Using volume price analysis to day trade forex in the London session on the MT4/5 platform

Using volume price analysis to day trade forex in the London session on the MT4/5 platform

00:00

Introduction to Forex Market Webinar

00:00

The webinar begins with a welcome and disclaimer emphasizing the risks of trading and advising against using money one cannot afford to lose. The session focuses on analyzing the forex market through volume price analysis (VPA), which examines the relationship between price action and market activity, particularly in the spot market. While spot market volume is based on tick activity rather than trade volume, it is sufficient for VPA methodology. The goal of the analysis is to predict future price movements, and the discussion will also consider fundamental news releases impacting the forex market.

02:01

Volume Price Analysis and Related Markets

02:01

The speaker explains the importance of analyzing related markets to understand market sentiment, such as risk-on or risk-off conditions, which are reflected in certain currencies and pairs. They emphasize starting analysis with charts using volume price analysis (VPA), noting that price action and volume do not operate in isolation but must be viewed within broader market contexts including fundamental news. The forex market is unique because it involves trading currency pairs that represent economies against each other, and understanding money flow between countries is crucial. The session will introduce specific indicators developed to capture these flows, starting with the currency strength indicator.

03:40

Currency Strength Indicator and Matrix

03:40

The speaker explains a tool that breaks down individual currencies to show what is being bought and sold. It includes a ‘matrix’ feature that pairs currencies to identify the strongest and weakest pairs, acting like a scanner to highlight which pairs are moving most strongly. This helps traders quickly decide which pairs to focus on, whether they scan broadly or concentrate on specific pairs, providing an instant update on market activity.

04:45

Further features include ‘the array,’ which measures the strength of trends in currency pairs, and the matrix also indicates whether buying or selling is dominant in a currency, such as the British pound showing strong selling pressure. This information helps traders identify where selling or buying is strongest across pairs. Lastly, the heat map analyzes pair performance across multiple timeframes and ranks them, offering a comprehensive view of market trends and strength for informed trading decisions.

05:51

Trend Array and Heat Map Indicators

05:51

The speaker discusses a sophisticated indicator that can also function as a scanner to identify the strongest currency pairs, highlighting the Pound/Aussie as an example. They explain how the indicator reveals different trends on various time frames, such as a strong uptrend on slower time frames and a pullback on faster ones. The best way to understand these indicators is by observing them in action. Additionally, the speaker mentions recent market movements in the British Pound and Australian Dollar and introduces a forex education program designed to help traders advance their skills.

06:55

Forex Education and Funded Trading Program

06:55

The program offers an option to become a funded trader, where you trade with the company’s money, eliminating personal financial risk. It begins with an evaluation stage involving trading smaller amounts ($5,000, $10,000, or $15,000). Upon successful completion, traders move to the portfolio stage where the trading capital is quadrupled, potentially up to $2 million. The program’s modules and details are available at quantumtradingeducation.com. While some traders succeed using only the book, the program provides additional value.

08:03

The program includes an advanced technical analysis module focused on Volume Price Analysis (VPA), which builds on Richard Wyckoff’s principles from the 1920s and 1930s. It offers a comprehensive, deep dive into trading psychology and more. Although the book alone is helpful and some traders adapt its concepts successfully, the program represents the next level of training and includes the full suite of Quantum Trading indicators. Additional explanations are provided in the webinar, and questions can be asked via chat.

09:06

Live Chart Setup and Session Analysis

09:06

The speaker explains their morning routine for analyzing currency markets, focusing on the hourly and 15-minute charts to get a snapshot of currency performance. After the Asia Pacific session, the London session has been underway for about 20-30 minutes. They observe a continued selling of the dollar, which appears overextended on the hourly chart, and note that the British pound has been moving sideways with some upward ticks, possibly signaling a buying opportunity.

10:16

The speaker discusses the challenges of trading during session crossovers, especially when the London session starts. They advise waiting 30 to 45 minutes after the crossover to let the market settle because initial activity often includes volatile price movements due to institutional position changes. This waiting period helps avoid trap moves and provides a clearer trading environment.

11:25

The speaker highlights the 24-hour nature of the forex market but emphasizes its distinct sessions with local opens and closes, such as the European session closing and the North American session starting around noon to 1 PM, with Wall Street opening at 2:30 PM local time. Traders should be aware of these rhythms when planning their trades. They also mention a student who limited trading to three pairs and faced fewer opportunities, underscoring the need for patience and careful pair selection.

12:36

The speaker advises traders who restrict themselves to a few currency pairs to conduct research on the volatility of those pairs during their trading hours. They mention tools and resources, including their program’s volatility coefficient and a page on investing.com, which provides information on pair volatility by session and day. They also stress the importance of considering related markets and fundamental data, using the example of the Australian and New Zealand dollars to illustrate interconnected market behavior.

13:41

Sentiment Impact on Commodity Currencies

13:41

The speaker explains that currencies like the Australian dollar, New Zealand dollar, and Canadian dollar act as risk sentiment indicators, rising when markets are optimistic and equities increase. Conversely, safe-haven currencies such as the Japanese yen, Swiss franc, and to some extent the US dollar, tend to fall in such risk-on environments. The Australian dollar is highlighted as a key currency in the Asia-Pacific region, moving actively during local and global trading sessions.

14:49

Using a matrix scanner tool, the speaker observes a strong upward move in the Australian dollar on the hourly chart, with the strongest pairs being AUD/USD, AUD/CHF, and AUD/JPY. The indicator provides numerical values that reflect the strength of these moves, helping to differentiate between strong and weak price actions. Currently, the readings indicate moderate movement rather than a highly volatile or rapid price change.

16:28

The speaker discusses the use of different time frames, such as the 15-minute and 5-minute charts, to identify corrections and pullbacks within broader trends defined on the hourly chart. While the hourly chart shows the dominant trend, shorter time frames can reveal potential tradeable retracements or corrections, though not all pullbacks are suitable for trading.

17:39

Traders must decide how long to stay in a trade, balancing between quick entries and exits versus holding positions longer. Staying in a trade too long risks reversals and pullbacks that can affect stop-loss placement and overall risk management. The speaker emphasizes that trading style, personal comfort, money management, and risk rules all influence decisions on trade duration and handling corrections.

18:44

Current observations show heavy selling pressure on the US dollar on the hourly chart, but signs of buying emerging on the 15-minute and 5-minute charts, indicating a potential reversal. The British pound is also showing signs of upward movement. The speaker notes that these indicator signals provide valuable information without requiring direct chart analysis. Finally, they caution that even in a downtrend, markets can remain overbought or oversold longer than expected, especially on the hourly chart.

19:52

Aussie Dollar Analysis with Camarilla Levels

19:52

The discussion begins by explaining how currencies, such as the yen, can remain oversold for extended periods without reversing, leading to frustration for traders. This concept is linked to John Maynard Keynes and is illustrated using the hourly chart of the yen, which shows it staying flat for several hours before buying resumed.

20:30

Attention shifts to the Australian dollar, highlighting the importance of session times in currency movements. The speaker notes that currencies can remain overbought or oversold due to specific resistance or support levels that coincide with different trading sessions.

21:08

Using the hourly chart and the Camarilla indicator, which calculates key support and resistance levels, the speaker examines the Australian dollar. These levels remain relevant throughout the week, offering traders important reference points for potential reversals or continuations in price.

21:56

The focus is on the R3 and S3 levels from the Camarilla indicator, with the Australian dollar hitting the R3 resistance level on the hourly chart. This strong resistance often causes price reversals, which can present trading opportunities on faster time frames.

22:44

It is explained that the Australian dollar has made most of its move during the Asian session, and since it has already reached the R3 resistance level and reversed, traders should assess the likelihood of further upward movement considering session timing and price behavior.

23:26

The Australian dollar’s price action shows a reversal off the R3 level with the possibility of another attempt to break it. If successful, the R3 could become a support level, increasing the chances of a continued rise, especially when analyzed on faster time frames below the hourly chart.

24:39

Daily recalculated resistance levels reveal that the Australian dollar has reached the R5 level, indicating a strong move has already occurred. The presence of multiple resistance levels in close proximity suggests price congestion, requiring caution and patience from traders.

25:40

The significance of the slower time frame resistance levels is emphasized, combined with price-based resistance on faster time frames. This confluence leads to a congestion phase, where a break above resistance, such as the R4 on the hourly chart or R6 on the 10-minute chart, would confirm further upside potential.

26:15

Resistance levels remain consistent across various time frames below the hour and are refreshed daily. Traders observing the Australian dollar recognize it as overextended on the hourly chart, with potential for reversal, yet persistent attempts to breach resistance levels have kept the move uncertain.

26:48

By isolating individual currency movements, the trader highlights the importance of patience when a currency reaches significant resistance levels. The Australian dollar’s next move depends on whether it breaks through or reverses from these points.

27:27

Sentiment is identified as a crucial factor influencing the Australian dollar. The speaker reviews current market sentiment by examining European and US futures indices, noting that US futures have retreated from earlier highs, which impacts global sentiment and thus currency price movements.

28:00

Renko Chart and Momentum Insights

28:00

The speaker discusses the Renko chart, which is a price-based chart that filters out noise and wick data, set here to three pips. This type of chart helps with identifying entries, exits, and structuring price action by showing trends, pullbacks, corrections, and consolidation phases. Using indicators like the trend dot and trend monitor together can aid in confirming trade signals and timing entries.

29:17

The trend dot indicator reacts earlier and is closer to price action than the trend monitor. The speaker notes a current consolidation phase in the Aussie dollar, visible on hourly and faster time frames, with limited momentum. The Renko chart completes a brick only after a three-pip move, indicating sluggish market conditions at the moment and highlighting the importance of waiting for trend confirmation before entering a trade.

30:22

The market is stuck between different support and resistance levels, consolidating on multiple time frames including the five-minute chart. There is a possibility of a downside break if significant support levels are breached, but a trend change and confirmation from the monitor indicator are required. The daily chart suggests the current consolidation represents a holding pattern following a large upward move.

31:32

The speaker evaluates the risk of a potential downside trade based on recent price action and candlestick patterns, noting a small reaction in the Aussie dollar after a weak day. Support and resistance levels remain consistent across time frames, with the market moving sideways in consolidation. Adjusting the chart to a 15-minute timeframe still shows these key levels holding.

32:44

Consolidation is confirmed as price moves sideways between established levels. The speaker highlights the importance of support and resistance in volume price analysis, referencing different indicators such as Camarilla levels, accumulation distribution, and volume-based support and resistance. These tools help to understand market structure but volume-based support is not discussed in detail at this time.

33:55

The Aussie dollar currently lacks a clearly defined trading direction due to consolidation across multiple time frames and a significant resistance level on the hourly chart. This resistance is reinforced across slower time frames, suggesting caution. Traders are advised to consider alternative pairs if the Aussie dollar does not present clear opportunities, emphasizing the need to combine multiple time frame analysis and indicator signals before committing to trades.

35:00

Sentiment and Trading Platforms Overview

35:00

David introduces multiple trading platforms running simultaneously on his machine, focusing initially on NinjaTrader to assess market sentiment on Inauguration Day as President Biden prepares to speak. He notes that while the Nasdaq had a strong day, this was not reflected in the yen currency pairs, which often lead equity market movements but do not always correlate intraday.

37:14

David explains that currency pairs, especially yen pairs, can show overbought or oversold conditions before corresponding equity market moves occur, sometimes with a delay of a day. He then transitions to showcasing TradeStation 9.5, linked with Interactive Brokers, emphasizing its live data feed and direct trading capability from the platform.

38:18

David demonstrates the currency futures workspace on TradeStation, highlighting a simple radar screen displaying various currency futures such as Aussie, Canadian dollar, Eurodollar, yen, and New Zealand dollar. He points out multiple time intervals and alerts integrated into the system, including dynamic volatility indicators, quantum trends, and trend monitors, which provide real-time insights into market trends and volatility across different charts. The platform’s ability to consolidate extensive data and facilitate rapid chart navigation is emphasized as a key strength.

39:49

TradeStation Indicators and Radar Screen

39:49

The speaker explains how to monitor various time frames using quantum indicators, highlighting a transition to red across multiple time frames indicating a market change. They describe volatility patterns around key market openings like London and Europe, noting that volatility triggers often lead to sideways congestion. The relationship between tick volume and futures volume is emphasized, with a strong correlation observed between the two, supported by extensive studies showing 90-95% accuracy.

40:48

The discussion continues on the reliability of these indicators, particularly for spot trading, confirming their accuracy and long-term use. The speaker introduces the trend monitor tool, which oscillates between +1 and -1 to indicate bullish or bearish trends, with transitional phases marked by intermediate values. They explain how the radar screen displays these indicators, helping traders anticipate market movements and volatility triggers associated with high volume and market maker activity.

41:47

Further details are given on the radar screen’s capabilities, including the accumulation distribution indicator that shows the strength of price levels based on how many times they have been tested. The speaker explains how support and resistance levels are identified and how breaches of these levels signal market direction. This segment underscores the comprehensive nature of the toolset for tracking market strength and momentum.

42:51

The speaker demonstrates how the indicators are applied across multiple currency complexes, including the euro, yen, dollar, pound, and Aussie. They showcase a radar screen setup that consolidates data for different currencies and time frames, indicating levels of overbought or oversold conditions. The interface provides crossing signals, volatility indicators, and trend information, offering a detailed and dynamic overview of market status.

44:00

The presentation highlights the extensive amount of information available on the radar screen, with hundreds of mini-chart cells linked for immediate data retrieval. The speaker briefly touches on Tradestation’s capabilities, including volume point of control indicators integrated into the radar screen. This gives traders a real-time heads-up on key volume levels relative to specific time frames and charts, enhancing situational awareness during trading.

45:23

To conclude, the speaker wraps up the overview of version 9.5 of the software, emphasizing its functionality and integration. They transition to showcasing TradingView with a setup focused on the yen complex, setting the stage for further analysis using this platform.

45:57

TradingView Account and Risk Management

45:57

The speaker explains they started a small trading account with around $800 at the beginning of the year, aiming to grow it using simple risk and money management rules. Alerts related to specific charts and time frames are coming in, which the speaker plans to disable to reduce distraction. The account is used as a practical example to demonstrate these trading principles.

46:56

The account balance has grown to $921, representing a gain of about $20 in a week. While the monetary gain is modest, the key achievement is 200 pips gained, which is significant for learning proper trading discipline and risk management.

47:29

The speaker emphasizes careful, conservative trading on this small account, using one micro lot per trade and limiting to around five trades at once, equating to roughly 5:1 leverage. Each position has a stop loss, and the approach mirrors that used on larger funded accounts. The trading is done on slower time frames, focusing on hourly charts.

48:06

The speaker reviews current market conditions, noting volatility on shorter time frames and explaining that volatility signals often lead to either full retracements or congestion. They advise taking profits when a volatility trigger occurs and you are in profit, as re-entry is always possible. The trading focus remains on hourly charts for a broader perspective.

49:07

The trading account is linked to an FXCM account and managed via TradingView, which allows easy order placement, stop loss, and take profit settings. The speaker highlights rising volume amidst a falling market, indicating potential trading opportunities. The trend monitors suggest a transition phase, reinforcing the focus on slower, hourly time frames, with the pound showing strength in the current market context.

50:10

Basket Trading and Volatility Triggers

50:10

The speaker discusses trading currency baskets rather than individual currencies, emphasizing the importance of managing risk by aligning trades with the overall risk sentiment. Commodity currencies like the New Zealand dollar, Canadian dollar, and Australian dollar are rising, while safe-haven currencies such as the Swiss franc, yen, and dollar are falling. When trading baskets, it is crucial to buy and sell currencies consistently with either a risk-on or risk-off approach to avoid conflicting positions.

51:12

The focus remains on avoiding contradictory trades within currency baskets and maintaining alignment with risk sentiment. The speaker highlights the importance of not trading against oneself, such as buying and selling the same currency in different pairs. A large volatility candle with increasing volume signals a potential exit point for traders holding long positions, as congestion and unpredictability could follow.

52:05

Given the build-up of volume and volatility, the speaker suggests closing profitable positions to avoid congestion. The New Zealand dollar is observed moving sideways at a certain level, signaling possible market indecision. Although external factors like Brexit can cause isolated currency moves, typically such sideways price action is a warning sign to avoid holding positions too long.

52:58

The speaker notes that the British pound is becoming overbought, which may persist for some time. Reversal trades often require patience and wide stop losses to avoid premature exits. Such reversals may be triggered by news events or session changes, such as the U.S. trading session. The strategy employed focuses on reversal trading with defined tactics rather than trend following.

54:02

Highlighting a recent volatility trigger on the dollar, the speaker notes that after a period of congestion, the dollar is starting to gain strength on the 15-minute timeframe. This movement is expected to influence longer timeframes like the hourly chart. The discussion concludes with preparations to review additional charts and tools before wrapping up the session.

55:04

Volume Price Analysis Example and Wrap-up

55:04

The segment discusses the current state of the pound, particularly the pound-dollar pair, highlighting that both the pound and the dollar are rising which could lead to a pause in movement. It notes significant trading volume, indicating active market maker involvement, with particular attention to volume under specific candles. Despite high volume, price movement is minimal, suggesting a disparity between trading effort and price result.

56:00

This part explains the concept of effort versus result in trading using the analogy of a car on an icy hill where increased effort does not yield proportional progress. The candle with high volume but little price movement exemplifies this imbalance, indicating strong selling pressure despite limited price change. The explanation emphasizes the importance of analyzing volume and price together to identify anomalies or confirm trends.

56:59

The discussion continues on volume price analysis, focusing on spotting anomalies or confirmations where price and volume either agree or disagree. Additional observations include volatility candles and a review of current market sentiment across indices like YM, NQ, and ES, which are showing similar behavior. The segment also touches on the extensive work done on the TradeStation platform.

57:59

This segment addresses some ongoing software development updates and challenges, particularly with managing alerts across multiple charts. It describes how users can enable or disable alerts through simple settings to reduce annoyance. The speaker explains customization options within the platform to tailor alert preferences to individual needs.

58:58

The final segment outlines the effort to align indicators between trading platforms like NinjaTrader and TradeStation, noting some differences due to data feeds and platform versions. It mentions that a detailed comparison will be covered in future sessions and concludes the current discussion, thanking the audience.

59:29

Quantum Trading Platforms and Education Details

59:29

The speaker explains where to find various trading platforms like MT4/5, NinjaTrader 7/8, TradingView, and TradeStation on the Quantum Trading site. They mention ongoing development to bring popular indicators such as currency matrix, currency heat map, and volume point of control to the TradingView platform within a few months. Users with the full TradingView package will receive these indicators free of charge as a reward for early adoption. The price of the package is expected to increase after the release of these features.

01:00:56

Information is provided about the Quantum Trading education program available at quantumtradingeducation.com. The funded trading program is an optional benefit exclusive to students in the education program, offering access to fully funded accounts starting from $15,000 up to $2 million with conservative risk and money management rules. This structure is designed to help traders build a consistent track record and prove their approach before trading larger amounts.

01:01:56

The evaluation stage of the funded program emphasizes the importance of consistency in trading regardless of the amount earned. Developing a consistent and reliable trading approach is the key focus, as the money earned will follow once consistency is achieved. Additional resources and links to Anna Cooling’s books and all trading platforms are available on the website for further support.

01:02:53

The speaker thanks the audience and outlines the schedule for the day, mentioning three sessions with the next ones at 2:15 PM and 3:15 PM UK time, focusing on stocks using TradeStation 10. They conclude by noting the weather conditions and signing off warmly until the next session.

01:03:18

A brief farewell is given, signaling the end of the current session.

By Anna Coulling – creator of volume price analysis