Showing posts with label Michael J. Huddleston. Show all posts
Showing posts with label Michael J. Huddleston. Show all posts

Thursday, July 18, 2024

Interbank Price Delivery Algorithm (IPDA) Data Ranges | D'onte Goodridge

IPTA stands for Interbank Price Delivery Algorithm which controls the price action on our charts. It is the sole reason we get the four phases of the market: consolidation, expansion, retracement, and reversal. IPTA is used by Commercial Speculators to move large orders in the market. IPTA creates shifts on the daily chart every 20, 40, and 60 trading days, known as the IPDA look-back periods.
 
 IPDA Look-Back Periods = 20, 40, and 60 Trading Days

Approximately every 20 trading days, new liquidity pools form on both sides of the market. Understanding IPTA will give clarity about which levels are significant to current price. IPTA is always working and exchanging orders every second. IPTA can be applied on a daily timeframe of the current trading day or the first trading day of a month. 
 
Before trading a new month, traders should follow three steps to gain insight in the market:

(I.) Visualize IPDA Data Ranges in Daily Chart
The first step you must follow is finding the first trading day of a new month. Next you count back 20, 40, and 60 trading days (TD) from the first trading day of the month. Last find the highest high and lowest low in each look back data range.

 
The above is the daily chart of British pound versus US dollar (GBPUSD). Currently we are in January 2023, and the first official trading day is Monday, January 2, 2023. That is the start. From here we look back 20, 40, and 60 trading days: back 20 TD = December 2, 2022; back 40 TD = November 4, 2022; back 60 TD = October 7, 2022. Now we have all our look back data ranges. We find the highest high (red lines) and lowest low (blue lines) in al three quadrants.

(II.) Create hypothesis were price might draw to based on Technical and Fundamental Analysis
Now that we have finished our chart activity, we will take a look at technical analysis, then perform fundamental analysis and gain macroeconomic data that can aid with insight. Last, bring together the two analysis techniques to form a hypothesis on what price should do in the near future. 
 
Every new trading month, I am asking myself two questions: 
 
(1.) Is price going to give me a quarterly shift, meaning change trends?
(2.) Or is price going to continue its current trend? 
 
I have no idea whether or not the market is going to continue its trend or make a quarterly shift during the new month. However, using the IPTA ranges, I am able to structure some story-line, especially around liquidity. Going into a new trading month, IPTA ranges can help to figure out where the large orders of liquidity are residing. One side of the market is going to be taken, whether that is buy side liquidity or sell side liquidity. Look for the highs and lows that are still intact. This is where the price algorithm is going to draw to.
 
 British Pound Forex Seasonality.

(III.) Consider Seasonality
Incorporate Seasonality for more insight going into a new trading month. Seasonality does not tell you when to buy or sell for the year but it does give a general sense of when to anticipate the high of the year or the low of the year or when a instrument may be going sideways for a month or a couple of months.

 
IPDA Library Example #1: Gold/USD vs IPDA.
 Primary driver of the market are Interest Rate Differentials (IRDs).
 
Reference:
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Friday, July 12, 2024

ICT Macros & Quarterly Theory | Michael J. Huddleston & Daye

Algorithmic macros are timed directives for market maker price algorithms to seek and take out liquidity levels and imbalances in the market. Hence looking at a chart the first task is always to identify imbalances/inefficiencies, buy-side and sell-side liquidity levels. Look at previous day's highs and lows, session highs and lows, highs and lows in the last three days and the previous week. 
 
 
There are 8 macros during the trading day:
 
          #1  London Pre-Open Macro      02:33 - 03:00 EST/EDT
#2 London Open Macro               04:03 - 04:30
#3 New York AM Macro                 08:50 - 09:10
#4 London Close Macro               09:50 - 10:10
#5 London Fix Macro                    10:50 - 11:10
#6 New York AM Close Macro    11:50 - 12:10
#7 New York Lunch Macro          13:10 - 13:40
#8 New York PM Close Macro    15:15 - 15:45
 
ICT Killzones and Macros in the US Dollar Index 5 minute chart.
 
ICT Killzones and Macros in the S&P 500 E-mini Futures 5 minute chart.

Macros focus mainly on the first 20, 30, or 40 minutes of a trading hour (22.5 Minute Cycle). 
 
► There are no ICT macros during the Asian Session.  
► The macro between 9:50 and 10:10 is a time window where the market maker algorithm starts running for liquidity (look for ICT Silver Bullet setup).
► The period between 10:50 and 11:10 marks the end of the 3rd hour of the New York AM Session, and the first 90 minutes of floor trading (90 Minute Cycle). 
► The transition from the AM session to the lunch period leads either to consolidation, reversal or continuation (6 Hour AMDX/XAMD Cycle).
 
Divison of the trading day according to the Quarterly Theory:
6 Hour Sessions, 90 Minute Quarters & 22.5 Minute Micro Cycles/Quarters (EST/EDT).
 
6 Hour Sessions & 90 Minute Quarters in the S&P 500 E-mini Futures 15 minute chart.
 
90 minute Cycles & 22.5 Minute Micro Quarters in the S&P 500 E-mini Futures 1 minute chart.
 
Based on market structure and price action prior and during a macro, three categories can be classified:
 
(1.) Manipulation Macros sweep both buy-side and sell-side liquidity levels.
(2.) Expansion Macros sweep liquidity only on the buy-side OR the sell-side (trending price).
(3.) Accumulation Macros are characterized by ranging prices. 
 
Swing highs and lows of macro intervals can act as support and resistance.
 
Reference:
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Thursday, July 11, 2024

Common Intra-Day Stock Market Patterns & Setups | Cory Mitchell

The US stock market has certain patterns, based on the time of day. These patterns, or tendencies, happen often enough for professional day traders to base their trading around them. One tendency is that the stock market can become less volatile, flatten out, and see less volume in and around the New York Lunch Hour. Many day traders stop trading about half an hour to an hour before this slowdown kicks in and don't trade again until well after the lunch hour, when volatility and volume pick up again.  

9:30 (EST/EDT) : The stock market opens, and there is an initial push in one direction.
 

9:45 : The initial push often sees a significant reversal or pullback. This is often just a short-term shift, and then the original trending direction re-asserts itself.

 Six Intraday Templates and Trading Setups for the S&P, Nasdaq and Dow Jones.

10:00 : If the trend that began at 9:30 is still in play, it will often be challenged around this time. This tends to be another time where there is a significant reversal or pullback

True Open, 6 Hour Cycle, 90 Minute Cycle, and 22.5 Minute Cycle.

11:15 – 11:30 : The market is heading into the lunch hour, and London is getting ready to close. This is when volatility will typically die out for a couple hours, but often the daily high or low will be tested around this time. European traders usually close out positions or accumulate a position before they finish for the day. Whether the highs or lows are tested or not, the market tends to "drift" for the next hour or more. 
 
11:45 – 13:30 : This is lunch time in New York, plus a bit of a time buffer. Usually, this is the quietest time of the day, and often, day traders like to avoid it.


13:30 – 14:00 : If the lunch hour was calm, then expect a breakout of the range established during lunch hour. Often, the market will try to move in the direction it was trading in before the lunch hour doldrums set in. 
 
14:00 – 14:45 : The close is getting closer, and many traders are trading with the trend, thinking it will continue into the close. That may happen, but expect some sharp reversals around this time, because on the flip side, many traders are quicker to take profits or move their trailing stops closer to the current price.


15:00 and 15:30 : These are big "shakeout" points, in that they will force many traders out of their positions. If a reversal of the prior trend occurs around this time, then the price is likely to move very strongly in the opposite direction. Even if the prior trend does sustain itself through these periods, expect some quick and sizable counter-trend moves. 
 
 Time must be divided into quarters for a proper interpretation of market cycles.

As a day trader, it is best to be nimble and not get tied to one position or one direction. It can be very hard to hold a trade for very long between 3 p.m. and the close. The last hour of trading is the second most volatile hour of the trading day. Many day traders only trade the first hour and last hour of the trading day.

15:58 – 16:00 : The market closes at 16:00. After that, liquidity dries up in nearly all stocks and ETFs, except for the very active ones. It's common to close all positions a minute or more before the closing bell, unless you have orders placed to close your position on a closing auction or "cross."


Big News Events can throw a wrench in these tendencies, resulting in big trends, reversals, or movement through the lunch hour or other times that would be uncommon without some sort of external catalyst. 

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Monday, June 17, 2024

The Market Makers Method | Jones Zondo

Price is a reflection of the number of transactions and the price paid for these transactions. A large number of transactions are required in order to shift price. The Forex market is said to trade about $4,000,000,000,000 [four trillion dollars] on average daily. The bulk of transactions are executed by large “Warren Buffet” institutions, and not by laptop traders such as ourselves.

 » A typical pattern of behavior particularly when analyzing the Three-Day Cycle is to be able
to identify a peak high followed by three moves down and a reversal which will form a peak low. «

Market Maker ability to dominate the market is overwhelming. It costs roughly 10,000 Lots to move the market by 1 pip, with this in mind Market Makers have the ability to move the price at will and retail traders can’t. For a retail trader to truly succeed in Forex, you need to at least have a concept of this Mammoth process so that you will understand what is happening and why. Rather you adapt to trade with them instead of against them once we are done with the secrets. Once you realize that price is moved as a result of intention, logic decision and the idea that price is a product of emotional feeling (sentiments) of various traders is misguiding “BS”. Failure to realize this, your trade career will be emotion driven leaving you to react to every trade.

 
See also:
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Wednesday, May 29, 2024

ICT Optimal Trade Entry (OTE) | Darya Filipenka

Timing is an important factor in trading, and a well-defined strategy can significantly increase your chances of success. The ICT Optimal Trade Entry (OTE) strategy is one approach that traders can utilize to identify high-probability trade setups. It’s important to pinpoint the specific time and day when the OTE is most likely to occur. Typically, this happens between 8:30 AM and 11:00 AM, New York local time.
 

Market Structure - As the market rises and declines and makes higher highs/lower lows, each new swing higher/lower in price is anchored or directly reacting to another swing higher or lower. Every swing in price has an equal counter swing it is unfolding from and attempting to fulfill. 
 
Market Structure Shift (MSS) - comes from the HL or LH levels, it will serve as one of the reasons for us to enter the trade. A market structure shift is depicted as a significant level on the chart where the prior trend Is invalidated. When the market is in an uptrend, the market structure shift level is typically identified as a point where a lower low is formed. Conversely, in a downtrend, the market structure shift level Is often observed at a juncture where a higher high emerges. Notably, these market structure shifts tend to arise following a displacement, signaling a potential shift in the overall trend direction.

1. The Premium Zone represents the price correction range situated above the 0.5 (50%) level in the context of a downward momentum. Traders pay attention to this zone when considering selling opportunities.
2. The Discount Zone refers to the price correction range located below the 0.5 (50%) level in the case of an upward impulse. Traders observe this zone for potential buying opportunities.
3. The Equilibrium Zone denotes the price range where the asset's average price is located. In other words, it represents the fair price zone or the level of balance between buyers and sellers.
 
 Concept of Premium & Discount.

Traders and market makers seek opportunities to buy at a Discount and sell at the Premium zone. As a result, traders often disregard the 0.236 and 0.382 Fibonacci levels in their analysis and instead wait for the price to move above or below the equilibrium level. We focus on the Premium / Discount Zones, since the price does not always enter the OTE zone. Sometimes it is enough for price to adjust by 0.5 (50%) in order for the big man to gain or lose a position.
 

To select the high and low points of a dealing range, follow these steps:

1. Run a Fibonacci retracement tool from the highest high to the lowest low within the dealing range. This will help establish the overall range of price action.
2. Pay attention to areas where the algorithms consolidate. These consolidation areas indicate fair value and are important in determining the proper dealing range.
3. Consider the nearest high when the 50% Fibonacci level aligns with the common consolidation area. This will help identify the appropriate high point of the dealing range.
4. Select the lowest low as the low point of the dealing range. This ensures that the range encompasses the relevant price action and aligns with the areas where algorithms are active.

To implement the OTE strategy, follow these steps:

1. Determine the current market structure, whether it has a bullish or bearish bias. This ia crucial as Fibonacci levels work best within a trending market.
2. Identify significant swing highs and lows to draw the Fibonacci grid. These highs and lows are often visually prominent and easy to label.
3. Use the Fibonacci retracement tool to assess the correction potential in an uptrend (from bottom to top) or downtrend (from top to bottom).

Using OTE during Silver Bullet: After identifying the MSS, I recommend drawing an OTE retracement from the Swing Low (High) to the Swing High (Low). The optimal entry point for trades is typically at the 62% retracement level of that range. Once the trade is entered, the first target is typically set at the -27% extension level, and the second target is set at the -62% extension level. Wait for price to trade back into the FVG (Fair Value Gap) and then reprice out of the FVG towards the targeted pool of liquidity. Usually a FVG lines up with the 62% retracement level.  
 
Reference:
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Monday, May 27, 2024

ICT Intraday Templates & Setups for ES/NQ/YM | Michael J. Huddleston

There are six Intraday Templates and Trading Setups for the S&P (ES), the Nasdaq (NQ) and the Dow Jones (YM) - three bullish and three bearish ones:
  • Two Session Up Close OR Two Session Down Close. (1.1 + 1.2)
  • AM Rally and PM Reversal OR AM Decline and PM Reversal. (2.1 + 2.2)
  • Consolidation AM Rally and PM Decline OR Consolidation AM Decline and PM Rally. (3.1 + 3.2)
1.1    Two Session Up Close (Trend Day ≈ 10% of all trading days)
If we are in the middle of an intermediate or long term price swing based on what we would see on the HTF (Higher timeframes = 4 hour, daily, weekly, monthly) chart, this is the classic scenario. When we start approaching HTF opposing arrays, this profile is less likely to occur. The daily range can go straight trough the lunch hour with very little consolidation whatsoever, depending on what the catalyst was that send prices higher it could be a very strong economic news release. Don't think we’ll always get the consolidation in lunch hour, if we move higher fast there is a chance they work trough lunch. PM session would be ideal if its symmetrical to the AM session.

  • Institutional Order Flow (IOF): Bullish.
  • AM Trend: Returns to a Discount Array then rallies.
  • Lunch Hour: Consolidates with shallow retracements.
  • PM Trend: Runs the Lunch Hour Lows [Sell Stops] OR Drops into a Fair Value (FV) Discount Array then rallies into Close.
 1.2    Two Session Down Close (Trend Day ≈ 10% of all trading days)
If we are in the middle of an intermediate or long term price swing based on what we would see on the HTF chart, this is the classic scenario. When we start approaching HTF opposing arrays, this profile is less likely to occur.
 

  • Institutional Order Flow: Bearish.
  • AM Trend: Returns to a Discount Array then declines.
  • Lunch Hour: Consolidates with shallow retracements.
  • PM Trend: Runs the Lunch Hour Highs [Buy Stops] OR Rises into a Fair Value Discount Array then declines into Close.
 
Tips for Two Session Up Close OR Two Session Down Close = trending days:
► When daily and 4H institutional order flow is bullish (two session up close)/bearish (two session down close).
► If we're in the middle of an intermediate term or long term price swing based on what we see on the HTF chart, then this is the classic scenario until we start approaching an opposing array on the 4h/daily/weekly. PM session would be ideal if its symmetrical to the AM session (measured move).
► The daily range can go straight through the lunch hour with very little consolidation whatsoever, depending on what the catalyst was that send prices higher it could be a very strong or surprised economic news release.
► Don't think we'll always get the consolidation in lunch hour, if we move higher fast there's a chance they work through lunch.
► ► How to trade: ICT always looks for SMT (Smart Money Tool / Smart Money Technique) between the 3 indices at the lows/highs on both sessions.
AM SMT: compare London lows/highs and 9:30 am lows/highs.
PM SMT: compare lunch lows/highs and the high/low formed from the 13:00 candle. One has to diverge.
AM session hold till about 10:30-11:00 and also look for 15m PD arrays.
PM session: besides the SMT we can also return to FVG or OB formed in lunch hour.

2.1    AM Rally PM Reversal (Typical Day ≈ 25% of all trading days)
Price is yet to fulfill a completion of a bullish run, but very close to where we are presently there is a higher time frame premium PD (Premium/Discount) array. The session will start off bullish until it hits the HTF PD array which causes the intraday market reversal.
 
  • Institutional Order Flow: Bullish - under HTF Premium-Discount Array.
  • AM Trend: Returns to a Discount Array then rallies.
  • Lunch Hour: Consolidates with shallow retracements.
  • PM Trend: Runs the Lunch Hour Highs [Buy Stops] and reverses into Close OR Runs the Intraday High and then reverses into Close.
  • PM Trend can resume higher if AM session Discount = HTF.
 
2.2   AM Decline and PM Reversal (Typical Day ≈ 25% of all trading days)

 
  • Institutional Order Flow: Bearish (IOF) - above HTF Discount Premium/Discount Array.
    AM Trend: Returns to a Premium Array then declines.
  • Lunch Hour: Consolidates with shallow retracements.
  • PM Trend: Runs the Lunch Hour Lows [Sell Stops] and then reverses into Close OR Runs the Intraday Lows and then reverses into Close..
  • PM Trend can resume lower if AM session Premium = HTF. 

 
Tips for AM Rally PM reversal (bullish)/AM Decline PM reversal (bearish):
► When daily and 4H institutional order flow is bullish/bearish and price is near a 4H/daily TF PD array, so this model is the completion of a run. AM session is bullish/bearish until it hits the HTF pd array which causes the intraday market reversal.
► In the AM scenario you first drop into a 1H or 4H discount (bullish) / premium (bearish), then rally into HTF PD array (4H/daily/weekly).
Smart money reversal (SMR) - PM trend could either
- Run out the AM high/low and then rally or make a LH when it reverses. Just a run above a STH is also possible.
- Be just a retracement into the AM range and then continue HTF trend or really reverse on HTF. How do we know which one the PM trend will do? The PM session can resume higher/lower (reversal) if the AM session premium array equals a higher timeframe (4H, daily, weekly, monthly) premium array, it can go back into that array in PM and recapitalize that and then go lower and resume lower. If that’s NOT the case we can expect price to continue until we reach that HTF array.
► ► How to trade: ICT always looks for SMT between the 3 indices at the lows/highs on both sessions.
AM SMT: compare London lows/highs and 9:30 lows/highs. PM SMT: compare lunch lows/highs and the high/low formed from the 13:00 candle. One has to diverge. So in the bearish scenario: If the AM high around 10:30am EST but often closer to 11:00 is below a 15m or the PD array, then we're going to be anticipating, before it even happens, outside the London lunch around 1 pm an initial rally into the 15m PD array followed by a HTF reversal. So in the AM session we're going to be holding our trade until there.
PM SMT: try to hold until 15:00 at least. If price is in the premium of the AM dealing range, we could see price continue lower/higher (when the premium array is not a HTF premium array), otherwise price will reverse there.
 
3.1    Consolidation AM Rally PM Decline (Trading Range /Neutral Day ≈ 35% of all trading days)
If unsure of what the IOF of the current day is or where we are relative to Premium/Discount on Daily/4h, chances are we likely see this scenario - especially if there is no high/medium impact news expected during 10am or later in the day.

  • Institutional Order Flow: Neutral.
  • AM Trend: Returns to a Discount Array then rallies OR expands Higher from Equilibrium to run London session Buy Stops.
  • Lunch Hour: Consolidates with shallow retracements.
  • PM Trend: Runs the Lunch Hour Highs [Buy Stops] and then reaches for Day's Sell Stops OR Runs the Intraday High and then reaches for ID/London session Sell Stops. PM Trend can simply consolidate into Close after Lunch Hour.
3.2    Consolidation AM Decline PM Rally (Trading Range / Neutral Day ≈ 35% of all trading days)
If unsure of what the Institutional Order Flow of the current day is or where we are relative to Premium/Discount on Daily/4h, chances are we likely see this scenario - especially if there is no high/medium impact news expected during 10am or later in the day.

  • Institutional Order Flow: Neutral.
  • AM Trend: Returns to a Premium Array then declines OR expands Lower from Equilibrium to run London session Sell Stops.
  • Lunch Hour: Consolidates with shallow retracements.
  • PM Trend: Runs the Lunch Hour Lows [Sell Stops] and then reaches for Day's Buy Stops OR Runs the Intraday Low and then reaches for the Intraday London session Buy Stops.
  • PM Trend can simply consolidate into Close after Lunch Hour. 

Tips for Consolidation AM Rally and PM Decline / Consolidation AM Decline and PM Rally:
► In this scenario Institutional Order Flow is neutral or unclear where we're at relative to premium or discount on 4H or daily. This scenario happens a lot in index trading which can be frustrating if you don’t know the mechanics behind it. When there's a strong directional bias behind the marketplace or the underlying meanings of the market suggest higher/lower prices, DO NOT look for this scenario. This is not seek and destroy (NFP), this is simply consolidation. This happens when there’s a lack of news or trend.
AM: price returns to a premium/discount then rallies OR after the first hour of the opening range or expands higher from EQ to run SSL/BSL (Buy Side Liquidity/Sell Side Liquidity)from London or intraday.
PM: 2 scenario’s —> 1. Run on lunch hour highs/lows then rally for AM session BSL/SSL or 2. run intraday high/lows and then run for intraday or London SSL/BSL.
► ► How to trade: Which one is it going to do, lunch highs/lows or AM SSL/BSL? We are going to be looking for a 15m PD array inside a 4h/Daily PD array. So the HTF confluence is the catalyst for the reversal. If that PD Array was already reached in AM, PM will just run out lunch hour highs/lows.
If the PM session takes lunch hour SSL/BSL or AM session SSL/BSL is dependent on the AM session BSL/SSL. If these lows/highs reached into a 15m PD array inside a 4h/Daily PD array PM will just run out lunch hour highs/lows.

How to know if the PM session will run lunch or intraday highs?

HTF PD array hit in AM session = Lunch highs likely to be run.
HTF PD array NOT hit in AM session= PM session  could run the intraday high, hit the HTF Premium array, and then reverse.
 
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