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ICT Mentorship Core Content - Month 05 - Quarterly Shifts & IPDA Data Ranges
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ICT Mentorship Core Content - Month 05 - Quarterly Shifts & IPDA Data Ranges

1.1 Implementing Macro Analysis

Introduction to Quarterly Market Shifts

  • The lesson focuses on implementing macro analysis, specifically quarterly shifts and EPTA (Efficient Price Trading Algorithm) data ranges in the Forex market.
  • The discussion revolves around an automated price delivery engine that enhances trading efficiency across all asset classes, emphasizing its universal application beyond Forex.

The Concept of Randomness in Markets

  • A rhetorical question is posed about the randomness of markets: if they were entirely random, how could traders gain an edge?
  • The speaker argues against the notion of randomness, stating that relying on past statistics does not guarantee future outcomes.
  • If markets were truly random, there would be no trust in their predictability or profitability.

Belief in Engineered Markets

  • The speaker asserts that markets are 100% engineered and controlled, particularly within the Foreign Exchange Market.
  • Demonstrating precision in forecasting price levels supports the claim that randomness does not exist; consistent accuracy indicates a structured market environment.

Understanding Price Delivery Algorithms

  • Central banks utilize price delivery algorithms to control market movements within predefined ranges.
  • By understanding these ranges and reference points used by algorithms, traders can better anticipate market behavior.

Market Structure Shifts

  • A significant shift occurs every three to four months across all asset classes to generate new interest and urgency among traders.
  • Traders must recognize that previous directional movements may not hold true as new trends emerge over time.

Strategies for Long-Term Position Trading

  • Emphasis is placed on analyzing price at a macro level (monthly, weekly, daily), allowing anticipation of intermediate price swings regardless of overall market direction.
  • Understanding intermediate retracements helps traders manage long-term positions without emotional attachment to holding indefinitely.

Navigating Market Changes

  • Every three to four months brings potential changes in direction or consolidation; recognizing this can aid strategic decision-making.

Understanding Market Trends and Smart Money

Intermediate Term Trading Strategies

  • The marketplace offers intermediate term trading opportunities every three to four months across various asset classes, especially in range-bound environments.
  • Identifying potential uptrends or downtrends can align traders with long-term trends visible on charts.

Smart Money Insights

  • Observing how smart money allocates funds can enhance trading strategies, aiming for high probability conditions during buy programs.
  • A buy program is characterized by consecutive up days on any time frame, with a focus on the daily chart for this discussion.

Buy Program Dynamics

  • Anticipating a buy program involves expecting several upward movements that may last months; even short-term rises can indicate liquidity targets above recent highs.
  • The underlying asset (what you trade) and the benchmark (what you measure against) are crucial for understanding market manipulation.

Analyzing Underlying vs. Benchmark

  • In smart money accumulation scenarios, the underlying may make higher lows while the benchmark makes lower lows, indicating strong buying pressure.
  • This relative strength suggests an expected upside movement in the underlying asset despite benchmark weakness.

Scenarios of Accumulation and Distribution

  • Another scenario occurs when the underlying makes a lower low while the benchmark makes a lower high, indicating potential accumulation.
  • For example, if the dollar index shows a lower low while another currency like GBP/USD shows a higher low, it signals accumulation behavior.

Turtle Soup Scenarios

  • When analyzing sell-side liquidity dynamics, if GBP/USD makes a lower low while the dollar index fails to make higher highs, it indicates potential turtle soup setups.
  • Conversely, if both assets show higher highs but different behaviors (e.g., pound making higher lows), it reflects relative strength favoring one over another.

Conditions for Sell Programs

  • For sell programs based on smart money distribution:
  • If benchmarks make higher highs while underlyings make lower highs (e.g., dollar making higher high vs. dollar-yen making lower high), it indicates heavy distribution.

Understanding Dollar Index Movements

Relative Strength and Weakness in Currency Pairs

  • The dollar index makes a lower low while the pound-dollar pair shows relative weakness by making a lower high, indicating potential bearish trends for the dollar.
  • A broken support level suggests continuation to lower prices; however, the dollar index's movement is seen as an accumulation of sell stops below previous lows.
  • The failure of the pound-dollar to make a higher high indicates heavy selling pressure due to its distribution phase.

Smart Money Accumulation and Market Manipulation

  • Smart money strategies involve manipulation where the dollar index's movements are compared against benchmarks like the dollar Swiss and euro-dollar pairs.
  • A scenario where the dollar index makes a lower low while euro-dollar makes a higher low indicates bullish sentiment for euro-dollar and bearish for the dollar.

Correlation Between Currency Pairs

  • When both the dollar index and euro-dollar make higher highs, it reflects relative strength in euro-dollar, suggesting potential sell-offs in other pairs.
  • The correlation between currency pairs such as dollar CAD and dollar yen with respect to oil prices highlights their relationship with the dollar index.

Analyzing Market Shifts Over Time

  • Observing shifts in market structure over time can provide insights into future price movements; this includes analyzing quarterly shifts on charts.
  • The analysis of monthly charts reveals how price swings occur within specific reference points, aiding traders in understanding market dynamics.

Importance of Time Frames in Trading Strategies

  • Utilizing different time frames (weekly vs. daily charts) helps identify market structures and potential trading setups effectively.
  • Daily time frames may not yield many setups but offer valuable macro views that support various trading disciplines.

Quarterly Shifts Analysis

Understanding the January Factor and Market Calibration

The Concept of Look Back

  • The "January Factor" is introduced as a method to anticipate quarterly shifts in market behavior, emphasizing the importance of calibration through a technique called "look back."

Setting Up Your Analysis

  • Begin your analysis by marking the first trading day of your month of study with a vertical line on your chart. This serves as a reference point for looking back at previous trading days.
  • Focus on three key timeframes: 60, 40, and 20 trading days prior to the marked date. These periods are chosen based on average data reach for algorithmic analysis.

Identifying Institutional Order Flow

  • Analyze institutional order flow by examining price movements over the last 60, 40, and 20 trading days. This helps identify significant highs and lows that may indicate liquidity pools or rejection blocks.
  • Look for old price highs and lows to determine potential liquidity areas. High wicks may suggest sell-off opportunities while long wicks below lows can indicate bearish order blocks.

Analyzing Historical Data

  • Investigate fair value gaps and liquidity voids within the last three months (60, 40, and 20 trading days). This historical context aids in understanding current market structure.
  • Use December's first trading day as an example; analyze data from this point backward to establish significant price levels.

Calibrating Market Structure

  • Determine whether the market has been trending higher or lower over the past three months. Frame your analysis around either recent lows or highs based on this trend.
  • Identify significant intermediate-term price points formed during this period to anchor your vertical line effectively against current market structures.

Practical Application Example

  • Using January 1st, 2016, as a reference point illustrates how to apply these concepts practically by moving back to December's first trading day for analysis.

Market Analysis and Institutional Order Flow: A Look Back at December 2015

Overview of Market Movements Pre-December 2015

  • The analysis begins with a focus on the market's performance over the last 60 trading days leading up to December 1, 2015, highlighting a bullish trend as the market traded higher.
  • Notable price movements include an interim low around October 2015, followed by a short-term high established on December 1, indicating significant consolidation before further upward movement.
  • The discussion emphasizes that institutional order flow was bullish during this period, suggesting liquidity is positioned below the marketplace due to prior upward trading.

Post-December Market Dynamics

  • After December 1, the market began to trade lower. This shift indicates a breakdown in market structure and anticipates potential bearish movements in the dollar index.
  • Despite possible sideways consolidation, there is an expectation of continued bearishness in the dollar index following December 2015 based on previous trends.

Understanding Market Trends and Shifts

  • The speaker stresses focusing on quarterly shifts rather than long-term trends for effective trading strategies. Recognizing these shifts can help frame position trades effectively.
  • It’s crucial to understand how markets oscillate between bullish and bearish phases; higher time frames may show defined ranges while lower time frames appear more dynamic.

Anticipating Future Movements

  • Using daily charts to identify bearish shifts allows traders to anticipate corrections over three months. Key reference points include order blocks and liquidity voids identified previously.
  • The expectation is for price movements to return towards institutional reference points before moving lower again, emphasizing logical levels rather than randomness in price action.

Casting Forward: Projecting Future Market Behavior

  • By analyzing past trading days (60, 40, and 20), traders can define ranges where sell-side liquidity exists beneath short-term lows established prior to December 1st.
  • Once recent market structures are calibrated with vertical lines marking significant shifts, traders can project future movements using similar parameters applied retrospectively.
  • The concept of "casting forward" involves anticipating new directional biases or sentiment shifts within a projected range of up to three months from key delineation points like December 1st.

Market Analysis and Trading Strategies

Understanding Market Moves and Liquidity Voids

  • The analysis begins by identifying a low point in the market, anticipating a downward movement to fill a liquidity void observed over 60 days following a market structure shift on December 1, 2015.
  • The speaker expresses personal trading preferences, noting that waiting up to 60 trading days for setups does not suit their style, although it may work for others.

Time Horizons and Trading Approaches

  • Emphasizes the importance of understanding both short-term setups and long-term objectives in trading, rather than focusing solely on intraday movements.
  • Discusses the inverse relationship between the U.S. dollar and euro dollar; bearish expectations for the dollar index suggest bullish trends for the euro dollar.

Charting Techniques

  • Instructions are provided on using MT4 to create trend lines anchored to significant dates (e.g., December 1, 2015), helping traders visualize potential price ranges over specified time frames (20, 40, and 60 days).
  • Highlights how high points in the euro dollar align with the identified 60-day range, indicating when setups are likely to occur based on historical data.

Market Structure Calibration

  • Stresses that successful trading relies on recognizing patterns that repeat due to market manipulation; these patterns should be measurable.
  • Observations indicate that after breaking its market structure bearishly, the dollar index is expected to decline while simultaneously noting bullish behavior in the euro dollar.

Practical Application of Analysis

  • Encourages viewers to apply similar analytical techniques on their own charts from different starting points (e.g., July 2016), reinforcing that these methods yield consistent results across various timeframes.
  • Projects bullish signals for euro dollars through March 2016 based on anticipated bearishness in the dollar index post December 2015.

Manipulation Insights and Data Ranges

  • Discusses how daily chart manipulations can influence trading decisions; highlights how highs formed within specific data ranges correspond with previous market structures.
  • Concludes with observations about liquidity void closures as new highs form in relation to benchmark currencies like the euro dollar versus the dollar index.

Market Structure and Price Action Analysis

Understanding Market Dynamics

  • The discussion emphasizes the importance of recognizing market structure shifts, particularly in the euro dollar, indicating a potential move within three months based on daily chart analysis.
  • A quarterly framing of the market is proposed to provide context for price action, allowing traders to identify setups rather than feeling overwhelmed by overall trends.
  • The speaker highlights that every three to four months, significant market shake-ups occur, leading to sentiment shifts and trend changes that can inject excitement into dormant asset classes.

Analyzing Dollar Index Movements

  • By breaking down market movements into measurable segments, traders can gain clarity on timing and setup formation. A bullish shift in the dollar index is noted after a series of lower lows.
  • The analysis includes identifying key vertical lines marking time intervals (e.g., June 1st, 2016), which help in calibrating future expectations based on past market behavior.

Seasonal Influences and Market Relationships

  • Observations are made regarding the relationship between lower lows in the dollar index and expected higher highs in the euro dollar; however, this expectation is not met as indicated by current price action.
  • The lack of anticipated higher highs in the euro dollar amidst lower lows in the dollar suggests heavy distribution within that market segment.

Implications of Price Action

  • The speaker notes that recent price movements reflect smart money accumulation and distribution patterns visible through price action analysis over quarterly periods.
  • A specific instance during an election day illustrates how price dynamics can reveal underlying strength or weakness; despite initial gains in euro dollars, subsequent rejection indicates false strength leading to a decline.

Conclusion: Importance of Continuous Learning

Market Analysis and Structure Breaks

Understanding Market Shifts

  • The speaker emphasizes the importance of balancing personal life with long-term market analysis, suggesting that a comprehensive understanding can be achieved within the first month of 2017.
  • A key focus is on identifying significant breaks in the marketplace. For instance, observing market behavior from January to February can reveal critical shifts.
  • The discussion highlights the need to analyze liquidity by looking back at historical data to identify where liquidity rests and how it influences future setups.

Quarterly Market Calibration

  • The speaker advises analyzing market trends on a quarterly basis, which helps in calibrating shifts effectively over time.
  • When determining starting points for analysis, it's crucial to reference the previous closed month. This ensures accurate calibration for ongoing evaluations.

Recognizing Market Structure Breaks

  • The concept of a "market structure break" is introduced, indicating a bearish trend for the Euro as it attempts to rally but ultimately shows underlying weakness.
  • The speaker draws parallels between current market behaviors and past occurrences, emphasizing that similar patterns often lead to predictable outcomes in trading strategies.

Anticipating Questions and Clarifications

Playlists: 2017 ICT Private Mentorship Core Content Month 05
Video description

2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in January 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.