Quarterly Theory Lecture Notes

Introduction to Quarterly Theory

• Quarterly theory is based on reverse engineering concepts taught by the Inner Circle Trader (ICT).
• It posits that time must be divided into quarters for proper market cycle interpretation.
• Blending quarterly theory with ICT concepts enhances precision in trading.
• The theory removes ambiguity by providing time-based reference points for trades.

Importance of Time in Trading

• Time is fractal:
  • Yearly cycle: 4 quarters (January - March, April - June, July - September, October - December).
  • Monthly cycle: 4 quarters (1 week each, starts from the first full week).
  • Weekly cycle: 4 quarters (1 day each, Monday to Thursday). Friday is excluded.
  • Daily cycle: 4 quarters (6 hours each, aligned with trading sessions).

Trading Sessions Breakdown

1. Asian Session (90-minute cycles):

   • Q1: 6 p.m. - 7:30 p.m.
   • Q2: 7:30 p.m. - 9 p.m.
   • Q3: 9 p.m. - 10:30 p.m.
   • Q4: 10:30 p.m. - 12 a.m.

2. London Session (90-minute cycles):

   • Q1: 12 a.m. - 1:30 a.m.
   • Q2: 1:30 a.m. - 3 a.m.
   • Q3: 3 a.m. - 4:30 a.m.
   • Q4: 4:30 a.m. - 6 a.m.

3. New York Session (90-minute cycles):

   • Q1: 6 a.m. - 7:30 a.m.
   • Q2: 7:30 a.m. - 9 a.m.
   • Q3: 9 a.m. - 10:30 a.m.
   • Q4: 10:30 a.m. - 12 p.m.

4. Afternoon Session (90-minute cycles):

   • Q1: 12 p.m. - 1:30 p.m.
   • Q2: 1:30 p.m. - 3 p.m.
   • Q3: 3 p.m. - 4:30 p.m.
   • Q4: 4:30 p.m. - 6 p.m.

Functionality of Quarters

• Q1 Function:
  • Acts as a barometer for forecasting subsequent quarters.
  • Overextended Q1 suggests consolidation in Q2; tight Q1 suggests expansion in Q2.

True Opens

• True Opens:
  • Main components of quarterly theory; price openings serving as time-based filters for liquidity events.
  • True Opens by Cycle:
    • True Year Open: First Monday of April.
    • True Month Open: Second Monday of the month.
    • True Week Open: Monday at 6 p.m.
    • True Day Open: 12:00 a.m.
    • True Open of sessions varies by session time.

Quarterly Theory Cheat Sheet

• Two sets of algorithmic instructions: AMDX and XAMD.

• AMDX process:

  • Q1 in a tight range leads to manipulation phase (Judas swing), then distribution phase.
  • Fourth phase can either continue the trend or reverse.

• Trading with Different Time Frames:

  • If trading with 1-minute chart, use 15-minute PDRY, etc.

• For XAMD:

  • Q1 continues or reverses from the previous cycle.
  • Q2 accumulates, Q3 manipulation, Q4 distribution based on true opens.

Conclusion

• Understanding and applying quarterly theory enhances trading accuracy and insight into market mechanics.
• Encouragement to revisit and practice the concepts discussed.