ICT Forex - The ICT London Close Killzone

Summary

This video script discusses the 'London Close Kill Zone' in forex trading, a period between 10 a.m. and noon New York time when major currency pairs often set up optimal trade entry patterns. It explains how this time frame can offer short-term trading opportunities of 10-20 pips and emphasizes the importance of understanding daily price action for both day traders and swing traders. The script also highlights how the London close can act as a continuation point for trends into the New York afternoon session.

Takeaways

• 🕒 The London Close Kill Zone is a specific time frame between 10 a.m. and noon New York time when the market often sets up an optimal trade entry pattern.
• 🌐 This time frame is significant for major currency pairs, especially those involving the US dollar.
• 📈 The London Close often marks the high or low of the day, providing a clear range for traders to work with.
• 📊 The price action during the London Close typically sees a retracement off the high of the day on bullish days and off the low on bearish days.
• 🔍 Traders should monitor the market closely during this time for potential short-term trades of 10 to 20 pips.
• 📉 The London Close can also create continuation points for swings that may extend into the New York afternoon trading session.
• 🔄 It's important to note that the London Close can sometimes reverse the trend, indicating a change in direction for the rest of the day.
• 📋 The information from the London Close is useful for both entry points and managing positions, providing a better understanding of price movement.
• 🚫 The London Close Kill Zone strategy may not be effective during sideways or highly volatile, non-trending days.
• 📝 Understanding the characteristics of the London Close is crucial for defining the daily range and the key price points of accumulation, manipulation, and distribution.

Q & A

What is the ICT London Close Kill Zone?

The ICT London Close Kill Zone is a specific time frame between 10 a.m. and noon New York time when the market often sets up an optimal trade entry pattern that can offer 10 to 20 pips for a scalp.

Why is the London Close Kill Zone significant for Forex traders?

The London Close Kill Zone is significant because it often encapsulates the daily range of major currency pairs, providing traders with potential entry points for short-term trades.

What is the typical time frame for trades set up during the London Close Kill Zone?

Trades set up during the London Close Kill Zone are typically very short-term in nature, with moves ranging from 10 to 20 pips.

How does the market behavior differ during the London Close Kill Zone compared to other times?

During the London Close Kill Zone, the market often sees a retracement off the high of the day on bullish days and off the low on bearish days, which can lead to optimal trade entry setups.

What is the importance of the 5-minute chart when analyzing the London Close Kill Zone?

The 5-minute chart is crucial for analyzing the London Close Kill Zone because it provides the necessary detail to identify optimal trade entry points on a short-term basis.

Can the London Close Kill Zone create continuation points for longer-term trades?

Yes, the London Close Kill Zone can create continuation points that can extend well into the New York afternoon hours, providing opportunities for longer-term trades.

How does the London Close Kill Zone interact with the New York session?

The London Close Kill Zone can influence the New York session by setting the high or low of the day, which can then lead to continuation of the trend seen in the London session.

What is the significance of the daily high or low forming during the London Close Kill Zone?

The formation of the daily high or low during the London Close Kill Zone is significant as it can indicate the overall sentiment of the market for the day and potentially set the stage for the rest of the trading session.

What are the characteristics of a London Close that indicates a bullish day?

A bullish day is indicated when the London Close forms the high of the day between 10 o'clock and noon New York time, suggesting an up-close day.

What should traders be cautious about when trading the London Close Kill Zone?

Traders should be cautious that not all days will form a clear London Close Kill Zone pattern. Days with low volatility or 'seek and destroy' days may not follow the typical patterns, making trades less predictable.

How does understanding the London Close Kill Zone contribute to overall trading strategy?

Understanding the London Close Kill Zone contributes to overall trading strategy by providing insights into short-term price movements and potential entry and exit points, which can be integrated into both day trading and longer-term trading strategies.

Outlines

00:00

🌐 Understanding the London Close Kill Zone

This paragraph introduces the concept of the London Close Kill Zone (LCKZ) in the context of the Intermarket Correlation Tool (ICT). It explains that the LCKZ occurs during a specific time frame, typically between 10 a.m. and noon New York time, when the market often reaches the opposite end of the daily range. This period is particularly active for major currency pairs coupled with the US dollar. The LCKZ is known for setting up optimal trade entry patterns that can yield 10 to 20 pips for scalping. The speaker uses the example of the USD/CAD and EUR/USD charts to illustrate how the daily high or low is often formed during the LCKZ. The paragraph also discusses how price action during the LCKZ can indicate a retracement from the day's high in bullish conditions or from the day's low in bearish conditions, with optimal trade entry setups often occurring within a five-minute window. The speaker emphasizes the short-term nature of these trades and contrasts them with longer-term movements like the London or New York open.

05:01

📈 Characteristics and Impact of the London Close

The second paragraph delves into the characteristics of the London Close and its potential to create continuation points for trades that can extend into the New York afternoon session. The speaker advises that when studying the LCKZ, one should focus on a 5-minute chart for detail. The paragraph highlights how the LCKZ can influence the direction of the market for the rest of the day, using the example of the AUD/USD chart. It discusses the overlap between the New York and London sessions and how the characteristics of the London close can indicate whether the market will continue in the same direction or reverse. The speaker also touches on how the market can form patterns like a double top during the LCKZ, which can lead to a reversal. The paragraph concludes by emphasizing the importance of understanding these short-term price movements for both entry and position management. The speaker notes that while the insights provided may seem simplistic, they are fundamental to understanding how daily bars or candles are formed and how to identify unfruitful days for trading, such as consolidation or 'seek and destroy' days.

Keywords

💡ICT

ICT stands for 'Intermarket Correlation Theory', which is a concept used in trading to understand how different markets are interconnected. In the script, the speaker discusses the London Close Kill Zone in the context of ICT, emphasizing the importance of understanding how markets behave during specific hours. The London Close Kill Zone is a time frame identified by the speaker as optimal for trading based on the theory.

💡London Close Kill Zone

The 'London Close Kill Zone' refers to a specific time frame between 10 a.m. and noon New York time when the London market is closing. It is considered an optimal time for trading entry patterns that can offer small but quick profits, typically 10 to 20 pips. The script uses the term to highlight a strategy where traders can take advantage of predictable price movements at the end of the London trading session.

💡Major Pairs

In the context of forex trading, 'major pairs' refers to currency pairs that involve the US dollar and another major world currency, such as the Euro or the British Pound. The script mentions that these pairs are ideal for trading during the London Close Kill Zone, suggesting that they tend to show more pronounced movements during this time.

💡Pips

A 'pip' is the smallest amount by which a currency quote can change. It is a unit of measure used in forex trading to express the change in a currency pair's value. The script uses 'pips' to quantify the potential profit from trades made during the London Close Kill Zone, indicating that traders can expect small but quick gains.

💡Scalping

Scalping is a trading strategy where traders aim to profit from small price changes in the market. The script mentions that the London Close Kill Zone is ideal for scalping, as the trades set up during this time can offer quick profits of 10 to 20 pips.

💡Daily Range

The 'daily range' in trading refers to the difference between the highest and lowest price of a security within a trading day. The script discusses how the London Close Kill Zone often encapsulates the daily range, meaning that the high and low for the day are often established during this time frame.

💡Optimal Trade Entry Pattern

An 'optimal trade entry pattern' is a specific price action setup that traders look for to enter a trade with a high probability of success. The script describes how the London Close Kill Zone frequently sets up such patterns, which can be exploited for quick scalping trades.

💡New York Time

Throughout the script, 'New York time' is used as a reference point for the timing of the London Close Kill Zone. This is important for traders who need to synchronize their trading activities with global market hours, as New York is a major financial hub and its time zone is often used as a standard in global trading.

💡Continuation Points

A 'continuation point' is a price level that suggests the continuation of a trend. The script mentions that the London Close can create continuation points for swings that trade well into the New York afternoon hours, indicating that the price action during the London Close can influence the market's direction for the rest of the day.

💡Price Action

Price action refers to the movement of prices on a chart and the patterns that form as a result. The script discusses how price action seen at the London Close typically sees a retracement off the high of the day on bullish days and off the low on bearish days, providing insight into how to read and react to market movements.

💡5-Minute Chart

The '5-minute chart' is a type of trading chart that displays price action over 5-minute intervals. The script emphasizes the importance of looking at 5-minute charts when studying the London Close, as this time frame provides the necessary detail for identifying optimal trade entry setups.

Highlights

The ICT London close kill zone focuses on time and price during the London close, often leading to optimal trade entry patterns.

Key times for the ICT London close kill zone are between 10 a.m. and noon New York time, where major currency pairs form highs or lows of the day.

The London close often sets the daily high or low, offering potential for 10-20 pips in scalping opportunities.

In bullish days, the London close typically forms the high of the day, and in bearish days, it forms the low.

A 5-minute optimal trade entry setup is usually present during the London close, which is highly short-term in nature.

The London close kill zone is critical for capturing small, short-term moves, generally between 10 to 20 pips.

In certain days, the London close can create continuation points for swings that extend into the New York afternoon.

The ICT London close kill zone works well on major currency pairs paired with the U.S. dollar.

On bullish days, the London close can create a continuation of the overall trend, leading to extended moves.

The London close overlap with New York session often leads to continued price action seen from the London session.

On reversal days, the London close can be a critical point where the high or low of the day forms, and the market reverses aggressively.

Understanding the short-term price action at London close can help manage trades and position entries.

Price movements at London close are linked to broader market phenomena like accumulation, manipulation, and distribution.

The London close kill zone is ideal for identifying the open, high, low, and close of the daily range, useful in intraday trading strategies.

Days with low volatility or erratic price movements (like Z days or seek-and-destroy days) may reduce the effectiveness of the London close kill zone.

Transcripts

but hey folks welcome back this teaching

can be specifically dealing with the ICT

running close kill zone

okay London close kills it what ICT

concepts are many years in his module

the importance of time and price alone

then close the London clothes kill then

characteristics of the London clothes

okay so the London clothes is a

particular time of day that usually ends

the opposite end of the daily range the

major pairs usually coupled with a

dollar or ideal for this time of day and

the London clothes frequently sets up an

optimal trade entry pattern that can

offer 10 to 20 pips for a scalp the key

times the monitor are 10 a.m. to noon

New York time this is the ICT London

clothes kill zone as you can see here on

the chart on the right this is a dollar

cad chart you can see the beginning of

the day we had consolidation but in that

consolidation during the asian market we

create the low of the day then after

midnight New York time to market rallies

one-sided all the way up into the time

window that's dylaney between 10:00 a.m.

and noon New York time this is the

London close kill zone you see the daily

high performed exactly within that

little window of time and then pry

subsequently traded the lower into the

close another example here this is the

euro dollar just to show you how did

london clothes encapsulate s-- the daily

range okay we have the agent range in

here the high created during the asian

market actually treated this pair and

this is a very similar chart we've used

in this series so far but the high forms

in asia

then after New York midnight time we had

a high form again and London high New

York session high and then the low of

the day forms exactly at the parameters

between 10:00 a.m. and noon New York

time

this is the ICT London close killzone

market rates higher off that window of

time and then goes into the close but on

the close kill then if we study this

portion of the day the price action seen

at London closed typically sees a

retracement off the high of the day on

bullish days and off the low one the day

that is seen bearish there's typically a

five-minute optimal trade entry setup in

these conditions but they're very

important to remember this they're very

very short-term in nature so the moves

aren't a lot they're not like the

equivalent of like a London open or in

New York open it's typically going to be

very small short-term 10 15 maybe even

20 pips if you get anything more than 20

pips it's going to be it's going to be a

rarity for that to occur but you can see

it as an example here the Aussie dollar

we have the ICT London close kills on in

here and the market creates the low of

the day as we would expect then it gives

us an optimal trade entry long and

trades higher now this gives us a rather

easy 20 pips in here on this particular

day there they won't always look like

this but it's important to see how the

daily range is encapsulated the higher

lows generally formed between 10:00

o'clock and noon New York time so for

the sake of note-taking and completeness

if we're bullish and the daily close is

going to be high relative to its opening

in other words it's an up close day the

London close is going to be typically

when the high today is formed between 10

o'clock and noon now there will be times

when that isn't the case but for now if

you use this general rule of thumb it's

going to serve you well okay

characteristics of London close and the

London close can create continuation

points for swings that trade well into

New York afternoon hours that means if

we're bullish overall in the day instead

of creating the

I of the day in bullish markets or

bullish days many times the London

clothes connects to create a

continuation pattern as seen in this

example here on the dollar yen the

market had traded higher initially

during today and then we have a

consolidation but inside the

consolidation we had an optimal trade

entry here this is gonna be on a

5-minute basis okay whenever we're

studying the month and close you have to

be looking at it from a 5-minute

anything higher than that you're not

going to get to detail you need but

awful trade entry long in here it

creates the continuation of the overall

trend and a nice extrapolated move all

the way up to 300 extension and what had

been the direction of the day or week

can change during the London close and

let's take a look at an example here you

can see in this Aussie dollar chart we

can see that a very phenomenon take

place let's zoom in and take a closer

look at what's being shown here this is

a New York and London close overlap so

there's characteristics that's important

for New York session typically what

you'll see is the continuation of what's

seen in London overnight and that would

be if we're bullish in London we would

expect to see New York continuing

continue moving foolishly as well and

then London close

be the high today if we're bearish and

we've seen London bearish then New York

bearish we're really looking for London

close to be the low of the day okay

between 10 o'clock and noon or expect to

see the low of the day form now if there

are times when the market creates a

Princeton side liquidity pool like this

you can clearly see what's I'm going to

reference here but it's the double top

right in here

and we can see how London closes this

particular day creates the high of the

day but also forms a reversal point for

the rest of that day and the next day we

see price move rather aggressively lower

so if we look at all these

characteristics as a whole okay I

started with the intraday even though

some of you may not be interested in day

trading because of your life

circumstances or you just don't have an

appetite for doing it it's beneficial to

understand the engineering of how price

moves from the short-term and then we

can work from that price point higher

into higher time frames it's important

to know these things for entries it's

important to know these things for

managing positions because the

characteristics that been shown in the

create tutorials that I've done thus far

they may seem rather simplistic they may

be rather short in duration you're used

to very long videos from me but the

insights I've given you are very concise

they're very generic but don't let that

simplicity and short-term delivery and

presentation for you there's a lot of

insight that's been shown I've given you

the DNA if you will of how a daily bar

or candle is formed on bullish and

bearish days the times you're going to

be unfruitful using this information is

when we have a Z day where it goes up

and down in quiet consolidation or a

seek and destroy day which is a really

wild choppy up-and-down day where it

doesn't really go anywhere until the

last portion of the day and then it runs

out the stops and no one saw coming so

if you accept the fact that you're going

to have days where you're gonna see a

scenario that may form and you may

believe it's a scenario that may warrant

a entry on your demo account it may not

come to fruition if your study the

things I've given you thus far we went

through the Asian session the London

session the New York session and now

we've completed the daily range with the

London clothes killzone so we have

everything at our disposal in terms of

defining the daily range now that does

not mean daily bias it does not being

long-term direction it just means that

we have been able to define the for

reference points that make up power

three the open the high the low and the

close and what those three phenomenon

take place inside of those four price

points which is the accumulation

manipulation and distribution so

hopefully you found this teaching

insightful you can find more at the

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