Do you want ME to help YOU with your trading?
Video Transcript:
All right, good morning. This is David from Trader Dale, and typically, each week, we go over a specific trade that we did. But today, I’m going to do something a little different. I’m going to go over a concept that we use. It is very similar to what ICT talks about with his macro times and important times of day, except we are going to look at the market a little differently. We are not going to concern ourselves with macro times. To me, those are really not that important. Some of them are, maybe around 10:00, and we will go over that then, but in general, those are really just fabricated types of times for people to trade. In reality, the market does not work that way.
Most people who come to the markets every day have a trading window. Some people say, “Okay, I am only going to trade the open from 9:30 to 11:00.” Or maybe, “I will trade from 9:30 to 2:00,” giving themselves the midday just in case the morning is choppy. Or there are people who say, “Hey, my window is 9:30 to 4:00.” They have a strategy, and they are going to look for their strategy during the time period of that window.
But here is the issue. The most successful people who do this have a certain niche of time of day. The reason why they trade those times of day is that there are people who make money around the first 10 to 15 minutes of the open. There is a reason for that. There are people who make money around the 10:00 time. There are people who make money after 10:30. There are people who just make money on continuation trades. You can do all of those, but what you need to understand is that there are different times of day when the market is going to act, and the market is going to act differently, deliver differently, and have a different agenda at different times of the day. These are the things that no one really goes into.
So, I am going to give you a brief introduction to it. Obviously, if you want to see this stuff in action, come and contact us and at least get a trial to our Accelerator Program. Then you can see for yourself how we do everything here.
To break down the day, we are going to break it down into different categories. I have a chart to the right, and I have this PDF to the left. So, let’s go over it.
From 5:00 a.m. to 8:00 a.m. Eastern Time is right after the London market kill zone closes and before 8:00 a.m. This is a time when I am not trading. We are looking at price action. Obviously, when we get to our charts, we are looking for a higher time frame bias based on what happened overnight, but this is not a time of day when we are looking to trade.
Then we are going to go to the no-trade zone, which is 8:00 a.m. to 9:20. This is the pre-market. This is when the pre-market tends to build up liquidity for 9:30. The only exceptions I will have to trade between 8:00 and 9:20 are if we have major red-folder news. The only three red-folder news events that I will trade before 9:30 or 9:20 are those 8:30 numbers: CPI, PPI, and non-farm payrolls. Non-farm payrolls come out on the first Friday of every month. CPI and PPI come out the following week, usually one on Tuesday and one on Wednesday. These are going to be the biggest red-folder news events of the month. This is where you are going to get major moves at 8:30. This is where price will dictate, structure will dictate, and it can give you the availability to trade before that 9:30 open. But these are the only three days that I will do that. Other than that, I consider 8:00 to 9:20 a no-trade zone.
Now, from 9:20 to 9:45, we are looking for liquidity grabs. These are opening ranges. At the beginning of the market, what the market tends to do is grab liquidity in different directions from pre-market. So, let me give you an idea. Here is the market open right here. What do we do in pre-market? We create some buy-side liquidity. We also create some more liquidity here. We have some lows right here. Then we also have a low right here, just to give an example. So, in the beginning, in the first 10 to 15 minutes of the market, what you are going to see is the market taking out all these internal levels. It takes out sell-side, takes out buy-side, and then goes to take out this sell-side.
Now, you can take advantage of this if you know what you are doing. It is a little bit more of an advanced trade, but between 9:30, when the market opens, and around 9:45, you are going to see a lot of this happen. Big market moves grab intraday liquidity before the market gets to the bias that it is going to have for the rest of the day. So, between 9:30 and 9:45, we are looking for these types of trades.
Now, between 9:45 and 10:00, if you are in a trade, you are just managing it. If you are not, and none of this is set up or you are out of a trade, then you are waiting until 10:00. What happens at 10:00 is the 10:00 a.m. AMD phase. It is called the Power of Three. What happens at 10:00 is one of two things. We are either going to continue in the direction that we are going, or we are going to reverse. Either one of those two things. That is all going to depend on what the 6:00 to 10:00 a.m. candle did. If it is indecision, we are not sure. If it is bullish or bearish, then we can look for continuation.
If the move between 9:30 and 10:00 is against the general bias, then we can expect more of a reversal. If it is in the general trend of where we are looking to attack liquidity or go to, then we are going to look for a continuation model, and we are going to look for an accumulation, manipulation, and distribution pattern around that time.
So, let me give you an example. Yesterday at 10:00, we had a continuation lower possibly happening. The way we trade here is that we use our higher time frames for bias, such as the 4-hour and 1-hour charts. Then we use our lower or middle time frames, like the 15-minute chart, for narrative. Then we use our 1-minute, 30-second, or 2-minute charts for execution. As you can see at 10:00 here, we accumulated, then we manipulated, and then we distributed lower. These are the patterns that you are looking for at 10:00. This is going to tell you what direction price is going to go. The way we figure that out is, after the accumulation, we are looking for an inverse fair value gap to take a short trade here into the direction and continuation of that distribution. So, at 10:00, you are looking for this move either as a reversal of the general move or as a continuation pattern.
Now, between 10:00 and 10:30, you are looking for this and monitoring this. At 10:30, the Initial Balance is formed. The Initial Balance is going to be the high and low of the 9:30 to 10:30 range. Let’s make sure this is on here. The Initial Balance is going to be shaded in this color with these red and green lines. These red and green lines are going to show the highs and lows. After the highs and lows of the first hour are made, we now have a trade that we can do or not do, and it depends on what price is doing.
There is a 96.4% chance that we are going to take out either the high or the low of the Initial Balance. Those are very good odds. With that said, after 10:30, we are looking for a draw on liquidity trade. We are looking for price to move into the high or the low if it has not been taken yet. Sometimes the Initial Balance high or low will be taken pretty quickly. Sometimes it will wait. If it waits and price gets more toward the middle, top, or bottom, we call this a draw on liquidity trade, where we look to trade into those Initial Balance highs or lows.
Once we hit the Initial Balance highs or lows, all countertrend trading is off. Meaning, once we hit the Initial Balance high, no more shorts. If we hit the Initial Balance low, no more longs.
After 11:00, from 11:00 to 2:00, it is really going to depend on what happened with the Initial Balance. If price extends above the Initial Balance, like it did here, or extends below, we are trending, and we are continuing to trade through the midday. If price, like here, breaks the Initial Balance, we are then going to trade a continuation. If price remains inside the Initial Balance, or fakes out and breaks back in, we are done trading for the day.
So, on days when we have continuations lower, above, or below the Initial Balance, we are going to look for continuation moves higher or lower. Here, we have a continuation break below the Initial Balance low. Here, we have continuation higher, a break above the high, a pullback, and continuation higher. Here, we never broke the Initial Balance high or low. We stayed in consolidation. No more trading after 11:00. So, this is what we are looking for from 11:00 to 2:00. If the Initial Balance breaks out of the high or low, we are looking for continuation moves. If it does not, then we are done trading for the day. After 2:00, we do not trade.
By breaking the day down into these categories, we can now show you what price is looking to do and what the agenda is for those specific times. Instead of having one big window or talking about these ridiculous macro times at the top of the hour that just do not work, we are giving you a solid schedule to follow, so you can understand how the market moves.
Before 9:30, there is no trading unless we have CPI, PPI, or non-farm payrolls, which are big numbers. Once the market starts, in the first 10 to 15 minutes, we are looking for liquidity grab trades and draws on liquidity. The way we do that is we look for inverse fair value gaps in the opposite direction. We are looking for buy-side to be taken, then sell-side, or sell-side, then buy-side. This is all based on pre-market liquidity.
Once that is done and we get closer to 10:00, we are looking for either a reversal or a continuation. There, we are going to use an AMD formation, an accumulation, manipulation, and distribution pattern, to tell us exactly what the market is going to do, with an inverse fair value gap trade as well.
Once 10:30 comes, the Initial Balance is formed. If price accepts below or above the Initial Balance, we will look to trade a continuation model in that direction. If price does not break out of the Initial Balance, or breaks out and fails to displace or extend, then trading is over for the day. Then, from 11:00 to 2:00, you are maybe just watching or not trading, but that is it for the day.
So, what this does is give you a clear, concise schedule of what to look for during the day, what type of trades to look for during the day, what you can expect for delivery, and what you can expect for entries. Remember, every trade needs a bias, a narrative, and an execution. All right, I hope this helps.
Hey everyone, it is Dale here. I hope you enjoyed the video. If you would like to trade alongside me and our team of prop firm funded traders every day, then click the link below the video and hop aboard. We are looking forward to trading with you.
