Time Trading Made Simple

Summary

This video from the MMC series explores the significance of trading time in relation to market volatility. It explains how combining the right time with price action increases trade probability, using economic calendars to identify volatile periods. The script demystifies the concept of 'time' in trading, emphasizing the importance of risk management and avoiding the pitfalls of overtrading. It also advises on navigating high-impact news events like NFP, FOMC statements, and CPI, advocating for a strategic approach to trading that respects both market dynamics and trader psychology.

Takeaways

• 🕒 Importance of Time: Trading time is crucial as it supports the probability of price movement in line with order flow and price action.
• 📈 Volatility as Time: Time in trading refers to periods of increased market volatility, which is essential for generating trade opportunities.
• 📊 Volatility's Role: Volatility is the energy of the market, allowing price to move towards stops and generate trade IDs.
• 🌐 Market Energy: The market gains energy through higher time frame events like economic news and lower time frame sessions or 'kill zones'.
• 🗓 Economic Calendar: The economic calendar is a tool to identify potential volatility and trade timing for different currencies.
• 🔍 Filtering Process: Traders should filter the economic calendar to focus on news events that increase the probability of significant price movements.
• 📉 Risk Management: Risk management is paramount, and traders should avoid news trading without proper risk assessment.
• 📈 High Time Frame Volatility: Understanding higher time frame volatility helps to determine if a price action like a PD Rate will hold.
• 📊 Price Action and Time: Combining price action with the right timing increases the probability of successful trades.
• 📉 Psychological Impact: Limiting chart time can reduce psychological errors and improve trading discipline.
• 🚫 Avoid Big News Releases: Certain news events like NFP, FOMC statements, and CPI can cause excessive volatility and slippage, making them risky for immediate trading.

Q & A

What is the main focus of the ninth video in the MMC series?

The main focus of the ninth video in the MMC series is to explain the importance of timing in trading and how it relates to volatility and market movements.

Why is the timing of trades important in trading?

The timing of trades is important because it increases the probability of successful trades when it aligns with market volatility and supports the direction indicated by price action.

What does the term 'time' refer to in the context of trading?

In the context of trading, 'time' refers to specific periods when market volatility is expected to increase, which can be influenced by economic news events or market sessions.

How does volatility affect price action in the market?

Volatility affects price action by causing significant price movements, creating gaps, and respecting certain price levels, which can lead to continued movement in a particular direction or consolidation.

What are the two methods mentioned for the market to gain 'energy' or volatility?

The two methods mentioned for the market to gain 'energy' or volatility are higher time frame events, such as economic news, and lower time frame events, such as market sessions or kill zones.

Why are news events considered a 'smokescreen' in the context of trading?

News events are considered a 'smokescreen' because they introduce volatility into the market that can overshadow technical analysis, often following along with it but not determining long-term currency movements.

What website does the speaker recommend for the economic calendar and how can it be filtered?

The speaker recommends forexfactory.com for the economic calendar and demonstrates how to filter it by turning off certain categories and currencies to focus on relevant news events.

How can understanding the economic calendar help in identifying high probability trading opportunities?

Understanding the economic calendar helps in identifying high probability trading opportunities by showing which currencies are likely to be more volatile due to upcoming news events, allowing traders to focus on those with higher potential for movement.

What are the 'big three' news events that require special attention and caution in trading?

The 'big three' news events that require special attention and caution in trading are Non-Farm Payrolls (NFP), the US Dollar FOMC Statement, and the US Dollar CPI (Consumer Price Index).

Why is it important to respect risk management when trading around major news events?

Respecting risk management when trading around major news events is important to avoid excessive slippage and to maintain a positive risk-reward ratio, ensuring that trading is a disciplined practice rather than gambling.

How can limiting chart time improve a trader's psychology and trading performance?

Limiting chart time can improve a trader's psychology by reducing the likelihood of overtrading and emotional decision-making. It allows for more focused and emotionally controlled analysis, leading to better trading performance.

Outlines

00:00

🕒 Understanding the Importance of Trading Time

This paragraph introduces the concept of trading time and its significance in increasing the probability of successful trades. It explains that trading time is essentially about identifying periods of increased market volatility, which is crucial for price movement. The speaker clarifies that volatility is the key to trading, as it provides the energy for the market to move, allowing traders to capitalize on opportunities. The paragraph also touches on the idea that understanding the right time to trade can lead to higher probability trade setups, combining both time and price action for optimal results.

05:02

📈 The Role of Time Frames and Economic Calendars in Trading

This section delves into the specifics of how time frames, particularly higher time frames, influence trading opportunities. It emphasizes the importance of economic calendars and news events in generating market volatility. The speaker discusses the concept of 'energy bars' as a metaphor for the market's need for volatility to move prices. The paragraph also introduces the idea of becoming a 'filtering process trader,' which involves identifying the most volatile and thus highest probability trading opportunities. The economic calendar is presented as a tool to filter and predict which currency pairs are likely to be more active and profitable to trade.

10:05

🛡 The Necessity of Risk Management in Trading

The speaker stresses the importance of risk management in trading, warning against the pitfalls of overtrading and the psychological strain of constantly monitoring the market. They argue that limiting the time spent on charts can help maintain a trader's psychological health and reduce the likelihood of making poor trading decisions. The paragraph also discusses the importance of aligning technical analysis with a trader's psychology to set up for success, both in trading and in maintaining emotional control.

15:05

📊 Analyzing Market Movements with Economic Events

This paragraph explores how economic events, as indicated on the economic calendar, can be used to predict and analyze market movements. It discusses the concept of 'big three' news events—NFP, FOMC statement, and CPI—which have a significant impact on market volatility and require careful consideration from traders. The speaker advises waiting until after these major news events have been released before executing trades to avoid the risks associated with high volatility and potential slippage.

20:06

📝 Conducting Case Studies for Better Trading Decisions

The final paragraph suggests conducting case studies to understand how price action (P) holds in relation to news events and higher time frame support. It encourages traders to analyze which days and events support trading decisions, providing a method to refine trading strategies and increase the likelihood of success. The speaker wraps up by emphasizing the value of this approach in enhancing a trader's ability to make informed and profitable trading choices.

Keywords

💡Order Flow Lags

Order Flow Lags refer to the points in the market where there is a pause or a lag in the price movement, which can be used to predict future price direction. In the video, it is mentioned that understanding these lags, along with the right timing, increases the probability of successful trades. The concept is used to explain how combining time with price action can lead to high-probability trade setups.

💡Volatility

Volatility is the measure of how much and how fast the price of a security can move. It is central to the video's theme as it is described as the 'energy of the market' that allows for price movement. The script discusses how increased volatility during certain times can create more trading opportunities, as seen in the context of 'fair value gaps' and market consolidation.

💡Fair Value Gaps

Fair Value Gaps are areas in the market where the price is expected to return to a certain level, providing a potential entry point for trades. The video script uses this term to illustrate how traders can use volatility and timing to trade back into these gaps for potential profits, especially when there is agreement between the higher time frame and the price action.

💡Higher Time Frame

The term 'Higher Time Frame' in the video refers to looking at longer periods on trading charts to identify significant trends and potential trade opportunities. It is important for determining whether a price action, such as a PD Rate, will hold and continue in a particular direction, which is crucial for planning trades based on volatility and economic events.

💡Economic Calendar

An Economic Calendar is a tool used by traders to track upcoming news events and their potential impact on the market. The video emphasizes its importance in identifying days with increased volatility due to news events, which can be used to filter and select high-probability trading instruments.

💡Risk Management

Risk Management is a crucial concept in trading that involves the process of identifying, evaluating, and controlling risk. The video script stresses the importance of respecting risk management in trading, especially when dealing with high-impact news events, to avoid excessive risk and maintain a healthy trading psychology.

💡PD Rate (Price Development Rate)

PD Rate, or Price Development Rate, is a term used in the script to refer to the rate at which the price of a security is developing or changing over time. It is used to assess whether a trade setup on a higher time frame is likely to continue in the expected direction, combining with the concept of time and volatility for trade decisions.

💡Breakaway Gap

A Breakaway Gap is a type of price gap that occurs when the price moves away from a consolidation pattern, indicating a strong trend continuation. The video script mentions this concept to explain how certain news events and market conditions can lead to the formation of breakaway gaps, providing potential trading opportunities.

💡Consolidation

Consolidation in the context of the video refers to a period of time where the price of a security moves within a certain range with little overall change, indicating a lack of strong buying or selling pressure. The script uses this term to describe market behavior when there is less volatility, which can precede or follow significant news events.

💡Psychology in Trading

Psychology in Trading refers to the emotional and cognitive factors that influence a trader's decisions and performance. The video script discusses how limiting chart time and focusing on specific trading opportunities can help maintain a trader's psychological stability, which is essential for making rational trading decisions and avoiding common pitfalls like overtrading or revenge trading.

Highlights

Importance of trading time in conjunction with order flow and price action for higher probability trades.

Time in trading refers to periods of increased market volatility.

Volatility is the foundation of every trade, driving price movement.

Market energy is analogous to volatility, necessary for price movement.

Higher time frame time is linked to economic calendars and news events that increase volatility.

Lower time frame time refers to market sessions or kill zones that affect volatility.

The significance of higher time frame time in determining the potential for price continuation from a PD (Point of Divergence).

News events can act as a smoke screen, obscuring the underlying technical analysis.

The economic calendar is a tool for identifying potential volatility and trade opportunities.

Filtering news events on Forex Factory to focus on relevant currency pairs.

Becoming a 'filtering process trader' to find the highest probability trades based on higher time frame analysis.

The necessity of respecting risk management in trading, especially when trading news events.

The impact of big news events like NFP on market volatility and the importance of trading after the news release.

The concept of 'energy bars' for the market, referring to news events that inject volatility.

The psychological benefits of limiting chart time to reduce errors and maintain focus.

The relationship between technical analysis setup and psychological trading success.

The importance of aligning trading strategy with one's psychological approach to achieve profitability.

Case study recommendation to understand which days a P (pivot point) holds and the impact of news events on those days.

Transcripts

now a question from me to you do you

know the right time to trade that is

exactly what you will learn in this

video so in the ninth video of the MMC

series we are going to go over time now

why is the time that we trade even

important because when we take a look

again at the previous videos what we've

talked about breaking down those order

flow lags and we have the fla the OD and

the lot sitting right there then if we

want to continue lower or continue

higher from an orderflow lag that will

be a lot higher probability if time is

also supporting the ID when you combine

time with the right price action that's

when it's the highest probability that's

when you get the best trade IDs now when

I was learning about time it was

presented as a very mysterious topic

very vague and very cryptic so I want to

first break down what is time what do we

actually mean with it time is volatility

so what is volatility well volatility is

how much and how fast price moves then

when we refer to time we refer to a

specific time where the volatility will

be increased so where we will have a lot

of volatility in the market now when

there's a lot of volatility in the

market you will see price action like

this fair value gaps being created being

respected and we continue lower when

there's a lack of volatility you will

see that price struggles to continue

higher or continue lower more so

creating a consolidation so volatility

for any type of Trader is extremely

valuable because when we have volatility

that means the price will actually make

a move somewhere so volatility is at the

basis of every Trader every Trader needs

some kind of volatility because let's

say if you place an entry right here the

volatility allows price to actually move

higher or move lower towards our

stoploss when there's no volatility

there's also no trade ID and we don't

move anywhere as I like to call it it is

the energy of the market for you to be

able to move you also need energy so you

need for example an energy bar you can

eat it and you get energy so you can

move a lot now the market doesn't eat

energy bars but the way the market gets

energy is through the following methods

when we talk about getting that energy

getting that volatility and what type of

time we have then we talk about the

following two higher time frame time

this refers to the economic calendar so

news events when we have a news event

there will be an increased amount of

volatility now this is also the case for

lower time frame time lower time frame

time refers to sessions or kill zones

higher time frame time is what we're

going to focus on in this video what

makes a higher time frame actually

volatile what makes the higher time

frame move lower time frame time is what

we're going to focus on in the entry

video and that will be focused on what

makes the lower time frame move so what

is that higher time frame time and why

is it important

well higher time frame time is important

to know if a PD rate on the higher time

frame will actually hold so do we have

enough volatility when we come into an

higher time frame PD to then continue

higher from it or continue lower from it

to give you an example we want this to

happen right here with our fair value

gaps we want to trade back into it and

that there's enough volatility to make a

significant move lower right there we do

not want something like this to happen

where we have a sting into it and then

after words we just simply have a

consolidation and this is what that

higher time frame time will help us with

now I've also written down right there

it's a smoke screen and what am I

referring to right there now the reason

why I call these news events a smoke

screen is simply because the fact that

short term is nothing more than

volatility coming into the market for

Price action the technical analysis that

we currently have to actually play out

so what you'll notice is that often

times the news events actually follow

along with technical analysis that you

also have now does that mean that the

technical analysis determines what is

going to happen with a currency long

term no of course not long term you will

see the effects from a news event and of

course then the news actually determines

if we're going to go higher or lower

long term now when we talk about higher

time frame time we are talking about the

economic calendar again this is an

example of the economic calendar and

what you're seeing here is different

news events for different currencies

those news events are of course

important for that currencies for that

state of the currency so those news

events they bring in volatility so what

we mentioned these are the energy bars

for the market they bringing that energy

now the economic calendar that I use is

forexfactory.com this is the website of

forexfactory.com and before we move on I

want to show you how I have filtered the

economic caler news events as well I am

not affiliated or anything with Forex

factory.com just so you know on

forexfactory.com if you go to the

calendar right there in the top right

you will see that you can filter things

when you click on that these are the

settings that I have so the only one

that I've have turned off is the yellow

folder right there and also the CNY y

currency then I apply the filter one

more important thing in the top right as

well under the time I always have my

time whether it's in trading view

whether it's in Forex Factory when I

refer to any time it is Eastern time New

York local time then the economic

calendar for this week that we currently

have will look something like this so

how can we then use that economic

calendar well the first one is which

currency can be volatile if you are

going to be a Trader that focuses really

on the higher time frame and focuses on

multiple pairs multiple instruments then

you are going to become something that

we call a filtering process Trader that

means that you are always looking to

find the highest probability price

action based on the higher time frame so

you go over multiple Pairs and you see

which one is the highest probability

that is where the economic calendar also

comes in because currencies that have

more volatility are also going to be

higher probability because again the

more volatile the more likely it is

actually going to move somewhere

otherwise it's just going to stand still

and be a consolidation so looking at the

economic calendar we can also see which

currencies are going to be volatile

throughout the week for example Euro

right there for example Australian

dollar as well then we have a lots of

news events for the rest of the week as

well now one that we don't have is New

Zealand dollar so a currency like the

New Zealand dollar is not going to be

very interesting to trade for this week

because it has less volatility than for

example something like Canadian dollar

which has a red folder News event right

there now that is how we can get to high

probability instruments and then we want

to combine that with the understanding

that we have of PD Ray so in the

previous videos we have gone over every

narrative area so what we can continue

higher from or continue lower from when

we trade back into one of those PD rays

in an orderflow lack and we also have

time agreeing with the ID that means

there's enough volatility to actually

continue lower from a bearish fair value

gap for example when we understand that

the higher time frame is high

probability and will make a move then

the lower time frame will be a lot

easier to navigate when we get into

entries now we'll go over multiple

examples on how to combine that time

with those narrative areas as well but

before we do that we also need to

understand number three and that is that

we always and I mean always need to

respect risk management now we're going

to have a dedicated slide towards

respecting risk management as well and

why it's so important but I need you to

understand that I'm not here to

encourage news trading and gambling

going full margin on for example

something like NFP if you are planning

to do that then you are ignoring the one

factor that allows you to be a Trader

which is risk management so you might as

well go to the casino and put everything

on R but first of all we need to go over

how we can combine it with a higher time

frame PD rate now let's assume right

here that we are looking at the daily

time frame and the daily time frame

looks something like the following we

have a perfect fair value Gap right

there that we can trade back into to

then continue High

but what happens in these daily candles

right there why is one daily candle so

extremely volatile so why is one candle

moving a lot and the other candle is a

consolidation right there well that

could be something like this where on

Monday we have no news so for example

this third candle of that fair value Gap

that creates a consolidation we might

not have any volatility when there's no

news for that Monday we can expect okay

potentially consolidation on Monday by

Tuesday the fair value Gap is now

created if we then sting back into that

fair value Gap and we also have news

supporting the ID on Tuesday that

Tuesday can then continue higher from

the fair value Gap so to give you an

example here on Australian dollar CHF we

have this daily F value Gap right there

now the first day that stings and that

trades back into the F value Gap is this

candle this candle is a Monday the 29th

of July that candle is not a big

rejection as in it's not creating a very

aggressive down candle to then continue

lower but the second candle right there

is an extremely aggressive candle to

continue lower and the candles

afterwards as well so what happened on

that Tuesday the 30th of July well if we

take a look at the economic calendar we

see on Monday There's no news on Tuesday

we have Australian dollar CPI right

there that means that for the Australian

dollar there will be a lot of volatility

so something like Australian dollar CHF

since it has Australian dollar in the

ticker name it will be more volatile now

if we go over the next example and let's

say we have a breakaway Gap when do we

or when are we more likely to create a

breakaway Gap and if you understand the

previous example then you'll probably

also understand this because let's say

we have Monday news and Tuesday news as

well then it's a lot more likely that

Monday is volatile so Monday can already

continue higher as well and tu Tuesday

can also already continue higher where

we don't get that perect value Gap

because we don't get consolidation now

this is then what we can get very

creative with and also what will help us

understand how the week will actually

form so what is often referred to as a

weekly profile how we can understand

which weekly profile we will most likely

have as well now if we get very creative

with this and then we understand also

the next example right here because what

happens here we have this fair value

area the fair value gap which we can

continue higher from the first day right

there is not a rejection this again

trading off the last line of defense

like we've mentioned in the previous

videos we get the previous candle low

sweep to then continue higher why do we

not reject on that first day well this

could look something like this Monday no

news creates a consolidation for that

fair value Gap right there the third

candle Tuesday no news so it has a

rejection lower but it does not have

enough volatility to actually make the p

P higher so what happens Wednesday is

where we do have news we sweep the

previous candle low to then continue

higher now once you start understanding

this you will start understanding when

to trade and knowing when to trade is so

extremely valuable and not only because

it sounds cool it sounds like you're

professional it's also valuable for your

psychology can you imagine staring at

the chart all day if you have done that

in the past and for my experience you

are going to be absolutely destroyed at

the end of the day the more Char time

you are going to have the more errors

you are also going to make in your

trading you're going to overtrade you're

going to take trades that you should not

be taking and funny thing if we look at

it from this perspective we have been

talking about liquidity in the previous

video and that liquidity in the market

is that for every buyer there needs to

be a seller for every seller there needs

to be a buyer well what is the reason

why 90% of the Traders do not fail is it

because there are some kind of magic

formula out there that you can simply

follow and you will be profitable or is

it also because people tend to struggle

with their psychology they tend to

overtrade they tend to Revenge trade

again taking trades they should not be

taking so what are the odds when you

click buy and on the other side of your

trade there's someone selling to you

who's taking a trade they should not be

taking because they are struggling with

their psychology and why is that then

important because that understanding

leads to that you are out competing

other people based on how long you can

keep your psychology intact how can you

keep your psychology intact meaning how

can you not mess up in your psychology

that is by limiting your chart time if

you are away from the charts can you

realistically do anything no so by

limiting your chart time you will also

have less psychology errors you will be

more fresh and when you do look at the

chart you will be more focused you will

have more emotional control so someone

that looks at the chart every single day

8 hours a day 245 that person is going

to have a lot more psychology struggles

than someone that only looks at the

chart when they know they should be

looking at the chart so I know I only

need to look at the chart on a Tuesday

and a Thursday this week in that short

period of time that Tuesday and the

Thursday you're a lot less likely to

mess up in your psychology so you are

out competing someone else just purely

by keeping your psychology in check this

is why the technicals in your technical

analysis should align with your

psychology you can't expect to have a

thousand things on your chart and then

just say well now I need to work on my

psychology no working on your psychology

starts with working on your technical

analysis when they set you up for

Success they give you an assist to

succeed in your psychology that's

exactly when you will reach

profitability as well and that's what

we're doing so to give you another

example right here here we have a fa

failure to reject off that fair Val Gap

right there or we have somewhat of a

rejection but not a new F Val Gap to

continue higher from instead we sweep

the low right there and then continue

higher now what could this be this could

be something like Monday no news Tuesday

no news Wednesday no news Thursday no

news and then Friday news where we

consolidate throughout the week Friday

could be something like nfb which is

always on the first Friday of the month

when that happens we tend to consolidate

before NFP and then we can look to

continue higher or continue lower

because that's where the real volatility

comes into the market this is how you

combine it with a higher time FR PD now

to understand it fully when we talk

about these economic calendar events

right here these news events these news

events bring in volatility for that

particular day so something that you can

do is go to a website where it shows the

average movement of price for any

particular day and if you look at the

days where we have the most movement

that is also the day is where we have

the most news events when we know this

that means that before the news release

so let's say right here we have core

retail sales for the US dollar red

folder News that means that that day

that Tuesday July 16th will already be

more volatile for the US dollar and that

is the important part because that

allows us to either before the news

release or after the news release

execute a trade ID so if on that day we

have a sting into a fair value Gap we

wait for our entry confirmation and we

know that we already have more volatile

we can simply take that trade but this

does not apply to the following three

news events that is always where we want

to wait until after the news release has

already happened and that is the

following this is about respecting risk

management where we will touch on the

big three news events and the big three

news events are the following nfb right

there which which will show up as

nonfarm employment change not the ADP

nonfarm employment change which is on a

Wednesday it's the one on the Friday

non-farm employment change NFP simply

known as nonfarm payrolls the second one

is US dollar fomc statement not fomc

meeting fomc statement then the third

one is CPI for the US dollar which is

Consumer Price Index now why are these

big three news events the one that we

want to watch out for there's a

following rule set when we have these

big three news events the day before

will also be less volatile so not more

volatile less volatile because there's a

higher probability that the day before

this news release so if NFP is on a

Friday on a Thursday we will see a

consolidation and on Friday for NFP

before we have the news release at 830

a.m. New York local time we will also

most likely see consolidation until

after the news release that's when the

volatility is in the market the reason

for that is because these big three

bring in so much volatility that the

market actually consolidates beforehand

and then after explodes to one side or

sweeps one side and then the other side

now the reason why these are dangerous

and we do not want to trade them at the

exact moment of the news release so only

after give it a few minutes is because

of slippage and slippage looks like the

following if you are in a trade right

there and let's say you are in a one

minute time frame trade you have a stop

loss above the recent one minute swing

high or you are about to execute a trade

at that moment in time when we have NFP

release or one of those news release

right there then if you have your stop-

loss in place you are not going to get

filled at the exact stop- loss placement

unless you're trading in demo and not in

live conditions then you are not going

to get filled at the exact stop- loss

order right there if we are shorting the

market and we have our stop loss above

the recent swing High we are not going

to get filled at that exact stop loss we

might get filled a little bit higher now

with the amount of volatility that comes

in during one of these news releases we

might get filled a lot higher and that

means that we won't be risking 1% no 10%

might be on the line at that moment in

time so if you're trying to make 2% with

10% risk because of slippage then you

have a negative RR and you are

disrespecting the fundamental thing that

allows you to be a Trader risk

management and if there's no risk

management involved then is nothing

better than simply gambling and if you

ever want to be a long-term successful

Trader then this gambling is not the way

to go now one other rule about the big

three news events if you have NFP on a

Friday for example and on Wednesday you

have fomc that means that you have two

big three news events in One Singular

week that also means that the first big

three news event in that week will not

bring in the real volatility yes it will

bring in volatility for example that

Wednesday with fomc but after it's most

likely to still consolidate and then NFP

the last big three news event for that

week will bring in the real volatility

the real Direction in the market as well

then there's one more thing to do and

this is for your sake start doing a case

study the case study for this video is

study which days a p hold so where we

continue lower off a bearish fair Vala

for example and if there was any news

event supporting the ID so if time

higher time frame time was supporting

the ID and then we can move on to the

context videos all right perfect thank

you