1 | 00:00:14,639 --> 00:00:21,809 | ICT: Welcome to Lesson Seven folks in the swing trading model, this teaching is going to be teaching the keys to selecting markets that will move explosively. |
2 | 00:00:27,690 --> 00:00:38,820 | can cover the hallmarks to explosive swing trades. And the first in the list of eight things I like to look for that are going to deliver, in my opinion, the |
3 | 00:00:38,820 --> 00:00:47,370 | highest probability for explosive price moves where it's this dynamically moving one sided, you want to be in those types of moves. And obviously, as a swing |
4 | 00:00:47,370 --> 00:00:56,730 | trader, we want to focus on markets that provide these in terms of the highest probability. What we look for is market profiles that show that the major four |
5 | 00:00:56,730 --> 00:01:07,020 | asset classes that mean the interest rate markets, stocks, commodities, and currencies, they are all trying to trend. They're not held in a consolidation. |
6 | 00:01:07,230 --> 00:01:15,420 | They're not at odds with one another than conflicting. And if you get one or two of the asset classes showing willingness to trend, that gives us a really |
7 | 00:01:15,420 --> 00:01:24,120 | favorable market conditions to trade in for swing trades. It doesn't matter that all four of them are trending. We want at least to have a see at least half of |
8 | 00:01:24,120 --> 00:01:38,010 | the four or two of them, showing a profile where there's trending environments underway. intermarket analysis confluences. This is the approach that using all |
9 | 00:01:38,010 --> 00:01:48,960 | the other asset classes to justify or confirm the idea that you have as a trade are in fact, in alignment. So I'll give you an example. If we think that there's |
10 | 00:01:48,960 --> 00:01:59,280 | a bullish dollar underway, we should see commodities. Therefore, at resistance levels of close across the major sectors in the commodity markets. That means |
11 | 00:01:59,280 --> 00:02:08,100 | that we're also going to see commodities fail to make higher highs, even if they break out, there'll be false breakouts, and we'll see commodities, very easily |
12 | 00:02:08,100 --> 00:02:16,050 | breaking their lows, or failing to make a rally. Okay, all of those conditions would be there, if we're expecting to see bullish dollar, the opposite would be |
13 | 00:02:16,050 --> 00:02:23,310 | seen, if we're looking for a bearish dollar. If the dollar is expected to go lower, based on our analysis, we will be looking for commodities to have very |
14 | 00:02:23,310 --> 00:02:34,470 | little resist resistance in terms of wanting to go higher and strong support levels. Okay, so highs were going to be broken on commodities and lows are going |
15 | 00:02:34,470 --> 00:02:43,260 | to be supported and very little breakdown on commodities will be seen, that would be an idea that would support the idea of a bearish dollar. Same thing |
16 | 00:02:43,260 --> 00:02:52,620 | would be said with, you know, once we arrive at that condition for the dollar, if we're expecting dollar to be bullish, we would be looking for bear scenarios |
17 | 00:02:52,860 --> 00:03:03,570 | where like Euro dollar, Aussie dollar POUND DOLLAR, New Zealand Dollar, those parents would be at resistance, okay, and they would be breaking lows, and have |
18 | 00:03:03,600 --> 00:03:11,040 | difficulty making higher highs or if they make higher highs, there are false breakouts and they trade lower, that would be supportive of bullish dollar. The |
19 | 00:03:11,040 --> 00:03:19,560 | reverse would be said for $1 that we bearish and then it means that we will be seeing Euro dollar POUND DOLLAR New Zealand dollar Aussie dollar, those pairs |
20 | 00:03:19,560 --> 00:03:29,250 | add support. And they would not be willing to make lower lows or if they do that quickly rejected and highs and those foreign currencies would be easily traded |
21 | 00:03:29,250 --> 00:03:37,470 | through. Okay, and that would also support the idea that weak dollar third in our list is the co2 hedging program alignment. This is where we look back in the |
22 | 00:03:37,470 --> 00:03:46,740 | last 12 months on the net positions held by the commercial traders. And then we get a range over the last 12 months with the highest level was and the lowest |
23 | 00:03:46,740 --> 00:03:54,810 | level for their holdings, regardless of their net short and long. And whatever that range is we divide that in half and then we define that in terms of being |
24 | 00:03:54,810 --> 00:04:03,720 | bullish or bearish. If we are supporting the idea that foreign currencies are going to go higher and therefore the dollar index is going lower, we would |
25 | 00:04:03,720 --> 00:04:14,640 | probably see the CIT hedging program show bullishness for like Euro dollar, cable, Aussie dollar and the more you see the commercials holding net long |
26 | 00:04:14,640 --> 00:04:23,670 | positions in their hedges or their hedging program, that more likelihood you're gonna have an explosive move in your favor with a bullish foreign currency idea |
27 | 00:04:23,700 --> 00:04:34,890 | when in a weaker dollar in the reverse would be said in terms of when you're looking for a stronger dollar. You would expect to see the bearish stance in |
28 | 00:04:34,920 --> 00:04:45,030 | hedging done by the commercial and I'll show you examples that would make this clear. And an open interest we look at that because all of the pairs I trade are |
29 | 00:04:45,060 --> 00:04:54,420 | the majors and they're calm, they're kondiles to commodity dollars. So I can get the insight gleaned from Commitment of Traders and the open interest that cannot |
30 | 00:04:54,420 --> 00:05:02,310 | be seen in spot market. So if we look at the open interest, we can actually track the smart money movement of buying and selling. And I'll kind of go over |
31 | 00:05:02,310 --> 00:05:12,300 | that, again, in this teaching and seasonal tendency, we can see that there's times when there's a very good probability for markets to want to trade higher |
32 | 00:05:12,300 --> 00:05:21,000 | or lower based on seasonality. And if you can have that in alignment with with your trade idea, it obviously pushes the probabilities for an explosive move in |
33 | 00:05:21,000 --> 00:05:21,570 | your favor. |
34 | 00:05:23,760 --> 00:05:33,630 | And we now talk about volatility filters. Okay, now, volatility filter is a way of gauging when the market gets quiet. Okay, and or there's a contraction in the |
35 | 00:05:33,630 --> 00:05:45,000 | ranges. If this is seen, what you're seeing is the market going into contraction right before a big explosive type of move. That is a hallmark that spells wild |
36 | 00:05:45,000 --> 00:05:52,140 | profitability, if you get the direction, right. Okay, it doesn't mean that you know, the direction because the markets are going into small ranges, it just |
37 | 00:05:52,140 --> 00:05:59,490 | means that you're going to see another big explosive move. And if you had the direction, right, many times, you're gonna see that explosive move takes off in |
38 | 00:05:59,490 --> 00:06:07,230 | the direction you anticipated based on your major market ideas, your inter market analysis and with hedging programs suggest by the commercials, or the |
39 | 00:06:07,230 --> 00:06:15,780 | buying or the selling and open interests are we tracking smart money buying and selling in relationship to lose ideas. If that occurs, at the same time, their |
40 | 00:06:15,780 --> 00:06:23,310 | seasonal tendency for it to rally higher and volatility starts to squeeze into small little ranges, there's going to be a high probability that moves going to |
41 | 00:06:23,310 --> 00:06:33,780 | be explosive to the upside. Major news headlines I like this one, because if we have a condition stage, and we think that the market is going to go higher, |
42 | 00:06:34,110 --> 00:06:44,850 | based on our major market analysis markets as a whole on the four categories or asset classes, stocks, interest rates, commodities and currencies, if two of the |
43 | 00:06:44,850 --> 00:06:53,490 | four groups are in trending environments, because one can always be held in consolidation, not really trending, if we see at least half of the four major |
44 | 00:06:53,490 --> 00:07:05,400 | asset classes trending, we are in a good swing trading model environment, if that happens, and we are bullish on an environment or a particular market, and a |
45 | 00:07:05,400 --> 00:07:13,980 | news event comes out and starts jawboning, weak, it's weak, it's not, it's not as bullish or something's wrong with that idea. Don't expect it to go higher |
46 | 00:07:14,130 --> 00:07:23,610 | than anything a talking head would have in their headline. That to me is fueling the fire if I'm bullish. So if I see there's headlines at a time when I want to |
47 | 00:07:23,610 --> 00:07:35,730 | be a buyer, that to me, helps my trade many times to be explosive in nature. And lastly, in our list, market sentiment, and all I do is gauge the bullishness or |
48 | 00:07:35,730 --> 00:07:48,330 | bearishness, based on the retail universes use of indicators. Okay, let's take a closer look and discussion about major market analysis and being one sided in |
49 | 00:07:48,330 --> 00:08:00,930 | this being a trending profile. If we look at the currencies, stocks, commodities and interest rates, those four asset classes we use those for our Inter market |
50 | 00:08:00,930 --> 00:08:09,570 | analysis. But before we get into our Inter market analysis, we have to look at are those markets now trending or are they held in consolidation. Again, we're |
51 | 00:08:09,570 --> 00:08:17,880 | looking for at least two of the categories to be trending. And if they are trending, that means that the other two Nady just lagging and they're going to |
52 | 00:08:17,880 --> 00:08:24,030 | eventually go into a training environment two, preferably all four of them should be trending. But there's not going to be times where it's going to be |
53 | 00:08:24,030 --> 00:08:31,680 | like that you have to demand at least just two of the major categories to be in a trending environment. If that's the case, then we're going to see a swing |
54 | 00:08:31,680 --> 00:08:39,630 | traders environment unfold in the markets that you've whittled down through a tip top down analysis. See the things we're going to talk about here and the |
55 | 00:08:39,630 --> 00:08:49,680 | actual process. In Lesson Eight. It'll give you the framework it'll give you the hallmarks to look for to frame out high probability trades with explosive nature |
56 | 00:08:49,680 --> 00:09:03,270 | in price action. If we see a market asset class like the commodity market being in consolidation, if that's the case, then stocks should be trending. Okay or |
57 | 00:09:03,270 --> 00:09:12,390 | vice versa. If stocks are in consolidation, then commodities should be trending interest rates and currencies one of those two should be trending as well. Okay, |
58 | 00:09:12,390 --> 00:09:21,630 | so if we're going to divide it in into into two special special groups, you want to group commodities and stocks together one of those must be in a trending |
59 | 00:09:21,630 --> 00:09:31,950 | environment and currencies and interest rates one of those two must be in a trending environment. Okay. So, you have to have one of the two groups being in |
60 | 00:09:31,950 --> 00:09:39,480 | a trending environment and that helps really frame the models that the algorithms will use to move price around not just in foreign exchange, but in |
61 | 00:09:39,480 --> 00:09:52,290 | all the other asset classes with the exception of commodities which are really focused in on real supply and demand factors. Okay, inter market analysis |
62 | 00:09:52,290 --> 00:09:54,030 | confluences. Okay, |
63 | 00:09:54,180 --> 00:10:03,720 | we talked about inter market analysis we've already taught how I look at and what things I look for For, but I want to bring it up as a hallmark here and not |
64 | 00:10:03,720 --> 00:10:12,510 | beat it to death. But you already know how I look at Inter market analysis, because there was a specific teaching in January about it. The the market as a |
65 | 00:10:12,510 --> 00:10:23,460 | whole, okay, we look for specific inverse relationships and positively correlated markets to suggest that if we're bullish on one asset class, or that |
66 | 00:10:23,460 --> 00:10:32,340 | one market in that asset class, is there supporting ideas through the use of inter market analysis to build a confluence? Is it supported in other asset |
67 | 00:10:32,340 --> 00:10:43,890 | classes or other markets. And if we're gonna be trading Forex, if we're looking for the dollar index to be bullish, we would look for commodities to be at |
68 | 00:10:43,920 --> 00:10:55,680 | levels of resistance, okay, or inability to to rally higher, or if it does make a higher high, it fails and goes lower. The commodities would be moving lower |
69 | 00:10:55,680 --> 00:11:01,950 | very easily or trending lower in that environment when the dollar would be bullish. And then obviously, it would be said opposite terms. If we're looking |
70 | 00:11:01,950 --> 00:11:13,980 | for a bearish dollar, commodities would be easily trading through their old highs and very stubbornly going below their old lows. And they would be moving |
71 | 00:11:14,010 --> 00:11:23,130 | aggressively higher, with very little consolidation more upside than they do anything else. And anything below an old low, when the dollar is weak. For |
72 | 00:11:23,130 --> 00:11:29,820 | commodities, if they take out an old low, many times, you could expect turtle soup scenarios in that condition and they would rally higher. So that's that's |
73 | 00:11:29,850 --> 00:11:40,350 | what we looking for for inter market analysis in conferences. So if we have those ideas seen across many sectors and commodities, not just the CRB Index as |
74 | 00:11:40,350 --> 00:11:49,650 | being indicated here, are the grain markets. If we're bullish on the dollar, are we seeing soybeans and wheat and corn fail to make higher highs? Or if they do |
75 | 00:11:49,650 --> 00:11:56,850 | make higher highs? Are they rejecting them quickly? And are they seeing their lows blown out? And are they trending lower, that supportive of bullish dollar |
76 | 00:11:56,850 --> 00:12:09,450 | in reverse would be seen? You know, in looking for a weaker dollar, we would see those commodities, making higher highs and very little resistance at all in |
77 | 00:12:09,480 --> 00:12:18,030 | strong support levels. And if lows are taken out in commodities, while the dollar is weak or expected to be weak, those lows and commodities would just be |
78 | 00:12:18,030 --> 00:12:24,270 | turtle soup Long's where there'll be a false break below and a low and then you see higher prices and commodities. If you see that you have confirmation that |
79 | 00:12:24,270 --> 00:12:32,910 | the dollar is in fact strong or weak relative to those ideas. If the dollar is strong and news classifications, then we can see bearishness in foreign |
80 | 00:12:32,910 --> 00:12:42,840 | currencies. And if the dollar is weaker, you know, you pair that up with stronger foreign currency. And it's goes without saying that's how we use the |
81 | 00:12:42,840 --> 00:12:52,530 | confluences for inter market analysis. So we look for trading environments as a whole. Either stocks or commodities have to be in trending environments, or, and |
82 | 00:12:52,530 --> 00:13:03,180 | I'm sorry, inter market analysis suggests that we see the reflection of trending environments in currencies and interest rates as well one of those two has to be |
83 | 00:13:03,180 --> 00:13:11,880 | in a training environment. So between the two major asset classes, we have to have at least two in a trending environment to support the idea that there is |
84 | 00:13:11,880 --> 00:13:23,220 | going to be an explosive, high probability swing trade CIT hedging program alignment. What we look for in this is the last 12 months of the commitment of |
85 | 00:13:23,220 --> 00:13:33,180 | traders report held by the commercials. The commercials are the largest producers or providers of a commodity. And they may manufacture it, they may |
86 | 00:13:33,210 --> 00:13:43,680 | grow it, they may offer it in terms of like a currency like a bank. That's their commodity, if you will. So they make it available. They're the storehouse of it. |
87 | 00:13:44,400 --> 00:13:55,470 | And I'd like to look back over the last 12 months because hedging is usually done over a plan using the last 12 months data. So what was pricing like last 12 |
88 | 00:13:55,470 --> 00:14:06,120 | months? What was the commodity price based on real supply and demand factors? Last March, what was it last January? What was it last August? What was it last |
89 | 00:14:06,420 --> 00:14:16,950 | December, okay, and by looking at a range of 12 months, it gives them an idea on how they should hedge pricing because they use the last last 12 months to frame |
90 | 00:14:16,950 --> 00:14:26,040 | their expectation on what may be normal or what would be reasonable to expect going forward for the next 12 months. So they use that for hedging. Because of |
91 | 00:14:26,040 --> 00:14:37,650 | that many times they're gonna see long term net short positions in a commodity through the use of the commitment trade report. So by looking at their net |
92 | 00:14:37,650 --> 00:14:45,750 | position being heavily net long or net short, for instance, if we're looking at a market that has a long term long |
93 | 00:14:46,800 --> 00:14:55,290 | net short position being held by the commercials that would be seen with the red line here in this example, you can see from January 2016 all the way to the |
94 | 00:14:55,290 --> 00:15:06,180 | present. They have been below the zero line. That and it's They'll buy standard definitions. And by way of teachings by Larry Williams, who did the majority of |
95 | 00:15:06,180 --> 00:15:13,920 | the early work on commitment treasurer's reports being made public, this would be deemed as bearish. And this was a frustration for me. And I'm not going to |
96 | 00:15:13,920 --> 00:15:21,510 | rehash all that because of the teachings on this. But I like to look as a hallmark I want to see are commercials buying, or are they selling in their |
97 | 00:15:21,600 --> 00:15:30,330 | hedging program right now as I'm doing the trade, or about to take the trade. And what I do is I frame the last 12 months and look at the highest high and |
98 | 00:15:30,330 --> 00:15:39,870 | lowest low and divide it in half. And then I have a new zero line. So I ignore the zero line on the standard net traders position chart that everybody has |
99 | 00:15:39,870 --> 00:15:49,200 | access to, you can find this on bar chart.com. And the lesson number eight actually do a walk through you can actually see me do this whole process. But I |
100 | 00:15:49,200 --> 00:16:00,990 | define that new range in the last 12 months of commercial activity. That's my net short or net long basis, the 50% mark of that range, January 16, you can see |
101 | 00:16:00,990 --> 00:16:10,740 | that sort of the highest portion of their holdings were that at the time was still underneath the net sum zero line. So they would be either neutral or bare |
102 | 00:16:10,740 --> 00:16:22,440 | slightly in January 2016. And then in July 2016, the redline went as low as it shows there. And that's the range, they need to find that by a high level and a |
103 | 00:16:22,440 --> 00:16:34,080 | low level divided in half. And that's going to be your new zero level, or bullish or bearish level. You can see in December of 2016, we went above that |
104 | 00:16:34,080 --> 00:16:46,800 | new adjusted or makeshift zero line, as I'm indicating here, by looking at their hedging program. So they were buying again, aggressively in December. So if they |
105 | 00:16:46,800 --> 00:16:55,920 | see if we see this, even though they're below the net sum zero line from a net traders vision chart, from everyone's perspective, in the retail world, I see |
106 | 00:16:55,920 --> 00:17:06,180 | that as buying in December going into January, and still presently now they're they're buying. So if we see this in alignment with the expectation that the |
107 | 00:17:06,180 --> 00:17:13,350 | market should be going in a trending environment, and inter market analysis suggests that the market itself is going to go higher, and other markets that |
108 | 00:17:13,350 --> 00:17:21,480 | are inversely correlated to it are going to go lower. Then we have the co2 hedging program in alignment stating that yes, the commercials are in fact |
109 | 00:17:21,480 --> 00:17:33,600 | they're buying. So we can go into our next stage of analysis looking at open interest. If we see the market when conditions were bearish, if this is the |
110 | 00:17:33,600 --> 00:17:44,820 | environment, you would see where we're above that zero line, and the markets been trending lower, and we are seeing this, this would not be supportive of a |
111 | 00:17:44,850 --> 00:17:54,630 | strong sell this would be at odds with that idea. So you'd have to wait for that red line to go back down below that new zero basis line or that heavy thick |
112 | 00:17:54,630 --> 00:17:57,480 | black line that created separating them green and the red line. |
113 | 00:17:59,970 --> 00:18:08,370 | Okay, open interest, we're going to look at the relationship of open interest because it shows us an x ray view, if you will, of what the smart money's doing. |
114 | 00:18:08,490 --> 00:18:17,760 | Now open interest real quick if we see a increase or reduction of open interest. And as delineated by that purple line here, it's a cumulative line of showing |
115 | 00:18:18,000 --> 00:18:25,110 | the total open interest in any one market. And it's going to be only shown through a commodity because that's where you get this information from. If open |
116 | 00:18:25,110 --> 00:18:34,740 | interest declines 10 or 15% or more, that's indicative of commercial short covering, if there is a reduction of open interest that shows their willingness |
117 | 00:18:34,740 --> 00:18:43,080 | to not want to offer liquidity or expect lower prices, because they think that prices are going to go higher significantly. Otherwise, they would hold on to |
118 | 00:18:43,080 --> 00:18:51,000 | their open positions. And they're having that short position. It's confirmed when you see the red line, which is commercials in a net trading position chart |
119 | 00:18:51,270 --> 00:19:02,910 | go higher towards the zero line. So that's a reduction of open interest and a confirmation that they are reducing their short positions. Otherwise, that red |
120 | 00:19:02,910 --> 00:19:11,820 | line would be either staying flat or going lower, it's going up at the same time that purple line drops down from November to November into December, there was a |
121 | 00:19:11,820 --> 00:19:22,950 | huge reduction in open interest over 500,000 contracts down to just five to 400,000. Okay, so there's over 100,000 contracts taken off that were short and |
122 | 00:19:22,950 --> 00:19:31,800 | you can see that that reduction is seen with that increase or movement higher in the red line but by the commercial traders, this is confirmation that your trade |
123 | 00:19:31,800 --> 00:19:42,930 | would be a bullish scenario and explosive price action should be expected. If we see an increase of open interest 10 to 15% or more at a time when the |
124 | 00:19:42,930 --> 00:19:57,570 | commercials increase their net selling okay or the red line goes lower that is bearish to see the open interest declining here, November going into December. |
125 | 00:19:58,410 --> 00:20:08,250 | At the same time, the red line is increasing in value, which is the reduction of short selling. So they don't have a heavy net short position on. And at the same |
126 | 00:20:08,250 --> 00:20:16,620 | time, we've been interested to claim this is bullish, because they're not trying to hold on to a heavy short position. Okay, moving on seasonal tendencies. And |
127 | 00:20:16,620 --> 00:20:24,810 | we want to find, obviously times when we take a swing trade when seasonal tendencies aren't aligned for movement. And so if we have our major market |
128 | 00:20:24,810 --> 00:20:35,970 | analysis suggesting that there's trending profiles in two of the major categories, open interest is declined. We have our hedging program suggesting |
129 | 00:20:35,970 --> 00:20:43,590 | the commercials are buying into market analysis suggest that this market is poised to go higher, because other markets are suggesting that confirmation, |
130 | 00:20:43,590 --> 00:20:51,690 | that's the case. And we see a seasonal tendency for the market to watch a rally, as it's indicated here, December into January, and growing over to the next |
131 | 00:20:51,690 --> 00:21:00,570 | year, you can still see January going into February, there's a strong tendency still for this market to go higher. If that's the case, we have, we now have |
132 | 00:21:01,080 --> 00:21:09,270 | five things in our favor suggesting there's going to be an explosive price action in this particular market. And if we're suggesting it's going to go |
133 | 00:21:09,270 --> 00:21:17,730 | higher, we know now that there's a strong degree of probability there's going to be explosive price move going higher. Prices should move higher, not in small |
134 | 00:21:17,730 --> 00:21:28,830 | ranges, but to be explosive. And it shouldn't be a lethargic price action move. Now we're talking about volatility filters. And a volatility filter is simply a |
135 | 00:21:28,860 --> 00:21:37,290 | contraction idea where price moves from a large range down to a small range. And it's universal, it can be applied to monthly, weekly, daily or any other |
136 | 00:21:37,290 --> 00:21:47,160 | timeframe. But if we look at the green candle as a monthly candle, and we see the next candle or next month's candle, trade down to a smaller range, we look |
137 | 00:21:47,160 --> 00:21:54,930 | at the body of the candle, not the wicks. Okay, so you can see that that smaller secondary candle or the Black Candle, it doesn't make a difference. If it's up |
138 | 00:21:54,930 --> 00:22:06,750 | close or down close, it's not important here, what we look for is the lower high in the higher low. This is called an inside candle or inside bar. Conceptually, |
139 | 00:22:06,750 --> 00:22:16,920 | it's a volatility contraction, that means there's a high probability that the next candle or the next candle after it will be a large range candle, especially |
140 | 00:22:16,920 --> 00:22:24,180 | if you have a condition that's poised to go higher or lower. So if it's trading at a level that would be offering a support, and we have all the factors that we |
141 | 00:22:24,180 --> 00:22:31,680 | mentioned so far in alignment, suggesting that it's going to be an explosive price move and then we had the direction picked as bullish. The next candle or |
142 | 00:22:31,680 --> 00:22:44,760 | next month's candle should be an explosive up candle or green candle, or if not that one, the very next one. So it gives us a anticipatory expectation for price |
143 | 00:22:44,760 --> 00:22:54,210 | to explode the upside. But it doesn't give you timing, it just gives you the stage that yes, this is going to very likely have an explosive price move to the |
144 | 00:22:54,210 --> 00:22:54,660 | upside. |
145 | 00:22:56,880 --> 00:23:07,380 | Now this can be seen as also the smallest range in the last seven days. That's another filter you can use. You can do also the last three days, the small |
146 | 00:23:07,380 --> 00:23:17,670 | change in the last three days. So I use the last three days, the last seven days. And I use any inside candle or inside bar to frame the context around a |
147 | 00:23:17,670 --> 00:23:25,170 | trade that I have already seen coming. If I get this, this, this really adds to it. It's like that little wind up of a spring again, that analogy I like to use |
148 | 00:23:25,170 --> 00:23:35,340 | and it's going to be let go and it's gonna be dynamic price movement. Major news headlines, if I'm bullish on a particular market and say we're looking at gold |
149 | 00:23:35,340 --> 00:23:46,110 | as an example, we have all these things lending well to the conclusion that gold should be bullish everything in in the cards that suggested higher prices. If |
150 | 00:23:46,110 --> 00:23:55,470 | I'm about the buyer, I'm looking to the buyer. I like to see headlines that show describing weakness or justifying why price went down. Because if I see that I |
151 | 00:23:55,470 --> 00:24:01,680 | know it's going to build in market sentiment for retail minded traders. When they see this, like the stuff, they don't want to buy gold, they think I'm gonna |
152 | 00:24:01,680 --> 00:24:10,500 | sell gold because they think that the news media, or the talking heads or CNBC, they're smart people, therefore they are traders. And that's not the case. If |
153 | 00:24:10,500 --> 00:24:16,740 | they were traders, they know what they're doing. They wouldn't be on the anchor position talking to us about why something already happened. They would be home |
154 | 00:24:16,740 --> 00:24:28,260 | trading it live before the fact. So if we're also bearish on a particular commodity or a pair or market, if we're bearish and we see price trade up until |
155 | 00:24:28,260 --> 00:24:36,300 | level we want to be short. Ideally, you want to see news headlines that are talking about how good it's been moving up or how it's hitting all historic |
156 | 00:24:36,300 --> 00:24:46,320 | highs or it's done something that looks underlying bullish in the commentary they put on there. For futures, I subscribe to futures magazine, and they do |
157 | 00:24:46,320 --> 00:24:54,300 | every month they talk about a particular market or two. And they say how great this markets been moving or how bad something's been happening. Usually I think |
158 | 00:24:54,330 --> 00:25:01,500 | the catalyst that really sets up really nice swing trade and if you can start seeing that also, at a time on On the internet, just go through the major |
159 | 00:25:01,500 --> 00:25:11,310 | headlines go like on market watch or CNBC, anything that has a lot of talking heads, and a lot of audience members usually following it if they start talking |
160 | 00:25:11,310 --> 00:25:19,260 | about a market when you're looking to be a bullish buyer, and they're giving headlines that are bearish or heavy, and it's like a loaded deal. So it's so |
161 | 00:25:19,260 --> 00:25:26,760 | good to see that. And it's also diametrically opposed to what you would expect to see retail sees this and they don't want to trade gold long. They think it's |
162 | 00:25:26,760 --> 00:25:36,840 | going lower. But we go in step right in front and say, Okay, we're trading right in there when the sentiment is most weak. Which brings us to market sentiment. I |
163 | 00:25:36,840 --> 00:25:46,500 | use a indicator for this. And yes, I heard that right, I use an indicator. If the waves percent are into my opinion, it's the most accurate in terms of an |
164 | 00:25:46,500 --> 00:25:58,770 | indicator for overbought oversold. And what I do is I plot a 15 period Mauryans percent or on a daily basis. And I do a simple overbought oversold idea. And I |
165 | 00:25:58,770 --> 00:26:11,850 | divided and use anything at the 50 level or below that is oversold and a buying area. And everything above the 50 level is over bought or a selling area. And if |
166 | 00:26:11,850 --> 00:26:22,110 | we're at the 50 level, and we've left the oversold scenario, I will still factor a potential buy. And if we left an overbought condition recently and traded down |
167 | 00:26:22,140 --> 00:26:32,550 | hovering around the 50 level, I will favor the overbought side to over the oversold condition onwards. If we're at a point of equilibrium or at the 50 |
168 | 00:26:32,550 --> 00:26:41,280 | level, wherever we left most recently, whether it be overbought or oversold, I like to go with that sentiment. And that's it. They're the hallmarks that I look |
169 | 00:26:41,280 --> 00:26:49,620 | for for explosive swing trades they actually will be referred to again later on in the mentorship when we start talking about making trades. But I'm actually |
170 | 00:26:49,620 --> 00:26:58,590 | gonna give you an outline in Lesson Eight to incorporate some of these ideas. And also we're gonna break down the actual swing trading model, what we do from |
171 | 00:26:58,620 --> 00:27:04,890 | step one to execution and management on the trade. Till next lesson, wish good luck and good trading |