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ICT Mentorship Core Content - Month 10 - Importance Of Multi-Asset Analysis
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ICT Mentorship Core Content - Month 10 - Importance Of Multi-Asset Analysis

Introduction

The speaker summarizes the content of the ICT mentorship program for June and explains why it is important to understand multi-asset class analysis.

Importance of Multi-Asset Class Analysis

  • Multi-asset class analysis is important because it helps traders understand how different asset classes are interrelated.
  • Traders need to look for symmetry between all four asset classes (bonds, currencies, commodities, and stocks) to appreciate their interconnections.
  • Understanding the ebb and flow of these asset classes can help traders identify risk-on and risk-off scenarios.
  • The purpose of the lessons in June was not to highlight individual asset classes but to show how they work together.

Interconnectedness of Asset Classes

The speaker explains how different asset classes work together and affect each other.

Decoupling of Asset Classes

  • All four asset classes work in harmony with each other but sometimes decouple.
  • When the bond market goes higher, it indicates a risk-off environment. Conversely, when the bond market goes lower, it indicates a risk-on scenario.
  • Risk-on scenarios bring with them buying opportunities for stocks and foreign currencies.

Importance of Symmetry Between Asset Classes

  • To be a specialist trader, one needs to understand what the general market is doing. Explosive moves come from understanding all four asset classes individually and as a whole collectively.
  • If there isn't beautiful dovetailing with all four asset classes, finding opportunities where moves can be explosive will be difficult.

General Market Analysis

The speaker emphasizes the importance of understanding the general market and how it affects trading opportunities.

Importance of General Market Analysis

  • Explosive moves and big directional one-sided markets come from understanding all four asset classes.
  • Traders need to read what each asset class is doing individually and as a whole collectively to understand the dance between them.
  • If there isn't symmetry between all four asset classes, finding explosive moves will be difficult.

Challenges in General Market Analysis

  • Understanding the general market takes a lot of wherewithal, conviction, and hard work.
  • Some traders want to be one-trick ponies and only follow one thing. However, being a specialist trader still requires an understanding of what the general market is doing.

Understanding Multi-Asset Class Analysis

In this section, the speaker explains how different asset classes work together and why it is important to understand multi-asset class analysis.

Asset Classes Working in Harmony

  • All four asset classes (stocks, currencies, commodities, bonds) work in harmony with one another.
  • When the dollar index goes higher, commodities go lower.
  • Stocks go higher during risk-on periods and fall during risk-off periods.
  • Currencies rally when it's risk-on and decline when it's risk-off.

Importance of Multi-Asset Class Analysis

  • It takes a lot of work to look at other things besides just one asset class.
  • Knowing what the market will do as a whole is necessary for successful trading.
  • During periods of drawdown or when the market isn't giving you what you want, understanding multi-asset class analysis can help prevent psychological impacts on trading decisions.

Struggling with Multi-Asset Class Analysis

  • Some traders may try to skip looking at other asset classes because they feel it's too much work or not relevant to their trading strategy.
  • However, this can lead to hit-and-miss success and feeling like something doesn't quite click in your trading approach.

Benefits of Multi-Asset Class Analysis

  • The speaker has experienced significant growth spurts in understanding as a trader by analyzing multiple asset classes.
  • Analyzing all four asset classes can provide clarity on what's going on in the market as a whole.

Understanding Asset Classes

In this section, the speaker emphasizes the importance of understanding asset classes and how they work together to create efficient markets.

Importance of Knowing Asset Classes

  • Even if you never trade a bond contract or manage your own self-directed IRA, it is important to know what these asset classes are doing as a whole.
  • Periodically check them and see what's going on. They should be moving in concert with one another.
  • Efficient markets create big moves that are easy to see coming.

Analyzing Markets

  • The speaker took a chance on some things in the last couple of weeks and primarily worked off an intraday four-hour chart to come away with his analysis.
  • It takes a lot of work without a lot of effort in designing it and bringing things together to make it user-friendly.
  • Using all four asset classes, there was no trade for Dollar CAD on Friday June 30th, 2017.

Risk Assessment

  • You need to dial back when the market is not black and white. Determine those conditions by rating the market in terms of risk on a risk-off.
  • Look at the whole universe of speculation currencies Commodities bonds and stocks.
  • This month was designed to draw attention to the importance of knowing what all asset classes should be doing before entering into trades.

Technical Analysis Indoctrination

The speaker talks about the importance of intermarket analysis and how it is crucial to understanding what will be taught in the next month. He emphasizes that traders need to focus on where large institutions are pouring money into, as they are the ones that will explode and move huge.

Understanding Asset Classes

  • Traders need to understand all four asset classes and their relationship with each other.
  • It's important to know which asset classes have leadership on the upside or downside based on what has been taught so far.
  • Traders should look for assets where large institutions are putting their money into because those are the ones that will move fast with lots of distance magnitude.

Salient Points from Each Asset Class

  • The speaker talked about the most important things from each asset class, such as notice day, last training day of the month contract rollover, etc.
  • The likelihood of a directional move per asset class and knowing what to look for and when it should happen is crucial.

Symmetrical Market Behavior

  • When two out of four asset classes behave differently than they should, it's not a symmetrical market.
  • If a third asset class starts behaving as it should, then we're starting to come out of chaotic uncertainty. This means more smart money is being put to work.

Importance of Teaching Everything Known

The speaker emphasizes that if he's not teaching something, then it's not important. He doesn't have enough time in his day to add stuff he already does not know.

Teaching Everything Known

  • The speaker made a promise to teach everything he knows and what makes him tick as an analyst.
  • He explains why he thinks price is going to behave a certain way, whether it's going up, down, or sideways.

Understanding the Four Asset Classes

In this section, the speaker emphasizes the importance of understanding all four asset classes and their seasonal tendencies to gain a greater understanding of what the market should be doing as a whole.

Importance of Understanding All Four Asset Classes

  • Knowing what each asset class is going to do ahead of a weekend or holiday can help predict how it will affect the markets.
  • It's important to understand all four asset classes even if you don't trade them because it gives you a greater understanding of what the market should be doing as a whole.
  • If there is a decoupling between any of the asset classes, it will be hard for the markets to find a one-sided move with great magnitude.
  • By looking at all four asset classes, traders can identify strong moves in multiple pairs and hit large targets.

Tips for Understanding Seasonal Tendencies

  • Traders should take time to study each asset class and draw parallels between them to better understand their seasonal tendencies.
  • Going through Olympic templates can help traders gain a general understanding that will allow them to see why certain points were made in previous content.
Playlists: 2017 ICT Private Mentorship Core Content Month 10
Video description

2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in June 2017. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.