Trading the London forex session and what it reveals about the day ahead

Trading the London forex session and what it reveals about the day ahead

00:00

Introduction and Forex webinar overview

00:00

The webinar host welcomes participants to the London session Forex webinar, expressing gratitude for their attendance. A cautionary note is given about the risks involved in trading, emphasizing the importance of only using money one can afford to lose.

00:27

Volume Price Analysis (VPA) methodology explained

00:27

The speaker introduces recent developments in chart analysis, specifically highlighting Volume Price Analysis (VPA) applied to the Pound Aussie currency pair. VPA combines price action with volume data and incorporates three key elements: price action, volume, candle patterns, and support and resistance levels. Support and resistance are emphasized as fundamental concepts not only in VPA but in technical analysis overall.

01:23

Fundamental news and market sentiment in forex

01:23

The speaker explains the importance of analyzing fundamental news and related markets to gauge market sentiment, noting that forex often reflects or even leads sentiment seen in other markets. They highlight the need to understand these relationships and mention the development of specialized forex market tools, including a currency strength indicator, to better analyze currency flows.

02:17

Forex indicators: currency strength and heat maps

02:17

The video explains the use of the matrix, the array, and the heat map, which provide different insights into the forex market. This information helps traders identify potential trading opportunities or monitor what has been happening with specific currency pairs they focus on.

02:47

Forex market sessions and flow dynamics

02:47

The foreign exchange market operates 24 hours a day but is effectively divided into three distinct sessions corresponding to key financial centers across different time zones. Each session has a physical open and close, influencing currency flows both globally and locally. These sessions overlap during ‘session crossovers,’ which are critical periods when one market opens as another closes, leading to notable trading activity.

03:40

Complete Forex Trading Programme and funded accounts

03:40

The speaker introduces the Complete Forex Trading Programme, designed to equip traders with essential knowledge and skills for success. A new feature, the Funded Forex Program, allows participants to practice trading with the company’s money, potentially managing accounts up to $2 million. The programme consists of comprehensive modules covering forex fundamentals, technical analysis with a focus on Volume Price Analysis (VPA), and trading psychology. While primarily aimed at forex, the principles taught are applicable to other financial markets as well. Attendees are encouraged to ask questions or share comments during the session.

05:57

Market sentiment and upcoming FOMC event

05:57

The discussion begins with an overview of the day’s key event, the FOMC meeting and press conference, highlighting the recent confirmation of Janet Yellen as Treasury Secretary. The speaker then checks market sentiment on investing.com, noting that futures are relatively flat amid a general ‘wall of worry’ in the markets.

06:48

Market sentiment is described as fragile despite strong recent gains, particularly in the NASDAQ. An analogy is drawn with sports teams at the top of their leagues, where success brings pressure and nerves. This analogy illustrates how market leaders experience increased worry even during good times.

07:41

The speaker contrasts the sentiment of market leaders with those at the bottom, where hope for improvement prevails. Current market indices like the Dow and S&P show little movement, and the VIX at 23 indicates moderate volatility. A significant rise in the VIX would signal a potential severe market correction impacting currencies.

08:33

Attention shifts to the NASDAQ’s divergence due to strong inflows into the tech sector. Key earnings reports from Tesla, Facebook, and Apple are noted as upcoming events that may influence markets after hours. Given the fragile state of the markets and ongoing earnings season, the focus is on whether Jay Powell will introduce stimulus measures to support risk assets, creating a tense and dramatic market atmosphere.

09:26

Forex volatility and trading the Pound Aussie pair

09:26

The speaker emphasizes the importance of understanding forex volatility when trading currency pairs, even for opportunistic trades. Volatility refers to the likely price movement within specific time frames or days, which helps traders gauge potential profit opportunities. The example used is the pound Aussie pair, which generally shows daily volatility around 100 pips, though this varies over time. Traders are encouraged to check volatility data on sites like investing.com to observe trends and compare pairs. The speaker also notes that trading involves both data analysis and trader psychology.

12:41

The speaker examines hourly volatility patterns for the pound Aussie, noting increased activity during the European and London market openings and just before the London fix at 4 PM. The pound often exhibits sharp moves in the morning and notable volatility around the London fix, which can guide trading decisions. Weekly data suggests Thursdays and Mondays tend to have higher pip movements. Lastly, the speaker mentions downloading an MT4 version of this data, recognizing that many traders use MT4 despite his preference for other platforms.

13:38

Support and resistance with Camarilla levels

13:38

The speaker explains the importance of identifying support and resistance levels on charts, which are crucial for both retail and institutional traders. These levels help predict potential pauses, reversals, or breakouts in price movements. The methodology involves using price action, candle patterns, and volume, alongside price-based and volume-based tools. Specifically, they use lines calculated from price data to mark these levels, with solid lines indicating stronger support or resistance tested multiple times, and hatch lines representing weaker areas. Unlike some platforms that visually thicken lines based on strength, their system uses solid or hatch lines. Additionally, they developed an indicator based on the Camarilla protocol, which identifies six key price levels on the chart, with the third level being particularly significant for potential price pauses or reversals.

16:29

Pound Aussie breakout and volume analysis

16:29

The speaker analyzes the Pound Aussie currency pair on the five-minute chart, highlighting a period of congestion around the volume point of control (VPOC), where the market lacks clear direction and trades within a range. This VPOC acts as a volume-based support and resistance level. The longer the price remains in this congestion phase, the more significant a breakout becomes when accompanied by rising volume.

17:27

Just before the European market open, a strong breakout occurred from the congestion zone, confirmed by increased volume and visible on the Renko chart as well. The breakout started around the 177.40 level, indicating a clear upward move following the congestion, supported by volume confirming the strength of the move.

18:23

The breakout continued higher, eventually reaching the R3 level on the Camarilla pivot system. The Camarilla levels behave differently depending on the timeframe: under one hour, they update every 24 hours, while on the hourly chart, they remain valid for a week. This means the R3 level on the hourly chart remains significant for the rest of the week, influencing price action.

19:21

The price approached not only the R3 on the hourly chart but also the R5 on the 15-minute chart, suggesting a strong resistance zone. When price hits these important levels on slower timeframes, a pause or pullback is common unless there is substantial volume and effort to push through. This makes these levels critical decision points for traders.

20:19

The breakout’s approach to resistance coincided with the London session open, where a two-bar reversal pattern formed on the five-minute chart, signaling a potential reversal. Given the price hit the R3 on the hourly chart and showed a reversal signal, traders could reasonably exit long positions and consider reversal trades, as the resistance and volume dynamics suggest a likely pullback.

21:19

Trading risks during session crossovers

21:19

The speaker explains the volatility that occurs during crossover trading sessions, where prices fluctuate wildly despite appearing to have a clear direction. Traders must be cautious during these times, as sudden price movements can disrupt expectations. The advice is to remain aware of this volatility and consider taking profits even if a trade seems likely to continue favorably, as it’s possible to re-enter the market later.

22:17

Traders are warned to be mindful of the timing when spotting potential reversal setups, as reversals may appear promising but can be undermined by market timing, especially during major market opens such as London and New York. The volatility is less pronounced in Europe compared to London, particularly around the London fix. The focus then shifts to the Pound/Aussie currency pair, where the speaker begins to analyze its price action and key levels.

23:16

The analysis of Pound/Aussie continues, showing that the daily chart reflects two doji days suggesting indecision but overall a positive dominant trend. The speaker uses multiple timeframes, including hourly, 15-minute, and 5-minute charts, to identify key levels and price patterns for the week. A Renko chart is also introduced as a helpful tool, credited to a trader who shared it with the group.

24:11

CSI and currency pair movement analysis

24:11

The speaker explains that on MT4, users can add the Camarilla level to Renko charts, which is not currently possible on MT5. They then analyze the currency strength index (CSI) for individual currencies and pairs, noting that the pound against the Australian dollar appears to be moving sideways on the five-minute chart but shows selling pressure on the 15-minute chart. This suggests looking for trading opportunities in other pound pairs.

25:04

The discussion continues on the selling pressure of the British pound, particularly against cable (GBP/USD), which has been moving lower. However, the pound and Australian dollar are moving similarly, lacking the strong divergence needed for a clear trade signal. Further CSI analysis reveals buying interest in the New Zealand dollar, US dollar, Swiss franc, and yen, indicating mixed market sentiment with Dow futures and S&P showing weakness while the NASDAQ behaves differently. The segment ends as the speaker passes the discussion over to David.

26:20

TradingView indicators update and enhancements

26:20

The speaker explains that previously, it was not possible to develop all quantum indicators for TradingView due to limitations in its scripting language. However, with the recent upgrade to TradingView’s Pine script, they can now offer the full range of quantum indicators on the platform, allowing TradingView users to access everything available on other platforms.

27:15

Until now, the complete package of TradingView indicators was sold at a lower price than packages for other platforms because not all indicators were available. Buyers of the full package will benefit from free updates whenever new indicators are developed, meaning any future additions will be included at no extra cost. The speaker encourages those considering purchasing the TradingView package to take advantage of this offer before the price increases.

28:30

The package price will rise once all new indicators are integrated and the first version of the matrix is enhanced. The enhancement will include a system that categorizes indicator values as high, medium, or low, helping traders identify potential reversals or ongoing trends. Some binary traders already use these values to predict market movements by understanding what constitutes high or low on specific timeframes.

29:55

Responding to user feedback, the developers plan to add a feature that highlights where values sit on the high-medium-low spectrum. The speaker also notes that TradingView is browser-based and accessible on phones, making it convenient for users. The segment ends with a transition to David for further analysis on the Pound Aussie currency pair.

30:52

QT programme changes and student benefits

30:52

The speaker welcomes viewers and introduces updates to the QT programme, which is available exclusively to students. They highlight that detailed information can be found on the public page, though purchase options are only accessible within the programme for students. The changes discussed are based on student feedback.

31:45

The programme covers funding levels from $5,000 up to $2 million. The main updates focus on the portfolio manager stage after passing evaluation. The evaluation stage has removed the previous requirement of 45 trades, replacing it with a minimum of 30 active trading days. Updated resources, including videos and PDFs, are available for students.

32:35

Further changes include maintaining a 5:1 lot exposure limit during evaluation, which increases to 6:1 at the portfolio manager stage. Stop loss rules remain mostly unchanged at 1.5%. Profit sharing improves significantly: portfolio managers now receive 50% of profits monthly, increasing to 60% at the million-dollar trader level.

33:31

The tradable assets have expanded beyond the original 28 currency pairs available during evaluation to include indices and gold at later stages. These enhancements were made in response to student requests and the programme’s success.

34:27

The profit target for portfolio managers has increased from 10% to 12.5% to accommodate the changes. Starting capital levels of $5,000, $10,000, or $15,000 multiply up through the levels, doubling at each stage. Importantly, traders use company funds, not their own, reducing personal financial risk.

35:20

The programme’s conservative money management rules help traders gain confidence and experience managing larger accounts. The speaker plans to demonstrate these rules using an FXCM account on TradingView and addresses upcoming topics, including analyzing slower timeframes in response to student questions.

36:07

TradeStation radar screen and currency futures

36:07

The presenter describes running three trading platforms simultaneously: Ninja Trader, TradeStation, and TradingView. They have reorganized their profile to be less cluttered and increased the font size for better visibility. The focus here is on currency futures, specifically several currency pairs such as the Aussie dollar (6A), pound dollar (6B), CAD dollar (6C), Euro dollar (6E), and New Zealand dollar (6N).

36:58

The presenter explains the layout of the currency futures display, which includes the Swiss dollar and emphasizes that the view focuses purely on the US dollar. The time frames shown are consistent across 1, 3, 5, 10, and 15 minutes. The screen includes a trend monitor with quantum trends, trend dots, trend line (yellow line), and dynamic volatility indicators. Additional custom indicators can be added, and this setup is seen on TradeStation Global version 9.5.

37:54

The data for this setup is driven through an Interactive account linked to TradeStation Global 9.5. Although live trading is enabled, it is not currently active. The system allows trading directly from the screen in a straightforward and intuitive manner. The trend monitor provides an instant snapshot of the dollar’s buying or selling pressure across multiple time horizons.

38:47

Using the 6B (pound dollar) as an example, the presenter highlights how trend reversals can be observed in real-time, particularly on the five-minute chart. The Ninja Trader platform updates in real-time with local time, making it easier to track ongoing market activity.

39:12

Volatility triggers and trend monitoring example

39:12

The segment describes a period of high volatility around the London Open at 8 o’clock, with suspiciously light volume causing erratic price movements. The trend monitor initially moves downward but starts to transition, indicated by changing trend dot colors. The fastest timeframe (one minute) shows the trend’s early development, but due to the volume point of control, the price is expected to reverse and congest again rather than develop a strong trend.

40:09

Focus shifts to the importance of monitoring trend development across multiple timeframes, starting from the fastest and moving to slower ones to confirm trend changes. The radar screen is versatile, allowing the user to click on different symbols and intervals which automatically update the charts, facilitating quick analysis across various assets.

41:02

An example using the CAD currency pair shows a clearer trade setup with a consistent bearish trend indicated by the trend monitor and trend dots. After an initial volatility spike, the trend remains red as price moves down to low volume at the volume point of control, signaling the need to check slower timeframes like the 10-minute and 15-minute charts for confirmation. The platform’s power is emphasized, especially in TradeStation version 10 and above.

41:55

TradeStation version 10 and above allows monitoring up to 1,000 sales on the radar screen, compared to 400 in version 9.5, enhancing the platform’s analytical power. The radar screen example focuses on currency futures showing a strong downward move with all cells red. The quantum dynamic volatility indicator on the right provides immediate insight into recent volatility triggers, improving situational awareness for traders.

42:45

The discussion highlights the value of certain volatility candles, particularly those with high volume and clear price action such as deep wicks and recovery moves. These candles often trap traders who enter positions too early, leading to rapid reversals and presenting trading opportunities.

43:11

Radar screen benefits and multi-timeframe trading

43:11

The speaker explains the simplicity and power of using radar screen for trading, highlighting its flexibility in setting up multiple timeframes and mixing instruments. They emphasize that radar screen eliminates the need for numerous charts by allowing customized arrangements tailored to the user’s preference.

43:41

The speaker discusses monitoring the Swiss dollar on a three-minute chart using the CSI indicator and Camarilla levels on a 15-minute timeframe. They note that the price is breaking through the S3 support level, indicating a potential move downward.

44:08

The expected price movement is toward the S4 support level, which may act as the next pause point. The speaker transitions to addressing common questions about their trading methods and introduces a comparison to illustrate how different traders may approach the market uniquely.

44:38

The speaker clarifies that their trading style differs from that of their colleague Anna, emphasizing that despite working together, they use distinct approaches. This highlights the importance of recognizing individual differences in trading strategies.

45:06

Personality is identified as the main reason for varying trading styles. The speaker uses a cricket analogy to illustrate how different individuals develop unique techniques to overcome challenges, reinforcing that trading success depends on finding methods that suit one’s personal style.

45:34

The speaker elaborates on the cricket example, describing how a batsman adapted his technique to handle spin bowling, contrasting it with the captain’s success. The key takeaway is that traders must discover their own effective strategies, and the speaker offers to share their approach.

46:03

Personal trading styles and strategy considerations

46:03

The speaker describes trading on slower timeframes, specifically hourly charts, aiming for gradual gains around 40 pips. They emphasize the importance of choosing a trading tactic that matches one’s style and schedule, such as trading reversals, trend following, or multiple small trades throughout the day. The decision depends on factors like available time and preferred order types.

46:57

The discussion continues on selecting trading preferences such as the number of currency pairs to trade, time of day to trade, and market liquidity. The speaker highlights the advantage of trading in the Northern Hemisphere due to access to major market openings like London and the US. Their own approach focuses on trading reversals on hourly or 30-minute charts using overbought and oversold levels, avoiding trend trading.

48:24

The speaker trades only a few positions at a time, mimicking a funded account style with limited leverage around 5:1 and wide stop losses of about 50-60 pips. Trades are held for several hours, often overnight or through weekends if risk is low. They accept missing opportunities and focus solely on reversal setups without scalping or trend strategies.

49:21

The trading strategy is simple and specific, avoiding complexity. The speaker prefers commodity currencies like the New Zealand, Canadian, and Australian dollars for risk-on trades, while the Japanese yen, US dollar, and Swiss franc are their go-to currencies for risk-off scenarios. Success comes when these currencies move together in clear patterns.

50:43

Risk on/off market dynamics and currency preferences

50:43

The speaker discusses the fundamental concept of risk in trading, emphasizing that market behavior is driven by risk-on and risk-off moods. This dynamic affects all asset classes including commodities, currencies, equities, and bonds. They illustrate this with the UK 100 index, noting a significant opening plunge that trapped traders, but the market eventually recovered, highlighting the universal nature of risk sentiment across different global markets.

52:08

Attention shifts to the US dollar and its relationship with rising equity markets, which is unusual since dollar buying typically correlates with risk-off scenarios. The presence of both dollar and yen buying suggests market nervousness ahead of events like the FOMC meeting. The speaker reviews the Aussie yen pair, noting a weak bearish trend with low momentum, indicating that a sharp reversal is unlikely at this stage.

53:34

The speaker reflects on the importance of consistent trading performance rather than chasing large immediate profits. They stress that success comes from finding a personal approach that fits the individual trader, not mimicking others. The key is discovering one’s own ‘nugget’ or method that unlocks consistency, emphasizing personalized application of trading methodologies and indicators.

54:34

Slower timeframe trading and heat map usage

54:34

The segment begins with a quick transition to Ninja Trader, where the presenter reviews the three major indices (YM, NQ, ES) showing rising dollars and mixed performance, including an unusual morning gap up in the NQ. The London Open sees a similar profile to the FTSE 100 with a sharp plunge at the open accompanied by heavy volume and increased volatility. The focus then shifts to currency charts, highlighting modest movements in the Aussie Yen and promising to examine slower timeframes.

55:32

The presenter explains that chart analysis principles and indicators apply consistently across all timeframes, from minute to daily charts. Using a specific price action phase as an example, they illustrate how increasing volume without corresponding price movement signals weakening effort in the market. The analogy of a car struggling to climb an icy hill is used to describe the market’s lack of progress despite rising volume.

56:32

Continued analysis of the price action shows that volume keeps increasing while price spreads narrow, indicating a fragile and weak market. By the fourth day, despite higher volume, price movement diminishes further, forming a spinning top doji. The presenter notes this arching, narrowing price movement as a sign of congestion and indecision, with the market attempting but failing to rally strongly.

57:26

The segment describes a congestion phase characterized by back-and-forth price action with bearish engulfing patterns and narrowing spreads, suggesting continued market weakness. Attempts to rally are met with resistance, though some indicators show a slight bullish tilt. The trend monitors have shifted somewhat positively, maintaining a cautious bullish outlook despite the evident indecision.

58:09

The presenter discusses trading on the daily chart, emphasizing the importance of setting levels based on analysis across multiple timeframes including weekly and monthly charts. They mention placing limit orders as an option but personally prefer market orders due to being actively present in front of the screen, enabling quick execution upon decision-making.

59:01

Attention shifts to the heat map indicator, which is designed to analyze slower timeframes from one minute up to monthly intervals. The heat map offers an instant visual representation of market sentiment—bullish, bearish, or neutral—across multiple currency pairs and timeframes. It provides valuable perspectives for both scalping intraday and longer-term trading strategies.

01:00:23

The ranking ladder component of the heat map is explained as a weighted system that reflects sentiment more heavily from longer timeframes like monthly charts, and less from shorter ones like the one-minute chart. Changes in ranking happen gradually over days or weeks, allowing traders to identify potential reversals and trends over slower horizons. The presenter encourages regular checking of the heat map, especially when away from the screen, to monitor evolving market conditions.

01:01:22

The presenter highlights current dollar opportunities revealed by the heat map’s ranking ladder, noting positions that appear to be setting up for significant moves over a slower time horizon. The segment concludes with a brief pause to invite input from a colleague, marking a transition in the discussion.

01:01:53

Quantum Trading Education programme and resources

01:01:53

The speaker reviews current market conditions, noting strong dollar buying and a pause in the UK 100 index. They express disinterest in entering trades at this point since the significant move has already occurred. They anticipate potential setups later in the euro or commodity currencies, but emphasize that the upcoming FOMC meeting will likely influence the day’s trading session.

01:02:53

Information is provided about the Quantum Trading Education Program, highlighting that funding options are exclusive to students. The speaker mentions resources available, including posts by Tana, books on Amazon, and recent success with Vietnamese publishers who have launched translated versions of their trading books, selling well in initial weeks.

01:03:53

Details are shared about where to find trading indicators compatible with multiple platforms such as MT4, NinjaTrader, TradingView, and TradeStation. Buyers of the full package receive future indicators free. The session concludes with thanks and well wishes to the audience.

01:04:22

Session closing and upcoming schedule

01:04:22

The speaker confirms the session will resume around 2:15, likely for the US futures, with stock trading potentially resuming at 3:15. They remind viewers to watch out for the upcoming FOMC event, thank everyone for attending, and wish them an enjoyable remainder of the trading day.

 

By Anna Coulling – creator of volume price analysis