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Hey folks.
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Welcome back.
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This is our first lesson in
ICT bond trading concepts.
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Again, we're dealing with commodities,
so it's very important that I remind
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you that I'm not a licensed CTA.
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This is not traded advice and
everything that's being referred
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to in this month's content.
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And in these lessons are
referred to as a paper trade or.
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Okay.
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June, 2017, ICT mentorship, ICT
bomb trading, lesson one basics
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and opening range concept.
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Okay.
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When I refer to the treasury
bond, what I'm referring to
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specifically is the 30 year treasury.
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Futures contract and the trade symbol
for this is the B and it's for the
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30 year treasury bond and the trading
session that these concepts I'm gonna
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be teaching this week are primarily used
for in analysis on the New York session.
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And it begins at 8:20 AM to 3:00 PM.
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New York time.
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And the contract delivery
months for the treasury bond.
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30 year note is March with the delivery
contract code of H June with the
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contract code month of M September
delivery contract month code you
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December delivery code contract month.
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And the format when we use for
entering our charts or pulling them
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up on in data, it's the symbol ZB.
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Then the month code, then the last
two digits of the trading year or an
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example, Z B U 1 7 4, September, 2017 is
contract of the 30 year treasury bond.
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You can see that to the
right, in this image.
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Treasury bonds, September
contract ZBU one seven at the top.
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It trades on the Chicago board of trade
exchange and it is a futures contract.
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And you can see the only delivery contract
missing here would be the March, 2018.
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The amount per tick, minimum fluctuation
is $31 and 25 cents per month.
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A forehand or full figure move equals 32
ticks or with referred to as 30 seconds 32
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ticks movement equals $1,000 per contract.
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Okay.
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Bond opening range con.
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Talking about nostalgic
things here, folks.
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These are the things that I
cut my teeth on as a commodity
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trader years and years ago.
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All right.
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So when we look at the bond market opening
range concept, the highest volume is going
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to be seen between 8:00 AM and 9:30 AM.
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New York time true day for the
bond market is 8:00 AM to 3:00 PM.
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New York.
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The opening range begins at 8:00 AM.
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New York time and ends 9:00 AM.
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New York time
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narrow your focus,
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the opening range between 8:00
AM and 9:00 AM tends to create
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the bond market high or low.
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It can be a run on stops
or a fair value set up.
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In other words, a bullish or
block or bear shorter block or
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trade down until liquidity void.
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We're filling the fair value gap.
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It is also the location for liquidity
pools to build around for the
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stock market opening to be rated.
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Let's take a look at a
couple of examples here.
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Okay.
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I have the treasury bond for
the September delivery contract.
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2017, and this is the 15
minute candlestick chart.
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And I have the 8:00 AM to
9:00 AM delineated here.
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So in this area, what we look for
is the opening range or the high
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and the low between those two
delineations and time she could see
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here, we have a block of price action.
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This is our opening range.
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We have our opening range low
and our opening range, high
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and price trades down below the low that
was formed between 8:00 AM and 9:00 AM.
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This is a stop run in a
potential reversal notice.
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The highest volume of the day
is between 8:00 AM and 900.
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Notice also on the lower low that was
created post 9:00 AM, New York time that
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lower, low was seen with lower volume.
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So there was massive buying
taking place right after 8:00 AM.
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But as price made that lower, low, it
did not see a large influx of volume.
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All we're seeing there is a
movement towards running in this.
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Sell stops for those individuals
that were correct in by buying
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early, just having their stop
loss too close to the marketplace.
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This is a volume divergence price making
a lower low that lower low should have
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been met with a higher bar on volume.
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This is a sign of impending
weakness for the down move.
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So that means there's no
more selling pressure.
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It's basically a run-on stops price moves.
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Hi.
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Find some support at the
opening range as well.
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Opening range high and finds another
opportunity to see price trading higher
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into the latter portions of the day.
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Okay.
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Another example, we have
our eight to 9:00 AM.
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Block of price.
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Action delineated, Mr.
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Opening range.
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Again, our opening range is to find
high and low opening range low.
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We have a order block last two down
close candles inside of the opening
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range and the opening range high.
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And you see price trades
down into the bowl.
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Shorter block supported around the
notion of the 8:00 AM to 9:00 AM.
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Opening range con.
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And price rallies away basis of a
little shorter block and notice as
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the price makes the higher high going
into the 11 o'clock hour volume was
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declining as price made a new high at 1
54 21 price makes a subsequent decline
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back down into the opening range,
and then it goes into consult with.
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The volume divergent here was
a early sign that the rally up
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into the 1 54 21 was a weak move.
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Therefore volume precedes price weakness
was seen after 1 54 21 had posted
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ideally volume should have had a higher.
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On its highest higher moving into 1 54 21.
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So now we're working with commodities.
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We have a more accurate
depiction of buying and selling
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pressure with real volume.
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The vertical line down here,
the green, blue and dark blue
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lines are delineations of volume.
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Okay.
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Another example, we have our
eight to 9:00 AM delineate.
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Our opening range,
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opening range, low
inside the opening range.
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The last damn close candle is bullish.
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Shorter block.
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There's two reference
points at that order block.
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You had the initial test here
and we have the secondary one.
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Either one would fit the bill.
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This is a bull shorter block.
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We expect a rally and notice the
largest volume was seen again
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at between 8:00 AM and 9:00 AM.
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New York time and price moves up
to run into the 1 54 26 level.
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But notice that 1 54 26.
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Look at the high that
was formed for 2:00 PM.
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That high, that volume spike, there was
not seeing with a greater volume measuring
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later on in the day in the evening time.
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So when we treated the 1 54,
26, it was done so on light
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volume, but it also reached above
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with diversions in volume.
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It reached above the opening range.
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Hi.
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So it ran the stops above that range
and failed to go any higher and traded
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down and closed it in a fair value
gap, seen at the 1 54, 10 level.
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So we have a blending of things that
we've already learned about in the
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Forex portion of this mentorship.
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And now we're blending other
things with specific commodities.
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Now, when we look at the opening range
for bonds, uh, what I like to do is
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I like to define the opening range
with much like I did the Asian range.
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I look for the bodies,
but also incorporate Wix.
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And then I also incorporate previous
highs and lows that are just to
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the left of eight to 9:00 AM.
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New York time notice that we have
the pies formed between 2:00 AM
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and 12:00 AM to the left of the.
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We have equal highs
there just below 1 54 19.
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With that high, I'm going to incorporate
the WIC in between eight and 9:00 AM.
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That's why that's mean defined there.
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Notice also that reference point
becomes an issue for stop rating
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later on in the evening during
the agent session time period.
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When we look for
opportunities, we're blending.
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Kind of like the Asian
range perspective in Forex.
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We're looking for that same general
theme occur with the eight to 9:00
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AM, time period in the bond market.
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Now I like to see signals form
at eight 20 or after they can
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occur as early as 8:00 AM.
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And sometimes a little bit before there's
like a New York session open at 7:00
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AM, but I generally prefer to see it.
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Between 8:00 AM and eight 30.
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So it basically the target time
is eight 20 or CME opening.
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See, there's a blending of
that time element again.
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So if we know that there's a strong
influx of New York traders coming
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in at eight 20 New York time,
London traders are still awake.
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They're still on, on the clock
looking to take some trading.
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And if UK traders or
European traders want to be.
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Participating in the treasury markets.
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And it's a very big market.
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It's not as big as Forex,
but it's very liquid.
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And one of the wonderful things
about the bond market, it's the
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least manipulated of all markets.
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Now think about that.
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I remember I made my career okay.
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Focus in the commodity
markets with the bonds.
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I liked the bond market because
it had the least in terms of
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manipulation, you don't get a lot of.
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Tom Foolery in that
market compared to others.
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Now it does not mean that there
is a lack of manipulation.
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It just means on par with
all the asset classes.
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Generally you see the
least with the bond market.
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00:13:12,839 --> 00:13:19,680
Now, when we go into FMC or interest
rate based reports or approaching those
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types of things, the bond market can get.
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Wonky, it can kick a little silly, you
can do things that doesn't make any sense.
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And the easiest way to avoid that is
simply stay out of that particular
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asset class ahead of those news events.
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Once the news event drops, FMC numbers
are released or the announcement
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or rate decision, anything like
that, uh, non-farm payroll as well.
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00:13:43,319 --> 00:13:47,640
There's nothing, uh, you know, sparing
the bond market when it comes to NFP.
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Uh, those environments are.
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Much, like I've mentioned in other,
uh, teachings regarding the Forex.
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You don't want to be trading around those
environments because it's, e-liquid, um,
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00:13:59,010 --> 00:14:02,640
the market's going to gap to wherever
the liquidity is and chances are it's
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going to be against your position.
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00:14:03,810 --> 00:14:06,540
So it's just better not to be
trading at all around there's times.
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00:14:07,350 --> 00:14:13,980
So if we know out of the commodity markets
as a whole, if you want to carve out a.
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Career as a one focused market trader.
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00:14:19,920 --> 00:14:25,500
Um, there is a plethora of opportunities
for trading the bond market.
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It's highly liquid.
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It's really nice when it's trending.
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00:14:30,199 --> 00:14:33,390
When it starts to move in one direction,
it generally stays in that direction.
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00:14:33,870 --> 00:14:39,870
Uh, when it goes into consolidation,
it can be a little choppy, but if
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00:14:39,870 --> 00:14:43,290
you know what you're looking at in
terms of fair value gaps or turtle
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suits, Using equilibrium ideas.
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00:14:46,665 --> 00:14:50,505
There's certainly no reason why you
can't carve out a small little, uh,
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00:14:51,225 --> 00:14:56,475
you know, amount of pips or ticks in
this case for this particular asset.
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00:14:57,165 --> 00:15:01,395
Now, obviously everyone wants to
be a trader for the bond market.
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00:15:01,515 --> 00:15:06,225
They want to capture 32 ticks or
a full handle and try to capture
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00:15:06,225 --> 00:15:07,425
a thousand dollars per contract.
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00:15:07,845 --> 00:15:11,265
This market generally
doesn't have a large daily.
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00:15:12,150 --> 00:15:17,580
So, if you can capture anywhere
between five to eight ticks as
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00:15:17,580 --> 00:15:20,910
an intraday day trade, there's
certainly nothing wrong with that.
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00:15:21,330 --> 00:15:26,850
If you can get 16, 30 seconds,
that's $500 per contract.
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00:15:27,450 --> 00:15:28,830
That's a G that's a good day.
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00:15:29,790 --> 00:15:36,450
A large range day is when you get a full
handle or 32 ticks or $1,000 per contract,
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00:15:36,900 --> 00:15:41,220
they don't happen all the time, but
there can be sustained moves that create.
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00:15:42,300 --> 00:15:44,790
Opportunity, but that's not the normal.
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00:15:45,270 --> 00:15:50,190
So it's an asset class that allows
for low expectations in terms of
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00:15:50,190 --> 00:15:56,730
the daily range, it has respect of
liquidity pools, liquidity gaps, fair
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00:15:56,730 --> 00:16:01,170
value gaps, all the things that we
talked with, Forex, they still occur
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00:16:01,200 --> 00:16:05,730
in this asset class, but you don't see
a whole lot of the things like you do.
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00:16:06,689 --> 00:16:10,829
The Forex market where it can spike
down, do some really crazy stuff and
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00:16:10,829 --> 00:16:13,079
then go right back in the direction
you were, you were trading in,
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00:16:14,729 --> 00:16:16,170
will it run your stop sometimes?
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00:16:16,229 --> 00:16:16,800
Yes.
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00:16:17,400 --> 00:16:19,920
Will you sometimes see something
in the chart and it doesn't
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00:16:19,920 --> 00:16:21,120
materialize and goes the other way?
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00:16:21,390 --> 00:16:21,930
Yes.
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00:16:22,260 --> 00:16:24,270
Will you see order
blocks that don't go up.
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00:16:24,310 --> 00:16:25,229
Just go sideways.
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00:16:25,319 --> 00:16:25,859
Yes.
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00:16:26,250 --> 00:16:27,930
And reverse it for bear shorter blocks.
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00:16:28,680 --> 00:16:30,300
Nothing about this asset class.
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00:16:31,380 --> 00:16:31,920
Perfect.
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00:16:32,370 --> 00:16:38,490
But if four X was ever to go into
a meltdown or I was unable to trade
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00:16:38,490 --> 00:16:43,620
for X, I would go back to trading
bonds without skipping a beat.
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It would be no problem at all for me
to go back to trading bonds, because
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it's a very good trading market.
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It can be swing traded.
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It can be short-term traded.
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It certainly can be day traded.
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And when the conditions are
right, you can be in a positions
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and hold them for longer.
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There I say it's several months.
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Uh, I've never been able to do
that personally, but it can be
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done because it's like a currency.
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Sometimes it trends very, very well.
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So now you have a beginning
basis, point to start
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looking@thebondmarketandyoucanpullupbarchart.com
and look at a 15 minute
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timeframe for one day.
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Pull up the ZBU one seven,
and as we go forward in time,
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just go to the next month out.
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00:17:29,010 --> 00:17:33,120
And if we go into 2018, you're just
going to change the 17 to 18 or
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whatever the year is respectively.
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00:17:35,490 --> 00:17:41,160
And you can keep a running journal
of what the bomb market's doing.
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Now.
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I'm going to counsel you that.
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Just as a general daily procedure,
even if your intentions are never to
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day trade or trade the bomb market,
say you never want to do it right now.
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I promise you by looking at it
on a day-by-day basis, it will
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00:17:56,054 --> 00:17:57,764
increase your price action skills.
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00:17:58,064 --> 00:18:03,165
It will develop a greater appreciation
for this particular asset for
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commodities, for interest rates.
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And you're also going to start studying
this in relationship to what the
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dollar's doing, what gold is doing
and the foreign currency system.
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So, hopefully this has been a good
introduction to the bond market.
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And one of the most basic concepts
I use when doing analysis on it,
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and next lesson, we're going to
talk about split session rules.
22384
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