Understanding Quarterly Trading Theory

Hello everyone, today I will be introducing quarterly theory. Before going forward, I would like to state that most if not all of my discoveries were made by reverse engineering concepts taught by the inner circle trader. Quarterly theory states that time must be divided in quarters for a proper interpretation of the market cycles. Blending quarterly theory and basic ICT concepts leads to enhanced precision. Understanding quarterly theory allows you to be flexible. It fits in with any style of trading as it is universal to all time frames. My favorite thing about this theory is that it removes ambiguity as it gives you specific time-based reference points to look for when entering trades. Before being able to implement this theory into your trading you must first understand that time is fractal. The yearly cycle is comprised of four quarters, three months each. The first quarter is January to March, the second quarter is April to June, the third quarter is July to September, and the fourth quarter is October to December. The monthly cycle is comprised of four quarters, one week each. In regards to the monthly cycle, I start counting the quarters from the first full week, meaning if the first week relating to the traditional month is a partial week, it is omitted and viewed as distortion. The first full week of the month is the first quarter, the second week is the second quarter, the third week is the third quarter, and the fourth week is the fourth quarter. The weekly cycle is comprised of four quarters. one day each. Monday is the first quarter, Tuesday is the second quarter, Wednesday is the third quarter and Thursday is the fourth quarter. Friday is not included into the weekly cycle due to the fact that it has its own specific function. The daily cycle is comprised of four quarters, six hours each, which perfectly aligns with the four trading sessions of a trading day. The first quarter is the Asian session, the second quarter is the London session, the third quarter is the New York session, and the fourth quarter is the afternoon session. Each session is comprised of four quarters, 90 minutes each. I refer to them as the 90-minute cycles. In regards to the Asian session, the 90-minute cycles are as follows. 6 p.m. to 7 30 p.m is the first quarter 7 30 p.m to 9 p.m is the second quarter 9 p.m to 10 30 p.m is the third quarter and 10 30 p.m to 12 a.m midnight is the fourth quarter in regards to the london session the 90 minute cycles are as follows the first quarter is 12 a.m. midnight to 1.30 a.m. The second quarter is 1.30 a.m. to 3 a.m. The third quarter is 3 a.m. to 4.30 a.m. The fourth quarter is 4.30 a.m. to 6 a.m. In regards to the New York session, the 90-minute cycles are as follows. The first quarter is 6 a.m. 7.30 a.m. The second quarter is 7.30 a.m. to 9 a.m. The third quarter is 9 a.m. to 10.30 a.m. And the fourth quarter is 10.30 a.m. to 12 p.m. In regards to the afternoon session, the 90-minute cycles are as follows. The first quarter is 12 p.m. to 1.30 p.m. The second quarter is. 1.30pm to 3pm, the third quarter is 3pm to 4.30pm, and the fourth quarter is 4.30pm to 6pm. Now that we understand that time is fractal, we can begin to look into the functions of some of the quarters. I believe that price is delivered by an algorithm, so there must be some initial input which is used to make decisions. throughout each cycle. This is the function of Q1. Q1 dictates the quarters which follow. Meaning, I use Q1 as a barometer for forecasting market conditions in the subsequent quarters of each cycle I'm looking at. If the first quarter is overextended, I'll expect the second quarter to consolidate. And if the first quarter is in a tight range, I will expect the second quarter to expand. Now is where things get interesting. So if you haven't been taking notes... I suggest that you pause the video right now and go grab some note-taking instruments. True opens are the main components of quarterly theory. They are specific openings of price which serve as a time-based filter for gauging Judas swings or stop-hunts. True opens are the beginning of Q2 of every cycle. It is a simple concept to understand. If you are bullish within a specific cycle, you want to buy below its true open. And if you are bearish within a specific cycle, you want to sell above its true open. This will increase your accuracy tremendously, as key levels usually rest above or below true opens. Every cycle has its own true open. The true year open is the opening price of the first Monday of April. The true month open is the opening price of the second Monday of the month. The true week open is Monday at 6 p.m. The true day open is 12 o'clock midnight. The true open of the Asian session is 7 30 p.m. The true open of the London session is 1 30 a.m. The true open of the New York session is 7.30 am and the true open of the afternoon session is 1.30 pm. The image to the right depicts how true opens function during bullish market environments. Now we'll look at the quarterly theory cheat sheet. There are two sets of instructions that the algorithm usually follows. I deem them as AMDX and XAMD. The diagram to the right gives a visual depiction of AMDX. As you can see, Q1 formed a tight range, after which the manipulation phase of price begins. ICT dubs this as the Judas swing. According to his algorithmic theory, the purpose of this fake move is to get traders offside, after which the real move takes place. After the manipulation phase takes place, the next phase is the distribution phase. This phase is usually the easiest to trade as the previous quarter has already established the trend of the cycle. The fourth phase is X. The fourth phase is X which can either continue the established range of the cycle or reverse. In regards to this example, the fourth quarter is reversal. As you can see, price reverses at higher time frame PDAs or key levels. Liquidity is induced when price breaches old highs and hold lows while trading into key levels. If you usually trade with the 1-minute chart, you need a 15-minute PDRY. If you usually trade with the 5-minute chart, you need a 1-hour PDRY. If you usually trade with the 15-minute chart, you need a 4-hour PDRY. If you usually trade with the 1-hour chart, you need a daily PDRY. And if you usually trade with the 4-hour chart, you need a weekly PDRY. In regards to XAMD, the first quarter is the continuation or reversal of the previous Q of the previous cycle. Using what we understand from the function of Q1, Q2 should then accumulate resulting in high range price action. Q3 would then be your manipulation phase. However, the rules for the true opens are static, they don't change. the opening price of Q2 will always be its true open. So if the profile that you're looking at is XAMD, even though accumulation takes place during Q2, you will use the opening price of Q2 which is its true open to gauge the Judas swing which will present itself more times than not in Q3. The last phase will be the distribution phase, which will be the easiest phase to trade in regards to XAMD. Hopefully this was insightful. I'll talk with you guys whenever I make another video.

It fits in with any style of trading as it is universal to all time frames. My favorite thing about this theory is that it removes ambiguity as it gives you specific time-based reference points to look for when entering trades. Before being able to implement this theory into your trading you must first understand that time is fractal. The yearly cycle is comprised of four quarters, three months each.

The first quarter is January to March, the second quarter is April to June, the third quarter is July to September, and the fourth quarter is October to December. The monthly cycle is comprised of four quarters, one week each. In regards to the monthly cycle, I start counting the quarters from the first full week, meaning if the first week relating to the traditional month is a partial week, it is omitted and viewed as distortion.

The first full week of the month is the first quarter, the second week is the second quarter, the third week is the third quarter, and the fourth week is the fourth quarter. The weekly cycle is comprised of four quarters. one day each. Monday is the first quarter, Tuesday is the second quarter, Wednesday is the third quarter and Thursday is the fourth quarter. Friday is not included into the weekly cycle due to the fact that it has its own specific function.

The daily cycle is comprised of four quarters, six hours each, which perfectly aligns with the four trading sessions of a trading day. The first quarter is the Asian session, the second quarter is the London session, the third quarter is the New York session, and the fourth quarter is the afternoon session. Each session is comprised of four quarters, 90 minutes each.

I refer to them as the 90-minute cycles. In regards to the Asian session, the 90-minute cycles are as follows. 6 p.m. to 7 30 p.m is the first quarter 7 30 p.m to 9 p.m is the second quarter 9 p.m to 10 30 p.m is the third quarter and 10 30 p.m to 12 a.m midnight is the fourth quarter in regards to the london session the 90 minute cycles are as follows the first quarter is 12 a.m. midnight to 1.30 a.m.

The second quarter is 1.30 a.m. to 3 a.m. The third quarter is 3 a.m. to 4.30 a.m. The fourth quarter is 4.30 a.m.

to 6 a.m. In regards to the New York session, the 90-minute cycles are as follows. The first quarter is 6 a.m. 7.30 a.m. The second quarter is 7.30 a.m.

to 9 a.m. The third quarter is 9 a.m. to 10.30 a.m.

And the fourth quarter is 10.30 a.m. to 12 p.m. In regards to the afternoon session, the 90-minute cycles are as follows.

The first quarter is 12 p.m. to 1.30 p.m. The second quarter is. 1.30pm to 3pm, the third quarter is 3pm to 4.30pm, and the fourth quarter is 4.30pm to 6pm. Now that we understand that time is fractal, we can begin to look into the functions of some of the quarters. I believe that price is delivered by an algorithm, so there must be some initial input which is used to make decisions.

throughout each cycle. This is the function of Q1. Q1 dictates the quarters which follow.

Meaning, I use Q1 as a barometer for forecasting market conditions in the subsequent quarters of each cycle I'm looking at. If the first quarter is overextended, I'll expect the second quarter to consolidate. And if the first quarter is in a tight range, I will expect the second quarter to expand.

Now is where things get interesting. So if you haven't been taking notes... I suggest that you pause the video right now and go grab some note-taking instruments.

True opens are the main components of quarterly theory. They are specific openings of price which serve as a time-based filter for gauging Judas swings or stop-hunts. True opens are the beginning of Q2 of every cycle. It is a simple concept to understand.

If you are bullish within a specific cycle, you want to buy below its true open. And if you are bearish within a specific cycle, you want to sell above its true open. This will increase your accuracy tremendously, as key levels usually rest above or below true opens. Every cycle has its own true open.

The true year open is the opening price of the first Monday of April. The true month open is the opening price of the second Monday of the month. The true week open is Monday at 6 p.m. The true day open is 12 o'clock midnight.

The true open of the Asian session is 7 30 p.m. The true open of the London session is 1 30 a.m. The true open of the New York session is 7.30 am and the true open of the afternoon session is 1.30 pm. The image to the right depicts how true opens function during bullish market environments.

Now we'll look at the quarterly theory cheat sheet. There are two sets of instructions that the algorithm usually follows. I deem them as AMDX and XAMD.

The diagram to the right gives a visual depiction of AMDX. As you can see, Q1 formed a tight range, after which the manipulation phase of price begins. ICT dubs this as the Judas swing. According to his algorithmic theory, the purpose of this fake move is to get traders offside, after which the real move takes place. After the manipulation phase takes place, the next phase is the distribution phase.

This phase is usually the easiest to trade as the previous quarter has already established the trend of the cycle. The fourth phase is X. The fourth phase is X which can either continue the established range of the cycle or reverse.

In regards to this example, the fourth quarter is reversal. As you can see, price reverses at higher time frame PDAs or key levels. Liquidity is induced when price breaches old highs and hold lows while trading into key levels. If you usually trade with the 1-minute chart, you need a 15-minute PDRY.

If you usually trade with the 5-minute chart, you need a 1-hour PDRY. If you usually trade with the 15-minute chart, you need a 4-hour PDRY. If you usually trade with the 1-hour chart, you need a daily PDRY. And if you usually trade with the 4-hour chart, you need a weekly PDRY. In regards to XAMD, the first quarter is the continuation or reversal of the previous Q of the previous cycle.

Using what we understand from the function of Q1, Q2 should then accumulate resulting in high range price action. Q3 would then be your manipulation phase. However, the rules for the true opens are static, they don't change.

the opening price of Q2 will always be its true open. So if the profile that you're looking at is XAMD, even though accumulation takes place during Q2, you will use the opening price of Q2 which is its true open to gauge the Judas swing which will present itself more times than not in Q3. The last phase will be the distribution phase, which will be the easiest phase to trade in regards to XAMD. Hopefully this was insightful. I'll talk with you guys whenever I make another video.

Transcript for:Understanding Quarterly Trading Theory

Transcript for:
Understanding Quarterly Trading Theory