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75-ICT Mentorship Core Content - Month 8 - Central Bank Dealers Range

Last modified by Drunk Monkey on 2022-10-10 09:32
1 00:00:00,000 --> 00:00:26,310 ICT: Hi folks, welcome back. This is Lesson three of the April 2017 ICT mentorship content this month for teaching ICT day trading model. And this
2 00:00:26,310 --> 00:00:29,760 teaching is specifically teaching central bank dealers range.
3 00:00:35,280 --> 00:00:46,740 Okay for central bank dealers range, I'm going to assume you've already went through my youtube tutorial dealing with the central bank dealers range. But if
4 00:00:46,740 --> 00:00:53,970 you haven't gone through it, this one's going to pretty much teach you everything you should have gleaned from that lesson anyway. But we're going to
5 00:00:54,060 --> 00:01:12,330 assume for a moment that you have an understanding of standard deviations. Now, first, we have to have a range or a number or a level in terms of a central
6 00:01:13,320 --> 00:01:22,440 focal point, and then it has to deviate above it or below it to give us our date deviation. Well, the central bank dealers range is a specific time of the day
7 00:01:22,470 --> 00:01:33,660 we're going to teach in this lesson. But for now, I want you to think about ranges in terms of a predefined higher low. And we're going to say the central
8 00:01:34,170 --> 00:01:41,010 box here represents the central bank dealers range, and I'll get into the specifics and show you what it looks like in the chart. But for now, we have to
9 00:01:41,010 --> 00:01:55,350 know conceptually, if there's a range that we have deemed a specific important range in price, once we determine that, that range height from high to low,
10 00:01:56,010 --> 00:02:08,730 based on two different types of parameters, which we'll go over that measurement of price range, in terms of pips, can be reproduced or replicated, if you will,
11 00:02:09,000 --> 00:02:21,390 in the form of a standard deviation. one standard deviation above and below would be the same range added to the high the central bank dealers range, and
12 00:02:21,420 --> 00:02:31,290 one standard deviation is the same range that makes the central bank dealers range in total range in terms of pips, and we subtract that range from the
13 00:02:31,290 --> 00:02:41,730 central bank dealers range low, and that would give us one standard deviation above it, and once their deviation below it, that range would be added to the
14 00:02:41,730 --> 00:02:54,090 high of the first standard deviation and subtracted from the low of the first standard deviation below, giving us the second standard deviation. And this
15 00:02:54,090 --> 00:03:09,090 would go one, replicating that central bank dealers range with standard deviations 123 and four. Typically, most sell days will create the highs of the
16 00:03:09,090 --> 00:03:22,170 day. From the central bank dealers range up to three standard deviations. Most buy days, we'll create the low of the day from the central bank dealers range
17 00:03:22,200 --> 00:03:35,730 down to the third standard deviation. Ideally, sell days create the high of the day. No more than two standard deviations above central bank dealers range many
18 00:03:35,730 --> 00:03:48,690 times just one standard deviation. Ideal by days will create the low of the day, no less than two standard deviations below the central thing, dealers range. And
19 00:03:48,690 --> 00:03:58,380 ideally, many times you'll see it just go one standard deviation below the central bank dealers range creating the low of the day. Four standard deviations
20 00:03:58,680 --> 00:04:11,280 above for high the day is going to be on the heels of a very high impact news event for the session in London. Same thing is said on by days if it drains down
21 00:04:11,280 --> 00:04:21,990 to four standard deviations. Usually it's going to be very high impactful news or price can come down or go up to the fourth standard deviation to create a New
22 00:04:21,990 --> 00:04:24,480 York session market reversal profile.
23 00:04:29,940 --> 00:04:44,550 Okay dealing specifics with the central bank dealers range. The time period that frames the central bank dealers range is 2pm to 8pm New York time. The ideal
24 00:04:44,550 --> 00:04:56,910 range is less than 40 pips, preferably the range should be no more than 20 to 30 pips in total range. Hi, hello. So what are we saying here? Between 2pm and 8pm
25 00:04:56,910 --> 00:05:10,260 New York time, regardless of where you live globally You need to find where your price charts indicate what will be seen as the candle that starts to 2pm and 8pm
26 00:05:10,260 --> 00:05:23,850 times in New York time. So for completeness sake and the sake of avoiding all confusion, like everything else I always teach, find out what New York Time is
27 00:05:24,570 --> 00:05:34,830 where you're at geographically. Then find out what that looks like in your platform for your charts, and delineate that with a vertical line with 2pm, New
28 00:05:34,830 --> 00:05:49,680 York, and 8pm, New York. Between those two time windows, the highest high and the lowest low, ideally should be less than 40 pips, preferably 20 to 30 pips
29 00:05:49,710 --> 00:05:57,900 total range is larger than 30 pips can tend to be unfruitful for projections.
30 00:06:02,970 --> 00:06:15,900 Now we can use the range in pips, by calibration, from high to low or using the wicks. Or alternatively, we can use the range in the highest body, and the
31 00:06:15,900 --> 00:06:28,650 lowest body as well, whatever the highest closing or open prices, and wherever the lowest close or open is in between 8pm and 2pm, New York time. Now,
32 00:06:28,650 --> 00:06:38,310 obviously, we need to know directional bias for this to be of any assistance to us. So it has to be used in conjunction for a projection to work. The central
33 00:06:38,310 --> 00:06:49,710 bank dealers range strength is aiding in the low of the day or high of the day selection. That's the most important thing as a day trader, we can focus on if
34 00:06:49,710 --> 00:06:58,950 we can look for the highest probable high or low the data form, or in terms of when markets are bullish. We're looking for the low that data form,
35 00:06:59,040 --> 00:07:09,360 predominantly in the London session. So where is that low most likely going to occur? And is it going to be on a day that's highly favorable for that event to
36 00:07:09,360 --> 00:07:19,230 unfold? Remember, I said many times over the last seven years, teaching Forex online that I don't trade every single day. And even in this mentorship, you've
37 00:07:19,230 --> 00:07:29,730 seen that it's not productive to try to trade every single trading day. But there are times we're going to learn that there are highest probabilities for a
38 00:07:29,730 --> 00:07:39,840 condition to be met. For that higher low to form in London. When we have these conditions, we can go in with reasonable expectation that we have a good chance
39 00:07:40,170 --> 00:07:51,780 more than most days that the high or low will form in London, and we can get a ballpark idea where that lower high should form using the central bank dealers
40 00:07:51,780 --> 00:08:05,910 range. So the central bank dealers range main focus is to help you find the high or low of the day in respective bullish or bearish days. In other words, if
41 00:08:05,910 --> 00:08:14,340 we're bullish on the market, as a whole, or if we're looking for one shot, one kill for the week, that's predominantly expected to go up for the for Friday,
42 00:08:14,340 --> 00:08:23,730 close higher than were opened up on Sunday. For instance, if we're looking for a one shot one kill in a bullish week, we're going to be looking primarily for low
43 00:08:23,730 --> 00:08:33,690 the day in London each day, Tuesday, Wednesday and Thursday, preferably those days, but it could occur on Monday as well. But we're looking for the low of the
44 00:08:33,690 --> 00:08:41,910 day the forum in London in that criteria. But just because we're looking for the low the form and be a bullish close every single day doesn't mean this highest
45 00:08:41,910 --> 00:08:53,010 probability setup. And we can use the central bank dealers range to help frame that context, as we'll teach in this lesson here. But we're using wicks in this
46 00:08:53,010 --> 00:09:04,020 example here. So every one of these blue boxes represents the central bank dealers range for that respective day. Now this chart represents the central
47 00:09:04,020 --> 00:09:13,710 bank dealers range with using the bodies. Now I will have to admit to you, I like to use the bodies predominantly because the wicks are always going to show
48 00:09:14,070 --> 00:09:23,280 erroneous price because of your dealing spread through your broker. Everyone's going to have a disparity between their high and their low on every candle, it's
49 00:09:23,280 --> 00:09:34,110 never going to agree. So what I use is the bulk of the trading which is the body that in my opinion, and there's no real panacea or be all end all answer for
50 00:09:34,110 --> 00:09:45,270 this. But my studies over the last two decades is that we focus primarily on the bodies of the candles. We're going to get more closer to what smart money is
51 00:09:45,270 --> 00:09:54,480 doing in relative terms then if we use just the wicks now we can get a lot of feedback in terms of what retails dealing with we study Wix, but if we study the
52 00:09:54,480 --> 00:10:03,000 bodies of the candles, and we frame our ranges with that, we'll get more clear pictures of about what the institutional accumulation distribution ranges are
53 00:10:03,000 --> 00:10:13,200 going to be when we use the central bank deals range. So as you can see here, each one of these ranges has its respective ranges in terms of pips. The first
54 00:10:13,230 --> 00:10:27,600 is 13 pips. The next is 58 pips. The next is 19. And the last and this example is 16 pips in range. So using the bodies, we're going to focus primarily on that
55 00:10:27,630 --> 00:10:38,220 now, before I go into greater detail I want you to think about just because I like using the bodies and I think it's got the most advantage, we still have to
56 00:10:38,220 --> 00:10:48,480 look at the ranges with the wicks included. Okay, so let's take a closer look at each example here. For this first one, we have replicated that central bank
57 00:10:48,480 --> 00:10:58,830 dealers range, the blue shaded area, and we duplicate that range and projected up one standard deviation that was that's what the one SP stands for. So one
58 00:10:58,830 --> 00:11:01,530 standard deviation, and
59 00:11:03,090 --> 00:11:13,290 second standard deviation, which is just basically central bank dealers range, total pip range, or in that case 13 pips, we added 13 pips more in an added 13
60 00:11:13,290 --> 00:11:25,740 pips Moore's for a total standard deviation of two. Notice how it takes you right to the high of the day formed in London, that particular session
61 00:11:25,770 --> 00:11:36,480 immediately after the central bank dealers range closes. So in other words at 8pm, starting the Asian range project that range that we created for central
62 00:11:36,480 --> 00:11:44,940 bank dealers range of two standard deviations up, that gives us the projected London Hi, now it does not mean it's going to call to the PIP, it might go a
63 00:11:44,940 --> 00:11:55,620 little bit above it, it might fall a little short of it, but it gives us a range to look for. The next one in our example here, the range is 58 pips. Now this is
64 00:11:55,650 --> 00:12:06,300 too large, our rules state that we want to have 40 pips or less ideally 20 to 30 pips. So this particular trading day, we have to allow the market to do whatever
65 00:12:06,300 --> 00:12:14,190 it wants to do. If we're going to scalp that's another thing, but for day trading, we can't use this criteria because it's too large of a central bank
66 00:12:14,190 --> 00:12:21,390 dealers range and this is not what I taught in the free teaching on my YouTube channel. But when you're using central bank dealers, range projections, highs
67 00:12:21,390 --> 00:12:34,020 and lows, the criteria is 2030 is ideal in terms of pips, no, it has to be less than 40 Generally, but ideal ranges are 20 to 30 pips high and the reason why is
68 00:12:34,020 --> 00:12:42,300 if the average daily range of the candle for the daily chart that you're trading is typically around 100 pips of say now they're not always 100 pips but I like
69 00:12:42,300 --> 00:12:54,150 to use as a ballpark figure, general rule of thumb, if we have 100 pips 1/3 of that is around 33 pips, so that's why I give them a 20 to 30 pips ideal scenario
70 00:12:54,570 --> 00:13:03,420 when you want to be less than 40 pips for that reason. So for power three concept to unfold if we're bullish, we're looking for the opening price in the
71 00:13:03,420 --> 00:13:15,240 market to trade down 20 to 30 pips, ideally no more than 33 pips. If it trades beyond that, we don't want to see it trade more than 40 pips, it doesn't mean it
72 00:13:15,240 --> 00:13:25,800 can't but ideal scenarios, the drop down from the opening price on accumulation days where the low the day is formed, and we have a higher close bullish, we're
73 00:13:25,800 --> 00:13:35,970 looking for that 20 to 30 Pip drop down, and we can use the central bank dealers rates to confirm that with other things that we'll teach in the next lesson. The
74 00:13:35,970 --> 00:13:47,640 next example here, we have one standard deviation projected below it. And you can see we just about hit that, but it was definitely inside of the first
75 00:13:47,760 --> 00:14:00,510 standard deviation, creating the low of the day, and price trades up aggressively. Next example had one standard deviation projected below. And
76 00:14:00,540 --> 00:14:10,620 second standard deviation projected below. So now we have two standard deviations below the central bank dealers range for this particular day. And it
77 00:14:10,620 --> 00:14:20,250 takes us right down to the low of the day. It was only off by one pip it went below one pip. And then we saw the load of a forum in London. Looking at this,
78 00:14:20,910 --> 00:14:30,150 obviously, you know it looks like cherry picking hindsight and all that business. But I want you to take in consideration. When we look at price. We
79 00:14:30,150 --> 00:14:38,670 have to have a bias what do we think price is going to do? Is price going to go higher or lower over the next two or three days? What's the price most likely
80 00:14:38,670 --> 00:14:47,520 going to do over the course of this present week or next week? is going to go higher? Or is it going to look go lower? Where are we at seasonally? Are we
81 00:14:47,520 --> 00:14:56,010 looking for bullish prices or lower prices? Where are we at quarterly? Are we in a quarterly shift that is underway that's still unfolding with bullish prices
82 00:14:56,280 --> 00:15:07,260 with premium PDAs that haven't been met yet? If that's the case, then we can be looking for scenarios to look for buys. So we're looking at discount PDA arrays,
83 00:15:07,530 --> 00:15:17,400 we're looking at reasons to suggest buying in a discount range. So our PDA array matrix is going to help us look for reasons to build ideas that are bullish. If
84 00:15:17,400 --> 00:15:27,270 we look for those ideas with the central bank deals rains in conjunction with those, it'll help us narrow down with time of day London Open, it'll help us
85 00:15:27,270 --> 00:15:39,150 frame ideal entry point. So if we look at the daily chart, and we see price trading up at a premium PD array, and markets are bearish, we're looking for
86 00:15:39,150 --> 00:15:50,760 lower prices for one shot one kill scenario looking for a lower close week, we could be looking for one, two or three standard deviations moved higher. When
87 00:15:50,760 --> 00:15:53,610 the central bank dealer trains is around 20 to 30 pips ideally.
88 00:15:54,810 --> 00:16:04,080 And if we get that projection up into London, we have a great deal of advantage on our side that we're probably going to get the high of the day in the London
89 00:16:04,080 --> 00:16:16,440 session. Now you add that also with your expectation of seasonal tendencies, all those things start coming together and draw a closer picture to what
90 00:16:16,470 --> 00:16:24,060 institutional order flow is and how it moves price. In the next lesson, we're going to go into greater detail about how we can pick the high and the low of
91 00:16:24,060 --> 00:16:27,120 the day with this information. And with the Asian range.