ICT-WENT-04.srt
Last modified by Drunk Monkey on 2021-06-10 09:21
| 1 | 00:00:11,400 --> 00:00:20,520 | ICT: Alright guys, we're looking at a few discussions on the use of support and resistance. And I know this is probably a very boring topic to most of you. |
| 2 | 00:00:20,790 --> 00:00:29,550 | Since you're all so advanced and so proficient in new trading, this is basic right? We're going to be looking at a few things that hopefully will amplify |
| 3 | 00:00:29,550 --> 00:00:44,310 | your understanding, and give you a better respect for those things that are lined up with the use of support resistance. Now, again, it's not to mention the |
| 4 | 00:00:44,490 --> 00:00:55,800 | obvious basic nature of support resistance to rub it in your face, it's meant to really bring it back to a core basic tenant, to sound technical analysis. |
| 5 | 00:00:56,640 --> 00:01:11,790 | There's no better way of gauging the measure of supply and demand. And the factors that are inherently tied to price moving up and down, no better than the |
| 6 | 00:01:11,790 --> 00:01:23,160 | use of support resistance. And it's important that you understand that it shouldn't be discounted, every effective trading plan should at least consider |
| 7 | 00:01:23,160 --> 00:01:37,230 | it. Even if you are a like an EA trader. Okay, if you are, you know, a trader that utilizes that type of approach of trading, hopefully, you've incorporated |
| 8 | 00:01:37,230 --> 00:01:48,060 | some measure of support resistance in your, your, your studies, or your your, your EA that is used to do your trading. Obviously, discretionary trading, and |
| 9 | 00:01:48,060 --> 00:01:59,610 | manual trading is my forte. Because I think it's the best. There isn't a program out there that I'm convinced that would ever outdo a sound technical analyst, |
| 10 | 00:01:59,640 --> 00:02:13,470 | and someone that has a lot of experience in in the study of price. The ability to adjust and adapt to short term variances in the market environment is |
| 11 | 00:02:13,590 --> 00:02:24,480 | completely unique to human mind. And I don't believe they'll ever come to that level of artificial intelligence, because it's a psychological thing, okay. And |
| 12 | 00:02:25,440 --> 00:02:35,520 | it's very hard, it's very difficult to trade that or rather not traded, but to code that. And it's about you seeing what the psychology is in the market |
| 13 | 00:02:35,520 --> 00:02:46,380 | through price action. And it's important that we focus our study on the technical aspects of trading through the study of price action, and there's no |
| 14 | 00:02:46,380 --> 00:02:56,130 | better way of doing it than trading support resistance. Now, I'm a very firm believer that horizontal support resistance is absolutely the best in terms of |
| 15 | 00:02:56,130 --> 00:03:07,380 | gauging the measure of supply and demand. And I don't have a whole lot of faith in diagonal, diagonal, like trend lines, I don't like seeing uptrend lines and |
| 16 | 00:03:07,380 --> 00:03:15,870 | downtrend lines, I have no faith in them. I can show you many examples of where that looks perfect right out of the textbook. And it's, it looks so easy, you |
| 17 | 00:03:15,870 --> 00:03:23,280 | know, anyone didn't sit down, just put two, two swing points together, draw a line and keep going in time eventually when it comes back down to it just |
| 18 | 00:03:23,340 --> 00:03:33,240 | despite it. Okay, well, it's not that easy. In fact, the professionals, okay, are the specialists out there understand that there's going to be a lot of |
| 19 | 00:03:33,240 --> 00:03:47,400 | liquidity based around that simple procedure of trading at a bounce or the proverbial bounce, okay. At a support, diagonal trend line up or down. And I |
| 20 | 00:03:47,400 --> 00:03:58,440 | don't see so much of that with horizontal support resistance. And it's based on like, basically, it's like an auction environment. Okay. If price drops down to |
| 21 | 00:03:58,440 --> 00:04:08,820 | a certain level, its perceived value will incite buying, okay, we're at least a very slow a drastic slowdown in the selling, which would cause a pause, at |
| 22 | 00:04:08,820 --> 00:04:20,040 | least, if not an altogether bounce in turn higher. And obviously the same would be reversed for resistance. But it's important that you understand that if you |
| 23 | 00:04:20,040 --> 00:04:30,330 | are an indicator based trader, I have I have a special affinity for indicators. While you don't see too many of them on my charts. And in my reviews. I believe |
| 24 | 00:04:30,330 --> 00:04:39,840 | that it's important that if a trader has the use of an indicator, whether being overbought or oversold, whether it be pivots or Fibonacci or something like |
| 25 | 00:04:39,840 --> 00:04:50,160 | that, it's an American even moving averages as well. It's important that you understand that price action is the framework that will enable the effectiveness |
| 26 | 00:04:50,190 --> 00:04:59,190 | of those tools to be capitalized on. It's not simply put an indicator on there and tell me if it's overbought or oversold, and when it goes over, so I'm just |
| 27 | 00:04:59,190 --> 00:05:06,930 | gonna be a buyer. And unfortunately, even when I was a neophyte trader, that's exactly what I thought I went into the marketplace, putting in my indicators. |
| 28 | 00:05:06,930 --> 00:05:10,500 | And I thought, that's all I had to do. And unfortunately, for me, |
| 29 | 00:05:11,910 --> 00:05:20,070 | while I did make funny, it was unfortunate that I got lulled into believing that I had it licked. And it was as simple as that. And I was the definition of new |
| 30 | 00:05:20,070 --> 00:05:30,120 | money. If you sit down and look at the dying, these going into 2000, it was pretty much a proverbial vertical bull market and the commodity market and |
| 31 | 00:05:30,120 --> 00:05:37,440 | everything was going straight up. So as long as you were buying oversold conditions, and buying bullish divergence, okay, that was all I was trading off |
| 32 | 00:05:37,440 --> 00:05:48,060 | of, it was just like taking, you know, a shotgun and blasting, you know, a barrel, full fish, you couldn't lose. But unfortunately, obviously, when the |
| 33 | 00:05:48,060 --> 00:05:57,330 | market changed, and moved into an trading environment, not a explosive trend, following, you know, commercial bull market, where everything was extrapolated |
| 34 | 00:05:57,330 --> 00:06:07,860 | to the upside, only, I fell into some problems. And I quickly learned that moving averages and indicators and all that stuff is great. But there has to be |
| 35 | 00:06:07,860 --> 00:06:17,520 | a context and a premise behind their use. And it's really framed on the basis of support resistance. Now, why do you trade support resistance, and it's important |
| 36 | 00:06:17,520 --> 00:06:27,450 | that you understand also that without a framework, okay, to anticipate when supply should come in, and when demand should come into the marketplace? You |
| 37 | 00:06:27,450 --> 00:06:36,060 | know, think about it, how are we to measure or anticipate that, okay, instead of reacting to because we don't want to chase price, by understanding horizontal |
| 38 | 00:06:36,060 --> 00:06:46,950 | support resistance levels, they will give us a precursor to future probable moves in the marketplace. Okay, so it gives you a like a wonderful |
| 39 | 00:06:46,950 --> 00:06:56,280 | prognostication value in terms of your chart study, by having an understanding of where support resistance is basis, the asset class you're trading and we're |
| 40 | 00:06:56,280 --> 00:07:06,300 | going to make speaks specific to forex here. But it's completely universal to everything. It's it's universal to index trading, bonds, currencies, futures, |
| 41 | 00:07:06,930 --> 00:07:13,500 | anything that can be traded even Bitcoin, not that I'm a Bitcoin trader, or even think that anybody in their right mind should be trading that kind of stuff. But |
| 42 | 00:07:13,500 --> 00:07:22,110 | it works in that as well. And I'm trying to rub rub you guys that trade Bitcoin wrong. Okay, I know a couple of you guys just, you started following me on |
| 43 | 00:07:22,110 --> 00:07:30,960 | Twitter, don't take that as a jab, personal, I just simply don't have any faith in trading Bitcoin. But if you look at the charts, obviously support resistance |
| 44 | 00:07:31,170 --> 00:07:45,870 | roles at that market as well. Because it is giving you a visual representation of supply and demand. Okay, resistance, providing you a means of supply and |
| 45 | 00:07:45,990 --> 00:07:48,030 | support, providing you a means of |
| 46 | 00:07:56,040 --> 00:08:08,760 | demand. And looking at where we are in relationship to supply and demand curve. Okay, we'll give you hopefully, the insight that you need to be consistently |
| 47 | 00:08:08,880 --> 00:08:17,610 | following a plan looking for trade setups that aren't just magically popping off at the chart, I can't say, Oh, look at me react to that, it will give you a |
| 48 | 00:08:17,610 --> 00:08:27,270 | framework by utilizing horizontal support resistance to number one know a level in advance, when price gets to that level, have a plan of action to trade when |
| 49 | 00:08:27,270 --> 00:08:37,980 | price gets to that level. Okay. And we talk about this concept in specific terms as time and price theory. When price gets to those levels, at a specific time of |
| 50 | 00:08:37,980 --> 00:08:52,410 | day or day a week, okay, that's a very specific condition that is usually met met, is usually met with a large probability for an anticipatory move higher or |
| 51 | 00:08:52,410 --> 00:08:59,940 | lower, you respect that to the support resistance level that you're looking at. Now, obviously, support resistance is absolutely not a panacea. It's not be all |
| 52 | 00:08:59,940 --> 00:09:13,110 | end all. But it does, hopefully, you give you the perspective or framework to look in the marketplace and say, Okay, this should be a relatively significant |
| 53 | 00:09:13,110 --> 00:09:23,100 | price level. Okay, that's you provide support. So therefore, when price comes down to that level, there should be a measurable indication of demand. Okay, and |
| 54 | 00:09:23,100 --> 00:09:31,710 | that asset class should at least pause, and if not bounce or reverse all together. Now, obviously, depend upon what time frame you're looking at, how |
| 55 | 00:09:31,710 --> 00:09:45,360 | much it moves away from those levels, is contingent upon what the other factors are, that we'll discuss in this video set. So understanding that value, okay, or |
| 56 | 00:09:46,110 --> 00:09:57,090 | you what is deemed as value okay is always going to be moving it's dynamic, okay, and which is a reason why there's multiple levels that would be considered |
| 57 | 00:09:57,090 --> 00:10:06,630 | support and resistance based on any time frame prices. Price. Just the same as on a monthly chart or a one minute chart, but how we perceive it, okay, and how |
| 58 | 00:10:06,630 --> 00:10:16,650 | we measure the supply and demand curve on horizontal support resistance is obviously going to be, you know, important to you as your development, okay, and |
| 59 | 00:10:16,650 --> 00:10:26,400 | understanding how to incorporate support resistance, we're going to give you some framework on how to look at very generic specific concepts to frame and |
| 60 | 00:10:26,400 --> 00:10:39,000 | flesh out support resistance on your charts. Now, there will be much more in terms of dynamic support resistance later on, when I start talking about the |
| 61 | 00:10:39,000 --> 00:10:47,760 | inner circle trader, market maker collection, when I start giving out some of the higher level price studies and how to look inside price action. And if you'd |
| 62 | 00:10:47,760 --> 00:10:58,380 | like the, the ICT order blocks that I released in precision trading volume one, one through three volume in 2014, then you'll really like the stuff that we |
| 63 | 00:10:58,380 --> 00:11:07,320 | talked about later on. But for now, we're going to get really back to the basics of when I came on the scene in 2010. Just talking about forex. I've been |
| 64 | 00:11:07,320 --> 00:11:21,960 | teaching obviously, since the late 90s 1997 98, when I came out of the corner, if you will, and started sharing my insights with everyone on Merck chat on the |
| 65 | 00:11:21,960 --> 00:11:24,450 | internet, as well. So |
| 66 | 00:11:25,350 --> 00:11:36,480 | looking ahead, okay, how can we develop a means of finding consistent trade setups? Well, again, like we talked about just a short moment ago, when we look |
| 67 | 00:11:36,480 --> 00:11:48,960 | at support resistance, we're looking at areas of where we would anticipate a probable bounce or move in price. Without having reference points to deem as |
| 68 | 00:11:48,960 --> 00:11:59,370 | support or resistance, you're not going to have any measurable way of determining a consistent approach, okay, you have to be looking for the same |
| 69 | 00:11:59,370 --> 00:12:06,540 | types of thing over and over and over again. Otherwise, you're gambling, okay, you're looking for a different result, doing the same thing over and over again, |
| 70 | 00:12:06,570 --> 00:12:18,120 | without having a sound plan in place, and looking for consistently reoccurring patterns that occur around support resistance. That's the basis for finding |
| 71 | 00:12:18,120 --> 00:12:27,030 | consistent trade setups. And I promise you, if you understand support resistance, that will give you 80% of the battle one for you all the way. |
| 72 | 00:12:27,330 --> 00:12:36,480 | Because you're going to be looking for things within and within anticipatory mind, not a reactionary mind, not a, I'm afraid, I'm going to miss the move |
| 73 | 00:12:36,480 --> 00:12:44,820 | mind. Okay, you know, what you're, you'll be looking at price, knowing full well that you as the trader, because you can't control price, you can't do anything |
| 74 | 00:12:44,820 --> 00:12:53,640 | to steer price, but you can control you, and you're at the driver's seat of your trading. No one can make you do these trades, you are the one that's completely |
| 75 | 00:12:53,640 --> 00:13:03,450 | and utterly responsible. So it's important that you understand in clear terms, what you do, when price gets to the specific price levels, if if price trades up |
| 76 | 00:13:03,450 --> 00:13:14,820 | to a quote unquote, key resistance level, what specifically Are you going to be doing once price gets there? Okay? Well, obviously, you know, in a real short |
| 77 | 00:13:15,870 --> 00:13:25,260 | list of means of deciding what it is you should be done, when price trades, the resistance level, you should be looking for signs of pausing and or reversing. |
| 78 | 00:13:25,440 --> 00:13:34,080 | Okay, and then you want to see a quick move away from that level, you will see some measurable means of rejection, you want to see price want to get away from |
| 79 | 00:13:34,080 --> 00:13:43,470 | that level. And then many times what will happen is it will try to run back to that level and fail. That's when a lot of our optimal trade entry patterns come |
| 80 | 00:13:43,470 --> 00:13:51,600 | in harmonic trades, okay, if you're a harmonic trader, and you trade bad patterns and butterfly patterns, and not crab patterns, all those things that |
| 81 | 00:13:51,630 --> 00:14:01,050 | exist, if you have the understanding of the support resistance level in mind ahead of time, when price trades to those levels, that's when you're stalking |
| 82 | 00:14:01,050 --> 00:14:08,790 | the pattern. It's not that we're looking for patterns, and then looking for a level around the round that pattern. Okay, you're looking for the pattern to |
| 83 | 00:14:08,790 --> 00:14:19,170 | develop at these predetermined price levels. And that's the power of using price action based study. Because using support resistance, it removes all the |
| 84 | 00:14:19,170 --> 00:14:26,850 | ambiguity of well, should I trust the indicator now or should I not trust the indicator? Okay, there's a there's a plethora of all kinds of overbought and |
| 85 | 00:14:26,850 --> 00:14:35,370 | oversold indicators, okay, if overbought, oversold was all there was to it, you would only need one. Why is there so many of them? Because they form fit to make |
| 86 | 00:14:35,400 --> 00:14:45,180 | the books and the webinars and workshops and authors money selling that crap? Okay, if you take all that stuff off your chart and just simply look at support |
| 87 | 00:14:45,180 --> 00:14:53,160 | resistance, once you understand how that works, and if you understand this, the simple premise of overbought and oversold when you looked at price with the tool |
| 88 | 00:14:53,160 --> 00:15:01,380 | then it's obviously you'll know exactly when you should be following the indicator then, but then it becomes a question about Is that Is there any value |
| 89 | 00:15:01,380 --> 00:15:12,480 | in the indicator, okay. And that's, that's arguable, I like indicators because it gives me a, like a sentiment indicator based view on what I think the |
| 90 | 00:15:12,480 --> 00:15:22,890 | neophyte traders are expecting. And if I'm an I'm it, if I'm coming down to a support level, and I see folks seeing a small little bounce off that support |
| 91 | 00:15:22,890 --> 00:15:30,960 | level, and it goes overbought, they're going to look to to sell that because it's overbought. And I'm going to be looking for the small retracement, go back |
| 92 | 00:15:30,960 --> 00:15:39,690 | down into that support level, and I'm going to be buying it. Okay. And that's many times why neophyte traders get caught up, you know, selling lows and buying |
| 93 | 00:15:39,690 --> 00:15:51,150 | highs. And that's because indicators will do that to you every single time. So now, what does support resistance tell us as traders specifically, obviously, we |
| 94 | 00:15:51,150 --> 00:15:59,220 | know that resistance provides us a means of supply and support provides a means of graphically depicting |
| 95 | 00:16:00,750 --> 00:16:13,650 | demand. So we understand that graphically, okay, when price runs into a resistance level as it rallies up, okay, that is indicative of more sellers than |
| 96 | 00:16:13,650 --> 00:16:24,510 | buyers, okay, and a lack of buyers, okay. And when price comes down to a support level, that's an indication of strong buyers, or a lack of sellers. Okay, so |
| 97 | 00:16:25,140 --> 00:16:33,690 | understanding that simple premise, okay, if you look at higher timeframe, price charts, like monthly, weekly and daily, there's absolutely no reason why you |
| 98 | 00:16:33,690 --> 00:16:43,080 | can't carve out a really, really nice return over an annual basis and not even really trade a whole lot. But the problem is, is much like myself, we are |
| 99 | 00:16:43,080 --> 00:16:50,880 | looking for action, we want to get in there, and we want to be doing something because it doesn't seem productive, until we actually put trades on, think about |
| 100 | 00:16:50,880 --> 00:16:59,190 | it. We don't know how much money we're going to make. Most of you don't know how much you're going to lose, because you don't either trade with stock, or you |
| 101 | 00:16:59,190 --> 00:17:08,010 | trade with a mental stop, okay, you think that, you know, you know where it's going to probably go, and you'll be willing to assume that that loss if it goes |
| 102 | 00:17:08,010 --> 00:17:13,680 | there, but many times it blows right through that, and then that mental stop does exactly what it's called, and it makes you mental, because you wish you |
| 103 | 00:17:13,680 --> 00:17:22,920 | would have had hard stop in there, you by having an understanding of support resistance will know exactly where your stop loss should be. And also where |
| 104 | 00:17:22,920 --> 00:17:32,100 | everyone else's stop losses as well. Even the fund managers, that's right, the fund managers, they're gonna put their stop loss in there just like everyone |
| 105 | 00:17:32,100 --> 00:17:44,370 | else does. And that's why the specialists and the market makers Exactly. Scoop up those, those liquidity pools where there's a pocket of orders resting just |
| 106 | 00:17:44,370 --> 00:17:53,070 | above an old high or just below an old low, and it's uncanny how many times that takes place. And if you understand where the markets going on a macro level, |
| 107 | 00:17:53,400 --> 00:18:01,050 | okay, and if you find a support level, when price is coming down to that level, okay? Don't assume that it's going to stop right on that level, many times what |
| 108 | 00:18:01,050 --> 00:18:09,540 | will happen, it's going to dip below that level. Why? Because there's going to be existing pending orders below that level, it's going to become immediate |
| 109 | 00:18:09,540 --> 00:18:18,360 | market orders, okay. And they're going to be used to provide liquidity for those participants in the marketplace that want to take the other side. And that's |
| 110 | 00:18:18,570 --> 00:18:28,800 | usually literally all of your losing trades. That's probably 99.99999% of how you lost in the marketplace. Your stock got taken, and then the move you thought |
| 111 | 00:18:28,800 --> 00:18:38,790 | was gonna happen took off and did it. Okay. And there's no, there's no secret to it, okay, everyone knows that the textbooks tell us to put your stop loss right |
| 112 | 00:18:38,790 --> 00:18:50,220 | below an old low, the most recent low, okay, and it's common sense it's made, it just takes a very small measure of static, you know, price action to come down |
| 113 | 00:18:50,220 --> 00:19:00,960 | and just tag that out. If a big order comes in the marketplace, and it needs liquidity to be executed, market makers gonna take to the market to that level, |
| 114 | 00:19:01,170 --> 00:19:11,910 | okay, and fill that order, knowing by that one trade printing, okay, once that trade becomes a market, print where that price is now there, every order around |
| 115 | 00:19:11,910 --> 00:19:21,270 | that particular level goes hot. In other words, everything becomes a market order, all pending orders, by stops and limit orders all become market orders |
| 116 | 00:19:21,300 --> 00:19:31,710 | immediately right then and there. And market orders are what? That's candy for the market maker. That means he's going to get whatever fill he wants. Okay, and |
| 117 | 00:19:31,710 --> 00:19:38,280 | that's their, that's what they're doing in the marketplace. And I know that's probably going to be, you know, probably a little bit uncomfortable for for some |
| 118 | 00:19:38,280 --> 00:19:45,480 | of you if you're just new to understanding how this stuff works. And you may be you may be questioning why should I be doing this? There's people out there |
| 119 | 00:19:45,480 --> 00:19:53,430 | trying to take me out the marketplace. But when you understand what they do and how they do it, you can do what they do in your trading and ride their |
| 120 | 00:19:53,430 --> 00:20:02,160 | coattails. That's really the that's the basis of consistent trading, knowing what the Smart Money is doing. who the real smart money is not the guys that are |
| 121 | 00:20:02,160 --> 00:20:10,950 | talking on the forums that think they knew where Smart Money is, most of them don't. Okay. And I have dealt with people on an institutional level, I have been |
| 122 | 00:20:10,950 --> 00:20:19,500 | in an institutional level environment. And I have seen a lot of things that I'm sharing now. And most of the folks that I know have known me for a long period |
| 123 | 00:20:19,500 --> 00:20:27,120 | of time, aren't real happy about me sharing this stuff. And I don't care because I like doing it. And I always say, if I, once I got to the point where I knew |
| 124 | 00:20:27,120 --> 00:20:33,690 | what I was doing, and I was comfortable with it, and I didn't need any more money, boom, I would share it, and this is what I'm doing. I'm never selling it. |
| 125 | 00:20:33,690 --> 00:20:44,790 | So I get a lot of gratification for just being helpful to the general populace. Now, it's not enough simply knowing what support resistance levels are, you |
| 126 | 00:20:44,790 --> 00:20:55,500 | know, on your charts, but we want to be able to gauge the strength of those particular price levels. And when we look at price, you want to see |
| 127 | 00:20:55,500 --> 00:21:05,220 | resistance levels being taken out and support levels being respected. Okay. And that is a really good bullish environment, if we see support levels being taken |
| 128 | 00:21:05,220 --> 00:21:14,490 | out and resistance levels being respected, that is a very bearish indication. By having that mindset in your trading, it's rather simple. If you think about it, |
| 129 | 00:21:14,550 --> 00:21:26,910 | it's very simple. But how many times are you actually looking at price that way, you're looking for everything to be extremely difficult. You want to make it so |
| 130 | 00:21:26,910 --> 00:21:36,030 | complicated, that it's, it's sexy, okay, that way you can tell your friends and they can say what, that doesn't make any sense to me, because that's too, that's |
| 131 | 00:21:36,030 --> 00:21:45,210 | too advanced. For my mind, I'm not gonna, I'm not gonna be a trader, because it seems too complicated. Trading really itself is easy. And the problem is, we |
| 132 | 00:21:45,210 --> 00:21:52,410 | like to make it harder, because simply saying it's gone low enough to a level, it's probably gonna go up from that point, if we just by their look to take a |
| 133 | 00:21:52,410 --> 00:22:02,250 | small profit and control our risk. That's all trading is. Now. Unfortunately, again, like we mentioned earlier, everyone that comes into the marketplace wants |
| 134 | 00:22:02,250 --> 00:22:13,230 | to trade a lot thinking that more trading equates to more success. And that's absolutely not the case. That's not the case at all, you'll find that many other |
| 135 | 00:22:13,230 --> 00:22:24,420 | most significantly profitable traders out there are those that are ones that do not trade a whole lot, okay, that are very selective, okay? Very, quote, |
| 136 | 00:22:24,420 --> 00:22:37,320 | unquote, cherry picking, if you will, the understanding that, you know, if you have a system, okay. And there's a recurring theme that comes out of most |
| 137 | 00:22:37,350 --> 00:22:44,550 | technical circles that, you know, if you have a system, you got to take every signal, I don't take every signal. Even in my own methods, I don't do that. |
| 138 | 00:22:44,940 --> 00:22:55,500 | Because I'm a discretionary trader, I know by looking at price action when the setups look like they're there. But the probabilities aren't as strong as other |
| 139 | 00:22:55,500 --> 00:23:03,720 | times. Okay. And that comes with experience, you can't learn that from a book, you can't go to a workshop and learn that, that comes from years and years and |
| 140 | 00:23:03,720 --> 00:23:12,600 | years of digging your nose into price action and studying and seeing your real trades pan out, taking the losing trades, taking the winning trades, taking the |
| 141 | 00:23:12,600 --> 00:23:23,550 | scratch trades, breakevens marginal losses, marginal wins in and digesting price action and seeing these reoccurring seasonal tendencies, these reoccurring |
| 142 | 00:23:23,550 --> 00:23:34,950 | General, you know, patterns that come into the marketplace, all the time that it just just generically inherent to repeating over and over and over again, |
| 143 | 00:23:34,950 --> 00:23:45,570 | certain periods of time, throughout the year, throughout the month, specific months. certain days of the week, all these phenomenon, okay, are at the |
| 144 | 00:23:45,570 --> 00:23:54,600 | disposal of a AV specialist. And I'm something of a specialist, because I understand specifically, certain times of the week times of the year times have |
| 145 | 00:23:54,600 --> 00:24:05,730 | specific months, and times of the days, where certain things are coming into effect where I know that smart money will be doing a specific type of thing. And |
| 146 | 00:24:05,760 --> 00:24:14,520 | I can capitalize on that. I'm not trying to go out here to hurt anyone. But I am going out there to try to take the other side of less informed traders and I |
| 147 | 00:24:14,520 --> 00:24:26,100 | don't, I don't feel that that is warranting an apology. Okay, because, you know, we all sign the risk with risk disclosures when we come into this business. And |
| 148 | 00:24:26,370 --> 00:24:34,920 | if you don't learn from your losing trades, you aren't going to learn from the experiences of losing because you're just going to be caught up in the pain |
| 149 | 00:24:34,920 --> 00:24:42,480 | factor. And that's usually the loser cycle. You go into this business in you have no framework, no basis of understanding where the trades are going to form |
| 150 | 00:24:42,690 --> 00:24:52,260 | or when to anticipate them and support resistance gives you that there's no better tool at a traders disposal than support resistance. It's absolutely |
| 151 | 00:24:52,260 --> 00:25:01,350 | crucial in terms of my opinion on trading technically. That's it That's the secret, you know, understanding of where support resistance That'll give you |
| 152 | 00:25:01,350 --> 00:25:11,730 | the, like I said, the 80 80% of the battle beaten right there, because you won't be trading out there in an empty space. Okay, between key levels, okay? There |
| 153 | 00:25:11,730 --> 00:25:15,000 | are ways of trading Don't get me wrong, there's there are ways of trading that stuff, |
| 154 | 00:25:15,029 --> 00:25:23,579 | but you're still going to be referencing smaller timeframe, key support resistance levels with a directional premise based on those higher timeframe |
| 155 | 00:25:23,579 --> 00:25:35,489 | levels, so you're still going to incorporate support resistance. But if you focus on monthly, weekly and daily levels, there's absolutely no reason why the |
| 156 | 00:25:35,489 --> 00:25:46,799 | average Joe trader can find a few trades a year to be net profitable. Now, what types of support resistance are there? Well, there are two types of support |
| 157 | 00:25:46,799 --> 00:25:55,949 | resistance and in my own understanding, okay, I dubbed them as natural support resistance levels, and implied support resistance levels. Now what what is a |
| 158 | 00:25:55,949 --> 00:26:05,489 | natural support resistance level one would be obviously, a 12 month higher low, and that would be the range, the highest price in the last 12 months and the |
| 159 | 00:26:05,489 --> 00:26:16,799 | lowest price in the last 12 months. That are there are basically your 52 week highs and lows. Okay, pretty standard levels in all of in technical circles, if |
| 160 | 00:26:16,799 --> 00:26:25,439 | you're a stock trader, there's a real important levels. You have quarterly highs and lows, that means every three months, throughout the calendar year, okay, |
| 161 | 00:26:25,469 --> 00:26:33,899 | there are specific highs and lows in the last three months. Okay, you want to make note of that those levels are very, very crucial. I love those levels more |
| 162 | 00:26:33,899 --> 00:26:42,509 | than any other level because they give me the framework on how the commercial traders which we'll talk about later in this video, how they move in and out of |
| 163 | 00:26:42,539 --> 00:26:51,659 | the marketplace and they hedge and they they provide the liquidity to move price around like it does. Okay. And a lot of people will argue and say, you know, |
| 164 | 00:26:51,659 --> 00:26:57,899 | it's not the commercials moving price, I'm going to tell you right now, it is the commercial traders it is the large institutions, it is the banks, okay, that |
| 165 | 00:26:57,899 --> 00:27:08,219 | move price to levels of disparity. In other words, they go too far away from equilibrium, okay, and that's where opportunity is you want to see price be |
| 166 | 00:27:08,219 --> 00:27:16,499 | pulled to these levels, okay. And every quarter, there's a specific, you know, tug of war that takes place where price has gone too far higher than they should |
| 167 | 00:27:16,499 --> 00:27:23,129 | have and too far lower than it should have. And then there's an opportunity when you trade these extreme levels, you have monthly highs and lows as well, which |
| 168 | 00:27:23,129 --> 00:27:31,529 | is basically the four week range, most highest high and lowest low in this four week range. Basically, if you just look at your your trading platform, just mark |
| 169 | 00:27:31,529 --> 00:27:41,459 | out the previous months high and low. Boom, you got it. You have weekly highs and lows. Okay, the previous week's high and well and I like to look at at least |
| 170 | 00:27:41,459 --> 00:27:51,179 | two or three weeks worth, if I'm looking at weekly ranges. I'd like to look at that because every swing point is going to be made with three candles. Okay, |
| 171 | 00:27:51,179 --> 00:27:59,579 | whether it be a monthly chart, weekly chart daily chart doesn't matter. Every swing highs and lows is going to be seen with at least three candles. Okay, so I |
| 172 | 00:27:59,579 --> 00:28:08,429 | like to look with a background of at least three candles in perspective. Even though I'm looking at weekly highs and lows, I'm still referencing at least |
| 173 | 00:28:08,429 --> 00:28:18,209 | three. The previous week's high and low are very sensitive as well. Now we have the daily highs and lows, obviously the previous 24 hour range. Then we have |
| 174 | 00:28:18,209 --> 00:28:25,709 | session highs and lows that would be the highest high and lowest low in during the asian session. The highest high and the lowest low during the London session |
| 175 | 00:28:25,889 --> 00:28:34,529 | and the highest high and lowest low than New York session. There's also intraday fractals, okay, that you could be looking for, that gives you your support |
| 176 | 00:28:34,529 --> 00:28:44,399 | resistance. That's a lot of times based with range trading and pattern trading. And then obviously, the least of all of importance to me is trendline analysis |
| 177 | 00:28:44,399 --> 00:28:58,979 | channels is supporting supply and demand lines. They to me if it's not horizontal, driven, I'm not interested. So if there's anyone that is looking for |
| 178 | 00:28:58,979 --> 00:29:08,039 | me to talk about trend lines, okay. diagnol up and down, or Tom demark trend lines, because, yes, I read the book. Yeah, new science and technical analysis |
| 179 | 00:29:08,039 --> 00:29:15,839 | when it first came out, I had the first print edition, and I'm sorry, I just don't see any value in it. And I have other tools that give me a lot more |
| 180 | 00:29:15,839 --> 00:29:24,329 | indication before those time demark trend lines break. I already know what you know, is most likely going to happen. And I'm usually in there before the trend |
| 181 | 00:29:24,329 --> 00:29:31,649 | rolling break. And that's usually what professionals are dealing they're getting in here before the move takes place. That's the basis of what we're doing. We |
| 182 | 00:29:31,649 --> 00:29:39,959 | want to be in there before the markets are moving. And trend lines, just unfortunately are just too late to party. Now, implied support resistance levels |
| 183 | 00:29:40,019 --> 00:29:50,609 | are things like Fibonacci levels, okay. retracements and extensions, pivot points, okay, monthly pivots, weekly pivots, daily pivots. And by having those |
| 184 | 00:29:50,609 --> 00:30:02,609 | levels, okay, you have they don't work by themselves. There's no magic to them, okay? But when you incorporate The natural support resistance levels with |
| 185 | 00:30:02,609 --> 00:30:09,029 | implied support resistance level concepts like Fibonacci and pivots. It's it's mind blowing how |
| 186 | 00:30:10,859 --> 00:30:22,049 | powerful the setups are when you have those those coupling or these confluences of both forms of support resistance. Now obviously when we talked about 12 |
| 187 | 00:30:22,049 --> 00:30:34,229 | months highs and lows This is this real quick graphic depiction of looking at 1997 you can see how price when we traded back up to that same general area in |
| 188 | 00:30:34,229 --> 00:30:45,689 | 2006 price was really giving you opportunities to define sell signals. Now obviously there's no there's no guarantee that price is going to return to this |
| 189 | 00:30:45,689 --> 00:30:54,539 | level stop on a dime not gobeil not go through it just a little bit might go through you know a lot more than you probably think it will obviously but then |
| 190 | 00:30:54,749 --> 00:31:06,329 | the patterns that exist at these levels you will be looking for sell scenarios. bearish divergence, optimal trade entry sell signals you bearish bats, bearish |
| 191 | 00:31:06,659 --> 00:31:15,509 | butterflies, bearish crabs bear everything that you would look for on a bearish level. Okay, turtle soups, okay. This is real actually giving you a turtle soup |
| 192 | 00:31:15,629 --> 00:31:25,469 | set up where Charles soup is just a false breakout. And it moves above the tooth that I'm inside of the 99 seven high, and then it quickly rejected and moved a |
| 193 | 00:31:25,469 --> 00:31:38,039 | considerable amount of pips lower now they return back to that 240 level, but it's still moved a significant means of price movement in terms of pips, and |
| 194 | 00:31:38,039 --> 00:31:47,189 | that's really all you're looking for, you're looking for scenarios that give you high odds setups. Now, obviously monthly, I'm sorry, 12 month highs and lows, |
| 195 | 00:31:47,429 --> 00:31:55,559 | they don't really set up a whole lot. Okay, but there are significant price levels you have to be aware of. We talked about earlier, one of the ones I've |
| 196 | 00:31:55,559 --> 00:32:05,849 | really enjoyed looking for and doing a lot of my studies with is the quarterly highs and lows. And you can see here, the the price on this example shown how |
| 197 | 00:32:05,849 --> 00:32:17,639 | price came down to just briefly blew through the previous low made in this is in the the sample size of data. During the month of April, the low was formed |
| 198 | 00:32:17,639 --> 00:32:26,849 | there, during June, it came down to that level swept up just a little bit and look at the reaction after that explosive to the upside. Now, what we're going |
| 199 | 00:32:26,849 --> 00:32:35,699 | to talk about is moment makes that lower low in June comparable to the low that was made in April. When we look at that phenomenon taking place there, there's a |
| 200 | 00:32:35,699 --> 00:32:42,569 | pattern that we're going to be looking for that helps us measure the institutional sponsorship behind specific types of moves like that. And you'll |
| 201 | 00:32:42,569 --> 00:32:50,729 | clearly see that these things are not in any way, shape or form indicative of continuation going lower. And in fact, there are many times accumulation |
| 202 | 00:32:50,819 --> 00:33:02,039 | patterns. Obviously, you know monthly highs and lows. It's not rocket science, you can see that look at just many examples here, trading old monthly highs and |
| 203 | 00:33:02,039 --> 00:33:12,389 | lows. Okay, just simply looking at the old monthly highs and lows, drawing your lines on them and waiting for price to get to them. There's a lot of |
| 204 | 00:33:12,389 --> 00:33:23,219 | opportunities just using this example. Okay, where you could do swing trades, and do a just a small handful a year and carve out an absolutely stunning return |
| 205 | 00:33:23,519 --> 00:33:32,009 | and not even have to be trading full time to be doing your nine to five desk jockey job, your average Joe, you're going to work come home and see what you've |
| 206 | 00:33:32,009 --> 00:33:41,249 | done in the marketplace. You can do and have a type of trading with monthly highs and lows is simply simply sitting down through charts, putting the lines |
| 207 | 00:33:41,249 --> 00:33:48,599 | in waiting for price to get to those levels, you can use a cell phone to alert you when price trades of those and then simply just pull it up real quick Can |
| 208 | 00:33:48,599 --> 00:33:50,159 | you take yourself to the bathroom at work, |
| 209 | 00:33:50,490 --> 00:34:00,210 | pull up pull up your your your your intraday price action software that you would be able to use on your smartphone. And if you don't have a smartphone and |
| 210 | 00:34:00,210 --> 00:34:07,110 | you're looking to trade forex, you kind of you got to get with the program and get caught up because it's really it's the invaluable tool, because you can |
| 211 | 00:34:07,110 --> 00:34:15,000 | actually do a lot of intraday trading. While you're at work. I'm not saying you can't cheat your boss and sit in front of your phone all day, but it only takes |
| 212 | 00:34:15,000 --> 00:34:26,100 | a few minutes. Once your alerts tell you that prices reached to these specific levels. You can say okay, well, we went up to a specific level at 110 670. And I |
| 213 | 00:34:26,100 --> 00:34:34,170 | think that price is probably going to be bearish there. And if price sells off a little bit that's indicative of we're looking for if it trades back up to a |
| 214 | 00:34:34,170 --> 00:34:41,280 | specific level that doesn't meet that same price level. In other words, a failure swing or optimal trade entry sell. You can put your limit order right |
| 215 | 00:34:41,280 --> 00:34:49,560 | there. And then there you go, you your your known stop loss would be in place you can put your limit order for entry and your take profits, you know and just |
| 216 | 00:34:49,590 --> 00:34:57,780 | simply let it go on autopilot. And again, you can trade MFI highs and lows with a day job and it's wonderful how many opportunities to set up over just a small |
| 217 | 00:34:57,780 --> 00:35:06,840 | sample set of pairs. Weekly highs and lows, same scenario. You don't need to be trading full time sitting in front of charts to trade weekly highs and lows. You |
| 218 | 00:35:06,840 --> 00:35:19,320 | can see the example here where price comes down for the Euro yen. Explosive move just coming right back down to an old low. Just an old previous week low bang |
| 219 | 00:35:19,350 --> 00:35:31,230 | explodes to the upside huge move. That's 300 pips, okay. And that's all inside of a short span of time, again as a swing trader working off the idea of working |
| 220 | 00:35:31,230 --> 00:35:37,680 | at a job and not having to be able to sit in front your charts and maybe you're developing trader. And that's how you're going to start. Weekly highs and lows, |
| 221 | 00:35:37,680 --> 00:35:47,160 | much like we did with the quarterly and monthly are absolutely phenomenal levels we keying up on. All right now the daily highs and lows, obviously you can still |
| 222 | 00:35:47,160 --> 00:35:56,400 | reference that if you are, you know, a part time trader or one that is unable to be in front of the charts every single day. But previous day's highs and lows |
| 223 | 00:35:56,880 --> 00:36:07,770 | are really the wonderful setups that day traders can use because the banks are looking at these levels. And I like to look at at least three days worth of |
| 224 | 00:36:07,800 --> 00:36:16,230 | data. In other words I'm looking at today and the previous two days before it sometimes maybe a day before that, but I'm looking for at least three days worth |
| 225 | 00:36:16,230 --> 00:36:27,480 | of data, okay to see where key highs and key highs and lows are. And I can look for rejections at these specific levels and anticipate price patterns forming if |
| 226 | 00:36:27,480 --> 00:36:37,680 | they line up with specific times of the day like New York session open and London session open. Now obviously, in greater detail the asian session highs |
| 227 | 00:36:37,680 --> 00:36:46,980 | and lows are really beneficial, especially if you're a London trader and New York trader. And again, this is now speaking specific to those individuals that |
| 228 | 00:36:46,980 --> 00:36:59,010 | are day traders or short term scalpers because these price levels are highly sensitive on an intraday basis. You can catch many times, you know 1015 2030 |
| 229 | 00:36:59,010 --> 00:37:12,210 | pips at intraday basis, by utilizing the asian session high and low. I, I adopted a style of the Asian range that was taught through Chris Laurie's work. |
| 230 | 00:37:12,840 --> 00:37:22,050 | That's really great. I learned the Asian range from I tweaked a little bit, he has a little bit of a different time window, it's not much, but I just |
| 231 | 00:37:22,050 --> 00:37:33,300 | incorporated the way I use price action in the globex s&p 500 market. And that's basically using the five, I'm sorry, the mid night timeframe of New York. That's |
| 232 | 00:37:33,300 --> 00:37:42,030 | my beginning basis of the new day. And that's where I end the latter parameter for the asian session. So even though it states here that 4am. And these times |
| 233 | 00:37:42,030 --> 00:37:53,430 | as you see here, beginning and ending, these are going to be New York Times. And unfortunately, I tried to consider all of the possible ideal scenario talk and |
| 234 | 00:37:53,430 --> 00:38:01,380 | teach this in a way where everybody all around the world because there's a lot of people to follow me in different parts of the world, I'm not going to go into |
| 235 | 00:38:01,770 --> 00:38:10,560 | trying to make sure that the times are lining up for you. Okay, so the way that you're going to learn the easiest for me, is understand that I live on the east |
| 236 | 00:38:10,560 --> 00:38:21,210 | coast of North America. So basically, whatever time it is in New York, that's what time I'm in. So every time I'm talking about specific times 90% of time, |
| 237 | 00:38:21,210 --> 00:38:30,690 | I'm referring to my local time. And in just it's easy, easier for you to just get yourself a cheap watch instead of to New York time and just have that when |
| 238 | 00:38:30,690 --> 00:38:37,380 | you're watching my videos or watching this, this type of information. And I'm looking at your chart because you'll know what I'm doing and what I'm expecting |
| 239 | 00:38:37,380 --> 00:38:38,310 | based on an idea. |
| 240 | 00:38:39,840 --> 00:38:46,410 | Obviously, that's in the same vein that we talked about with the asian session, the London session highs and lows now, London session highs and lows are going |
| 241 | 00:38:46,410 --> 00:38:54,150 | to be very influential in terms of your New York trading if you're a New York intraday trader and our loads if you start your trading, okay, a lot of people |
| 242 | 00:38:54,150 --> 00:39:03,270 | can't get up during the London session. I don't know why, because there's a lot of money to be made. And it's absolutely the best entries for the daily range if |
| 243 | 00:39:03,270 --> 00:39:09,870 | you're gonna be trading it. It's obviously in the London session. But I understand there's a lot of people that can't do it because of time constraints |
| 244 | 00:39:09,870 --> 00:39:17,010 | and family commitments and maybe even jobs. But if you're gonna be a New York session trader, you have to at least reference the London session highs and lows |
| 245 | 00:39:17,010 --> 00:39:25,710 | because they're going to be paramount to the swings that set up during the New York session. If you do not understand London session highs and lows. Just take |
| 246 | 00:39:25,710 --> 00:39:37,260 | a couple weeks and go through the previous data on your platform. Mark those out and see what trades set up during the New York session timeframe on an intraday |
| 247 | 00:39:37,260 --> 00:39:45,780 | basis and how many pips are available just by incorporating those specific price points and you'll be absolutely astonished. And obviously, the New York session |
| 248 | 00:39:45,780 --> 00:39:58,590 | highs and lows will be influential for the new asian session that starts up Okay, so the calendar that follows the sun around the globe here on planet earth |
| 249 | 00:39:58,590 --> 00:40:07,260 | in the investment world. trading day, whatever session highs and lows are formed in the New York session, okay are going to be influential during the asian |
| 250 | 00:40:07,260 --> 00:40:18,360 | session. Okay, so the asian session requires and references to New York session and the previous London session highs and lows and New York session references |
| 251 | 00:40:18,390 --> 00:40:26,460 | the previous London session and asian session. So you're always looking back at least two sessions before the trading session that you're trading now, by having |
| 252 | 00:40:26,460 --> 00:40:36,630 | that it gives you all of the the intraday fractals, okay, that are most likely gonna be influential in terms of support resistance on an intraday basis. And |
| 253 | 00:40:36,630 --> 00:40:46,920 | like we just said, intraday fractals, highs and lows are going to be you swings that form and retrace back into previous session highs and lows. And by |
| 254 | 00:40:46,920 --> 00:40:55,080 | understanding that concept of intraday range. And where we're at in terms of directional premise for the high or low forming for that particular day, they're |
| 255 | 00:40:55,080 --> 00:41:06,480 | going to give you a framework to at least look for trading scenarios to get in sync with momentum, or maybe even take profits as price reaches up to these old |
| 256 | 00:41:06,480 --> 00:41:18,510 | levels, that may be a good indication to take your profits. Now, institutional price levels are ones that we like to follow. And they're very simple. Okay. And |
| 257 | 00:41:18,570 --> 00:41:29,220 | honestly, as a new trader, this is where I tell everyone to start with, if you simply look at the 100 point levels and onwards, for instance, you're looking at |
| 258 | 00:41:29,220 --> 00:41:39,540 | the British Pound USD pair Here is a sample set. If you mark off the 160 level, and you mark off the 161 level, which doesn't appear on this chart, okay, they |
| 259 | 00:41:39,540 --> 00:41:43,260 | would be your 100 levels, okay, or big figure levels. |
| 260 | 00:41:44,550 --> 00:41:54,840 | In between halfway between that is a 50 PIP mark, okay. In other words, it would be 159 50 level. Okay, that's your mid figure level, in between the big figure |
| 261 | 00:41:54,840 --> 00:42:10,200 | 160 and 159 50. Okay, we look for the 159 80 level, okay. And then between 159 50 and 159, even big figure level, we'd look for the 159 20. Now. And in |
| 262 | 00:42:10,200 --> 00:42:21,330 | summary, we're looking for the 00 levels, the 80 levels, to 50 levels, and 20 levels. And then obviously, the lower 00 level again, and this goes across the |
| 263 | 00:42:21,360 --> 00:42:32,310 | price action that you're trading around now. And what I do is I look at about a 300 PIP range based on where we're ever at trading at market, and I go up 300 |
| 264 | 00:42:32,310 --> 00:42:40,860 | pips and I go down 300 pips and I look at those price levels. If you do that, as a beginning neophyte trader, and you say you're questioning your your prowess as |
| 265 | 00:42:41,430 --> 00:42:48,660 | you're being able to identify support resistance levels, or maybe you can't be in front of the charts all the time, and you just want a real quick, clean |
| 266 | 00:42:49,170 --> 00:42:57,660 | approach to support resistance, this is it. Okay, this is the one you're looking for. Because there will be enough trading patterns to form over the course of a |
| 267 | 00:42:57,660 --> 00:43:07,650 | month that if you aren't able to trade every single day of the day trader, not that you should trade every day. But if you're not able to do that be in front |
| 268 | 00:43:07,650 --> 00:43:15,510 | of the charts every single day. By using these types of levels. And looking at the higher monthly, weekly and daily, you'll find trade setups, they'll be |
| 269 | 00:43:15,510 --> 00:43:26,190 | there, that the ability to to remove the uncertainty or the emotional charge that comes with how many levels you know, how many lines should I have on my |
| 270 | 00:43:26,190 --> 00:43:34,560 | chart? What take all that out of the equation and to simply say, Okay, I'm going to be looking at the big figures, 00 levels, the mid figures to 50 levels, the |
| 271 | 00:43:34,560 --> 00:43:46,500 | 80 levels and the 20 levels. And the reason why these levels are so significant is because institutional traders, many times their order blocks are around these |
| 272 | 00:43:46,500 --> 00:43:59,490 | particular price levels. That's why it's uncanny how price goes to these particular levels, that the banks are taking action and providing liquidity for |
| 273 | 00:43:59,490 --> 00:44:10,740 | traders at these price points. Citi Bank is not having a trade out there with 159 17. That's not their order. That's not that that's not their block, okay, |
| 274 | 00:44:10,950 --> 00:44:22,530 | they will have 159 20 they will have 159 evens they want, they will have 159 50, okay, those levels are why many times you'll see what you think is the short |
| 275 | 00:44:22,530 --> 00:44:29,970 | term support resistance level that may be at a weird off the wall number, many times price will go beyond that despite a little bit but go right to one of |
| 276 | 00:44:29,970 --> 00:44:38,400 | these levels and then turn around go the other way. But if you're just looking at what you think as a short term, support resistance level, it may not be |
| 277 | 00:44:38,400 --> 00:44:47,790 | enough, okay, so for now, just understand that these levels are very, very psychologically sensitive, okay? Because there's a real world business need, |
| 278 | 00:44:47,850 --> 00:44:55,620 | okay, that's facilitated around these price levels, and it's based on institutional trading. We're gonna talk a little bit more obviously, as we go |
| 279 | 00:44:55,620 --> 00:45:05,430 | further about support resistance, but right now, you absolutely have no excuse. Now. It's Zero excuses why you can't have your charts properly lined up. For |
| 280 | 00:45:05,430 --> 00:45:16,230 | support resistance scenarios. There's a lot of types of support resistance that are made available to you. And when price gets these price levels, what you're |
| 281 | 00:45:16,230 --> 00:45:25,050 | going to be looking for is your pattern, you may be simply a overbought divergence trader. But if you trade up into a resistance level, based on the way |
| 282 | 00:45:25,050 --> 00:45:36,000 | we defined it in the previous slides here, that, okay is going to be the framework for you to engage price to get an experience with price of |
| 283 | 00:45:36,000 --> 00:45:46,200 | understanding how price reacts at these levels, looking at how your indicator based analysis works, and or doesn't work, you're gonna hone your anticipatory |
| 284 | 00:45:46,200 --> 00:45:55,260 | skills. And again, it's not important that you make money initially, you want to learn how price behaves, when price gets to these levels, many times you're |
| 285 | 00:45:55,260 --> 00:46:02,340 | gonna think that price should absolutely turn on a dime, and it won't do it, it'll go through it and blow through it actually, you'll learn more from those |
| 286 | 00:46:02,340 --> 00:46:06,780 | environments than you will from when the trades actually work out. Okay, and it sounds |
| 287 | 00:46:08,969 --> 00:46:19,289 | like an oxymoron. But you really do learn from the times that it doesn't work out for you. And what it does is also desensitizes you, okay, from when you see |
| 288 | 00:46:19,289 --> 00:46:28,019 | it not working. And then when you actually eventually start trading with real money and trading with live funds, you'll understand that your trade generally, |
| 289 | 00:46:28,019 --> 00:46:38,849 | because it's worked eight times out of the last, you know, 10, it doesn't always equate to 80% accuracy, you're going to have that future existence of a string |
| 290 | 00:46:38,849 --> 00:46:47,939 | of losses, okay, and it doesn't make a difference, how, and that's why I don't like to preach too hard about consistency in terms of percentage, because it |
| 291 | 00:46:47,939 --> 00:47:01,109 | doesn't make any difference, you can make an extremely large amount of money and be 40% profitable, you have a win rate of 30% 30% of the time trading and make |
| 292 | 00:47:01,229 --> 00:47:09,449 | millions and millions and millions of dollars. Now, fortunately, I've I've traded with a higher percentage of that, obviously, I've been trading for two |
| 293 | 00:47:09,449 --> 00:47:19,919 | decades. But you don't need a higher percentage rate. Okay, to make a lot of money, you need to have a consistency rate that's high, okay, of doing the same |
| 294 | 00:47:19,919 --> 00:47:28,619 | thing over and over and over again. But in time, you'll have a selective process that will, yes, your quote unquote, method or system says there's a likely trade |
| 295 | 00:47:28,619 --> 00:47:38,279 | sitting there. But you'll also have a worldly knowledge that says, You know what, it looks like it, but I'm gonna wait for the next scenario that does this |
| 296 | 00:47:38,279 --> 00:47:46,289 | or that, okay. And that might fly again, in the face of those that are out there saying, well, that's wrong, because you need to take every single thing. And |
| 297 | 00:47:46,559 --> 00:47:55,289 | it's like this, I've been doing for two decades, and I made a lot of money, and obscene amount of money. And I'm telling you what works. And 90% of everything |
| 298 | 00:47:55,319 --> 00:48:03,719 | I'm telling you isn't in books, that tells you something, if you're if the guys that are selling these methods, and systems and courses and stuff tell you, you |
| 299 | 00:48:03,719 --> 00:48:11,099 | have to take every signal, are you going to miss that next winning trade, I get enough winning trades. And my losses are small enough that I don't care about |
| 300 | 00:48:11,099 --> 00:48:20,549 | missing the ones that I didn't take and still pan out, I don't care about them. Because you're gonna see that there's a generic method of trading, that you're |
| 301 | 00:48:20,549 --> 00:48:30,629 | going to be in line with a professional perspective. And by default, you will see money move into your account. Think about that, by default, by no effort of |
| 302 | 00:48:30,629 --> 00:48:41,249 | your own, okay, except for the execution of your orders, there's going to be no effort of your own that results in you making that money. See the guys that do |
| 303 | 00:48:41,249 --> 00:48:49,859 | the system, you beat in your chest and you have to take every single signal, okay, or you're not following the system. I'm following my system. I'm following |
| 304 | 00:48:49,859 --> 00:48:58,469 | my method. It's discretionary. And that's the people that make money. If you look at system traders that trade every single trade, that's why their |
| 305 | 00:48:58,469 --> 00:49:11,219 | percentage is hurt, because they take every single trade, they don't learn to anticipate when price action is really favored to move in a specific direction |
| 306 | 00:49:11,219 --> 00:49:21,269 | or another. Okay. And it comes with the understanding of market tone, or risk on risk off scenario. Okay, understanding what the general markets doing, okay, and |
| 307 | 00:49:22,139 --> 00:49:39,659 | they get too much complacency, okay, about trusting the system and not learning to be a very sensitive price action trader, I can see many times turns in in the |
| 308 | 00:49:39,659 --> 00:49:49,199 | market tied before they actually are clearly discernible on the chart. And when I sit with people in live sessions, and they see that it's, it blows them away, |
| 309 | 00:49:49,769 --> 00:49:57,149 | because I'm not relying on anything outside of my own understanding of price action. And it's not going to be found in books, you're not going to get that |
| 310 | 00:49:57,179 --> 00:50:06,209 | but you will get it by using these things that we're teaching in these videos, buy skill sets and two rules and exercises that force you to look at price with |
| 311 | 00:50:06,209 --> 00:50:15,059 | very specific laser guided perspectives, okay, specific segments of price action, certain times of the day, certain times of the year, certain specific |
| 312 | 00:50:15,059 --> 00:50:25,319 | months, okay, there's a thing that, you know, that repeats itself over and over and over again. But systems don't see that. Okay? EAS don't see that. They just |
| 313 | 00:50:25,319 --> 00:50:37,859 | want to catch the next minor aberration in price. And I don't care about that. I want to see when UBS is coming in with a large block of orders. Okay. That's |
| 314 | 00:50:37,859 --> 00:50:46,859 | what I want to see. And that that's what that's what moves price, huge institutional order flow, not rinky dink little indicator based EA stuff. Okay, |
| 315 | 00:50:46,859 --> 00:50:53,909 | that doesn't make any sense whatsoever. It's mathematically derived. And I have no faith in all that stuff. I do have faith and understanding what price has |
| 316 | 00:50:53,909 --> 00:51:01,529 | done on the left side of my chart. And what that indicates in terms of institutional sponsorship, when you understand that everything else is |
| 317 | 00:51:01,529 --> 00:51:07,979 | secondary, you want to have institutional sponsorship in your trading. And what we're gonna be covering in here will help you do that as well. |
| 318 | 00:51:15,719 --> 00:51:25,589 | Alright guys, we're gonna be talking about the CBOT analysis concept, okay, or Commitment of Traders. Now, before I get into this, you got to understand that a |
| 319 | 00:51:25,589 --> 00:51:34,649 | lot of the stuff that I teach, okay, of core principles that I have actually derived from Larry Williams, and nice, obviously, you know, pretty well known |
| 320 | 00:51:34,649 --> 00:51:43,919 | guy around the world. It's interesting that if you research him, he's actually on YouTube, and in a couple different videos, not that he published them, other |
| 321 | 00:51:43,919 --> 00:51:53,249 | people are sharing them. But he was doing a keynote speaker speaking engagement, where he was talking to individually about specific types of trading asset |
| 322 | 00:51:53,249 --> 00:52:00,629 | classes and such, and how he settled on futures. And I used to be a futures trader, but I segwayed out of futures and moved into forex, because I do believe |
| 323 | 00:52:00,629 --> 00:52:08,339 | it's the best asset class right now. It could change because of things down the road we all know about but as it is, right now, I think for access, because you |
| 324 | 00:52:08,339 --> 00:52:16,469 | can tailor risk parameters, like no other you can't, you can't do this in stocks, you can't do it in and commodities, because commodities, you have |
| 325 | 00:52:16,589 --> 00:52:24,659 | specific assets, I'm sorry, you have specific contract specifications that you have to work with. In forex, you can trade for as little as you know, one cent |
| 326 | 00:52:24,689 --> 00:52:32,849 | per Pip, and not that you could do a whole lot with that. But as a developing learning trader, that's a wonderful thing. And you can't learn outside of paper |
| 327 | 00:52:32,849 --> 00:52:41,069 | trading the commodity market, you know, without trading a medium contract, you're stuck either trading a full lot or a half a lot. And if you don't have |
| 328 | 00:52:41,069 --> 00:52:53,579 | the capital to be able to do that, and you're pretty much out of the game. He I'm referring to Larry Williams, he was the probably the first person on the |
| 329 | 00:52:53,579 --> 00:53:05,609 | planet that put Commitment of Traders on the map, okay, and why it's important. And the CFT See, requires the large traders that have reportable sizes in their |
| 330 | 00:53:05,609 --> 00:53:15,869 | trading, they have to win a weekly basis now. divulge, you know whether they're buying or selling on a net basis. And that's a wonderful insight to have. And I |
| 331 | 00:53:15,869 --> 00:53:26,579 | hope they never change that transparency, because it gives us an X ray view of real institutional sponsorship on a macro level. And what you're going to see |
| 332 | 00:53:26,579 --> 00:53:36,629 | here as it relates to commitment traders is nothing more than what I learned back in 1990s, from Larry Williams, okay. And it's still wonderful. He was using |
| 333 | 00:53:36,629 --> 00:53:43,829 | the same stuff in the night in the 1970s and made millions of dollars doing it then, and and stuff still works and makes millions of dollars now. So if you |
| 334 | 00:53:43,829 --> 00:53:53,369 | haven't considered the commitment traders, and your forex trader, you're pretty much cheating yourself because there's a wonderful resource to have. But what is |
| 335 | 00:53:53,369 --> 00:54:01,019 | commitment traders? And really what it is, is you're looking at three groups. Okay, three groups of traders, you have the small speculators, which is kind of |
| 336 | 00:54:01,019 --> 00:54:12,689 | like us, we're people that aren't trading with astronomical level of contracts in the futures market. Obviously, most of you, if not all of you are watching |
| 337 | 00:54:12,689 --> 00:54:23,639 | this your forex traders, and we don't trade in contracts, we trade in lots. We would still be grouped in what we consider the small speculators category. |
| 338 | 00:54:24,119 --> 00:54:34,289 | There's a second group called the large speculators and they're usually the large hedge fund traders, okay. And 90% of time, they're right in the trending |
| 339 | 00:54:34,289 --> 00:54:44,399 | environment. Okay, where they get hurt is when the trend reverses and goes the other way, and that's okay. they're okay with taking that they. Institutional |
| 340 | 00:54:44,399 --> 00:54:53,579 | funds are predominantly trend following in nature, they're momentum type traders. They understand the large ebb and flow on the macro level and they're |
| 341 | 00:54:53,579 --> 00:55:03,239 | able to ride that stuff out because of their risk parameters and their risk new models that are in adopted. for that type of trading. The third category of |
| 342 | 00:55:03,239 --> 00:55:15,989 | traders for traders, data is the commercials. Now the commercials are grouped into categories, you have a commercial user, and you have a commercial supplier. |
| 343 | 00:55:16,289 --> 00:55:28,379 | Okay, and a perfect example of that would be like cocoa, cocoa is used to make chocolate. And there are masked commercial growers of cocoa. And then there's |
| 344 | 00:55:28,379 --> 00:55:38,789 | mass corporate users of cocoa, like Hershey and Nestle. And, you know, anything else that would be, you know, a large commercial entity that uses cocoa for |
| 345 | 00:55:38,789 --> 00:55:39,599 | chocolate producing, |
| 346 | 00:55:40,920 --> 00:55:50,310 | they have a real close tie to fundamental supply and demand factors as it relates to cocoa. Okay, and don't let me confuse you, and we're not talking |
| 347 | 00:55:50,310 --> 00:55:58,950 | about commodity markets is, you know, that's the sauce that we're going to be talking about that in the supply and demand equation, and how it's discernible. |
| 348 | 00:55:59,550 --> 00:56:11,310 | Through the utilization of the CRT data, deep commercial traders, whether they're either a supplier or commercial user, they both have very sensitive ears |
| 349 | 00:56:11,310 --> 00:56:24,480 | and eyes, you are closely watching the, you know, the fundamentals, okay, of cocoa. There's, that's not anything different from a commodity, okay, like corn, |
| 350 | 00:56:24,870 --> 00:56:39,930 | or wheat or gold or crude oil. Okay. And same thing with currency. Okay. Banks are watching the supply and demand for specific country's currency by following |
| 351 | 00:56:39,960 --> 00:56:52,020 | these individuals that have a lot more people, okay, that their job is primarily just simply to watch the fundamental basis of it under a large level of demand |
| 352 | 00:56:52,020 --> 00:57:00,330 | or waning demand, or is there a large supply coming in the marketplace? Okay, there, there's trained accredited staff for these large commercial users that |
| 353 | 00:57:00,330 --> 00:57:11,160 | are staffed just to do that very thing to watch the fundamental drivers in that specific asset. Well, think about it, if we are able to watch that same |
| 354 | 00:57:11,160 --> 00:57:21,720 | phenomenon take place for like the Swiss franc, or the Japanese yen, or the Canadian dollar, or the British pound, or the Australian dollar that is |
| 355 | 00:57:21,720 --> 00:57:34,500 | astronomical in terms of waiting out a huge amount of fundamental data data. I'm not a fundamental driven trader. But if you hold me to to the aspect of do I use |
| 356 | 00:57:34,500 --> 00:57:42,360 | fundamentals, I'd have to say yes, because it's based on this stuff right here. You can't get more fundamental than administrators, because they are the ones |
| 357 | 00:57:42,360 --> 00:57:53,190 | that provide the liquidity that makes the markets move like they do. Okay, it's these entities on the other side, okay. of the trading world. They are the ones |
| 358 | 00:57:53,190 --> 00:58:02,760 | that propel price up and down. It's not the retail traders. It's not the it's not the large funds. They are, if you look at this chart, the heavy dark line is |
| 359 | 00:58:02,760 --> 00:58:12,390 | the commercial traders. And if you look at the the medium thickness on your line, okay, if you look at that, they're generally diametrically opposed to one |
| 360 | 00:58:12,390 --> 00:58:24,630 | another, when the heavy thick line is making a peak, okay, making a real higher high, that lesser thickness or large speculator line, it's making a lower low |
| 361 | 00:58:24,690 --> 00:58:36,870 | comparable to commercials. So there's a diametrically opposed position between the two. When the commercials change gears and start coming down from a high, |
| 362 | 00:58:36,930 --> 00:58:45,540 | okay, you'll see the funds, okay, or large speculators, they'll start to come up, okay. And they're always moving back and forth until they reach an extreme |
| 363 | 00:58:45,540 --> 00:58:56,970 | reading on a diametrically opposed basis. When you see the diametrically opposed scenario where they're really, really high in the commercials and the large |
| 364 | 00:58:56,970 --> 00:59:05,790 | speculators are really, really, really low. Okay. What it's suggesting is that the commercials are net long, heavily net long, while the speculators on the |
| 365 | 00:59:05,790 --> 00:59:16,050 | large scale are fund managers, okay, are extremely bearish. Okay. Usually when you see that scenario, and it's a 12 month or four year extreme reading, not |
| 366 | 00:59:16,050 --> 00:59:25,050 | words, it's the commercials have the highest reading a net longs in the last 12 to 12 months to four years. Okay, those are the two benchmark measurements. I |
| 367 | 00:59:25,050 --> 00:59:34,860 | like to look at 112 month calendar year, okay, what's the highest and lowest they've had in terms of net long and that short positions, when we violate a 12 |
| 368 | 00:59:34,860 --> 00:59:42,330 | month higher low? That's significant. That's usually a trend changing environment. If we look at over a four year span, okay, they're really |
| 369 | 00:59:42,330 --> 00:59:49,440 | indicative of a major tide change. And it's important that you understand that we're going to be looking at an example that the Canadian dollar and recent |
| 370 | 00:59:49,440 --> 01:00:00,900 | price action and analysis that I shared on the internet and with Chris Laurie's group in his pro traders club but what is the commitment Traders report. Well, |
| 371 | 01:00:00,900 --> 01:00:11,850 | it's basically a breakdown of the total Long's and total shorts. And then by comparing it to you getting a net position of net long or net short position, |
| 372 | 01:00:12,000 --> 01:00:15,630 | okay, what we like to look at are the |
| 373 | 01:00:15,630 --> 01:00:24,540 | measurements of the long or short positions, other commercials ideally, okay, because they are, quote unquote, the smart money. And then the large |
| 374 | 01:00:24,660 --> 01:00:34,020 | speculators, okay, those two camps are the ones that we do not look at the small traders, because the average Joe, if you look at what's going on there 90% of |
| 375 | 01:00:34,020 --> 01:00:42,060 | time wrong, they don't they don't know what they're doing. But if you look at the commercials, and you look at the large speculators, okay, those two camps |
| 376 | 01:00:42,420 --> 01:00:51,060 | are basically taking the other side of each trade. Okay, in other words, as commercials are putting their positions into the marketplace, we're going to |
| 377 | 01:00:51,060 --> 01:00:57,240 | give a graphic depiction of what that looks like. The large speculators are usually assuming the other side of that trade. And then in trending |
| 378 | 01:00:57,240 --> 01:01:05,970 | environments, it's profitable for both. And you'll see that as we move along. But we do not consider the small traders at all, because they're the less |
| 379 | 01:01:05,970 --> 01:01:19,980 | informed or will be considered the street money. Alright, so, again, we're focusing on the large speculators because those individuals are going to be |
| 380 | 01:01:19,980 --> 01:01:31,380 | trend following in nature. And that's going to be very important, because if we are looking for institutional level types of trades, okay. And we're looking for |
| 381 | 01:01:31,380 --> 01:01:40,470 | a directional premise. And in our trades, it's going to be arrived by looking at the relationships between the large commercial traders and the large speculators |
| 382 | 01:01:40,470 --> 01:01:50,130 | because the large speculators are trend following, they have a really good track record of being right during the long trends. Again, they're paying come comes |
| 383 | 01:01:50,130 --> 01:01:57,690 | in at the major extremes highs and lows, and they don't care about picking tops and bottoms, and you shouldn't either, okay, and what this is really going to |
| 384 | 01:01:57,690 --> 01:02:08,250 | help you focus in on is trading during that Lion's portion of the big moves, and not trying to be so fixated on trying to get the high, the high, and the lowest |
| 385 | 01:02:08,250 --> 01:02:16,680 | low, we don't need that. In fact, I don't even try to trade that I used to do that kind of stuff. And I got probably lucky two times and getting a high and a |
| 386 | 01:02:16,680 --> 01:02:24,540 | low in the market. But outside of that, and you think in 20 years, I'd be able to do better than that. And it just simply doesn't happen. But I can trade |
| 387 | 01:02:24,570 --> 01:02:35,070 | really, really high near the highs on a bear market. Okay, as we have retracements in a bear market, I'll sell right near very close, if not sometimes |
| 388 | 01:02:35,070 --> 01:02:45,150 | very pips of the highs in bear markets, because I understand that the dynamic of that, but I'm not trying to pick tops in a bull market, I'm not trying to pick a |
| 389 | 01:02:45,150 --> 01:02:53,340 | tops, I'm looking for some clear indication of a reversal, before I start going in there expecting a breakdown. And there's tools that we use to help gauge that |
| 390 | 01:02:53,610 --> 01:03:01,140 | they're not 100% of the time, accurate, okay, but you don't need to understand the time accurate. But when we do things, see things in line with a measurable, |
| 391 | 01:03:01,170 --> 01:03:11,790 | sustainable macro trend based on these two camps, large speculators and commercials, you're going to see that's astronomical in terms of probability. So |
| 392 | 01:03:11,790 --> 01:03:20,970 | the superstars that we really want to be focusing on as a fundamental insider are the commercials, and where their net long and net short positions in |
| 393 | 01:03:20,970 --> 01:03:30,510 | extremes over the last 12 months and four years is absolutely crucial. Because if they're extremely bullish net long, higher than they have been the last 12 |
| 394 | 01:03:30,510 --> 01:03:39,390 | months. And really, more importantly, if they've done it, most recently, in the last four years at the most highest they've ever been, that is a major low |
| 395 | 01:03:39,390 --> 01:03:49,410 | forming. And you could really avoid a lot of unnecessary losses by being a continuation trend follower in a bear market, because that's what will be going |
| 396 | 01:03:49,410 --> 01:03:57,870 | on. As they get that net long, extreme position, the market will be dropping, okay, and because as it's dropping, they're hedging, so they're gonna answer the |
| 397 | 01:03:57,870 --> 01:04:07,620 | moves. And we'll talk a lot more in detail about this, but they price in the low, okay, when they no longer are buying, okay, and they're gonna start |
| 398 | 01:04:07,620 --> 01:04:17,460 | distributing that is going to facilitate the chain change that takes place in the large speculators, again, start to unwind their shorts, and then start to re |
| 399 | 01:04:17,460 --> 01:04:24,840 | accumulate long positions as the commercials now start to sell that and provide the liquidity to the large speculators. So we really may be focusing on the |
| 400 | 01:04:24,840 --> 01:04:34,680 | trend, the macro trend of the the ebb and flow of net net long and net short positions of the commercials engage that with the overall price action on a |
| 401 | 01:04:34,680 --> 01:04:40,500 | monthly and weekly basis. And that's going to give us a huge amount of insight in terms of prognostication, and future direction. |
| 402 | 01:04:45,750 --> 01:04:54,030 | Now, what is a 12 month extreme net long position and a 12 month extreme net short position look like? Well, when we look at a Commitment of Traders report, |
| 403 | 01:04:54,840 --> 01:05:06,060 | graph, okay, there's zero basis line, okay, and that's going to be depicted by this heavy, thick line here. And above the heavy black line, we have it showing |
| 404 | 01:05:06,120 --> 01:05:16,740 | a color of green. Okay, not that commend traitors is colored. But I'm trying to give you an idea what it looks like conceptually above the zero line, okay, and |
| 405 | 01:05:16,740 --> 01:05:24,780 | we're only looking at commercials as it relates to the co2 data, we're not looking at the net long net short of the speculators, small speculators or large |
| 406 | 01:05:24,780 --> 01:05:33,540 | speculators, we're just specifically looking at the commercials above that black line or zero basis line is what we considered net long, okay. In other words, |
| 407 | 01:05:33,540 --> 01:05:45,990 | they're bullish, they may have a large number of short positions on but as a net basis, they have more Long's on than they do shorts. So again, we have to |
| 408 | 01:05:45,990 --> 01:05:56,940 | understand that commercials are both hedgers and producers. So they are going to always be doing a business transaction always in the marketplace. But if they're |
| 409 | 01:05:57,240 --> 01:06:04,320 | extreme levels, net long net short, okay, think about cuz they're greedy, just like us, you know, they're trying to save money and you're trying to make a |
| 410 | 01:06:04,320 --> 01:06:10,110 | profit, okay. Otherwise, why are they in business, they're not in business, you know, for the fun of it, they want to, they want to have a net gain in profit. |
| 411 | 01:06:10,410 --> 01:06:21,660 | So if their net long, Okay, hi, Sabin. In the last 12 months, we will be expecting a major bottom to be forming. And extreme net short, okay, basically, |
| 412 | 01:06:21,660 --> 01:06:30,870 | all you're doing is looking back over the last 12 months, you're looking for the lowest reading they've had. And you can see in this crude example, during the |
| 413 | 01:06:30,870 --> 01:06:39,120 | period of July and August, they had a net short position. Okay, but look what they did in October. That's the lowest they've had in terms of the last 12 |
| 414 | 01:06:39,120 --> 01:06:47,970 | months, they had a net short position in May, and probably will be considered the previous year in December, they were net short as well. But this is a |
| 415 | 01:06:47,970 --> 01:06:58,050 | graphic depiction. Okay, not based on any real data, I'm just showing you the concept that in October, this would represent a net short position, extreme |
| 416 | 01:06:58,050 --> 01:07:05,310 | reading over the last 12 months in October. So there would be a major high or top to be formed in that particular time period. |
| 417 | 01:07:10,620 --> 01:07:24,900 | Looking at the trend changes like this, it provides you a an X ray view, if you will, to anticipate reversal patterns. Not did bet the farm on I'm thinking |
| 418 | 01:07:24,900 --> 01:07:34,140 | okay, um, it would it would be great if I see this data. And you know, if Michael says it's working, and it does really well and Larry's made millions of |
| 419 | 01:07:34,140 --> 01:07:43,530 | dollars and Michaels made millions of dollars in X, Y, Z traders made millions dollars doing this. Let's just say that, you know, the Australian dollar is a |
| 420 | 01:07:43,590 --> 01:07:52,230 | net short position extreme. That doesn't mean go out there and bet the farm and over leverage your account and looking for sell scenarios. Okay. Yeah, there's |
| 421 | 01:07:52,230 --> 01:08:04,680 | things that you have to look for in price action to justify the expectation that a reversal is underway. Okay. And if we look back at risk reward ratios, okay, |
| 422 | 01:08:04,680 --> 01:08:18,000 | and managing equity and risk, if you are a 2% risk trader, typically answer your maximum risk. in environments where you're expecting major turns, and reversals |
| 423 | 01:08:18,000 --> 01:08:29,040 | of long term trends. Those are the times when you will be risking less than half of your normal trade position size. So if you're risking 2%, risk about point |
| 424 | 01:08:29,040 --> 01:08:36,870 | seven 5% or point five, or in other words, a half of 1% if you're gonna be looking for reversal patterns, okay? in that environment, because there's no |
| 425 | 01:08:36,870 --> 01:08:45,570 | guarantee that you're going to time it perfectly, because you're still inside of a macro uptrend or downtrend based on the data you're looking at. So if you're |
| 426 | 01:08:45,570 --> 01:08:52,740 | looking at a net short position, 12 months extreme by the commercials, again, can't remember their early, okay, and they have the deep pockets, they can |
| 427 | 01:08:52,740 --> 01:09:04,020 | absorb all that time of sitting in losing positions, okay, or drawdown. Because think about it. If they grow cocoa, they could be sitting in a net loss, okay, |
| 428 | 01:09:04,020 --> 01:09:14,280 | of a hedge, but they have the actual cocoa, okay, they actually have it, what's worth more a transaction in the marketplace or actually having the commodity the |
| 429 | 01:09:14,280 --> 01:09:23,610 | having the commodity? Because that's real business. You can't You can't make money. Okay, telling someone here, I'm going to give you 100 shares of IBM, IBM, |
| 430 | 01:09:23,610 --> 01:09:34,650 | if I was on an island, I don't care about 100 shares of IBM, but if you have, you know, 5000 bushels of wheat or, or 10,000 bushels of, you know, or bales of |
| 431 | 01:09:34,680 --> 01:09:44,940 | hay, okay, I'm not hay but of wheat. I'm gonna, I'm gonna be looking for you know, value in that because I could I could use that shares Oh mean anything, |
| 432 | 01:09:45,000 --> 01:09:55,200 | okay. There's intrinsic value associated by the actual commodity in hand. So they have the deep pockets to absorb all this. So don't go in there thinking |
| 433 | 01:09:55,200 --> 01:10:04,170 | just simply because the co2 data is indicating this major reversal underway. It makes take months for that thing to unfold. And then finally turn around start |
| 434 | 01:10:04,170 --> 01:10:12,390 | going lower. Okay, but it gives you the indication that hey, look, don't be so wildly bullish now, because everything's so against it fundamentally with the |
| 435 | 01:10:12,390 --> 01:10:22,410 | commercials be very short term nimble buyers in that environment as well, if you have a net short position extreme, yeah, I'm very leery of betting a whole lot |
| 436 | 01:10:22,410 --> 01:10:30,600 | of money on trades that are net long in those environments. And again, same thing, much in the same vein that we talked about risking a whole lot less by |
| 437 | 01:10:30,630 --> 01:10:38,640 | being a reversal pattern trader looking for tops in that environment. Same thing, cut your risk on the buys in that environment as well. And you'll avoid |
| 438 | 01:10:38,700 --> 01:10:43,200 | getting caught buying the one that really breaks down and starts to reverse all together. |
| 439 | 01:10:48,420 --> 01:10:56,880 | So have the commercial straight, well, I'm going to give you a this is basically the standard commercial accumulation phase. And as price, okay, depicted by this |
| 440 | 01:10:56,880 --> 01:11:06,030 | blue line here is V, okay, on the left side of the chart, we start coming down that's going to best basically graphically depict a decline in price, once price |
| 441 | 01:11:06,060 --> 01:11:15,900 | comes down to a low of some kind find support level, okay, or deemed value, okay, the commercials, okay, are done all their buying. And then what'll happen |
| 442 | 01:11:15,900 --> 01:11:27,450 | is, is they start showing a profit release portion of the move where all of the selling is debated, and now the buying influence now comes on their way. And |
| 443 | 01:11:27,480 --> 01:11:38,970 | they'll be a, an appreciate appreciation in price as price starts to rally up all the accumulated by positions, they, they start to take no words as, as their |
| 444 | 01:11:38,970 --> 01:11:45,720 | positions that they bought as price was dropping lower and lower and lower, because they're hedging. As price drops, they buy more, as price drops, they buy |
| 445 | 01:11:45,720 --> 01:11:53,370 | more and they buy more, they buy more and eventually when price stops going down because they've bought so much need, there's no more selling, we can all the |
| 446 | 01:11:53,370 --> 01:12:03,540 | sellers have been absorbed. Okay, the long positions, okay, as price starts to move up, they start liquidating that, okay, and they offset their long |
| 447 | 01:12:03,540 --> 01:12:13,890 | positions, okay. So as a whole, not individually, okay. But as a whole, collectively, the commercial entities, okay, this is what this is what causes |
| 448 | 01:12:13,890 --> 01:12:22,290 | the shifts and major macro price swings, okay? You don't get this information from textbooks, you don't get this stuff from, you know, Larry Williams, or |
| 449 | 01:12:22,290 --> 01:12:29,610 | you're talking about this level of it. But when you understand what's going on as price drops, commercials are buying and buying and buying and buying buy, |
| 450 | 01:12:29,910 --> 01:12:38,280 | eventually as price starts to move higher, they will liquidate those buy orders, okay, and they're not trying to make astronomical amounts of money. All they did |
| 451 | 01:12:38,280 --> 01:12:48,300 | was hedge price, okay. In other words, they were locking in a fair price that they felt that was fundamentally based on their collective understanding of what |
| 452 | 01:12:48,330 --> 01:12:56,190 | you supply and demand curve called for that time. And once price gets back to those price levels, they can unwind that hedge, okay, and that's all that |
| 453 | 01:12:56,220 --> 01:13:05,640 | trading is really, if you look at the macro perspective on any asset class, that's what's going on. Okay. And that's how the Smart Money operates. So an |
| 454 | 01:13:05,640 --> 01:13:10,680 | intermediate term, price swing, looks like this overall. |
| 455 | 01:13:19,020 --> 01:13:28,380 | Now during the accumulation phase, Now, obviously, everything that we're showing here, for a market load of you forming reverse everything here, it's graphically |
| 456 | 01:13:28,380 --> 01:13:36,630 | being depicted, for a top performer immediate term or long term high, they would be selling as it goes up, and they would be buying it back as it starts to drop |
| 457 | 01:13:36,630 --> 01:13:49,170 | down. But every time that price comes to a point at which they would be selling, okay, there's going to be a retracement and inside that retracement, that's |
| 458 | 01:13:49,170 --> 01:14:00,090 | where optimal trade entry comes in. That's where I have found a sweet spot, if you will, in trading inside these macro price moves. If you look at a daily |
| 459 | 01:14:00,090 --> 01:14:10,770 | chart, and if you look at a long term or short term price low like this is graphically depicted depicting. You could see clearly that the the minor |
| 460 | 01:14:10,770 --> 01:14:24,180 | retraces that take place are absolutely stellar, buying opportunities. But unfortunately, as price starts to move up like that neophyte traders are in two |
| 461 | 01:14:24,180 --> 01:14:31,980 | categories. One, they don't think it's going to keep going up, it's probably going to go lower now, because everything's, you know, trying to find the top or |
| 462 | 01:14:32,040 --> 01:14:43,230 | trying to find the bottom. And the other camp is it's already moved too high. And I'm afraid that I don't I don't want to buy it right now. So those two camps |
| 463 | 01:14:43,230 --> 01:14:49,860 | are the reason why the neophyte traders don't make money. When the moves are really moving in the right direction. They don't trust the directional premise. |
| 464 | 01:14:51,270 --> 01:15:01,470 | The basis to finding and consistently trading with a directional premise is to understand the macro trends. Okay, the macro price link on a monthly, weekly and |
| 465 | 01:15:01,470 --> 01:15:10,080 | daily basis, using can administrators understanding price action market structure, as we discussed in previous video in this set, understanding how |
| 466 | 01:15:10,080 --> 01:15:21,120 | price moves in long term intermediate term and short term price swings, understanding where you're at in that market structure, where the probable |
| 467 | 01:15:21,120 --> 01:15:32,940 | direction may take us from current price action, that is going to be paramount for you to have your directional premise in mind. So, we're going to assume for |
| 468 | 01:15:32,940 --> 01:15:45,990 | a moment that as this price action model, or example here depicts, as price was dropping lower, and they bought for large scale blocks, okay, as price dropped |
| 469 | 01:15:45,990 --> 01:15:53,610 | down, and obviously, I don't have the insight to tell you how many blocks of Long's a bottle, whatever that asset class would be. Okay, but I'm just giving |
| 470 | 01:15:53,610 --> 01:16:03,960 | you a graphic depiction of they were buying as it was going lower, as they were buying, as it was going lower, the net long position on the commercials would be |
| 471 | 01:16:03,960 --> 01:16:13,140 | net, you know, it would be about the basis line, or if it's below the zero line, okay, you know, we're showing a net short position, it would be dramatically |
| 472 | 01:16:13,170 --> 01:16:22,710 | being reduced, it still may not be net long basis, zero basis line on your net, some net zero position, when you're coming to traitors graph, which will, would |
| 473 | 01:16:22,710 --> 01:16:28,470 | I'll show you real examples of what that looks like. So if you kind of like scratch your head, saying, you know, it still doesn't make any sense, trust me, |
| 474 | 01:16:28,470 --> 01:16:40,200 | it will in a few moments. But the CRT data will indicate what we're showing here. Okay, in the CRT and onwards, commercials will be dramatically lessening |
| 475 | 01:16:40,200 --> 01:16:55,260 | shorts, or increasing to a net long position in a co2 graph or chart. And once the price finds the support level, and shows an indication that it has a |
| 476 | 01:16:55,260 --> 01:17:04,620 | willingness to bounce and trade higher, once that takes place, and we have a market structure shift bullish, okay, as defined in previous videos, once we |
| 477 | 01:17:04,620 --> 01:17:13,860 | have that we would now be looking for support to be respected and resistance to be violated and broken to the upside. That's how we work within market |
| 478 | 01:17:13,860 --> 01:17:23,790 | structure. And then every time we see a retracement, we don't anticipate the sky falling, okay. And you know everything going to hell, we were looking for new |
| 479 | 01:17:23,790 --> 01:17:33,540 | buying opportunities and looking for to trade back into a previous existing order block bullish Lee finding a an old resistance now turning support, |
| 480 | 01:17:34,950 --> 01:17:49,440 | maintaining higher lows and higher highs. And then on a daily chart, if we start seeing institutional order flow that's measured with a coupling of two moving |
| 481 | 01:17:49,440 --> 01:17:57,630 | averages we're going to talk about in that case, it would be the 18 and 40 exponential moving averages. Again, that's the 18 period exponential moving |
| 482 | 01:17:57,630 --> 01:18:06,690 | average, and the 40 period exponential moving average on a daily chart, when the 18 crosses the 40. Once it crosses that we don't care about the crossing itself, |
| 483 | 01:18:06,810 --> 01:18:16,710 | we want to see it cross and then start opening up when it opens up. That's called stalking. When that happens, that is measuring a very strong momentum. |
| 484 | 01:18:17,070 --> 01:18:30,570 | Okay, and the way funds trade is momentum based. And one of the largest followed approaches to momentum trading is the 18 or 40, institutional moving averages. |
| 485 | 01:18:31,140 --> 01:18:39,630 | And to simply looking at the the opening of those averages, okay, it will give you the insight you need to follow the direction of both those averages once |
| 486 | 01:18:39,630 --> 01:18:47,160 | they cross an 18 and is above the 40 and they start widening, okay, and you're still pointing up the diagonal of the direction of where the train is pointing |
| 487 | 01:18:47,190 --> 01:18:57,720 | up. And they're opening wider 18 widening above the 14 that's institutional sponsorship graphically depicted and moving averages that gives you the |
| 488 | 01:18:57,720 --> 01:19:08,670 | directional premise to focus in on specifically waiting for retracements back down to a known support level or resistance broken then turn support going into |
| 489 | 01:19:08,670 --> 01:19:18,150 | a previous existing order block that's bullish, okay. And if you don't know what an order block is, look at my trading, position trading volumes One, two and |
| 490 | 01:19:18,150 --> 01:19:26,130 | three. It goes into great details what an order block is and institutional order block. And it's that's simply what you're all you're going to be doing, you're |
| 491 | 01:19:26,130 --> 01:19:34,530 | gonna be looking for those scenarios that pan out for your, your buying scenarios, okay? And it doesn't matter if you're a short term trader, or if |
| 492 | 01:19:34,530 --> 01:19:45,360 | you're a day trader or if you're a position trader, every one of those asset, you know, approaches to trading. Those will be complemented very well with this |
| 493 | 01:19:45,360 --> 01:19:55,050 | approach and using institutional order flow using commitment traders fundamentally, price action drive drive drivers behind why price should be |
| 494 | 01:19:55,050 --> 01:20:05,430 | expected to go higher, and you'll have everything that you need to build The directional premise model that you're looking for. Now the problem is, is |
| 495 | 01:20:05,460 --> 01:20:14,250 | there's going to be times when the averages on 1840 won't be crossed over, and price will be going up, and you're going to be wanting to send me email saying, |
| 496 | 01:20:14,460 --> 01:20:22,440 | it's not working. Something's not right, I missed that move. Guess what, there's a lot of moves I miss, and you're gonna miss a lot of moves. But you don't need |
| 497 | 01:20:22,440 --> 01:20:31,920 | every move. Okay? If you looked at my net earnings, based on what I do for over a whole year, you would be like, you know, all this stuff, and you trade that |
| 498 | 01:20:31,920 --> 01:20:42,930 | little gap. But guess what, I took you to the bottom line with that a whole year, you'd be like, wow, this is a whole lot of of nothing in terms of effort, |
| 499 | 01:20:42,990 --> 01:20:51,360 | but a huge reward in terms of the return. And that's, that's what trading is, that's what professional trading is. I don't want to be a whole lot of time in |
| 500 | 01:20:51,360 --> 01:20:58,110 | front of charts, I did that you don't, you should trust me, if you want to do that you won't want to do when you do it. Okay, you'll you'll like living life |
| 501 | 01:20:58,110 --> 01:20:59,430 | and doing the things with your family. |
| 502 | 01:21:05,070 --> 01:21:15,480 | Now, here is the key. This is the million dollar secret, if you will, okay. When you're looking at the co2 graph, or the nicknamed traders report chart, |
| 503 | 01:21:17,100 --> 01:21:26,070 | basically, it's plotting the net long net short positions of both the all three camps the speculators don't small level large speculators or fund managers and |
| 504 | 01:21:26,070 --> 01:21:39,300 | in the commercials, and every week, it's updated. Okay, what you're looking for is the trend of the commercials, what are they doing? Okay. Now, for instance, |
| 505 | 01:21:39,330 --> 01:21:49,230 | looking at the number one part of this crude depiction, I admit, it's very crude, but it's still going to, it's going to accomplish the means. This number |
| 506 | 01:21:49,230 --> 01:21:55,950 | one point is going to represent a 12 month stream net long position by the commercials, okay. And what you should be doing is you should be reduced |
| 507 | 01:21:55,980 --> 01:22:06,720 | reducing your risk on all of your new shorts, okay, or existing shorts, and anticipate a likelihood to find buying opportunities. The number two point in |
| 508 | 01:22:06,720 --> 01:22:15,630 | this graphic depiction, you can see the commercials move down to a net short position, this net short commercial position, okay, even though it's very, very |
| 509 | 01:22:15,630 --> 01:22:26,910 | small, okay, you can look for short to intermediate term downside corrections. Okay. But overall, look, what we have, we have a very large pre existing net |
| 510 | 01:22:26,910 --> 01:22:35,880 | long positions, about the commercials that number one point, so really, even though price may correct and trade lower during that period of time, that in |
| 511 | 01:22:35,880 --> 01:22:46,110 | May, where we see a net short position by the commercials that may be as small as a minor correction, okay, for the trend to resume during the number three |
| 512 | 01:22:46,110 --> 01:22:55,200 | point. Okay, number three, is a new net long position. Now notice, it's nowhere near the level of net long that the point one reference was, you see that it |
| 513 | 01:22:55,200 --> 01:23:03,450 | doesn't matter. Because you've established the trend change likely if you if you see it confirmed in price action, if point one and that period of time between |
| 514 | 01:23:03,450 --> 01:23:17,160 | February March and early April, if we have a bottom form in say, The Canadian Dollar, if we see that form, okay, price will rally, okay and break market |
| 515 | 01:23:17,160 --> 01:23:26,580 | structure to the upside, and then it will retrace during the month of May during that net short position, okay, because they're going to sell into that, that |
| 516 | 01:23:26,580 --> 01:23:33,570 | rally, then that rally that initial rally they're gonna sell into that you remember what we just talked about their unwinding that hedge they put on place |
| 517 | 01:23:33,600 --> 01:23:44,670 | it during the whole period of point one during that retracing of point two, don't think that you're in a bear market stay focused on looking for net long |
| 518 | 01:23:44,670 --> 01:23:53,820 | positions, okay, for your own trading. So in the point three, okay, after that 12 months net long position, you want to be looking for swings and position |
| 519 | 01:23:53,820 --> 01:24:04,350 | trades, long your macro trend traders and long term traders, you're looking for big moves, that's when that's what happens when a move back to net long after |
| 520 | 01:24:04,350 --> 01:24:13,410 | big huge net long position. Okay, when they move to a net short, back up to a net long, that's when the best buying opportunities for position trading takes |
| 521 | 01:24:13,410 --> 01:24:13,830 | place. |
| 522 | 01:24:16,230 --> 01:24:25,320 | If you're a swing trader, it's an astronomical place to take you know entries for being a buyer. point four again they swing back down to a net short position |
| 523 | 01:24:26,040 --> 01:24:34,830 | during this time, okay, you can still take short to aiming at term downside shorts because it's gonna basically gonna be correcting again, it's gonna be a |
| 524 | 01:24:34,890 --> 01:24:43,800 | retracement and an up move. Then at point five we have another net short I mean sorry, net long position. Okay, the commercials went back above that zero basis |
| 525 | 01:24:43,800 --> 01:24:52,380 | line. Notice they're nowhere near the level they were before. NET long but it does not matter. This is like an oversold condition for you. Okay, you want to |
| 526 | 01:24:52,380 --> 01:25:01,500 | be looking at that saying wow, this is now another buying opportunity because they have now bought some more prices dip down in retraced. So now what's going |
| 527 | 01:25:01,500 --> 01:25:09,330 | to take place is you're going to again, look for short to intermediate term, buying opportunities, because you're trading with the co2 trend, okay. And at |
| 528 | 01:25:09,330 --> 01:25:18,030 | point six, we see price come down and they make a huge net short position, the largest they've made in the last 12 months was that going to indicate the |
| 529 | 01:25:18,030 --> 01:25:28,110 | likelihood of a high, so you want to be reducing the risk on your long positions, and many times filtering out new, new buying opportunities, and start |
| 530 | 01:25:28,110 --> 01:25:37,740 | looking for selling opportunities. Okay. But again, don't bet very large in terms of risk on those large net long positions in net short positions. You |
| 531 | 01:25:37,740 --> 01:25:46,440 | don't want to do that. It's the initial retracement later on after that extreme in price supports the notion that is a major reversal taking place. That's when |
| 532 | 01:25:46,440 --> 01:25:53,880 | you want to put your maximum leverage on if at all. Now, obviously, the no secret to commitment traders is to trade with the trend of commercial traders, |
| 533 | 01:25:54,150 --> 01:26:02,220 | okay, because they set in motion all of the intermediate term and long term highs and lows in the marketplace. And you can find them by ferreting out the 12 |
| 534 | 01:26:02,220 --> 01:26:11,490 | month extremes and the net positions short and long by the commercials. So if you look at this as a macro understanding of fundamentals, okay, it gives you |
| 535 | 01:26:11,580 --> 01:26:19,740 | all of the things that you want to look for in terms of studying fundamental data reports, bank reports, all that stuff, all that ferreted out for you. And |
| 536 | 01:26:19,740 --> 01:26:29,700 | if you coupled this information with support resistance, astronomical results, or result as a result for you for doing such. So now, what does it look like |
| 537 | 01:26:29,700 --> 01:26:40,440 | graphically, okay, and what I'm showing you here is a chart from price charts.com. Now, before I say anything further, this is a paid service, you will |
| 538 | 01:26:40,440 --> 01:26:50,460 | have to pay for this, okay? To get this particular chart, you don't have to have this chart, I just simply like this chart, when you see my videos, I don't |
| 539 | 01:26:50,700 --> 01:26:59,730 | always share this format, okay, cuz I really print these charts out and really mark them up with pin. And yes, I still do that archaic way of doing, even with |
| 540 | 01:26:59,880 --> 01:27:08,370 | having computers, you have the ying yang here, I still like to mark up paper charts. That's how I started I'm old school. So you know, dinosaurs 20 years |
| 541 | 01:27:08,370 --> 01:27:17,340 | ago, we didn't have the wonderful things we have now. You know, your high end technical traders. But if you don't want to use price charts, calm and pay the |
| 542 | 01:27:17,340 --> 01:27:27,360 | money for the absolutely gorgeous charts, you can go on their website and try their two week free demo, okay, and he's created email address because they're |
| 543 | 01:27:27,360 --> 01:27:35,460 | going to spam you. Okay, I'm telling you upfront, they're going to spam you. And you can try for two weeks for free. And never use the email address again. And |
| 544 | 01:27:35,490 --> 01:27:45,180 | you they can keep sending all their publications trying to get you to subscribe to an email address, you never touch again. Or you can go to bar chart.com and |
| 545 | 01:27:45,180 --> 01:27:51,390 | pull up the chart like we're going to show later on in this video how you can do it for free. And I know a lot of you're saying Yay, Thank you, Michael for free. |
| 546 | 01:27:51,390 --> 01:27:59,370 | But, you know, sometimes it's nice to pay a little bit of money, it's not a lot of money you would be getting as an expense to get this but it to me, you know, |
| 547 | 01:27:59,400 --> 01:28:06,330 | if you do like to print them out, or if you'd like to have electronic doesn't make a difference. I just like to have them in hardcopy because I draw all kinds |
| 548 | 01:28:06,330 --> 01:28:16,290 | of notes all over them. But if you look down here, and we have the net short position and net long position and the zero basis line, and I'm going to show |
| 549 | 01:28:16,290 --> 01:28:28,770 | you that right here, this is the zero line file that across the chart. Okay. See that right here? What this is indicating is zero basis line. Anything above zero |
| 550 | 01:28:28,770 --> 01:28:38,940 | is net long. Anything below is net short. The commercials are the heaviest black line. That's this line right here. Okay. And you see what they have here, large |
| 551 | 01:28:38,940 --> 01:28:48,690 | net long position, largest they had. And look down here we have the commercials diametrically opposed to the large speculators. They're the funds. Okay. Now |
| 552 | 01:28:48,720 --> 01:28:50,160 | notice what's going on here. |
| 553 | 01:28:51,690 --> 01:29:06,690 | As price had dropped in the Euro, this long big trend going lower from 150 down to 120. That's 3000 pips. Okay. 3000 pips of a down move. Okay. The large |
| 554 | 01:29:06,690 --> 01:29:17,310 | speculators were pretty much with that whole trend all the way to the very end. The commercials were buying the whole way up. Okay, I'm sorry, all the way down. |
| 555 | 01:29:17,310 --> 01:29:32,430 | They were buying large numbers of net long position when the Euro finally when the Euro came down the 120. The diametrically opposed tug of war, okay, the tide |
| 556 | 01:29:32,430 --> 01:29:42,600 | changed, price changed and moved higher, started trading higher. And then they got in sync with the now new bull move. Okay, as the commercials not started |
| 557 | 01:29:42,600 --> 01:29:50,940 | liquidator long positions, who was assuming the other side of the long positions, they're selling the funds. Okay, you see how there's an entertains |
| 558 | 01:29:50,940 --> 01:30:00,780 | relationship between the two. As the commercials move higher, the funds start moving lower. This is one of the absolutely wonderful secrets. If you We'll to |
| 559 | 01:30:00,780 --> 01:30:11,160 | how the dynamics of the marketplace work. And if you understand the relationship between these two, okay, it's a dance. Okay? It's a beautiful dance between two |
| 560 | 01:30:11,160 --> 01:30:19,290 | entities in the marketplace to absolutely give you every insight that you would absolutely love to know. But you probably didn't even know you needed to need |
| 561 | 01:30:19,290 --> 01:30:27,090 | this have had this information. I mean, think about it. If you didn't see this before, you probably never many of you probably never even knew this existed, |
| 562 | 01:30:27,480 --> 01:30:34,230 | let alone Let it be free information. Okay, because there's information, the information is free, they have to buy it. This is one thing the government did, |
| 563 | 01:30:34,230 --> 01:30:45,060 | right? They forced large traders to tell us whether they're net long or net short now imagine if they could do that for stocks. I mean, that'd be wonderful |
| 564 | 01:30:45,090 --> 01:30:52,740 | for a once we have no problem making money then. Okay. So now looking at this example, okay, here we have the, like we were talking about earlier, we have a |
| 565 | 01:30:52,740 --> 01:31:03,990 | net long position by the commercials. Okay, net long, hugely net long, okay, and then eventually, price starts to move higher, then they swing down below net |
| 566 | 01:31:03,990 --> 01:31:12,150 | zero. So now they're bearish to have a net short position. What do you think price should be doing at that point, it's going to correct you see that happen |
| 567 | 01:31:12,150 --> 01:31:21,960 | here? It comes down and corrects to what an old support level and see this? Okay, price comes down to that price level. Now, also look very closely, you'll |
| 568 | 01:31:21,960 --> 01:31:31,050 | see price moving up aggressively, and then trading all the back coming back inside of that range right there. Okay, see that? This is optimal trade entry. |
| 569 | 01:31:31,380 --> 01:31:43,770 | This is the classic ICT entry pattern. Okay. If you were an indicator driven trader, if you look for over sold bullish divergence scenarios in this |
| 570 | 01:31:43,770 --> 01:31:55,350 | environment right in here, you would have hugely popular results in terms of success being a buyer at that time point. Okay, that's when your indicators |
| 571 | 01:31:55,350 --> 01:32:03,060 | work. And also notice once we got back down to this level one, you know it the commercials were now net long. So now they're re assuming another long position |
| 572 | 01:32:03,930 --> 01:32:13,830 | to the trend, if you will, is in a bull market, and you want to be in sync with with them. So here they are the net long the large speculators are the funds, |
| 573 | 01:32:13,860 --> 01:32:22,440 | they're short here, okay, they wrote this little bit of a move down. Now it's time to get in gear with the move higher again resumed the primary macro trend |
| 574 | 01:32:22,440 --> 01:32:32,310 | higher to commercials established new Long's in here, price should be rallying as it rallies the unwind that hedge. And as they drop it off in here, who's |
| 575 | 01:32:32,310 --> 01:32:40,950 | buying the other side of it? Large funds until we get to a diametrically opposed position. Again, when we have this extreme, largest net short position in the |
| 576 | 01:32:40,950 --> 01:32:50,340 | last 12 months, there should be a high for me, there's your high. Now, price comes back up to an old level of support resistance, we have a price move from |
| 577 | 01:32:50,340 --> 01:33:00,840 | this high down to this low grade. And here. If you look at the weekly chart, as we discussed in the position trading set, we talked about weekly order blocks, |
| 578 | 01:33:01,140 --> 01:33:10,440 | you'll see price in this example comes right up to that price point. Okay. And that's when gives you the high based on the fundamental drivers in co2 data and |
| 579 | 01:33:10,920 --> 01:33:22,830 | we start to move lower and resume the downtrend. Okay. Because we have an another net short position extreme weather commercials. Okay. So that's a |
| 580 | 01:33:22,830 --> 01:33:34,050 | graphic depiction, if you will. So that's a graphic depiction, if you will, of the trend of the commercials or trade Commitment of Traders and commercials and |
| 581 | 01:33:34,050 --> 01:33:46,770 | how they move. But look at this example here. Okay, this is what gets a lot of folks disgruntled with the use of Commitment of Traders. |
| 582 | 01:33:48,180 --> 01:33:58,980 | Looking at where we are just simply over, are we above or below the zero line? That's not enough, you have to have price action included with the |
| 583 | 01:33:58,980 --> 01:34:06,150 | understanding, because if you're looking at this example, here, you can clearly see that there was a diametrically opposed position between two net shorts held |
| 584 | 01:34:06,150 --> 01:34:19,170 | by commercials and net longs held by the large speculators. So the common sense tell us that we should be expecting a high to form but look what takes place. |
| 585 | 01:34:19,500 --> 01:34:30,390 | These are weekly candles, okay? There's roughly three months Okay, or so before the actual high was formed, and then start to see the Euro start trading down. |
| 586 | 01:34:30,390 --> 01:34:39,960 | So that's why I'm trying to explain to you this, not just simply having the, the natural position or net long positions of the commercials, okay, that's not |
| 587 | 01:34:39,960 --> 01:34:48,210 | enough. You have to have support resistance. You have to have market structure. You have to have all those facets together to complement your analysis and not |
| 588 | 01:34:48,210 --> 01:34:50,430 | to simply putting everything on one tool. |
| 589 | 01:34:56,250 --> 01:35:07,080 | Now looking obviously at the net long position here How about the commercials when you see that if you have been selling, and you've been bearish, okay, |
| 590 | 01:35:07,380 --> 01:35:21,870 | looking for new shorts, should again start waiting like weaning back the amount of risk on your your shorts and start expecting some level of rejection around |
| 591 | 01:35:21,870 --> 01:35:30,810 | higher level support and resistance levels. Now I don't have the charts in this example. But if you go out to historical charts, and you look at the 120 level, |
| 592 | 01:35:31,050 --> 01:35:41,610 | it's very indicative of a key support level. And when price came down to that level, and if you just recently saw in the last year or so, we were calling the |
| 593 | 01:35:41,610 --> 01:35:51,330 | market to trade around that same level again, and that was the low of the year last year. So when you see that, you know, in video on YouTube, on national |
| 594 | 01:35:51,330 --> 01:36:01,800 | trader, YouTube channel, you can see it's, it's it's there. I mean, it was called in advance. And it is, and it was basically using the information that |
| 595 | 01:36:01,800 --> 01:36:12,750 | I'm showing you here, understanding again, that the idea of support resistance is the the central tenant to why this works, not just simply are the commercials |
| 596 | 01:36:12,750 --> 01:36:20,310 | net long and short. You want to be looking at support resistance. You want to be looking at market structure, are we in a overall bullish or bearish market |
| 597 | 01:36:20,310 --> 01:36:28,980 | environment? Are we making higher highs, higher lows, we're making lower lows and lower highs have we broken significant resistance and then has it turned to |
| 598 | 01:36:28,980 --> 01:36:39,900 | support and now as the commercials signifying that there's a major trend change underway, okay, as we see here in the year 2009, around April in June time |
| 599 | 01:36:39,900 --> 01:36:48,180 | period, all of a sudden, that low formed and they had an astronomical opportunity to capture a huge amount of pips. |
| 600 | 01:36:53,970 --> 01:37:02,340 | Same thing can be said here, when we have this extreme level net short position, you're probably thinking, well, I don't have a lot of time to be waiting around |
| 601 | 01:37:02,340 --> 01:37:11,400 | for these yearly moves here, okay, you know, these net long extremes, I don't have time for that, well, that's wonderful, okay, you don't have to have time. |
| 602 | 01:37:12,210 --> 01:37:21,270 | All you need to know is where we're at in terms of the trend, okay, and you can get in sync with that. If we see that there's a heavy net short position here. |
| 603 | 01:37:22,470 --> 01:37:32,520 | We don't have to have the bets are highly leveraged, okay. We're gonna see the high form in this euro market, okay, we would expect it to break down then try |
| 604 | 01:37:32,520 --> 01:37:45,120 | to rally again, kind of like it in here. See, price broke down, took out an old low rally again failed. If you look at optimal trade entry concepts, this is |
| 605 | 01:37:45,120 --> 01:37:53,280 | your your entry point right here. This is what you would be looking for. Then when you break down below the low that this formed. This is when you have a very |
| 606 | 01:37:53,280 --> 01:38:03,600 | clear shift in market structure or break in structure. Then at low that's anchored to this high here, retraces then you have another apple transitory read |
| 607 | 01:38:03,600 --> 01:38:13,950 | in here. And boom, you have a nice sell off. Okay, several 100 pips again made available to you. That's what this concept teaches you. It doesn't give you the |
| 608 | 01:38:13,950 --> 01:38:26,550 | 50 PIP trades, okay? It doesn't give you the 120 pips weekly ranges, okay. It gives you the 500 plus PIP moves to 1000 pips, okay. That's the type of trades |
| 609 | 01:38:26,550 --> 01:38:36,450 | that sets up. Now, looking again, at this area here where we went short by the commercials, okay, there's a lot of money to be made just trading inside of |
| 610 | 01:38:36,450 --> 01:38:45,630 | this, but keeping their perspective in mind and knowing that, okay, we just came out of a net long position, that's extreme, were retracing, if we come back down |
| 611 | 01:38:45,630 --> 01:38:52,890 | to these levels here support at around 130. See how it bounced off that level there. Okay, we had some resistance here. And it did violate a little bit, okay. |
| 612 | 01:38:52,890 --> 01:39:02,340 | But generally, you see the bounce here. When we trade it back down at 130 level and commercials when net long. With the backdrop of this net long position |
| 613 | 01:39:02,340 --> 01:39:13,320 | extreme, you have to have this in mind that this could be a very explosive move, coming off of that 130 level, simply utilizing the market structure shift that |
| 614 | 01:39:13,320 --> 01:39:22,740 | took place here. So you have a high and then blew through it right there. Okay, we have a market structure shift comes back down to noon, resistance broken. Now |
| 615 | 01:39:22,740 --> 01:39:33,810 | support with commercials on the backside of neck long position by the commercials, man that's like a, that's like candy, that's candy. And these set |
| 616 | 01:39:33,840 --> 01:39:44,490 | up one to two times a year. That's where you hunt. That's what you want to be the 90% of your time, looking at studying in price. You're looking for these |
| 617 | 01:39:44,490 --> 01:39:53,580 | scenarios here. Okay, you're looking for them. Because once you identify that, look at how much time you have when trend starts moving. When you're in these |
| 618 | 01:39:53,580 --> 01:40:02,610 | consolidations like this, and like this and here, okay, and down in here, you have to be a harmonic trader. Okay, during consolidations, when the markets in |
| 619 | 01:40:02,610 --> 01:40:11,430 | training ranges, that's when harmonic trading is ideal. That's when you make money with harmonics, trading crabs and in gartley and such, okay? But the way |
| 620 | 01:40:11,430 --> 01:40:20,430 | you make astronomical explosive profits, okay? And risk reward is astronomical, is when you catch these types of moves here, you put the trade on with very, |
| 621 | 01:40:20,430 --> 01:40:30,030 | very low risk, and you'll let them run. Okay, these are what I call mega trades. Okay, I kind of dubbed that back in the late 90s, where you look for one or two |
| 622 | 01:40:30,030 --> 01:40:39,660 | big moves a year and 97 year study time is based on that. And if you look at the work over the last four years that I've been dealing with, just with forex, on |
| 623 | 01:40:39,690 --> 01:40:48,840 | on the internet, all the major moves has been pretty much called by me in advance, and I'm not trying to beat my chest and brag, okay, but asking around |
| 624 | 01:40:48,840 --> 01:40:52,740 | and there's not a whole lot of people that can do that, and it hasn't been documented as well. |
| 625 | 01:40:58,620 --> 01:41:10,380 | Alright, so now we're gonna focus in on this net long position here. When we see this environment, what do you look for? Well, I like to look for a combination |
| 626 | 01:41:10,380 --> 01:41:21,420 | of things. Obviously, I want to see a market structure shift on a intraday basis. Okay, because it you're gonna see the chain change on an intraday level |
| 627 | 01:41:21,510 --> 01:41:31,890 | intraday level before you see it clearly on the weekly and daily, okay, it's gonna happen on the intraday levels first, but what happens is many times folks |
| 628 | 01:41:31,890 --> 01:41:40,470 | are spending too much time on an intraday basis and not spending enough time where we are on a macro level as it relates to the intraday Okay, so now we're |
| 629 | 01:41:40,470 --> 01:41:50,670 | say put way too much emphasis on the intraday. When we get to these environments like this, then I'm very, very keen on knowing what the intraday levels look |
| 630 | 01:41:50,670 --> 01:41:57,360 | like around noon to five and 15 minute and one hour basis because if we're trading at these price levels and around time of day and we start seeing |
| 631 | 01:41:57,360 --> 01:42:07,140 | explosive moves up, I'm gonna be looking for that retracement. Okay, I'm gonna be looking for bullish harmonic patterns, I'm gonna be looking for optimal trade |
| 632 | 01:42:07,140 --> 01:42:17,640 | entries, I'm gonna be looking for bullish reflection pattern ITT reflections, I'm gonna be looking for you to open up the days near the low, okay, and very |
| 633 | 01:42:17,640 --> 01:42:26,040 | minor moves from the opening down and then exploding up to close high on day. That's that's the, that's the environment I'm looking for. If I start seeing |
| 634 | 01:42:26,040 --> 01:42:36,270 | that unfold in on a daily on the daily ranges, I know I probably got a tiger by the tail. And if I can get an intraday pullback on an hourly or four or four |
| 635 | 01:42:36,270 --> 01:42:45,870 | hour basis, and catch an optimal trade entry, you know, based on like a big figure number or mid figure or an institutional level based on an initial pop, |
| 636 | 01:42:45,930 --> 01:42:54,390 | because you want to buy the first return. When we see that big surge up and it starts to retrace, I'm going to be testing the waters and trying to catch that |
| 637 | 01:42:54,390 --> 01:43:03,420 | first return from where we came from at that 120 level, it may not get right back down to that 120 level. In fact, I don't want to go down to the 120 level, |
| 638 | 01:43:03,780 --> 01:43:13,800 | I want to see it blast off and try to fill in the expansion of the recent price action. Once it retraces back into an existing order block on a lower timeframe, |
| 639 | 01:43:14,160 --> 01:43:25,440 | I'd be looking to be a buyer there. And then whatever market profits I can acquire during that initial move. That's what I'll use as a buffer to allow me |
| 640 | 01:43:25,440 --> 01:43:38,070 | to take initial, you know, Long's on the, you know, the swing setup, like we would have in here, right in here. So if I if I can make money down here on this |
| 641 | 01:43:38,070 --> 01:43:48,810 | movement here, okay, if I get a bounce in here, whatever profits I have initially, I'm going to use that to maximize the leverage, okay? When I get the |
| 642 | 01:43:48,810 --> 01:43:58,410 | scenario here, because this is the trend following event, where we'll see the explosive portion of the trend and the longest portion of the trend unfold right |
| 643 | 01:43:58,410 --> 01:44:09,990 | in here. Okay, and we're gonna look at an example of the Canadian dollar later on exactly what I did this year. Alright, this is what it looks like on a forex |
| 644 | 01:44:09,990 --> 01:44:19,980 | chart. Okay, same thing. All we're doing is looking at the data in a forex platform. And this is at the time this was actually done with an FX cm. I don't |
| 645 | 01:44:19,980 --> 01:44:28,920 | trade with FX at the moment. But this is that that charting platform that was used and you can see the price did make the low here just like it did in the |
| 646 | 01:44:28,920 --> 01:44:39,000 | commodity market, and price rally. And then here's that retracement back down into a an existing waterblock rallied up retraced optimal trade entry and then |
| 647 | 01:44:39,000 --> 01:44:49,140 | boom for the trend continuation. Here's where the commercials for net long, wildly net long and here's where they move, move back to a net long position and |
| 648 | 01:44:49,170 --> 01:45:02,640 | all of a sudden took off. A lot of money to be made right there. Lots and lots of money to be made and something like that. Now rate in here, this scenario, |
| 649 | 01:45:02,910 --> 01:45:11,760 | okay, much like we had described down here, I would be looking for very similar types of events I'd be looking for, you know, if you're an indicator based |
| 650 | 01:45:11,760 --> 01:45:22,950 | trader, like MACD or something like that, you could be looking for bullish divergence, you could be looking for trades to set up with the Judas swing. In |
| 651 | 01:45:22,950 --> 01:45:32,790 | other words, if price trades initially intraday lower for the day, I would expect price to make the low that day first and then rally up, I could be |
| 652 | 01:45:33,000 --> 01:45:46,470 | expected to find I see reflection patterns, bullish harmonic patterns, okay. But the problem, okay, harmonic traders have is they'll be taking profits way too |
| 653 | 01:45:46,470 --> 01:45:57,360 | early. Okay. Because yes, we're inside of an ideal range environment for harmonic trading. But they'll cut their profits short, not understanding where |
| 654 | 01:45:57,360 --> 01:46:02,460 | we are on a macro level perspective. And they'll cheat themselves all of the existence, |
| 655 | 01:46:03,900 --> 01:46:17,550 | potential profits that made available and by doing that, it kills the, in my opinion, it kills the necessity to be just a harmonic trader, even though I have |
| 656 | 01:46:17,550 --> 01:46:27,270 | harmonic skills in my trading. I'm not, quote unquote, a harmonic trader, I am a dynamic trader, and I understand market profiling. So when you understand how to |
| 657 | 01:46:27,270 --> 01:46:33,570 | profile a market, you can work within any market environment and be able to reap profits. |
| 658 | 01:46:38,640 --> 01:46:48,960 | So looking at this, we can actually see a turtle soup, which is a false break below an old low, quick rejection. Now think about it. Price had rallied up |
| 659 | 01:46:48,960 --> 01:46:58,320 | here, came down and bounced, where would the funds and trend traders, okay, they were looking at the buy down here, or maybe even down here, here? Where were |
| 660 | 01:46:58,320 --> 01:47:07,710 | they now immediately move their stop loss to right below here, right. So watch what happens. Price rallies and comes back down, takes out the stops? Why would |
| 661 | 01:47:07,710 --> 01:47:17,700 | they do that? Why would price come all the way back down here just to come down to this below this area, quickly run it in rally away, because these stops are |
| 662 | 01:47:17,700 --> 01:47:26,370 | going to be what? Sell stops, sell stops when they're triggered at market price right here. When price comes down in your hand hits that level here. All of the |
| 663 | 01:47:26,370 --> 01:47:35,850 | pending orders down here become what market orders to do what to sell. Why? Because they're net long in here. So if they're trying to protect your position, |
| 664 | 01:47:35,880 --> 01:47:43,200 | they want to sell out of it because they don't want to lose any money, okay, or maybe lose some of the profits, what will happen is price will come down, |
| 665 | 01:47:43,680 --> 01:47:54,390 | trigger those pending orders, the sell stop becomes a market order to sell at market who's going to buy at market smart money. So they knock these guys out of |
| 666 | 01:47:54,390 --> 01:48:02,670 | them. They're completely off the bus now. And they assume their seat right before the bus takes off. And hence the destination they wanted to be part of |
| 667 | 01:48:03,540 --> 01:48:18,330 | town here, here and here. So when we start to see rejections and, and raids on liquidity pools right below old lows, I love seeing that 90% of the best moves |
| 668 | 01:48:18,660 --> 01:48:27,870 | take place with this environment right in here. Okay? Now, here's the wonderful thing is the daily chart. If you see the reaction like this, come down here and |
| 669 | 01:48:27,960 --> 01:48:38,700 | take that out and reject, you can now look for the environment where the market opens and trades lower initially for the day by that by that initial low moving |
| 670 | 01:48:38,820 --> 01:48:46,080 | off of the opening, okay, during the London session, the London session is going to create the load that typically in that environment, and you'll see the market |
| 671 | 01:48:46,080 --> 01:48:54,630 | rally up close high on the day. And then you'll see that phenomenon unfold as we move higher. Okay, but with minor retracements as we go along. Every time the |
| 672 | 01:48:54,630 --> 01:49:05,640 | price retraces Okay, it comes back to an order block. Okay, or comes back to an old support, resistance broken turn support of resistance, broken turn support, |
| 673 | 01:49:06,180 --> 01:49:16,470 | resistance, broken turn support, or resistance broken turn support. Each one of those environments is an opportunity for you to be a buyer using directional |
| 674 | 01:49:16,470 --> 01:49:25,980 | premise. There's no rocket science to it, it's just a matter of looking for a combination of ingredients, and then following the recipe to get Blue Ribbon |
| 675 | 01:49:25,980 --> 01:49:34,260 | results. And it takes some effort guys, it's not simply a magic wand where you waving in front of your screen and it's going to be a neon sign, okay? Or I'm |
| 676 | 01:49:34,260 --> 01:49:42,960 | not gonna be on here every day tweeting, hey, look, it's a bi day or this is the day you buy. Don't Don't, don't look to me as an Oracle. I'm not that. I am an |
| 677 | 01:49:42,960 --> 01:49:49,500 | educator. I'm trying to teach you how to do this for yourself. I've been doing it for 20 years. I know this stuff works. It makes lots and lots and lots of |
| 678 | 01:49:49,500 --> 01:50:01,410 | money and you don't need to do a whole lot to make a lot of money. Alright, so now looking at again, the price action that takes place here right before this, |
| 679 | 01:50:01,410 --> 01:50:08,730 | this is an optimal trade entry. Okay, so if you've run your fibs across this price action, you will see this take place, the main thing I really want you to |
| 680 | 01:50:08,730 --> 01:50:18,120 | understand is what makes this optimal is that it comes back and fills this range. Okay, from the low to high, right before it takes off this explosive |
| 681 | 01:50:18,120 --> 01:50:28,620 | move. This is what is indicative of institutional order flow. This is only going to occur when there's going to be institutional sponsorship, people that have |
| 682 | 01:50:28,620 --> 01:50:38,820 | lots and lots and lots of money at their disposal, and they're putting it to work by buying this currency. And when it rallies up like this, okay, it has to |
| 683 | 01:50:38,820 --> 01:50:47,370 | cool down, just like we saw in the commitment traders, they went net short. And that's why you see this retracement, what do they do? Again, they went to a net |
| 684 | 01:50:47,370 --> 01:50:57,180 | long position. So these are buying more aggressively right in here. And they accumulated even more of the positions made through liquidity by running out the |
| 685 | 01:50:57,210 --> 01:51:07,140 | old low here, notice there was no other load taken out prior, this is the one that's going to cause the x exponential surge higher in price when you see that |
| 686 | 01:51:07,440 --> 01:51:12,870 | in a move up, you see this, you like to trade the A to B C to D? You know, |
| 687 | 01:51:14,190 --> 01:51:24,060 | price projections. Okay? When you see this phenomenon, this is what is the telltale signature point. And guess what no one else teaches that nobody on |
| 688 | 01:51:24,060 --> 01:51:34,020 | internet teaches that. But this is the perfect scenario to justify when an ABCD extension, okay, a price swing, when that takes place. This is what's there |
| 689 | 01:51:34,020 --> 01:51:46,560 | always. Okay. But that in your notes, every ABCD extension, or price swing or measured move always has this in it. Every single one of them when it comes down |
| 690 | 01:51:46,560 --> 01:51:53,910 | blows out too low in an existing price swing up. This is when you know what's going to happen. When it violates and rejects That's it, you know, you're gonna |
| 691 | 01:51:53,910 --> 01:52:03,480 | get an extension. What do you mean by that? Well, watch this take the low to this high see that range from this low to high. When this thing rallies up, it's |
| 692 | 01:52:03,480 --> 01:52:13,290 | going to do this same measure move from this low to high off the low. And you can see the range from this low to high is duplicated from this low to this |
| 693 | 01:52:13,290 --> 01:52:26,400 | high. So now you know how to do a confirmation if you will have one of the quote unquote, basic harmonic patterns that no one else teaches. Alright, now, |
| 694 | 01:52:26,490 --> 01:52:33,870 | obviously, it sounds like, you know, it's so easy, you can't wait to get out and start looking at commitment traders and start making lots of money. But I want |
| 695 | 01:52:33,870 --> 01:52:44,490 | you to understand, it's not always as clear as we would hope. Many times, it's simply understanding, are we reducing net shorts? Or are we reducing net longs, |
| 696 | 01:52:44,520 --> 01:52:51,900 | it doesn't necessarily have to be a net long net short position that tells us something. And that's when another tool needs to come into play. And that's |
| 697 | 01:52:51,900 --> 01:52:53,970 | going to be the tool of open interest. |
| 698 | 01:52:59,490 --> 01:53:06,600 | When we see price action like this, where the commercials are already net long, okay, but they were coming out of the net long positions aggressively and then |
| 699 | 01:53:06,600 --> 01:53:17,580 | they added aggressively right here. This is indicative, okay, of a buy. This is supporting a buy. Okay? They are Yes, net long, but they have been aggressively |
| 700 | 01:53:17,580 --> 01:53:28,560 | coming off in that long. But when they see this buying surge again in here that happens that occur right here. When we come back down to this swing, this low in |
| 701 | 01:53:28,560 --> 01:53:38,700 | here. When we look at price coming down to these levels in here, we're gonna find support does justify them increasing net long positions. And you see price |
| 702 | 01:53:38,700 --> 01:53:51,030 | taken off, okay? It's not again, it's not indicative of easy winnings by simply looking at the net short, natural and net long position for the commercial. |
| 703 | 01:53:51,030 --> 01:54:02,460 | That's not enough, you need to have a little bit of perspective, if you will, if, for instance, I'll give you this if the commercial are heavily net short, |
| 704 | 01:54:02,970 --> 01:54:14,580 | okay, if they're heavily net short, that would be you know, viewed as they have a fundamental reason to expect lower prices soon, sometime soon. They expect |
| 705 | 01:54:14,580 --> 01:54:23,700 | fundamentally that the price should not go much higher, and it should be a retracement of some sort or altogether a reversal. But if they aggressively |
| 706 | 01:54:24,090 --> 01:54:39,240 | change gears, okay, and they don't think that there is a likelihood of the move occurring on a timescale that they thought they may aggressively change their |
| 707 | 01:54:39,270 --> 01:54:50,460 | net position. Okay, and that is useful, okay, because you can see that here we have a net overall net short position, their net short here, but then look what |
| 708 | 01:54:50,460 --> 01:55:00,540 | they do. They rapidly reduce their net short position right before the big move takes place out of this consolidation inside of this move right in Here, if you |
| 709 | 01:55:00,540 --> 01:55:08,310 | looked at open interest, which we'll talk more about in a little bit, no open interest decline. I know this for a fact, because I have the information I'm not |
| 710 | 01:55:09,120 --> 01:55:18,240 | looking at trading opportunities back then, looking at this in here, you'll see open interest decline, open interest is only going to decline if commercials are |
| 711 | 01:55:18,240 --> 01:55:29,250 | covering shorts rapidly, because they are the market entity that creates the markets for us in the futures market. So if they are the largest net short, or |
| 712 | 01:55:29,460 --> 01:55:38,640 | seller in the marketplace, they have a real reason to be selling. And then because they are hedging, if they are rapidly reducing their natural position, |
| 713 | 01:55:39,150 --> 01:55:46,800 | that's telling you something fundamentally that they don't think it's going to go lower immediately soon, they expect a sizable move, and when you know 1000 |
| 714 | 01:55:46,800 --> 01:55:51,570 | PIP move and Sue's before it starts to take a turn of events and makes it go lower. |
| 715 | 01:55:56,910 --> 01:56:08,970 | Now, again, going back to this in here, okay? It's important that you understand that there is a lot of swing trades available throughout the year by using this |
| 716 | 01:56:08,970 --> 01:56:17,580 | information. This is a daily chart, these are all daily candles, when you see price surge like this initially, okay, it starts to retrace, you want to be |
| 717 | 01:56:17,580 --> 01:56:25,290 | focusing on support resistance, you want to be looking for order blocks, okay, which would be the last bearish candle before the big move, okay, that's where |
| 718 | 01:56:25,290 --> 01:56:34,290 | the Smart Money accumulates in down moves. Okay. As we discussed how the commercials trade in a large macro span of price swings, the same thing happens |
| 719 | 01:56:34,320 --> 01:56:42,000 | on a daily chart, you know, on down days, that's when they accumulate Long's. Okay, how many times have you looked at a stock chart? Have you looked at an |
| 720 | 01:56:42,000 --> 01:56:53,880 | indicee? Okay, or a currency and we had real big washout day, you know, big 200 pips down day, and the very next day, it rockets up 150 next day continues on |
| 721 | 01:56:53,880 --> 01:57:05,370 | and never turns around. They accumulated long positions during those down days, you need to think like a smart trader, okay. And smart traders are, what we dub |
| 722 | 01:57:05,370 --> 01:57:16,500 | as smart money. smart money buys, when prices dropping, you have to get that in your mind. And don't be afraid you, you need to grow comfortable buying when |
| 723 | 01:57:16,500 --> 01:57:27,000 | prices screaming going lower. And I know it sounds like it doesn't make any bit of sense. But that's exactly what works. Okay, you want to be trading in the |
| 724 | 01:57:27,000 --> 01:57:37,170 | opposite direction you want to see a profit in. Alright, so basically, as it relates to Commitment of Traders, you need to start listening to the herd. Okay, |
| 725 | 01:57:37,170 --> 01:57:42,960 | in other words, the forums, people telling you, I'm buying this, I'm buying that the guys that had the most popular YouTube channel, the most subscribers by yada |
| 726 | 01:57:42,960 --> 01:57:50,190 | yada, these guys don't know what they're doing. They talk a good game, but they have no idea what they're doing. The way you stay informed is you want to be |
| 727 | 01:57:50,190 --> 01:57:58,770 | focusing in on the smart money. And here's the wonderful thing, they make the information available for free, you want to trade in the direction of the most |
| 728 | 01:57:58,770 --> 01:58:08,940 | recent 12 month commercial net position, you want to wait for price to form intermediate term swings, use optimal trade entry patterns to enter and trade |
| 729 | 01:58:08,940 --> 01:58:17,250 | with the large traders. Now again, that's not the commercials, the large traders are those long trend following long term trend following traders, okay. They are |
| 730 | 01:58:17,250 --> 01:58:26,880 | going to be assuming the other side of the liquidation of the hedges that the commercial traders absorb and accumulate during these big price swings. You want |
| 731 | 01:58:26,880 --> 01:58:37,800 | to filter out long when commitment traders reaches a fresh 12 months and or four year extreme on the commercial net short position. Now think about that. You're |
| 732 | 01:58:37,800 --> 01:58:48,300 | getting rid of the necessity to feel like you're gonna make a million dollars on an long position, when fundamentally it's not likely to happen. That's wealth |
| 733 | 01:58:48,330 --> 01:58:57,300 | making insight right there. You want to filter out shorts when the Commitment of Traders reaches fresh 12 month or four year extremes on commercial net long |
| 734 | 01:58:57,300 --> 01:59:07,050 | positions. All we did was reverse the scenario. When we see commitment traders reaching a 12 months or four year extreme in net long positions. You want to be |
| 735 | 01:59:07,050 --> 01:59:14,160 | filtering your short positions and reducing risk not to say you can't day trade. And so you can't you're not saying you don't have opportunity to be a seller |
| 736 | 01:59:14,160 --> 01:59:22,980 | still, but you just have to be mindful that anytime soon, there's going to be a major upset of that downtrend. And it's going to be aggressive, many times it |
| 737 | 01:59:22,980 --> 01:59:31,860 | unfolds very aggressively. You want to trade with the co2 trend engineered by the commercials. You want to look for seasonal tendencies that line up with the |
| 738 | 01:59:31,860 --> 01:59:44,310 | net readings of what's what you see in price action. And by doing that, you're going to have the framework for remarkable trade setups. Now for more |
| 739 | 01:59:44,310 --> 01:59:54,870 | information on commitment traders, obviously not to resources that I think are really good are the commitments of traders Bible by Stephen Reese and trading |
| 740 | 01:59:54,870 --> 02:00:02,430 | stocks and commodities with the insiders. Secret of the CIT report by Larry Williams and I don't have it listed here. But I always talk about every time I |
| 741 | 02:00:02,430 --> 02:00:12,540 | talk about books. If you don't have Larry Williams, how I made a million dollars trading commodities last year book, again, it was a 1970s book. And it's still |
| 742 | 02:00:12,540 --> 02:00:22,770 | absolutely timely today, the information is related to commercials in there and open interest is what I'm discussing here. Okay. And I think it's one of the |
| 743 | 02:00:22,770 --> 02:00:32,400 | absolute gems in technical analysis, that honestly, a lot of people read his book, a lot of people know that commitment traders, a lot of people know what |
| 744 | 02:00:32,400 --> 02:00:44,400 | interest open interest is, but not a lot of people actually use it, because if they did, they'd be wildly successful. So going ahead, going forward. If you |
| 745 | 02:00:44,400 --> 02:00:54,240 | find yourself another resource that provides commitment, traded resources, and you think it's useful to the subscribers to my work, obviously, I would love to |
| 746 | 02:00:54,240 --> 02:00:57,750 | have a heads up about it. Again, we talked about |
| 747 | 02:00:59,010 --> 02:01:10,320 | using bar chart Comm. And you see me using bar chart, bar chart calm in my videos. But I mentioned in here, price charts calm. And I think that, to me, I |
| 748 | 02:01:10,320 --> 02:01:20,250 | think Mark chart is just as good as price charts calm, if not better, because it's free and allows the subscribers to my material to do without having any any |
| 749 | 02:01:20,250 --> 02:01:28,260 | kind of paid resources. And I know a lot of guys who are on short budgets, but eventually at some point, you might want to avail yourself some resources and |
| 750 | 02:01:28,260 --> 02:01:38,730 | spend a little bit of money in it. There's nothing wrong with that. But if you find something that's comparable to the ones I've suggested here to share it, |
| 751 | 02:01:38,880 --> 02:01:53,040 | share it with me and I'll share it with subscribers and pass that insight on to others. Okay, how to capture explosive forex profits. Now I know this is exactly |
| 752 | 02:01:53,040 --> 02:02:01,590 | what everybody wants to know, right. All right, Michael, how do I make money? This is great. We're talking about a lot of theory here. You're boring me to |
| 753 | 02:02:01,590 --> 02:02:09,690 | death? How do I make money? How do I get in the marketplace and find these big moves? Okay, you're showing this stuff in hindsight, but how do I how do I look |
| 754 | 02:02:09,690 --> 02:02:21,450 | forward going ahead? Well, understand this. One of the biggest moneymakers that I have is trading with the weekly range. And weekly range is one of the |
| 755 | 02:02:21,450 --> 02:02:34,530 | absolutely beautiful scenarios where you get the lines portion of the weekly range. And ideally, you want to be buying very near the weekly low. And you want |
| 756 | 02:02:34,530 --> 02:02:49,050 | to be able to absorb the time required to hold on to the position until late Thursday. And even as late as Friday. It's close. there's a there's a little |
| 757 | 02:02:49,050 --> 02:03:03,330 | study I made a lot of folks do why am I initially put out this information 2010. I asked everyone to simply look at the weekly range over a 15 minute chart, I'm |
| 758 | 02:03:03,330 --> 02:03:12,240 | not going to compress your your 15 minute chart, and delineate the days that way. It gives you a vertical line delineating when the days begin and end. And I |
| 759 | 02:03:12,240 --> 02:03:22,590 | want you to notice that reoccurring pattern it takes place. And I know many folks have been training for a long period of time, I had commented in email |
| 760 | 02:03:22,590 --> 02:03:31,590 | saying was pretty obvious in it. Well, my question is, if it's so obvious, how did you use the information to trade the weekly rains on a consistent basis, |
| 761 | 02:03:31,860 --> 02:03:43,110 | we're able to use the information and use it to facilitate a trading plan. And they never replied with any information to the to the effect that they did. So |
| 762 | 02:03:43,650 --> 02:03:52,740 | what I'm suggesting to you is this to go into your charts and go for the next couple weeks. Okay, I'm going to show you how if you focus on the monthly, |
| 763 | 02:03:52,740 --> 02:04:04,020 | weekly and daily and you arrive at a premise to directional bias on co2 data, the 18 to 40 moving average concept that we just discussed and we'll talk more |
| 764 | 02:04:04,020 --> 02:04:15,600 | about in a little bit here. If you look at when it's positioned to move higher or expected to be bullish, if you look at the activity on a weekly chart, or |
| 765 | 02:04:15,600 --> 02:04:23,580 | weekly basis rather over a whole week, timespan, and it's easy to see it on like a 15 minute time frame compresses you have the whole Sunday to Friday's close. |
| 766 | 02:04:24,120 --> 02:04:36,810 | You'll see that the weekly high in a bearish environment typically forms around Tuesday's London open session. And many times if it's going to be a down week, |
| 767 | 02:04:36,840 --> 02:04:49,320 | it'll form no later than Wednesday's London open. There is a 70 to 80% chance of that phenomenon taking place. Again, if it's a bearish environment, you're |
| 768 | 02:04:49,320 --> 02:04:59,700 | expected to see lower prices because the overall macro trend is bearish. What will happen is is Sunday's opening will open and Monday's trading will generally |
| 769 | 02:04:59,850 --> 02:05:08,760 | be consolidation and then it'll start to move up. Okay? What happens is all the neophyte traders start thinking this is going to be the next big move up. So |
| 770 | 02:05:08,760 --> 02:05:17,280 | they start buying and buying and buying and buying, and on Tuesday, okay? what'll happen is during the asian session Monday into Tuesday, there'll be more |
| 771 | 02:05:17,280 --> 02:05:26,550 | consolidation and then what happens? They'll ramp it up real aggressively up. And that's what we call a Judas swing, okay? Or it's like a fake out. Or what I |
| 772 | 02:05:26,550 --> 02:05:39,750 | just recently dubbed it for those that make fun of the Judas swings name. It's the open rally sell. down close. Okay, so to open rally. So, okay, so I know |
| 773 | 02:05:39,750 --> 02:05:50,580 | what you're looking for an opening, looking at midnight in New York time, the initial move up, at that time point, going into the London open session around |
| 774 | 02:05:50,580 --> 02:05:52,980 | three o'clock in the morning. In New York time. |
| 775 | 02:05:54,360 --> 02:06:01,680 | Generally, between two o'clock in the morning and four o'clock in the morning, New York time, in that environment, the high, the high of The day will form. |
| 776 | 02:06:01,800 --> 02:06:11,640 | Now, if it happens to be on a Tuesday, or Wednesdays London open, you have an 80% chance that that's going to be the weekly high. Don't take my word on it, go |
| 777 | 02:06:11,640 --> 02:06:19,350 | through your charts, and study it. Okay. And I'm telling you, I know what's going to happen. I'm going to get three to 400 emails again, saying I can't |
| 778 | 02:06:19,350 --> 02:06:27,150 | believe it's been there all this time. Yeah, you're right. It's been there all this time. And again, nobody talks about it. But ICT in bullish environments, |
| 779 | 02:06:27,390 --> 02:06:36,090 | okay. What will happen is the market will open on Sunday, consolidate it or trade lower on Monday, and then Tuesday, oh, consolidate and then there'll be a |
| 780 | 02:06:36,090 --> 02:06:46,440 | rapid decline going into Tuesday's London open or between two o'clock and four o'clock in the morning on the East Coast, New York time. Okay. When you have |
| 781 | 02:06:46,440 --> 02:06:58,080 | that window of opportunity, that's the that's the ICT London open kill zone. The opportunity is the expect the weekly low to form on Tuesdays on an open or as |
| 782 | 02:06:58,080 --> 02:07:06,450 | late as Wednesday's London open now. You're probably saying okay, well, no, that's, that's wonderful, but it's still not 100%. You don't need 100%. Okay, if |
| 783 | 02:07:06,450 --> 02:07:16,530 | you had the macro view in line and expecting, you know, the directional premise to be one direction or another based on what we've discussed so far, you have a |
| 784 | 02:07:16,530 --> 02:07:27,960 | lot of the battle already won for you. Now, you're just going to fine tune it down to Okay, well, if the markets predisposed to move higher. And that means |
| 785 | 02:07:28,050 --> 02:07:40,200 | that the market should be closing up on the week. So the rains from the opening on Sunday to close on Friday, ideally should be an up move. So much principle |
| 786 | 02:07:40,680 --> 02:07:49,920 | should suggest that Friday's clothes should be higher than the price that was traded on Sunday. Right? Okay, well, how do we get to that? There's got to be a |
| 787 | 02:07:49,920 --> 02:07:58,230 | low form first, right? Many times what happens is they engineered early beginnings of the week to go lower and a lot of times that fake out sucks and a |
| 788 | 02:07:58,230 --> 02:08:06,630 | lot of neophyte traders. And if you watch the forum's many times, they buy it hook line and sinker and they chase prices going lower. And then they get shell |
| 789 | 02:08:06,630 --> 02:08:16,500 | shocked when they reverse it dramatically. And they drag them across the whole entire weekly range. Okay, folks, we're looking at the Canadian dollars as a |
| 790 | 02:08:16,500 --> 02:08:27,390 | weekly chart. And I want to show you what it looks like. In an example that just recently happened. We have the red line here is its commercials. And where you |
| 791 | 02:08:27,390 --> 02:08:40,320 | get this chart on your on your this is bar chart.com By the way, you go down to the bottom of the page once you load a chart up, click indicator and you're |
| 792 | 02:08:40,320 --> 02:08:53,160 | going to add this one right here. The Commitment of Traders line chart. Okay, that's what you want. You can make it small, medium, large. It's small right now |
| 793 | 02:08:53,160 --> 02:09:05,550 | and on even larger than it is and I got five years on it. So going back, you can see that this is the largest net long position the commercials has had in the |
| 794 | 02:09:05,550 --> 02:09:20,340 | last four years. Okay, it was above the one that we have here. And price traded down to the like 89 level, almost 88 level, big figure. If you go out to a |
| 795 | 02:09:20,340 --> 02:09:32,310 | higher time frame which I'm not going to do here just for time constraints. That is a major support level. We have a net long position and we see price drive |
| 796 | 02:09:32,310 --> 02:09:42,240 | lower but failed to go lower and in rally up breaking market structure highs in here so now everything is bullish, we would expect to see retracements and |
| 797 | 02:09:42,240 --> 02:09:55,170 | moving higher going up. Before we go any further. I want you to take a look at this low here. The lows over here and this low here. Okay and our price went |
| 798 | 02:09:55,170 --> 02:10:09,090 | right to 94 and traded off of that I called 94 Back here, okay. And I called 94 back here as well. And it's all on YouTube and on videos that were shared |
| 799 | 02:10:09,090 --> 02:10:15,810 | through Twitter. So you can go back and take a look at all that stuff. It's not hindsight. I want you to take a look at this purple line here as well because |
| 800 | 02:10:15,810 --> 02:10:25,410 | we're gonna look at this is open interest as it relates to how all this stuff fits together. For right now, as price traded lower, the accumulation of the |
| 801 | 02:10:25,410 --> 02:10:44,790 | Long's held by the commercials indicated there was possibly a reversal on their way. Looking at the daily chart, we have our 18 and 40 day EMAS the green is the |
| 802 | 02:10:45,330 --> 02:10:49,320 | 40 and the red is the 18 day |
| 803 | 02:10:50,820 --> 02:11:12,900 | as noted here, exponential moving average and I have the open interest, again open interest can be found by adding it here, or by simply having total volume, |
| 804 | 02:11:12,900 --> 02:11:21,510 | you want to have total volume, not contract volume, you want total volume one, okay? I have nine months on here, you can do whatever you want to do have as |
| 805 | 02:11:21,510 --> 02:11:37,380 | much data you want to show. But looking at what we have. This was the low number two, violate this little consolidation here, rejected ran out and higher. Broke |
| 806 | 02:11:37,380 --> 02:11:48,930 | market structure in here and retraced back to an old resistance now turn support, then rallied again. Okay, came back, found support at old resistance |
| 807 | 02:11:48,930 --> 02:12:01,440 | broken turn support. rally through now we're coming back down to an area of old resistance should act as support old lows back here, it blew through those. |
| 808 | 02:12:02,040 --> 02:12:10,980 | Okay. But now I want to go back and take a look at a few things. We have a consolidation here. open interest declined rapidly. Remember what we talked |
| 809 | 02:12:10,980 --> 02:12:20,190 | about open interest open interest declines rapidly only when the Smurfs commercials are rapidly covering their short selling? Why would they do that? |
| 810 | 02:12:20,220 --> 02:12:29,430 | Because they think bullish prices are on their way. Also, we have a consolidation in here in an existing bullish environment. See the 18 is above |
| 811 | 02:12:29,430 --> 02:12:43,590 | the 40. We have a retracement many optimal trade entry opportunities in here. But remember, I talked about rate before we see a measurable move, you'll see a |
| 812 | 02:12:43,590 --> 02:12:55,650 | stop run. Here's a low Mark comes down below the low blows it out. And then what do we see the expansion on the upside. Not withstanding that during this |
| 813 | 02:12:55,650 --> 02:13:04,950 | consolidation, we also have a nother drive down in open interest, which we talked about in video before the fact. And we saw prices rally up to what level |
| 814 | 02:13:05,250 --> 02:13:20,040 | 294 figure. Now, this is a 500 PIP move. All based on the information that we just discussed. In this particular video. I promise you that if you'd go through |
| 815 | 02:13:20,040 --> 02:13:32,220 | your charts, study them well, you'll see a couple of these form a year, not a million, not one every month, okay, but you have one or two major moves set up |
| 816 | 02:13:32,250 --> 02:13:42,420 | like this, but you can trade in sync with them. Once you have the directional premise in mind, like see we crossed over on the averages, but then later on, we |
| 817 | 02:13:42,420 --> 02:13:52,560 | started seeing the averages open up. Okay, the averages are opened here, all the way through all this, you can day trade this long, with the open drop down |
| 818 | 02:13:52,560 --> 02:14:04,350 | initially in London rally off of that and close higher. Okay, all of us being seen here. You can also find retracements. Okay, for optimal trade entries. All |
| 819 | 02:14:04,350 --> 02:14:10,830 | in this move. Once the average is crossed over here, you wait for the retracement and then the next move up should open the averages and you start |
| 820 | 02:14:10,830 --> 02:14:18,390 | seeing stacking, this is stacking when all the averages open up. much in the same vein that this is stacking on the lower side, the 18 was below the 40 and |
| 821 | 02:14:18,390 --> 02:14:27,390 | you would just continuously look for selling opportunities while that condition exists. Okay. So I counsel you guys to really just spend a lot of time with the |
| 822 | 02:14:27,390 --> 02:14:36,570 | higher time frames because it gives you the the backbone, okay to hold on to a directional premise because you're in sync with the higher timeframe smart |
| 823 | 02:14:36,570 --> 02:14:36,870 | money. |
| 824 | 02:14:43,500 --> 02:14:52,740 | Alright, the swing trade, okay, we talked about the 1840 averages, how it looks, what you do with it on the charts and how the co2 data is useful in that |
| 825 | 02:14:52,740 --> 02:15:01,620 | respect. Okay, but what is it what is the swing trade look like conceptually, what what are you doing? How's it work? How do we confirm The setups you know, |
| 826 | 02:15:01,710 --> 02:15:09,900 | is there something that we can do to build the confidence factor behind trades? Well, there just happens to be something that I use in my trading that helps me |
| 827 | 02:15:09,900 --> 02:15:26,520 | do that. We're gonna be looking at the ICT swing trading method. Now, what sets up an ICT swing? Okay, well, there's a concept that I released in 2009 and |
| 828 | 02:15:26,520 --> 02:15:40,050 | actually posted this in the forums on forex. mentor.com. Yes. forex mentor.com. Now forex mentor.com. Okay, obviously is one of the one of the widely known |
| 829 | 02:15:40,500 --> 02:15:55,680 | educating for for profit websites out there. And I think, you know, pretty much everyone knows about them, but I, I have bought just about everything that they |
| 830 | 02:15:55,680 --> 02:16:12,060 | have put out with the exception of Peter Baine stuff, I did get his big dogs course. And really, it's not it's not much at all. The the insight, okay, that I |
| 831 | 02:16:12,060 --> 02:16:22,350 | shared about this concept is the SMT divergence. Okay. And I get a lot of questions about what is SMT divergence. And always, it's a little abbreviated |
| 832 | 02:16:22,410 --> 02:16:33,510 | term that I came up with or smart money tool, and smart money tool, okay, is basically looking at correlated market asset classes. Okay, we're groups, okay |
| 833 | 02:16:33,510 --> 02:16:50,520 | to arrive at a underpinnings based on the actions of smart money. Okay, so think about this, if we, if we can agree on the the mechanics of the markets moving by |
| 834 | 02:16:50,550 --> 02:16:58,920 | those that have a lot more money than us, if we can agree on that. Okay, I think it should be a very easy thing for us to agree on. Words, the market is only |
| 835 | 02:16:58,920 --> 02:17:09,870 | going to move by that entity or entities that have a lot more money than us, if we are able to agree on that. You have to understand something, they are |
| 836 | 02:17:09,870 --> 02:17:23,520 | motivated by greed. Either not to lose money, or to make money. Either way, cut it, it's still great. Now because they are driven by greed, they will be |
| 837 | 02:17:23,850 --> 02:17:35,790 | emotionally. Okay? charts, humans just like us, okay? The guys that are managing those hedges, okay, and they're assuming those positions, they're human beings |
| 838 | 02:17:35,790 --> 02:17:43,260 | just like us, and they're prone to make mistakes, they're gonna buy more than they should, or they're gonna sell more than they should. Now think about this, |
| 839 | 02:17:43,440 --> 02:17:57,180 | if we understand that an asset class is closely correlated. And I'll give you an example. If you look at the stock averages, okay. And the idea behind SMP, it |
| 840 | 02:17:57,180 --> 02:18:04,590 | really comes from the Dow Theory. Okay, there's really no magic to it says I just use something I understood very clearly with the Dow. And it was really |
| 841 | 02:18:05,850 --> 02:18:15,990 | amplified with Larry Williams, how to select stocks for immediate gains. Book real book, okay. The only thing that was useful in the book to me was how he |
| 842 | 02:18:15,990 --> 02:18:25,920 | looked at when the Dow made, you know, a lower low, but stocks didn't make a lower low. And then once the stock market as a whole started trade higher, the |
| 843 | 02:18:25,920 --> 02:18:33,270 | ones the issues that didn't make lower lows, they're the ones that smart money was accumulating, otherwise, they would have made lower lows too. But they |
| 844 | 02:18:33,270 --> 02:18:42,990 | didn't they were being a heliad. So I use that premise, along with the whole general premise behind Dow Theory. The averages should confirm themselves, okay. |
| 845 | 02:18:43,020 --> 02:18:51,540 | And when they don't confirm themselves, that is a telltale sign that they're someone with a lot more money than us working behind the scenes. Okay, so they |
| 846 | 02:18:51,540 --> 02:19:02,370 | can see the underpinnings of the market on a smart money basis that no one talks about. Okay. So, where this phenomenon takes place is every quarter, there's a |
| 847 | 02:19:02,370 --> 02:19:14,760 | shift in institutional flows. And by using old highs and lows, okay, focusing in on SMT divergence on a daily chart will ferret out many of the trade scenarios |
| 848 | 02:19:14,760 --> 02:19:21,660 | that you're looking for. Okay, you want to decide the full price links to work inside of whether you're a scalper a day trader, swing trader, short term |
| 849 | 02:19:21,660 --> 02:19:31,830 | trader, or looking to position a long term trade. This is how it's done. Okay, you're gonna use market structure, and you're going to be referencing swing |
| 850 | 02:19:31,830 --> 02:19:39,390 | point analysis, you're going to just use simply the optimal trade entry for your strategy to get in the trade. But you're gonna use swing projection for your |
| 851 | 02:19:39,390 --> 02:19:41,640 | profit objectives and determine where you're going to get out at. |
| 852 | 02:19:45,090 --> 02:19:55,380 | All right, SMT swings on a daily chart, what is it What's it look like? Well, we're going to say for instance, that this is the dollar, okay? The green |
| 853 | 02:19:55,380 --> 02:20:07,830 | represents the greenback, okay? And we're gonna say that the red represents the British pound or cable. Now the problem with this is going to be this because |
| 854 | 02:20:07,830 --> 02:20:18,150 | there's an inversion, okay? Ideally, if the dollar is rallying, British Pound USD will be declining. That's the mechanics behind it all. That's usually what |
| 855 | 02:20:18,150 --> 02:20:29,610 | you see. For us to see how this works easily, and it's easier for your eye, okay, you have to have a way of inverting one or the other, either invert the |
| 856 | 02:20:29,610 --> 02:20:38,070 | dollar, or you have to invert the cable, and otherwise you're gonna have to mirror one. So that way, there'll be moving in tandem. Okay. And the insight is |
| 857 | 02:20:38,070 --> 02:20:48,030 | going to be gleaned by looking for periods of when price between the two. Okay, you see how the red again, obviously, we're using as an example of being the |
| 858 | 02:20:48,030 --> 02:20:59,550 | cable was able to make a lower low here, the dollar was not willing to make a lower low. That is SMT diversions, that is a it's a cracking correlation. They |
| 859 | 02:20:59,550 --> 02:21:10,350 | should have made comparable lows, see how they were trading together lower here, both declining rate in here, the dollar was saying, Ah, I'm not going lower. |
| 860 | 02:21:10,770 --> 02:21:20,940 | Okay, when the cable, okay, we're assuming it's being mirrored here, this would have been the cable making a higher high. And that may be a bit confusing. So |
| 861 | 02:21:20,940 --> 02:21:28,350 | this is the reason I got to watch the video several times. But if the dollar makes a failure swing to go lower when a cable makes a higher high or in this |
| 862 | 02:21:28,350 --> 02:21:36,480 | case, if we mirrored to, if it makes a lower low, that's an s&p divergence, that's a cracking correlation and expect to see a major move the other way. |
| 863 | 02:21:36,900 --> 02:21:49,650 | Okay. Same thing happening here. We have price, making a low, lower low in here. And the cable was not making comp below it was actually a little bit higher in |
| 864 | 02:21:49,650 --> 02:21:59,940 | here, we have a divergence s&p divergence, we also see that same thing happening on a larger scale, see this low comparable to this low. This low represents this |
| 865 | 02:21:59,940 --> 02:22:11,670 | low, the cable went lower here, the dollar was not willing to do so. Nailsea pricing. Okay, price moves higher here in the cable was unable to do it here. |
| 866 | 02:22:12,120 --> 02:22:20,430 | Okay, now, when I say higher in here, okay, well, again, this is assuming it's being mirrored like it is. So this would be a lower low when $1 made a failure |
| 867 | 02:22:20,430 --> 02:22:30,900 | swing to go higher. Okay. And I know it's a little bit confusing, but basically, a higher high end dollar should be met with a lower low and cable, and lower, |
| 868 | 02:22:32,520 --> 02:22:43,440 | low and $1 should be met with a higher high and cable, okay, so that every low and high should be equal in terms of breaking to higher or lower ground between |
| 869 | 02:22:43,440 --> 02:22:53,220 | the two. If you don't see that happening. There's a break in correlation. Okay, you see the high here, we need a higher high here in the dollar. Look what was |
| 870 | 02:22:53,220 --> 02:23:01,620 | going on here. Again, this would be the cable mirrored so this would be lows in the cable, the cable was unwilling to make a lower low or in this case, since |
| 871 | 02:23:01,620 --> 02:23:10,200 | it's being mirrored, it was unable to make a higher high when the dollar was able to make a higher high. So what does that saying that while the dial dollar |
| 872 | 02:23:10,200 --> 02:23:18,390 | was able to rally, the cable was actually being distributed. Smart Money was selling that whole thing right here. Every time it was making a rally, they were |
| 873 | 02:23:18,390 --> 02:23:27,870 | selling it aggressively, and then boom. Okay, I said that wrong, just realize that this would be actually buying the cable because it's an inverted, so they |
| 874 | 02:23:27,870 --> 02:23:36,930 | were unwilling to go lower in the cable, graphically depicted here as not being able to go higher. So the dollar, when it starts to sell off, we'll see an |
| 875 | 02:23:36,930 --> 02:23:46,020 | extrapolated move on the cable going higher, because it was unmake unwilling to make a lower low. So again, this high to high on the dollar was higher, that |
| 876 | 02:23:46,020 --> 02:23:55,380 | should have been met with a low and a lower low in the cable here. Can again, this is mirrored, okay, this is actually this whole price action here should be |
| 877 | 02:23:55,380 --> 02:24:03,960 | reversed. But for us to compare highs, the highs and lows, lows, you have to mirror one or the other. Now I used to teach it where I didn't mirror it. And it |
| 878 | 02:24:03,960 --> 02:24:11,250 | just was so confusing for a lot of folks that just it was very frustrating for him. And this is probably doing the same thing to some of you now watching it, |
| 879 | 02:24:11,250 --> 02:24:18,090 | you're thinking Wait, I thought I understood it. Now I don't, it's really not that hard of a concept. Once again, watch the video several times, and you'll |
| 880 | 02:24:18,090 --> 02:24:26,190 | get what I'm talking about when we see the examples you'll it would make much, much more sense. The dollar here failed to make a lower low when the cable on |
| 881 | 02:24:26,190 --> 02:24:36,060 | this chart here made lower lows which would have been higher high in actual price of cable cracking correlation, expected price pricing to the upside. And |
| 882 | 02:24:36,090 --> 02:24:39,360 | really, that's all you're looking for every three months or so, |
| 883 | 02:24:39,750 --> 02:24:48,570 | inside of inside of three months, there's going to be a crack in in correlation. And all you're doing is looking to find that scenario that's selection tool, |
| 884 | 02:24:48,630 --> 02:24:56,400 | okay. It's not a timing tool. It's a selection tool. You're looking at the daily chart to frame the idea that there should be institutional sponsorship on the |
| 885 | 02:24:56,400 --> 02:25:07,110 | buy side or the sell side and by seeing that you get yourself in sync with looking for the anticipate emancipatory move of price going lower or higher |
| 886 | 02:25:07,890 --> 02:25:21,900 | based on this insight and then using intraday entries and price patterns around that with support resistance. Now, assuming we have the scenario where price has |
| 887 | 02:25:21,900 --> 02:25:33,540 | now set up a SMT divergence on a bears side of things? Well, you would expect price to rally up into a level of higher timeframe resistance, what is that? |
| 888 | 02:25:33,930 --> 02:25:44,490 | That's a monthly resistance, a weekly resistance or daily resistance. Okay. Once price shows a clear indication that it is wanting to move away from that |
| 889 | 02:25:44,490 --> 02:25:55,890 | resistance level. Now you have a commitment on the smart money's they know if you're looking at this, think about graphically this would look like a |
| 890 | 02:25:55,890 --> 02:26:05,130 | retracement for a buy. If you're just looking at price, and thinking without higher timeframe premise in mind, and if overall premise was bearish, this would |
| 891 | 02:26:05,130 --> 02:26:12,240 | look like a buy signal. And I just think I just gave this example. At the time of this recording the previous week of this recording, I gave examples of how |
| 892 | 02:26:12,240 --> 02:26:21,360 | the charts look like buys areas when it was still underneath institutional sell. But this is what you're looking for, you want to see it break down and start to |
| 893 | 02:26:21,360 --> 02:26:30,510 | rally back up to that resistance level. When it does that, that's where you sell it. Damn, once you enter the short, you want to see the market break down and |
| 894 | 02:26:30,510 --> 02:26:41,550 | take out the previous swing lows, once that thing breaks that low. Now you're going to be looking for that A to B to C to D measured move phenomenon, okay? |
| 895 | 02:26:41,820 --> 02:26:51,930 | And what will happen is there'll be a retracement of some sort, very soon after that inside of this retracement, it could come back to the old low, or what |
| 896 | 02:26:51,930 --> 02:27:01,200 | you're looking for is you want to see that stop running event. You want to see a short term high in here that's ran out. Okay, that's really not clearly soon in |
| 897 | 02:27:01,200 --> 02:27:11,580 | this one, I'm really graphically oversimplifying this, I'm afraid but inside of this rally in here, okay, this would be a period of time that would encapsulate |
| 898 | 02:27:12,090 --> 02:27:20,640 | a previous swing high that's eventually ran again, once it does that, that's the stop rate that you want to see. And that's when the big move starts to take |
| 899 | 02:27:20,640 --> 02:27:33,780 | place and runs down and you have the measured move phenomenon or to A to B to C to D extensions. When you when you have that measured move of this low to high |
| 900 | 02:27:33,810 --> 02:27:47,820 | that range projected from this low down, that's one objective. Or you can take the range of this low to high and do a 127 extension here, or 1.618 or 1.62 |
| 901 | 02:27:47,820 --> 02:27:58,950 | extension. That's how I just round it up. use that example Okay, and couple that with the A to B to C to the extension harmonically. And that is the easiest way |
| 902 | 02:27:59,370 --> 02:28:09,150 | that you can get in sync with the trend trade with the commercials with the Smart Money trade with a pattern based method using support resistance, only |
| 903 | 02:28:09,150 --> 02:28:17,700 | higher timeframe monthly, weekly and daily support resistance levels in mind. Many times what will happen is this area here will be an order block over here |
| 904 | 02:28:17,700 --> 02:28:25,260 | this high that's not been depicted here. This will be a bearish order block and price will return right back into that area and sell off again. Okay. And that's |
| 905 | 02:28:25,260 --> 02:28:37,560 | really that's the basis for building a very sound approach to higher timeframe trading. And once you understand how this is done all the intraday action of |
| 906 | 02:28:37,560 --> 02:28:47,160 | selling in a down day. That's all this is the same thing being applied on an intraday basis. What will happen eventually is you're going to consolidation and |
| 907 | 02:28:47,160 --> 02:28:51,390 | everyone will now start chasing the move lower, but the moves already happened and you've already profited. |