All language subtitles for Lesson 3 - Consolidations Day EN

Welcome back folks again, as a
reminder, please read these, these

disclaimers because I am not a CTA.

I'm not licensed to good trade advice
and the discussions we are having

pertaining to commodities and features.

We are only referring to
them as paper trades only.

okay.

Folks, June, 2017, ICT
mentorship, ICT bond trading

lesson three consolidation days.

okay.

Folks consolidation days,
um, before we get into.

Let me preface it by saying I'm not
teaching specific setups, I'm teaching

thought process and how this is
incorporating the bond analysis into

the whole grand scheme of things.

I'm trying to draw it back to four X
when we have consolidation days or we're

anticipating a consolidation day in which
we'll talk more about that in a moment

we want to refer to overnight prices.

Okay.

And overnight price action can
have seen trending environments,

or it could be range-bound.

There is no specific with a
precursor to overnight price action.

So don't think that there's anything
that leads to like the, for instance,

the London trading, whatever takes place
in London, doesn't always translate to.

Future prognostication for the New
York trading hours because the market

could be making a move overnight.

And then during the New York session
simply go dead New York session news.

Generally, when there's a lack of
noteworthy reports or do the New York

session vacuum, if you will, we'll
create a dead space in the bomber.

Economic calendars.

If we see high to medium impact us reports
due to release on another trading date

later in the week, this is going to
promote the idea of a consolidation day.

If we know that, for instance, the time
of this recording, we saw a FMC date at.

2:00 PM in New York time.

So also that's same very morning.

The New York session had a plethora
of high-impact news dollar based that

coupled with the FMC later in the day,
created a high volatility day, which we

anticipated before the trading week began.

If we had a lack of high-impact
news during the New York session, a.

And FMC was the only
high-impact news event.

Then generally we would see a
consolidation day leading up to

this particular day and it would
carry over into the morning session.

And then we'd see a vault in
volatility in the latter portion

of the day or the PM session

formation, characteristics
of consolidations.

After a higher timeframe, premium
or discount array is meant.

For instance, if we've been trading
for a while higher, moving away

from a discount and we met a premium
array, one of two things can happen.

One, it can pause and consolidate.

They're waiting for another
point at which you can continue

higher for another PDA re or.

You can retrace after that consolidation
or it can simply just reverse

when price hits this
hard timeframe PD array.

In this case, if we were assuming that
price was moving up from a discount

reaching for premium arrays, once it
hits that premium Ray on hard timeframe,

generally, what will happen is profit
taking will come in and there'll be, uh,

a Paul's in the advancement hierarchy.

It may not require a retracement,
but it can pause in there.

So knowing that that higher timeframe
premium arrangement hit, we can.

Look for, or anticipate a point at
which the market wait, take a breather

or pause or consolidate knowing this
helps us with our four X trading.

It helps us with our commodity
trading and helps us.

Obviously, if we're going to be a
bond trader, it helps us with our

objectivity and other things that
goes along with all the intermarket.

Now.

When price hits an equilibrium of a
higher timeframe, price, swing, or

midpoint, we can anticipate a pause,
just like we said, in our example,

reaching for a higher timeframe,
premium array or discount array.

When these mile markers are met in price
action, it's reasonable to expect some

measure of consolidation or a pause.

And remember the markets move.

Consolidation to expansion, to
consolidation, to expansion in

the midst of all that we will have
retracements and, or reversals

consolidations by far and large will
be the most dominant consideration

when we look at price action.

So if we know that there's going
to be a likelihood of a pause or

a, uh, consolidation before price
makes its next move higher or lower.

If it's been met by premium array or
discount rate on a hard timeframe, or

it hits the equilibrium price point of
a measured move or a longer-term price

swing that we think is going to unfold.

Price can consolidate at that mid point.

Or if we retrace back to an equilibrium
price point, don't always anticipate

or expect immediate response in price
because it can stay around equilibrium

because the hard timeframe required.

The larger traders to
work on that timeframe.

So they're going to work that
level sometimes more than one time.

So that's why it's important that
when we look at these reference

points, it's not that we anticipate
equilibrium being explosive.

Or that we anticipate just because price
hits our premium array for our buys

or our discounted rates for ourselves.

And that's the end of it.

You know, it can create a pause
and then it can continue on

when there's a bank holiday in the
United States, there's going to be

obviously an impact on the markets.

So it's going to cause consolidations.

Uh, hip holidays in the United
States, for instance, we, our next

big holiday coming up at the time of
this recording is the 4th of July.

So going into that holiday, if there's
a trading day, that is before the

4th of July, uh, there's generally
going to be a quiet period in the

marketplace, and there's gonna be
consolidation that consolidation

is going to reverberate throughout
the marketplace bond auction days.

So if we look at our economic counter
and we see there's going to be a

bond auction the day before the bond
auction could be a consolidation day

and the day of that bond auction day,
the 8:00 AM session of that particular

day generally is a consolidation.

So.

I want you to think about what
causes or what promotes the idea of

consolidation in the bond market?

Because if we can figure those individual
conditions or characteristics out,

know what they are that routinely and
generically repeat themselves over

time, we will have a game plan and
also be able to incorporate these

ideas in our trading too many times
in my trading, I've been overzealous

about a specific price mood and.

Early on.

I would be frustrated because
the moose wouldn't pan out or

they wouldn't take place at all.

They wouldn't even begin or just
simply, you know, stay stagnant.

Wouldn't go anywhere.

Not higher or low wouldn't even stop me.

I just wouldn't even move.

And that's very frustrating.

And over the years I've learned that
obviously the incorporation of the

interest rate markets and the bond
market, that's that missing link.

So having that in our
analysis is paramount.

So if we know that there's going
to be a consolidation period in the

bond market, we have to reasonably
expect the same thing occurring

and the other asset classes.

Now when we have consolidation
days, when we are looking to trade

in the am session, we can scalp
obviously for five to 10 ticks.

And again, remember one
tickets, $31 and 25 cents.

So five ticks is it, it doesn't sound like
a lot, but you can do very well with just

five ticks day trading in the bond market
a couple of times a week, but five to 10.

We can see if the opening range is small.

Okay.

As we learned in the first lesson of this
topic of bond trading, if the opening

range is small and what's small, well,
if you look at it, opening range of

12 ticks or less, if the opening range
is 12 ticks or less generally you'll

have a, an expansion move or something.

And it may just blow out a
previous, overnight high or low.

But if you get that small little opening
range that usually will allow that

little bit of a squeeze, that volatility
squeeze, and then finally it'll snap and

move in a direction that you would have
predetermined based on institutional

order flow, scoping the PM session again.

And consolidation days, you can
look for five to 10 ticks, but

there's one caveat with treating the
PM session on consolidation days.

You only want to trade the PM session.

If the am session has
not yet ran a stop run.

In other words, if there's a liquidity
pool that has obviously not been

tapped, that's generally what's
going to be seen in the PM session.

Once it takes those
stops, don't be greedy.

Run the stops with the, with
the professionals and take your

profits and move to the sidelines.

But the PM session on consolidation
days, generally, that's not happening

as an average or a general rule of
thumb when we're consolidating or

we're anticipating small ranges.

Do your trading in the
am session before noon

avoid trading the am session
on bond auction days.

As I mentioned in the previous slide to
market usually is own whole waiting for.

The auction, the com avoid
trading the PM session.

When there's interest rate drivers
do usually it's two o'clock in

the afternoon, New York time.

So simply just avoid it regardless
of how good the volatility looks.

Trust me, just avoid it.

I'm going to focus on trading.

The higher timeframe
premium arrays are met.

As I mentioned in the previous
slide, when we reach a premium array.

For instance in a market that's
been going up for a while.

See we've been bullish on the market.

Uh, the seasonal tendencies implied that
the market should be trading higher, that

we looking for an advancement in price,
and it's been, uh, providing that for us.

And maybe we've had a profitable position.

Uh, even if we haven't had a profitable
position argument position at all,

when the premium arrays hit, obviously,
as I mentioned in the previous slide,

we want to be anticipating some
measure of pause or consolidation.

That is when we shift our gears and
don't think big moves, we think.

Okay, well, I have to adapt to
what price action is telling me.

So either I'm going to
move to the sidelines or.

Operate in a scalpers mentality
and look for very small little

fluctuations in the bond market.

That's going to translate into small
movements and all the other asset classes.

By having this idea, it removes that
insatiable desire to be doing a whole

lot and swinging for the fences.

Recall small ranges, pre-seed
large rages on daily.

So.

It can be frustrating when we anticipate
the consolidation days formation.

If we are action hounds and we
want to get in here and trade like

Cowboys, obviously that's going to
be detrimental to your trading, but

we as professional minded traders,
we are welcoming these consolidations

because it allows us time to formulate
a plan on how we can study where the

next movement is going to be worse.

The next liquidity.

All these ideas, help frame
our next trading opportunity.

So one of the worst things we can
do is trade on such a short term

timeframe that it doesn't permit
us an opportunity to plan our next.

So consolidation days, even for a
day trader or a scalper, they provide

those little periods of time where we
can take a breather, take a step back.

Maybe even don't even worry about
treating that particular day.

Wait for end of the day, go back in and
do some analysis and figure out where

the liquidity is, and then formulate an
idea based on that consolidation day.

What is price going to reach for?

Because the next move is probably
going to come on the heels

of a large range expansion.

So consolidation days are
like big banner signs.

Hello.

There's a big opportunity coming.

It's going to be a juicy price move, be
aware of it and start doing your homework

and figure out what it's going to be.

Don't cuss, it's extreme and
get frustrated because these

pauses are, these consolidation
periods are goldmines in the mail.

Always allow your limit exits
to exceed your targets, because

this will give you a bonus.

We don't know for certain that
the market is going to stay in a

predetermined consolidation range.

So when I'm looking to trade in
small ranges, I will have access.

This is why I said, if you're
gonna be scalping, you want to

be looking at the marketplace.

I have the charts right in front of you,
not reading, not watching TV, not watching

your children, you know, play whatever.

If you're going to be in the marketplace
and you're scalping, you need to give

the market your 100% undivided attention.

If you have an objective of making
eight PIP or eight ticks by having

these consolidation days, we already
know that the probability going to

be lower for a big expansion move.

So.

If we're wrong, we allow that, that
Tennessee to be human once in a while

and say, we anticipate a small range,
but it, it takes off and blows off.

Okay.

Well, if we put a 16 tick target on
the bond market, we could originally

be only looking for eight, but say it
expands quickly and it starts to run.

It can pay you for being wrong about.

So have that mindset when you're looking
for a small range days or operating in

small range days as a scalper always offer
your limits to be the larger than you're

really what you're trying to make, and
then manage those positions accordingly.

Then you can always watch and
see what price is doing when

it gets to your objective.

Because many times I've been wrong
and using this technique, it's

paid me more than I would've.

If I just simply put it, took my
first objective and move to the side.

Keep overnight short term highs and
lows in mine for low resistance.

Liquidity runs as the
chart here is showing.

Obviously you can see there is a
London session high and a London

session low that was rated for
opportunities for that am session.

In the bond market.

So by knowing the overnight highs
and lows, even the short-term swings

and highs and lows, that's where
your liquidity is going to be.

That's where the market's going
to reach for during consolidation

days during the New York session,

unless PM session news drivers are due
out consolidation days, typically offer

setups an am session most of the time.

So by knowing that what we need to do.

General rule of thumb.

A practice that we do day by day is
when we're in a short term, small bowel

utility, the very tight consolidation
environment or consolidation day.

We want to avoid forcing PM
session trades routinely.

In other words, if we are
anticipating a little bit of activity,

not a whole lot of expansion.

You need to be doing your work before noon
and before noon, all of your trading has

to be done preferably before 11:00 AM, New
York time be done, move to the sidelines

and don't worry about the rest of the day.

There's going to be opportunities
that take off and something happens

that you didn't see coming in
the PM session, let it happen.

And don't be, don't be worried about it.

Don't be upset about it.

Consolidation brings expansion.

Now, when we identify the market is likely
to trade in small range or consolidate.

We should immediately note the
next trading day or the day.

Not long after it will produce a
large range day or trending day.

How do we know this, the economic
calendar we already identified that

Wednesday of the day of this week and
the day of this actual recording, what's

going to be a high impact day and news.

And we're going to see a lot of
volatility and wild price action.

True to form.

We saw how.

While the bond market is
held in a narrow range.

This will create a stranglehold
on volatility for the other

asset classes on average.

So just because the bond market is in
consolidation, doesn't mean it's going

to be the wild, wild west in the Japanese
yen or the Swiss Franc, or it's going to

be, you know, craziness in the crosses.

You know, don't, don't think that way,
if you're going to be working with

a professional mindset, that means
that you have a faith in knowing.

There's a probability of the market
doing this or that if we're not

going to have rules, then simply
don't even watch these videos.

And don't worry about doing
anything and trade how you

want and be impulsive about it.

But if we're going to be professional
minded traders, we have to have rule

based ideas and parameters to operate in.

Because if you don't have that, if
you don't have parameters to work

within and, and act as guidelines.

You will always deviate outside that and
you'll never get an accurate measurement

on your development or your consistent.

But if you know, over a long period
of time that operating in small

range consolidation days like
we're describing here, it adopts a

mindset that promotes professional
trading professional perspective.

It will by default remove a lot of
the anxiety as traders and encounter

a psychological effect on not making
enough or the market's not moving enough.

It changes is a paradigm
shift that takes place.

When you understand what the
market as a whole should be doing.

98% of traders out there, even
professional traders get sucked

into emotional and psychological
effects of trading neophytes to

have no idea what's going on, they
are always falling victim to it.

They end up in a trader's
graveyard within the first 90 days,

many times in the first month.

You're learning how to do what's
necessary to, to cultivate a professional

mindset, but also to alleviate all of
the problems that every trader encounters

I encounter, trade psychology issues.

I encounter fear and greed.

Many times it's screened the,
the effects of these things.

Can't be overstated there.

There's never a shortage on.

You know, keeping those things in the
forefront of your mind as a trader,

because they will be your undoing.

But if you focus on rule-based ideas and
an expectation of what the characteristics

are in these environments, it removes
your focus on fearing and being

greedy because you're focusing on the
process and the parameters you have to

operate in your mind is a wonderful.

Tool.

It's a, it's a resource that many times
because we misappropriate our time

and our energy and our efforts and our
attention on the worst toxic things.

Our mind is so powerful and
our imagination is so powerful.

It will bring things to life that aren't
really there through what a thinking.

So.

By having rule-based ideas that you
develop over time, a faith in, and seeing

them by case study, after case study,
seeing the effects of following this,

you'll see that it's profitable for you.

Not only monetarily, but also
psychologically and emotionally

to operate in a rule-based.

By having this process of knowing what
you should be doing or how the market

should behaving and consolidation
periods and consolidation days in the

bond market, it removes all of the
fear and trepidation and all of the

uncertainty about what you're going
to do, or what's going to happen.

When's the next big move going to happen?

Well, if you know, by analysis that
the bond market is predisposed to

be a small range, low volatile.

Right away.

What does that tell you?

Don't expect a whole lot
from the markets right now.

So by having that, it's very sobering.

It gives you peace of mind.

It doesn't force you into thinking,
oh, where's the next move.

And I'm afraid I'm going to miss it.

It gives you context.

And here's the wonderful thing.

When you see it working in it, frames
your idea and your context about

how you interpret price action as
a whole, from a macro perspective.

You harness traits, psychology.

You harness in rain in fear and greed.

You master.

You put them on a leash where all
the other traders are going to be

drawn in and drag by their hair, into
trades or out of trades because of

not knowing what's going on, you're
going to be calm, cool, and collected

because you're going to know exactly
what it is that you are going to do.

You can't make the market, do what
you want to do, but you can align

yourself with what most likely will
occur based in these conditions.

So it's not that we're teaching
consolidation trade techniques to go

in there and kind of make a killing
it's to keep your perspective as

a professional minded trader, not
getting in here, like it's casino time.

You know, this is not Las Vegas.

We're in here for longevity.

We want to be able to hold on to our
account, to wait for the inevitable

expansive moves, where trading becomes
a lot easier and then we can feed.

The elation, not because we've mastered
the markets, but because we've mastered

ourself, we've operated in a clear,
defined realm of rural based ideas.

We have parameters, we color inside the
lines and we can measure our progress and

feel good about following that process.

And it's positive for.

When we take a loss or we miss
opportunities, we don't worry about

it because if it wasn't in the context
of our based ideas, it doesn't matter.

And it's going to be lots of things
that occur in the marketplace.

They're going to happen outside
your rural based ideas, but you

already should have given yourself
permission to miss some of them.

Everybody's going to work somewhere
and everybody's making more than you.

You can't worry about what
they're making at their job,

doing whatever they're doing.

And worry about spending
someone else's money.

And that's the same thing you're doing
when you say I missed that trade.

And I wish I would have
been a part of that.

And who knows what, who
got part of that move?

Who cares stay in the role based idea and
keep your perspective in the mindset of

consolidation, low expectation across the
board, in all asset classes, the use of

this observation serves as well as for.

And that we can reduce or limit
our expectations on ethics pairs,

movement, and operate in a more
reserved fashion, sticking to low

hanging fruit and small gains.

If you've studied the bond market.

As I indicated today in the live
session, we should be relieved at

least to know this is the reason why
the markets have been rather fickle

because the bond market as a whole has
been in a range bound consolidation.

There's going to be a move
out of this consolidation.

And when we leave consolidations, it
tends to be a trending environment,

the longer the consolidation.

And it's been many months this
year, we've seen consolidation

take place in the bond market.

When it leaves the range, it
will have a protectionary state

where it moves in a trend.

That's when Solidays.

Easy trading days.

And guess what?

It's a couple months away and fall.

We'll be here.

Everyone's looking to summer because we're
now in it at the time of this recording.

But the thing I'm looking at is we've
been consolidating ahead of fall, which

bolsters my confidence about how well
I believe the price action is going

to be in the last four months of 2017.

So when we look at
consolidation, we should be.

Elated about the future opportunities
that come after this period where

everyone else is pushing really, really
hard to try to get as much as they

can out of this little bit of movement
it's being offered by the marketplace.

Don't arm, rest of the market, sit
back, let the market grind everybody

else down, let them wear down
emotionally and psychologically.

But we know during consolidation
periods, the smart money is

setting up the next big thing.

And if we understand that principle in
the bond market, it's going to reverberate

through all the other asset classes.

And since we're primarily Forex traders
in this mentorship to bond, market

speaks volumes when it's in consolidation
and when it's not in consolidation, it

allows all the other markets to move
more fluidly and more efficiently.

And until next lesson, I wish
you good luck and good trading.