95-ICT Mentorship Core Content - Month 10 - Bond Trading - Split Session Rules

Last modified by Drunk Monkey on 2022-10-26 08:54
1 00:00:02,879 --> 00:00:15,569 ICT: Okay folks, welcome back. This is another discussion on commodities. Everything we refer to in this lesson, and in this month 2017 June content is
2 00:00:15,569 --> 00:00:19,349 referring to specifically as a paper trade only.
3 00:00:32,159 --> 00:00:38,939 evokes June 2017, ICT mentorship, ICT bound trading lesson number two split session rules
4 00:00:46,680 --> 00:01:00,390 Katie Bong splits session rules. Now before we get into this, I understand that most of you are in his mentorship to learn how to trade with my concepts, Forex,
5 00:01:01,170 --> 00:01:17,220 and there's a lot of time of day references for forex, and commodities have a unique time of day element is well, I'm going to teach you the way I interpret
6 00:01:17,220 --> 00:01:26,430 price action for my analysis for the bond market. There's some similarities, but there's some slight deviations as I mentioned, the beginning is mentorship. When
7 00:01:26,430 --> 00:01:35,100 we get into the commodity content, there are time of day studies. But there's a small variance, what do you normally expect to see in for instance, the foreign
8 00:01:35,100 --> 00:01:46,890 exchange market, there's a small overlap, but then there's a small deviation for what we would normally expect for time of day. Traditionally, overnight sessions
9 00:01:47,010 --> 00:02:02,070 will have an impact. And it's traditionally seen as the london session. New York am session is defined by 8am, New York Time to noon, New York time. The New York
10 00:02:02,100 --> 00:02:13,530 pm session is defined by noon, New York time to 3pm New York time. Now, before I go any further, just understand that while we are generally familiar with the
11 00:02:14,040 --> 00:02:25,710 New York session, or New York open kill zone in the US a London close kill zone. And then the daily range, we understand can trade always late as 2pm. There's a
12 00:02:25,710 --> 00:02:35,070 little bit of overlap, but we're going to actually define it in two sessions. So while I'm teaching here, the analysis concept should be focused primarily on the
13 00:02:35,070 --> 00:02:45,240 New York session hours. While if you're going to graduate into maybe go through the lessons this week, and you fall in love with bond trading, and you say new
14 00:02:45,240 --> 00:02:55,950 The heck with Forex, the fact the heck with new stock trading and the other asset classes, I'm going to be a Vaughn trader, well, you Great, that's, that's
15 00:02:55,950 --> 00:03:02,190 wonderful. If that's what you become, and you find your niche in the marketplace, then great. That means that you've been a success going through the
16 00:03:02,190 --> 00:03:17,190 mentorship. But you can trade overnight or during the London session, the Zb or 30 year treasury bond, and trade with similar things that we talked about in
17 00:03:17,190 --> 00:03:29,130 regards to the London Open. I would counsel you to use the information that is seen by overnight trading during the London session to look for stops, liquidity
18 00:03:29,130 --> 00:03:40,380 voids, fair value gaps, those types of things, and focus primarily on trading the New York session. As we mentioned in a previous lesson one bond concepts.
19 00:03:41,880 --> 00:03:50,880 The largest volume is seen between eight o'clock and nine o'clock in the morning, or generally before the equities open. So between 8am and 9:30am New
20 00:03:50,880 --> 00:04:04,890 York time, that's the largest influx of purchasing and selling of the treasury bond futures. The am session has a built in advantage because it generally will
21 00:04:04,890 --> 00:04:16,350 see the largest volume of the day. That means it's generally going to form the higher low of the New York session or the blending of or total range of the true
22 00:04:16,350 --> 00:04:29,910 day for Treasury bonds. The pm session generally will have a continuation or reversal. And then the other thing is a consolidation. So generally you're going
23 00:04:29,910 --> 00:04:43,320 to see a move more often than not in the am session. I tried to focus when I was doing commodities only as an asset class focusing primarily on 820 in the
24 00:04:43,320 --> 00:04:54,570 morning to 11 o'clock in the morning but it was like my Killzone if you want to call it that, when I was trading the E Mini s&p, the s&p futures Big Boy and the
25 00:04:54,570 --> 00:05:04,500 commodity the currencies and the the bond market, that was my work day and when I wanted to be a deviant or really push my luck, I would trade the pm session
26 00:05:05,220 --> 00:05:11,370 and the pm session for the treasury bond market, it seemed here as noon to 3pm.
27 00:05:13,710 --> 00:05:24,420 training days can see the complete trading day be one sided in both the am and pm sessions. So in other words, the opening around 8am 8:20am New York Time
28 00:05:24,900 --> 00:05:34,620 creates the low of the day, and it can trade all the way up to 3pm. One sided completely bullish through am and pm trend. Those sessions together create the
29 00:05:34,620 --> 00:05:49,170 full daily range. training days can start also, with one of the sessions being for instance, the pm session. For instance, there could be a late afternoon FOMC
30 00:05:49,170 --> 00:05:59,490 like we have tomorrow, the bond market can be consolidated during the am session and then go into a trending environment in the pm session that carries over and
31 00:05:59,490 --> 00:06:12,750 what we call a runner where you can have the move continuously going into the next trading session or session after that. Consolidation days can see opposing
32 00:06:12,750 --> 00:06:24,420 directions in the am and pm sessions. Or it can see one session produce a swing and the other be quiet or consolidate. So we look at two o'clock in the morning
33 00:06:24,420 --> 00:06:33,720 to 5am. We understand that is to traditional London session. Okay, so if we're looking at price in terms of the bond market, we can refer to what overnight
34 00:06:33,720 --> 00:06:42,570 price trading has seen between two o'clock in the morning and 5am. That'll give us where our stops are overnight stops. Overnight liquidity voids, fair value
35 00:06:42,570 --> 00:06:54,690 gaps. Any measure of pdra that we would normally use in the foreign exchange market, we would look for that to be found in this specific reference point in
36 00:06:54,720 --> 00:07:04,050 time. While we're not actively trading them on the session, and I don't really want to trade or imply that you should be traded in one session with the bond,
37 00:07:04,890 --> 00:07:20,340 we refer to it always between these two reference points, two o'clock in the morning at 5am. The am session or morning trend is defined by 8am to noon. Now
38 00:07:20,340 --> 00:07:31,470 sometimes the 8am to noon session can end early around 11am, which is the traditional London close time period, London, European traders will be looking
39 00:07:31,470 --> 00:07:39,810 to close up shop, it made their money in the morning and they move to the sidelines doesn't mean it's trailing the trading days ended or there's no more
40 00:07:39,810 --> 00:07:49,920 opportunity, it just means that we're going to see a reduction in volume. A lot of the European and UK traders are going to close up shop. Like I said they're
41 00:07:49,920 --> 00:07:58,650 gonna stop trading for the day. And then you're left with North American traders only. But we're also encountering what is referred to as New York lunch around
42 00:07:58,650 --> 00:08:08,550 11 o'clock to one o'clock in the afternoon. So while I'm defining it in general terms noon, ends the am session, just know that it can end earlier around 11
43 00:08:08,550 --> 00:08:23,310 o'clock in the morning. This is your New York session am trend or New York am session. The next portion of the daily range for bond trading is the New York pm
44 00:08:23,310 --> 00:08:36,930 session. This is seen by delineating 12 noon, New York time to 3pm New York time. Again, this is the New York pm session. Now generally, if you have a
45 00:08:36,930 --> 00:08:46,590 runner, that means the markets made a significant higher low in the morning session. You can see follow through equal distance measured moves that type of
46 00:08:46,680 --> 00:08:59,700 scenario. And whatever usually happens in the morning session generally is seen in quicker terms or less time in the pm session. If there's a large degree of
47 00:08:59,700 --> 00:09:08,670 the average daily range, if you will, seen in the am session. That means that the pm session will be rather abbreviated. So that way we can use this
48 00:09:08,670 --> 00:09:18,870 information as if we know that the lines portion of the day has been fulfilled by the am session and we are going flat before New York lunch. We could avoid
49 00:09:18,870 --> 00:09:30,810 trading the pm session altogether don't come back for a second portion. Just be happy with what you made and go home in the black. Alright, let's take a look at
50 00:09:30,810 --> 00:09:37,020 the examples we had in the first lesson and define the price action by way of split session rolls.
51 00:09:38,520 --> 00:09:48,870 Can see between two o'clock and five o'clock in the morning. There was a London open trade here, trades back up into closes the fair value gap and sells off
52 00:09:48,870 --> 00:10:00,630 going into what we understand classically as the New York open in forex, but now we have to apply the bond rules which is 8am to 9am. We have our open range
53 00:10:00,690 --> 00:10:11,100 which we defined in the first lesson. And then we saw a subsequent lower move, which is the equities opening runs that opening range low. And that's all
54 00:10:11,100 --> 00:10:24,060 occurring during the am session for the morning trend. Price rallies up into the 11 o'clock hour. One and European traders go home, they square positions
55 00:10:24,420 --> 00:10:36,810 retracement takes place right down into noon. So the retracement ends at noon. And that begins the pm session which we see here. This is the afternoon trend or
56 00:10:36,810 --> 00:10:48,570 the pm session for bonds. Price makes the high the day ahead of two o'clock New York time and goes in consolidation at 3pm. So we can see the daily range as
57 00:10:48,570 --> 00:11:00,840 defined by 8am typically is a bullish day we can see the down move, which is a Judas swing price rallies away comes back find support at the opening range and
58 00:11:00,840 --> 00:11:12,990 around that 153 27 level or there abouts and then rise again making a high the day ahead of two o'clock in the afternoon and in price goes into retracement and
59 00:11:12,990 --> 00:11:25,320 consolidation at 3pm traditional power three just defined in terms of the split session rules for bonds. Okay, we have another example here. And again, these
60 00:11:25,320 --> 00:11:37,140 are the same the examples I used in lesson one, but we're just defining in Split session rules for your benefit. Again, we have a price swing in the London Open
61 00:11:37,980 --> 00:11:53,250 price makes a high trades down into the eight to 9am session notice it's taking out the load that was formed in the London Open to the am session for the bond
62 00:11:53,250 --> 00:12:08,490 market trades down below the london session lows creates a failure swing moves into a bullish order block at the 153 29 level price goes into expansion through
63 00:12:08,490 --> 00:12:23,220 the entire morning trend or am session into noon where it creates a market reversal profile and reversal takes place where we have the split session rolls
64 00:12:23,250 --> 00:12:33,960 seeing the am session going higher. Then the pm session going lower both offering opportunities one for buy one for sell and then after three o'clock
65 00:12:34,500 --> 00:12:40,530 price goes into what we would see classically as a consolidation as defined by today in forex.
66 00:12:46,080 --> 00:12:57,300 Okay, we have another example here. Price makes that high in the two o'clock hour in london session, price trades down and then notice what's happening here
67 00:12:57,330 --> 00:13:09,720 early at 7am. New York open kill zone in the forex market price rallies up and clears out the highs the equal highs around 154 19 Going into the eight o'clock
68 00:13:09,720 --> 00:13:23,370 hour. Price makes that high sweeps the London high, trades down aggressively and blows out the lows that was formed in the London session. And the early seven
69 00:13:23,370 --> 00:13:33,810 o'clock in the morning low between eight o'clock and nine o'clock in the morning. So at nine o'clock it creates the low the day. True to form. Donate am
70 00:13:33,810 --> 00:13:43,800 session price has a large opening range. So when there's a large opening range, we want to start looking for retracement ideas or fair value ideas and always
71 00:13:43,800 --> 00:13:51,540 bullish or blocks fair value gaps to be a buyer or seller and in his case, it was bullish because price traded down took out the liquidity below the lows at
72 00:13:51,540 --> 00:14:05,790 150 403. And ran the stops on the buy stops in the London highs. So it's worked both sides of the marketplace. But more specifically it trades down creates the
73 00:14:05,790 --> 00:14:17,670 Judas swing and it creates a turtle soup which is a move below the 130 402 level in the opening range eight o'clock to nine o'clock in the morning New York time.
74 00:14:18,720 --> 00:14:28,890 That down closed candle creates a bullish order block at that 140 402 level. And that is what is seen for the move taking place for the pm session or the
75 00:14:28,890 --> 00:14:37,590 afternoon trend and price starts to rally away there. Now you're probably saying what doesn't look like there's much of a move there doesn't require a whole lot
76 00:14:37,590 --> 00:14:50,310 of move for the bond to pay you. So you have a bullish order block during the am session or turtle soup either or the turtle soup is a buy below 154 Oh twos,
77 00:14:51,390 --> 00:15:02,880 which is the six o'clock and seven o'clock in the morning lows or price trades back above that 154 With three level and then comes back down into the bullets
78 00:15:02,880 --> 00:15:17,790 or a block for the pm session, you can take that trade or during the am session, price trade down into fields the fair value gap at 130 403 into 134. Two ahead
79 00:15:17,820 --> 00:15:31,380 of the 10 o'clock hour. And this is all during the equities open. And price rallies from 1.402, all the way up into one party for 10. So it's an eight tick
80 00:15:31,380 --> 00:15:40,710 move, eight times $31.25 per contract, that will be your am session moved. Now I know some of you're thinking, well, that doesn't seem like a lot. You can find
81 00:15:40,710 --> 00:15:51,270 these trades several different times a week. But you're highly selective by what you're looking for in my time. But the better trade was in the pm session. And
82 00:15:51,270 --> 00:16:05,040 you can take portions off once the fair value gap is filled between the highs at 1.24 10 During the am session and the last up close candle during the eight
83 00:16:05,040 --> 00:16:17,460 o'clock hour. So that fair value gap closes in at 144 13. There's your profit there, you would take profits on that position, so 134 to the 154 13. So you
84 00:16:17,460 --> 00:16:25,440 would see an 11 Tick move for the pm session. And if you left something on as a runner, you could have captured a little bit more move to run out the opening
85 00:16:25,440 --> 00:16:38,880 range high at 134 21. Later on in the evening during the Asian session. So by having these ideas applied to price action, we defined the bond market trading
86 00:16:38,880 --> 00:16:48,960 day in a specific criteria as defined here. But we're also including everything we learned in terms of PDA raise institutional order flow, and other time of
87 00:16:48,960 --> 00:17:01,080 date studies as the overlaps with Forex. So you can see how there's a blending of how the markets work together, they still respect time. But by applying these
88 00:17:01,170 --> 00:17:10,230 concepts, and then thinking about how it dovetails nicely with foreign exchange, you'll start to see there's a synergy that takes place between the asset
89 00:17:10,230 --> 00:17:18,840 classes, and how bonds influence other markets. But you're not going to appreciate that until you start doing it day by day basis, and study and keeping
90 00:17:18,840 --> 00:17:28,860 a journal of the bond market as we're shown here. So what we've covered so far is the opening range concept, the basics of what makes a bond market valuation
91 00:17:28,860 --> 00:17:39,840 in terms of its movement, the time of day that we'd like to study it and specific generic terms of what type of moves take place at these times of day.
92 00:17:41,700 --> 00:17:50,550 Your next lesson is going to be in trading and consolidation days and how we can look for small moves before we get to those trending days where there's a big
93 00:17:50,670 --> 00:17:54,750 large range available. Until then, I wish good luck and good trading