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ICT Mentorship Core Content - Month 08 - When To Avoid The London Session
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ICT Mentorship Core Content - Month 08 - When To Avoid The London Session

When to Avoid the London Session

In this lesson, the speaker outlines specific characteristics that traders should consider when deciding whether or not to trade during the London session.

Large Range Day

  • A day with a range greater than two times its average five-day range is not ideal for trading during the London session.
  • This condition generally leads to consolidation or choppy price action.

Three Consecutive Up Closes on a Daily Chart

  • After three consecutive up closes on a daily chart, it's best to avoid trading long positions in the London session.
  • This condition often leads to retracements or pauses in price action.

Three Consecutive Down Closes on a Daily Chart

  • After three consecutive down closes on a daily chart, it's best to avoid trading short positions in the London session.
  • This condition often leads to deep retracements or sideways price action.

FOMC Events

  • After an FOMC event that produces extreme whipsaw up and down, it's best to avoid trading during the London session.
  • The Central Bank dealers' range can be disrupted by this type of price action.

Non-Farm Payroll Numbers and Holidays

  • On days when non-farm payroll numbers are expected, traders should avoid trading during the London session.
  • Similarly, traders should also avoid trading during the London session on days heading into long weekends or holidays due to early exits from the market.

Avoiding Trading During London Session

In this section, the speaker discusses how to avoid trading during the London session.

Characteristics of a Tricky London Session

  • Multiple high or medium impact news drivers for a particular market can make the London session tricky.
  • An absence of any news during London can be a wild card day that could go either way.
  • If Central Bank dealers range and/or Asian range is not visually consolidating, it's best to avoid the London session.

How to Identify an Avoidable London Session

  • If there are multiple events due out on the economic calendar for a particular pair, it could be problematic for your London session trade.
  • The Central Bank dealers' range greater than 50 Pips is an indication that you should possibly pass on a London session.
  • If the market starts to sustain rally or decline from 8 PM New York, that's usually a poor indication of a good London session.

When to Avoid Trading During Asian Range

In this section, the speaker discusses when to avoid trading during Asian Range.

Criteria for Delayed Protraction Profile

  • If the agent range is greater than 40 Pips, consider using delayed protraction profile but it has to meet every one of those criteria for it to unfold otherwise move to sidelines and avoid trading in Asia.

When Not To Trade During Asian Range

  • If Central Bank dealers' range and/or Asian range is not visually consolidating, it's best to avoid trading in Asia.

Identifying High Probability Trading Conditions

In this section, the speaker discusses how to identify high probability trading conditions by analyzing the Central Bank dealers range and the Asian range.

Identifying Consolidation

  • Look for a small, narrow range in contrast to all previous days.
  • If it's wide or erratic or trending, it makes London highly suspect.
  • The market is conditioned for London slop when it is trending from 8 PM New York.

Building Open Float

  • Anticipate banks holding the market in a small tight consolidation.
  • This allows orders to build above and below to form an intraday height between the Asian range open and close at midnight.

Sloppy London Session

  • When the market is conditioned for London slop, sleep in trade New York.
  • Not every single trading day will have clear profile characteristics as described in lesson five.

Accumulation, Manipulation, and Distribution

In this section, the speaker explains that intraday trading involves accumulation, manipulation, and distribution of orders.

Accumulating Orders

  • Banks accumulate orders in the marketplace based on directional bias from daily chart and four-hour using pdra Matrix.
  • We look for consolidations in Central Bank dealers range and Asian range.

Manipulating Price

  • Banks take price lower into an area where traders will be induced to sell or get knocked out of premature entries that are already long.
  • They unseat those positions then distribute those positions they've accumulated going long near low/high of day at London close or late New York.

Ideal Trading Conditions

  • There are hallmark trademark characteristics that make London session entries perfect and ideal.
  • If they are not present, you do not have high probability conditions to trade in.

Ideal Trading Conditions for London Session

In this section, the speaker discusses the ideal trading conditions for the London session and how to avoid ugly periods in the market.

Daily Bias and PD Array Matrix

  • The daily chart should have a discernible direction in the marketplace and be respecting a PD array matrix.
  • When the market is poised to trade higher on the daily to a premium array, we're going to be looking for London Longs because they're going to be ideal entry points.

Rule-Based Ideas and Filters

  • We have to have rule-based ideas and filters. These are our filters, and you do not trade every single trading day.
  • These conditions will prevent you from taking positions in London, and you have to accept it. You got to submit to it; you have to be subordinate to some level rules.

Avoiding Ugly Periods

  • There are instances where the conditions are not prevalent, even though they may seem like they are.
  • This helps you avoid ugly periods but doesn't guarantee that you won't experience losses.

Formulating an Ideal Scenario for London Session

In this section, the speaker discusses how we can formulate an ideal scenario for trading during the London session.

Daily Chart Respect of PD Arrays

  • The daily chart should clearly respect non-ambiguous PD arrays where the market is closing in a gap or responding as expected.
  • This way, we know what our daily bias is - whether it's reaching higher or lower.

Poised Market Direction on Daily Chart

  • When the market is poised to trade higher on the daily chart towards a premium array, we look for long positions during London sessions.
  • Conversely, when it's poised towards a discount array, we look for short positions.

Trading Strategies

In this section, the speaker discusses various trading strategies and conditions that traders should consider before making trades.

Premium and Discount Arrays

  • When the market is poised to trade higher on The Daily to a premium array, London longs are ideal.
  • When the market is poised to trade lower on The Daily to a discount array, London shorts are ideal.

Bullish Order Block

  • If we have just recently traded off of a premium array and we're going to be reaching down into a discount array that means a bullish order block closing a fair value got below market price closing a liquidity void below market price.
  • Trade down below an old low Market deploys to make a low resistance liquidity run to a discount if we see that scenario in the daily London shorts are ideal.

Average Daily Range

  • If the daily range has not recently exceeded its five-day average daily range an expansion day is due to form.
  • Keep track of the expected average daily range from a five-day basis and what is the actual five-day average daily range at the close of each day for pairs you trade.
  • If we have traded several days and the previous day has not seen or exceeded it doesn't mean it has to go two times the average daily range of a five-day basis but it has yet to trade above the average daily range on a five-day basis, you have a really good chance of having a large range day on your next trade.

Big Range Days

  • Don't try to force trades every single day because you're going to get small little singles drawdown days drawdown days drawdown days and then when you get a good win it doesn't really show as much profit because you have all these small little singles small little singles that are erased by a loss.
  • Use the big range days to show all your profit and if you stick with these rules, you're going to do better than if you don't.

Rule-Based Trading

In this section, the speaker discusses how to improve equity growth by removing periods of drawdown probability from trading. By doing so, traders can increase their chances of trading in ideal scenarios and avoid larger losses.

Standardizing Monthly Returns

  • Traders should start with rule-based ideas to standardize monthly returns.
  • Apply these ideas to live sessions, exercises, and drills.
  • Go through a specific criteria list of rules and eliminate certain trading days.
  • Eliminating certain trading days will help traders understand why they are not trading on those days.

Trading in Ideal Scenarios

  • Traders should remove periods of drawdown probability from the equation.
  • This way, traders can trade when it's in ideal scenarios with high probability conditions.
  • Although traders may still suffer losses, larger losses will hopefully be avoided because they are forcing themselves into a role-based idea.

Positioning for Big Runners

  • Traders should position themselves during big moves and hold onto them for the whole day.
  • Doing so will push Equity return for the month way over average.
  • Catching a big average daily range move is key to increasing Equity return.

Understanding Market Conditions

  • Traders need to study price data and look at several months of data to understand market conditions.
  • If certain conditions are present in the marketplace, it's highly unlikely that there will be a clean London session.
  • The goal is to trade when the market has a clear squeeze on volatility and is holding in consolidation while letting orders stack up.

Protecting Against Losing Trades

  • Applying rule-based ideas helps protect against taking what would otherwise be losing trades in London.
  • It's important to have rules that help traders stay out of the marketplace.
  • The best rules are the ones that help traders stay out of the marketplace because everyone can come up with a reason to get into a trade.

Conclusion

  • Having clear criteria and rules for trading helps build a winner's mindset.
  • Traders need to know when to stay out of the marketplace, not just when to enter it.
  • The criteria given in this lesson will save traders regardless of their trading discipline.

Trading Rules for Favorable Market Conditions

In this section, the speaker discusses the importance of having favorable market conditions when trading and shares his personal experience of learning this lesson.

Importance of Favorable Market Conditions

  • As a trader, it is important to be in the market when the odds are in your favor.
  • The speaker emphasizes that traders should aim to be on the side of the marketplace that is highly favored.
  • He stresses that he learned this lesson painfully over a long period and through personal experience.

Rule-Based Trading

  • The speaker believes in rule-based trading and emphasizes that traders need to have a checklist of rules to follow.
  • He suggests creating a checklist with 100 rules based on personal experience.
  • Traders should write out their own checklists by hand as it helps with retention.

Probability and Technical Symmetry

  • The speaker explains that if certain conditions are not present in the market, probability has fallen off the table, making it difficult to anticipate manipulation by central banks.
  • When technical symmetry is not present, traders may be gambling rather than trading strategically.

Conclusion

  • The speaker wishes listeners good luck and good trading.
Playlists: 2017 ICT Private Mentorship Core Content Month 08
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2017 Premium ICT Mentorship Core Content Video Lectures Audio and visuals are exactly as they were distributed in April 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.