ICT Forex - Time & Price Theory
Summary
TLDRThis educational video script delves into the concept of time and price theory in trading, emphasizing the significance of analyzing higher timeframes like monthly charts for macro institutional bias. It discusses the fractal nature of price action and how patterns can be identified across different timeframes. The speaker shares insights on using the 'ICT Power 3' for identifying bullish or bearish trends and provides a step-by-step guide on trading strategies based on opening prices in monthly, weekly, and daily charts. The script concludes by highlighting the importance of aligning with the highest probability setups and the value of technical analysis in trading.
Takeaways
- đ The teaching focuses on time and price theory, emphasizing the importance of analyzing price patterns across different time frames.
- đ Price action is fractal, meaning patterns seen on smaller time frames like 1-minute or 5-minute charts can also be observed on larger time frames like the monthly chart.
- đ Higher time frames like the monthly chart are given more significance in analysis, providing a macro perspective of institutional sentiment and bias.
- đ When analyzing the monthly chart, if it's bullish, traders should look for buying opportunities at or below the opening price; if bearish, focus on selling short at or above the opening price.
- đ€ Large institutions use algorithmic systems that react to monthly and weekly opening prices, suggesting the importance of mimicking these behaviors for effective trading strategies.
- đ The Euro Dollar monthly chart example illustrates how to identify long-term trends and reversals, using concepts like swing lows and false breaks.
- đ The importance of validating swing lows and highs is highlighted, showing how to confirm bullish or bearish trends on the monthly chart before seeking trading opportunities.
- đ The daily chart provides a short-term institutional bias, useful for day traders and scalpers, focusing on the daily opening price for entry points.
- đ Price action can retrace or consolidate within the context of a larger macro bias, emphasizing the need to understand the interplay between different time frames.
- đ The teaching stresses that not every day will present a trading opportunity, and the importance of recognizing and capitalizing on high-probability setups.
- đ The use of Fibonacci levels is mentioned as a tool to help identify potential price targets, although it's not always perfectly accurate and should be used in conjunction with other analysis.
Q & A
What is the main focus of the teaching in the provided script?
-The main focus of the teaching is time and price theory, specifically how to analyze and trade using these concepts.
What are the key components of price action mentioned in the script?
-The key components of price action mentioned are the open, high, low, and close of a price formation.
Why is the monthly chart considered significant in this teaching?
-The monthly chart is considered significant because it provides a macro institutional bias, allowing traders to see the broader market sentiment and large institutional movements.
What does the term 'fractal' mean in the context of price action?
-In the context of price action, 'fractal' means that price patterns observed on one timeframe can be seen on any other timeframe, whether higher or lower.
How should traders approach buying and selling based on the monthly chart analysis?
-Traders should look for buying opportunities at or below the monthly opening price if the monthly chart is deemed bullish and selling opportunities at or above the monthly opening price if it is deemed bearish.
What is the significance of algorithmic systems used by large institutions in relation to monthly and weekly opening prices?
-Large institutions use algorithmic systems that key off monthly and weekly opening prices, and their actions generate massive volumes, which traders can imitate to align with the institutions' directional biases.
How does the script illustrate the use of monthly opening prices with the Euro Dollar example?
-The script illustrates the use of monthly opening prices with the Euro Dollar example by showing how bullish and bearish biases were determined and validated using monthly price action and key levels, leading to significant price movements.
What is meant by 'swing low' and how is it validated in the script?
-A 'swing low' is a three-bar pattern where the center candle has a lower low than the candles on either side. It is validated when the high of the third candle is penetrated by subsequent price action.
What timeframe is suggested for traders who cannot actively trade due to other commitments?
-For traders who cannot actively trade due to other commitments, it is suggested to use higher timeframes like the monthly chart for a macro perspective and less frequent monitoring.
How does the weekly chart provide an intermediate institutional bias?
-The weekly chart provides an intermediate institutional bias by showing a timeframe that is not too long-term but also not too short-term, ideal for swing trades or longer-term short-term trades.
How should traders use the daily chart for short-term institutional bias?
-Traders should use the daily chart for short-term institutional bias by looking to buy at or below the daily opening price if bullish, and sell short at or above the daily opening price if bearish, aligning with the monthly and weekly biases for the highest probability setups.
Outlines
đ Introduction to Time and Price Theory
The speaker introduces a teaching session focused on time and price theory, emphasizing its complexity and broad scope. They mention that a comprehensive understanding can be achieved through free tutorials and premium mentorship. The importance of time and price is underscored, along with the significance of the 'ICT power 3' concept. The session aims to explore monthly, weekly, and daily time and price characteristics, highlighting the fractal nature of price action and the hierarchical significance of different time frames, with the monthly chart being the most influential for macro institutional bias.
đ Analyzing Monthly Charts for Institutional Sentiment
The speaker delves into the use of monthly charts to discern the sentiment of large institutions, suggesting that algorithmic systems often key off these opening prices due to the high volume associated with them. They advocate for imitating these institutional strategies and provide an example using the Euro Dollar chart. The analysis includes identifying key patterns such as swing lows and penetration of previous lows, which can signal bullish or bearish trends. The speaker also recounts a past successful prediction of the Euro Dollar reaching a specific price point, demonstrating the effectiveness of the approach.
đ Trading Strategies Based on Opening Prices
The paragraph discusses the strategy of using opening prices for trading decisions, with a focus on buying opportunities below the opening price in a bullish market and short selling above the opening price in a bearish market. The speaker illustrates this with examples from the Euro Dollar's daily chart, showing how each monthly opening price can be used as a reference point for potential trade entries. They highlight the importance of recognizing patterns and price action that confirm the validity of a swing low, which can provide multiple opportunities for profitable trades.
đ Weekly Time Frame Analysis and Trading Bias
The speaker transitions to the intermediate institutional bias provided by the weekly time frame, explaining its utility for swing trades and short-term trades. They discuss the concept of aligning with the macro directional bias and the importance of recognizing when the weekly perspective agrees with the monthly bias. The paragraph includes an analysis of price action below the weekly opening price and the subsequent buying opportunities that arise, with examples provided to illustrate the potential for profitable trades.
đ Daily Chart Analysis and Short-Term Institutional Bias
The final paragraph focuses on the daily chart, which offers a short-term institutional bias and is crucial for day traders and scalpers. The speaker explains how to use the daily opening price in conjunction with the monthly and weekly perspectives to identify high-probability trade setups. They caution against the misconception that every day will present a trading opportunity and emphasize the importance of blending analysis concepts to arrive at the most favorable setups. The speaker concludes by encouraging further study and chart analysis to understand the timing and context of explosive price moves.
đ Conclusion and Encouragement for Further Study
In the concluding paragraph, the speaker summarizes the teaching by emphasizing the importance of analyzing time frames from monthly to daily for trading opportunities. They stress that while tools and methods can identify potential setups, it does not guarantee finding a profitable trade every day. The speaker acknowledges the effort and experience required to achieve proficiency in technical analysis and trading, and they encourage students to study and practice to improve their understanding of high-probability setups.
Mindmap
Keywords
đĄTime and Price Theory
đĄFractal Nature
đĄICT Power 3
đĄMonthly Time and Price Characteristics
đĄMacro Institutional Bias
đĄAlgorithmic Systems
đĄSwing Low
đĄDirectional Bias
đĄLiquidity
đĄWeekly Opening Price
đĄDaily Chart
Highlights
Introduction to time and price theory, emphasizing its vastness and the availability of more detailed teachings in free tutorials and premium mentorship.
Explanation of the importance of time and price in price action trading, revisiting the power of 3 and teaching monthly, weekly, and daily time and price characteristics.
The fractal nature of price action, allowing patterns to be seen across different time frames from minutes to months.
Emphasis on higher time frame charts for greater significance in analysis, with monthly charts providing a macro institutional bias.
Strategies for trading based on monthly chart analysis, including buying opportunities below the opening price in a bullish market and selling short in a bearish market.
Use of algorithmic systems by large institutions that key off of monthly and weekly opening prices, suggesting mimicking their actions for trading advantages.
Case study of the Euro Dollar monthly chart, illustrating a long-term bullish trend and the achievement of a specific price point prediction.
Identification of a swing low pattern and its validation as a bullish signal on the monthly chart.
Importance of recognizing key resistance levels and the potential for price retracement in trading strategies.
Daily chart analysis with specific monthly opening prices marked to identify buying opportunities in alignment with the monthly trend.
Discussion on the use of Fibonacci levels to predict price movements and the acknowledgment of its imperfections in technical analysis.
Transposition of monthly analysis concepts to the weekly opening price for intermediate institutional bias and swing trades.
Highlighting the importance of aligning weekly and daily opening prices with the macro monthly bias for high-probability trade setups.
Clarification that not every day or week will align with the macro directional bias, and the need for analysis blending for optimal setups.
Daily chart's role in providing a short-term institutional bias and its significance for day traders and scalpers.
The concept that the highest probability trades on the daily chart occur when both the monthly and weekly perspectives support the trade idea.
Advice against the misconception that a setup can be found every single trading day, emphasizing the effort and experience required in trading.
Encouragement for traders to study charts for high-probability setups by understanding the relationship between daily, weekly, and monthly ranges and their opening prices.
Transcripts
okay folks welcome back this teaching
will be specifically dealing with time
and price theory now while this is going
to be a generalized overview and more or
less an introduction to time and price
theory as I teach it it's a very vast
subject and I go into greater detail in
my free tutorials and in greater detail
in my premium mentorship but I think
you'll find this teaching will be
beneficial to you nonetheless okay folks
everything you seek in price action is
found in this formation the open high
the low and the closed the ICT concepts
used in this module will be the
importance of time and price we're gonna
be revisiting the power 3 and we're
specifically teaching monthly time and
price characteristics weekly time and
price characteristics and finally daily
time and price characteristics ok
ICT power 3 and the monthly open now
price action is fractal in nature that
means everything that you can see in
terms of a price pattern on a 1-minute
chart on a 5-minute chart can be seen on
a monthly chart or we clean any time
frame and any interval of time
measurement that plots price the fact
that we can see a pattern on any
specific timeframe price action has a
generic characteristic to it so whatever
we see on one time frame could be easily
replicated and seen on a lower timeframe
or a higher time frame so when we see
price patterns it's not that one
timeframe is better than the other per
se but there is an emphasis or
significance that's placed on the higher
time frame charts over the lesser time
frames for instance the monthly has the
most significance to me and my analysis
and because it gives me a the ability to
look at a whole year or multi years
or I can look at it from a quarterly
basis or a biannual basis and always in
six months of intervals so I don't need
to see any other time frame because the
monthly gives me all the depth and
detail that I would ever need from a
macro standpoint which brings me to the
purpose of using a monthly chart is that
it provides a macro institutional bias
so we can see what large institutions
are doing or what their sentiment is
based on what these higher timeframe
monthly charts are revealing in price
action in a nutshell if we are doing our
analysis on the monthly chart and we
deem that monthly chart to be bullish we
as traders and analysts we look for
buying opportunities at the opening
price or below the opening price if we
have come to the conclusion that the
monthly chart or perspective on the
monthly is bearish then we are focusing
our analysis on selling short at or
above the monthly opening price now
large institutions use algorithmic
systems that key off of monthly and
weekly opening prices since there are
massive amounts of volume in these
entities actions we would do well to
imitate or mimic their actions and
directional bias so let's take a closer
look at this monthly chart this is the
Euro Dollar
and if you go in through my material
there's a lot of things that I teach by
way of directional bias picking a
direction sticking with a specific
direction looking for key levels looking
for key targets looking at this sample
size of price action on a monthly basis
for the euro dollar I want you to take a
look at what you're seeing in price
action now obviously majority of what's
already happened is all hindsight but
it's for your learning for the
individuals I've gone through my
mentorship in 2016 2017 they know that I
was bullish in the first quarter of 2017
with the euro dollar and I called a
specific price point of 120 at that time
several months later here we are in
December of 2017 you can see we did in
fact hit
one twenty mile marker on the Eurodollar
it was based on what I'm about to show
you here a lot of other things they go
along with it to help fine tune that
detail but generally it started with
this concept so do you see anything that
stands out in the chart for instance
this old low over here they're
relatively equal price makes an attempt
to drop lower and it does in fact go
below these equal lows and then it does
what it trades back above those lows and
then we have a swing low form we have a
candle to the left with a higher low a
candle in the center and it can look to
the right so there's our three bar
pattern or swing low and then we wait
for that third candle to be penetrated
we have it here so that way now we can
start looking for being bullish on the
monthly chart for the euro dollar we see
the previous month even though I had a
weaker close it still was a up close and
because we broke the swing pattern for a
swing low to be without valid every
subsequent candle should be viewed as
bullish until we get to some key
resistance
this isn't key high it's cause they
market turn so we're gonna have to keep
our focus on here and just like we saw
market movement go below this low here
true support resistance isn't lining
this and it can't go any higher than
that we understand that there's going to
be a one so I want to go through that
high to seek some measure of liquidity
just like it looked for liquidity below
these lows so if there's ideas in mind
let's add some lip stick to this chart
so now we have a long term key low here
and we have a long term reversal in the
form of a false break below swing low
forms and then I started delineating all
the opening prices on the subsequent
months so every one of these candles
represents one full month data and then
I noted that long term key high here so
we would be looking for it down
a move above this high which if you
think about it that is a lot of pips so
I know I've been doing a lot of work on
Twitter and on my youtube channel to be
active with day trading and scalping
just to show my proficiency in studying
and reading price action and executing
on there's lower timeframes I have tools
and applications that work on higher
timeframe charts like this if you can't
do day trading
I have methods that help you do these
types of things I personally do not like
this style trading it's too slow and
doesn't give me enough action and I just
Excel as a short term intraday trader in
teacher and short term traders for one
shot one kill there are many students of
mine that can't do that because of their
businesses that they're running or their
jobs or they're just unable to do it
because of their family commitments they
just can't do it
so they need a larger or higher
timeframe perspective and this is one
way you can do that so we have a monthly
chart here with the opening prices after
a swing low and a violation of an old
low and once we try to start the trade
back above that low here we start
looking for validation with the swing
low being in fact valid and we have that
one this month here so we had plenty of
times several months before this month
begins the hunt for lungs so it gives
you lots of time to get prepared you
don't have to be in front of your charts
every five seconds in fact you don't
have to probably watch it every day you
just got to be aware that this swing low
has to be validated and it does it here
when it starts to trade above this
candles high so with this information
let's take a closer look and now we have
the daily chart of the euro dollar and
what I have here is every specific
monthly opening price doing it with a
small little horizontal trend line
segment so each little short trendline
that's moving horizontally starting with
this one here this represents a monthly
open well it's the opening price it's a
month and this isn't the other one this
is another one this is another one
another one
and finally
here's the last one I'm gonna reference
in this specific teaching so we're going
to start with April 2017 and we have
seen a potential long-term reversal and
we're gonna be looking for buying
opportunities and we're gonna look for
validation to see that in price action
now for a bullish we want to see
signatures in price action that support
that idea that means the opening price
and below it we want to see some
bullishness or buying so is there a
swing low that forms below the opening
price on the monthly and is it showing
energetic price action once that low
forms and does it move higher with
magnitude strength and speed while we
have that here and not too long after
that we start seeing price move higher
obviously I'm using this chart with the
benefit of compensate for its time
purposes to save a lot of time in the
recording but you can see that reference
point there below the opening price of
April gives us our nice buying
opportunity you can look at many
instances overlapping for optimal trade
entry at that price point and we're
moving to the next month this is May
2017 again we're looking at the opening
price of May 2017 and we want to see a
willingness to go below the opening
price and then find buying we had that
here and again very very strong reaction
in price action and the market starts to
move rather aggressively on the upside
moving right along
we're going into the next month this is
June 2017 and again we have the opening
price of June and below the opening
price we want to see buying we see that
in fact does come to fruition here very
nice accelerated movement on the upside
and again now we have July of 2017 the
opening price delineated and we want to
see a movement below the opening price
and then buying nice optimal trade entry
long pattern there as well very very
explosive price action up to that
horizontal maroon color line that is
that old long
term hi so now we hit that in the month
of July at that price point now we have
to start easing off large expectations
of being bullish doesn't mean completely
abandon the idea it just means that we
have to slow down and not be so
aggressive but we can be aggressive and
looking for that long term highly
betrayed to every previous month but now
in July we can see price did in fact hit
that level so we have to be mindful that
could stop now the next month here is
August of 2017 some similar pattern we
have movement below the opening price of
August and again a nice little rally up
and it moves well it moves about 400
plus points or pips above the old long
term high so obviously we can't use a 10
to 20 or 30 pip sweep idea let me deal
with intraday charts looking for
movements beyond the old highs and lows
or double bottoms and double tops when
we were using longer turn timeframe
levels we had to have a greater
expectation of terms of the the
magnitude or range of how far it will
move past those price points now I don't
have a science to that I do use
Fibonacci to help me get to those levels
it's not always accurate sometimes it's
it's all short of it and sometimes it
goes beyond to what I thought was gonna
happen and that's technical analysis and
trading you're never gonna be perfect
you're never gonna be right but over
time you're gonna see that this method
serves you very very well now we can
take these ideas also and transpose them
to the weekly opening price now this is
going to be the framework for a lot of
the things that I teach in my mentorship
for my one shot one kill
which is essentially trading the weekly
range now I'm not gonna be teaching that
here but I will give you some of the
signature points that will help you with
the free tutorials to get really close
to how I do one shot one kill but if you
want to learn it you can go through the
mentorship and get all the fine details
about how to do and how I look for it
get the weekly hiring the weekly lows
well and if we go through this
specific idea with weekly opening price
again price action is fractal and what
we would see on a monthly basis we would
expect to see that same thing on a
weekly basis so the weekly charts
provide an intermediate institutional
bias that means it's not a long-term
bias but it's not short-term either so
it's a pretty good timeframe to look for
like swing trades or even a little bit
longer term short-term trades not just
one or two day trades and duration
longer term like two weeks to a month
this is the perspective you want to be
looking for to get those types of setups
but what we use for the weekly open if
we know that our analysis leads us to a
bullish weekly perspective we're gonna
be focusing on buying at or below the
weekly opening price when bullish and
when we're bearish on a weekly we're
gonna be focusing on selling short at or
above the weekly opening price now large
shifts in price that originate from the
macro monthly bias will provide the
framework - weekly opening price setups
now here's a key point
make sure you remember this because it's
not that every week and is gonna be
bullish or bearish not every week we'll
move in the macro directional bias but
however there will be some weeks that
move violently in agreement with the
macro monthly bias so just like we have
retracements on any other time frame we
may be longer term bullish on the macro
monthly perspective and the weekly we
may be enduring some measure of
retracement or consolidation because
this chart shows four weeks of price
action and I've highlighted or
delineated the opening price for every
respective week here and I want you to
take a look at the response that price
shows below the opening price while
we're bullish and then while price makes
a really nice buying opportunity here in
a green shaded area and it really Walt's
higher price gets a little too far ahead
of itself and needs to retrace so the
next week so even though we have the
weekly opening price and it does trade
below it we have to be mindful that it
may be
needing to retrace deeper the following
after a retracement slight consolidation
we have another opportunity where Christ
shares a willingness to show buying
strength below the opening price of the
weekly range and again later in a week
on Thursday at that particular week we
see another opportunity after taking out
the equal loads that were formed on
Monday and Tuesday of this particular
week there was two opportunities to by
Monday and Tuesday offered profitability
but then on Thursday ahead of deep
retracement retracing down below the
Monday and Tuesday is low but if you
look at the previous week the Wednesday
this low here - this high here this is
an optimal trade entry long and it's
nice houses overlaps with a run on sell
stocks below equal lows and we see a
subsequent explosive move to the upside
and in the following week on Monday of
that week we see that does create a very
nice buying opportunity and an explosive
price movement ensues on Monday trading
into Tuesday then during Wednesday and
Thursday there's a retracement and in
New York of Thursday has an exclusive
price move again that's when we see it
trade up into that long-term weekly high
okay moving right along to complete this
teaching we're going to be referring to
now the opening price on the daily so
again price action is fractal and what
we would see on other timeframes can be
seen on the daily as well but the daily
chart provides us a short-term
institutional bias so in other words
what the large institutions insurance
companies and banks what they're looking
at relative to the daily timeframe
that's going to be their short-term now
we look at a daily chart from an analyst
standpoint because as day traders and
scalpers the daily is like referred to
as a hard time frame for institutional
minded traders the daily is just like
that's their executable time frame
that's where they're doing most of their
work the orders are based around that
time frame and that's why it's important
to know previous day's highs and lows
weekly highs and lows entry week eyes
and lows and knowing what the liquidity
reference points are
there's specific levels that's going to
help you in your development as a
technical analyst but if we're bullish
relative to the daily timeframe we are
looking to be buying at or below the
daily opening price and if we're bearish
on the daily we're gonna be focusing on
selling short at or above the daily
opening price now the market will gyrate
higher and lower relative to the monthly
and or weekly perspectives as we
mentioned in the previous slides the
highest probabilities and trade in the
daily chart is when both the monthly and
weekly support the trade idea that you
would be using or hunting on dealing
focusing on the elements of time and
price will greatly assist you in
analysis and overall development as a
technical analyst if we look at this
representation of a daily range here
notice I'm only highlighting one
specific day the teaching that I just
gave you here is not to promote the idea
that if the monthly is bullish every
week is going to be bullish below the
opening and or every day is gonna be
bullish below the daily opening equally
so when the weekly is bullish it does
not translate into every day below the
opening price is bullish there's going
to be times when you have to blend some
analysis concepts to arrive at the
highest probability setups even day
trading is not every day trading I've
said this so many times over the last 10
plus years teaching just forex alone and
I want to ingrain that in your mind that
even though we have tools and I've shown
this in the last two months online every
single day finding a setup I do that to
show you what's available in terms of
opportunity and understanding I am in no
way shape or form trying to promote the
idea that you can find they setup
yourself every single trading day I've
been doing this for 25 plus years and it
takes a lot of effort and experience to
get to that level and I'm sometimes
wrong too but many of my new students
we'll see that and they'll say well you
know I'm gonna do the same thing and I'm
not trying to promote that idea this
teaching was to highlight the importance
of going from a hard time frame down to
a lower time frame using a similar
concept that overlaps and dovetails very
nicely but I want you to go through your
charts and study when there are really
good opportunities like this example
here for the daily buying below the
opening price where does that sit in
relationship to with the weekly range
and the monthly range and their
respective opening prices because if you
study that you will figure out where the
highest probability setups are it
doesn't mean that you're getting the
entry points it just means that you're
highlighting the proper stage when these
explosive price moves that move
directionally biased happen so hopefully
you found this teaching insightful and
until next time I wish you good luck and
good trading
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