Time ▾ Price ▴ Research: Michael J. Huddleston

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

Friday, February 23, 2024

ICT Deep Dive Into Institutional Order Flow | Darya Filipenka

Institutional order flow refers to the way large institutions and banks interact with the market, either as buyers or sellers, to achieve their intended purpose. This can involve taking participants out of the market or drawing them in as counter-parties to their trades. Institutional order flow is not visible on volume profile analysis, depth of market, ladder, or level 2 data, as these can be spoofed. Instead, it can be identified through price action and understanding how price is being delivered in the market.

Reference:

Darya Filipenka @ Twitter/X.

Darya Filipenka (2023) - Unlocking Success in ICT 2022 Mentorship: The Smart Money Guide to the Full ICT Day Trading Model.

Michael J. Huddleston (2023) - ICT Mentorship 2023 - Deep Dive Into Institutional Order Flow. (video)

Monday, February 5, 2024

Implementing Economic Calendar Events | Darya Filipenka

One of the primary reasons for studying the economic calendar is to anticipate and manage potential volatility in the markets. Economic events can have a profound impact on market sentiment and can cause significant price fluctuations. For example, an unexpected interest rate hike by the Central Bank can lead to a sharp sell-off in the stock market, while positive economic data can boost investor confidence and drive prices higher. The focus should be on High Impact and Medium Impact News Events.

Reference:

Darya Filipenka (2023) - Unlocking Success in ICT 2022 Mentorship: The Smart Money Guide to The Full ICT Day Trading Model.

Darya Filipenka @ Twitter/X.

Michael J. Huddleston (2022) - The ICT 2022 Mentorship Trading Strategy.

David Hickson (Feb 05, 2024) - News Events & Financial Markets.

Best Economic News Calendar.

Monday, January 15, 2024

The ICT Judas Swing | Michael J. Huddleston

The » Judas Swing « is an engineered false price run meant to trap traders into taking positions in the wrong direction. Traders can use this to catch the high or low of the day and sometimes even the week if the proper narrative is in play. A Judas Swing can happen either in the London or in the New York session; however it is most common during the London session. During the London session Judas Swing price action usually trades above or below the week's opening price and manipulates buy or sell stops. The Judas Swing usually runs into keys levels such as the previous week's, the previous day's High/Low and the previous session's High/Low, into premium/discount levels, and into imbalances (Fair Value Gaps, FVGs).

The concept of a Judas goat leading sheep to slaughter can be applied to price action in trading.

The London session Judas Swing can set the session's or the day's high or low.

This will come as a quick spike price action hunting for buy or sell liquidity.

► The London Session Judas Swing - Bearish Scenario

The London Judas Swing refers to a false move in the market during the London session that tricks traders into believing the price will continue in a particular direction but then reverses. Focus on trading and identifying the London Judas Swing between New York midnight to 5 AM (New York Local Time).

Mark Highs and Lows of the Asia Session: Identify the highest and lowest price levels reached during the Asia session.
Mark New York midnight candle opening: Identify the opening price of the candle at New York midnight (NY 00:00).
Check price trading above New York midnight: During the London Kill Zone (typically from the start of the London session until around 5:00 AM NY local time), check if the price is trading above the opening price of the candle in New York midnight.
Check for Liquidity Grab at Asian high: If the price is trading above the New York midnight opening during the London Kill Zone, check for a liquidity grab at the Asian session high.
Identify Market Structure Shift: Look for signs of a market structure shift, indicating a potential change in the market direction.
Find a favorable entry point (e.g. a Fair Value Gap): Based on the market structure shift and liquidity grab, identify a favorable entry point that aligns with the anticipated market direction.
Target: In an ideal scenario, set the target at the Asian session low or any visible sell-side liquidity, aiming for a profitable trade.

► The London Session Judas Swing - Bullish Scenario

Here’s a step-by-step breakdown for the bullish scenario, focusing on identifying a liquidity grab at the low of the Asian session during the London Kill Zone, finding the Market Structure Shift (MSS), determining a favorable entry point (FVG or IFVG), and setting the target at the Asian session high or buy-side liquidity:

Identify Liquidity Grab at Asian Session Low: During the London Kill Zone (between New York midnight to 5 AM NY local time), observe if the price trades above the New York midnight opening and check for a liquidity grab at the Asian session low.
Find Market Structure Shift (MSS): Look for a significant change or shift in market structure, such as a clear indication of a potential bullish movement.
Determine favorable entry (FVG or IFVG): Based on the observed market structure shift and liquidity grab, identify a favorable entry point (FVG) or an improved favorable entry point (IFVG) that aligns with the anticipated bullish movement.
Set Target: In this bullish scenario, set the target at the Asian session high or any visible buy-side liquidity, aiming for a profitable trade.

► The New York Session Judas Swing - Bearish Scenario

Time Frame: Focus on trading from 7:00 AM to 9:00 AM (New York Kill Zone)
Price Condition: Confirm the price is trading above 7:00 AM and the NY Opening.
Buy Side Liquidity Hunt: Wait for a move higher to trigger buy orders (liquidity hunt).
Market Structure Shift (MSS): Look for a significant shift indicating a potential bearish direction.
Favorable entry (FVG or IFVG): Identify a strategic entry point aligning with the expected bearish movement.
Target: Aim for sell-side liquidity or visible sell-side order clusters.

► The New York Session Judas Swing - Bullish Scenario

Time Frame: Focus on trading from 7:00 AM to 9:00 AM (New York Kill Zone)
Price Condition: Confirm the price is trading below 7:00 AM and the NY Opening.
Sell Side Liquidity Hunt: Wait for a move lower to trigger sell orders (liquidity hunt).
Market Structure Shift (MSS): Look for a significant shift indicating a potential bullish direction.
Favorable entry (FVG or IFVG): Identify a strategic entry point aligning with the expected bullish movement.
Target: Aim for buy-side liquidity or visible sell-side order clusters.

Michael J. Huddleston (Dec 10, 2017):

Understanding the ICT Judas Swing.

Ritchie Naso, a 40-year veteran NYSE floor trader:
» Algorithms control the stock market. «

Reference:

Michael J. Huddleston (2023) - ICT Daily Range Profiles.

Michael J. Huddleston (2023) - ICT Weekly Range Profiles.
M. Hamza Akhtar (Oct 02, 2023) - ICT Judas Swing: Smart Money Trap.
DayTradingRauf (2023) - ICT Judas Swing and Market Protraction.

Daye (2023) - The Quarterly Theory.

Saturday, January 13, 2024

The Quarterly Theory | Jevaunie Daye

Time must be divided into quarters for a proper interpretation of market cycles. Blending the Quarterly Theory (not to be confused with the Quarters Theory) and basic ICT concepts leads to enhanced precision. Understanding Quarterly Theory allows to be flexible. It fits in with any style of trading, as it is universal to all time-frames. The Quarterly Theory removes ambiguity, as it gives specific time-based reference points to look for when entering trades. Before being able to apply this theory to trading, one must first understand that time is fractal:

Yearly Quarters = 4 quarters of three months each.
Monthly Quarters = 4 quarters of one week each.
Weekly Quarters = 4 quarters of one day each (Monday - Thursday). Friday has its own specific function.
Daily Quarters = 4 quarters of 6 hours each = 4 trading sessions of a trading day.
Sessions Quarters = 4 quarters of 90 minutes each.
90 Minutes Quarters = 4 quarters of 22.5 minutes each.

Yearly Cycle: Analogously to financial quarters, the year is divided in four sections of three months each.

Q1 - January, February, March
Q2 - April, May, June (True Open, April Open)
Q3 - July, August, September
Q4 - October, November, December

Monthly Cycle: Considering that we have four weeks in a month, we start the cycle on the first month’s Monday (regardless of the calendar Day).

Q1 - Week 1, first Monday of the month
Q2 - Week 2, second Monday of the month (True Open, Daily Candle Open Price)
Q3 - Week 3, third Monday of the month
Q4 - Week 4, fourth Monday of the month

Weekly Cycle: Daye determined that although the trading week is composed by 5 trading days, we should ignore Friday, and the small portion of Sunday’s price action.

Q1 - Monday
Q2 - Tueday (True Open, Daily Candle Open Price)
Q3 - Wednesday
Q4 - Thursday

Daily Cycle: The Day can be broken down into 6 hour quarters. These times roughly define the sessions of the trading day, reinforcing the theory’s validity.

Q1 - 18:00 - 00:00 Asia
Q2 - 00:00 - 06:00 London (True Open)
Q3 - 06:00 - 12:00 NY AM
Q4 - 12:00 - 18:00 NY PM

6 Hour Quarters/Sessions divided into four sections of 90 minutes each (EST/EDT).

Asian Session

Q1 - 18:00 - 19:30
Q2 - 19:30 - 21:00 (True Open)
Q3 - 21:00 - 22:30
Q4 - 22:30 - 00:00

London Session

Q1 - 00:00 - 01:30
Q2 - 01:30 - 03:00 (True Open)
Q3 - 03:00 - 04:30
Q4 - 04:30 - 06:00

NY AM Session

Q1 - 06:00 - 07:30
Q2 - 07:30 - 09:00 (True Open)
Q3 - 09:00 - 10:30
Q4 - 10:30 - 12:00

NY PM Session

Q1 - 12:00 - 13:30
Q2 - 13:30 - 15:00 (True Open)
Q3 - 15:00 - 16:30
Q4 - 16:30 - 18:00

Micro Cycle: Lastly, dividing a 90 Minute Cycle yields 22.5 Minute Quarters, known as Micro Sessions.

Asian Session

Q1/1 18:00:00 - 18:22:30
Q2     18:22:30 - 18:45:00
Q3     18:45:00 - 19:07:30
Q4     19:07:30 - 19:30:00
Q2/1 19:30:00 - 19:52:30
Q2/2 19:52:30 - 20:15:00 (True Open)
Q2/3 20:15:00 - 20:37:30
Q2/4 20:37:30 - 21:00:00
Q3/1 21:00:00 - 21:23:30
etc.    21:23:30 - 21:45:00
21:45:00 - 22:07:30
22:07:30 - 22:30:00
22:30:00 - 22:52:30
22:52:30 - 23:15:00
23:15:00 - 23:37:30
23:37:30 - 00:00:00

London Session

00:00:00 - 00:22:30
00:22:30 - 00:45:00
00:45:00 - 01:07:30
01:07:30 - 01:30:00
01:30:00 - 01:52:30
01:52:30 - 02:15:00 (True Open)
02:15:00 - 02:37:30
02:37:30 - 03:00:00
03:00:00 - 03:22:30
03:22:30 - 03:45:00
03:45:00 - 04:07:30
04:07:30 - 04:30:00
04:30:00 - 04:52:30
04:52:30 - 05:15:00
05:15:00 - 05:37:30
05:37:30 - 06:00:00

New York AM Session

06:00:00 - 06:22:30
06:22:30 - 06:45:00
06:45:00 - 07:07:30
07:07:30 - 07:30:00
07:30:00 - 07:52:30
07:52:30 - 08:15:00 (True Open)
08:15:00 - 08:37:30
08:37:30 - 09:00:00
09:00:00 - 09:22:30
09:22:30 - 09:45:00
09:45:00 - 10:07:30
10:07:30 - 10:30:00
10:30:00 - 10:52:30
10:52:30 - 11:15:00
11:15:00 - 11:37:30
11:37:30 - 12:00:00

New York PM Session

12:00:00 - 12:22:30
12:22:30 - 12:45:00
12:45:00 - 13:07:30
13:07:30 - 13:00:00
13:00:00 - 13:22:30
13:22:30 - 13:45:00 (True Open)
13:45:00 - 14:07:30
14:07:30 - 14:30:00
14:30:00 - 14:52:30
14:52:30 - 15:15:00
15:15:00 - 15:37:30
15:37:30 - 16:00:00
16:00:00 - 16:22:30
16:22:30 - 16:45:00
16:45:00 - 17:07:30
17:07:30 - 18:00:00

The Monthly Cycle is comprised of four quarters, one week each. Start counting the quarters from the first full week, meaning if the first week relating to the traditional month is a partial week, it is omitted and viewed as distortion. The first full week of the month is the first quarter, the second week is the second quarter, the third week is the third quarter and the fourth week is the fourth quarter.

The Weekly Cycle is comprised of four quarters, one day each. Monday is the first quarter, Tuesday is the second quarter, Wednesday is the third quarter and Thursday is the fourth quarter. Friday is not included into the weekly cycle due to the fact that it has its own specific function.

The Daily Cycle is comprised of four quarters, six hours each, which perfectly aligns with the four trading sessions of a trading day. The first quarter is the Asian session, the second quarter is the London session, the third quarter is the New York session and the fourth quarter is the afternoon session.

Each Session is comprised of four quarters, 90 minutes each. During the Asian session, the 90 minute cycles are as follows: 6pm to 7.30pm is the first quarter, 7.30pm to 9pm is the second quarter, 9pm to 10.30pm is the third quarter and 10.30pm to 12.00pm midnight is the fourth quarter. During the London session, the first quarter is 12.00am midnight to 1.30am. The second quarter is 1.30am to 3.00am. The third quarter is 3.00am to 4.30am. The fourth quarter is 4.30am to 6.00am. During the New York session, the first quarter is 6.00am to 7.30am. The second quarter is 7.30am to 9.00am. The third quarter is 9.00am to 10.30am. And the fourth quarter is 10.30am to 12.00pm. During the Afternoon session the first quarter is 12.00pm to 1.30pm. The second quarter is 1.30pm to 3.00pm. The third quarter is 3.00pm to 4.30pm. And the fourth quarter is 4.30pm to 6.00pm.

Now that we understand that time is fractal, we can begin to look into the functions of some of the quarters. Price is delivered by an algorithm. So there must be some initial input which is used to make decisions throughout each cycle. This is the function of Q1. Q1 dictates the quarters which follow, meaning Q1 is used as a barometer for forecasting market conditions in the subsequent quarters of each cycle. If the first quarter is overextended, expect the second quarter to consolidate, and if the first quarter is in a tight range, expect the second quarter to expand.

True Opens are the main components of quarterly theory. There are specific openings of price which serve as a time-based filter for gauging manipulation swings or stop-hunts. True opens are the beginning of Q2 of every cycle. True Opens are defined by these times:

Yearly True Open = 1st Monday of April.
Monthly True Open = 2nd Monday of the month.
Weekly True Open = 6:00 PM EST every Monday.
Daily True Open = 12:00 P.M (Midnight) EST time.
NY Session True Open = 7:30 A.M EST time.
Asian Session True Open = 7:30 P.M EST time.
London Session True Open = 1:30 A.M EST time.

Buy below True Open. Sell above True Open.

It is a simple concept to understand. If you are bullish within a specific cycle, you want to buy below its true open, and if you are bearish within a specific cycle, you want to sell above its true open. This will increase your accuracy tremendously, as key levels usually rest above or below true opens. Every cycle has its own true open. The true year open is the opening price of the first Monday of April. The true month open is the opening price of the second Monday of the month. The true week open is Monday at 6 p.m. The true day open is 12 o'clock midnight. The true open of the age on session is 7 30 p.m. The true open of the London session is 1 30 a.m. The true open of the New York session is 7 30 a.m. And the true open of the afternoon session is 1 30 p.m. The image to the right depicts how true opens function during bullish market environments.

There are two sets of instructions that the algorithm follows:

AMD-X and X-AMD

A = Accumulation (required for a cycle to occur)
M = Manipulation
D = Distribution
X = Reversal or Continuation

After a tight Q1 range the Q2 Manipulation Phase begins. ICT calls this the 'Judas Swing'. According to his algorithmic theory, the purpose of this fake move is to get traders offside. After Q2 the real move takes place: the Q3 distribution phase and is usually the easiest to trade as the previous quarter has already established a trend of the cycle. The fourth phase is X which can either continue to establish range of the cycle or reverse. In regards to this example, the fourth quarter is reversal. As you can see, price reverses at Higher Time Frame Premium-Discount Arrays (PDAs) or key levels.

The AMD-Principle is represented in every bar of every time-frame (monthly, weekly, daily, 4 Hour, etc.)

with a price value at which it starts trading (opening price), the highest price value (high), the lowest (low),

and a value of the time it ends trading (close).

Liquidity is induced when price breaches old highs and old lows while trading into key levels. If you usually trade with the one minute chart, you need a 15 minute PDA. If you usually trade with the five minute chart, you need a one hour PDA. If you usually trade with the 15 minute chart, you need a four hour PDA. If you usually trade with the one hour chart, you need a daily PDA. And if you usually trade with the four hour chart, you need a weekly PDA.

Regarding X-AMD, the first quarter is the continuation or reversal of the previous Q. Of the previous cycle, using what we understand from the function of Q1, Q2 should then accumulate, resulting in high range price action. Q3 would then be the manipulation phase. However, the rules for the true opens are static. They don't change. The opening price of Q2 will always be its true open. So if the profile that you're looking at is X-AMD, even though accumulation takes place during Q2, you will use the opening price of Q2, which is its true open to gauge, the Judah swing, which will present itself more times or not in Q3. The last phase will be the distribution phase, which will be the easiest phase to trade in regards to X-AMD.