Time Trading Made Simple
Summary
TLDRThis 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
🕒 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.
📈 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.
🛡 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.
📊 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.
📝 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.
Mindmap
Keywords
💡Order Flow Lags
💡Volatility
💡Fair Value Gaps
💡Higher Time Frame
💡Economic Calendar
💡Risk Management
💡PD Rate (Price Development Rate)
💡Breakaway Gap
💡Consolidation
💡Psychology in 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
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