ICT Forex - The ICT London Killzone

Introduction to the ICT London Open Kill Zone

In this section, the speaker introduces the ICT London Open Kill Zone and discusses the concepts that will be covered in this module.

Key Points:

• The London Open is a time frame during the 24-hour banking cycle that offers many trading opportunities.

• The speaker will focus on using ICT concepts such as time and price to trade during this time frame.

• The Euro Dollar and British Pound pairs are ideal for trading during the London session.

• It is important to understand what higher time frames are doing when trading during this period.

Importance of Trading During the London Open

In this section, the speaker explains why he prefers to trade during the London Open and highlights its favorable magnitude.

Key Points:

• The speaker likes to trade during the London Open because it provides many opportunities.

• Trading during this period comes with a great deal of responsibility, especially for short-term traders.

• Economic calendar releases can be very volatile overnight, but they offer ideal conditions for trading Euro Dollar and British Pound pairs.

• The magnitude of opportunities available during this period is more favorable than other times of day.

Optimal Trade Entry Pattern During London Open

In this section, the speaker discusses an optimal trade entry pattern that frequently sets up during the London open.

Key Points:

• The key times to monitor are 2:00 a.m. to 5:00 a.m. New York time (relative to your local time).

• This window of opportunity between 2 am - 5 am NY time can offer 25 to 50 pips for a scalp.

• To avoid confusion about different global locations, determine your local time relative to New York time.

• The speaker elected to trade Euro Dollar and British Pound pairs during this period because they frequently set up an optimal trade entry pattern.

London Open's Probability of Creating High or Low of the Day

In this section, the speaker explains how the London Open generally has the highest probability of creating the high or low of the day.

Key Points:

• The London Open generally has a high probability of creating the high or low of the day.

• By studying charts, traders can determine where and when bearish trends will form.

• This phenomenon is not limited to forex but also occurs in other assets such as commodities and bonds.

• If traders can accurately predict where highs and lows will form, they can ride most of the daily range for three to four opportunities per month.

The Power of London Open

In this section, the speaker explains how the concept of trading is not limited to Forex and can be applied to other asset classes. He also discusses how the London session sees the highest probability of a low-risk entry price point.

Trading with London Open

• When the market is in a strong trending environment, focusing on London will give you the highest probability of a low-risk entry price point.

• The market tends to trade down creating the low of the day in the London open. This creates an optimal trade entry long using previous day's data to today's London set up.

• If you could have taken a long not even at the low, say you use some buy stop to get in, and eventually it trips you in gets you long and this is held onto it for 30-40 pips each trading day it adds up quickly folks.

• An optimal trade entry long using previous day's data to today's London set up would be framing a range between two consecutive days' lows.

Importance of Five O'clock in New York Time

• The significance of five o'clock in New York time is that it sets up an interlining market that is poised to go higher during the London session.

• For my concepts, I want to graduate over time from five o'clock in New York time to seven o'clock in New York time which is classically like a London lunch period where it can go quiet and have minor retracements.

• The most bang for your buck is going to be in the London open as it sees the highest probability of a large directional move within 24 hours.

Trading During Volatile London Session

• The London session can be extremely volatile and can be like a lightning bolt. If you're caught on the wrong side of the marketplace and there's a high impact event that's out during that timeframe, you can get mowed over rather quickly.

• If you don't use stop-loss orders, that session is going to treat you very cruelly in the form of taking money from you because London can be extremely one-sided and once it takes off, it's pretty relentless.

• The London trading session actually extends beyond the 5 a.m. hour to 7 a.m. New York time and sees the highest volume of order execution than any other trading session.

Trading Range

• The relationship between one long and open low and the immediate day after lemon open low creates a range framed by two consecutive days' lows.

• We have trading day here of consolidation creating a little bit of run-up, rejecting that, trades aggressively lower, then comes off the low and begins the New York session so we have a micro power three formation in here with an open rally up expansion low off.

Intraday Price Action

The speaker discusses the intraday price action between a vertical line that delineates 2 o'clock in the morning to seven o'clock in the morning New York time. They explain how this can be viewed as a micropower three formation and why it is significant.

Micropower Three Formation

• A micropower three formation can be viewed as bearish.

• If price drops down into a significant low during the London session and doesn't start to run, we could reasonably expect that the real move will be in the next trading session which would be the New York session.

• The London session technically extends even beyond seven o'clock in the morning up into ten to eleven o'clock in the morning New York time.

• The takeaways are that the London session can create the high or low of the day, and we can study the profile that takes place between the beginning and ending of overnight sessions if it's trending.

Focus on London Session

The speaker explains how to focus on London sessions when trading daily timeframes.

Trading Daily Timeframes

• When markets are primarily bullish, an abundant session typically creates a low of the day.

• When markets are poised to trade lower on a daily timeframe, we can focus on London sessions to post high of trading days.

• Encapsulate entire range with wicks included for optimal trade entry.

Understanding Power 3 Formation

In this section, the speaker explains how to identify a potential sell trade using a bearish candle and studying the next candle for a power 3 formation.

Identifying Potential Sell Trade

• A bearish candle inside the area of optimal trade entry would be deemed as a potential sell.

• The very next candle should be studied to see if it frames a power 3 formation with a down close relative to the daily chart.

Characteristics of Power 3 Formation

• Look for price rally up after London open and take out equal highs.

• Candy lien by stop liquidity pool runs up knocking stops out and then trades aggressively lower creating the low of the day.

• Dynamic balance or range expansion for the daily candle or bar creating the low of the day right here then we come off the low trading near the low of the day in closing right here.

Daily Bias

• If one candle shows willingness to reject and go lower, we can expect that daily bias is bearish because it's been going bullish while we treated into an area of optimal trade entry.

Candlestick Chart Analysis

• The opening creates limited upside movement above it, which creates high of day during London open kill zone between 2 o'clock and 5 o'clock in morning dynamic and balance or range expansion for daily candle or bar creating low of day right here then we come off low trading near low of day in closing right here.