Filling The Numbers

Date: 2024-12-25

Four Daily Reference Levels

[00:12] Welcome back, folks. This is lesson two of the May 2017 ICT Mentorship, ICT Amplified Day Trading and Scalping. This teaching is going to cover filling the numbers.

When we talk about filling the numbers, what we're referring to is the likelihood or tendency for IPDA to fill specifically four numbers per day. The daily range will seek to fill or trade to four specific levels each trading day. The first two levels that come to mind are the previous day's high and low. As a day trader, you're going to work with the previous day's high and low and the last three days' highs and lows, whichever are the highest and lowest in that regard, for swing points based on a daily chart.

[01:12] Those reference points are going to be like your bread and butter. You're going to go to these specific levels because they'll give you a great deal of context, as you'll learn later in this month's teachings. But with the previous day's high and low, we always look for one of those levels to be traded to. It doesn't have to happen because the daily range could be smaller than what's required to reach the previous day's high or low, but generally we're looking for a retest or trade through the previous day's high or low as a day trader.

Pivot Levels and Staged Orders

[01:40] One of the tools most commonly used by retail traders—and still used by large funds—is what we historically understand as floor trader pivot numbers. I don't use them a great deal in my trading except for this. I look for the Central Pivot Point, and these are 0 GMT pivots.

We look for movement above the Central Pivot in the form of M3, which is the midpoint, or 50%, of the distance between the Central Pivot Point and R1. R1 is the resistance level for staged orders.

[02:26] M4 is the midpoint, or 50%, of the distance between R1 and R2. R2 is the resistance level for staged orders. M5 is the midpoint, or 50%, of the distance between R2 and R3. And R3 is the resistance level for staged orders.

You're probably asking yourself, “What are staged orders, Michael? What is this?” Because traders will most likely be using pivot points collectively, and funds use them as well, IPDA will invariably trade to them and through them. Most of the time, folks who use pivot points aren't really using them accurately, and they don't always work either.

[03:08] But there is a tendency for IPDA to want to trade to them because there are going to be staged orders there. Staged means there are buyers and sellers at those levels because most people don't know how to use them.

So what would otherwise be viewed as a good buy point below the Central Pivot Point, at something like S1 or S2, might actually be a very good area to sell short once the daily range starts expanding lower and then trades back up to that S1 or S2.

[03:34] That could be a continuation sell. But if you look at the general consensus across the board from a retail perspective, they think anything below the Central Pivot Point is a good buy.

That's why we talk about these in terms of staged orders. We don't care whether they're buying or selling. We simply know that IPDA is going to go there to facilitate trade and move through that market for fund liquidity—not retail broker traders, not the little guys in the mom-and-pop brokerage firms.

[04:01] At the big-bank level, they'll trade through these levels to fill those numbers. Obviously, below the Central Pivot, we look for M2, which is the midpoint, or 50%, of the distance between the Central Pivot and S1. S1 is the first support level for staged orders.

Then M1, which is the midpoint, or 50%, of the distance between S1 and S2. S2 is the support level for staged orders. M0 is the midpoint, or 50%, of the distance between S2 and S3. And finally, S3 is the support level for staged orders.

[04:37] Now, if you've never heard of a pivot point or you've never seen these before, this is probably very confusing. It's not that big of a deal. It's a simple little indicator that I'm going to share with you on the forum.

At the time of this teaching, when you're done watching it, all you have to do is go back to the forum under the Resources tab. Underneath the PDF file link, which isn't active until all the lessons are finished, you'll see a link where you can download the MT4 indicator.

[05:05] While it's not important that we understand how to trade pivot points like the retail crowd, it is important to understand what these levels are and how we're going to interpret them in terms of filling the numbers.

Using the order flow direction and PD Array Matrix for specific bias, we can use these numbers to help determine what numbers will be filled for that particular day. From the trade entry point you use for your trades, you look for the numbers that will fill from that price point. If you're going long, from your long entry you look above your entry point for the sequential four levels above.

[05:53] If you're selling short, you look below your entry point for the sequential four levels below. That means if we're looking to go short and we happen to be entering near the R2 level, we could look for M4, R1, M3, and the Central Pivot—four levels below us.

That would be an example of looking for the numbers to fill using the pivots. On large-range days, more than four levels can be filled or traded to. The tendency to move to at least four levels is just a general rule of thumb.

[06:35] Ideally, the majority of your trade position will be taken off after four levels are filled. Always leave a portion on for the potential of a large-range day if time permits it.

So if we're long intraday—say we've gone long from London—and we've already seen four pivots traded to on the upside, the bulk of your position, I'd say about 75% to 80%, should have been taken off in profit. Leave a small portion, about 20% to 25%, remaining to see if you get a much larger range day.

Central Bank Range Projections

[07:16] Because New York could see a much wilder condition where price continues higher, and you may have already seen four levels traded to just inside the London session.

Using the order flow direction and PD Array Matrix for specific bias, and utilizing the Central Bank Dealers Range, when you're shorting the market and selling above the Central Bank Dealers Range, you count the low of the Central Bank Dealers Range itself as level one of four to fill.

In other words, once we determine what the Central Bank Dealers Range is, whatever the lowest line of that range is—whatever creates the base of that consolidation or range, whether you're using the wick low or the lowest close or open of the bodies—that represents the first of four.

[08:13] So you would count that as one. Ideally, you'd be shorting above that low. Then, when price trades down in your favor and crosses below the Central Bank Dealers Range low, that counts as one of four.

We expect the market to trade down through four Central Bank Dealers Range lows. Let's look at the chart and see an example. Everything we're showing here, you would simply reverse for buying.

So going short here, this would be level one because you're selling short above the Central Bank Dealers Range low.

[08:52] When price trades down through it, that's level number one, then level two, level three, and finally level four.

So there's an example of IPDA filling the numbers on the basis of the Central Bank Dealers Range. Now look at what we've done here. I've given you a means of looking at how the daily range is fulfilled using pivot points. Now, with the Central Bank Dealers Range—which is unique to me, no one else does this, whereas everyone knows about pivot points—we look for that same phenomenon.

[09:30] We're looking to sell short above the Central Bank Dealers Range low, using that low as level one. Then you count down each new standard deviation of the Central Bank Dealers Range projected lower.

Every time price crosses the low end of that new range projection or standard deviation, that's counted as one new level, and you look for four of those to fill.

Reversing that, you'd be buying below the Central Bank Dealers Range low, and once price reaches the Central Bank Dealers Range high, that would be counted as level one. Then you continue projecting the standard deviations of the Central Bank Dealers Range higher, higher, higher, stacking them on top of one another.

[10:13] Once price trades through four of the Central Bank Dealers Range highs, that's your level-four count, or the numbers being filled on the basis of the Central Bank Dealers Range.

So IPDA will look to fill four pivots intraday. It'll also look to fill four Central Bank Dealers Range projections or standard deviations. Either one can be used.

Now, I already know what you're thinking, but trust me, I'll answer that question. I already know what you're thinking. We'll get to it at the end of this teaching.

Asian Range Level Count

[10:43] Using the order flow direction and PD Array Matrix for specific bias, and utilizing the Asian Range, when you're buying the market below the Asian Range, you count the high of the Asian Range as level one of four to fill. Expect the market to trade up through four Asian Range highs.

See the chart to the left. Everything I'm showing you here, you're going to reverse for shorting. You see the market making a low here after the midnight candle opens. It trades lower. Asian Range high: fill number one, level two, level three, and level four.

[11:21] Again, as I mentioned earlier at the beginning of this teaching, four is just the general rule of thumb. It can always go one more level or more.

Continuing with our theory of filling the numbers, using the order flow direction and PD Array Matrix for specific bias, and utilizing the flout—oh, we haven't talked about that yet, have we?

When you're shorting the market above the flout's equilibrium, or 50% of the range that creates the flout, you count the equilibrium of the flout range to the high of the range as one standard deviation.

Flout Range Projections

[12:10] The equilibrium of the flout range to the low of the range is also counted as one standard deviation.

Now, I probably confused you, but watch—it's very easy to understand. The total flout range is projected on the basis of 50% of its complete range, and that range is determined between 3:00 p.m. New York and midnight New York.

Whatever that range is—the highest high and the lowest low, or the highest body open or close and the lowest body open or close, however you want to define the range—you're going to do both of them because we always have to factor in the potential error from retail data feeds.

[12:46] But by using both, we're going to get a pretty good idea. We take that total range, the entire range from 3:00 p.m. to midnight New York time, and find the middle of it, or equilibrium—basically the Mean Threshold of that total range.

What you end up with is two new ranges, and one of those ranges equates to one of the numbers that would be used for the flout. You expect the market to trade down through four flout ranges in the form of lows.

[13:21] So once you project the flout down one new low using half of its total range, that constitutes level one of four numbers to fill for the day.

Look at the chart to the left and you'll see what I'm referring to. We're going to come back to the flout again this month because I'm going to teach everything I know about it. Everything I'm showing you here, you simply reverse for buying.

We have the flout range determined here between the two blue lines, and the shaded boxes are a little bit beyond the actual time window.

[13:53] The first uppermost gray box and the second box below it, the light-blue box, together represent the entire flout range. What I did was divide it in half, so it creates two flout ranges.

If you're bearish, price needs to be selling short above the equilibrium of the total flout range, or in the uppermost portion of that flout range—the gray box here, as indicated by the arrow.

Price trades down to level one, which is the new flout range low, or basically the lower half of the total flout range. That's level one.

[14:38] If we were bullish and buying below the equilibrium of the total flout range between 3:00 p.m. and midnight New York, we would buy below equilibrium and use the high of the flout range as level one, or the first of four numbers to fill for the day.

Then you simply keep projecting half of the total flout range as a new number to fill. So you're not projecting the entire flout range. You're doing standard deviations based on 50% of the range between 3:00 p.m. and midnight New York time.

[15:09] You can see the respective level two, or second number to fill, which is the next flout range low, then level three, and finally level four. And obviously, you can project it one more time because, like everything else we've shown here, four is only a general rule of thumb.

It goes down to a fifth level, actually nailing the very low. This is a Pound-Yen chart, just for you guys who like trading those exotic pairs.

[15:49] This stuff works there as well. I already know what you're thinking: “Michael, which one do I use? Do I use the pivots? Do I use the Central Bank Dealers Range? Do I use the Asian Range? Do I use the flout?”

When it comes to considering which numbers to fill, you have to understand that we never know for certain before the day begins what IPDA is going to use to fulfill the daily range. I never know that. But I look at London's trading going into New York.

Confluence and Session Context

[16:27] By the time we get to New York, you'll have greater insight. We get closer to the truth as the trading day unfolds. The New York session will generally provide the measurements IPDA is presently using for the engineering of the daily range.

What do I mean by that? We know we have several different things at our disposal for determining where price will go for the daily high or low. If we're bullish, we want to see how far IPDA will deliver price on the upside.

[16:54] By themselves, these ranges and projections don't mean anything. They don't mean anything at all. What we look for is confluence between one or possibly more of the tools outlined in this teaching for measuring these four levels.

Coupling these with the present trading environment, time of day, direction, and the PD Array Matrix will help you unlock the daily high or low. You've seen me do this several times throughout the mentorship. Even before the mentorship, I was calling daily highs and lows and getting within one or two pips, many times right

[17:28] How I do that, I don't know for certain at the London open. I don't know that. Some of the folks in the free members group who follow me and never made it into our mentorship think I'm superhuman and do this on a daily basis. That's not true. Obviously, you've seen that's not the case. But there are certain times when I feel an unction about where the market is going. When I'm showing you how it works in real time and giving you examples like we did with the Euro this week, with the 109.30 level, I was off by five pips there, but nonetheless, it went up there with a great deal of ease.

[18:07] The level was determined by using these ideas. Now, I don't show you everything on my charts because invariably, like I've shown you here, there are probably a thousand questions already going through your mind about the flout. “What was that again? The range? Do we divide this? Do we divide that? What are we projecting?” I already know you're going to have a million questions about flout. So just understand that we're going to teach the flout in detail, but I'm using it here as a segue into more teachings about it.

[18:36] We use the flout, Central Bank Dealers Range, Asian Range, and pivots for looking to fulfill the daily range, or filling the numbers, as it's called. So how do we use all this information? Number one, you determine where price should be reaching based on the PD Array Matrix. Remember, we've already determined, based on institutional order flow on the daily and 4-hour charts, whether price is going higher or lower. If price is respecting a premium PD Array on the daily or 4-hour chart, we're going to anticipate price rallying up at New York's midnight candle or thereafter.

[19:13] That rally up, that protractionary market state, is the Judas Swing. We're using some measure of standard deviation, one of the four shown here, either by way of general pivots, the Central Bank Dealers Range, the Asian Range, or now the flout. We use those projections as a basis for how far price can go down.

We don't know how quickly price is going to be delivered across the daily range. In other words, London can produce 80% of the daily range, and then the rest of the day simply goes quiet.

[19:48] It's happened before. Sometimes London doesn't do much at all, and then finally the move takes place in New York and the entire range is completed from 7:00 in the morning to the London close. We never know that for certain.

What we do is project these measurements across all four of them. We go through them, and this is the work you do throughout the day. You don't just look blindly at your chart. I'm doing measurements, I'm looking at things, and I'm having Cody go back and forth between different charts because I want to see which measurements overlap and converge.

In this case, if we're looking to go short, I'm looking for some measure of a discount PD Array on the daily or 4-hour chart that would line up with time of day and the standard deviations I would use respectively with either the Central Bank Dealers Range, flout, Asian Range, and/or the levels on the pivot points.

[20:47] Eventually, throughout the morning, you're going to come to a conclusion where you can narrow down exactly where price is most likely going to go. The worst-case scenario is that you'll see it go further than you thought. And guess what? That's why you leave a little piece of the position on, because you can be wrong and it can actually benefit you.

When you're bullish, we're obviously looking for some measure of a move lower and some measure of standard deviation that we adopt.

[21:21] We go through all of them. We're not just picking our favorite one and saying, “I understand the Central Bank Dealers Range,” or, “I understand the Asian Range, so I'm just going to stick with that.” No, you don't want to do that.

If you've already started thinking, “This is getting too complicated for me,” then you need to dig your heels in and really do the work of following this and doing it. It doesn't take long, folks. Really. If you're following 28 pairs, obviously you're not going to want to do this.

[21:46] But we teach in this mentorship that you want to be a specialist. Have one really good pair that you like to trade all the time and a secondary pair that goes well with it. Maybe it's in concert with it or trades in close correlation with it. I teach trading with Cable and Fiber. I'm not forcing you to trade those, but there are other pairs you can trade that are closely correlated, like Kiwi and Aussie, for instance.

By using these measurements, we can determine how IPDA will fill the numbers based on their respective characteristics.

[22:20] Each one obviously has a certain measure of overlap. But when it comes to the flout, that range between 3:00 p.m. and midnight New York time, you have to divide it in half. Take the highest high and the lowest low, divide that range in half, and find the equilibrium price point. You end up with two flout ranges.

To go short using the flout, you must be entering short above the equilibrium of the total flout range, and then use the flout range low as the first of four numbers to be filled for the day.

[22:46] If you're going long using the flout, you have to be buying below the equilibrium of the total flout range between 3:00 p.m. and midnight New York time, and then use the flout's total range high as level one of the count. You do that for four flout projections.

The projections, or standard deviations, are basically 50% of the total flout range. You do not use the flout's entire range, okay?

By doing this, what you'll end up doing is buying after some measure of protraction below the range. Obviously, the Asian Range low would be ideal.

[23:25] You'd be looking for those projections to overlap with time of day and a premium PD Array. By doing that, you blend those things together with time of day. How much time do you have left in the day? Does price have enough time to reach these projections?

You keep stacking them on, and you end up getting the daily highs and lows like I've shown many times over the last few years. This teaching is exactly how I do it. There's no secret sauce outside of this.

[23:57] There are a couple of little things I still have to teach you about the flout throughout the rest of this month's teachings, but you'll know everything I do when it comes to picking the daily highs and lows, because you need that for day trading. You need to know how far that daily range is going to go.

If you don't have those things at your disposal, yeah, no wonder day trading is hard for everyone—they don't know what they're doing. But we can narrow it down to precise entry points and precise exit points and know, with a great deal of certainty, once some of the trading range has been posted through London, where price is likely to reach.

[24:31] Then you start incorporating things like Average Daily Range, which we'll also incorporate this month. When those overlap as well, wow, you've got dynamite in a bottle. It's amazing how quickly you can become really precise with your entries and exits, have the lion's portion of the daily range at your disposal, and take down those trophy-buck wins.

Obviously, by blending several of these concepts together, you'll get a confluence of amazing precision. This week, we mentioned how the low was most likely forming on Thursday's New York open.

[25:12] Price traded down below the sell stops that were outlined on our charts and explained in great detail. In fact, it did that ahead of the 8:30 news, and I mentioned that this was most likely going to be problematic and that we were probably making the low of the week.

That's actually forming the Bullish Order Block being delineated here on the chart. Going into Friday, you can see the market moving into a small consolidation and price dropping down after midnight, which is 4 GMT on the Forex LTD platform.

Pivot Target Example

[25:50] Looking at price like this, you can see it trade back down below the Asian Range. Notice it didn't go below the Asian Range by much at all. It doesn't have to.

It traded to the Asian Range low and a discount PD Array, Bullish Order Block. Price moved away from that and was consolidating during the New York session. When we were live with one another, I stated that we would probably see 109.30 as the daily high because there was a Fair Value Gap in that price range. What you didn't see on my other charts was this information here.

[26:30] We had M5 calling for 109.33. I teach that we want to get out ahead of that. What's the nearest round number before it? 109.30. Price ultimately traded to 109.35.

The likelihood of you finding this information across the internet or in someone else's work using pivot points—maybe once in a while you'll see something overlap, and they'll do all kinds of Fibonacci this and Fibonacci that. Once in a while, you might get a good trade. But the pivots aren't magic numbers.

[27:09] We use them for determining how far the range will expand. I don't use them so much for entries, but I do use them in the context shown here.

When I'm looking for the numbers to fill, I'm looking for four of them—four levels—either by way of Central Bank Dealers Range standard deviations, Asian Range standard deviations, the flout, where 50% of that total range creates each new flout range standard deviation, or four pivot levels.

[27:46] Again, as I stated at the beginning of this mentorship, it's going to require you to think with the material that's being taught. We're in the meat of it now, so you have to put some work behind it.

You can't simply put these things on your chart and expect them to speak to you. There's no download that suddenly takes place just because they're on your chart. You have to think, do some work, and perform measurements throughout the day.

[28:15] It's not easy. It requires work and effort. But when you put the effort in, you get amazing blue-ribbon results, and that's what you're looking for.

You signed on with this mentorship to see how I do these things. You've seen me doing them, and now you're seeing how I arrive at that information.

But here's the main thing: if the markets do not move and there isn't volatility, you cannot get precision because there has to be displacement. Look at that nice move we saw during the New York session.

[28:46] It exploded up like that. That's what we need. When price gives us that, then I'll show you this mojo. Until next time, I wish you good luck and good trading.