ICT Price Action Lesson: Major Moves With Seasonal Tendencies

Introduction

The lecturer introduces the topic of seasonal tendencies in trading and explains that he will be focusing on commodities.

Seasonal Tendencies

• Seasonal tendencies are a generalization of what has happened in the past.

• There are services available to measure repeating phenomena over the last 5, 10, 15, 20, and 25 years.

• It's important to note that there are certain caveats that have to be considered when looking at seasonal tendencies.

Dollar Index Chart Analysis

The lecturer begins his analysis with the dollar index chart and explains how it can help determine if we are in a risk-on or risk-off environment.

Risk-On vs. Risk-Off Environment

• A risk-on environment is where the market has the dollar index going lower, which permits markets to rally or go higher.

• A risk-off environment is where the dollar index is going higher, which is deflationary for commodity prices and foreign currencies.

• If we have a period of time when the market indicates that the dollar wants to go lower, then we should watch for big moves on the upside.

Soybean Market Example

• One such big move this year was in the soybean market.

• The lecturer has been vocal about this move and tipped off his students and community through his YouTube channel.

Introduction

In this section, the speaker introduces himself and explains why he uses thumbs up on his posts. He also mentions that he made a prediction about corn prices going up and talks about his past predictions on Bitcoin.

• The speaker uses thumbs up to indicate that a post has been seen and is now public.

• A month ago, the speaker predicted that corn prices would go up due to China buying everything it can.

• The speaker previously predicted Bitcoin hitting $20,000 before Christmas and $30,000 by the end of 2020.

Corn Market Prediction

In this section, the speaker discusses his prediction for the corn market based on dollar bearishness from July.

• The speaker predicts that corn prices will go up due to China buying everything it can.

• The dollar index being bearish is another reason for the predicted increase in corn prices.

Soybean Market Analysis

In this section, the speaker analyzes the soybean market and its price run since June of last year.

• The soybean market has had an extremely handsome price run since June of last year.

• Due to dollar bearishness from July, there is anticipation for higher prices in every market covered in this teaching.

• From $8.80 per bushel to $10.80 per bushel is a gain of $10,000 per contract; if it goes to $12.80 or $14.80 per bushel, there could be gains of another $10,000 each time.

Bitcoin Predictions

In this section, the speaker talks about his previous predictions on Bitcoin and how he called 2017's top.

• The speaker previously called 2017's top in Bitcoin.

• The speaker did not trade Bitcoin but made his calls public.

• The speaker previously predicted Bitcoin hitting $30,000 by the end of 2020 and $40,000 in the future.

Understanding Market Moves

In this section, the speaker talks about how he tries to be open and transparent with his predictions. He also explains that there are big moves in the commodity market that can define wealth without needing a Bitcoin move.

Seasonal Tendency and Bullish Market Structure

• The speaker uses tools to identify seasonal tendencies and bullish market structures.

• If a seasonal tendency indicates that the market is likely to go up, they wait for the market to give them a bullish market structure.

• The speaker has previously talked about soybeans as an example of this strategy.

Corn Market Prediction

• A month ago, the speaker predicted that corn would be the next big move in the community tab on their YouTube channel.

• The speaker has been giving million-dollar maker moves publicly for free because they can afford it and are interested in teaching others how to find these moves.

Warning Against False Teachers

• The speaker warns against false teachers who take their content without understanding it fully and try to teach others without knowing what they're doing.

Understanding the Potential of Commodity Trading

In this section, the speaker discusses how to capture big moves in commodity trading and emphasizes the importance of understanding the markets.

Capturing Big Moves in Commodity Trading

• Passive investment can capture big moves.

• Call options can be used to limit risk while still capturing price moves.

• Finding trades that present large price moves over time can make you wealthy.

The Importance of Understanding the Markets

• Understanding what the markets really do versus what they did is crucial for success.

• Many books and courses on trading are not helpful and can cause more harm than good.

• Learning how the markets really work changed everything for the speaker.

Recommended Book for Commodity Trading

In this section, the speaker recommends a book that he found helpful when starting out in commodity trading.

Recommended Book

• "How I Made One Million Dollars Last Year Trading Commodities" by Larry Williams is recommended.

• Chapter four covers important factors that make commodity markets move on a large scale.

• The chapter provides valuable insights into fundamental analysis.

The Importance of a Solid Foundation

In this section, the speaker emphasizes the importance of having a solid foundation in trading and highlights the flaws in following niche or gimmicky trading strategies.

The Flaws in Niche Trading Strategies

• Elliott wave and harmonic patterns are subjective and based on stylized perception rather than objective market truths.

• Different traders may have different opinions when using these strategies, highlighting their subjectivity.

• These strategies do not start with real logic behind them but instead focus on finding patterns or wave counts.

The Benefits of a Solid Foundation

• A solid foundation is rooted in real market truths that are either present or not present in the marketplace, making it binary and objective.

• Having a solid foundation helps traders understand why a market should go up or down, providing a real understanding of what sets the market up for a move higher or lower.

• Larry Williams' book "Long-Term Secrets to Short-Term Trading" provides an effective foundation for understanding market movements.

Larry Williams' Success Story

In this section, the speaker discusses Larry Williams' success story and how his book can help traders achieve similar success.

Larry Williams' Success Story

• Larry Williams made over $1 million using his trading strategy and won the World Cup Robbins Contest for Futures Trading in 1987 with an 11,000% gain.

• His success was based on three primary rules and tools that set up big fortune makers.

Using Larry Williams' Book as a Guide

• Larry Williams' book "Long-Term Secrets to Short-Term Trading" provides a solid foundation for understanding market movements.

• The book is effective because it is rooted in things that work and provides real logic behind market movements.

• The speaker recommends subscribing to the information presented in Chapter 4 of the book as it gives a real solid foundation for understanding why a market should go up or down.

Seasonal Tendency for Coffee to Rally in Mid-July

In this section, the speaker discusses the seasonal tendency for coffee to rally in mid-July and how it can be used as a framework to find big moves.

Using Seasonal Tendencies to Find Big Moves

• The speaker shows a price fractal of coffee and asks viewers to consider the likelihood of mid-July being a seasonal tendency for coffee to go higher.

• The speaker explains that from a macro perspective, blending seasonal tendencies with technical analysis can help find big moves in commodity markets.

• Viewers are encouraged not to feel like they have to be an intraday or short-term trader if they don't have the time or personality for it.

• The analysis concepts discussed by the speaker can be applied to any type of trading, including day trading, intraday trading, and swing trading.

Price Model Analysis

• The speaker uses swing trade position trading as an example and explains how he uses analysis concepts to frame every type of trade he is comfortable with.

• Viewers are shown relative equal highs on a chart indicating a buy-side liquidity pool.

• A bullish order block is identified using the lowest low to highest high projection.

• An optimal trade entry is identified when the market comes back down into the bullish order block.

• Viewers are given an upside objective of about $1.34 per pound for coffee based on projections above the buy-side liquidity pool.

Total Range Analysis

• The best-case scenario for a low is at $1.01 per pound and the best-case scenario for an extra high is at $1.3565 per pound.

• The total range from the low to the high represents a market maker buy model with a seasonal tendency in mid-July and a falling dollar index in July.

This section provides insights into how seasonal tendencies can be used as a framework to find big moves in commodity markets, specifically coffee. The speaker also discusses analysis concepts that can be applied to any type of trading.

Understanding Market Moves

In this section, the speaker discusses significant market moves and how traders can use tools to identify them.

Significant Market Moves

• The speaker mentions significant market moves in soybeans, coffee, and bitcoin.

• Traders can use higher time frame charts to identify big round numbers like $1 per pound for coffee.

• When trading commodities, traders need to be aware of the contract expiration dates.

Identifying Optimal Trade Entries

• The speaker introduces the concept of order blocks and explains how they can help traders identify optimal trade entries.

• Traders should look for relative equal highs in price action as a draw on liquidity that signals an optimal trade entry.

Contrasting Crypto Trading with Other Markets

• The speaker reminds listeners that big market moves weren't invented by crypto and that there are fortune-making moves occurring every single year for those individuals who know how to find them.

Understanding Seasonal Tendencies in Trading

In this section, the speaker talks about how he has developed his own unique trading strategy and terminology. He emphasizes the importance of giving credit where it's due and not just using someone else's ideas without acknowledgement.

Unique Trading Strategy

• The speaker has developed a unique trading strategy that is not based on traditional concepts like supply and demand.

• He has coined his own terms such as "order block" and "breaker".

• It is offensive to see people use his terminology without giving him credit for it.

Understanding Seasonal Tendencies

• Seasonal tendencies can be used to predict market movements.

• Coffee is an example of a market with strong seasonal tendencies.

• It's important to look at the overall trend of the market before making predictions based on seasonal tendencies.

• If the market is bullish going into July, there is a good chance that coffee will have a mid-July run higher.

• However, if the market is bearish going into July, it's unlikely that coffee will experience a mid-July run higher.

Examples of Bullish and Bearish Markets

• The speaker provides examples of times when coffee was bullish or bearish in different years.

• It's important to study historical data to understand how seasonal tendencies have affected the market in the past.

Conclusion

• The speaker encourages viewers to give his video a thumbs up if they found it useful or inspiring.

• He wants his channel to grow so that more people can benefit from his teachings.

Going Back to Mentorship

In this section, the speaker talks about his plans to go back to being who he was before 2016 in August when he started his mentorship. He also mentions that he will continue with his mentorship group and give them private teachings.

Plans for the Future

• The speaker wants to go back to doing things more relaxed.

• He will still present lessons on trading even if someone cannot afford the mentorship.

• There is a lot of wisdom in these videos, and one needs to watch them multiple times and take notes.

Understanding Seasonal Tendencies

In this section, the speaker talks about seasonal tendencies and how they can be used as a foundational idea for understanding why a market should be doing anything at all.

Importance of Seasonal Tendencies

• Seasonal tendencies are important because there are specific times of the year that you should be focusing on one side of the marketplace and not the other.

• You have to have an understanding of why a market should even be doing anything at all.

• Just because you think you see something harmonic or an Elliott wave-based idea or even a supply and demand idea doesn't mean anything by itself.

Using Seasonal Tendencies

• When we get to July, if the market's been bullish, you can anticipate something unfolding based on seasonal tendencies.

• It doesn't give you an entry pattern, exit pattern or stop loss but it's teaching you a foundational idea which is important.

• Coupling seasonal tendencies with market structure helps understand whether we're in a risk-on or risk-off environment.

Relationship Between Macro Factors and Trading

In this section, the speaker talks about how macro factors such as dollar index impact trading decisions.

Understanding Macro Factors

• If you're expecting a buy signal in commodities but you don't see a weaker dollar, you're probably looking at a market that isn't going to pan out for you.

• The probability has shifted to a very low probability in your favor versus if you were expecting a move higher in a commodity market and the dollar index was bearish.

• There's this relationship of macro, and it's important to understand.

Using Macro Factors

• If there is a time when the market is seasonally bullish, you can look at the seasonal tendency as a way of timing the other direction because markets find ways to punish those individuals that look for these types of patterns and they don't exist.

Short-term Rally and Seasonal Tendency

This section discusses the seasonal tendency of markets and how it can affect short-term rallies.

Short-term Rally to Sell Short Into

• A short-term rally can be an opportunity to sell short.

• The seasonal tendency may not be present during a short-term rally.

• Departing from the norm in price action tends to incite excitement and price action.

Importance of Understanding Market Foundations

This section emphasizes the importance of understanding market foundations for successful trading.

Entry Patterns vs. Market Foundations

• Understanding market foundations is more important than entry patterns.

• Knowing why a market should have a big move gives traders a foundation for success.

• Trading solely for small gains is not necessary, as traders can turn this knowledge into whatever they want it to be.

Setting Reasonable Objectives in Trading

This section discusses setting reasonable objectives in trading and making a career out of small gains.

Reasonable Objectives in Trading

• A reasonable objective for forex traders is to make 25 pips per week.

• Making a career out of small gains is possible with dedication and knowledge.

Customizing Your Trading Model

This section discusses customizing your trading model based on what resonates with you while still being rooted in market truths.

Building Your Own Trading Model

• Traders can take what makes sense to them from different strategies and create their own model.

• However, the model must be rooted in market truths to see success.

• Agricultural markets are fundamentally driven by supply and demand factors, making them ideal for trading based on supply and demand principles.

Markets Move Based on Higher Time Frame Premise

This section emphasizes the importance of understanding higher time frame premises for successful trading.

Market Truths and Higher Time Frame Premises

• Markets move based on a higher time frame premise.

• Agricultural markets are fundamentally driven by supply and demand factors, making them ideal for trading based on supply and demand principles.

• Commodities are a real market that has supply and demand factors that govern them.

Real Value in Agricultural Markets

This section discusses the real value in agricultural markets compared to other markets.

Real Value in Agricultural Markets

• Agricultural markets have real value as they are a source of food.

• In times of turmoil, there may be a shortage of food, putting pressure on grain prices.

• Trading commodities is an effective way to trade based on supply and demand principles.

Applying Intraday Trading Principles to Daily Charts

This section discusses how intraday trading principles can be applied to daily charts for successful trading.

Applying Intraday Trading Principles to Daily Charts

• The same tools and premise used for intraday trading can be applied to larger daily charts.

• Understanding where big moves come from is key to successful trading.

• Experience is important when it comes to predicting big moves.

Make 2021 the Year to Study and Frame Out a Trading Model

In this section, the speaker encourages viewers to study charts and videos on their YouTube channel to develop a trading model that makes sense to them.

Key Points:

• Dig into charts and videos on the YouTube channel.

• Make 2021 the year to frame out a model that makes sense.

• The model doesn't have to have all moving parts but should be rooted in why a market should go up or down logically.

• The speaker promises that viewers will find something they can't find elsewhere if they put time into studying.