Professional Documents
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Version1.09
January06,2013
TABLEOFCONTENTS
PSYCHOLOGY
ICTTRADINGPLAN
TOPDOWNANALYSIS(BIASANDDIRECTION)
DETAILEDTOPDOWNANALYSISRULES
UNDERSTANDINGCOMMITMENTOFTRADERS(COT)
MARKETPROFILES
SUPPORT/RESISTANCEAREAS
AREASOFCONFLUENCE
FIBONACCI
OTEPATTERNS
SESSIONTRADING
PRICEACTION
HIGHPROBABILITYPRICEPATTERNS
TRADINGSWINGS
ICTTRADINGCONCEPTS
ICTTRADINGMETHODS
INSIDERSTRADINGMETHODS
PROFESSIONALSUSEOFINDICATORS
MISCVIDEONOTES
TRADERULES
RISKMANAGEMENT
TRADINGINSIDETHERANGE
PETERSICTVIDEONOTES
ICTTERMSANDABBREVIATIONS
TIONS
PSYCHOLOGY
Belowisbasicpsychologyatraderneedstounderstandbeforebeginningtotrade.Ensurethefollowing
conceptsareunderstoodandplannedoutbeforetrading:
1. Understandtheassetclassyouaretrading(i.e.dontfollow20pairsatonce)
2. Thinkindependentlyanduseyourownanalysis(turnofftheTVandrumorsites)
3. Developandadheretoyourpersonaltradeprofileandcompressivetradeplan
4. Utilizeandexerciseimpeccableequitymanagement(11.5%riskpertradefornew,2%forexp.)
5. Dontassumetoknowwherepricewillgo(i.e.nopredictions),setupyourtradesperyouranalysisin
anticipationIFthemarketmovesinyourdirection
6. Thinkintermsofprobabilityandnotabsolutes,therearenoabsolutesintrading
TradelikeaSniper
TraderswholearntopickandchoosetheirtradeslikeaForexsniperaretypicallytheoneswhosucceed.
Traderswhofailactlikemachinegunsbyshootingateverythingtheysee(overtrading)and/ortendtorunout
ofammo(money)veryquickly.
1. LessisMore
Waitpatientlyforanticipatedtargettocomeintoviewasaresultofyourownanalysis.
Actonlywhenyoursetofcriteriaaremet.
3. HigherTimeFrames
Thehigherthetimeframethemorereliablethetarget,informationispresented.Lookingat
MonthlyorWeeklytimeframesonlydoesnotgiveyouenoughtargetstotrade.
BasemostofyouranalysisoffofDailyand4Hourchartstoidentifyhighvalue,probability
targets.
Workwiththelowertimeframes(1Hourand15Min)tomanagethecircumstancesaroundthe
trade.
4. Patience
Mostbeginningtraderslosemoneyinthemarkets,andmostbeginningtradersarealso
anythingBUTpatient.
Forbeginnertraders,fightthetendencytomakeyourselftradebecauseyouhavetheideathat
tradingwillearnyoumoney.Onlysmarttradingwithaplancanmakeyoumoney.
Waitforconfirmationbymultiplefactorsbeforejumpingintoatradetoavoidfalsemoves.
5. FearandGreed
Combatnaturaltendenciesoffearandgreedbydocumentinganddiligentlyfollowinga
tradingplan.
Maketradingaboutfollowingrules,plans,andriskmanagement.NOTaboutemotions.
ICTTRADINGPLAN
EverynightatMidnight(NewYork)IcalculatenewdayPivotPointsfortheCable(GBP/USD)andpostthem
onmycharts.IthennotekeysupportandresistancelevelsfromMonthlychartsdowntofiveminutecharts.
IdeterminemytradebiasforthenewsessionandwhileIdolookfortradesinthisdirection,I'mnotmarriedto
thenotionthemarketmustbendtomyexpecteddirection...Iamflexible.ThemarketisalwaysrightandIcan
acceptbeingwrongeverydayaslongasIcanbewillingtochangemybiasbasedoncurrentpriceaction.
IfwearetradinginthePivotlevelsabovetheCentralPivotlevel...Idemandalotforbuys.IdeallyIfocuson
tradesthatshowashorttermoverboughtconditionandpriceintheareaatoraboveR1orR2forshorts.Thisis
evenmorepowerfulifthepreviousdayshighisslightlybelowtheR1orR2level.
Inotherwords,IlookforfalsebreakoutsabovepreviousdayshighsatR1andorR2levels.Iusestopsand
limitstogetmeinatthelevelsandusea30pipstoporlessinitially.Asthetrademakesthespreadupand
movesinmyfavor,Ilooktoreducetheriskandtightenthestop.Myexitsarepredeterminedandcanbeat
marketifthingsgethairy.
Iusecandleformationsandbasicchartpatternstodeterminelowrisktradesandtargetsaretypically2530
pipsbeforescalingoutsomeoftheposition.Igenerallytrytoholdfortheaveragedailyrangeinpipsbefore
exitingfortheremainingportion.
Thereversecanbesaidforbuys.IlikeshorttermoversoldconditionsandpriceintheS1andorS2levels
undertheCentralPivot.Ilikebuyingpreviousdaysloworafalsebreakunderthislevelgiventheconditions
warrantabounce.
Iliketradingatthefigure,themarketslikeroundnumbersandoptionsgettrippedatthesepointssotheyarean
easytrademultipletimespermonth.Youcantradeforalivingjustdoingthatasamethod,newtraders!
SohereiswhatIwillbedoingthisweek:
Iwillshortpreviousdayshighsandbuypreviousday'slows.IfIgetstoppedoutandthemarketfindssupport
abovethepreviousdayslow,Iwillbuy.Ifthemarketfindsresistanceatthepreviousdayshighafterbeing
penetratedIwillshortit.
Itaketwotradesperdaymax,ifIwinonthefirstIcloseshopandbankthewins.IfIloseonthefirstItryto
capturethetradeasdescribedabove...ifitlosestoo,Icloseshop.Noemotions,nomussnofuss.
IfaPivotlevelfindsitselfattheFigure,sayCable1.51,Iwilllooktobuyitatthatpointifpricehastraded
downtoitandconverselyforpricetradinguptoit.IjustfoundtheMeetPips.comsiteandcreatedanaccount.I
willdomybesttohighlighttradeswiththisasitapparentlygivesrealtimeorclosetoittracking?
TOPDOWNANALYSIS(BIASANDDIRECTION)
1. TheBasicTopDownAnalysis:
a. StudyUSDollarIndexforgeneralmarketdirection
b. RefertotheCOTreportandnotetheCommercialTrader'snetposition
c. ConsidertheCommercialTradersasthe"SmartMoney"thustrytopositionliketrades
d. Refertoandmonitordailythe2,5,10,and30yearnotelinechartoverlay
e. OntheTreasuryNoteoverlay,lookforfailureswingstoprovidecluestothefuturedirection
oftheUSDollar
f. Iftheyieldsaredroppingandoneofthethreeyieldsfailtomakealowerlow,lookforUS
Dollartobounce
g. Ifyieldsarerisingandoneofthethreeyieldsfailstomakeahigherhigh,lookforUSDollar
toslidelower
h. AbullishUSDollartranslatestolowerforeigncurrencies
i. AbearishUSDollartranslatestohigherforeigncurrencies
j. Lookatthemonthly,weekly,anddailychartsofthecurrencypairstraded,notingkeysupport
andresistancelevels
k. Determinethemarketflowonthedaily,4hour,and1hourchartsviaswinghighsandlows
l. Trytotradeinlinewiththelongterm(topdown)directionalbiasandwhenthe4hourmarket
flowisinsync.Thiswillfiltermanyfalsesignalsandassistusinhighprobabilitytradesetups
m. Whenthereisnocleardefinabledirection,remainflatandsidelineduntilthereisaclearbias
3. MarketBias
a. Biasisdeterminedbyswings,usefractalstohelpquicklyandvisuallyidentifyswingareason
thedaily,4hr,1hr
b. Wanttohaveconfluenceofdaily/4hror4hr/60m,orall3intermsofswings
c. Whenswinglowfractalisformed,thePAmusttradebelowthatlowfractaltothedownside
formarketflowtobeconsideredshort
d. Ifpricedoesnottradebelowthelowfractalformed,thenpriceactionislong
e. Onlyconsiderfractalstotheimmediateleftofthepriceaction,priorfractalsarenolonger
valid
4. HigherTimeFrameAnalysis
a. HigherTimeFrametoLower
i. MonthlyChart>IdentifykeyS&Rlevelsanddirection
ii. WeeklyChart>IdentifykeyS&Rlevelsanddirection
iii. DailyChart>IdentifykeyS&Rlevelsanddirection
iv. 1HourChart>Spendmostofyourtimeherelearningtendenciesofhourly
v. 15MinChart>Timeframewheremosttrends,projections,objectivesaremade.Trade
managementtimeframe
vi. 5Min>Entertradesat5min
b. StopsIftherearetradesthatrequiremorethana30pipstoploss,probablyletthattradego
andlookforanotheropportunitytoenter
c. RespectableSwingWhenlookingforswingstodrawFib,etc.,lookforpricemovesof40
pipsorgreater
d. SeasonalTendencies
i. USD
1. TypicallytopsoutinthemiddleofFebruaryanddeclinesintomidMarch.
2. LasthalfofMarchisusuallystrongandthensellsoffinApril(andlastbitof
March).
3. BeginningtomiddleofMayisastrongtimefortheUSD.
4. MiddleofJuneusuallymarksashorttermhighandtheUSDdeclinesintothe
endofAugust.
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5. RallyfrombeginningofAugusttoearlytomidSeptember.
6. Afterthisthelinesbecomedivergentmeaningsignalsarelessclearandno
strongseasonalpatternsareblatantlypresent.
ii. EUR
1. TheEurotypicallyformsabottominmidFebruaryandthenmoveshigher
intomidmarch.Apullbackthenoccursthenweseeanotherclimbintothe
endofApril.
2. AnotherlowinJunewhichclimbsintolateJuly/earlyAugust.
3. UsuallyadeclinefromearlyAugusttoearlySeptember.
4. EarlytolateSeptemberbeginsabullishtrendforEurothroughyearendwith
apullbackinOctober.
iii. GBP
1. ThePoundtypicallyformsabottominearlyMarchandthenmoveshigher
intotheendofApril.
2. EarlyMaytomidMayisusuallyabearishtime.
3. AbottomtypicallyformsagaininmidMayweseeamovehigherintoearly
August.
4. PriceusuallypeakearlyinAugustanddeclineintomidSeptember.
5. PricepeaksinearlyNovemberandthepriceslidesintomidtolateNovember.
6. PricesbottominlateNovemberandrallyintotheendoftheyear.
DETAILEDTOPDOWNANALYSISRULES
1. LongTermAnalysisUseUSDXGeneralmarketdirection
a. USDXisameasureofthevalueoftheU.S.dollarrelativetomajorityofitsmostsignificant
tradingpartners.Basketindexof6currencies(theeuro,Japaneseyen,Canadiandollar,British
pound,SwedishkronaandSwissfranc.)
b. RiskOffEnvironmentIfUSDIndexispoisedtogohigher(lackofrisktolerance),foreign
currenciesmayseesellingpressure.Example:GBP/USDwouldmovelower
c. RiskOnEnvironmentIfUSDIndexispoisedtogolower(risktolerance),foreigncurrencies
mayseebuyingpressure.Example:GBP/USDwouldmovehigher
2. COT(CommitmentofTraders)
a. ConsidertheCommercialTradersastheSmartMoney.Examineactualpositionsoftraders
andthenetchangefrompriorreport(commercials)
b. Lookforextremenetpositionsinthedata,warnofmajortrendchange
c. Commercialsentimentiscontrarytocommercialactivity(i.e.hedging)
i. Whensentimentisbearishwhilecommercialhedgesholdlargenetlongs,expecta
rallytounfoldortrendchangelong
ii. Whensentimentisbullishwhilecommercialhedgesholdlargenetshort,expect
sizabledeclinetounfoldinthemarket
iii. Whenaboveisnotineffect,tradethetrendwithLargetraderscommercialsare
hedgersonothersideofpositions,largetraderswillhavelargestnetonatextreme
levels,lookforextremesbetweenlargeandcommercialpositionsforclueofmarket
change
4. BondYieldAnalysisTNoteAnalysis
a. DebtInterestRates
i. Increasinginterestrates,increasedforeigncurrencyvalue,decreasedlocalcurrency.
ii. Decreasinginterestrates,decreasedforeigncurrencyvalue,increasedlocalcurrency.
b. BondYieldDivergenceMonitoryieldsof2,5,10,and30yearnotes.Identifydivergenceof
oneormoreoftheyieldsasachartoverlay.
c. Asyieldsmovehigher(orlower)atsomepoint,1willformafailuresignasoneyieldfailsto
posthigherhighsorlowerlowsonthelinechart,thisissignalconfirmationthatUSDXpoised
tochangedirection
5. MarketFlowFractals
a. SwingHighsIdealsetupishavingtwolowerhighcandlesoneachsideoftheFractalHigh
candle.MostrecentSwingHighisthePivotPointandmustbebreachedtotheupsidebefore
MarketFlowturnsup.
b. SwingLowsIdealsetupishavingtwohigherlowcandlesoneachsideoftheFractalLow
candle.MostrecentSwingLowisthePivotPointandmustbebreachedtothedownside
beforeMarketFlowturnsdown.
c. OnlythemostrecentSwingHigh/LowareutilizedfordeterminingMarketFlowwithold
Swingsdisregarded
d. ThereisstrongagreementofMarketFlowifDaily,4Hour,and1Hourtimeframesareinline.
Focuson4HourMarketFlowforconsistency.
e. Fractalsbydefinitioncanbeidentifiedfromthehighertimeframeondowntoeachlowertime
frame.YoushouldbeabletofindanOTEateachtimeframedowntothelowerones.(July12
ProTradersClub32:00)
6. FuturesContracts
a. Lookatfuturecontractclosingandwhethertheleadmonthclosedhigherthan2ndmonth(i.e.
thismonthscontractclosedhigherthannextmonthscontract)
b. Backwardationwhen2ndmonthcloseslowerthanleadmonth,indicatesthatpremiumisno
leadmonthandthereforethereisstrongdemandforthecontract
c. Ifahugedifferenceincloseprices,canindicateachangeinpricemovementthefurtherthe
pricedifferenceinthefuturescontractthemorepricewilllikelychangetowardsthefuture
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price
7. OpenInterest(OI)
a. Thisisthetotalnumberoflongsandshortsmovingintothefuturesinstrument
b. IfincreaseinOI,indicatecommercialsincreasingnetshorts,whenOIdecreases,commercials
reducingnetshorts(i.e.pricewillgoup)
c. OIusefulinthefollowingcase:wanttoseemarkettradeindirection,gointoconsolidation,
thenseeOIdroporrisearound15%suddenlyduringconsolidation
i. Ifmarkettradesup,consolidates,andOIdrop,probabilitymarketwillmoveup
ii. Ifmarkettradesdown,consolidates,andOIincreases,probabilitymarketwillmove
down(ascommercialsareaddingtohedge)
d. CannotuseOImovebyitself
KEYPOINTS:
Tradeinlinewiththelongterm(TopDown)directionalbiasandwhenthe4hourMarketFlowisin
sync.
Whenthereisnocleardefinabledirection,weremainflatandsidelineduntilthereisaclearbias.
UNDERSTANDINGCOMMITMENTOFTRADERS(COT)
1. WhytheCOTReport?
Itisdifficulttoquantifyvolumetradedateachpricelevelsincethecurrencymarketisdecentralized
andthereisnosingleexchangethattracksalltradingactivities.Inplaceofvolumebasedtrading,
manytraderslooktotheCommodityFuturesTradingCommission's(CFTC)CommitmentsofTraders
(COT)reportformoreinformationonpositioningandvolume.Ifusedwisely,theCOTdatacanbea
prettystronggaugeofpriceaction.Thecaveathereisthatexaminingthedatacanbetricky,andthe
datareleaseisdelayedasthenumbersarepublishedeveryFridayforthepreviousTuesday'scontracts,
sotheinformationcomesoutthreebusinessdaysaftertheactualtransactionstakeplace.
2. ReadingtheCOTReport
Hereisaquicklistofsomeoftheitemsappearinginthereportandwhattheymean:
CommercialDescribesanentityinvolvedintheproduction,processing,ormerchandisingof
acommodity,usingfuturescontractsprimarilyforhedging
LongReportIncludesalloftheinformationonthe"shortreport",alongwiththe
concentrationofpositionsheldbythelargesttraders
OpenInterestThetotalnumberoffuturesoroptionscontractsnotyetoffsetbyatransaction,
bydeliveryorexercise
Noncommercial(Speculators)Traders,suchasindividualtraders,hedgefundsandlarge
institutions,whousefuturesmarketforspeculativepurposesandmeetthereportable
requirementssetforthbytheCFTC
NonreportablePositionsLongandshortopeninterestpositionsthatdon'tmeetreportable
requirementssetforthbytheCFTC
NumberofTradersThetotalnumberoftraderswhoarerequiredtoreportpositionstothe
CFTC
ReportablePositionsThefuturesandoptionpositionsthatareheldabovespecificreporting
levelssetbyCFTCregulations
ShortReportShowsopeninterestseparatelybyreportableandnonreportablepositions
SpreadingMeasurestheextenttowhichanoncommercialtraderholdsequallongandshort
futurespositions
3. ThreePrimaryPremises
a. Flipsinmarketpositioningmaybeaccuratetrendingindicators.
b. Extreme positioning in the currency futures market has historically been accurate in
identifyingimportantmarketreversals.
c. Changesinopeninterestcanbeusedtodeterminestrengthoftrend.
4. COTCommitmentofTraders
a. CommercialsMostinformedgroupandprovidecountertradepositionforthemajorityof
openinterestinthemarket.ThesearetheSmartMoney.
i. StandardCommercialAccumulationPhase:
ii. Commercialsarethelargestshortsellersinthemarketplacebecausetheyarehedging
theirbusinessneeds.
iii. Commercialscontrolthelongtermtrendbasedon12monthor4yearextremes.
1. Comingfrom12monor4yrextremenetshort,we'reinsellprogram.
2. Comingfrom12monor4yrextremenetlong,we'reinbuyprogram.
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b. LargeSpeculatorsLargefirmtraders,funds,andhighlevelprivatespeculatorswhoforthe
mostparttrendtrade.Generallyontherightsideofthemarket
c. SmallSpeculatorsMajorityoftraders.TheyaretheDumbMoney.Consistentlywrongon
thesideofthemarket.
6. OpenInterestinCOTData
a. Openinteresttendstoincreasewhennewmoneyispouredintothemarket,meaningthat
speculatorsarebettingmoreaggressivelyonthecurrentmarketdirection.Thus,anincreasein
totalopeninterestisgenerallysupportiveofthecurrenttrend,andtendstopointtoa
continuationofthetrend,unlesssentimentchangesbasedonaninfluxofnewinformation.
b. Conversely,overallopeninteresttendstodecreasewhenspeculatorsarepullingmoneyoutof
themarket,showingachangeinsentiment,especiallyifopeninteresthasbeenrisingbefore.
c. Inasteadyuptrendordowntrend,openinterestshould(ideally)increase.Thisimpliesthat
longsareincontrolduringanuptrend,orshortsaredominatinginadowntrend.Decreasing
openinterestservesasapotentialwarningsignthatthecurrentpricetrendmaybelackingreal
power,asnosignificantamountofmoneyhasenteredthemarket.
d. Therefore,asageneralruleofthumb,risingopeninterestshouldpointtoacontinuationofthe
currentpricemove,whetherinanuptrendordowntrend.Decliningorflatopeninterestsignals
thatthetrendiswaningandisprobablynearitsend.
e. Whenopeninterestrisesordropsquickly,likelypricemovesintheoppositedirection.
f. ConventionalPriceRelationship:
i. OpenInterestUp,priceupisbullish
ii. OpenInterestUp,pricedownisbearish
iii. OpenInterestDown,priceupisbearish
iv. OpenInterestDown,pricedownisbearish
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MARKETPROFILES
1. ConsolidationRangeProfile
a. ConsolidationRangeProfileUnderstandwhereyouareinthemovethatmayalreadyexist.
Ifinbearishmarketenvironment,duringaconsolidationrangeyoucanidentifyfalse
breakoutstotradeagainstoropportunitiestoentershortwithanOTE.
b. EstablishPositionDuringConsolidationPeriodsofconsolidationaretypicallythe
opportunitytoestablishyourpositioninanticipationofwherethetrendwillgo.Lookfortimes
candles/barsaresmalltoentertrades.
c. TradeEntryonOpposingCandleYouwanttoentertradeswhenthebar/candlegoesagainst
themarketprofiledirection.Ifprofileislong,entertradesonadowncandle.
d. ICTPreferenceICTprefersnottofollowtradesintonewterritoryasitusuallytriestocome
backdowntotherange.Basetradingonknownlevels.
2. BreakoutValid&FalseProfile
3. TrendingProfile
4. ReversalProfileTheprofilewillformaselldayduringabullishAsian,LondonandpossiblyNY
sessionbutfailtoholditsrallyandreverselower.ItwillformabuydayduringabearishAsian,
LondonandpossiblyNYsessionbutwillfailtoholditslowerpriceslideandreversehigher.Typically
NYO,LCandlateNYsessionwillpostthereversal.
a. SwingDown
i. Swingdowntoakeyweeklyand/ordailysupportandbreakthroughbeforeturningup
andreversing.
ii. Reversalmaybreakintonewsessionhighsbeforeitsettlesintoatradingrangefora
newtradingday.
b. SwingUp
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i.
Swinguptoakeyweeklyand/ordailyresistanceandbreakthroughbeforeretracing
down.
ii. Reversalmaybreakintonewsessionlowsbeforeitsettlesintoatradingrangefora
newtradingday.
5. Search&DestroyTrendingSidewaysMarket:Bankswilllooktoclearoutstopstogainadditional
liquidity.
a. Arangeformsafterswinglowandswinghigh.SupportandResistanceareasareformedinthe
range.Marketwilllooktotakeoutthelongsbydippingbelowtheestablishedsupportlevelof
therange.
b. Nextthemarketwilllooktotakeouttheshortsbyshootingbackupabovetheresistance
levels.
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c. Dealerswillthentargetthestopsaroundtheswingpointsandshootaboveprevioushighsto
triggerthestopsoftheshorts.
d. Tradersthinkingthatthepreviousmovefinallysignalsabuybreakoutwillthenbefooledas
thedealerswilllooktotakeoutthestopsaroundthepreviousswinglowpoint.
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SUPPORT/RESISTANCEAREAS
1. Support(Demand):Thisisanareawherebuyersarelikelygoingtooverwhelmsellerscausingthe
markettogoup.Whenamarketfallsdowntoapriorlow,itismoresignificantthanwhenamarket
fallsdowntoapriorhigh.
2. Resistance(Supply):Thisisanareawheresellersarelikelygoingtooverwhelmbuyers,causingthe
markettogodown.Whenamarkettradesuptoapriorhigh,itismoresignificantthanwhenamarket
tradesupapriorlow.
3. Supportcanbecomeresistanceandresistancecanbecomesupportifpricesbreakthroughtheseareas.
4. ConfluenceofS&Rareasisakeyconcepttothetradeentry.Thelistingsbelowareconsideredkey
S&Rareastoconsiderforconfluence.Thereisnorightorwrongconfluencesetup,themore
confluenceyouhavethehighertheprobabilitythetradeoutcome.TheeasiestwaytofindKeylevels
toanticipatereactionsinthefutureistobeginwiththelongtermchartsandworkyourwaydownto
thelowesttimeframeyouintendtotradefrom.
5. NaturalS&RLevels
a. High/Lowsbasedoff:12monthsrollingQuarterlyMonthlyWeeklyDaily4hr
i. MonthlyChartsNotethehighsthemarketturnedatandthelowsthemarketturned
at.Theselevelsaretheobviouslevelsthatanyquickglancewouldreveal.Donot
strainyoureyesandwastetimewonderingifaspecificlevelisaKeylevel...itis
becauseitisobvious.Thesemarketturningpointsareobvious...donotoverthink
them.
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ii. WeeklyChartsThelongtermMonthlyKeyS&Rlevelswillappearonthesecharts
aswellasnewKeyLevelstheMonthlytimeframewasnotsoapparenttosee.
iii. DailyChartsThisiswherethebanksworkfrom.AllthelongertermMonthlyand
WeeklyS&RlevelsaretobeplottedonthisDailytimeframe.TheDailychartwill
presentitsownKeyS&Rlevelsandtheseneednotingaswell.
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iv. IntradayTimePeriods(4hour,1hour,and15min)Thesewillshowexcellent
reactionlevelstoanticipatetradestosetuponfarinthefutureandthisisthekeyto
propertradeselectionanddevelopingpatience.NotetheKeyS&Rlevelsonyour
individualintradaychartsyouliketouse.
b. SessionHighsandLows(Asiamostimportant)
i. AsianSessionsetstheparametersforthefollowingLondonsession
1. Begins:7pmESTor12amGMT
2. Ends:4amESTor9amGMT
3. Allowupto1hourbeforeandafterthesetimes
ii. LondonSessionsetstheparametersforthefollowingNewYorksession
1. Begins:3amESTor8amGMT
2. Ends:12pmESTor5pmGMT
3. Allowupto1hourbeforeandafterthesetimes
iii. NewYorkSessionsetstheparametersforthefollowingnewtradingsessionstrading
1. Begins:8amESTor1pmGMT
2. Ends:5pmESTor10pmGMT
3. Allowupto1hourbeforeandafterthesetimes
c. IntradayFractal(moneyflowandITLorITH)Usethe15minuteasagotochartfor
monitoringshorttermswingsforlowerriskentriesandfinetuningstopplacementonopen
positions.
d. TrendLineAnalysis(channels,obvioustrends)
6. ImpliedS&RLevels
a. FibLevels
i. Retracement
ii. Extensions
b. PivotPoints
i. MonthlyPivots
ii. WeeklyPivots
iii. DailyPivots
7. OtherS&RLevels
a. PreviousDayClose/Open
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b. InstitutionalPriceLevels(IPL)InstitutionalTradersmaydeterminetimingoftradesaround
100pippricelevels(0.20,0.50,0.80,etc.)
c. Tradingtoapriorloworhigh
d. DailyADRhigh/low
KEYPOINTS:
Themoretimesasupportandresistanceareaishit,themoresignificantitis.
OnlythemostrecentSwingHigh/LowareutilizedfordeterminingMarketFlowwitholdSwings
disregarded.
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AREASOFCONFLUENCE
1. MarketStructureAsmarketsdeclineandmakelowerlows,eachnewswinglowerinpriceis
anchoredordirectlyreactingtoanotherswinghigherorlower.Everyswinginpricehasanequal
counterswingitisunfoldingfromandattemptingtofulfill.
a. AnyShortTermLong(STL)thathasahigherSTLonbothsidesofitisconsideredan
IntermediateTermLow(ITL).AnyITLthathasahigherITLonbothsidesofitisconsidered
aLongTermLow(LTL).
b. AnyShortTermHigh(STH)thathasalowerSTHonbothsidesofitisconsideredan
IntermediateTermHigh(ITH).AnyITHthathasalowerITHonbothsidesofitis
consideredaLongTermHigh(LTH).
c. Tradeprimarilyonthesideofthetrend.Longonbullishandshortonbearish.
2. SwingPointsMarketdeclinesandmakeslowerlowsoneachnewswinglowerinprice,thepriceis
anchoredordirectlyreactingtoanotherswinglower
a. Eachswinginpricehasequalcounterswing
b. PAneedstomoveatleast40pipstobeconsideredaswing(onGUatleast)
c. Markettradesfromshorttermlows(STL)toshorttermhighs(STH)backtonewSTL.At
STLandSTH,PAwilldevelopmarketstructures
i. Intermediatetermlow(ITL):STLthathashigherSTLoneitherside
ii. Intermediatetermhigh(ITH):STHthathaslowerSTHonbothsides
iii. Longtermlow(ITL):ITLthathashigherITLoneitherside
iv. Longtermhigh(ITH):ITHthathaslowerITHonbothsides
d. Swings:lookatswingsandunderstandeverymoveisanchoredtopreviousloworhighand
PAbecomesclearitispivotingona50%basisofthepreviouslowsandhighs
i. Ifswingmoves50pips,afterconsolidationifitcontinueshigherandbreachesthe
swinghigh,anticipateanother50pipsmoveaddedtothelowduringconsolidation
ii. IfPAfailstotradeabovethepreviousswinghigh,anticipateadeclineof50pipsfrom
thehighmadeonmostrecentrally/consolidation
3. SessionHigh/Lowthehigh/lowofthe3differentsessions.Asiaismostimportantandthehigh/low
usuallysetsthedaysS&RforLondonandUK.
a. SessionTimeAsia7pmEST9pmEST(124GMT)London3am12pmEST(917
GMT)NY8am5pmEST(1220GMT)
b. Whendrawingthehigh/lowofAsia,usethehardbodiesandnotthewicks.Onlyusewicksifa
candleisastronghammer.
5. RangeExpansion/ContractionDailyrangestypicallyswingfromlargerangedaystosmallrange
daysandviceversus.
5. InstitutionalPriceLevel(IPL)Pricelevelswherecommercialsusuallyenterthemarket.Theyare
00,.20,.50,.80locatedbetweenevery100pipmarking(e.g.1.0100,1.0120,1.0150,1.0180)
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a. TheFigureTermusedbytraderstorefertoa100point/piplevelorevenamidpointtothe
Figure.Example,1.5550,1.5450,and1.5350.
b. BasicBigFigureModel
i. Pricecantradetoandbounce/retracefromabigfigurelevel.
ii. Lookforconfluenceofsupportinglevels,OTE,etc.AlwaystaketheFigureinlightof
wherewestandintheoverallmarketflow,structure,andtrend.
c. AnticipateSweepsAnticipatepricesweepinghigherandlowerthantheFiguretotakeout
stopsaboveandbelowthelevel.
6. TradingtoPriorLoworHigh:
d. OnLong,whenmarketfallsdowntopriorlow,thismoveismoresignificantthanwhen
marketfallsdowntopriorhigh
e. OnShort,whenmarkettradesuptopriorhigh,thismoveismoresignificantthanwhenmarket
tradesuptopriorlow
f. FibsDrawfibsusingtheswings,sweetspotisthe6279%levelwith72%beingmostoptimal
g. RangeCycleCalculations
i. Marketcyclesinlargeandsmallranges,asdailystartstoclosenearpriorcloseitisa
smallrange
ii. Forswinghighranges,countday/barsbetweenpreviousswinghighsandmultiplyby
1.28,thencountforwardthat#.Shouldindicatewhereanewhighwillunfold
iii. Forswinglows,countdaysbetweenpriorlowsandmultiplyby1.28
7. PivotPointsTypically,whenpriceistradingabovecentralpivot,it'stimetosell.Whentrading
below,it'stimetobuy.Ifpricehasnotgonebelowcentralpivotfortheday,itmayactassupport.It
mayactasresistanceifpricehasnotgoneabovecentralpivotfortheday.
DailyPivots
Usepivotsasatooltofindanticipatedlevelstotradeoninthefuture.Drawnbyhandorindicator
from12amEST.CentralpivotactsasananchorforPA.PAactslikearubberbanditmovesaway
21
fromcentralpivotandthenpullsbacktowardsit.However,likearubberband,oncetrendtakesoffit
willsnapandfly.Usedbestinrangetradingperiods.
a. BuyZoneAreabelowcentralpivot
b. SellZoneAreaabovecentralpivot
c. Youcanbuyinasellzoneifyouaretradingbetweenpivotsopposedtotrendtrading
8. OTEOptimalTradeEntryDeepFibRetracementThe~62and~79retracementlevelsbecause
theyarealmostatthefull100%retracement.OTEwouldberoughlythe50%levelbetweenthe62and
79levels.
22
FIBONACCI
TradersusetheFibonacciRetracementlevelsaspotentialsupportandresistanceareas.Sincesomany
traderswatchthesesamelevelsandplacebuyandsellordersonthemtoentertradesorplacestops,thesupport
andresistancelevelstendtobecomeaselffulfillingprophecy.
TradersusetheFibonacciExtensionlevelsasprofittakinglevels.Again,sincesomanytradersarewatching
theselevelstoplacebuyandsellorderstotakeprofits,thistooltendstoworkmoreoftenthannotdueto
selffulfillingexpectations.
TheFibonaccitoolworksbestwhenthemarketistrending.Theideaistogolong(orbuy)onaretracementat
aFibonaccisupportlevelwhenthemarketistrendingup,andtogoshort(orsell)onaretracementata
Fibonacciresistancelevelwhenthemarketistrendingdown.Inordertofindtheseretracementlevels,you
havetofindtherecentsignificantSwingHighsandSwingsLows.Then,fordowntrends,clickontheSwing
HighanddragthecursortothemostrecentSwingLow.
Foruptrends,dotheopposite.Clickonthe
SwingLowanddragthecursortothemostrecentSwingHigh.
1. PreviousThreeDaysReferencethepreviousthreedayswhentryingtodeterminepointstodrawFibs
attheHighs/Lows.
2. SessionHighsLowsYoucanuseaSessionHigh/LowwhendrawingFibs.Notjustonlydaily
highs/lows.
UPTREND
DOWNTREND
23
1. TargetingUsingFibRetracement
a. UpsideObjective:PullFibfromrecentswinghightotheswinglow.Firsttakeprofitwouldbe
aroundthe100levelandthenthe200level.
b. DownsideObjective:PullFibfromrecentswinglowtotheswinghigh.Firsttakeprofitwould
bearoundthe100levelandthenthe200level.
c. Alwayslooktotheleftofpricetoidentifyotherkeypricelevelswhichmaycoincidewiththe
targetedpriceobjective.
2. TargetingUsingFibExpansion
a. UpsideObjective:Pullfromthebuypointontheswinglowtowardsthepreviousswinghigh.
Thiswillshowtheexpansionlevels.
b. DownsideObjective:Pullfromthesellpointontheswinghightowardsthepreviousswing
low.Thiswillshowtheexpansionlevels.
24
3. ProlongedTargetingUseFibRetracementandinsteadofpullingfromhightolowandthehighsits
onthe100level,raisetheFibtoolsothatthehighsitsonthe50level.You'llseetheextensionlevels
movehigherforalongerrangepriceobjectiveinatrendinghighermarket.
25
OTEPATTERNS
1. StandardOTE
a. OTEPatternLong:Dontreacttopricemovements,anticipate.Anticipateandtradeinto
keysupportlevels.Buyaspricegoesdownandapproachestheswinglow.Ifbar"wicks",you
canmovestopsortaketradesofftobreakeven.
v. Anticipatepricetogodowntosupportlevelandbounceup.Thetouchofthesupport
is#1.
vi. Bounceuptoashorttermhighatpoint#2.Anticipatetradetogobackdownand
retestsupport.
vii. Looktoenterlonginthe""SweetSpot""(Between62and79levels~70.5)
viii.Firsttakeprofitpointwouldbewhentradereachespoint#2priceor20pips.
ix. Protectivestoplossis10pipsminimumbelowpoint#1.
b. OTEPatternShort:Dontchasepriceaction.Ifpricegoesup,dontassumeitwillalways
moveup.Anticipateandtradeshortintokeyresistancelevels.Sellaspricegoesupand
approachestheswinghigh.Ifbar"wicks",youcanmovestopsortaketradesofftobreak
even.
x. Identify,anticipatepricetogodowntoresistancelevelandretracesdown.Thetouch
oftheresistanceis#1.
xi. Retracedowntoashorttermlowatpoint#2.Anticipatetradetogobackupandretest
resistance.
xii. Looktoentershortinthe"SweetSpot"(Between62and79levels~70.5)
xiii.Firsttakeprofitpointwouldbewhentradereachespoint#2priceor20pips.
xiv. Protectivestoplossis10pipsminimumabovepoint#1.
2. ICTReflectionPatternTheAntiOTE
a. BuyExample:You'llhaveasignificantlowandyouanticipatethemoveistochasestops
belowthelevel.Inordertoapproximatethepriceleveltoenter,drawaFibfromlowtohigh
26
andlooktogolongatthe100level.Whenlookingtotheleft,itwillappeartobeanOTE
Reflection.
YoucanpulltheFibfromthehightolineupthepreviouslowattheOTElevelandyou'llsee
howtherecentlowatthe100levelwasspoton.
b. SellExample:You'llhaveasignificanthighandyouanticipatethemoveistochasestops
abovethelevel.Inordertoapproximatethepriceleveltoenter,drawaFibfromrecenthigh
tolowandlooktogoshortatthe100level.
YoucanpulltheFibfromthelowtolineuptheprevioushighattheOTElevelandyou'llsee
howtherecenthighatthe100levelwasspoton.Whenlookingtotheleft,itwillappeartobe
anOTEReflection.
3. HiddenOTE
YoucandrawFibsfromotherimportantareasofconfluencelikerecenthighs/lowsorsessionhighs
lowstofindanOTE.
27
28
SESSIONTRADING
1. AsianSessionTheAsianRangedeterminesthedirectionalbiasorlikelydirectionforthemajorityof
theLondon&NYsessions.WherethemoneyispositionedinAsiandictatestheprofitreleaseonthe
tradingday.TypicallytradescountertheNYsessiondirectioninacorrectivebounce.
a. AsianKillZone
i. 6:00pm10:00pmESTistypicalAsianKillZonefortrades.KillZoneisthetimeof
daywhereyou'dideallylookforatrade.
ii. AsianSessionisbetterforpositiontradinginlongtermpositions.
b. WhiplashShort&CatapultBuy
i. SundayOpenGapHigherfromFriday'sClose
ii. WaitforinitialattemptstocontinuehigherandwatchSMTforNegativeorBearish
Divergence.
iii. ShortnearSundayOpeningandlookforexitattheFridayClosingRange.
iv. ForbullishenvironmentsyoucanbuytheSMTPositiveorBullishDivergenceinside
andorattheFridayclosingrangeupongapfilling.
v. Takeprofitsat20pipsandsetremainingportiontobreakevenandlookforLondon
continuationintoNYsession.
c. WhiplashBuy&CatapultShort
i. SundayOpenGapLowerfromFriday'sClose
ii. WaitforinitialattemptstocontinuelowerandwatchSMTforPositiveorBullish
Divergence.
iii. BuynearSundayOpeningandlookforexitattheFridayClosingRange.
iv. ForbearishenvironmentsyoucanshorttheSMTNegativeorBearishDivergence
insideandorattheFridayclosingrangeupongapfilling.
v. Takeprofitsat20pipsandsetremainingportiontobreakevenandlookforLondon
continuationintoNYsession.
29
d. LazyAsianSessionSessiondoesnttypicallyattempttobreakintonewhighs/lows.
e. AsianSessionBuyTypicallytradescountertheNYsessiondirectioninacorrectivebounce.
i. AsianSessionrarelyseesfollowthroughonnewlows.
ii. OnhighertimeframeslikeWeekly,Daily,4Hour,andor60minutecharts,noteKey
SupportLevels.
iii. AnticipateOTEBuystoforminAsianSessionwhenpricetradesdownintoSupport.
iv. TakeprofitsatOTElevelsforNYSwingandleaveportionforcontinuationinto
London.
f.
AsianSessionSellTypicallytradescountertheNYsessiondirectioninacorrectivebounce.
i. AsianSessionrarelyseesfollowthroughonnewhighs.
ii. OnhighertimeframeslikeWeekly,Daily,4Hour,andor60minutecharts,noteKey
ResistanceLevels.
iii. AnticipateOTESellstoforminAsianSessionwhenpricetradesupintoResistance.
iv. TakeprofitsatOTElevelsforNYSwingandleaveportionforcontinuationinto
London.
30
2. LondonOpen
a. LondonOpenKillZoneSweetSpot7:30am8:30amGMT
b. LongOpportunityRaidStopsthenShootforSupport
i. GoalistodialinontheLowofthedaytogolongfrom.
1. FirstobjectiveafterLondonOpenistoraidAsianHighstops.
2. Afterstopsaretakenout,pricemoveslowertestingkeysupportlevels&
OTE.
3. FromLondonOpentoCloseor18:00GMT,theDailyRangeisputinandyou
shouldnotusetighttrailingstops.
ii. InBullishconditionsyoumayleaveaportionofthetradeonbeyond18:00GMTfor
shorttermovernighttradesthatcanpaywellwithonly1020%oforiginalposition.
c. ShortOpportunityRaidStopsthenShootforSupport
i. GoalistodialinontheHighofthedaytoshortfrom.
1. FirstobjectiveafterLondonOpenistoraidAsianLowstops.
2. Afterstopsaretakenout,candlesmovehighertotestkeyresistancelevels&
OTE.
3. FromLondonOpentoCloseor18:00GMT,theDailyRangeisputinandyou
shouldnotusetighttrailingstops.
31
ii. InBearishconditionsyoumayleaveaportionofthetradeonbeyond18:00GMTfor
shorttermovernighttradesthatcanpaywellwithonly1020%oforiginalposition.
d. LondonOpen
i. DuringahigherTFconsolidation,wewaitforthedailyrangetocontract.Monitorthe
hourlychartsforconsolidationnearkeyS/Rlevels.Theidealsetupwouldleadto
rangeexpansionwhichmeansthatthepreviousdayisusuallyashortrangeday.Use
thehigh/lowofpreviousdaytomeasureOTE.
ii. Thesetupusuallyoccursafteradailyfractalformsatakeylevel.Lookforconfluence
ofSupport&Resistance,weeklypivotsandprojectiontargets.Numberthebarsofthe
Head&Shoulderspatternfrom1to5,3beingthehead.Inaperfectworlddays3&4
areshortrangedaysandIwoulduseBar#4asthegreenlighttoanticipaterange
expansionondays5&6.
iii. ThesetupoccursmorefrequentlyduringahigherTFrangeexpansion.Inthis
environmentsentimentisamajorcatalystforfrequentLOsetups.Iusea30Period
Williams%Ronthe4Hrcharttogaugeshorttermsentiment.
iv. Priceisrelentlesslyreachingforakeylevel.LookforconfluenceofSupport&
Resistance,weeklypivotsandprojectiontargets.IfpriceretracesduringLO,toretest
aS&Rlevel,therunisusuallyshortlivedandaswiftmovetowardsourtargetcanbe
expectedatNYO.
v. DuringasmallerTFrangeexpansion,Iusethe50period%Ronthe30Minchartasa
sentimentmeter.AlsousedtogaugecountertrendexhaustionandkeyoffofS/Rrole
reversals.
3. LondonClose
a. LondonCloseKillZone
i. LondonCloseat11amESTApprox.
ii. KillZoneisbetween10am1pmEST.
iii. Generallythemarketwilllooktoencounterprofittakingaround11amESTasLondon
tradersclosetheirtradingdayandNYtradersaretakinglunch.
b. TwoDominantTradeTypes
i. CounterTrendTrade:Quick1520pipscalpusing5minchartforshorttermmarket
exposure.
ii. LondonCloseTrendTrade:Trendtradeentrytogetinsyncwiththedailytrendor
32
longtermpriceswing.
c. AverageDailyRange
i. Identify5,10,and20dayADRtogetanideaofthepipstradinginthecurrent
environment.
ii. Use5dayADRaroundNYOpenwhichiswhenthemarkethas""pricedin""thehigh
orlowoftheday.Addthe5dayADRtothehighesthighandlowestlowtoADR
highsandlows.
d. OptimalTradeEntry
i. P.Stopisplaced10pipsbeyondtheHighorLowonFib.
ii. Firstobjectiveis1520pipsprofit.
iii. LastprofitistakenattheHighorLowoftheswing.
iv. TheEntryPointisthe6279%levelsorbetweenthem(~70.5)
e. LondonCloseCounterTrendBuy
i. ReferencetheUSDollarIndexanddetermineifithasmetits5dayAverageDaily
Range
ii. Determineifthepairtradedhasmetits5dayADR.
iii. PriortotheLondonCloseKillZonewindowdeterminehighertimeframeWeekly,
Daily,4hour,1hourS&Rlevels.
iv. Notetheprevious3dayshighsandlows,SessionHighs/Lows,andPivotPoints
v. AspricedropsdownintotheADRlevelandKillZone,lookatthe5minlowsfora
bounceoffofoneofthelevels.
f.
vi. Afterthebounce,pullaFibovertheshorttermupswingandconsiderbuyingthepair
atOTEonthe5minchart.
vii. Risk10pipsunderthelowusedfortheFibandtakeprofitson1520pipsandholdfor
thehighoftheFibbasedswing.
viii.Ideally,bettertradesformonswingsmeasuringatleast15%20%ofthedailyrangeof
thetradingday.
LondonCloseCounterTrendSell
i. ReferencetheUSDollarIndexanddetermineifithasmetits5dayAverageDaily
Range
ii. Determineifthepairtradedhasmetits5dayADR.
iii. PriortotheLondonCloseKillZonewindowdeterminehighertimeframeWeekly,
Daily,4hour,1hourS&Rlevels.
iv. Notetheprevious3dayshighsandlows,SessionHighs/Lows,andPivotPoints
v. AspricerisesupintotheADRlevelandKillZone,lookatthe5minlowsfora
bounceoffofoneofthelevels.
33
vi. Afterthebounce,pullaFibovertheshorttermdownswingandconsidersellingthe
pairatOTEonthe5minchart.
vii. Risk10pipsabovethehighusedfortheFibandtakeprofitson1520pipsandhold
forthelowoftheFibbasedswing.
viii.Ideally,bettertradesformonswingsmeasuringatleast15%20%ofthedailyrangeof
thetradingday.
g. LondonCloseSetup
i. DuringahigherTFconsolidation,wewaitforthedailyrangetoexpand.Monitorthe
hourlychartsforrangeexpansiontowardskeyS&Rlevels.Theidealsetupwouldlead
torangecontractionwhichmeansthatwearecomingoffaLOprofitrelease.
ii. Thesetupusuallyoccursduringtrendexhaustionatakeylevel.Lookforconfluence
ofS&R,weeklypivotsandprojectiontargets.LCsetupsarecountertrendtrades.Use
the30periodWilliams%Ronthe4hrchartandtrytosticktheweeklyhigh/lowon
Bar#3.
iii. DuringahigherTFrangeexpansionthissetupisnotrecommended.
4. TradingtheNewYorkSession
a. NYOpenKillZoneSweetSpot11:00am13:00GMT
b. RangeExpansionSmallrangeorseriesofsmallrangedays/barswillsuggestanupcoming
largetradingrangeday/bar.
c. CloseProbability
i. 80%oddsoftheclosebeingatornearthehighorlowfortheday/bar.
ii. Ifinabearishscenario,~75%oddsthattheopenisnearthehighandthecloseisnear
thelow.
d. NYOpenEasiestsessiontotrade.Londonhigh/lowalreadyinplace.
e. IdealEntry
i. ForShorts,Sellonamoveup.
ii. ForLongs,buyonamovedown.
f. SettingaStopwhenideallevelistoomanypipsWhentheidealstopistoomanypipsaway
fromthe2030pipstoplevel,gotosmallertimeframesandidentifyastoplevelonwhatprice
istellingyouonthesmallerlevel.
g. NYSessionTradesNotes:
i. Getinsyncwithwhatthehigherleveltimeframesaretellingyou.Majorityofthetime
thetradeswillfollowthattrend.
ii. Iflookingatdailytimeframeandmarketopenednearthedayshighsandhastrended
lower,we'dlookformoreshortstopushtoaday'slow.LondonSessioncreatedthe
day'shigh.
iii. LondonClosecoincidingwithNYSessionlunchtimeallowedforacountertrade
opportunity.Takeprofitatthe38%retracementlevelofthefulldaysrange.
34
PRICEACTION
WhatisPriceAction?
Verybasically,PriceActioniseverythingthattradersaredoingandhowtheyarebehavingplacedontoachart
forotherstoanalyze.PriceActioniseverythingthatpriceisdoingandhasdoneonaForexpairortrading
instrumentforatradertoseeonachart.Allpricerepresentsonachartiswhattradershavedoneandhowthey
havebehavedgivenacertainsituation.Forexamplepricegetstoasupportareaandpricebounceshigher.This
istradersbuyingupatalevelinthemarketwheretheythinksupportis.
AnotherexampleofpriceactionatworkonachartisaPinBar.Pricegetstoacertainlevelinthemarket
beforerejectingthatlevelandsnappingbacktheotherway.OnachartweseeaPinBarbutthatPinBarwas
madeupoftradersallaroundtheworldbuyingorsellingatthesameareaandrejectinghigherorlowerprices.
Thisisamethodthathasbeenaroundforalongtimeandwillbearoundforalongtimetocome.Unlikeother
rubbishindicatorsorblackboxsystemsPriceActiontradingdoesnotstopworkingwhenthemarketdynamics
change.
HowcanweusePriceActiontoprofit?
Tradersandhumansareveryhabitualandwilldothesamegiventhesamecircumstances.Astraderswecan
begintorecognizepatternsthatformonthechart.Thesepatternswilltendtorepeatthemselvesandhavethe
sameoutcomes.Notwotradeswilleverbethesameandnooutcomeswillevermatchaprevioustrades,but
byperfectingthesehighprobabilitypriceactionpatternswecanbegintoplacetradesthatovertimewillgive
usanedgeinthemarket!
Traderscanlearnandperfectthesetradingpatternsandbegintoimplementstrategiesthatwillovertimegive
themanedgeonthemarket.Anedgeissimplysomethingthatgivesatraderabetterchancethan50/50of
placingawinningtrade.
35
HIGHPROBABILITYPRICEPATTERNS
1. TheDojiFormwhenopenandclosearevirtuallyequal.Dojialoneisneutral.Bullishorbearishbias
isbasedonprecedingpriceactionandfutureconfirmation.Bestusedasconfirmationofanticipated
action,changesindirection.
2. TheHammerakaPinbarFormwhenpricemovessignificantlyloweraftertheopen,butralliesto
closewellabovetheintradaylow.Worksintheoppositedirection(bullishandbearish).Ideallylike
seeingthesepatternsatOTEoratkeySupport&ResistanceLevels.
3. TheTweezerLowLookslikeconsecutiveBullishPinbars.Indicatesthatpriceheldtwiceatthe
exactsamelevel.Sellersnotabletopushpricelower.Thelongerthewicksthebetter.Preferenceis
toseethepatternat4Hourand1HourchartsathighertimeframeS&Rlevels.IfaccompaniesSMT
Divergence,looktotrademaximumriskexposure!
4. TheTweezerHighLookslikeconsecutiveBearishPinbars.Indicatesthatpriceheldtwiceatthe
exactsamelevel.Buyersnotabletopushpricehigher.Thelongerthewicksthebetter.Preferenceis
toseethepatternat4Hourand1HourchartsathighertimeframeS&Rlevels.IfaccompaniesSMT
Divergence,looktotrademaximumriskexposure!
36
5. RailroadTracksTwocandlestickswithsmallerwicksforhighs/lowswheretheprecedingcandle's
bodymatchesthatofthecurrentcandle'sbodyintheoppositedirection.Lookfortheseatkeylevels
tosignifyanengineeredreversal.Verystrongpattern.
6. Head&ShouldersTopFormationSellingPattern
a. Typicallyoccursatintermediateorlongtermhigh.
b. Priceobjectivefromhighesthighofheadtothelowsattheneckline.Measurefromhightothe
necklineandpriceobjectivewouldbethatdistanceextendingbelowtheneckline.
c. SellingPattern.
7. ThreeIndiansClimaxReversalPattern
a. Threeprogressivelyhigherpriceslopehighsreachingatopnearanareaofresistance.This
wouldbeasellpatternaswe'dreasonablyexpectpricetofall.LookforOTEatalowertime
frame.
b. SellingPattern.
37
8. Triangles&HowICTTradesThem
a. Noteakeyresistancelevelwhereyoufindconsolidationandsupport/resistance.Plotageneral
trendlinefromlowpointtoitsintersectionwiththekeyresistancelevel.Measurefromlow
uptotheresistancelevel.
b. Usethewidestportionofthetriangleandaddthatpiprangetothelowpointdipsalongthe
trendline.Noteachlevelasitprogressesandtheselevelswouldbewhereyou'dexpecttake
profitpointsinthefutureduringabuyprogram.
9. InvertedHead&ShouldersBottomFormation
a. Typicallyoccursatintermediateorlongtermlow.
b. Priceobjectivefromlowestlowofinvertedheadtothehighsattheinvertedneckline.Measure
fromlowtotheinvertednecklineandpriceobjectivewouldbethatdistanceextendingabove
fromtheinvertedneckline.
c. BuyingPattern
10. BullFlagContinuationPatternLookfortheflagpolewhichwouldbeasharppricerunup
followedbydescendingrangeofpricebetweenchannel.Priceobjectivewouldbedonebygettingthe
piprangefromlowtohighandaddingthatdistancetothelowestlowoftheflagandtothebreakoutof
theflag.Therewouldbeareasonableexpectationthatpricewillappreciatetomeetthoselevels.
38
11. BearFlagContinuationPatternLookfortheflagpolewhichwouldbeasharppricerundown
followedbyascendingpricerange/channel.Priceobjectivewouldbedonebygettingthepiprange
fromhightolowandaddingthatdistancetothehighesthighoftheflagandtothebreakoutlowerof
theflag.Therewouldbeareasonableexpectationthatpricewilldepreciatetomeetthoselevels.
12. CoilExpansionPattern
a. Drawtrendlineoflowerhighsandtrendlineofhigherlowtoapointwheretheylookto
intersect.Aspriceapproachestheintersection,we'dexpectpricetorangehigherorlower
fromthatpoint.
b. Usehighertimeframeanalysistogetinsyncandanticipatewhichdirectionpricewilldueto
directionalbias.Ifpatternoccursatkeysupportlevel,anticipatepricetorangehigher.
c. Measurerangefromthelowtothetouchpointoftheuppertrendlineoflowerhighsaboveit.
Addtherangetotheupperorlowertrendlinetoidentifyapriceobjectiveoncepricebeginsto
rangeoutofthecoil.
13. TurtleSoupReversalPatternTurtleSoupiswhenpricetakesoutstopsbeyondanoldhighorlow
andimmediatelyreversesdirection
a. Identifythelowestlowandhighesthighinthelast20periods/candlesticks.
b. Golongatthetimepricegoesbelowthelowestlowintheprevious20periods.Thisisdone
39
onthenotionthatthepricemovebelowisafalsebreak.
c. Goshortatthetimepricegoesabovethehighesthighintheprevious20periods.Thisisdone
onthenotionthatthepricemoveaboveisafalsebreak.
14. RiptideReversalAnysignificanthighorlowbroken/rejectedoveranyperiod,numberofcandles
shouldmoveintheoppositedirectionafterbroken.
15. OutsideDaywithDownClose
a. Patternwheresecondcandlehasahigherhighandlowerlowthantheperiodbeforewitha
downclose.BullishscenariowhenitoccursatanoversoldperiodusingWilliams%R.
b. Getlongatthefollowingbarusing30and70levelsfortheindicatortodetermine
overbought/oversoldand10period.
16. InsideDayPatternwhenthesecondcandlehasahigherlowandalowerhighthanthepreviousday.
Uponthecloseofthecandle,itsignifiesatrendingdayorlargerangeexpansiondaytofollow.
40
TRADINGSWINGS
1. TheJudasSwing
a. JudasSwingAnengineeredpriceswingmeanttoleadreactionarytradersintothewrong
direction.Typicallyafalserallythatappearsinitiallytoemotionaltradersasthenextbigrun
inprice.Inthemarket,tradersthatfollowthisswingfindthemselvestrappedonthewrong
sideandpaytheprice.
b. WhenJudasSwingFormsEssentiallyisastopraidthatmanytimestradesinto:
i. KeyS&RLevel
ii. PreviousHighorLow
iii. CounterSwingtoFormOTE
iv. RaidthePreviousWeekHigh
v. RaidthePreviousWeekLow
vi. RaidthePreviousSessionStops
vii. RaidingSessionStops
1. IftradingLondonOpen,lookforAsianstopstoberaided.
2. IftradingNYSession,lookforLondonOpenstopstoberaided.
2. MarketSwingPoints
a. 10:00GMT@5minChart
i. StandardJudasSwing
1. Useopeningpriceonmidnightcandle,drawopenlineintotheday.
2. IfBearish,lookforshortsatpointsabovetheline.
b. JudasSwingOnceEvery24Hour
i. TheSwingshouldhappenatleastonceina24hoursession.
ii. Swingshouldbeintheoppositedirectionofwhatthetrendforthedayhasbeen.
c. ConfluenceofS&RUse15pipbufferwhenlookingforconfluenceofS&R
d. TradeAfterSwingHigh/Low
i. Ifmarketistradinglower,thenlookforasellafterarecentswinghigh.
ii. Ifmarketistradinghigher,thenlookforabuyafterarecentswinglow.
e. TwoTrendsinaDay
i. MorningTrendthatisthemarketopentoaround11amandconsolidatestoaroundthe
NYlunchperiod.
ii. Around1pm2pm,thingsheatuptofulfillthePMtrendfortheremainingportionof
thedailyrange.
41
ICTTRADINGCONCEPTS
1. TheTrader'sTrinityInnerCircleTrader'sExclusiveOverboughtOversold&S&RConcept
Day11
a. TradersTrinity
i. UpperPortionOverboughtzone.Lookforshorts.
ii. MiddleoftheRangeFairvalue/Equilibrium
iii. LowerPortionOversoldZone.Lookforbuys.
b. MonthlyTrinity
i. LookforperiodswherepricehasbrokenoutoftheTrinityRangetothelowandhigh
usingthedailychartassectionedoffbyMonthlyTrinity.
ii. Referencethe3previousperiodsinthetimeframetolookbackforrelevant
levels/information.
c. TrinityLevels
i. Upperboundarypricelevelswouldsignifyanoverboughtareaandweshouldlookfor
opportunitiestosell.
ii. Lowerboundarypricelevelswouldsignifyanoversoldareaandweshouldlookfor
opportunitiestobuy.
iii. Alwaysseeifthisisinagreementoragainsthighertimeframeanalysis.
iv. PricewilltypicallycomebacktothefairvaluezonesinthecenterareaoftheTraders
Trinity.TrynottotradeintheFairValueZone.
d. BrokenTrinity
i. WheneverseeingabrokenTrinity,preparethelikelihoodofamajorhighorlow
forminginthemarketplace.
ii. WhenpricebreaksoutabovetheTrinity,useFibbytakinghighofTrinityandbring
downtothelow.Whenbreakingtothelow,useFibbytakinglowandbringdownto
thelow.Thetwolevelstofocusonarethe162and200extension.Thesetwolevels
willusuallyhaveareactionorcorrectiontobeusedtogettargets.
iii. Lookforcorrectionatthebreakouthigh/lowpoint.
iv. 162and200ExtensionTheselevelsshouldholdtrueastargetsuntiltheyare
reached.Ifpricedoesnotreachtheselevelsandpullsaway,youmaythinkthatthe
levelsarenotvalidanylongerbuttheytendtostillholdtrueinthelongertimeframe.
42
v. PreviousWeekTradersTrinitySamepremiseasMonthlyTrinity.Identifyareas
wherepricebreaksoutoftheTrinitytotheLoworHigh.UseFibtoproject162and
200extensionlevelstoestimatewherepricemaygo.
2. TradingSmartMoneyCorrelationConceptsDay12:Smartmoneyactionsgetrevealedthrough
cracksinthemarket.Theyleavefingerprintsastheyswitchthetideofthecurrentpriceswing.When
thecorrelationmaterializesatpredeterminedsupport&resistancelevelswecanbeconfidenta
reactionwillunfold.
a. USDXSMTDivergence:Giveninversecorrelationofpairs,whenpriceononehaslower
lows,itisexpectedthattheothershouldreachhigherhighs.Whenthisdoesnotoccur,we
haveSMTDivergence.Thisissuggestiveofmajoraccumulation/consolidationinadvanceof
amajormoveintheoppositedirection.
b. CorrelatedPairSMTBullishDivergence:Shouldoccuratandconfirmpredetermined
SupportLevels.Ifonepairfailstomakealowerlowwhiletheothersucceeds,thenexpect
bothpairstoshoothigheratakeysupportlevel.
i. WhenlookingatSupportplaysor"buys"considerthepairthatfailstomakethe
lowerlowrespectively.Premisebehindthis:Thepairthatfailstodroplower,itis
beingboughtandhence,notwillingtogolower...thisisessentially"Demandin
Operation"...anticipateHigherprices.
ii. EUR/USDismakinghigherlowswhileGBP/USDismakinglowerlows>Buy
EUR/USD
c. CorrelatedPairSMTBearishDivergence:Shouldoccuratandconfirmpredetermined
ResistanceLevels.Ifonepairfailstomakeahigherhighwhiletheothersucceeds,thenexpect
bothpairstoshootloweratakeysupportlevel.
i. WhenlookingatResistanceplaysor"sells"considerthepairthatfailstomakethe
higherhighsrespectively.Premisebehindthis:Thepairthatfailstorallyhigher,itis
beingsoldandhence,notwillingtogohigher...thisisessentially"Supplyin
Operation"...anticipateLowerprices.
ii. EUR/USDismakinghigherhighswhileGBP/USDismakinglowerhighs>Sell
GBP/USD
43
d. RealExampleofCorrelatedPairSMTDivergence(GBP/USDvs.EUR/USD):GBPmadea
higherhighwhileEURfailedtomakehigherhighs.Thissignaledareversalforbothpairs.
3. TradingAccumulation/Distribution
a. OpportunitiestotradeAccumulation/Distributionindicatoroccurwhenpricedivergeswith
thedirectionoftheindicatorandissupportedbytheoverbought/oversoldWilliams%R(10
period)indicator.
b. Bullish/LongSetup
i. Pricemakesalowerlow.
ii. Accum/Distrforsameperiodmakesahigherlow
iii. Williams%Risinoversoldzone
iv. Giventimeandpriceaction,findopportunitytogolong
44
c. Bearish/ShortSetup
i. Pricemakesahigherhigh
ii. Accum/Distforsameperiodmakesalowerhigh
iii. Williams%Risinoverboughtzone
iv. Giventimeandpriceaction,findopportunitytogoshort
4. MACDDivergence
a. Type1BullishDivergencePricemeetsalowerlowwhiletheMACDreachesahigherlow.
DrawFibfromtheswinglowwherethedivergencewasestablishedtotherecentswinghigh
andlookforOTEtoenterlong.
45
b. Type1BearishDivergencePricemeetsahigherhighwhiletheMACDreachesalower
high.DrawFibfromtheswinghighwherethedivergencewasestablishedtotherecentswing
lowandlookforOTEtogoshort.
5. ICTGrail(MarketReview7/15~32min)
TheICTGrailformsattheOTEwhenthereisaType2TrendFollowingDivergenceofpricevs.the
StochasticOscillator.Oscillatorsettingis%K@10,%D@3,Slowing@3.
a. BuySetupPricefindsahigherlowattheOTElevel.Forthesameperiod,theindicator
findsalowerorequallowatthesametime.
46
b. SellSetupPricefindsalowerhighattheOTElevel.Forthesameperiod,theindicatorfinds
ahigherorequalhighatthesametime.
6. ICTStinger(Day15Notes~20:30)
Type1and2Combined(STINGER)Overaperiod,pricemoveswiththehightimeframe
trendbutdivergeswiththeindicator.Thiscombinedwithasmallerperiodwherepricemoves
againsttrendanddivergeswithindicator.Verypowerfulindicationofpricetakingoff.
a. Type1Lowerlowinpricebutahigherlowinthestochastic(yellowlinesinchart)
b. Type2Trendfollowingdivergenceahigherlowinpricebutlowerreadinginthe
stochastic(greenlinesinchart)
c. MostpowerfulwhenthisoccursatkeysupportandresistancelevelsandOTE.
47
7. InterestRateYieldTriad(MarketReview7/29)26:15
a. US10yearyieldvstwocorrelatedcountrys10yearbondyields.
b. Risingyieldsmeansrallyingprice(rising)asthehigheryieldsdrawattractiontothe
currency.
c. LookfordivergenceamongthecorrelatedcurrenciesandtheUSbondyield
d. Theyieldthatwasunwillingtogolowervs.theothertwoyields,identifiesthe
currencywhichwillbeattemptingtogohigher.
e. Whenonecurrencygoeshigher,itshouldaffecttheothercorrelatedcurrencyinthe
samemanner.
48
ICTTRADINGMETHODS
1. 20PipPerDayScalpingMethodDay19
a. KeystoProfitableScalps
i. UnderstandPriceActionTheory
ii. FirmGraspofKeyS&RLevels
iii. TradeHigherTimeframeBias
iv. TakeProfitsRoutinely&Often
v. TradeOneorTwoPairsatMax
b. BasicScalpingBuyMethod
i. Identifyakeysupportlevel
ii. AnticipateaJudasSwingLower
iii. LookforOTEaroundkeysupportleveltogolong
iv. Risk20pips
v. LookforSMTDivergencetoanticipatelowofday
vi. Takefirstprofit@20pips
vii. EnteronDoubleTap
viii.LetsecondportionrunandholdforDailyRange
ix. LookforTimeofDayObjectivearoundNYO,LOC,and18:00GMT.
c. EnteronDoubleTap
i. Assumingtotalriskontradeis2%ofEquity,Take50%ofpositionoff@~2030pips
for1%gain(Scalp).Remaining1%portionwillbeheldforthedailyrange.Lookfor
timeofdayobjectiveandkeepprotectivestopoutsidethedailyrange.
ii. ProtectivestopatBreakevenaftertakingprofitonfirsthalfoftrade.
d. BasicScalpingSellMethod
i. Identifyakeyresistancelevel
ii. AnticipateaJudasSwingHigher
iii. LookforOTEaroundkeyresistanceleveltogoshort
iv. Risk20pips
v. LookforSMTDivergencetoanticipatehighofday
vi. Takefirstprofit@20pips
vii. EnteronDoubleTap
viii.LetsecondportionrunandholdforDailyRange
ix. LookforTimeofDayObjectivearoundNYO,LOC,and18:00GMT
49
2. ShortTermIntradayMethodDay20
a. Method
i. PlotEMA(40)andEMA(18)
ii. BuySignalsLookforperiodswherethe18periodEMAisabovethe40periods
EMA.BuyprogramwhenyouseethewideningoftheareasbetweenEMA
iii. SellSignalsLookforperiodswherethe18periodEMAisbelowthe40periods
EMA.SellprogramwhenyouseethewideningoftheareasbetweenEMA
iv. Oncepricemakesafractal,swinglowduringBuyProgram,lookforopenafterthe
fractalisformedandgolongoncepriceattemptstomovedown(JudasSwing)
v. Take70%offwhenyoucanandlettheremainingrun.
b. HigherTimeFrameStopsAspricemoveshigher,bringstopto~10pipsbelowthenext
fractallowoncetwonearfractalsform.
3. SwingTradingMethodDay21
a. ICTSwingTradeSetup
i. QuarterlyShiftinFlows
ii. OldHighs&Lows
iii. SMTDivergenceonDaily
iv. MarketStructure
v. SwingPointAnalysis
vi. OptimalTradeEntryStrategies
vii. SwingProjectionforProfitObjectives
50
b. HigherTimeframeResistancePricewillswinghigherintoakeyresistanceandtheshortwill
betradedonthe4hourand/or1hourchartforsetup.Theentrywillbetakenonthe5min
chartTurtleSoupSelland/orOTESellPattern.WhendailyFractalswinghighforms,lookfor
Judasralliestoshortintofornewentrypoints.
4. HowToCaptureExplosiveFOREXProfitsDay25
a. WeeklyHighs/LowsTheWeeklyHighorLowforms80%ofthetimebetweenSunday's
Open&Tuesday'sLondonOpen.Whenitfails,itwilllikelyformbetweenTuesday'sLondon
OpenandWednesday'sLondonOpen.
b. Week'sOpeningPrice
i. IdentifytheOpeningPricefortheWeekandkeepitnotedonthechartthroughthe
tradingweek.Ifwe'rebullishonmarketconditions,welookforanopportunitytogo
longwhenthelowfortheweekisformed(likelytoformbeforeTuesday'sLondon
Open).Thesameistrueforshorts.
ii. IfithasnotformedbyTuesday'sLondonOpen,thenverylikelytooccurbetween
Tuesday'sLondonOpenandWednesday'sLondonOpen.
51
INSIDERSTRADINGMETHODS
1. TheFourMarketGroups
a. Domestic&ForeignBondandorInterestRates
i. 30YearTreasuries
ii. 10YearTreasuries
iii. 5YearTreasuries
iv. 2YearTreasuries
b. StocksandEquities
i. DowStocks
ii. S&P500Stocks
iii. NASDAQStocks,etc...
c. CommoditiesandFutures
i. CRBIndex
ii. Agricultures
iii. Financials
d. Currencies
i. TheUSDollar
ii. ForeignCurrencies
2. InflationaryEnvironmentIntermarketRelationships
a. APOSITIVErelationshipbetweenbondsandstocks
b. AnINVERSErelationshipbetweeninterestratesandstocks
c. BondsusuallychangedirectionBEFOREstocks
d. AnINVERSErelationshipbetweencommoditiesandbonds
e. APOSITIVErelationshipbetweencommoditiesandinterestrates
f. APOSITIVErelationshipbetweenstocksandcommodities
g. CommoditiesusuallychangedirectionAFTERstocks.
h. AnINVERSErelationshipbetweentheUSDollarandcommodities
3. DeflationaryEnvironmentIntermarketRelationships
a. AnINVERSErelationshipbetweenbondsandstocks
b. APOSITIVErelationshipbetweeninterestratesandstocks
c. AnINVERSErelationshipbetweencommoditiesandbonds
d. APOSITIVErelationshipbetweencommoditiesandinterestrates
e. APOSITIVErelationshipbetweenstocksandcommodities
f. AnINVERSErelationshipbetweentheUSDollarandcommodities
52
4. BigEventsinthemarket(i.e.EUcrisis)canthrowcertainrelationshipsoutofwhack.
53
PROFESSIONALSUSEOFINDICATORS
1. RevisitingtheMarketProfiles
a. ConsolidationRangeProfile
b. BreakoutValid&FalseProfile
c. TrendingProfile
d. ReversalProfile
2. Overbought&Oversold
a. FocusonOversoldinMarketProfilesthatsuggestpricesarebullishisOptimal
b. OverboughtinMarketProfilesthatsuggestPricesareBearishisOptimal.
c. Stoch(14,3,3)thatsayswe'reoversold.We'dexpecttoseeapricerise.Otherexamplesof
overboughtandwe'dexpecttoseeapricefall.
3. FalseSignalsOverboughtsignalswerenolongersuggestiveofpricemovementsbecausepricetraded
offofahighertimeframesupportlevel.
4. PriceDivergenceClassicusewithindicatorsistolookforDivergencebetweenpriceandthe
indicator.Pricereachesnewlowbutindicatordoesnotreachanewlow.Thisisadivergencebetween
priceandindicator.
54
a. Type1Divergence(ReversalinNature)Pricemovesoppositethehighertimeframetrend
anddivergeswithindicator.Pricemovesoppositethehighertimeframetrendanddiverges
withindicatorbecauseitisasignofareversalbynature.
i. BullishType1Divergence:Pricefindsalowerlowwhiletheindicatorfindsahigher
highforthesameperiod
ii. BearishType1Divergence:Pricefindsahighhighwhiletheindicatorfindsalower
lowforthesameperiod.
55
b. Type2TrendFollowingDivergenceDivergencefromindicatorwhenpricefollowsthe
trendbutdivergeswithindicator.
i. BullishType2Divergence:Pricefindsahigherlowwhiletheindicatorfindsalower
lowforthesameperiod
ii. BearishType2Divergence:Pricefindsalowerhighwhiletheindicatorfindsa
higherhighforthesameperiod.
56
MISCVIDEONOTES
1. 3.1InterestRateOverlayTutorial
a. Stockcharts.comEODYields
b. FreeCharts>PerfChart>$UST2Y,$UST5Y,$UST10Y,$UST30Y
2. 3.2InterestRateOverlayTutorial
a. SMTSmartMoneyTool
b. EUR/USDvs.GBP/USDcorrelation.Divergencemayindicatefavorinonevs.theother.
3. 4.3SwingProjectionApplication&FibConfiguration1.28Projection
a. DailyHigh/Lows90%chancethatthedailyhigh/lowisestablishedinthefirst4hoursof
tradingafterNYmidnight.
b. RangeExpansion/ContractionCycleYoucantypicallyexpectbigrangesontimeframes
aftersmallrangesandviceversus.
c. Open@Hivs.CloseatLow?
i. Whenhigh/closeiscloserinproximityafterwiderangesaspricegoesup,it'smore
likely/suggestiveyou'reatatop.
ii. Whenlow/closeiscloserinproximityafterwiderangesaspricegoesdown,it'smore
likely/suggestiveyou'reatabottom
d. 1.28ProjectionMeasureswinglowtoswinglow,countthedays.Multiplethatnumberby
1.28(rounddown)andaddthatnumberofbarstotheswinghighinthemiddleofthetwo
swinglows.Thisshouldbringyoutothenextswinghigh.
4. Day14ThePowerofThreeAccumulationProfitReleaseDistribution
a. 3MajorMarketCycles
i. AccumulationPhaseSmartMoneyaccumulatinglongsorshorts
ii. ProfitReleasePhaseRangeexpansionwhereprofitispermitted
iii. DistributionPhaseSmartMoneydistributeslongorshorts
b. TheOpenSmartmoneydistributesabovetheopenandaccumulatesbelowtheopen.
c. 3BarPattern
i. Sell@SwingHighAhighwithtwolowerhighsoneachside.Looktogoshorton
thefirstbarafterthecloseofthe3rdlowerhighbar.Lookforthisactionatkey
resistancelevels.
ii. Buy@SwingLowAlowwithtwohigherlowsoneachside.Looktogolongonthe
firstbarafterthecloseofthe3rdhigherlowbar.Lookforthisactionatkeysupport
levels.
d. PriceTargets
i. NYOpen12:00GMT(7AMEST)
ii. LondonClose15:00GMT(12AMEST)
iii. And18:00GMT
e. Williams%R(10period)Ifitgoesoversold,lookatthenextday'strading.Ifweopen/start
rangingattheAsianrangeandittradesdown,thereisan80%likelihoodthatitwillbea
tradabledaytogolong.LookforanexitaroundNYOpenorLondonClose.
f. AnticipatingFalseRallyIfyoudon'tgetthehighmadeinAsianSession,it'llformin
London.IfitdoesnotforminLondon,you'llseetradingrangeandJudasswinginNY
Session.
g. TradingJudasSwingAfterFractalHigh/Low(55:001:00:04)
57
TRADERULES
1. Risk
a. Riskpertradewillbelimitedto1.5%orlesspertradeoranoverallopenriskof1.5%orless
b. Valueperpipdeterminedbyrisk:riskpertrade/SLamount=$/pip
i. e.g.5kaccount,2%risk=$100risk,SLis25pips::100/25=$4/pipor4minilots
2. TradeEntry
c. Time:Lookforentriesneartheopen/closeofasessionoptimalentriesareLondonopen,NY
open,Londonclose
d. Wantbiasconfluenceondaily/4hror4hr/1hrorall3regardlesstradewithbiasdirectionof
4hr
e. OptimalTradeEntry(OTE)
i. Drawfibfromswingofthedayoryesterdayhigh/lowtotodayshigh/low(canusethe
4hrfractalsasquickshowingoftheswing)
ii. Lookfortradedirectioninbiasof4hr
iii. WanttoseeconfluenceofkeyS&Rareas(listedin5)betweenthe6279%fibzone
iv. Doublecheckpivottradezone
f. DealersSpreadIncludethedealerspreadwhendeterminingthepricetoenteratradeto
ensureitiscovered?
g. TradeIntoOpposingDirectionEntertradesonPAthatisoppositetheanticipatedprice
direction.Enterlongondowncandles.Entershortonupcandles.
3. TakeProfitGoals
h. UsingthefibtodrawOTE,127and168%aregoodTPzones
i. UsingthefibtodrawOTE,movethefibsothatthe50%isatthetopoftheswing(iflong)and
use100%asTP
j. AnyconfluenceofmajorS&Rareasthatmightexist,notnecessarilyaTPareabutsomething
tomonitor
4. ExitMonitortraderiskuntiltradeisclosed
k. 3050%oftradetakenoffat30pipsintomove,remainderatultimateTP
l. Exittradeiftradebiaschangesduringtradeoranalysissuggesttradeisnolongervalid
5. StopLoss
m. SLplace1020pipsbelow/aboveswingusedforFib
n. MoveSLtoBEwhenPAtradesabove/belowthepreviousswinghigh/lowusedtodrawthe
Fib
o. Donotusetrailstops,onlymanualstops
RISKMANAGEMENT
1. HandlingLosses&InevitableDrawdownsDay13
a. 2%RiskNeverriskmorethan2%pertrade.
b. CuttingRiskAtfirstloss,cut2%riskpertradeto1%riskpertrade.Ifconsecutivelosses
continue,cutriskagainto0.5%pertrade.
c. WalkingBack
i. Stayatthedecreasedrisktieruntilyoumadeback50%ofthepreviousrisklevel
drawdown.
ii. Ifyoulostat2%,stayat1%leveltillyou'vemadebackhalfofthe2%tierloss.
iii. Ifyoulostat1%,stayat0.5%leveltillyou'vemadebackhalfofthe1%tierloss.
58
TRADINGINSIDETHERANGE
1. MonthlyRangeOverview
a. DetermineMonthlyRangeMarketStructure
b. IdentifyMonthlyRangeSwings/TurningPoints
c. HighlightKeyS&RLevels
d. TradeinDirectionofthePrimary
2. WeeklyRangeOverview
a. DetermineWeeklyRangeMarketStructure
b. IdentifyWeeklyRangeSwings/TurningPoints
c. HighlightKeyS&RLevels
d. TradeinDirectionofthePrimary
e. LookforNewOTEReversalsAnticipate
3. DailyRangeOverview
a. DetermineCurrentRangeMarketStructure
b. IdentifyDailyRangeSwings/TurningPoints
c. HighlightKeyS&RLevelsMonthlyWeekly
d. TradeinDirectionoftheSwingPoint
e. LookforNewOTEReversalsAnticipate
4. AsianRange
a. NotetheInitialRangeHigh&Low
b. NarrowFocustoHigherMarketTrend
c. NoteKeyS&RLevelsOldHighs&Lows
d. TradetheDirectionofDailySwingPoint
e. AnticipateLondonStopRadeFadeIt!
5. ADR(AverageDailyRange)
a. AlignTradeExpectationto5DayADR
b. OnceTradeEntryStalkADRObjectives
c. BlendTimeofDay&PriceTheory
d. AnticipateProfitObjectivesNearADR
e. Expect15:0016:00GMTandADRConvergences&OtherTechnicalstoConfirm
ProfitTakingObjectives
6. EntryConcept
a. FocusonOptimalSetups
b. ApplyPowerofThree&RangeExpansion
c. IfBullish,anticipateBankstoSELLfirst
d. IfBearish,anticipateBankstoRallyupfirst
e. ExplaintheRaidsofOldSwings&ExpectPatternstoFormtoConfirmEntries(High
ProbabilityTradingPatternsVideo)
7. ProfitObjective
a. IfADRis100pips,takeprofitat80pips
b. AlwayslooktoScaleOutofTrades
c. ADRdoesNOThavetobefulfilled
d. DevelopProfessionalMindsetinTargeting(PreservationofCapitalisgoal#`1)
e. LeaveGreedoutoftheProcess
8. ProfessionalOrderPlacement
a. TryKeepingEntry&ExittoLimitOrders
b. MarketOrdersareLastDitchProtection
c. DoNottrytogetthebestEntryPrice
d. DoNottrytoexitattheveryHighorLow
e. AlwaysFactortheSpreadPlus23pips
59
60
PETERSICTVIDEONOTES
SMTDivergence(SmartMoneyTool):
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at57:50mins)whichpair,weakersister
InnerCircleTrader11/04/12YouTube(at24:54mins)
InnerCircleTrader'sMarketReview06/24/12YouTube(at30:30mins)withTurtleSoup
InnerCircleTrader'sMarketReview06/01/12YouTube(at17:40mins,and20:10mins)
InnerCircleTrader'sMarketReview07/15/12YouTube(at48:00mins)confirmsbearflag
InnerCircleTrader'sPTC09/14/12YouTube(at9:00mins)
SeasonalTendencies:
InnerCircleTrader'sMarketReview07/15/12YouTube(at8:00mins)
InnerCircleTrader'sPTC09/14/12YouTube(at1:50min)referencetoMooreResearch
InnerCircleTrader'sPTC09/08/12YouTube(at23:00mins)everythingtradablehasaseasonaltendency
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at53:00mins)
MarketStructure/Flow:
InnerCircleTrader'sMarketReview06/24/12YouTube(at30:00mins)
InnerCircleTrader'sPTC09/14/12YouTube(at6:00mins,and9:50mins)breakandsuspectrally
InnerCircleTrader'sPTC10/23/12YouTube(at18:30mins)
InnerCircleTrader'sPTC10/24/12YouTube(at7:00mins)
InnerCircleTrader'sPTC10/25/12YouTube(at11:00mins)
InnerCircleTrader11/04/12YouTube(at14:35mins,and22:20mins)
InnerCircleTrader'sTradePlanDevelopmentPart6YouTube(at27:30mins)
InnerCircleTrader11/07/12YouTube(at11:20mins)
InnerCircleTrader11/12/12YouTube(at12:30mins)breakandsuspectrally
InnerCircleTrader11/28/12YouTube(at21:00mins)breakwithswingtrade
InnerCircleTrader'sTPDSPart7YouTube(at25:00mins)
DivergenceintheBondMarketandUSDXTriadDivergence:
InnerCircleTrader'sTradePlanDevelopmentSeriesPart1YouTube(at26:00mins,39:50mins,and45:00mins)
InnerCircleTrader'sTradePlanDevelopmentPart3YouTube(at2:00mins)
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at25:00mins)
InnerCircleTrader'sMarketReview07/26/12YouTube(at19:00mins)
InnerCircleTrader'sMarketReview07/29/12YouTube(at20:00mins)
InnerCircleTrader11/07/12YouTube(at10:50mins)
InnerCircleTrader'sMarketReview09/16/12YouTube(at10:20mins)
InnerCircleTrader'sPTC10/23/12YouTube(at2:50mins)
InnerCircleTrader'sPTC10/24/12YouTube(at12:00mins)
InnerCircleTrader11/01/12YouTube(at7:50mins)
InnerCircleTrader'sPTC09/04/12YouTube(at4:50mins)checkthisdateshoulditbe11/07/12?
SessionHigh&Lowsimportanceof:
InnerCircleTradersPTC09/17/12YouTube(at7:50mins)
FractalAnalysis:
InnerCircleTrader'sTradePlanDevelopmentPart3YouTube(at34:00mins)
Turningpointsinmarket:
InnerCircleTrader'sTradePlanDevelopmentPart3YouTube(at40:30mins)
Bias:
InnerCircleTraderMarketMappingYouTube(entirevideo)
InnerCircleTrader'sPTC09/24/12YouTube(at11:00mins)useofUSDX
InnerCircleTrader'sPTC10/04/12YouTube(at2:00mins)useofUSDXanalysistoachievebias
InnerCircleTrader'sPTC10/01/12YouTube(at2:50mins)
InnerCircleTrader'sMarketReview08/26/12YouTube(at51:40mins)
61
StopRaidsoftenwithJudas:
InnerCircleTrader'sPTC10/04/12YouTube(at16:20mins)natureofJudas
InnerCircleTrader11/04/12YouTube(at14:35mins,and24:50mins)withSMT
InnerCircleTradersPTC09/17/12YouTube(at37:50mins)aggressivemoveafterraid
InnerCircleTrader'sPTC09/13/12YouTube(at13:10mins)
InnerCircleTrader'sPTC09/19/12YouTube(at13:20mins)
InnerCircleTrader'sMarketReview09/30/12YouTube(at35:00mins)
InnerCircleTrader'sPTC10/01/12YouTube(at14:00minscleanareaand17:00minsstopraidbeforenews
release)
InnerCircleTrader'sPTC09/13/12YouTube(at13:10mins)
InnerCircleTrader'sMarketReview08/08/12YouTube(at12:45mins)
ICTStingerType1&Type2divergence:
HowProsUseIndicatorsInnerCircleTraderYouTube(at21:00mins)
InnerCircleTraderMarketReview03/06/12YouTube(at13:50mins)
InnerCircleTrader'sMarketReview03/26/12YouTube(at9:00mins)
InnerCircleTrader'sMarketReview07/26/12YouTube(at21:50mins)
ICTHolyGrailType2divergenceswithOTE:
ShortTermTradingInnerCircleTraderYouTube(at27:30mins)pricereaching18ema
InnerCircleTrader'sMarketReview07/15/12YouTube(at29:40mins)introductiontoHolyGrail
ICTReflectionPattern:
InnerCircleTrader'sMarketReview06/16/12YouTube(at3:00mins)introductiontoreflectionpattern
InnerCircleTrader11/08/12PTCYouTube(at2:00minspricehoveringatresistanceat8:40minshowtovary)
InnerCircleTrader11/07/12YouTube(at12:50mins)
InnerCircleTraderPTC09/06/12YouTube(at11:30mins)withlimitorder
InnerCircleTrader'sPTC10/04/12YouTube(at20:50mins)withlimitorder
InnerCircleTrader'sMarketReview07/15/12YouTube(at21:00mins)goodviewofP/A
InnerCircleTrader11/18/12YouTube(at18:00mins)livetradeinaction
InnerCircleTrader12/02/12YouTube(at3:00mins,and9:00mins)onUSDX
TurtleSoup:
InnerCircleTrader'sMarketReview06/24/12YouTube(at18:00mins,and36:00mins)howoftenICTuses
InnerCircleTrader'sMarketReview08/13/12YouTube(at11:15mins)
InnerCircleTrader11/04/12YouTube(at20:45mins)
ADR(avgdailyrange)useof.
InnerCircleTrader'sTPDSPart7YouTube(at1:05mins)useoffibonADR
InnerCircleTrader'sMarketReview07/26/12YouTube(at12:40mins,and18:25mins)
InnerCircleTraderPTC09/06/12YouTube(at15:00mins)
InnerCircleTradersPTC09/17/12YouTube(at14:00mins,and18:00mins)
InnerCircleTrader'sMarketReview08/26/12YouTube(at36:00mins)
TheLondonCloseTacticInnerCircleTraderYouTube(at5:30mins)
ICTsuseofthe3barswingpoint:
InnerCircleTrader'sMarketReview04/29/12YouTube(at4:20mins)
InnerCircleTrader'sMarketReview07/26/12YouTube(at9:50mins)
InnerCircleTrader'sMarketReview08/26/12YouTube(at34:30mins)
InnerCircleTrader'sPTC10/04/12YouTube(at2:00mins)useofUSDXanalysistoachievebiaswith3barswing
InnerCircleTrader11/04/12YouTube(at19:00mins)
ShortTermTradingInnerCircleTraderYouTube(at14:20mins)
ShortTermTradingInnerCircleTraderYouTube(at30:30mins)forICT,theholygrailofintradaytrading
InnerCircleTraderFibonacciConceptsInForexYouTube(at9:00mins)howtotradethe3barpattern
COTDataexamplesofuse:
InnerCircleTrader'sMarketReview07/22/12YouTube(at16:00mins)callingtheEurolow2daysinadvance
exampleofthepowerofCOTdata
62
InnerCircleTrader'sPTC09/08/12YouTube(at18:50mins)
InnerCircleTrader'sPTC09/14/12YouTube(at6:30mins)
OpenInteresthowtoread:
InnerCircleTrader'sPTC09/08/12YouTube(entirevideo)includesCOTandvolume
InnerCircleTrader12/06/12YouTube(at1:00min)endofcontracteffectonOI
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at38:00mins,and59:00mins)settingup
Barchart.com
InnerCircleTrader'sPTC09/14/12YouTube(at7:30mins)OIincreaseatresistanceasellsignal
InnerCircleTrader'sMarketReview09/16/12YouTube(at8:00mins)
Trendcontinuationprofile:
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at1:07mins)
SwingpointpowerfulP.A.:
InnerCircleTrader'sMarketReview07/26/12YouTube(at8:00mins)
AscendingTriangle:
InnerCircleTraderMarketReview06/12/12YouTube(at6:00mins)
SymmetricalTrianglewindupbelowresistance:
InnerCircleTrader'sPTC10/04/12YouTube(at6:00mins)
InnerCircleTrader'sPTC10/25/12YouTube(at15:00mins)
MarketReversalInAction:
InnerCircleTrader10/26/12YouTube(at15:00mins)
InnerCircleTrader'sPTC10/04/12YouTube(at17:15mins)includesPowerofThree
BabypipsCalendarhowtosetup:
InnerCircleTrader'sMarketReview07/22/12YouTube(at3:40mins)
08/06/12
RangingMarkettips3mins&14minsoscillators&pivots
InnerCircleTrader'sMarketReview08/06/12YouTube
Seek&DestroyZDayexamples:
09/17/124.00mins
InnerCircleTradersPTC09/17/12YouTube
09/19/124.30mins
7.20minsUseofTradersTrinity
12.15minsHi/LotakenoutineitherL.O.orNYOaggressivemoveahead
13.00minsZDaycanbemorethanoneday
13.50minsSearch&Destroyequilibrium
InnerCircleTrader'sPTC09/19/12YouTube
30/09/1229.50minsSeek&destroynotlimitedtoonetimeframe
InnerCircleTrader'sMarketReview09/30/12YouTube
MarketMappingvideoat17.10notlimitedtooneday
InnerCircleTraderMarketMappingYouTube
Aimingfortheweeklyrange:
08/26/12(allofvideoisvalid)
11.30howtoreadfibreweekly
13.30weeklyroadmap
26.20previousweekshi/lozoomedinweekly
63
34.30MShowtoanticipaterangeexpansion
48.40Howtobuythedipsinabullmarket
49.00Longcable&shortfibreatsametime
51.40Weeklycharthowtoapplyfordailybias
InnerCircleTrader'sMarketReview08/26/12YouTube
09/09/128.00minsuseofpreviousweekshi/loforentrybyICT
InnerCircleTradersMarketReview09/09/12YouTube
09/30/12at28.00minswhennottotryforweeklyrange
InnerCircleTrader'sMarketReview09/30/12YouTube
11/18/12Tradecapturingweeklyrange
MS/MFbreakdownat18.00mins
InnerCircleTrader11/18/12YouTube
Thelast3dayshi/loimportant:
09/13/1208.40mins
InnerCircleTrader'sPTC09/13/12YouTube
FibConceptsvideoat2.10mins
InnerCircleTraderFibonacciConceptsInForexYouTube
Howtoexpectabounce:
09/16/12at4.00mins
InnerCircleTrader'sMarketReview09/16/12YouTube
SessionHi/LoOTEnextday:
09/17/12at19.00mins
InnerCircleTradersPTC09/17/12YouTube
USDXatequilibriumonbothHTFandLTF:
MeansintradaytradingforICT09/30/121.00min
InnerCircleTrader'sMarketReview09/30/12YouTube
SlopingTrendLine:
09/24/12at08.00mins
InnerCircleTrader'sPTC09/24/12YouTube
09/30/12at09.00mins
InnerCircleTrader'sMarketReview09/30/12YouTube
Trinityanduseof:
08/08/12at09.00mins
InnerCircleTrader'sMarketReview08/08/12YouTube
08/13/12at11.15Buy/SellwithTrinity
InnerCircleTrader'sMarketReview08/13/12YouTube
OTE(Hidden)(FibFROMknowns/rlineorbig/midfigure:
10/23/1213.00and20.00mins
InnerCircleTrader'sPTC10/23/12YouTube
10/25/12at8.00mins
InnerCircleTrader'sPTC10/25/12YouTube
11/04/12at8.15minsand19.40mins
InnerCircleTrader11/04/12YouTube
11/12/12at11.15mins
InnerCircleTrader11/12/12YouTube
08/04/12at8.00minsfroms/rline
InnerCircleTrader'sMarketReview08/04/12YouTube
64
12/06/12at32mins
InnerCircleTrader12/06/12YouTube
MACDDivergenceUsuallyStochs10,3,3:
07/22/12at59.40
InnerCircleTrader'sMarketReview07/22/12YouTube
12/06/12at27.00mins
InnerCircleTrader12/06/12YouTube
ICTToolswhentouse:
11/04/12at13.00mins
InnerCircleTrader11/04/12YouTube
Pivotsanduseof:
09/25/124.15minsand13.10mins
InnerCircleTrader'sPTC09/25/12YouTube
10/04/12at07.50mins4pivotsfulfilled
InnerCircleTrader'sPTC10/04/12YouTube
TPDSPart411.30mins
Useofmonthlypivotson4hrchart
InnerCircleTrader'sTradePlanDevelopmentPart4YouTube
RangeExpansion:
07/26/12at11.50mins
InnerCircleTrader'sMarketReview07/26/12YouTube
SwingTrading:
06/01/12at07.00mins
InnerCircleTrader'sMarketReview06/01/12YouTube
09/10/12at07.20minstrailingstops17.00mins
InnerCircleTrader'sPTC09/10/12YouTube
09/30/12at39.00minsOTEwithinOTE
InnerCircleTrader'sMarketReview09/30/12YouTube
MarketMappingVideoat42.20mins
InnerCircleTraderMarketMappingYouTube
Howtocutlosses&letprofitsrun:
ShortTermTradingat19.00howtotrailastop
ShortTermTradingInnerCircleTraderYouTube
HowtolastinForex:
ShortTermTradingat43.40mins
ShortTermTradingInnerCircleTraderYouTube
65
ICTTERMSANDABBREVIATIONS
Certainwordsandphrases,below,areitalicizedtoindicatethattheyaredefinedseparately,elsewhereintheGlossary.In
thefollowingdefinitions,twoabbreviationsareusedfrequently:i.e.,meaning"thatis"ande.g.,meaning"forexample".
A
accumulationsmartmoneybuyingeither(1)toenterlongpositions,or(2)tocovershortpositions,atornearaswing
low(i.e.,smartmoney"buyinglow")
AD(orA/D)accumulationand/ordistribution
ADR(seeaveragedailyrange)
AKZ(seeAsianKillZone)
anticipatorytradeanalysisphasetopdownanalysis,phase2:seasonaltendencies,SMTdivergences(yields,USDX,
etc.),COTreport,andkeyS/Rlevels
AsianKillZonenominally8am12pmTokyotime(thistimeperiodmaybeexpandedatthediscretionofthetrader)
thisisoneof4killzones
Asianrangethistermmayreferto(1)the9am2pmTokyotimeperiod,(2)theHLpricerangewithinthatperiod,or
(3)priceactionwithinthatHLrange
Asiansession9am7pmTokyotime(alowvolumetradingsession,typicallycharacterizedbypriceconsolidation
withinarestrictedrange)
ATR(seeaveragetruerange)
AUAUD/USDpair
AussienicknameoftheAUD/USDpair
averagedailyrange(ADR)theaverageofthemostrecentdailyHLrangestypically,thelast5dailyHLrangesare
averagedtoyieldtheADRforday6
averagetruerange(ATR)dailyATRissimilartoaveragedailyrange(ADR),exceptthatATRaccountsforpricegaps
(e.g.,Sundaygaps),butADRdoesnot
B
banks(or"bigbanks")toptierinvestmentbanks,participantsintheinterbanknetwork,engagedinhighvolume
currencytradingseelistonpage4
bazooka(orICTbazooka)Michaelsometimesreferstoastandardtype2oscillatordivergenceasa"bazooka",to
contrastitwiththemorepowerfulstinger
BE(seebreakeven)
bearflagafairlytight,fairlyshortdurationconsolidationpatternformedatthebottomofasharpdownmove,marking
apauseinthedownmove
bias(seedirectionalbias)
bigfigure(seefigure)
breakeventhepriceatwhichclosingaposition(eithermanually,orbybeingstoppedout)resultsinzeroprofitand
zeroloss
BSTBritishSummerTime(BST=GMT+1),thetimezoneintheU.K.andIrelandbetweenMarchandOctobersee
Londontime
bullflagafairlytight,fairlyshortdurationconsolidationpatternformedatthetopofasharpupmove,markinga
pauseintheupmove
buyprogramatrendingmarketprofileinwhichthedirectionalbiasisup(bullish),andtradesinthedirectionofthe
trendarelong(buys)
buyzonegiveneither(1)aHTFbullishbias,or(2)arangingmarket,abuyzoneisthepricerangebelowthepivot(P),
orbelowtheTTfairvaluezone
C
cableoneofthenicknamesoftheGBP/USDpair
centralbanktheentityresponsibleforoverseeingthemonetarysystemofanation,orgroupofnationsseeliston
page4
CFTC(seeCommodityFuturesTradingCommission)
ChrisLoriathlete,fundmanager,Forextrader,andteacher/mentoroftenmentionedpositivelybyMichael
CityofLondon(orTheCity,orTheSquareMile)thefinancialdistrictinLondon
66
classicAsiansessionbuysignalasignaltogolongafter(1)alateNYsessionpricedecline,and(2)anAsiansession
pricebounceoffakeysupportlevel
classicAsiansessionsellsignalasignaltogoshortafter(1)alateNYsessionpricerise,and(2)anAsiansessionprice
bounceoffakeyresistancelevel
coilexpansionpatternaconsolidationpattern(thecoil)whichisfollowedbyabreakout(theexpansion)whoseextent
dependsonthedimensionsofthecoil
commercialslarge(futures/options)hedgerswhosepositionsizesrequirereportingtotheCFTCtheirnet(aggregate)
positionappearsintheCOTreport
CommitmentofTraders(report)weeklyCFTCreportonpositionsheldby3classesoftradersinindividualfuturesand
optionscontracts(incl.currencies)
CommodityFuturesTradingCommissionU.S.regulatorofcommodityfuturesandspotForextheCFTCcompilesand
publishestheCOTreport
confluenceoccurrenceoftwoormoresignificanttechnicallevels(e.g.,apivotlevelandanOTE)atthesame(or
nearlythesame)priceonachart
consolidationatimeperiod(consolidationperiod)inwhichpricemovesinanarrowrange(consolidationrange),
typicallyboundedbyshorttermS/Rlevels
correlatedpairstwocurrencypairswhosepricesmoveroughlyintandem(example:EUR/USDandGBP/USD
anotherexample:AUD/USDandNZD/USD)
COT(orCOTreport)(seeCommitmentofTradersreport)
CRBIndexCommodityResearchBureauIndexof19commodities(agriculturals,metals,oil&gas)theIndexisused
asoneelementofintermarketanalysis
D
daytrade(orintradaytrade)atradeinwhichtheentryandexitareexpectedtooccurwithinthesametradingday,and
theprofittargetis30100pips
DD(seedrawdown)
demoapracticeplatform,practiceaccount,orpracticetrade,etc.
directionalbiascurrentdirectionofpricemovement(asdeterminedonHTF's),deemedtobethetradeabletrend(see
buyprogram,andsellprogram)
distributionsmartmoneysellingeither(1)toentershortpositions,or(2)toliquidatelongpositions,atornearaswing
high(i.e.,smartmoney"sellinghigh")
dojiacandlestickhavingaverysmallrealbody(ornorealbody),withupperand/orlowerwicksofanylengthitoften
indicatesaswinghighorswinglow
doubletapgivenanOTEretracementfromaSH(orSL),adoubletapinvolvestaking1stprofitattheSH(orSL),and
2ndprofitatahigherprofittarget
drawdownameasureofaccountdepletionduetoaccumulatedlosses
dumbmoney(seestreetmoney)
E
EDTEasternDaylightTime(EDT=GMT4),thetimezoneintheeasternU.S.andCanadabetweenMarchand
NovemberseeNewYorktime
EJEUR/JPYpair
EMA(seeexponentialmovingaverage)
equitymanagement(seeriskmanagement)
ESTEasternStandardTime(EST=GMT5),thetimezoneintheeasternU.S.andCanadabetweenNovemberand
MarchseeNewYorktime
ETEasternTimeintheU.S.andCanada(NewYorktime)ETiseitherESTorEDT,dependingontimeofyear
EUEUR/USDpair
europropernameoftheEuropeanUnionsinglecurrencyalso,oneofthenicknamesoftheEUR/USDpair
exponentialmovingaverageamovingaverageofdatafromnnumberofperiods,weightedexponentiallytogive
greaterweighttomorerecentdata
F
fairvaluethemedianpriceinapreviousHLpricerange(e.g.,apreviousDailypricerange,oraTrader'sTrinityprice
range)seenoman'sland
fibshorthandforFibonaccitool,orFibonaccilevel(note:incommonusage,Fibonacciissometimescapitalized)
FibonacciextensioncontinuationofaFibonacciretracementscale,beyondthe100%retracementlevel,typicallyto
127.2%,161.8%,200%,etc.
67
Fibonacciretracementascaleformeasuringretracementsaspercentagesofapricerange,typically0%,23.6%,38.2%,
50%,61.8%,76.4%and100%
Fibonaccitoolapricemeasuringtoolwhichdividesapricerangeintopercentages(seeFibonacciretracement,and
Fibonacciextension)
fiberoneofthenicknamesoftheEUR/USDpair
figshorthandforfigure
figurepriceoftheformx.xx00(alsocalledfig,bigfigure,fullfigure,and00's)
fractal(def.1)oneofthemanypricepatternswhichrepeatthemselvesinallmarkets,onalltimeframesfrom1minute
(orlower)to1Month(orhigher)
fractal(def.2)apatternof5consecutivecandles,inwhichthecentercandlehasthehighesthighofthe5candles,or
thelowestlowofthe5candles
fractalhighina5candlefractalpattern,ifthecentercandlehasthehighesthighofthe5candles,thenthathighisa
fractalhigh
fractallowina5candlefractalpattern,ifthecentercandlehasthelowestlowofthe5candles,thenthatlowisa
fractallow
fundamentalanalysisanalysisofmacroeconomicfactors(interestrates,inflation,GDP,unemployment,etc.)which
influencelongtermcurrencytrends
G
generalmarketanalysisphasetopdownanalysis,phase1:analysisofinterestrates,USDX,Treasuries,stockindices,
CRBIndex,andgoldandoil
GJGBP/JPYpair
GLGTGoodLuckandGoodTrading(signatureusedbyMichael,andothers)
GMTGreenwichMeanTime,theworld'scommercialreferencetimezone,towhichallothertimezonesarerelatedby
"offsets"(e.g.,GMT1,GMT+1,etc.)
GMTpivotsseeLondonpivots
GUGBP/USDpair
H
H&S(orHS,orHS,orH/S)(seeheadandshoulderstop)
H1,H4,D1,etc.charttimeframes(1hourchart,4hourchart,Dailychart,etc.)expandedlist:m1,m5,m15,m30,
H1,H2,H3,H4,H6,H8,D1,W1,M1
hammeracandlestick(ofeithercolor)havingashortrealbody,averyshortupperwick,andalonglowerwickit
typicallyoccursfollowingadownmove
hangingmanacandlestickidenticaltoahammer,exceptthatittypicallyoccursfollowinganupmove
headandshoulderstopanITH(the"head")precededby,andfollowedby,alowerITHoraLTH(the"head")
precededby,andfollowedby,alowerLTH
HHhigherhigh
hiddendivergencetrendfollowingdivergence(seetype2divergence)
hiddenOTEinastrongdowntrend,apricemovefromoneSTLtothenextSTLmayresultina"hidden"OTE
retracement(or,inastronguptrend,useSTH's)
highprobabilitypricepatternsselectedcandlestickpatternsandchartpatternswhichreliablysignalpricedirection
seelistonpage4
highertimeframeformostdaytradersandshorttermtraders,HTFmeansatimeframehigherthan1hour(e.g.,
4hour,Daily,Weekly,orMonthly)
HLhigherlow
HLhighlow(orhighminuslow)referringtoapricerange(e.g.,DailyHLrange,WeeklyHLrange,etc.)
HolyGrail(orICTgrail,orICTholygrail)anOTE(eitherbuyorsell)confirmedbyatype2(hidden,trendfollowing)
oscillatordivergence
HTF(seehighertimeframe)
I
ICTInnerCircleTrader(mayrefertoMichaelHuddleston,hismethodology,histools,hisforumthreads,orhisvideos)
Indi(seeindicator)
indicatoraderivativeofrecentpricedata,computedbyalgorithm,whichpurportstorevealcertaintrendsortendencies
regardingfutureprices
insidedayadailycandlewithalowerhigh,andahigherlow,thanthepreviousdailycandleusuallyitsignalsatrend
continuation
68
institutionallevel(orinstitutionalpricelevel)priceoftheformx.xx20(the20level),orx.xx80(the80level)
interbanknetworkagroupoftoptierbanks,electronicallylinkedthroughEBSorReutersforcurrencytradingamong
themselvesandwithmajorclients
intermarketanalysisanalysisofcorrelationsbetweeninterestrates,equities,commoditiesandcurrenciesduring
conditionsofinflationordeflation
intermediatetermhighafractalhighprecededby,andfollowedby,alowerfractalhigh
intermediatetermlowafractallowprecededby,andfollowedby,ahigherfractallow
invertedheadandshouldersbottomanITL(the"head")precededby,andfollowedby,ahigherITLoraLTLpreceded
by,andfollowedby,ahigherLTL
ITH(seeintermediatetermhigh)
ITL(seeintermediatetermlow)
J
JSTJapaneseStandardTime(JST=GMT+9),thetimezone,yearround,throughoutJapanseeTokyotime
Judasswingafalsepricemove(bysmartmoney)torunstopsandlurestreetmoneytothewrongsideofthemarket,
aheadofthereal(opposite)move
K
KenRobertstradingandlifestyleguru,author,andlecturerMichaelcreditsKenRobertswiththe62%79%
retracementconcept(whichMichaelcallsOTE)
keyS/R(orKSR)(seekeysupportandresistancelevels)
keysupportandresistancelevelsS/RlevelsidentifiedonHTFcharts(H4,D1,W1),andthentransferredtotheLTF
chartsbeinganalyzedortraded
killzoneoneof4highprobabilitytimeperiods(typically2hourseach)inwhichtofindtradesetupsusingICTtools
seeAKZ,LOKZ,NYOKZ,andLCKZ
KiwinicknameoftheNZD/USDpair
KZ(seekillzone)
L
largerangedayadaywhoseHLpricerange(theday'shighminustheday'slow)substantiallyexceedstheday'sADR
largespecslarge(futures/options)speculatorswhosepositionsizesrequirereportingtotheCFTCtheirnet(aggregate)
positionappearsintheCOTreport
LarryWilliamswellknownmillionairecommoditytrader,author,andlecturerMichaelreferstoLarryWilliamsas
oneofhismentors
LC(seeLondonClose)
LCKZ(seeLondonCloseKillZone)
LHlowerhigh
LLlowerlow
L/NYoverlapLondon/NewYorkoverlap(bothmarketsopen)1pm5pmLondontime,8amnoon,NewYorktimesee
LondonsessionandNewYorksession
LO(seeLondonOpen)
LOKZ(seeLondonOpenKillZone)
LondonClose5pmLondontime,theendofthenormalbusinessdayinLondon
LondonCloseKillZonenominally4pm6pmLondontime(thistimeperiodmaybeexpandedatthediscretionofthe
trader)thisisoneof4killzones
LondonOpen8amLondontime,thebeginningofthenormalbusinessdayinLondon
LondonOpenKillZonenominally7am9amLondontime(thistimeperiodmaybeexpandedatthediscretionofthe
trader)thisisoneof4killzones
LondonpivotsdailypivotlevelsbasedonmidnightLondontimeasthestartofeachForextradingday
Londonsession8am5pmLondontimethefinal4hoursofthissession(theL/NYoverlap)aretypicallythe
highestvolumeperiodofthetradingday
LondontimeGMT(OctoberMarch),orBST=GMT+1(MarchOctober)Note:MichaelalwaysreferstoLondontime
asGMT,regardlessoftimeofyear
longtermhighanintermediatetermhighprecededby,andfollowedby,alowerintermediatetermhigh
longtermlowanintermediatetermlowprecededby,andfollowedby,ahigherintermediatetermlow
loonienicknameoftheUSD/CADpair
lowertimeframeformostdaytradersandshorttermtraders,LTFmeansatimeframelowerthan1hour(e.g.,
30minute,15minute,or5minute)
69
LTF(seelowertimeframe)
LTH(seelongtermhigh)
LTL(seelongtermlow)
M
MA(orSMA)(seemovingaverage)
MACDamomentumindicatorwhichtracksthedifferencebetweentwoEMA's,comparesthatdifferencetoathird
EMA,andshowstheresultasahistogram
majormarketanalysis(MMA)(seeintermarketanalysis)
marketflowmarketdirection(trend)indicatedbythemostrecentbreakofafractalhighorlowonaHTFchart(H1,
H4,D1)comparetomarketstructure
marketmakeratoptierbank,amemberoftheinterbanknetwork(wherethecurrencymarketisliterally"made")see
banks,andsmartmoney
marketmakerprofile
marketprofileoneof4currentmarketenvironments:consolidationrangeprofile,breakout(realorfalse)profile,
trendingprofile,andreversalprofile
marketstructureananalysismethodbasedonpatternsofSTH's,STL's,ITH's,ITL's,LTH'sandLTL'sonhighertime
frame(HTF)charts(H4,D1,andW1)
MF(seemarketflow)
MichaelMichaelHuddleston(screennameInnerCircleTrader),veteranAmericanstock/commodity/currencytrader,
contributor/teacherontheBabypipssite
midfig(seemidfigure)
midfigurepriceoftheformx.xx50(the50level)
MillionaireTraders'GuildMichael'sthreadonthe"ShowMetheMoneyDaytrading"forum,emphasizinga
planbasedapproachtousingtheICTtools
MMdef.1(seemarketmaker)
MMdef.2(seemoneymanagement)
MMAmajormarketanalysis(seeintermarketanalysis)
MMP(seemarketmakerprofile)
momentumindicatoratechnicalindicator(e.g.,MACD)whichmeasuresthestrengthofaprevailingtrenditcanbe
usedinsteadofapriceoscillator
moneymanagementtheproperuse(inplanningatrade)ofpositionsize,stoploss,andR/R(reward/risk)ratioinorder
tolimitlossesandpreservecapital
movingaverage(orsimplemovingaverage)theaverageofthedatafromthemostrecentnnumberofperiods,not
weighted(comparetoEMA)
MR1,MR2,etc.intermediateresistancelevels(computedfrompivotpointformulas)seeICTPivotPointFormulas
onpage4
MS(seemarketstructure)
MS1,MS2,etc.intermediatesupportlevels(computedfrompivotpointformulas)seeICTPivotPointFormulason
page4
MT4aretailtradingplatform,licensedworldwidetobrokers,popularforitsMQL4scriptinglanguageallowing
creationofEA's,customindicators,andscripts
MTG(seeMillionaireTraders'Guild)
N
negativelycorrelatedpairstwocurrencypairswhosepricesmove(roughly)inoppositedirections(example:
EUR/USDandUSD/CHF)
nestedOTEanOTEwithinanOTEasmaller(LTF)priceswingwithanOTEretracement,nestedwithinalarger
(HTF)priceswingwithits(larger)OTE
NewYorkOpen8amNewYorktime,thebeginningofthenormalbusinessdayinNewYork
NewYorkOpenKillZonenominally7am9amNewYorktime(thistimeperiodmaybeexpandedatthediscretionof
thetrader)thisisoneof4killzones
NewYorkpivotsdailypivotlevelsbasedonmidnightNewYorktimeasthestartofeachForextradingday
NewYorksession8am5pmNewYorktimethefirst4hoursofthissession(theL/NYoverlap)aretypicallythe
highestvolumeperiodofthetradingday
NewYorktimeEST=GMT5(NovMarch),orEDT=GMT4(MarchNov)Note:MichaelalwaysreferstoNewYork
timeasEST,regardlessoftimeofyear
newsshorthandforscheduledeconomicdatareleases,whosereleasedates/timesareknowninadvance,andwhose
70
metricsareforecastinadvance
NFP(seeNonFarmPayrollreport)
NickVanNiceoriginatoroftheconceptofhiddendivergence(whichMichaelreferstoastype2divergence)
noman'slandonaTrader'sTrinitychart,noman'slandisthemiddle25%ofthe(previous)HLpricerangethe
centerofthiszoneisthefairvalueprice
NonFarmPayroll(report)U.S.employmentreport(oftenamarketmover),releasedonthefirstFridayofeachmonth
bytheU.S.DepartmentofLabor
NYO(seeNewYorkOpen)
NYOKZ(seeNewYorkOpenKillZone)
O
OB/OSoverboughtoroversold(thistermusuallyreferstoreadingsgeneratedbyapriceoscillator)
OHLC(orOHLC)Open,High,LowandClose(the4priceswhicharedisplayedgraphicallyoneachcandle,oreach
pricebar)
OI(seeopeninterest)
OneshotonekillICTsnipertactic:Lieinwait(forasetup),takeaim(atthesetup),pullthetrigger(enterthetrade),
nailthetarget(collectpips)
openinterestthenumberofopencontracts(thosenotyetoffsetordelivered)inaspecificcommodity/deliverymonth
oneofthemetricsinaCOTreport
opentradereactionphasetopdownanalysis,phase4:marketfailuretomove,pricerejectionatS/R,newsreleases,
globalevents,and/ortraderissues
optimaltradeentryentryzonebetweenthe62%and79%retracementlevelsnotethat62%and79%arenot
standardfibretracementlevels
OTE(seeoptimaltradeentry)
oscillatoratechnicalindicator(e.g.,RSI,stochastics,orW%R)whichplotspriceasapercentage(from0%to100%)
ofsomevariable
outsidedaywithadowncloseanengulfingDailycandlewithalowercloseifconfirmedbyanoversoldindicator,it
signalsareversaltotheupside
overboughtapricewhichappearstohavemovedtoofarcountertoabearishbias(asindicatedbypivots,Trader's
Trinity,oranyofvariousoscillators)
oversoldapricewhichappearstohavemovedtoofarcountertoabullishbias(asindicatedbypivots,Trader'sTrinity,
oranyofvariousoscillators)
P
P(orPP,orCP)pivot,orpivotpoint,orcentralpivot(computedfrompivotpointformulas)seeICTPivotPoint
Formulasonpage4
PA(seepriceaction)
Pacmanslangtermreferringtosmartmoney"gobblingup"stops(likePacMangobblinguppacdotsinthe1980's
arcadegame)
PB&Jpeanutbutterandjelly
PerfChartPerformanceChart(StockCharts.com),tracks%changeinpriceoveraselectedtimeperiod,startingfroma
0%baselineseelistonpage4
pinshorthandforpinbar
pinbaracandlestick,ofeithercolor,havingalongupperorlowerwick(orboth),signalingmarket"hesitation"inthe
directionofthelongwick
positiontradeatradeinwhichtheentryandexitareexpectedtooccurweeks,months(orevenyears)apart,andthe
profittargetis1,000pipsormore
poundinformalnameoftheU.K.currency(propername:poundsterling)also,oneofthenicknamesoftheGBP/USD
pair
PowerofThreeentryimmediatelyafterthecloseofathreebarhigh(orlow)atakeyresistance(orsupport)levelona
Dailychart(advancedtechnique)
priceactionamethodofanalyzingand/ortradinganymarket,basedonlyonpricepatternsandsimplepricemeasuring
tools,butexcludingindicators
profitreleasephaseinatypicalaccumulation/distributionscenario,thisisthepricerangebetweentheaccumulation
phaseandthedistributionphase
ProTraders'CluboneofMichael'sthreadsonthe"NewbieIsland"forum,devotedtodailyreviewsandICTtool
application
PTC(seeProTraders'Club)
71
pullafibuseaFibonaccitooltodelineateapriceswing(frominitialpricetofinalprice)showingFibonacci
retracementlevelsandFibonacciextensionlevels
R
R1,R2,R3,etc.resistancelevels(computedfrompivotpointformulas)seeICTPivotPointFormulasonpage4
rangecontractionthetendencyforaseriesoflargerangedaystobefollowedbyoneormoresmallrangedays
rangeexpansionthetendencyforaseriesofsmallrangedaystobefollowedbyoneormorelargerangedays
reflectionpatternapatterninwhichpriceretracesbeyondtheOTEzone,the100%fibretracement,andthe127%fib
extension,creatinga"reverse"OTE
regulardivergencetrendreversaldivergence(seetype1divergence)
reversalprofileanearlydaypriceswing(upordown),takingoutakeyDailyorWeeklyS/Rlevel,followedbya
reversalandalargerlatedaypriceswing
riptidereversalsimilartoaturtlesoupreversal,butbasedonafalsebreakoutofaSHorSLwhichformedmorethan
20periodsprior
riskmanagement(orequitymanagement)thecombinationofmoneymanagementplustrademanagement
riskoffwidespreadtraderattitude(orsentiment)inwhichhighriskpositionsareabandonedinfavorof
lowerrisklowerreturnsafehavenpositions
riskonwidespreadtraderattitude(orsentiment)inwhichlowrisksafehavenpositionsareabandonedinfavorof
higherriskhigherreturnpositions
RR(orR/R,orR:R)risk/rewardratio(e.g.,SL/TP),orreward/riskratio(e.g.,TP/SL),dependingontheorderinwhich
thenumbersarestated
RRtracksrailroadtracks(referstotwo,long,sidebysidecandlebodies,withoppositecolors,denotinganengineered
pricereversal)
RSI(relativestrengthindex)oneof3priceoscillators(RSI,stochastics,andW%R)includedintheICTtoolsetuse
oneofthese(orMACD)
S
S1,S2,S3,etc.supportlevels(computedfrompivotpointformulas)seeICTPivotPointFormulasonpage4
scalp(orscalpingtrade)atradeinwhichtheentryandexitareexpectedtooccursecondsorminutesapart,andthe
profittargetis30pipsorless
searchanddestroyasmartmoneytactic(whichsavvyretailtraderscanimitate)ofsystematicallygunningstopsabove
andbelowaconsolidationrange
seasonaltendenciestendenciesofmanymarkets(currencies,equities,commodities,bonds)tomakeLTH'sorLTL'sat
specifictimesofyear
sellprogramatrendingmarketprofileinwhichthedirectionalbiasisdown(bearish),andtradesinthedirectionofthe
trendareshort(sells)
sellzonegiveneither(1)aHTFbearishbias,or(2)arangingmarket,asellzoneisthepricerangeabovethepivot(P),
orabovetheTTfairvaluezone
sessiondailyperiodofhighvolumeForextradinginaparticularmarket,generally8am5pmlocaltime(seeAsian
sessionforanexceptiontothisrule)
SH(seeswinghigh)
shortertimeframeatimeframeshorterthanthetimeframebeingdiscussed"shortertimeframe"isnotnecessarily
synonymouswithlowertimeframe(LTF)
shorttermhighafractalhighwhichhasnotevolvedintoanITHoranLTH
shorttermlowafractallowwhichhasnotevolvedintoanITLoranLTL
shorttermtradeatradeinwhichtheentryandexitareexpectedtooccurwithin2to5tradingdays,andtheprofit
targetis100300pips
SLdef.1(seestoploss)
SLdef.2(seeswinglow)
SM(seesmartmoney)
SMAsimplemovingaverage(seemovingaverage)
smallrangedayadaywhoseHLpricerange(theday'shighminustheday'slow)fallssubstantiallyshortoftheday's
ADR
smartmoneylargebanksandcertainotherinstitutionswhichhaveinformationonresting(stopandlimit)orders
informationnotavailabletostreetmoney
SmartMoneyToolanoverlayoflinechartsof2(or3)correlatedinstruments,onwhichshorttermpricedivergences
arereadilyseenseelistonpage4
SMT(seeSmartMoneyTool)
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SMTdiv(seeSMTdivergence)
SMTdivergencedeviationfromthenormalpositiveornegativecorrelationbetween2instrumentsonanSMTchart,
signalingapotentialpricemove
sniperatrader"lyinginwait"foratradesetuptocomeintorange
S/R(orSR,orS&R)(seesupportandresistance)
sterlinginformalnameoftheU.K.currency(propername:poundsterling)also,oneofthenicknamesofthe
GBP/USDpair
STF(seeshortertimeframe)
STH(seeshorttermhigh)
STL(seeshorttermlow)
stingerinanupmove,abullishtype1divergencenestedinsideabullishtype2divergenceinadownmove,nested
bearishtype1andtype2divergences
stoch(seestochastic)
stochasticoneof3priceoscillators(stochastics,RSI,andW%R)includedintheICTtoolsetuseoneofthese(or
MACD)
stophuntapricemoveengineeredbysmartmoneyinordertotriggerstopandlimitordersrestingaboveorbelowthe
currentmarketprice
stoplossthepricelevelatwhicharestingorderhasbeenplacedtocloseapositionatalossor,theanticipatedloss,in
pips,whenthatpriceishit
stopsloosetermreferringtobuystoporbuylimitordersrestingabovethecurrentmarket,orsellstoporselllimit
ordersrestingbelowthecurrentmarket
streetmoneymarketparticipantsotherthanthesmartmoneystreetmoneyisnotprivytotheinsideinformationon
whichsmartmoneytrades
SundaygappricedifferencebetweenFriday'scloseandSunday'sopen,representingpricemovementoverthe
weekend,whiletheretailmarketwasclosed
supportandresistancesignificantlevelsbelowandabovethecurrentmarketwherepricehasreactedinthepast,and
mightdosoagaininthefuture
sweetspotthecenterofthetargetareaforanOTE,atthe70.5%retracementlevel(whichismidwaybetweenthe62%
and79%retracementlevels)
swinghighanyofthefollowing:athreebarhigh,astandard5barfractalhigh,anintermediatetermhigh(ITH),ora
longtermhigh(LTH)
swinglowanyofthefollowing:athreebarlow,astandard5barfractallow,anintermediatetermlow(ITL),ora
longtermlow(LTL)
swingpointwhenpricebreaksaswinghigh(orswinglow)forthefirsttime,thatswinghigh(orswinglow)becomesa
swingpoint
swingtradeatradeinwhichtheentryandexitareexpectedtooccuraweekormore(uptoseveralweeks)apart,and
theprofittargetis3001,000pips
SwissynicknameoftheUSD/CHFpair
T
TA(orT/A)(seetechnicalanalysis)
takeprofitthepricelevelatwhicharestingorderhasbeenplacedtocloseapositionwithaprofitor,theanticipated
profit,inpips,whenthatpriceishit
technicalanalysismarketanalysisbasedonpriceaction,withorwithouttechnicalindicators,butnotutilizing
fundamentalanalysis
TF(seetimeframe)
threebarhighatruncatedfractalhigh,containing3bars(insteadof5),withthecenterbarhavingthehighesthighof
the3bars
threebarlowatruncatedfractallow,containing3bars(insteadof5),withthecenterbarhavingthelowestlowofthe
3bars
threeIndiansclimaxreversalaseriesof3closelyspacedimpulsepricemoves(higherorlower),followedbyaprice
reversal
timeandpricetheorytheuseof(1)highertimeframes(H4,D1,W1,andM1)tofindkeyS/R,MS,andMF,and(2)
confluences(onLTF's)totimetrades
timeframeusuallyreferstoacharttimeframe,suchasa5minutechart,a4hourchart,etc.
timezoneadesignatedgeographicalareawhosetimeofdayisdeterminedinrelationtoGMTtime(orUTCtime)
example:Moscowtime=MSK=GMT+4
Tokyosession8am5pmTokyotimecomparetoAsianSession,whichincludestheTokyosessionplusthe
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(GMT+8)SingaporeandHongKongsessions
TokyotimeJST=GMT+9(yearround)Japandoesnotobservedaylightsavingtime
topdownanalysis(1)generalmarketanalysisphase,(2)anticipatorytradeanalysisphase,(3)tradeexecutionphase,
and(4)opentradereactionphase
topdownapproach(seetopdownanalysis)
TP(seetakeprofit)
TPDS(seeTradingPlanDevelopmentSeries)
tradeexecutionphasetopdownanalysis,phase3:markettone,riskonoroff,buyorsellprogram,HTFS/Rlevels,MS,
MF,timeandprice,andtradeentry
trademanagementmanagementofopentradesto(1)reducetraderisktozeroandprotectprofitsonprofitabletrades
or(2)cutlossesonlosingtrades
Trader'sTrinitychartdividingaDaily,WeeklyorMonthlyHLrangeintozones:lower25%(oversold),middle25%
(fairvalue),andupper25%(overbought)
tradingplanwrittenrulesspecifyingthepairs,sessions,timesofday,etc.,tobetradedandtheanalysismethods,
moneymanagement,etc.,tobeused
TradingPlanDevelopmentSeriesavideoseriesdetailingtheuseofriskmanagement,plusfundamental,intermarket,
technical,andtopdownanalysis
trendlineanupwardslopinglinebelowaseriesofprogressivelyhigherlowsoradownwardslopinglineabovea
seriesofprogressivelylowerhighs
triangleaconsolidationpatternboundedbyupperandlowerlineswhichconvergeatapointsomewheretotherightof
thecurrentcandle
TT(seeTrader'sTrinity)
turtlesoupasmartmoneytradeplacedcounter(opposite)toatypical"turtletrade",anticipatingafailureoftheturtle
trade(i.e.,theturtlesget"eaten")
tweezersreferstotwo,long,sidebyside,upper(orlower)candlewicks,withoppositecolors,typicallyataswing
high(orswinglow)
type1divergencepriceandoscillatordiverge,signalingaprobabletrendreversalbullish:priceLL,oscillatorHL
bearish:priceHH,oscillatorLH
type2divergencepriceandoscillatordiverge,signalingaprobabletrendcontinuationbullish:priceHL,
oscillatorLLbearish:priceLH,oscillatorHH
TZ(seetimezone)
U
UJUSD/JPYpair
U.S.DollarIndextheUSDmeasuredagainstaweightedbasketof6currencies:EUR57.6%,JPY13.6%,GBP11.9%,
CAD9.1%,SEK4.2%,andCHF3.6%
USDX(seeU.S.DollarIndex)
USDXtriaddivergence
UTCCoordinatedUniversalTimetheworld'sscientificreferencetimezone(forourpurposes,thefollowingare
equivalent:UTC=UT1=Zulutime=GMT)
W
W%R(orWilliams%R,orWilliams%Range)oneof3priceoscillators(W%R,stochastics,andRSI)includedin
theICTtoolsetuseoneofthese(orMACD)
WallStreetthefinancialdistrictinLowerManhattan(NewYork)
WhatEveryNew&OrAspiringForexTrader...StillWantsToKnowMichael's"sticky"threadonthe"NewbieIsland"
forumstartingpointforICTinstruction
whiplashlongandcatapultshorttradinglong,thenshort,whenSunday'sopengapslowerthewhiplashfillsthegap
thecatapultextendsthedownmove
whiplashshortandcatapultlongtradingshort,thenlong,whenSunday'sopengapshigherthewhiplashfillsthegap
thecatapultextendstheupmove
Y
yenpropernameoftheJapanesecurrencyalso,nicknameoftheUSD/JPYpair
Z
Zconfigurationafractal(def.1)priceconsolidationpattern,seenonalltimeframes,ofwhichtheZdayisthemost
oftenobserved
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Zdayadayofpriceconsolidationwithinadefinedrange,clearlyboundedbyS/RlevelsZdaysareoftenfollowedby
searchanddestroystophunts
NumericalItems
00'sx.xx00pricelevel(seefigure)
1.28projectionthisrulesaysthat,ifthe2mostrecentSL'swerendaysapart,thenthenextSHwillform(approx.)
1.28xndaysafterthemostrecentSH
18EMA18periodEMAtogether,the18EMAandthe40EMAcompriseamovingaveragecrossoverindicator,
usefulfordaytradingandshorttermtrading
20levelx.xx20pricelevel(seeinstitutionallevel)
40EMA40periodEMA(see18EMA,above,foranexplanationofitsuse)
50levelx.xx50pricelevel(seemidfigure)
62levelshorthandforthe62%retracementlevel(notastandardfibretracementlevel)
70levelshorthandforthe70.5%retracementlevel,whichistheOTEsweetspot(notastandardfibretracementlevel)
79levelshorthandforthe79%retracementlevel(notastandardfibretracementlevel)
80levelx.xx80pricelevel(seeinstitutionallevel)
PerfChartabbreviations(apartiallist)
$USDU.S.dollarindex(seeUSDXinthealphabeticallisting)
$XEUtheeuropricedinU.S.dollars(PHLXpricing,notspotForexpricing)
$XBPtheBritishpoundpricedinU.S.dollars(PHLXpricing,notspotForexpricing)
$XJY100yenpricedinU.S.dollars(PHLXpricing,notspotForexpricing)note:thischartistheinverseofa
standardUSD/JPYForexchart
$UST1MU.S.Treasury1monthtreasurybill
$UST1YU.S.Treasury1yeartreasurybill
$UST2YU.S.Treasury2yeartreasurynote
$UST5YU.S.Treasury5yeartreasurynote
$UST10YU.S.Treasury10yeartreasurynote
$UST30YU.S.Treasury30yeartreasurybond
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