ICT Forex - Market Maker Series Vol 1 of 5.srt

Last modified by Drunk Monkey on 2021-07-27 06:27
1 00:00:30,840 --> 00:00:45,750 ICT: Alright, folks, welcome back. For those that don't know, this is me doing a revamp of an old 2014 video series I did, by the same title, market maker
2 00:00:45,750 --> 00:01:00,990 series. I did 12 videos in that series, and I was long winded in most of those installments. So with the backdrop of all of the supportive studies on his
3 00:01:00,990 --> 00:01:12,660 YouTube channel, it's been my interest to revisit that series and kind of like polish it up a little bit. And with that perspective in mind, hopefully I'll be
4 00:01:12,660 --> 00:01:21,600 able to deliver something that's much more meaningful and impactful to your trading, especially for those that have been with me for a long time. Newer
5 00:01:22,500 --> 00:01:38,670 students have acquired over the last six months or so maybe impressed by the level of insight that this series will bring them. But I also want to begin with
6 00:01:38,670 --> 00:01:52,590 something that is important to know. There's a lot of market maker, buzzwords that are making the rounds on YouTube, on Instagram, all over social media,
7 00:01:52,590 --> 00:02:08,550 Facebook, telegram everywhere. And the bulk of what you're seeing regurgitated actually came from this series here. Or it came from my 1996 elections, which,
8 00:02:09,270 --> 00:02:24,780 again, many people have taken pieces of what I've taught over almost the last three decades, and tried to come up with their own little interpretation. And
9 00:02:25,170 --> 00:02:42,120 all of them have been found wanting. It's my goal here to try to present this in a manner that is concise, succinct, and to the point as best as I possibly can,
10 00:02:42,630 --> 00:02:55,680 and not try to gloss over too much and make it of no use. So while I won't have 12 videos, I'm going to go through that series, and pull out everything and put
11 00:02:55,680 --> 00:03:09,030 them in the proper context, the proper order, so that way, everything that should have been understood, and more, because it's the revamp of it. Hopefully
12 00:03:09,030 --> 00:03:15,930 will be delivered by me in these five videos. This first volume is understanding the macro.
13 00:03:22,530 --> 00:03:34,860 All right, before we get into the nuts and bolts of all this who is the market maker? Now obviously, I'm saying that with my tongue in cheek, but who is it Who
14 00:03:34,860 --> 00:03:49,740 is the market maker? While the central banks are the producer of currency prices, and are the market maker central banks establish and manage a country's
15 00:03:49,740 --> 00:04:07,080 currency price at all times, both autonomously and manually. Currency prices are 100% controlled and manipulated by central banks. Investment Bank dealers,
16 00:04:07,710 --> 00:04:22,350 Goldman Sachs, UBS city, or brokers are not market makers. Now they're commonly calling themselves. I'm a market maker. I'm an X market maker at Goldman Sachs.
17 00:04:22,350 --> 00:04:33,930 I'm an X market maker at UBS. I'm an X market maker at Credit Suisse. All these guys are dealers, okay? Or ladies, in deference to the women. They're not market
18 00:04:33,930 --> 00:04:47,550 makers. Okay, if we're talking about the currency markets, forex the central bank is the market maker. Everybody deals and trades and exchanges on their
19 00:04:47,550 --> 00:04:59,550 product. their product is the price of the commodity or currency. They make that price. buyers and sellers do not make that price. We only exchange at the price
20 00:04:59,550 --> 00:05:16,650 feed. That's given to us, dealers and brokers do business with the price feed set and delivered by central banks. dealers and or brokers do not set or control
21 00:05:16,650 --> 00:05:31,710 currency prices. Central banks are not following retail indicators or flawed retail logic. Examples being they do not, and algorithms do not consider wycoff
22 00:05:32,220 --> 00:05:47,040 harmonic, Elliott Wave VSI or volume spread analysis, supply and demand zones etc no matter what it is that you may subscribe to as a trader. None of that is
23 00:05:47,040 --> 00:06:01,260 considered when the central bank algorithms deliver price reprice or hold in consolidation. It's just the facts. Central Banks employ high tech algorithms to
24 00:06:01,260 --> 00:06:12,510 deliver currency price feeds, and they do not run on supply and demand. I'm gonna repeat this one. Central Banks employ high tech algorithms to deliver
25 00:06:12,510 --> 00:06:27,000 currency price feeds. And they do not. Not. Not Okay. And then we press it so many times. It's important you understand this that supply and demand has no
26 00:06:27,000 --> 00:06:40,020 bearing on the delivery of currency prices, period. Now with all that said, let's dive deep.
27 00:06:47,070 --> 00:06:58,650 Understanding the macro. Now, when you're considering market maker concepts, real market maker concepts. You have to start with quantitative analysis. Okay.
28 00:06:58,680 --> 00:07:09,330 quantitative analysis is something that's statistical, it's measurable. It's not subjective. It's not left for interpretation. like looking at a trend. is a
29 00:07:09,330 --> 00:07:17,040 trend still bullish? Is it bearish? You ask 20 different traders on multiple different timeframes they're all going to come with with a different
30 00:07:17,190 --> 00:07:26,190 interpretation of whether it's bullish or bearish. Okay, that's subjective. That's qualitative. Okay, we'll get into qualitative analysis. But for now, we
31 00:07:26,190 --> 00:07:35,640 have to start with quantitative analysis. And that means something that is measurable, it's statistical, and it's not up for interpretation. It's pretty
32 00:07:35,640 --> 00:07:47,070 much straightforward. When you're doing quantitative analysis, you're asking essentially, the first question being what should the market be experiencing at
33 00:07:47,070 --> 00:07:57,000 the present? Like right now, when you're sitting down in front of your charts? What are you expecting price to be experiencing in terms of bullish or bearish?
34 00:07:57,840 --> 00:08:08,280 Is the market bullish or bearish? You have a way of determining that. How do you get that information? What derives that answer or whether it's bullish or
35 00:08:08,280 --> 00:08:20,220 bearish? So where do you find that information? Well, the first is global interest rates. Now this address here is just an additional link. And but if you
36 00:08:20,220 --> 00:08:31,830 go to WWW dot global hyphen rates calm, it'll take you through very simple prompts on the page. That link specifically though, you want to bookmark that
37 00:08:31,830 --> 00:08:45,240 one, okay. And whenever you do your quantitative analysis, you can refer to the global rates and the other being Commitment of Traders. And you can find that
38 00:08:45,780 --> 00:08:58,830 one bar chart.com. Now, these are just suggested websites that if you google and you do some, your own legwork, you may find that there are other websites out
39 00:08:58,830 --> 00:09:10,620 there that you're more inclined to use or warm up to. These are just simple, generic websites that will provide the information for you for free. You don't
40 00:09:10,620 --> 00:09:19,140 need to subscribe to anybody service. You don't need to be a part of any specific platform. This information is 100% free, it's just a click in research.
41 00:09:19,200 --> 00:09:35,190 And that's it. The global interest rates are the quote unquote, fundamental driver that sets the tone for long term macro price movement. The Commitment of
42 00:09:35,190 --> 00:09:48,000 Traders shows you a visual representation of what Smart Money is doing and how they're positioned periodically. Now, by blending these two elements, it gives
43 00:09:48,000 --> 00:10:02,670 you a real, measurable and quantitative perspective on what Smart Money is doing. Or in this case, what market makers are breeding price on a long term
44 00:10:02,670 --> 00:10:12,270 basis. That's how you start with the question of what's bullish. What's bearish? Notice I'm not talking about trend lines, I'm not talking about moving averages.
45 00:10:12,510 --> 00:10:25,410 I'm not looking for any of those types of things. This is what interbank traders concern ourselves with. This is what they're looking at. How do you plan your
46 00:10:25,410 --> 00:10:37,320 analysis? Well, by looking at these two specific points of interest, you're going to come up with a buy program or sell program. Very simple. Now, what does
47 00:10:37,320 --> 00:10:49,890 that really mean, though? Well, let's go further. When you go to bar chart.com, we're going to assume that we're going to be pulling up a currency. And we'll
48 00:10:49,890 --> 00:10:58,590 use Japanese yen here as an example, you're going to see that they have a select commodity tab, when you click that tab, the drop down menu will appear. You
49 00:10:58,590 --> 00:11:09,990 scroll down to currencies, and you pick the currency that you're interested in studying. In this case, we're going to use Japanese yen, you click on that your
50 00:11:09,990 --> 00:11:15,120 browser will take you to this page here, what you're looking for is,
51 00:11:16,500 --> 00:11:25,560 every one of these particular lines aren't necessarily one that you're going to be picking the top, you're going to be looking for the one that has the highest
52 00:11:25,590 --> 00:11:36,150 open interest. So it's the line directly underneath this one. The top one is cash, you can't plot the Commitment of Traders data on a cash chart, you got to
53 00:11:36,180 --> 00:11:48,690 use a futures chart. So the highest open interest right now is the September contract for 2021. And you can see the open interest is 196,469. contracts, that
54 00:11:48,690 --> 00:12:01,230 means that's the open interest or available, open interest, it's in that particular contract month, after September's contract expires, because we're
55 00:12:01,230 --> 00:12:10,380 talking about futures here, it would roll over to December 2021, in the open interest would rise from 958 to whatever the highest open interest would be,
56 00:12:10,680 --> 00:12:21,270 before it expires. And then once December 2021, expires, it would roll over to march 2022, where it only has six in the open interest slot. Now, that would
57 00:12:21,270 --> 00:12:36,090 only increase considerably after the December contract starts the midway point of its lifecycle. When you have this page here, you will be clicking obviously
58 00:12:36,120 --> 00:12:47,970 on the second one, which is September 2021. Once that occurs, this is the page that will take you to and look at the upper left hand corner where it says
59 00:12:47,970 --> 00:12:58,950 interactive chart, you would click that link at this point here. And it would give you this chart, once you're on this chart, you're going to go to the little
60 00:12:58,950 --> 00:13:12,780 tab that says plus study, when you click on that, you're gonna see an option to put in an indicator, okay, when I say that, I understand that we're not looking
61 00:13:12,780 --> 00:13:23,610 at something like an RSI, or stochastic or CCI. None of that stuff is useful, okay, you don't need any of that. But the Commitment of Traders, you're going to
62 00:13:23,610 --> 00:13:32,820 type that out comm administrators, and by the time you put in C o m, it'll offer that as an option, you just click on it, and then once you click on it, it'll
63 00:13:32,820 --> 00:13:42,630 open up this little window, you're going to click on the little eyeball next to small specks, and that'll put a line through it. And then you'll click the Add
64 00:13:42,630 --> 00:13:53,580 button. When you do that, you'll get the commitment traitors graph applied to your chart, it'll post it on the bottom of the chart, you can toggle it to the
65 00:13:53,580 --> 00:14:03,480 top of the chart or leave is the bottom. Historically, it's always been seen underneath price charts, but we'll get to that in a minute. The other link I
66 00:14:03,480 --> 00:14:13,590 gave you is global hyphen rates.com. And once you go to that website and click on interest rates, and the central bank's breakdown, or summary of current
67 00:14:13,590 --> 00:14:24,240 interest rates, page will open up. This is basically what it looks like. Now, each one of these columns are active and the way that if you click on it, it'll
68 00:14:24,240 --> 00:14:33,090 sort it like a spreadsheet. And if you click on the country or region, it will put in athletic order. If you click on current rate, it'll do it from high to
69 00:14:33,090 --> 00:14:43,620 low or low to high or vice versa. Or if you want to know which one's changing direction for going up or going down, you can toggle that and enlisted by that
70 00:14:43,890 --> 00:14:54,780 way as well. Or you can do a search on how the rate was previously. And when the last time that rate was changed at the Central Bank level. For now, the only
71 00:14:54,780 --> 00:15:07,620 thing I want you to focus on is toggling Clicking this and in sorting them by high to low. Okay, so or low to high doesn't make a difference. But you want to
72 00:15:07,620 --> 00:15:19,950 enter a list that increases or decreases. So that way you can find things rather quickly. Now, there are some countries in here that I'm not interested in. For
73 00:15:19,950 --> 00:15:27,930 instance, the Israeli interest rate, I'm not interested in trading that I'm not interested in the Polish interest rate, and I'm not interested in the Czech
74 00:15:27,990 --> 00:15:40,080 interest rate, or the Hungarian interest rate. What I'm looking for is like the majors like the Swiss franc, the Japanese yen, European interest rate from ECB,
75 00:15:42,900 --> 00:15:54,090 British pound for Great Britain. Obviously, the fed from United States Canada's bank rate, New Zealand's bank rate. So it's basically the majors. Alright, so
76 00:15:56,430 --> 00:16:04,920 Australia is another one in here, so Australian dollar. So you have all the majors in here and what their respective current interest rate is.
77 00:16:11,580 --> 00:16:21,630 Now, when you're looking at the interest rates, you want to toggle them, obviously, however, you want to sort them, you want to sort them by specific
78 00:16:22,140 --> 00:16:31,080 country, you can click on this, and I'll toggle all of the countries by alphabetical order. Sadly, you can find the majors that are coupled with the
79 00:16:31,080 --> 00:16:36,990 dollar or a cross of your choice quicker that way and visually go right over to where the interest rate is at the moment.
80 00:16:42,779 --> 00:16:50,909 Now, I'm gonna talk to you about interest rate differentials. What is an interest rate differential? Well, it's the difference, obviously, between one
81 00:16:50,909 --> 00:17:02,729 country's interest rate versus another. And why is that important? Well, the importance is that on a central bank level, and an interbank level, large flows
82 00:17:03,269 --> 00:17:17,969 seek yield. And that means that they're always looking for a rate of return. Now, would you rather be in a country that has an interest rate of 5%? Or would
83 00:17:17,969 --> 00:17:31,019 you rather be in a country that has an interest rate of 2%? Some words, you have the ability to make 5%? Or 2%? Which one would you put your money in? Well,
84 00:17:31,109 --> 00:17:42,839 hopefully, you would be considering the 5%. Well, large flows and large interest in yield and speculation, they think the same way. So how do you get the
85 00:17:42,839 --> 00:17:53,849 information on which country has the highest yield this list right here. And obviously, as a foreign exchange trader, that you're aspiring to be or maybe you
86 00:17:53,849 --> 00:18:06,449 are, you're just not finding consistency. This will give you the foundation to finding real markets that are really engineered to go a particular direction.
87 00:18:08,759 --> 00:18:20,969 But you have to look for something specific, and that's the differential. So it's not enough to simply look for a high yielding interest rate country, you
88 00:18:20,969 --> 00:18:33,239 need to find a high interest rate yielding country's currency and couple it with a weak currency. For example, if you look at Japan right here, okay, the
89 00:18:33,239 --> 00:18:45,599 Japanese interest rate for the Central Bank of Japan, its interest rate is negative point, one zero. Now, in this list, if we found a currency that has a
90 00:18:45,629 --> 00:18:57,569 high yielding interest rate relative to that negative point, one zero from Japan, we'll look at the feds current interest rate at point two 5%. So there's
91 00:18:57,569 --> 00:19:10,709 a differential between the two. The higher interest rate is with the Fed or the American dollar versus the Japanese yen, meaning the differential is positive
92 00:19:10,739 --> 00:19:13,439 for dollar in negative for yen.
93 00:19:19,050 --> 00:19:30,750 Now, since we have that fundamental backdrop, on the interest rate front, we know now we can go into the Commitment of Traders chart. And we're looking at
94 00:19:30,780 --> 00:19:42,480 the Dollar Index. Now, typically, I don't really like to put the commitment traitors graph on the dollar index. And the reason why is because many times it
95 00:19:42,480 --> 00:19:52,410 could look like this, where it doesn't really give you a whole lot of information in this format. Now there's a way to obviously change this and draw
96 00:19:52,410 --> 00:20:00,510 more information from it. But majority of time It looks like this and it won't give you the movement above the zero basis line. Now the zero basis line What
97 00:20:00,510 --> 00:20:10,230 we're interested in is the red line. That's the commercials and the commercials, we'll just call them the central banks. Okay? When they go above the zero line,
98 00:20:10,260 --> 00:20:22,830 that doesn't necessarily mean it's a buy. And just because they're below zero basis line doesn't mean that the dollar index is going to go down. What we're
99 00:20:22,830 --> 00:20:39,390 looking for is a combination of interest rate differential, and the highest long position, net long or lowest net short position held by the commercials. Now,
100 00:20:39,840 --> 00:20:49,590 since we're looking at the Dollar Index, and we're thinking in terms of it being a higher interest rate, which is, you know, it's really not that high of an
101 00:20:49,590 --> 00:21:01,320 interest rates only a quarter percent. But in relationship and contrast to the rate of the Bank of Japan being negative point, one $0 has the better interest
102 00:21:01,320 --> 00:21:13,830 rate. So what we're looking for is a time when the dollar has the commercials being above the zero line. And we see that here in the latter portions of 2020
103 00:21:14,370 --> 00:21:24,900 in December into January, notice that the red line is higher than it's ever been in the past few years. So their net long here higher than they have been in
104 00:21:24,930 --> 00:21:35,430 recent time, at this moment in the chart. Now this by itself is bullish, only if we see the opposite with the Japanese yen. Because remember, what we're doing is
105 00:21:35,430 --> 00:21:48,540 we're matching up a strong fundamental interest rate differential against a weak interest rate differential, that mean dollar versus yen. So if we take a look at
106 00:21:48,540 --> 00:22:02,730 the yen, you can see as we crossing from December into January 2021. The commercials have never been this net short north, they're thinking that it's
107 00:22:03,120 --> 00:22:14,700 overbought, and it's likely to go down at this point right there. So anytime in the past in this chart, they've never been as bearish or below the zero line as
108 00:22:14,700 --> 00:22:25,170 they were right here. And by itself, it doesn't mean anything, you want to see a break in market structure. And if you look at this swing low right there, you
109 00:22:25,170 --> 00:22:32,610 see a low with a higher low to the left and a higher low to the right. Many of you to understand market structure would be looking at this low being broken and
110 00:22:32,610 --> 00:22:42,480 that's the market structure break for you. That's not what it is for me. This is a swing low the highest of all these candles up here until it finally broke
111 00:22:42,480 --> 00:22:58,590 down. This being broken there is a market structure shift or break for me. Once this occurs, then all of the understanding that this outline for you where it's
112 00:22:58,590 --> 00:23:13,140 bearish for again bullish for dollar and the interest rate differential will now kick in. Then the algorithms will start to reprice yen lower, end dollar higher
113 00:23:13,170 --> 00:23:20,220 or consolidate dollar. Presently we've been seeing dollar consolidated but yen has been allowed to repriced lower.
114 00:23:25,560 --> 00:23:35,580 So how does that translate to a forex chart? Well, here we have the dollar yen, because when we're pairing the weaker against the stronger using these
115 00:23:35,580 --> 00:23:47,880 differentials, the two currencies are dollar and yen. So the pair name is dollar yen. And that's what we're employing here for the charting purposes. The chart
116 00:23:47,880 --> 00:23:59,820 is plotted on the basis of US dollars versus Japanese yen. And we're using the stronger fed rate versus the weaker Japanese right. So this translates into
117 00:24:00,480 --> 00:24:12,720 expectations that it would be bullish for this chart, because dollars should be going up while yen drops and it would be basically bearish yen. Thus, dollar yen
118 00:24:13,050 --> 00:24:23,580 should be expected to rally higher. And we obviously see that here, here's December crossing into January, short term high broken so then we have a break
119 00:24:23,580 --> 00:24:32,700 in market structure. Now the algorithm will reprice dollar higher against yen, and that's what you see here. Now, this is not a small move, folks, this is
120 00:24:32,730 --> 00:24:44,520 pretty significant. But this in itself is the basis to understanding how to find markets that should be moving in one direction. But you're doing it in a way
121 00:24:44,550 --> 00:24:56,160 that is done like an interbank trader. It's not some willy nilly guy that puts TDI indicators on his chart, calling all kinds of moving averages and chasing
122 00:24:56,160 --> 00:25:08,880 price. We're looking for real measurable And quantitative means of determining what these markets are going to do. It's not hypothetical, it's not subjective.
123 00:25:08,970 --> 00:25:19,650 It's very specific things you're looking for. And you go in looking for these types of moves to be the foundation to majority of your trades. Now, if you
124 00:25:19,650 --> 00:25:27,720 trade in this direction, and you're buying, you can be a short term trader, being a buyer, you can be a day trader, you can be a scalper, you can be a
125 00:25:27,720 --> 00:25:36,810 position trader, swing trader, every facet of trading disciplines can be employed by being bullish on dollar yen.
126 00:25:44,490 --> 00:25:53,790 Okay, now we're gonna be looking at the interest rate differential in the CAD yen, this is gonna be a case study for it. So we're gonna be looking again at
127 00:25:54,000 --> 00:26:07,290 the Japanese yen, which has a weak interest rate, negative point one zero, and the Kenyan dollar has a interest rate the same of what we referred to in the
128 00:26:07,320 --> 00:26:18,240 dollar index as the same rate. So right away, you should know that it should be bullish Canadian dollar bearish Japanese yen. But we have to go behind the
129 00:26:18,240 --> 00:26:29,100 scenes and go do a quantitative analysis on what the actual positions are by the smart money. Because the commitment traders gives us a graphic depiction of
130 00:26:29,100 --> 00:26:41,550 their real trading of their real positions. It's not just Well, this should be bullish, or this should be bearish. Okay, that's the precursor, the interest
131 00:26:41,550 --> 00:26:49,710 rate differential is the precursor. It doesn't mean just because one interest rate is higher than the other that the charts gonna be anytime you sit down in
132 00:26:49,710 --> 00:26:59,910 front of it. It's a good buy or a good sell relative to that differential. You need to know that that is just the fundamental backdrop or underpinnings in the
133 00:26:59,910 --> 00:27:07,590 marketplace, then you have to wait for smart money to position themselves. Then once that's there, the algorithm will reprice.
134 00:27:14,010 --> 00:27:22,500 Alright, we're looking at the Canadian dollar futures market. And this is the September 2021, contract, one bar chart.com. And this is the symbol you would
135 00:27:22,500 --> 00:27:37,380 use to see it. Okay. And plotting the commitment traitors. Now, if you recall, back on the global rates.com, or global hyphen rates.com website, when we were
136 00:27:37,380 --> 00:27:46,050 looking at Canadian dollar, you probably didn't notice it. I didn't mention it, I apologize. But if you go back to that list, or rewind the video and rewatch
137 00:27:46,050 --> 00:28:01,560 it, and whatever, you'll see that in March of 2020, it showed that it dropped about half a percent, from point seven 5% down to point two 5%. So it's a
138 00:28:01,560 --> 00:28:13,980 quarter percent from three quarters of percent. So the interest rate actually dropped a half percent in March of 2020. just from looking at it from face
139 00:28:13,980 --> 00:28:22,440 value, some would say oh, that's not good, because the interest rates are dropping. It doesn't make a difference here because we're we're looking at the
140 00:28:22,440 --> 00:28:38,880 differential. Point two, five is still better than negative point one zero. So when we look at March here, this deep dive down in price. It happens around the
141 00:28:38,880 --> 00:28:47,790 same time that the interest rate announcement comes out. And even though the dangerous rate dropped to half a percent, it's still a positive interest rate
142 00:28:47,850 --> 00:28:59,880 versus a negative interest rate seen in Japan. So right in here, when price is consolidating, look what's occurring here. We have a big buildup of net long
143 00:28:59,880 --> 00:29:09,030 positions by the commercials. They're above the zero line. So they're bullish. Okay, so they're bullish, we're at a time when the interest rate differential is
144 00:29:09,030 --> 00:29:24,840 positive for Canadian negative for yen. Later on, as we get into the end of 2020, we moved from bullish to negative below the zero level, this swing down
145 00:29:24,870 --> 00:29:34,200 doesn't change it being bullish, it just means that we're in a strong trend, and these relative equal highs up here. And if some of you that are new think that
146 00:29:34,230 --> 00:29:44,370 this is an equal. It's relative. It's, we'd look for this to be taken out. Okay. Knowledge is a lot of buy stops up there. Just like this is relative equal
147 00:29:44,370 --> 00:29:53,460 highs, but it didn't take long for it to get above that there. But from a long term perspective, and this is we're focusing on this high here should be
148 00:29:53,460 --> 00:30:01,740 challenged and we seen it here. Now, I know some of you may be new to me and this might seem like well, this is Obviously talk about it in hindsight, but I
149 00:30:01,740 --> 00:30:13,770 promise you, this stuff repeats all the time every three months, every six months, every nine months, every year. Okay, it works all the time. But we're in
150 00:30:13,770 --> 00:30:26,940 a year, that followed a really weird year because of all the illness related things. And I'm not gonna say anything more than that. But even with that, this
151 00:30:26,940 --> 00:30:40,260 information still ferrets out moves. So we have a net long position here, that's bullish at a time when the interest rate has dropped. So since 2016, the
152 00:30:40,260 --> 00:30:50,070 negative rate on Japan hasn't been changed. So we had a change in the interest rate on the loonie, or the
153 00:30:51,330 --> 00:31:05,070 Canadian dollar. So that rate dropped a half percent but still remained positive rate, in contrast to what Japan's rate is negative point, one, zero. So we have
154 00:31:05,070 --> 00:31:15,600 the real positioning of the smart money being bullish at a time after the interest rate announcement. And even with this drop down below the zero line
155 00:31:15,600 --> 00:31:25,740 here, all that indicates is we're in a strong trend. And now they're just hedging into until we get to this really extreme net short position here, where
156 00:31:25,770 --> 00:31:35,940 that's where the market tops out, after it runs this high, and it runs the end of it seasonal tenancy, and I will count you to go back through recent videos.
157 00:31:35,940 --> 00:31:51,210 And again, the time of this recording is July 26 2021. So in recent weeks, or within a month or so, I taught a lesson on seasonal tendencies, and actually
158 00:31:51,210 --> 00:32:04,170 talk about Canadian dollar, and how the seasonal tendency for Canadian dollar is specific around a time of year. And if you look at what we see here, it's
159 00:32:04,800 --> 00:32:12,690 deliberate exactly like I outlined even in that video there. But that's for another time. Another discussion. Let's move over to the Japanese yen. Again,
160 00:32:12,750 --> 00:32:26,760 we've already seen the chart, but we're referring to it again. So we're bearish here. And just crossing over doesn't change it from being bearish to bullish, it
161 00:32:26,760 --> 00:32:36,840 just means that the trend is strong, and now they're hedging in as it's dropping down, they're buying into those lower lows because they sold short up here. And
162 00:32:36,840 --> 00:32:43,950 to get out of a short how you have to get out of it, you have to buy it back. And that's all we're seeing here is the Smart Money is buying back their heavy
163 00:32:43,980 --> 00:32:56,520 net short position from up here. So let's take a look at what that translates to in terms of a forex chart. So the interest rate differential on CAD yen is seen
164 00:32:56,520 --> 00:33:05,610 here. So in november december time period, you can see a market structure break here, comes back down and starts to rally up and follows that underlying Lee
165 00:33:05,610 --> 00:33:21,960 bullish Canadian dollar bearish Japanese yen, and the market rallies up and has a significant price run of over 1200 points. So that's a significant run in
166 00:33:21,960 --> 00:33:30,540 price. So you can be again, in any of this run up here, you could be a day trader, you can be a short term trader, you can be a swing trader or a position
167 00:33:30,540 --> 00:33:42,270 trader. But these large moves are what the interbank traders from the central bank level. Okay. There will be people that say central banks don't trade. No,
168 00:33:42,750 --> 00:33:52,290 they employ people to trade for them. They speculate they're trying to make money in every avenue. Okay, they have their tentacles in everything, okay? So
169 00:33:52,770 --> 00:34:06,840 it's not a stretch of the imagination to if they're going to control price, and they basically run the whole store. Who's going to police them? No one. There's
170 00:34:06,840 --> 00:34:14,940 never been an audit on any central bank. You're never going to tell them they can or can't do something. It's their game. It's their role. It's their casino.
171 00:34:15,240 --> 00:34:25,500 And they can do whatever they want. And if they control it, they have the inside edge, they have the advantage. Okay. So you can be mad, you can fold your arms
172 00:34:25,500 --> 00:34:35,790 and hiss and say this is unfair. Or you can say, Well, this is how they do it. And I'm going to operate like this. This is the closest that you're gonna get to
173 00:34:35,790 --> 00:34:48,840 it. And it works. It's extremely powerful information. The insight that it gives you really puts you on the right side of the marketplace and it's not just a one
174 00:34:48,840 --> 00:35:04,110 day bias. It's long term. Now I don't get in positions and hold them from a low like in November. 2020 all the way up to a high of June, I don't trade that way.
175 00:35:04,500 --> 00:35:14,400 And the reason why is I don't have the patience to do that, because I'm like a dog Chasing Cars, I can see a one minute chart, a five minute chart, a 15 minute
176 00:35:14,400 --> 00:35:29,430 chart, a one hour chart, and see dozens of trades all week long. And if I have a trade on, like this, my personality is short term, specialized in doing in and
177 00:35:29,430 --> 00:35:41,040 out surgical strikes, that because I can change my mind a lot. And I'm not saying that's a good thing, I'm just saying I've matched my personal personality
178 00:35:41,730 --> 00:35:45,390 with a mode of trading that fits and suits me, which is
179 00:35:45,420 --> 00:35:56,130 crucial for your trading. But don't let that be in invitation for you to mimic me. Because some of you may be excellent, long term position traders, that
180 00:35:56,130 --> 00:36:05,310 you're very committed to an idea, and it takes a lot for you to change your mind. That's the personality characteristic that's meant for long term position
181 00:36:05,310 --> 00:36:16,620 trading. But if you don't have those characteristics, and you're trying to do it, it's like, it's very miserable, because you're gonna feel like you can't can
182 00:36:16,620 --> 00:36:21,900 do it. Okay, you're gonna be wanting to change your mind all the time, every little fluctuation is gonna make you want to change your mind to get out of the
183 00:36:21,900 --> 00:36:34,650 trade. And a swing trader has a little bit less patience than a position trader, but more patients than a short term trader day trader or scalper, and some of
184 00:36:34,650 --> 00:36:44,580 you have those characteristics. And others are thinking, Well, you know, I like to be in for a week, maybe three or four days, and then get out. That's short
185 00:36:44,580 --> 00:36:56,670 term trader. If you have less patience than that, you're probably a day trader at heart. And the way you use this information is from the crossover here when
186 00:36:56,670 --> 00:37:05,970 we had a market structure break, and it starts to rally again, every bullish day in here is a day where you're trying to capture intraday price moves a day
187 00:37:05,970 --> 00:37:19,170 trade, and down days may be a day that you take a loss or you sit on your hands and wait for a new setup. And scalping. You would put more on your trades that
188 00:37:19,170 --> 00:37:30,870 were in the bullish side of things, and trade a whole lot less leverage when you're shorting in a move that's fundamentally driven like this. I'm not saying
189 00:37:30,870 --> 00:37:38,400 you can't make money shorting in moves that run up like this, but my question is, is why would you want to do that when everything is predisposed to go
190 00:37:38,400 --> 00:37:48,600 higher? Okay, so hopefully this first installment has got your gears turning, and it gives you a little bit of clarity about the mystery that makes these
191 00:37:48,600 --> 00:37:57,600 markets move around. We're going to dive a little bit deeper into what makes these things gyrate and go to where they want to eventually get to in Volume
192 00:37:57,600 --> 00:37:59,460 Two, until then, be safe.