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Saturday, January 13, 2024

The Quarterly Theory | Jevaunie Daye

In March 2023 Jevaunie Daye (traderdaye), a young ICT trader from the US, took the trading world by storm with his Quarterly Theory (not to be confused with the Quarters Theory), a concept he derived from Michael Huddleston's ICT mentorships. Within weeks Daye's Youtube Channel with just one video in which he briefly outlined his theory exploded to 16,000 subscribers: "Time must be divided into quarters for a proper interpretation of market cycles."

Daye (March 14, 2023) - Ever wondered ... ?

The idea is to split year, month, week, day and session into quarters at specific times which lead to ICT's Power of 3 (Accumulation-Manipulation-Distribution) cycles within those quarters. They present in one of these two forms:

Q1. (A)ccumulation - Consolidation.
Q2. (M)anipulation - Judas Swing.
Q3. (D)istribution - Low Resistance Liquidity Run.
Q4. (X) - Continuation or Reversal of previous quarter.

(OR)

Q1. (X) - Continuation or Reversal of previous quarter.
Q2. (A)ccumulation - Consolidation.
Q3. (M)anipulation - Judas Swing.
Q4. (D)istribution - Low Resistance Liquidity Run.

Daye (April 14, 2023) - Introduction to Quarterly Theory.

Blending the Quarterly 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 Minute 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.

S&P 500 E-mini Futures (daily candles) — Monthly Cycle.

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.

S&P 500 E-mini Futures (4 hour candles) — Weekly Cycle.

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 - Tuesday (True Open, Daily Candle Open Price).
Q3 - Wednesday.
Q4 - Thursday.

S&P 500 E-mini Futures (1 hour candles) — Daily Cycle.

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.

S&P 500 E-mini Futures (15 minute candles) — 6 Hour Cycle.

6 Hour Quarters or 90 Minute Cycle / 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

S&P 500 E-mini Futures (5 minute candles) — 90 Minute Cycle.

Micro Cycles: Dividing the 90 Minute Cycle yields 22.5 Minute Quarters, also known as Micro Sessions or Micro Quarters:

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 (True Session Open)
Q2/2 19:52:30 - 20:15:00
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

London Session

00:00:00 - 00:22:30 (True Daily Open)
00:22:30 - 00:45:00
00:45:00 - 01:07:30
01:07:30 - 01:30:00
01:30:00 - 01:52:30 (True Session Open)
01:52:30 - 02:15:00
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 (True Session Open)
07:52:30 - 08:15:00
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 - 13:30:00
13:30:00 - 13:52:30 (True Session Open)
13:52:30 - 14:15:00
14:15:00 - 14:37:30
14:37:30 - 15:00:00
15:00:00 - 15:22:30
15:22:30 - 15:45:00
15:45:00 - 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

S&P 500 E-mini Futures (30 second candles) — 22.5 Minute Cycle.

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.

Daye (Feb 19, 2024) - Quarterly Theory - The Secret ICT Trading Strategy.

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: 18:00 to 19.30 is the first quarter, 19.30 to 21:00 is the second quarter, 21:00 to 22:30 is the third quarter and 22:30 to 24:00 midnight is the fourth quarter. During the London session, the first quarter is 00.00 / midnight to 1:30. The second quarter is 1:30 to 3:00. The third quarter is 3:00 to 4:30, and the fourth quarter is 4:30 to 6:00. The New York AM Session starts with the first quarter at 6:00 and lasts to 7:30. The second quarter is 7:30 to 9:00. The third quarter is 9:00 to 10:30. And the fourth quarter is 10:30 to 12:00. The first quarter of the New York PM Session starts at 12:00 and lasts to 13:30. The second quarter is 13:30 to 15:00. The third quarter is 15:00 to 16:30. And the fourth quarter is 16:30 to 18:00.

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 = 18:00 every Monday.
Daily True Open = 12:00 (Midnight).
NY AM Session True Open = 7:30
NY AM Session True Open = 13:30
Asian Session True Open = 19:30
London Session True Open = 1:30

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 18:00. The true day open is 12 o'clock midnight. The true open of the age on session is 19:30. The true open of the London session is 1:30. The true open of the New York session is 7:30. And the true open of the afternoon session is 13:30. 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 = Judas Swing
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.