Core Month 04 01 Interest Rate Effects On Currency Trades - newsqlguru/ict-index GitHub Wiki

ICT Mentorship Core Content - Month 04 - Interest Rate Effects On Currency Trades

Key Terms

  • Smart Money Accumulation (SMA)

  • Smart Money Distribution (SMD)

  • Smart Money Technique (SMT)

  • Divergence, change in correlation between assets.

  • Interest Rate (IR)

    • Set by central banks as overhead cost of borrowing money for a period of time.

  • Interest Rates Triad (IRT)

    • Bond Futures Markets
    • 30 Year Bond, key long term interest rate.
    • 10 Year Bond, key intermediate term interest rate.
    • 05 Year Bond, key short term interest rate.

  • Institutional Order Flow (IOF)

    • Price action that shows what institutions are doing in the market, what orders they are placing.
    • Provides visual representation of bias.
    • Is the IOF supporting a bullish or bearish condition in the market?

Content

  • Smart Money Accumulation & Distribution

    • Interest Rates are the single most influential driving force behind market moves.
    • Understanding IR shifts & changes can unlock professional money movement.
    • IRTs provide a visual depiction of SMA & SMD.

  • IRTs

    • Overlaying or Comparative Analysis on the three IRs unlocks Price Action.
    • Failure Swings at opportunistic times can validate IOF.

  • What does SMA/SMD/SMT look like?

    • How do we know the Smart Money is moving in the market place?

    • We compare correlated assets, correlation can be +/- 1.

    • Bearish Conditions

    • Base asset or benchmark is making Higher Highs. Moving higher in price.

    • SMD is occurring when correlated assets are making lower highs.

    • SM is distributing while the base asset is moving higher.

    • SM is selling heavily which is preventing the asset price moving higher from a supply and demand perspective.

      • e.g. SM is selling to take profits.

    • Bullish Conditions

    • Base asset or benchmark is making Lower Lows. Moving lower in price.

    • SMA is occurring when correlated assets are making higher Lows.

    • SM is accumulating while the base asset is moving lower.

    • SM is buying heavily which is supporting price in the asset preventing it from going lower to match the correlated assets.

      • e.g. SM is buying cheap in prep for later distribution and profit taking.

    • Failure swings confirm SM is moving in the market place.

    • When we see SMT Divergence, and price moves into prior IOF, anticipate dynamic price movement.

    • Use the Points of Focus (POF) from Month 01.

    • When price action trades to POF like:

    • Orderblock

    • Liquidity Pool

    • Liquidity Void or Fair Value Gap

    • Refer to SMT and confirm SM is behind your trade idea.

    • If there is no SMT, pass on the idea and wait for a time where there is SMT in alignment with your trade idea. SMT shows institutional sponsorship and increases the probability of your trade.

Notes

  • Find 10 occurrences in past price action and log them in your trade journal.
  • Extra credit if found on multiple time frames.