ICT - Trading Plan Development 1.srt

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ICT: Folks, all right, we are going to cover the need for a

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trading plan.

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If you're new to trading and you do not have a trading plan,

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it's hopefully my goal

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as an end result in this presentation to communicate the

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need for one. If you've already started trading, and you've

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been having difficulties, and you don't have a trading plan,

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I could pretty much guarantee if you just put some work into

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formulating a very clear, concise trading plan, your results

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would be dramatically different. Because basically having no

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plan equals emotional driven results, okay, you're not gonna

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have any understanding what to do going to be reacting more

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than you're anticipating. And that's the stark difference

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between a professional trader because they do have a

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detailed, organized trading plan. It's well written, it's

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it's by their trading desk, it's memorized. It's reviewed

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continuously. By having such they have an objective and

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result. And it really is the DNA of a successful trader. So

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having a trading plan is at the top of your list as far as

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being a consistently profitable trader. Right The majority

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of your time, what do you do as a trader? And where is it

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most spent in terms of time? Well, first, you got to

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understand that you have to manage your time wisely.

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Okay, no one's going to manage it for you.

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So it's important that you understand that the countless

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hours that you spend in analysis without having a clear

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objective premise to it is actually counterproductive. Okay,

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you feel like you're doing the right thing by spending a lot

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of time staring at the chart. But unless you have an

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understanding of exactly what it is you're looking for,

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you're just wasting your time. You need to spend quality

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time with the macro economic analysis and higher time frame

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support resistance levels. I can't stress this enough

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because most new traders come into the marketplace and he

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spent too far time in Five and 15 minute charts, and maybe

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even one minute charts, hoping to see some kind of

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mysterious neon sign saying buy me or sell me. Nothing

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significant occurs without first leaving telltale signs on a

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long term basis. That means if there's a significant price

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move, I guarantee you if you look at the higher timeframe

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charts, and I'm referring to the monthly, weekly, daily for

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hour and new, less than a one hour chart, those timeframes

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are going to have a clue as to what was the catalyst for

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that move prior to it actually unfolding. Follow the

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interest rates. This is where the majority of your time is

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gonna be spent. You need to get a feel for what interest

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rates are trying to do. Are they moving higher or are they

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moving lower? Keeping track of the overnight lending rate

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with the banks per country is absolutely significant

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information and insight you need as a consistent trader

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what's the least important part? And trading? Well, don't

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focus on the money number one. And unfortunately, we all get

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into this business for a number of things, okay, but top of

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the list should be to make money. But while you're trading,

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your focus should not be on the money. Don't focus on the

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amount of money that you hope to make, there's no guarantee

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you're going to make it on every trade. So there's no real

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point in hoping you just trade the process, trade your plan,

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and the end result should if you have a well grounded, well

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formulated trading plan, money will deposit into your

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account. Do not worry about losses, okay? You're going to

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have losing trades. If you accept that going in. You won't

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be demoralized from it. Okay, every good trader whether

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you're professional or not, they have losing streaks. Do not

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worry about missed trades. I'm going to tell you right now

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I'm probably miss more winning trades every single week than

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more than most of you realize. I don't take a whole lot of

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trades. I like to cherry pick. I like to take things And are

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really

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Unknown: set up.

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ICT: And if you have that mindset going in much like

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expecting losses, it's very comforting to know that you

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don't feeling rushed. And that's a very important

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characteristic of a professional trader. We aren't rushed to

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get in the marketplace. You know, we react slowly when

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trying to make money. And we react fast and quickly when

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we're trying to preserve our money. That's a very

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significant paradigm shift that you're going to need if you

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don't already have that mindset going in.

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The least important process in trading is the entry signals.

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And I'll probably stop you right there. But it really is

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least in terms of significance. If you don't have a macro

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understanding of what's going on in the marketplace and the

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higher timeframe directional bias, chances are, you're

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probably going to be wrong more times, and you're right. So

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it's my goal to really try to drive you to looking at the

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weekly the monthly, the daily in the four hour chart. And if

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you're going to go a little less than four hour, don't go

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below one hour, but spend most spend most of your time on

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the weekly and daily, those charts are going to be the most

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in significance. Because it's the banking levels are

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determined.

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Premise and sound basis is paramount. That means you have to

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have an understanding of what it is that you're doing.

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You're not just staring blindly at charts because that's not

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going to get you anywhere. I guarantee you unless you have a

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specific pattern, a motive that you use to get into a

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particular trade. And you hunt that whether you're back

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testing or walking forward with it. Unless you have that

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understanding of what it is specifically that you're looking

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for. You're just basically spinning your wheels and it's my

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advice not to do that. Keep the focus on the plan and work

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the trading edge that your method exploits

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All right, the general overview. Right trading plans are

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basically taking all the pieces of the puzzle to equate to

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successful trading and bringing those pieces together. Those

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pieces could be fundamental data technicals, inter market

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analysis. All these things go together in terms of building

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a trading plan. impeccable risk control is the first

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component to any successful trading plan. Flawless equity

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management, which is closely tied to risk control is

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essential to every successful trading plan. You can have all

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the bells and whistles on your trade monitor, but it means

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nothing unless you control your money and the risks involved

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in all your trades. fundamentals at any measure can always

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assist a trader in trade plan development. inter market

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analysis is key to a well balanced trading plan.

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Understanding how all the asset classes tie together in his

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Upon movement on the interest rate markets that is crucial

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for your long term success and longevity in trading.

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Technical analysis, and a comprehensive approach to sound

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tools and concepts is the framework to exercising a trading

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plan. If you don't have a concise list of specific tools

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that you use for specific times and reasons, you're going to

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be floating in and out with different oscillators, you're

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gonna be using different tools, understand what tools you're

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going to have and stick to those and understand what it is

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that those specific specific tools do. And try not to use

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them for any other reason except for those purposes only.

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executing a top down analysis with all the above components

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will deliver optimal results while controlling risk, which

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is the number one reason why we as traders last as long as

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we do in this business, we control risk. So all the pieces

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together it begins and ends with the control of risk.

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paradigm shift Alright guys, you are not the only predator

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in the marketplace. I know sometimes when we get these

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trading plans and trading tools and it's the first time

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you've ever probably looked at an organized structure of how

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to apply analysis to the marketplace, and you feel kind of

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like a big shot, and that's normal. It's kind of cool now,

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but dude Not overestimate the importance of knowing there's

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other people out there that want your mind to when you go in

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confident, or you develop confidence later on, understand

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overconfidence is actually counterproductive. overconfidence

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is actually an invitation for ego which also allows the

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input of emotions and that's not what you want your trading.

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Never assume your well designed trading plan won't hit a

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losing streak. I'm assuring you that it will. There's no one

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out there that is immune to it, you're going to have a

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losing streak, okay. always reflect on your wins as a

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victory and your losses as a learning opportunity. All

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learning opportunities that I've experienced in my trading

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have actually produced greater growth

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in

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my development as a trader. So losses are actually a

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beneficial thing. It will take preparation in advance to

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weather periods of inevitable draw down. Journal your

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results both good and bad. It's important you go back to

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that journal Because it periods of drawdown and strings of

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losses, it will help remind you that these are temporary

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events and that you do eventually trade out of them if you

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control risk and reduce your overall exposure as you

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continue to take losses. Do not overdrive your trading plan

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or attempt to trade outside its intended purpose. Do not

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turn a position trade, okay into multiple different

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timeframe trades. Okay. If you if your analysis suggests

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it's a position, trade, trade it like that, okay. Every

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great trader has one thing in common and it's the respect

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and understanding that the risk will always outweigh the

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reward unless it is properly managed. It's not about the

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profits. It's controlling risk.

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Pack small play big

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2% risk or less, is it really enough? I probably get this

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question emailed to me more than any other You when you get

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into trading guys, you probably fantasize about going to

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places like this. And you think you need to risk 2015 10% of

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your account to get there. And I can assure you, I've been

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to places like this. And I've done it with 2% risk or many

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times with less than that. And it's amazing. If you just

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understand the power of compound interest, you don't need a

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whole lot of risk exposure to build this wealth. The

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question will always be in the developing traders mind, how

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can I make a fortune with so little risk and hopefully by

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the end of this presentation, you'll see that you don't

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really need a whole lot of risk. You just need time and

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consistency. proficient consistent traders focus on the

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reality that their trading will not be perfect. We are not

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going in with the mindset of expecting our trades to be

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perfect, okay? We don't even need high accuracy,

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okay.

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But you do need consistently following a trading plan.

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That's paramount. You have to continuously do that. You can

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make all the money you ever need risking 2% and many times

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even less than that portrayed. Wealth is built with time,

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not excessive risk exposure. Keeping realistic goals in

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focus. Alright guys, you've seen all of the internet gurus

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and you probably thought I was one like that as well. That

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promised riches real quick.

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You're gonna get, you know, 1000 pips every month.

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Guys, look, don't take the bait. Okay, that is meant for you

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to lose. Okay? Do not buy into that mindset. Your goal is to

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steadily build your account with little draw down as humanly

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possible. Your trading is not hinged on the premise. You

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must hit home run profits, every trade, or even weekly.

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There's a lot of times I'll have a losing week. There's many

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times on Have a losing day and then come back from that and

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be able to recoup it. But I'm not always hitting Win Win

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Win, win win, and you're not going to either. Your career

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should be built on a low, yet sufficient baseline target

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based on percent return, or pips per month or week. trading

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with risk controlled and profiting a net gain of 25 pips per

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week should be a new traders goal. After consistently

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harvesting 25 pips per week graduate to targeting 50 pips

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after 50 pips per week is achieved, aim for 75 pips and

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eventually move beyond that as your experience and tolerance

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for risk increases.

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Alright, let's look at a case study here we're going to look

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at a

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trading model that more or less targets and shoots a goal

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for 25 pips for the week. And we're looking at possibly

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making 6% return for the month, and we're risking 2% per

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trade and 30 PIP stops are used, and the monthly goal only

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equates to 90 pips for the entire month. Now, if you look at

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these numbers, okay, this is a spreadsheet so there's going

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to be a little bit of, you know, rounding issue but 23 pips,

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okay, per week, roughly we'll just call 25 pips that would

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equate to 6% return per month. If you start with 20 $500. In

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one year, your account goes to over $5,000, which is more

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than doubling. After two years, it goes to $10,122. Okay, so

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you see, essentially you're doubling your money every single

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year, you're only risking 2% and you're only looking for 25

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pips per week. Now notice over here we have daily calm,

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okay, this is more or less to stimulate the idea that if you

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trade on a daily basis, and you scout I don't really teach

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traders to go in and try to scalp scalp five pips. But just

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for the sake of argument we're going to look at you know,

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every day if you scalp five pips, that would give you your

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25 pips for the week. Obviously, if you're trading the best

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days of the week, which were Tuesday, Wednesday and

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Thursday, regardless of what pair you trade, eight pips per

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day, three times a week would give you your goal for the

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week and obviously 11 should be around rough rounded up like

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12 twice a week would give you your weekly PIP haul. So you

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can see over time your money is growing steadily. And while

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it's not a whole lot of money, you got to look at what

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you're starting with and what you're really aiming for.

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Okay, and I think 25 pips per week if you're brand new

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trader is an absolutely wonderful goal to start with. Okay,

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look at another case studies is 50 pips per week, okay, and

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we're gonna be targeting 10% per month sign with the same

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account. 20 $500 now this time we're going to exercise the

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risk exposure of one and a half one and a half percent 30

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pips per stop, and a monthly goal in terms of pips is 200

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pips and the weekly goal is 50 pips per week, and if you

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trade everyday scalping 10 pips per day, equates to 50 pips.

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And three times Tuesday, Wednesday and Thursday looking for

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17 pips per day or two times for the week at 25 pips per

258
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trade. The first year your account would move to $7,846 and

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then in second year, it would be at $24,624 not bad and

260
00:18:43,739 --> 00:18:45,719
you're not really hitting homeruns yet guys, are you it's

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only 50 pips. Okay, look at a case study where we're looking

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for 75 pips per week. Now I can tell you, you can build a

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career on this, okay. 75 pips is absolutely Astonishing if

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you use it the right way 10% per month, risking only 1% per

265
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trade using a 30 PIP stop loss, the goal 300 pips 75 pips

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per week, if you day trade every single day 15 pips would be

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your goal 25 if you're trading three times per week and 38

268
00:19:19,559 --> 00:19:23,969
pips twice a week with equate to your goal and in one year,

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your 20 $500 would essentially grow to 7846. And again

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$24,624

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modular thinking steady progress.

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Now small consistency can still surprise you. It takes an

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exponential mindset, little things over a period of time

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equals big results. Building your trading plan flexibility,

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you're not always going to see it on the timeline that you

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want. You might have a weekly goal that may require shorter

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term day trades or scalps to achieve. Do not force yourself

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into hunting or believing you need to make your goals daily

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and or weekly. Your weekly goals might fall short a week or

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two, but still might be met in the course of the same month.

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It may just average out guys. Your monthly goal might

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average out over the quarter or over the entire year. Don't

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be so rigid and allow the market to pay you when and how it

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will. Your goals might fall short of your forecast and

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hopes. However, do not be disappointed if this occurs, you

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00:20:41,310 --> 00:20:43,590
will still be heading in the right direction and that's

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really what matters. Success without homeruns Is it

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00:20:51,240 --> 00:20:54,690
possible? Well, let's look at this. This is kind of lost the

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00:20:54,690 --> 00:21:00,720
I admit, but this is what could happen. 20% per month Now

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00:21:00,720 --> 00:21:04,530
it's rather impressive analysis. That's another way that you

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00:21:04,650 --> 00:21:08,190
many fantasize about. We're going to be risking 2% per trade

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00:21:08,190 --> 00:21:12,150
maximum. And now we have an understanding what we knew using

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00:21:12,150 --> 00:21:15,360
our trading plan and we have some consistency. We understand

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00:21:15,360 --> 00:21:17,940
how to use a lower timeframe so we can use now 20 pips stop

295
00:21:17,940 --> 00:21:22,860
losses. The monthly goal is 200 pips still in terms of many

296
00:21:22,860 --> 00:21:26,460
expectations of traders, that's very, very modest, weekly

297
00:21:26,460 --> 00:21:30,120
PIP goal 50 pips and if you break that down, it could be

298
00:21:30,120 --> 00:21:33,300
done over a course of everyday 10 pips three times a week is

299
00:21:33,300 --> 00:21:38,910
17 pips and 25 times two per week 20 $500 in one year gross

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00:21:38,910 --> 00:21:45,810
of $22,290 and in two years, it goes to 198,000 and in 34

301
00:21:45,810 --> 00:21:49,890
months, gross to what everyone fantasizes about in trading

302
00:21:49,920 --> 00:21:51,210
the $1 million mark.

303
00:21:58,140 --> 00:22:01,950
Keep something pay yourself You have to learn to be

304
00:22:01,950 --> 00:22:04,950
methodical about taking first profit guys, no one's going to

305
00:22:04,950 --> 00:22:07,080
pay you, your broker is not going to take first profit for

306
00:22:07,080 --> 00:22:09,000
you. They're not going to scale some of your position and

307
00:22:09,000 --> 00:22:12,090
make sure you get some profit out of a winning trade. It's

308
00:22:12,090 --> 00:22:15,120
your responsibility. So before taking any trade, it's

309
00:22:15,120 --> 00:22:18,480
crucial for you to know at what level you will take first

310
00:22:18,480 --> 00:22:22,830
profit and then start to reduce or remove risk altogether.

311
00:22:24,600 --> 00:22:27,540
Limiting risk after taking half of your original position

312
00:22:27,540 --> 00:22:31,440
off will remove emotional and psychological pressures you

313
00:22:31,440 --> 00:22:35,310
may feel while the position is open. If you take first

314
00:22:35,310 --> 00:22:40,530
profit, that will absolutely remove all of the rush for you

315
00:22:40,530 --> 00:22:42,540
to be able to close the trade because how many times you've

316
00:22:42,540 --> 00:22:45,540
been in a trade, even a demo account if you guys are new,

317
00:22:45,780 --> 00:22:47,760
and you see a profit and you just want to close it out

318
00:22:47,760 --> 00:22:50,010
because you just want to see it in your account as

319
00:22:50,010 --> 00:22:52,950
registering as a profit. Okay, when you take some off and

320
00:22:52,950 --> 00:22:55,500
you split your position in half, take some of it off and

321
00:22:55,500 --> 00:22:58,260
move your stop to break even or reduce it to half of what

322
00:22:58,260 --> 00:23:03,150
your original profit was. That's a wonderful position to be

323
00:23:03,150 --> 00:23:05,940
in because now no matter what you either make half of your

324
00:23:05,940 --> 00:23:10,320
first positions profit potential when it was first profit,

325
00:23:10,890 --> 00:23:14,340
or you stop at an event and you collect your first you know

326
00:23:14,340 --> 00:23:18,840
first profit and it was it taking first profit at a

327
00:23:18,840 --> 00:23:21,750
predetermined level will assist in building confidence and

328
00:23:21,750 --> 00:23:25,410
removes the sting of the trade losing should it reverse on

329
00:23:25,410 --> 00:23:28,170
you and stop you out of breakeven. How many times you had a

330
00:23:28,170 --> 00:23:30,720
winning trade and then go against you and become a losing

331
00:23:30,720 --> 00:23:33,840
trade? Okay, I know that's like, I'm not immune to that I

332
00:23:33,840 --> 00:23:37,440
experienced that. The greatest thing you can do is learn to

333
00:23:37,440 --> 00:23:45,090
take profits take first profit, and scale. Continuing our

334
00:23:45,090 --> 00:23:47,910
theme success without homeruns Now let's take a look at an

335
00:23:47,910 --> 00:23:50,730
example. Let's assume for a moment we are a trader that now

336
00:23:50,730 --> 00:23:56,370
uses two positions. Okay, to enter on a trade. In other

337
00:23:56,370 --> 00:23:59,970
words, we take a maximum of 2% risk and we split it in half

338
00:24:00,000 --> 00:24:04,560
If the first portion of a trade we take first profit at 30

339
00:24:04,560 --> 00:24:08,190
pips, we're going to be risking 20 pips. So we're already

340
00:24:08,190 --> 00:24:11,730
risking 1.5 to one reward the risk.

341
00:24:12,390 --> 00:24:14,280
Okay, so we're making, we're making a little bit more

342
00:24:14,579 --> 00:24:18,839
than what we're risking for the initial first profit. And if

343
00:24:18,839 --> 00:24:21,539
we just did that alone in the second portion of our trade,

344
00:24:22,139 --> 00:24:24,809
we moved to break even and it stops out every single time we

345
00:24:24,809 --> 00:24:27,359
trade for the entire year, our account would still double.

346
00:24:27,869 --> 00:24:33,779
Okay. Risking 1% it would equate to 6% so that's still good.

347
00:24:34,979 --> 00:24:37,619
But now let's look what happens if we allow the second

348
00:24:37,619 --> 00:24:44,579
portion of our trade to run. What happens if the second

349
00:24:44,579 --> 00:24:47,189
portion captures the average daily range? Now the average

350
00:24:47,189 --> 00:24:49,619
daily range for the sake of argument we're just going to use

351
00:24:49,619 --> 00:24:50,459
is 100 pips.

352
00:24:52,200 --> 00:24:55,020
Now, that would equate to if you just did this

353
00:24:56,759 --> 00:24:59,879
once per week, okay, now don't look at the daily three

354
00:24:59,879 --> 00:25:02,309
times. For a week or twice a week on numbers, we'll block

355
00:25:02,309 --> 00:25:06,299
that out here. But the weekly number that 100 that's going

356
00:25:06,299 --> 00:25:09,479
to be more or less equate to one solid trade for the week

357
00:25:09,509 --> 00:25:13,829
where you nail down one average daily range or collect 100

358
00:25:13,829 --> 00:25:18,869
pips in other words in terms of intraday trade. That would

359
00:25:18,869 --> 00:25:21,869
equate to 20%.

360
00:25:23,940 --> 00:25:24,660
Now think

361
00:25:25,920 --> 00:25:32,160
20% plus 6%. What are you making? We'll get that in a

362
00:25:32,160 --> 00:25:37,830
moment. But if we able to do this, our money 1% risk grows

363
00:25:38,040 --> 00:25:45,180
exponentially. Now taking both of those examples together

364
00:25:45,180 --> 00:25:48,600
and assuming ideal scenarios at the end, or both are

365
00:25:48,600 --> 00:25:53,610
profitable, that would equate to about 26% return your

366
00:25:53,610 --> 00:25:56,460
20 $500 would grow to $40,000 in one year

367
00:25:58,109 --> 00:25:59,639
and 640,000 in two years.

368
00:26:01,829 --> 00:26:05,219
Notice that you're really not even risking more than 320

369
00:26:05,219 --> 00:26:06,719
average per Pip.

370
00:26:47,400 --> 00:26:51,480
Alright guys interest rates. That is the market's driving

371
00:26:51,480 --> 00:26:53,850
force, okay? If you've never learned about interest rates,

372
00:26:53,850 --> 00:26:55,020
you're gonna learn a little bit of that in this

373
00:26:55,020 --> 00:26:58,170
presentation. But what makes the markets go around whether

374
00:26:58,170 --> 00:27:01,770
it be stocks, commodities, you No forex it's all interest

375
00:27:01,770 --> 00:27:05,460
rates need to get to know the interest rate market okay

376
00:27:05,460 --> 00:27:11,460
because that will be the key to unlocking the mind. The

377
00:27:11,460 --> 00:27:15,240
entire global markets are interconnected and they spin on

378
00:27:15,240 --> 00:27:20,760
the gyrations in the interest rate market. Each country we

379
00:27:20,760 --> 00:27:23,790
trade currencies with has their own interest rates and thus

380
00:27:23,790 --> 00:27:26,940
these rates influence the demand or disenchantment with its

381
00:27:27,180 --> 00:27:32,460
own currency. The market will always seek yield and the

382
00:27:32,460 --> 00:27:38,430
higher the yield, the bigger the demand on average. There

383
00:27:38,430 --> 00:27:41,100
are several types of interest rates that traders can track

384
00:27:41,100 --> 00:27:46,440
and utilize to determine a trade idea. Understanding how

385
00:27:46,440 --> 00:27:50,310
they trade and the yields will make long term trends easier

386
00:27:50,310 --> 00:27:51,000
to determine.

387
00:27:55,980 --> 00:27:58,050
Interest Rate spreads and differentials.

388
00:27:59,580 --> 00:28:01,830
Alright guys, you Need to track the country's overnight

389
00:28:01,830 --> 00:28:06,060
lending rates? Okay, that's an it's one of the core

390
00:28:06,060 --> 00:28:10,320
principles to having long term trend analysis. And if you

391
00:28:10,980 --> 00:28:15,180
just Google any country and look for historical data, you

392
00:28:15,180 --> 00:28:18,480
can get that keep a spreadsheet. And you can do a whole lot

393
00:28:18,480 --> 00:28:21,960
with that information. It's not my goal to do that here. You

394
00:28:21,960 --> 00:28:24,600
can find sources on the internet to actually do these for

395
00:28:24,600 --> 00:28:30,720
you. But the currency markets, they more or less trend on

396
00:28:30,720 --> 00:28:35,340
long term basis based on interest rates. And understanding

397
00:28:35,340 --> 00:28:38,130
which country has higher interest rates and which have lower

398
00:28:38,130 --> 00:28:41,820
rates can be a differential play or carry trade. And not

399
00:28:41,820 --> 00:28:45,450
only can you trade profit by directional bias in your

400
00:28:45,450 --> 00:28:48,330
trading, but it also could be paid interest on top of that.

401
00:28:50,640 --> 00:28:54,030
If the country sees lower interest rates, this will weaken

402
00:28:54,030 --> 00:28:57,930
the base currency. At the con On the contrary, if the rates

403
00:28:57,930 --> 00:29:00,390
are increasing, this will prop up to come on trees in

404
00:29:00,390 --> 00:29:09,150
currency, million dollar futures insights, yes, seasonal

405
00:29:09,150 --> 00:29:12,900
tendencies. Now, some of you folks have already been

406
00:29:12,900 --> 00:29:16,530
introduced to this graph this is the British Pound seasonal

407
00:29:16,530 --> 00:29:21,780
tendency is a chart that I've had held dear to me for many

408
00:29:21,780 --> 00:29:25,980
years since 1995. I got this from Larry Williams

409
00:29:26,310 --> 00:29:27,030
course.

410
00:29:27,449 --> 00:29:32,489
And it was among other seasonal tendencies, but because I've

411
00:29:32,489 --> 00:29:36,479
grown to trade the British Pound more than any other pair.

412
00:29:38,849 --> 00:29:42,569
This seasonal tendency chart is kind of like, it gives you

413
00:29:42,569 --> 00:29:46,769
like a macro roadmap of what should transpire. Now, one of

414
00:29:46,769 --> 00:29:49,709
the most impressive concepts you can learn is the nature of

415
00:29:49,709 --> 00:29:53,879
seasonal tendencies in the marketplace. The commodity market

416
00:29:53,879 --> 00:29:56,909
is one such market that has a very cyclical seasonal

417
00:29:56,909 --> 00:30:00,629
tendencies that have an uncanny ability to forecast Major

418
00:30:00,629 --> 00:30:05,129
price swings. Now I have used seasonal tendencies for nearly

419
00:30:05,129 --> 00:30:09,209
20 years and they still amaze me. One such seasonal tendency

420
00:30:09,209 --> 00:30:11,849
is the British pound to make a major low in February to

421
00:30:11,849 --> 00:30:16,769
March, June, September, October in December, and major highs

422
00:30:16,769 --> 00:30:17,639
in April to May.

423
00:30:20,819 --> 00:30:23,369
This is also seen in stocks as well.

424
00:30:29,910 --> 00:30:34,650
Let's look at the comparison of the British pound. And since

425
00:30:34,650 --> 00:30:37,530
we've already learned at the interest rate market is what

426
00:30:37,950 --> 00:30:41,190
more or less pushes the markets all around. We're going to

427
00:30:41,190 --> 00:30:44,280
look at the US Treasuries. Yes, it does have a seasonal

428
00:30:44,280 --> 00:30:48,510
tendency. Now, I want to draw your attention to the fact

429
00:30:48,510 --> 00:30:52,410
that usually in April and May, if you look at the British

430
00:30:52,410 --> 00:30:57,150
Pound chart on the left, you can see that there's a red line

431
00:30:57,540 --> 00:31:01,110
and a blue line. Okay. And what that This is measuring the

432
00:31:01,110 --> 00:31:04,440
bullish years and the bearish years together to get a

433
00:31:04,440 --> 00:31:09,210
composite index. And the blue line is the 25 year historical

434
00:31:09,210 --> 00:31:13,410
data. And the red line is a 15 year historical data. So you

435
00:31:13,410 --> 00:31:14,460
can see over

436
00:31:15,929 --> 00:31:18,809
overall basically the seasonal tendencies pretty solid.

437
00:31:20,730 --> 00:31:23,520
It usually makes a rally of some kind late

438
00:31:25,049 --> 00:31:30,359
February, early March, and trades up into the April May time

439
00:31:30,359 --> 00:31:32,279
period where it makes a significant high and then trades

440
00:31:32,279 --> 00:31:38,339
down into the June timeframe. Well, if the bonds are

441
00:31:38,339 --> 00:31:43,409
inverse, okay, in other words, as currencies go down, the

442
00:31:43,409 --> 00:31:45,749
bond market or the futures market will go up.

443
00:31:45,930 --> 00:31:46,290
And

444
00:31:46,320 --> 00:31:50,760
while the bonds go up, the yield is inverted. So the yield

445
00:31:50,760 --> 00:31:53,100
would be going down while the bond goes up. And for

446
00:31:53,100 --> 00:31:58,110
instance, let's look at the April May time period on the

447
00:31:58,110 --> 00:32:01,770
bond and you can see that it Has seasonal tendency to rally

448
00:32:02,280 --> 00:32:05,460
that would indicate that interest rates would be going down.

449
00:32:05,850 --> 00:32:10,530
Okay? Now if interest rates are going down, that would drive

450
00:32:10,530 --> 00:32:13,950
What? currencies lower, there won't be any demand. So what

451
00:32:13,950 --> 00:32:16,500
will they be doing? It'll be a flight to quality that will

452
00:32:16,500 --> 00:32:20,340
rally the dollar. Okay? And that would be essentially a risk

453
00:32:20,340 --> 00:32:26,820
off scenario. Now look at January and February. Okay. In the

454
00:32:26,820 --> 00:32:31,290
bond market, we see the bonds are sliding down into the

455
00:32:31,290 --> 00:32:36,030
April May time period. That means that interest rates would

456
00:32:36,030 --> 00:32:40,380
be increasing. Now, if interest rates are increasing, that's

457
00:32:40,380 --> 00:32:43,020
going to have demand for foreign currency and it'll be a

458
00:32:43,020 --> 00:32:46,830
risk on scenario the dollar index will be falling at that

459
00:32:46,830 --> 00:32:52,440
time period. Okay. Look at January February time period. And

460
00:32:52,440 --> 00:32:57,240
you can see where in the 15 year basis, it was making lows

461
00:32:57,270 --> 00:33:00,240
and even in a 25 year basis, it was making lows where it Did

462
00:33:00,240 --> 00:33:04,830
rally up, and essentially around the march time period, it

463
00:33:04,830 --> 00:33:07,920
got in sync and maybe it's low, and then it'll trade up into

464
00:33:07,920 --> 00:33:11,640
that spring time period, making a high. So study these

465
00:33:11,640 --> 00:33:14,610
charts and you can see there's a huge advantage of having

466
00:33:14,610 --> 00:33:18,450
insight like this, because it can put you on one track to

467
00:33:18,450 --> 00:33:21,240
finding a long term trend. And this waiting for interest

468
00:33:21,240 --> 00:33:22,590
rates to get in sync with this.

469
00:33:27,390 --> 00:33:28,920
co2 and commercial trends.

470
00:33:30,330 --> 00:33:31,710
tracking the smart money.

471
00:33:33,359 --> 00:33:36,539
Okay, guys, you've probably seen this a few times in some

472
00:33:36,539 --> 00:33:40,799
other tutorials. But mainly, you wouldn't be looking at

473
00:33:40,799 --> 00:33:43,229
higher timeframe charts and you want to spend some time

474
00:33:43,289 --> 00:33:46,079
analyzing the net positions of the large commercial traders.

475
00:33:46,409 --> 00:33:49,229
You want to be looking at the trend where their net

476
00:33:49,229 --> 00:33:52,979
positions are moving, are they continuously moving higher

477
00:33:52,979 --> 00:33:57,389
low or higher, lower overall, bearish or bullish? In other

478
00:33:57,389 --> 00:34:01,439
words, are these swinging bullish Above the baseline zero

479
00:34:01,439 --> 00:34:06,539
line, okay doing uptrend or are they doing that during

480
00:34:06,569 --> 00:34:08,969
downtrend? Okay. And what we're doing we're looking at the

481
00:34:08,969 --> 00:34:11,609
higher timeframe weekly chart and determine if the price is

482
00:34:11,609 --> 00:34:14,939
going higher. And if it is, you won't be waiting for the

483
00:34:14,969 --> 00:34:18,779
commercials to be net long or extremely lightening up on

484
00:34:18,779 --> 00:34:22,049
their net short positions because that would equate to a

485
00:34:22,049 --> 00:34:27,779
bullish scenario. The trend on the weekly chart and the

486
00:34:27,779 --> 00:34:31,259
swings from net long to net short are very easy to spot and

487
00:34:31,259 --> 00:34:34,319
determine the long to intermediate term trends or direction.

488
00:34:36,599 --> 00:34:39,269
Looking for trades in this trend or directional bias will

489
00:34:39,269 --> 00:34:42,089
further increase your odds of capturing trades with large

490
00:34:42,089 --> 00:34:44,219
institutional sponsorship behind the moves.

491
00:34:48,480 --> 00:34:49,500
trading the news

492
00:34:50,850 --> 00:34:53,520
All right, I basically look at trading the news or

493
00:34:54,120 --> 00:35:00,780
news releases as volatility injections. Okay. Don't fear

494
00:35:00,780 --> 00:35:04,320
news, but I certainly respect it. There are certain reports

495
00:35:04,320 --> 00:35:07,350
and events that I more or less will step outside of and more

496
00:35:07,350 --> 00:35:10,230
trade. But one of the most difficult ways to trade the

497
00:35:10,230 --> 00:35:14,580
markets is to try to trade the news releases themselves. The

498
00:35:14,580 --> 00:35:17,400
internet is littered with so called robots or programs

499
00:35:17,400 --> 00:35:20,130
designed to quickly give you trading profits on a knee jerk

500
00:35:20,130 --> 00:35:25,380
reactions to the news. To me, this is pure and simple

501
00:35:25,650 --> 00:35:30,030
gambling. We can never know for sure what the numbers will

502
00:35:30,030 --> 00:35:32,790
be in the reports and the guests is just ridiculous.

503
00:35:34,500 --> 00:35:38,070
However, we can wait for the release in watch the reaction

504
00:35:38,070 --> 00:35:41,220
in many times a signal will form shortly after the release.

505
00:35:41,670 --> 00:35:47,250
Many times counter direction to the intended news hawks use

506
00:35:47,250 --> 00:35:52,410
news releases for injections and volatility and fuel trade

507
00:35:52,410 --> 00:35:54,210
ideas based on price action.

508
00:35:59,640 --> 00:36:05,550
Key Market moving indicators, key economic releases, okay,

509
00:36:05,550 --> 00:36:10,650
we're going to be looking at the US market, the UK market

510
00:36:10,770 --> 00:36:14,610
and the German market. Okay, we're gonna start with the UK,

511
00:36:14,880 --> 00:36:21,000
the British pound, daily rate decision, retail sales,

512
00:36:21,030 --> 00:36:24,570
consumer prices, claimant count, GDP and industrial

513
00:36:24,570 --> 00:36:28,560
production. Those are reports that I have on my calendar

514
00:36:28,590 --> 00:36:32,190
times when they're going to come out. And I will absolutely

515
00:36:32,190 --> 00:36:36,510
be aware of these and I will be more or less looking for

516
00:36:36,510 --> 00:36:41,190
trades to either be propelled in the direction that I've

517
00:36:41,190 --> 00:36:45,270
been prior to the report, or I'll be looking for a signal to

518
00:36:45,270 --> 00:36:48,480
generate shortly after one of these reports are released.

519
00:36:56,460 --> 00:36:59,010
All right, the US dollar we're gonna get the North American

520
00:36:59,010 --> 00:36:59,460
market

521
00:37:01,470 --> 00:37:04,620
Federal Reserve rates, retail sales consumer and producer

522
00:37:04,650 --> 00:37:08,010
prices, non farm payroll I avoid that I do not touch it

523
00:37:08,550 --> 00:37:12,930
gross domestic product GDP trade balance consumer confidence

524
00:37:12,930 --> 00:37:16,560
reports and service and manufacturing ICM you want to note

525
00:37:16,560 --> 00:37:19,740
these as well because all of your crosses with the dollar

526
00:37:20,130 --> 00:37:21,750
will be impacted by this as well.

527
00:37:31,050 --> 00:37:33,540
Okay the German market we're gonna look at the euros

528
00:37:34,860 --> 00:37:38,340
okay rate decision German IFO German unemployment German

529
00:37:38,340 --> 00:37:41,460
consumer prices German GDP and manufacturing and services

530
00:37:41,460 --> 00:37:45,180
sector PMI. You want to have these on your calendar when

531
00:37:45,180 --> 00:37:47,880
time they're gonna be released and be aware of these because

532
00:37:47,880 --> 00:37:50,430
these absolutely will move the market considerably.

533
00:37:55,200 --> 00:37:56,910
I plan for news impact.

534
00:37:58,830 --> 00:38:02,610
You have to have awareness of your economic calendar folks.

535
00:38:05,100 --> 00:38:07,380
Now there are a few resources that you can use to determine

536
00:38:07,380 --> 00:38:10,230
when high impact news will release and hit the market.

537
00:38:11,400 --> 00:38:14,130
Number one, obviously baby pips, coms calendar,

538
00:38:16,379 --> 00:38:18,929
forex factory comm calendar.

539
00:38:20,670 --> 00:38:24,270
And you can actually Google econo day calendars. You can

540
00:38:24,270 --> 00:38:29,370
find some at Bloomberg and a few other resources, but they

541
00:38:29,370 --> 00:38:31,140
have a very good format. And I like that they're

542
00:38:31,440 --> 00:38:32,430
very user friendly.

543
00:38:34,470 --> 00:38:37,890
And if for more information on this topic, and if you have

544
00:38:37,890 --> 00:38:41,100
any more interest on interest rates, I would recommend that

545
00:38:41,100 --> 00:38:44,970
Chris Lori's inside the banks webinar. I purchased this A

546
00:38:44,970 --> 00:38:48,570
number of years ago and I was very impressed with his

547
00:38:49,950 --> 00:38:56,400
presentation on the banking level in terms of interest rates

548
00:38:56,400 --> 00:39:00,630
and how they move and propel the marketplace. So if This

549
00:39:00,630 --> 00:39:01,890
isn't if this isn't,

550
00:39:03,180 --> 00:39:05,190
more or less get to the

551
00:39:06,509 --> 00:39:10,199
understanding you're looking for. I would counsel you to,

552
00:39:10,229 --> 00:39:12,989
you know, do a little investment in your career, and it's

553
00:39:12,989 --> 00:39:15,479
not much money at all. But it absolutely is a wonderful

554
00:39:15,479 --> 00:39:19,259
resource. It doesn't really good job in that webinar. You

555
00:39:19,259 --> 00:39:24,059
can reach Chris Laurie at Chris laurie.com. And you can get

556
00:39:24,059 --> 00:39:27,989
his webinar from his website. He's actually the only one

557
00:39:27,989 --> 00:39:33,209
that I recommend any folks buy material from? I have

558
00:39:33,569 --> 00:39:38,669
everything but his Aussie yen course and I just don't trade

559
00:39:38,669 --> 00:39:41,009
yen crosses, otherwise, I probably would have bought that as

560
00:39:41,009 --> 00:39:45,029
well. He does a really good job of teaching. He's very, very

561
00:39:45,029 --> 00:39:48,209
interested in your success. And that separates him as far as

562
00:39:48,209 --> 00:39:52,169
my concern from all the other folks out there. So you know,

563
00:39:52,679 --> 00:39:53,399
kudos to him.

564
00:40:33,150 --> 00:40:36,390
Alright guys, 30 year treasuries and tea notes. Okay, now

565
00:40:36,390 --> 00:40:39,120
some of my best concepts are found in my early days as a

566
00:40:39,120 --> 00:40:42,720
futures trader and the bond market is a big market and it

567
00:40:42,720 --> 00:40:46,410
provides so much insight and leading information. Now, I

568
00:40:46,410 --> 00:40:48,810
don't trade bonds anymore, but I absolutely monitor the

569
00:40:48,810 --> 00:40:51,450
futures on a daily basis. This market can tell you

570
00:40:51,480 --> 00:40:54,300
everything you need to know in any market asset class if you

571
00:40:54,300 --> 00:40:57,000
understand it. The scope of the bond market is not the

572
00:40:57,000 --> 00:41:00,150
objective here, but we will use it to discover some rap are

573
00:41:00,150 --> 00:41:03,390
impressive techniques to ferret out some blockbuster trades.

574
00:41:06,570 --> 00:41:10,410
10 year Treasury notes, okay, much like the 30 year treasury

575
00:41:10,410 --> 00:41:14,130
bond, I used these early on in my career as a futures

576
00:41:14,130 --> 00:41:20,190
trader. And there's a little caveat to understand the the

577
00:41:20,190 --> 00:41:22,560
bond market, whenever you see the price chart on the

578
00:41:22,560 --> 00:41:28,980
futures, when they rally up, they will have an inverse

579
00:41:28,980 --> 00:41:31,680
relationship. In other words, as the price data goes higher,

580
00:41:32,130 --> 00:41:35,220
the yield will actually be going down. So you have to have

581
00:41:35,220 --> 00:41:39,030
that in your mind. Now, since I trade the cable and the

582
00:41:39,030 --> 00:41:44,130
fiber exclusively, you know, I trade tracking the German 10

583
00:41:44,130 --> 00:41:50,640
year bond as well. The five year Treasury note much like the

584
00:41:50,640 --> 00:41:55,620
10 year and 30 year and when price runs up on the contract

585
00:41:55,800 --> 00:42:00,000
price on the futures market. The yield will be basically the

586
00:42:00,000 --> 00:42:03,300
creasing are dropping and obviously if the chart would be

587
00:42:03,300 --> 00:42:06,060
dropping on the futures, that would mean the yield would be

588
00:42:06,060 --> 00:42:10,830
increasing as well. And much like the 10 year I also track

589
00:42:10,830 --> 00:42:15,450
the five year German bond as well. And two year Treasury

590
00:42:15,450 --> 00:42:20,070
note much like the five year and 10 year I track that on a

591
00:42:20,070 --> 00:42:25,620
German basis as well and by having an understanding of all

592
00:42:25,620 --> 00:42:29,340
three of those we can find some pretty neat things we're

593
00:42:29,340 --> 00:42:30,660
going to learn about here shortly

594
00:42:32,220 --> 00:42:34,500
obviously goes without saying the US Dollar index

595
00:42:36,900 --> 00:42:41,250
i like daily FX calm if you go to the net Dania charting now

596
00:42:41,280 --> 00:42:45,930
do not go to net Dania calm Okay, it's very important. Go to

597
00:42:45,930 --> 00:42:49,380
daily FX calm and use the net Dania charting it's free.

598
00:42:49,710 --> 00:42:54,540
Okay, and you open up a US Dollar Index chart, and it'll

599
00:42:54,540 --> 00:42:58,590
give you what I like to see in terms of the US Dollar Index

600
00:43:01,410 --> 00:43:06,600
I look at the cash basis also. And the chart to the right

601
00:43:06,600 --> 00:43:09,720
here. This is the futures chart of the United States Dollar

602
00:43:09,720 --> 00:43:16,380
Index. If you like these types of charts, and you want to

603
00:43:16,380 --> 00:43:18,780
subscribe to them, it's not very expensive or things like

604
00:43:18,780 --> 00:43:23,520
$25 a month, but you can get that at price charts calm. You

605
00:43:23,520 --> 00:43:26,370
don't need to pay for futures charts, but I do prefer this

606
00:43:26,370 --> 00:43:30,480
format because I'm used to reading them since 1990s. I've

607
00:43:30,480 --> 00:43:35,100
just grown accustomed to having them in my repertoire. Now I

608
00:43:35,100 --> 00:43:38,100
like to use SMT concepts to spot diverging highs and lows

609
00:43:38,100 --> 00:43:41,100
between the US dx and relative price points in the fiber and

610
00:43:41,100 --> 00:43:46,890
cable. And you knew that as my us dx SMT and I look for the

611
00:43:46,890 --> 00:43:54,000
bond and us dx SMT as well. Major stock market indices,

612
00:43:54,300 --> 00:43:56,910
okay, the major stock market indices are one of my favorite

613
00:43:56,910 --> 00:44:00,720
tools to gauge long term price swings. If we are failing and

614
00:44:00,720 --> 00:44:03,480
highs on the daily charts as we see here in the image to the

615
00:44:03,480 --> 00:44:07,950
right. This suggests a possible risk off scenario. Expect

616
00:44:07,950 --> 00:44:11,640
weaker stock prices and possibly foreign currencies. The US

617
00:44:11,640 --> 00:44:15,150
Dollar index will confirm this with a rally at support. At

618
00:44:15,150 --> 00:44:19,140
the same juncture, simply reverse for risk on scenarios. The

619
00:44:19,140 --> 00:44:22,290
markets as a whole are interconnected and it pays to monitor

620
00:44:22,290 --> 00:44:29,190
them and hunt for clues. The CRB Commodity Index, okay, now

621
00:44:29,190 --> 00:44:32,670
I usually watch this on the cash basis. And you can get that

622
00:44:32,670 --> 00:44:35,970
from the price charts calm. I'm sure if you do a google you

623
00:44:35,970 --> 00:44:38,280
probably find that as well. But again, I just really like

624
00:44:38,280 --> 00:44:41,340
this, this chart, I think it's real crisp, and we print them

625
00:44:41,340 --> 00:44:43,830
out. There's nothing like printing out charts and marking

626
00:44:43,830 --> 00:44:47,520
them up by hand. I'm like Flintstone caveman. I like being

627
00:44:47,520 --> 00:44:50,790
able to carve up, you know, some notes and draw my charts.

628
00:44:50,820 --> 00:44:53,700
You know, I like sharing with you guys electronically. But

629
00:44:53,970 --> 00:44:55,890
you know, if it's going to be a matter of preference, I

630
00:44:55,890 --> 00:44:58,830
would love to have you printed charts every single day.

631
00:44:58,830 --> 00:45:04,770
That's this is my My opinion really, now I like the CRB

632
00:45:04,770 --> 00:45:07,560
index, because it usually has a inverse relationship to the

633
00:45:07,560 --> 00:45:11,070
dollar index. And I like to confirm a swing higher in dollar

634
00:45:11,400 --> 00:45:16,680
with shorting fiber and or cable with a CRB decline. Now the

635
00:45:16,680 --> 00:45:19,890
CRB index tends to be a little bit early and can one of

636
00:45:19,890 --> 00:45:23,220
possible long term shifts in the trend. It's a dynamite tool

637
00:45:23,220 --> 00:45:25,950
to use for major market analysis and pinning down long to

638
00:45:25,950 --> 00:45:32,310
intermediate term directional bias. All right, well in gold

639
00:45:32,340 --> 00:45:34,290
now, I like looking at these two markets, I don't trade

640
00:45:34,290 --> 00:45:37,590
them. But I'd like to use them as barometers more or less to

641
00:45:37,590 --> 00:45:41,580
see if there's risk on a risk off scenario is underway. And

642
00:45:42,120 --> 00:45:45,300
basically, you want to be looking at the same way that you

643
00:45:45,300 --> 00:45:49,260
know, foreign currencies and CRB all those markets should be

644
00:45:49,530 --> 00:45:51,060
moving in tandem with both.

645
00:45:58,200 --> 00:46:02,160
Okay, we're looking at the Tina Note yields, okay, these are

646
00:46:02,160 --> 00:46:08,070
going to be the two year, five year and 10 year. And you can

647
00:46:08,070 --> 00:46:12,450
look at the legend up here to determine which is which as we

648
00:46:12,450 --> 00:46:17,130
go through. And what I'm highlighting here is when there is

649
00:46:17,130 --> 00:46:23,010
a divergence between these yields, okay, these are t note

650
00:46:23,070 --> 00:46:27,360
yields. And this line is not the T note price, it's the

651
00:46:27,360 --> 00:46:31,260
actual t note yield. So, the yield is actually inverse is an

652
00:46:31,260 --> 00:46:35,250
inversion of the futures charts price of the T note, okay,

653
00:46:35,250 --> 00:46:39,600
so I kind of monitor both, but the yield when you monitor it

654
00:46:39,600 --> 00:46:45,690
like this, it will basically mirror what foreign currencies

655
00:46:45,690 --> 00:46:48,600
should be doing. In other words, as the yields were

656
00:46:48,600 --> 00:46:51,630
increasing here, that would have been bullish for foreign

657
00:46:51,630 --> 00:46:56,490
currency and contrary as the yields drop, that would be

658
00:46:56,520 --> 00:47:00,720
bearish for foreign currencies. Okay. You You see these

659
00:47:00,750 --> 00:47:03,540
confirmations in your technicals on your charts. In other

660
00:47:03,540 --> 00:47:09,090
words, if there's a buy signal for foreign currencies and in

661
00:47:09,090 --> 00:47:13,110
your daily charts or respective timeframes that you trade,

662
00:47:13,890 --> 00:47:18,570
and there is a sell signal being confirmed in the US dollar,

663
00:47:19,170 --> 00:47:22,380
that is a confirmation that you probably got a, you know, a

664
00:47:22,380 --> 00:47:26,520
good probability of a nice swing for your respective

665
00:47:26,520 --> 00:47:29,580
timeframe. Now, what we're referring to here is a daily

666
00:47:29,580 --> 00:47:33,420
basis, this is really going to give you a buy, program or

667
00:47:33,420 --> 00:47:37,980
sell program. Okay, this is the beginnings of a buy program.

668
00:47:38,370 --> 00:47:43,320
This is the termination of a buy program and a beginning of

669
00:47:43,320 --> 00:47:47,520
a sell program. Now, the main thing I want you to focus on

670
00:47:47,730 --> 00:47:51,960
is that there's typically a three or four month cycle, okay?

671
00:47:51,960 --> 00:47:55,140
It's like almost like a quarterly effect that takes place in

672
00:47:55,170 --> 00:47:58,740
the yields and it's based basically on interest rates and

673
00:47:59,610 --> 00:48:02,160
macro Economics and things of that nature. But I'm not going

674
00:48:02,160 --> 00:48:05,070
to bore you with that here. But just basically, if you look

675
00:48:05,070 --> 00:48:08,670
at the charts, and on historical perspective, you'll see

676
00:48:08,670 --> 00:48:13,260
that that is, in fact, what happens on the average. And

677
00:48:13,260 --> 00:48:16,020
we're going to do is we're going to talk about at the time

678
00:48:16,020 --> 00:48:21,510
of this recording, this is June 2012. And what I'm looking

679
00:48:21,510 --> 00:48:27,840
at is trying to go over why we saw the precipitous slide in

680
00:48:28,380 --> 00:48:32,190
the foreign currency market, namely the British pound and

681
00:48:32,310 --> 00:48:40,020
the Euro, USD, pairs, cable and fiber. And we're gonna look

682
00:48:40,020 --> 00:48:43,140
at how that relates to these yields here, okay. And what

683
00:48:43,140 --> 00:48:46,170
we're looking at again, on this chart is the United States

684
00:48:46,230 --> 00:48:49,920
10 year, United States, five year in the United States, two

685
00:48:49,920 --> 00:48:53,850
year t notes. Okay, and again, these are the yields and

686
00:48:53,850 --> 00:48:57,390
basically what you're looking for is at a specific time,

687
00:48:57,390 --> 00:49:01,350
seasonally, and quarterly. There will be divergence that

688
00:49:01,350 --> 00:49:06,300
posts in these yields. And that looks like this. We have, it

689
00:49:06,300 --> 00:49:09,210
may be a little difficult to see I understand but the orange

690
00:49:09,330 --> 00:49:14,670
line here which is the two year, the high made back here is

691
00:49:14,670 --> 00:49:19,860
lower than the high made in March April time period. Okay,

692
00:49:20,130 --> 00:49:21,840
or actually in March 19.

693
00:49:23,610 --> 00:49:24,150
The

694
00:49:24,899 --> 00:49:27,449
high here on the 10 year

695
00:49:31,080 --> 00:49:32,460
was just about equal.

696
00:49:35,250 --> 00:49:38,010
And same thing here we have

697
00:49:38,280 --> 00:49:38,730
the

698
00:49:39,030 --> 00:49:39,780
five year

699
00:49:41,940 --> 00:49:42,810
just about equal.

700
00:49:43,050 --> 00:49:46,230
Okay, so we have a divergence between the two year five year

701
00:49:46,230 --> 00:49:52,350
and 10 year. Okay. That typically is a reason to start

702
00:49:52,350 --> 00:49:56,190
looking for other reasons to support a decline in yields

703
00:49:56,190 --> 00:49:59,430
which would represent a decline in foreign currency, any

704
00:49:59,430 --> 00:50:03,600
rally The US Dollar Index. Okay, so let's take a look at a

705
00:50:03,600 --> 00:50:06,810
few other examples and we're looking at the foreign bond

706
00:50:06,810 --> 00:50:13,410
markets. Right now we're looking at the five year notes on

707
00:50:13,500 --> 00:50:18,930
the UK 10 year, I'm sorry, UK five year note, the German

708
00:50:18,930 --> 00:50:23,910
five year note and against the United States five year

709
00:50:24,150 --> 00:50:24,750
Treasury note.

710
00:50:26,250 --> 00:50:27,120
Okay, and

711
00:50:29,070 --> 00:50:33,210
we're going to look at this time frame in here. Okay, going

712
00:50:33,210 --> 00:50:35,160
back to this chart real quick, just to reference again,

713
00:50:36,180 --> 00:50:41,640
we're looking in 2012, March, April time period. Okay, we're

714
00:50:41,640 --> 00:50:45,990
going to go and look at this area here. And what I want to

715
00:50:45,990 --> 00:50:48,480
draw your attention to is the fact that we had

716
00:50:49,710 --> 00:50:50,280
the

717
00:50:51,270 --> 00:50:52,800
US five year note

718
00:50:53,910 --> 00:50:56,130
higher, respectively

719
00:50:58,020 --> 00:51:05,040
while the German Five Year note was lower. And the UK five

720
00:51:05,040 --> 00:51:09,390
year note was lower. Okay. And what I'm gonna do is I'm

721
00:51:09,390 --> 00:51:14,280
gonna take off to UK so you can see there is a clear

722
00:51:14,640 --> 00:51:17,520
divergence between the US and the German metal sufficiently.

723
00:51:17,520 --> 00:51:25,980
So the divergence Okay, see the high here, too high on the

724
00:51:25,980 --> 00:51:31,050
red line, that's the German five year note. It's bearish

725
00:51:32,220 --> 00:51:36,810
while at the same time the US five year note was making a

726
00:51:36,810 --> 00:51:42,690
higher high in yield. Okay and then you saw them slide

727
00:51:42,690 --> 00:51:52,410
together that that is a yield SMT divergence. Okay, as I

728
00:51:52,470 --> 00:51:54,900
look at it, you can see a

729
00:51:55,350 --> 00:51:56,340
contrary

730
00:51:57,030 --> 00:52:03,660
signal here back in October. As of 2010, where the German

731
00:52:03,660 --> 00:52:08,100
five year note was failing to make lower lows in the yield.

732
00:52:08,490 --> 00:52:12,720
At the same time, the US five year note was making a lower

733
00:52:12,720 --> 00:52:17,610
low. Okay, and then we saw both yields increase together.

734
00:52:18,060 --> 00:52:24,300
And here the high, you saw an inability for the US to trade

735
00:52:24,690 --> 00:52:29,460
higher in yield while the German yield went higher, and you

736
00:52:29,460 --> 00:52:33,330
can see there was a shift in the major market sentiment. And

737
00:52:33,330 --> 00:52:35,280
that's really what this is measuring market sentiment

738
00:52:35,430 --> 00:52:39,270
because you're, you're chasing the yield. Okay. And the

739
00:52:39,270 --> 00:52:41,970
markets always going to seek yield. Okay, so if the yields

740
00:52:42,390 --> 00:52:44,610
are increasing, that's going to be bullish for major

741
00:52:44,610 --> 00:52:46,860
currencies, and it's going to be

742
00:52:47,010 --> 00:52:49,020
bearish for the dollar

743
00:52:50,460 --> 00:52:53,550
and vice versa. And we seen the same thing here and this

744
00:52:53,550 --> 00:53:00,330
April 2010. Okay, the US five year made higher highs While

745
00:53:00,360 --> 00:53:05,220
the German five year note was unable to make equivalent, new

746
00:53:05,220 --> 00:53:08,580
hot, and there was your shift, and notice this is happening

747
00:53:08,910 --> 00:53:13,650
march april time period. And we just recently at the time of

748
00:53:13,650 --> 00:53:16,380
this recording also had another divergence which is a

749
00:53:16,380 --> 00:53:20,130
continuation of this longer term downtrend in the yield. And

750
00:53:20,130 --> 00:53:23,430
again, here is a 10 year comparison we're going to compare

751
00:53:23,430 --> 00:53:33,240
the German which is the orange, the UK, green and the

752
00:53:33,660 --> 00:53:38,010
lighter Orange is the US 10 year Treasury note. Do you see

753
00:53:38,010 --> 00:53:42,210
the same thing happening here where the German was making

754
00:53:42,210 --> 00:53:48,390
higher highs while the US and UK 10 year notes were failing

755
00:53:48,390 --> 00:53:51,600
to make higher highs in their yield? And the same thing is

756
00:53:51,600 --> 00:53:58,230
also that low was formed in the fall of 2010. We saw the

757
00:53:58,230 --> 00:54:02,940
German 10 year failed to make lower lows in yield while the

758
00:54:03,150 --> 00:54:07,830
US Treasury made on its 10 year basis made a lower yield and

759
00:54:07,830 --> 00:54:13,200
the UK failed to make a lower yield also in that was your

760
00:54:13,350 --> 00:54:16,440
sentiment shift to bullish and that would have been looking

761
00:54:16,440 --> 00:54:20,850
for buy programs on major currencies and sell signals okay

762
00:54:21,750 --> 00:54:24,150
in the dollar, okay. In other words, the dollar would have

763
00:54:24,150 --> 00:54:27,780
been declining all during this period here. And at this

764
00:54:27,930 --> 00:54:30,780
point where we saw a major shift, okay and the yield

765
00:54:30,780 --> 00:54:35,370
diverged, the sentiment now was going to send the dollar

766
00:54:35,730 --> 00:54:40,350
bullish and then major currencies on the farm would be

767
00:54:40,440 --> 00:54:44,760
declining. So that would be a risk off scenario here or sell

768
00:54:44,760 --> 00:54:50,160
program from forex. And this is a bi program, okay,

769
00:54:50,189 --> 00:54:52,379
where the, the

770
00:54:54,000 --> 00:54:57,420
current foreign currency markets would be rallying and the

771
00:54:57,420 --> 00:55:01,620
US dollar at this time period would be declining. Okay, so

772
00:55:01,920 --> 00:55:03,930
it just basically think in terms of make it real easy for

773
00:55:03,930 --> 00:55:07,620
yourself, when the yields are going up. The foreign currency

774
00:55:07,620 --> 00:55:10,620
markets should be trailing in sympathy, okay? Because

775
00:55:10,620 --> 00:55:13,140
they're going to chase yield. And as the yields drop,

776
00:55:13,260 --> 00:55:16,080
foreign currencies are going to chase that down as well,

777
00:55:16,080 --> 00:55:18,000
there won't be any demand for that foreign currency and

778
00:55:18,000 --> 00:55:21,780
they'll be a flight to safety in the form of going back to

779
00:55:21,780 --> 00:55:28,410
the dollar and buying bonds. Okay. So, again, there's an

780
00:55:28,410 --> 00:55:31,080
inverse relationship between the bond market itself and the

781
00:55:31,080 --> 00:55:34,890
yield as bonds would go up, the yields would drop and vice

782
00:55:34,890 --> 00:55:39,300
versa. Okay. So it that's basically the panoramic view of a

783
00:55:39,300 --> 00:55:43,530
risk on risk off scenario and determining, buy and sell

784
00:55:43,530 --> 00:55:49,140
programs on the daily basis. And this is one really strong

785
00:55:49,140 --> 00:55:53,250
powerful way of keeping yourself in sync with the macro

786
00:55:53,370 --> 00:55:55,890
economic view. And you don't have to go through all this

787
00:55:56,520 --> 00:55:59,430
economic data. This is this is visual for you. You can see

788
00:55:59,430 --> 00:56:02,730
it happening. every three to four months, just look for a

789
00:56:02,730 --> 00:56:06,450
shift to occur. And when you start seeing these things occur

790
00:56:06,450 --> 00:56:09,630
on your on the yield, okay? That's when you want to be

791
00:56:09,630 --> 00:56:11,820
looking at your, your price charts and looking for maybe

792
00:56:11,820 --> 00:56:16,470
some top formations and some reversal scenarios. Okay? And

793
00:56:16,710 --> 00:56:19,380
same thing in here. So we're using seasonal tendencies,

794
00:56:19,530 --> 00:56:26,640
cyclical analysis and the yield analysis where the market

795
00:56:26,640 --> 00:56:29,430
will always seek yield and if yields are dropping, that's

796
00:56:29,430 --> 00:56:32,190
going to be bearish for major currencies and bullish for the

797
00:56:32,190 --> 00:56:32,850
US dollar.

798
00:57:16,920 --> 00:57:20,040
Key support and resistance, you got to know your key levels

799
00:57:20,040 --> 00:57:23,010
guys. If you don't have a firm grasp on support resistance,

800
00:57:23,370 --> 00:57:26,070
all this is going to be a waste of time because none of your

801
00:57:26,070 --> 00:57:29,190
signals are ever going to confirm entry or exit unless they

802
00:57:29,190 --> 00:57:32,880
get to on these key levels. The cornerstone to your success

803
00:57:32,880 --> 00:57:35,580
in trading will be your patience in determining high

804
00:57:35,580 --> 00:57:38,670
timeframe key support resistance levels, and waiting for the

805
00:57:38,670 --> 00:57:42,120
setups to form at those same levels. Once you have

806
00:57:42,120 --> 00:57:45,390
directional bias based on the major market analysis, you

807
00:57:45,390 --> 00:57:48,630
identify key price levels from the 60 minute chart up to the

808
00:57:48,630 --> 00:57:52,140
monthly nothing less than a 60 minute chart and ideally, the

809
00:57:52,140 --> 00:57:56,730
daily basis is optimal. Determined monthly, weekly previous

810
00:57:56,730 --> 00:58:00,000
day's session highs and lows as well as pivot levels and age

811
00:58:00,000 --> 00:58:08,460
Marines highs and lows, market sentiment, you have to avoid

812
00:58:08,580 --> 00:58:12,660
them a herd mentality. if everybody's doing it, it's

813
00:58:12,660 --> 00:58:15,570
probably not a good thing in the futures market or Forex.

814
00:58:15,930 --> 00:58:18,720
It's usually probably petered out. And so you want to be

815
00:58:18,720 --> 00:58:23,250
looking to trade against the majority. Now when decided to

816
00:58:23,250 --> 00:58:25,590
take action in the market, it is important to remain on the

817
00:58:25,590 --> 00:58:30,870
side of the market that is the minority. Looking for trades

818
00:58:30,870 --> 00:58:34,410
when the market is by all parents bullish when you want to

819
00:58:34,410 --> 00:58:37,890
short is ideal. And you might have already guessed it, when

820
00:58:37,890 --> 00:58:42,960
it looks bearish, do your buying. This might sound rather

821
00:58:42,960 --> 00:58:45,900
obvious and elementary but consider how little actually

822
00:58:46,260 --> 00:58:51,720
followed this mindset. Consider the intraday Judas swing for

823
00:58:51,720 --> 00:58:55,020
example. This is a sentiment play by all standards, and it's

824
00:58:55,020 --> 00:58:58,500
used to quantify an entry in the opposite direction.

825
00:59:04,319 --> 00:59:10,379
market structure, hunt intermediate term price swings. If

826
00:59:10,379 --> 00:59:13,829
you find all of your trading occurring at long term

827
00:59:13,829 --> 00:59:16,439
intermediate term price swings, you're going to find that

828
00:59:16,439 --> 00:59:21,869
your trading is absolutely mind blowing. The ideal setups

829
00:59:21,869 --> 00:59:24,809
for trading low risk high probability swings is to limit

830
00:59:24,809 --> 00:59:27,449
your consideration to only trade the intermediate term highs

831
00:59:27,479 --> 00:59:31,979
for shorts and intermediate term lows for Long's. Taking

832
00:59:31,979 --> 00:59:35,129
short term scalps and or day trades in the same direction is

833
00:59:35,129 --> 00:59:39,419
advised. Your trading plan is not to capture every move in

834
00:59:39,419 --> 00:59:45,179
the market, just the easy low hanging fruit. Using daily

835
00:59:45,179 --> 00:59:48,119
four hour and hourly market structure and nesting fractals

836
00:59:48,239 --> 00:59:51,719
can be a wildly profitable price action approach. This is my

837
00:59:51,719 --> 00:59:53,189
core price action concepts

838
00:59:57,510 --> 00:59:59,190
open interest and premiums

839
01:00:00,630 --> 01:00:03,960
open interest reflects Smart Money activity. And open

840
01:00:03,960 --> 01:00:06,450
interest is basically only going to be found in the futures

841
01:00:06,450 --> 01:00:09,930
market. And the open interest in for instance, is example

842
01:00:09,930 --> 01:00:12,090
here. Okay, in this example, we're looking at the Swiss

843
01:00:12,090 --> 01:00:16,650
franc. And what I've noted here is that price had ran up,

844
01:00:16,650 --> 01:00:20,160
it's been an uptrend and we moved into a trading range.

845
01:00:20,490 --> 01:00:26,970
Okay? And if you look at the circle here, that is open

846
01:00:26,970 --> 01:00:30,840
interest, that cumulative line that goes along, and all of a

847
01:00:30,840 --> 01:00:34,200
sudden drops off precipitously drops straight down. Okay,

848
01:00:34,680 --> 01:00:37,320
that is open interest declining while the market is in a

849
01:00:37,320 --> 01:00:43,500
range. What do you think that translates to? Well, this is a

850
01:00:43,500 --> 01:00:46,020
concept that I adopted from Larry Williams and it still

851
01:00:46,020 --> 01:00:49,350
served me well today. The open interest while in a market

852
01:00:49,410 --> 01:00:52,620
market consolidation or range can tip the hand of the smart

853
01:00:52,620 --> 01:00:57,090
money if you understand what to look for. If the open

854
01:00:57,090 --> 01:01:00,000
interest drops off, 20% or more rapidly, this is a trick

855
01:01:00,000 --> 01:01:03,180
tributed to commercial short covering, if open interest

856
01:01:03,180 --> 01:01:06,810
increases 20% or more rapidly in a consolidation, this is

857
01:01:06,810 --> 01:01:10,230
commercial short selling. Commercial traders are the largest

858
01:01:10,290 --> 01:01:12,960
hedgers in the marketplace. And when you hedge, you're

859
01:01:12,960 --> 01:01:15,510
essentially shorting the market, you're selling something

860
01:01:15,510 --> 01:01:19,920
you already have. So, if open interest declines, that means

861
01:01:19,920 --> 01:01:22,830
that they're lightening up aggressively on their shorts. Why

862
01:01:22,830 --> 01:01:25,920
would they do that? Because they anticipate price going

863
01:01:25,920 --> 01:01:30,420
higher. When you have a premium in the futures contracts,

864
01:01:30,630 --> 01:01:34,140
that means the nearby contract is selling at a higher price

865
01:01:34,230 --> 01:01:38,940
than the next month out in the future. That is a premium.

866
01:01:39,030 --> 01:01:42,210
Okay, that means there's a high demand for that particular

867
01:01:42,210 --> 01:01:46,920
commodity or currency. If you see open interest dropping off

868
01:01:46,920 --> 01:01:49,860
in that scenario, this is a near perfect trade scenario you

869
01:01:49,860 --> 01:01:56,190
need to be buying. And as a result, this was a mega trade.

870
01:01:56,250 --> 01:01:59,160
This is in 2010. If you look at your charts around the

871
01:01:59,160 --> 01:02:03,330
Fourth of July in two 2010 you can see how in the FX market,

872
01:02:03,570 --> 01:02:09,900
the pair for the swissy fell out of bed like a rock. This

873
01:02:09,900 --> 01:02:13,200
trade in the futures market actually moved 2300 points, and

874
01:02:13,200 --> 01:02:16,950
it did less than half of two months. And the open interest

875
01:02:16,950 --> 01:02:21,510
dropped while in the range its support at 118. And it was in

876
01:02:21,510 --> 01:02:25,200
an existing trend already. And that's an absolutely mind

877
01:02:25,200 --> 01:02:29,340
boggling profit. And if you have that type of scenario

878
01:02:29,340 --> 01:02:31,200
unfold in the marketplace and you see a couple of these

879
01:02:31,200 --> 01:02:34,860
happen a year, you can really absolutely kill it catch some

880
01:02:34,860 --> 01:02:37,830
explosive price moves. So I would counsel you to look at

881
01:02:37,830 --> 01:02:40,080
open interest in the futures markets on the pair's you

882
01:02:40,080 --> 01:02:44,190
trade. Swiss franc as an example here, but it's not limited

883
01:02:44,190 --> 01:02:47,100
to that it's you can use it in the dollar index. You can use

884
01:02:47,100 --> 01:02:50,970
it the Canadian dollar, Australian dollar, British pound,

885
01:02:51,210 --> 01:02:59,310
Japanese yen, and even the Euro higher timeframe directional

886
01:02:59,310 --> 01:03:02,730
bias Maintaining a focus on the weekly daily and possibly

887
01:03:02,730 --> 01:03:04,890
the four hour time frames will keep your trading in the

888
01:03:04,890 --> 01:03:08,190
highest probable direction. Look for support or resistance

889
01:03:08,190 --> 01:03:11,670
on these levels determine where price is trying to reach to.

890
01:03:12,180 --> 01:03:15,090
If price is trading lower on the daily look for an old low

891
01:03:15,120 --> 01:03:18,120
or high in the left side of your chart to determine if

892
01:03:18,150 --> 01:03:21,900
there's time and price available for trade. Given that

893
01:03:21,900 --> 01:03:27,000
direction. Reverse for looking for buy setups. The main

894
01:03:27,000 --> 01:03:30,510
point is to keep the higher timeframe in your trading. It

895
01:03:30,510 --> 01:03:31,770
really does pay off

896
01:04:13,110 --> 01:04:17,310
general market risk on or risk off, you want to start with

897
01:04:17,310 --> 01:04:20,370
the interest rates? Are we seeing yields dropping or

898
01:04:20,370 --> 01:04:23,490
increasing? Is there weakness or strength in the stocks

899
01:04:23,520 --> 01:04:27,150
commodity and treasuries? is gold and or oil giving you any

900
01:04:27,150 --> 01:04:30,720
clues? Is the dollar index confirming recent highs or lows

901
01:04:30,720 --> 01:04:34,590
compared to the interest rates? Are there any market reports

902
01:04:34,590 --> 01:04:38,610
do that might change the current market tone. The more the

903
01:04:38,610 --> 01:04:41,910
other asset classes confirm or negate your trade idea, the

904
01:04:41,910 --> 01:04:46,950
better risk off dollar rallies risk on it slides. It's that

905
01:04:46,950 --> 01:04:55,530
simple. anticipatory stage of analysis. This is the stage of

906
01:04:55,530 --> 01:04:58,350
analysis where you will spend the majority of your time it

907
01:04:58,350 --> 01:05:01,890
is on the weekly daily time. Since the trades are based on

908
01:05:01,890 --> 01:05:04,320
these higher timeframes, there might be a few days or so

909
01:05:04,320 --> 01:05:07,200
before a trade actually sets up. Don't worry, that's a good

910
01:05:07,200 --> 01:05:10,590
thing. You want to track the interest rates, you want to be

911
01:05:10,710 --> 01:05:14,280
paying attention to cod Commitment of Traders reports, major

912
01:05:14,280 --> 01:05:17,400
market indices, seasonal tendencies, key support resistance

913
01:05:17,400 --> 01:05:20,550
levels and inter market analysis with correlated assets.

914
01:05:21,210 --> 01:05:24,240
This stage of analysis is the foundation to your successful

915
01:05:24,240 --> 01:05:31,440
trading career. execution stage of analysis This is stage of

916
01:05:31,440 --> 01:05:34,800
analysis where you hunt setups based on the insights and

917
01:05:34,800 --> 01:05:37,500
conclusions you arrived at in the anticipatory stage of

918
01:05:37,500 --> 01:05:41,190
analysis. If risk is on, look for setups to buy currencies

919
01:05:41,190 --> 01:05:44,220
and confirm the setups with higher moving or poised to rally

920
01:05:44,220 --> 01:05:49,620
stock indices, CRB oil golden SMT concepts. If risk is off,

921
01:05:49,800 --> 01:05:52,620
look for setups to sell currencies and confirm these setups

922
01:05:52,620 --> 01:05:56,130
with lower moving or poised to decline, stock indices, the

923
01:05:56,130 --> 01:06:03,750
CRB index oil, gold and SMT concepts Management stage of

924
01:06:03,750 --> 01:06:07,290
analysis This is the stage that requires your concepts for

925
01:06:07,290 --> 01:06:10,710
trade management on open positions, the management of stop

926
01:06:10,710 --> 01:06:13,680
loss orders, limit orders, initial profit objectives and

927
01:06:13,680 --> 01:06:17,730
scaling later portions. Your trading plan must have clear

928
01:06:17,730 --> 01:06:20,400
concepts and techniques for the process that you will adhere

929
01:06:20,400 --> 01:06:24,060
to. When managing open positions. This stage of analysis is

930
01:06:24,060 --> 01:06:27,540
crucial for consistently and having longevity in this

931
01:06:27,540 --> 01:06:32,430
career. You can find wonderful setups, enter at optimal

932
01:06:32,430 --> 01:06:35,370
entry points and still miss manage the trade and in this

933
01:06:35,370 --> 01:06:39,360
stage, you will find results bring with it loss and regret

934
01:06:39,360 --> 01:06:48,300
if you do not manage your analysis correctly. reactionary

935
01:06:48,300 --> 01:06:52,020
stage of analysis. This stage of analysis is seen where your

936
01:06:52,020 --> 01:06:55,740
trades are open and you suspect or clearly see reasons to

937
01:06:55,740 --> 01:06:58,860
collapse the trade and cut your losses or take what profits

938
01:06:58,860 --> 01:07:01,860
you have open. There must be clear parameters in your

939
01:07:01,860 --> 01:07:05,310
trading plan that will invoke an immediate trade termination

940
01:07:05,310 --> 01:07:08,460
and abort when your original trade idea. This might be a

941
01:07:08,460 --> 01:07:12,900
result of a report or news event, global catastrophe and or

942
01:07:13,020 --> 01:07:15,870
you realize you're simply human and essentially wrong.

943
01:07:16,320 --> 01:07:17,880
Imagine that making a mistake.

944
01:07:23,250 --> 01:07:26,760
The documentation stage of analysis. This stage of analysis

945
01:07:26,760 --> 01:07:29,550
is where you record in your journal, what your trade idea

946
01:07:29,550 --> 01:07:34,200
was based on what tools you used in why screenshots and how

947
01:07:34,200 --> 01:07:37,380
you felt going into the trade while the position was open,

948
01:07:37,410 --> 01:07:40,470
and what made you nervous. The results of the trade should

949
01:07:40,470 --> 01:07:43,890
be documented and reflection on the trade plan and was it

950
01:07:43,890 --> 01:07:47,430
here too from the beginning to end? document any lessons

951
01:07:47,430 --> 01:07:49,410
learned from the trade and what you would have liked to have

952
01:07:49,410 --> 01:07:53,100
done differently? determine what leverage and or lot size

953
01:07:53,100 --> 01:07:56,340
your next trade will be using? Keep these records and refer

954
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to them when you experience a period of drawdown and or a

955
01:07:59,160 --> 01:08:02,160
string of losses. It will remind you that temporary losing

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01:08:02,160 --> 01:08:03,300
streaks come and go.