrence in trading forums.

Analyzing the Canadian Dollar Weekly Chart

In this section, the speaker analyzes the Canadian dollar weekly chart to demonstrate an example of a recent market event.

Analyzing the Chart

• The red line on the chart represents commercials.

• To access this chart, go to missusbar.com and add the commitment of traders line chart indicator.

• The net long position for commercials was at its highest in four years.

• Price traded down to around 88/89 level before reversing dramatically.

• A higher time frame shows that this level is a major support level.

Bullish Reversal Underway

In this section, the speaker discusses how accumulation of long positions by commercials indicated a possible bullish reversal underway.

Accumulation of Long Positions

• As price traded lower, accumulation of long positions helped by commercials indicated a possible reversal underway.

• Looking at the daily chart, we see that we have our 18 and 40-day EMA's with green being 40-day and red being 18-day exponential moving average.

• Open interest declined rapidly during consolidation indicating that Smurfs (commercials) were covering their short selling as they thought bullish prices were on their way.

Optimal Trade Entry Opportunities

In this section, the speaker discusses optimal trade entry opportunities and how to identify them.

Identifying Optimal Trade Entry Opportunities

• We have a consolidation in an existing bullish environment.

• There are many optimal trade entry opportunities during retracements.

• A measurable move is seen after a stop run.

• Open interest declined rapidly during consolidation indicating that Smurfs (commercials) were covering their short selling as they thought bullish prices were on their way.

Understanding Open Interest

In this section, the speaker explains open interest and how it relates to trading.

Understanding Open Interest

• Open interest can be found by adding it here or by simply having total volume.

• Total volume should be used instead of contract volume.

• During consolidation, we see another drive down in open interest which was discussed before the fact.

• Prices rallied up to 94 figure based on information discussed earlier in the video.

Understanding the ICT Swing Trading Method

In this section, the speaker discusses the concept of stacking and how it can be used to identify selling opportunities. He also emphasizes the importance of spending time with higher time frames to hold onto a directional premise.

Stacking and Selling Opportunities

• The next move up should open the averages and you start staying stacking.

• Stacking is when all the averages open up, much in the same vein that this is stacking on the lower side.

• Continuously look for selling opportunities while that condition exists.

Importance of Higher Time Frames

• Counsel to spend a lot of time with higher time frames because it gives you the backbone to hold onto a directional premise.

• Being in sync with hard time from smart money helps in holding onto a directional premise.

Conceptualizing Swing Trade

• Discusses what swing trade looks like conceptually, what are you doing, how does it work, and how do we confirm setups.

• Introduces ICT swing trading method as something that helps build confidence behind trades.

SMT Divergence and Smart Money Tool

• Speaker introduces SMT divergence as a concept he released in 2009.

• Smart money tool is looking at correlated market asset classes or groups to arrive at underpinnings based on actions of smart money.

• Markets move by those who have more money than us; they are motivated by greed either not to lose money or make money.

Swing Projection for Profit Objectives

In this section, the speaker explains how to use swing projection to determine profit objectives and when to exit trades.

Understanding Swings on a Daily Chart

• A daily chart can be used to identify swings in the market.

• The green line represents the dollar, while the red line represents the British Pound or cable.

• When the dollar rallies, British Pound USD should decline. This is known as inversion.

• To make it easier to see how this works, one of the lines needs to be inverted so that they move in tandem.

Identifying SMT Divergences

• SMT divergences occur when there is a break in correlation between two lines.

• Look for periods where price between two lines differs.

• If one line makes a lower low while another does not, it's an SMT divergence.

• Expect a major move in the opposite direction when an SMT divergence occurs.

Mirroring Lines

• To compare highs and lows of two lines, one must be mirrored.

• If there is no mirroring, it can be confusing for traders.

Conclusion

Swing projection and understanding SMT divergences are important tools for determining profit objectives and exits. By identifying swings on a daily chart and mirroring lines if necessary, traders can better understand market movements and make more informed trading decisions.

Using Higher Timeframe Trading to Trade with Smart Money

In this section, the speaker explains how to use higher timeframe trading to trade with smart money.

Using Daily Chart as a Selection Tool

• The daily chart is used as a selection tool to identify institutional sponsorship on the buy or sell side.

• This helps anticipate inventory moves and price direction.

SMT Divergence and Resistance Levels

• When price sets up an SMT divergence on the bearish side, expect it to rally up into higher timeframe resistance levels such as monthly, weekly or daily resistance.

• Once price shows a clear indication of moving away from that resistance level, there is now a commitment from smart money traders.

Stop Running Event and Measured Move Phenomenon

• After entering short, wait for the market to break down and take out previous swing lows.

• Look for stop running events in retracements where there is a short term high that has run out before the big move starts taking place.

• Use measured move phenomenon by projecting range projected from low down or using 127 extension or 1.618/1.62 extension coupled with A2B Decided Extension Harmonically to get in sync with trend trade with commercials using support resistance only higher timeframe monthly weekly in daily support resistance levels in mind.

Building Sound Approach to Higher Timeframe Trading

• Building a sound approach involves understanding how higher timeframe trading works and applying it on an intraday basis when selling during down days happens.

• Consolidation will eventually occur where everyone will start chasing the move lower but you have already profited because you have anticipated the move.