Introduction to Quarterly Theory (Something You Shouldn't Know)

Summary

This video introduces the Quarterly Theory, a trading concept that divides time into quarters for market cycle analysis. It integrates with Inner Circle Trader (ICT) principles, enhancing precision across all trading styles and timeframes. The theory removes ambiguity by providing specific time-based reference points for trade entries. It outlines various cycles from yearly to 90-minute sessions, emphasizing the importance of Q1 as a market forecast indicator. The concept of 'true opens' is introduced as a key filter for gauging market swings, with specific 'true open' times for different trading sessions. The video concludes with a cheat sheet explaining the algorithmic patterns of 'AMDX' and 'X AMD'.

Takeaways

• 📊 Quarterly Theory emphasizes dividing time into quarters for better market cycle interpretation.
• 🔄 Understanding quarterly cycles enhances precision in trading strategies across all time frames.
• ⏳ The yearly cycle consists of four quarters, each lasting three months.
• 📅 Monthly cycles are divided into four weeks, starting from the first full week of the month.
• 📆 Weekly cycles consist of four days, with Friday excluded due to its unique function.
• 🕒 Daily cycles are broken down into four quarters of six hours each, aligning with trading sessions.
• 🔍 True opens serve as critical price reference points for gauging market movements.
• 📈 If bullish, traders should buy below the true open; if bearish, sell above it to increase accuracy.
• 📉 The algorithmic trading phases include manipulation, distribution, and reversal, each with distinct characteristics.
• 📝 The true open times for various sessions are crucial for timing trades effectively.

Q & A

What is the main concept of Quarterly Theory?

Quarterly Theory is based on the idea that time must be divided into quarters for a proper interpretation of market cycles. It aims to enhance precision in trading by blending this theory with basic ICD (Inner Circle Trader) concepts.

How does Quarterly Theory apply to different time frames?

Quarterly Theory is universal to all time frames, allowing traders to be flexible and apply it to any style of trading, from yearly to daily cycles, and even down to 90-minute cycles within a trading day.

What is the significance of the first quarter (Q1) in Quarterly Theory?

Q1 is crucial as it dictates the quarters that follow. It serves as a barometer for forecasting market conditions in the subsequent quarters of each cycle.

What are 'True Opens' in the context of Quarterly Theory?

True Opens are specific openings of price that serve as a time-based filter for gauging Judas swings or stop losses. They represent the beginning of Q2 of every cycle.

How do you determine the True Open for different cycles?

The True Open varies by cycle: the True Year Open is the opening price of the first Monday in April, the True Month Open is the opening price of the second Monday of the month, and so on for weekly, daily, and session-specific cycles.

What is the role of the second quarter (Q2) in Quarterly Theory?

Q2 is where accumulation takes place, setting the stage for the rest of the cycle. It can either consolidate if Q1 is overextended or expand if Q1 is in a tight range.

How does the third quarter (Q3) function within the Quarterly Theory?

Q3 is the manipulation phase where the Judas string occurs, which is a fake move designed to get traders offside before the real move takes place.

What is the significance of the fourth quarter (Q4) in the theory?

Q4 is the distribution phase, which is often the easiest to trade as the trend of the cycle has already been established by the previous quarters.

What are AMDX and X AMD patterns in Quarterly Theory?

AMDX and X AMD are two sets of instructions that the algorithm usually follows according to the theory. AMDX starts with a tight Q1 range followed by a manipulation phase (Judas string), and then a distribution phase. X AMD begins with continuation or reversal from the previous cycle's Q4, followed by accumulation in Q2, manipulation in Q3, and distribution in Q4.

How does the concept of 'time is fatal' apply to Quarterly Theory?

The concept 'time is fatal' implies that time is a crucial factor in trading and that each quarter has a specific role and impact on the market, which can be analyzed and predicted using Quarterly Theory.

Why is it important to understand the different trading sessions within a day according to Quarterly Theory?

Understanding the different trading sessions helps traders identify key times for market movement and potential trading opportunities, as each session has its own Q1 to Q4 cycle.