ICT Market Maker Primer Course - 05 - The ICT London Killzone.srt

Last modified by Drunk Monkey on 2021-06-10 06:21
1 00:00:07,919 --> 00:00:14,069 ICT: Okay, folks, welcome back. This teaching is going to be specifically dealing with the ICT London open kill zone.
2 00:00:21,360 --> 00:00:35,910 Okay, so the London kill zone, what ICT concepts we're going to use this module the importance of time and price again, the London open the London session.
3 00:00:38,070 --> 00:00:54,510 important characteristics of London. Okay, folks, this is one of those topics where it's a very vast subject. So I'm introducing you slowly into one of the
4 00:00:54,510 --> 00:01:05,670 most important timeframes of the 24 hour banking cycle. The London open is typically a time where I like to trade, because it gives me a lot of
5 00:01:05,670 --> 00:01:19,980 opportunities. And it's, well, its magnitude is a lot more favorable for a short term trader. It comes with it a great deal of responsibility, in terms of
6 00:01:19,980 --> 00:01:28,740 knowing what the hard timeframes are doing. A lot of economic calendar releases come out overnight, and they can be very volatile. But the euro dollar and the
7 00:01:28,920 --> 00:01:38,160 British Pound pairs are ideal for this time of day. And that's why I've elected to trade those two pairs, the London open frequently sets up an optimal trade
8 00:01:38,160 --> 00:01:54,540 entry pattern that can offer 25 to 50. pips, for a scalp. The key times to monitor are 2am to 5am, New York time, sound words, the easiest way to avoid me
9 00:01:54,540 --> 00:02:12,030 confusing you about the time is determine whatever time it is in your area relative to what it is in New York time, okay, and physically wait for 2am to be
10 00:02:12,660 --> 00:02:21,780 in New York, and then calibrate that with your broker and your local time. And always set a clock for New York. And you'll know exactly what I'm referring to
11 00:02:21,780 --> 00:02:31,530 in terms of time, it's the easiest way I can overcome that barrier. Because it's been a point of confusion many times, because I don't know where you are
12 00:02:31,530 --> 00:02:43,560 globally, and you're all in different locations of the globe. I don't know what what the the translation is going to be in terms of time, so the conversions are
13 00:02:43,560 --> 00:02:56,910 going to be up to you. But the ideal ICT London kill zone for your learning is going to be 2am to 5am. And it's relative to New York time. Now, if you look at
14 00:02:57,300 --> 00:03:10,800 this chart here, this is a euro dollar chart. And what I'm highlighting here is two specific trading days. And I want you to take a look at the red, it's like a
15 00:03:10,800 --> 00:03:26,490 deep red vertical line, there's two of them immediately to the right, of the left most vertical red line, we see price action drop down initially, and then
16 00:03:26,490 --> 00:03:37,290 rallies up. And it creates the very high of the day, the day's low forms down here. And it comes off the low and close closes off the low. The next trading
17 00:03:37,290 --> 00:03:47,550 day. Again, here is that vertical red line. And it's delineates New York time.  midnight. Okay, so Midnight in New York. That's what this vertical red line
18 00:03:47,550 --> 00:03:57,870 delineates for this particular day. And this represents Midnight in New York on this trading day. So we can see that the price rallies again for the euro dollar
19 00:03:57,900 --> 00:04:08,640 up into this small little segment of time. And it creates a high end trades down crease a little day later on and goes and consolidation and closes in the middle
20 00:04:08,640 --> 00:04:22,770 of the range. The key takeaway that I want you to more or less be encouraged to go through your charts and study is that London open generally has the highest
21 00:04:22,770 --> 00:04:34,470 probability of creating the high or the low the day. So here, we see price trading up to in this little blue line segment. And this little blue line
22 00:04:34,470 --> 00:04:43,080 segment is just delineating that little pocket of time that window of opportunity. Between two o'clock in the morning and 5am New York time you can
23 00:04:43,080 --> 00:04:52,740 see how beautifully goes up. trades makes the highly day and then trades aggressively lower. Same thing here on this day it trades up spikes up, creates
24 00:04:52,740 --> 00:05:03,330 the high the day and then sells off. Okay? This is one of the biggest things that a lot of students of mine And people that have just casually looked at my
25 00:05:03,330 --> 00:05:07,740 things. In terms of my tutorials. This is one of the biggest
26 00:05:08,940 --> 00:05:20,100 wealth. In my career, it was the biggest discovery, because it helps me determine where when I'm bearish, natural, hi, the other day is going to form.
27 00:05:21,180 --> 00:05:33,600 And if I can do that, with a reasonable measure of accuracy or consistency, just imagine if you get three to four opportunities where you can get the high or
28 00:05:33,600 --> 00:05:43,080 very close to the high of the day, and ride the majority of the daily range. If you could do that a few times a month, you can do exceptionally well as an FX
29 00:05:43,080 --> 00:05:54,510 trader. Now, it doesn't lend itself to just forex, this same phenomenon occurs in other assets. Now I don't trade Bitcoin or cryptocurrencies. But I have
30 00:05:54,510 --> 00:06:04,080 students of mine that swear by this working in that asset as well. It works in commodities, it works in bonds, it works in just about everything that trades
31 00:06:04,470 --> 00:06:17,220 electronically overnight. Incidentally, you can anticipate things like this to occur in index trading. So if you're trading, for instance, the DAX, the the
32 00:06:17,220 --> 00:06:31,230 footsie or the s&p 500, or Dell, or NASDAQ futures contracts, overnight trading, you can see the same phenomenon occur as well. So it really isn't limited to
33 00:06:31,230 --> 00:06:44,640 just forex. Now. Because I taught it to the trading community, they assumed that it was limited and only salient to forex or foreign exchange, I used this same
34 00:06:44,640 --> 00:06:56,370 concept as a commodity trader in the early 90s. So it's not that we have a asset class that it can only function in with this type of trading or this type of
35 00:06:56,370 --> 00:07:09,870 price action. It's completely universal. And that's pretty powerful. Now if we have a market that is, let's say, in a strong trending environment, you want to
36 00:07:09,870 --> 00:07:22,590 be really focusing in on London, because London will give you the highest probability of a low risk entry price point. Okay, and conversely, we can see
37 00:07:23,280 --> 00:07:39,060 when the market is bullish, the tendency is for the market to trade down creating the low bid day in the London open ICT kills them again here, market
38 00:07:39,060 --> 00:07:48,030 trades down after midnight New York time creates the low of the day, between two o'clock and five o'clock in the morning New York time. Low they formed off to
39 00:07:48,030 --> 00:08:02,010 the races we go. So here's to back to back trading days. Okay, if you could have taken a long not even at the low Okay, say you use some other online maybe a buy
40 00:08:02,010 --> 00:08:14,070 stop to get in, keep each other buy stop above these individual candle highs and eventually it trips you and get you long. In this held on to it for 3040 pips,
41 00:08:14,310 --> 00:08:28,710 each trading day, it adds up quickly, folks, same thing here, market creating a low takes off aggressively. Now I want you to take a look at the relationship
42 00:08:29,070 --> 00:08:43,740 between one one and open low. And the immediate day after one in open law. Okay, we have a range that's framed by the low here. And this highest high in between
43 00:08:43,770 --> 00:09:02,340 the two London lows. This is your trading range here and this would be an optimal trade entry long using previous day's data to today's London setup. She
44 00:09:02,340 --> 00:09:14,430 can get an optimal trade entry on that and prices an expansion on the upside.  And we can see a very nice opportunity to have a long trade on both days here,
45 00:09:14,790 --> 00:09:31,890 focusing on London open, creating the low the day when the underlying market is poised to go higher. Okay, so the London session itself actually trades a little
46 00:09:31,890 --> 00:09:46,200 bit longer than 5am. Okay, but for the sake of my concepts I want to graduate over time, the significance of five o'clock in the morning, New York time to
47 00:09:46,200 --> 00:09:58,170 seven o'clock in the morning New York time, which is classically like a London lunch period where it can go quiet. It can have minor little retracements but I
48 00:09:58,170 --> 00:10:08,070 don't like to see any kind of entry between five o'clock and seven o'clock in the morning, New York time. Because it can tend to wait for the New York open,
49 00:10:08,070 --> 00:10:09,300 which we'll cover next
50 00:10:09,300 --> 00:10:19,320 lesson. But the price action during the London session sees the highest probability of a large directional move in the 24 hour day. So what does that
51 00:10:19,320 --> 00:10:33,450 mean? If we were to look at the entire 24 hour market, and pick it picked up, beginning point and fall around the entire world, and where it began, it'll end.
52 00:10:33,750 --> 00:10:42,840 So we have 24 hours of time, if we were to measure the volume, or how much action if you want to call it any other word, it's it's layman's terms, the most
53 00:10:43,200 --> 00:10:53,490 bang for your buck is going to be in the London open. Now that right away draws excitement to younger guys. And if you don't know what you're doing, you can get
54 00:10:53,520 --> 00:11:03,120 really hurt quick, and the woman session because it can be extremely volatile.  And it can be like a lightning bolt. Okay, if you're caught on the wrong side of
55 00:11:03,120 --> 00:11:14,190 the marketplace. And as a high impact news event that's out during that timeframe, you can get mowed over rather quickly. And if you don't use stop loss
56 00:11:14,190 --> 00:11:26,550 orders, that session is going to treat you very cruelly in the form of taking money from you. Because London can be extremely one sided. And once it takes
57 00:11:26,550 --> 00:11:37,530 off, it's pretty relentless, it doesn't really give you a chance to get off the hook. The London trading session actually extends beyond the 5am hour to 7am,
58 00:11:37,830 --> 00:11:48,480 New York time, the London session sees the highest volume of order execution than any other trading session, we look at the little chart to the right. And
59 00:11:48,480 --> 00:11:57,690 again, all I'm trying to do is show the profile itself, we don't need to zoom in and look at details of wicks and candle bodies, I just want you to look at it
60 00:11:57,690 --> 00:12:10,740 graphically in terms of the way the ranges expand and how it looks overall. So we have a trading day here of consolidation, it creates a little bit of a run
61 00:12:10,740 --> 00:12:29,520 up, rejects that and trades aggressively lower and then comes off the low and begins the New York session. So we have a micro power three formation in here.
62 00:12:30,030 --> 00:12:45,390 So we have the open the rally up the expansion, the low off the lot closes.  Okay, prices fractal folks, we can anticipate seeing duplicate patterns that are
63 00:12:45,390 --> 00:12:54,780 seeing on higher timeframes on a lower timeframe. So if we understand that the daily range, if it's a bearish market profile or for looking for lower prices,
64 00:12:55,110 --> 00:13:04,800 the opening on the daily range or daily bar, it's going to be at or near the high the day, the high is going to be very limited in terms of how much it goes
65 00:13:04,800 --> 00:13:11,550 above the opening price. And then the largest portion of the range is going to be between the open and the close. And the close is gonna be near the low of the
66 00:13:11,550 --> 00:13:21,540 day. Well, this is intraday price action between this vertical line here and this vertical line here. This is delineating two o'clock in the morning to seven
67 00:13:21,540 --> 00:13:34,410 o'clock in the morning, New York time. Okay, so we're looking at a window of five hours. So if we understand that price can be fractal and we're bearish,
68 00:13:34,470 --> 00:13:46,200 this could be viewed as a micro power three formation. Okay. Now, why is that significant? Why should I be teaching it to you? What's the point of it? Well,
69 00:13:46,200 --> 00:13:57,750 if we see in this trading day here, it creates a scenario where let's assume for a moment that we were anticipating a bullish market move, okay, maybe this
70 00:13:57,750 --> 00:14:06,900 particular day trade down to a level that was some kind of a support level. And we came off of it, traded consolidated, okay, and then we came down initially,
71 00:14:07,230 --> 00:14:28,560 right after the two o'clock time period. And price drops down into a significant low. If price doesn't start to run there, during the London session, we could
72 00:14:28,740 --> 00:14:36,450 reasonably expect that the real move is going to be in the next trading session, which would be the new york session which is not going to be our teaching here.
73 00:14:36,960 --> 00:14:48,840 It's the next lesson in this series. But you can see the move ensues after the crossover from the London session and then the beginning of the new york
74 00:14:48,840 --> 00:15:00,720 session. Now, the London session technically extends even beyond seven o'clock in the morning, up into 10 to 11 o'clock in the morning, New York time. Okay, so
75 00:15:02,010 --> 00:15:07,950 basically, it's three o'clock in the morning New York time, to 11am to noon,
76 00:15:09,269 --> 00:15:18,779 all relative to New York time. Okay, so there's an overlap of New York and London trading, which makes the next teaching a little bit more interesting as
77 00:15:18,779 --> 00:15:33,059 well. But the takeaways I want you to have is that the London session can create the higher load day. And we can also study the profile that takes place in
78 00:15:33,059 --> 00:15:44,399 between the beginning and ending of the overnight session. If it's trending, okay, we have a trending model like this, chances are, we could see it rather
79 00:15:44,399 --> 00:15:56,399 quiet. New York session doesn't mean that always but it's one way I like to look for potentially a slow New York session. Or we could have a reversal scenario,
80 00:15:56,399 --> 00:16:03,629 which is what we saw here. Okay, to the right of this vertical line is the New York session, you can see it did have a little bit reversal. But when
81 00:16:03,629 --> 00:16:13,259 consolidated, and basically traded in the middle of the overall range into the close. The very next day, we had a initial drop down in London, creating the low
82 00:16:13,259 --> 00:16:22,919 of the day. But it closed the session right in the middle. So it didn't really have much of a trend, it had a spike low. But if we're bullish, it didn't really
83 00:16:22,919 --> 00:16:32,999 show any kind of indication that in the London session, but soon as we crossed over into the New York session and overlap with London, then we have the optimal
84 00:16:32,999 --> 00:16:47,849 trade entry. Then we have the dynamic imbalance, where the range expansion occurs for the for the daily, upside and up close. So London, gives us a lot of
85 00:16:47,849 --> 00:16:55,889 things to study. And I want you to go through your charts and look for examples of the things I just outlined here. And I think you'll be rather surprised.
86 00:17:00,089 --> 00:17:09,329 Okay, the one session characteristics. Now abundant session typically creates the low of the day when the market is primarily bullish. And the high of the day
87 00:17:09,479 --> 00:17:18,779 when bearish. When the market is poised to trade higher on a daily timeframe, we can focus on the London session to post a low of the trading day. If the daily
88 00:17:18,779 --> 00:17:23,999 is poised to trade lower, we can focus on the London session to post the high in the trading day.
89 00:17:33,750 --> 00:17:43,350 Okay, and what I've done is instead of putting the Fibonacci on the chart, and cluttering it all up, I just basically drew a line indicating the high I'm using
90 00:17:43,860 --> 00:17:53,670 and the low I'm using. Now I'm not using the body the body reference points because it's a daily timeframe. And I want to encapsulate the entire range with
91 00:17:53,700 --> 00:18:02,760 the wicks included. It will not change what I'm going to show you here. So if you have your daily timeframe on your eurodollar you'll see that it will still
92 00:18:02,760 --> 00:18:15,180 take us up into optimal trade entry, which is basically a non indicator form of overbought or oversold. Okay, so what we're seeing here is the market on the
93 00:18:15,180 --> 00:18:27,120 Euro, trading up into the 17.5 level, failing to get to the 79 level and this candle right here shows a willingness to want to reverse so the next candle we
94 00:18:27,120 --> 00:18:36,990 could potentially see this be a bearish candle. Now I'm not looking at swing points, I'm just looking at in terms of where we are in a higher time frame and
95 00:18:36,990 --> 00:18:47,790 this could be a point of interest for a breakdown. Okay, so once we have a bearish candle like this, and we're inside the area of optimal trade entry for
96 00:18:47,790 --> 00:19:00,450 sell or we would be deemed as a potential sell. The very next candle we want to study that extend may give us a condition that frames a power three formation
97 00:19:00,630 --> 00:19:15,270 with a down close relative to the daily chart. Okay, so we have this particular day here, which is the 28th of November and we have the market trading sideways
98 00:19:15,900 --> 00:19:29,520 until midnight in New York. And then we have the market initially dropped down.  We do not worry about that. We want to see it rally up into London open. It
99 00:19:29,520 --> 00:19:40,290 starts this area right here. It's dropping here we went. We don't want to see that. We want to see price rally up. That's where we'll sell. Notice also that
100 00:19:40,290 --> 00:19:49,830 we have equal highs in here. Okay, about 10 pips above this short term high that gives us the high of the day. At the same time, we would reasonably expect to
101 00:19:49,830 --> 00:19:58,800 see London open create the high the day. Why should the daily bias be bearish?  Because it's been going bullish here, while we trade it into an area of optimal
102 00:19:58,800 --> 00:20:08,700 trade entry and we got one kid Handle showing the ones that reject and go lower.  So we want to look for characteristics like we're seeing here you open, and then
103 00:20:08,700 --> 00:20:20,580 a rally above we can look to be a seller there, after it takes equal highs out.  So we have Candyland by stat liquidity pool, okay, runs up noxa stops out and
104 00:20:20,580 --> 00:20:34,860 then trades aggressively lower grades, the low of the day, it comes off of love day trades at or near the low. So in relationship to power three, if we're
105 00:20:34,860 --> 00:20:44,820 looking at this price action here, you can see that would be the daily range. So we can see that the opening. It's a very limited upside movement above the
106 00:20:44,820 --> 00:20:52,560 opening. That's this little portion of price action here. It creates the high of the day during the London open kill zone between two o'clock and five o'clock in
107 00:20:52,560 --> 00:21:02,610 the morning. Dynamic imbalance or range expansion for the daily candle or bar creating the low of the day, right here. And we come off the low trading near
108 00:21:02,640 --> 00:21:15,630 the low of the day. In closing right here. So this is this is this whole candle right here. This is what it looks like an open high low close format. So
109 00:21:15,630 --> 00:21:20,490 hopefully you found this teaching insightful. Until next time, I wish you good luck and good trading.