ICT mentorship, ICT bond trading, lesson one, basics and opening range concept. Okay, when I refer to the treasury bond, what I'm referring to specifically is the 30-year treasury futures contract, and the trade symbol for this is ZB, and it's for the 30-year treasury bond, and the trading session that these concepts I'm going to be teaching this week are primarily used for in analysis on the New York session, and it begins at 820 a.m. to 3 p.m. New York time, and the contract delivery months for the treasury bond 30-year note is March with the delivery contract code of H, June with the contract code month of M, September delivery contract month code U, December delivery code contract month Z, and the format when we use for entering our charts or pulling them up in data, it's the symbol ZB, then the month code, then the last two digits of the trading year. For an example, ZBU17 for September 2017's contract of the 30-year treasury bond. You can see that to the right in this image, treasury bond September contract,

ZBU17 at the top. It trades on the Chicago Board of Trade exchange, and it is a futures contract, and you can see the only delivery contract missing here would be the March 2018. The amount per tick minimum fluctuation is $31.25 per contract. A full handle or full figure move equals 32 ticks, or is referred to as 30 seconds. 32 ticks movement equals $1,000 per contract.

Okay, bond opening range concept. Talking about nostalgic things here, folks. These are the things that I cut my teeth on as a commodity trader years and years ago. All right, so when we look at the bond market opening range concept, the highest volume is going to be seen between 8 a.m.

and 930 a.m. New York time. True day for the bond market is 8 a.m. to 3 p.m. New York time. The opening range begins at 8 a.m. New York time and ends 9 a.m. New York time. Narrow your focus. The opening range between 8 a.m. and 9 a.m. tends to create the bond market high or low of the day. It can be a run on stops or a fair value setup. In other words, a bullish order block or a bearish order block, or trade down into a liquidity void or fill in a fair value gap. It is also the location for liquidity pools to build around for the stock market opening to be rated. Let's take a look at a couple examples here. We have the Treasury bond for the September delivery contract 2017, and this is a 15-minute candlestick chart, and I have the 8 a.m. to 9 a.m. delineated here.

So in this area, what we look for is the opening range or the high and the low between those two delineations in time. As you can see here, we have a block of price action. This is our opening range.

We have our opening range low and our opening range high, and price trades down below the low that was formed between 8 a.m. and 9 a.m. This is a stop run and a potential reversal. Notice the highest volume of the day is between 8 a.m. and 9 a.m. Notice also on the lower low that was created post 9 a.m. New York time, that lower low was seen with lower volume. So there was massive buying taking place right after 8 a.m., but as price made that lower low, it did not see a large influx of volume. All we're seeing there is a movement towards running initial sell stops for those individuals that were correct, and by buying early, just having their stop loss too close to the marketplace. This is a volume divergence, price making a lower low. That lower low should have been met with a higher bar on volume. This is a sign of impending weakness for the down move, so that means there's no more selling pressure. It's basically a run on stops.

Price moves higher, finds some support at the opening range as well, opening range high, and finds another opportunity to see price trading higher into the latter portions of the day.

Okay, another example. We have our 8 to 9 a.m. block of price action delineated.

This is our opening range. Again, our opening range is defined high and low, opening range low.

We have a order block, last two down closed candles inside of the opening range and the opening range high. As you see, price trades down into the bullish order block, supported around the notion of the 8 a.m. to 9 a.m. opening range concept, and price rallies away and price rallies away, basis of a bullish order block. Notice as the price makes the higher high going into the 11 o'clock hour, volume was declining as price made a new high at 154.21.

Price makes a subsequent decline back down into the opening range and then goes into consolidation.

The volume divergence here was an early sign that the rally up into the 154.21 was a weak move. Therefore, volume precedes price. Weakness was seen after 154.21 had posted.

Ideally, volume should have had a higher bar on its highest high moving into 154.21.

So, now we're working with commodities, we have a more accurate depiction of buying and selling pressure with real volume. The vertical lines down here, the green, blue and dark blue lines are delineations of volume. Okay, another example. We have our 8 a.m. to 9 a.m. delineation, our opening range, opening range low. Inside the opening range, the last down closed candle is a bullish order block. There's two reference points at that order block. We have the initial test here and we have the secondary one. Either one would fit the bill.

This is a bullish order block. We expect a rally and notice the largest volume was seen again between 8 a.m. and 9 a.m. New York time and price moves up to run into the 154.26 level. But notice at 154.26, look at the high that was formed before 2 p.m. That high, that volume spike there was not seen with a greater volume measuring later on in the day in the evening time. So, when we traded the 154.26, it was done so on light volume but it also reached above with a divergence in volume. It reached above the opening range high. So, it ran the stops above that range and failed to go any higher and traded down and closed in the fair value gap seen at the 154.10 level. So, we have a blending of things that we've already learned about in the Forex portion of this mentorship. But now we're blending other things. So, we have a blending of things with specific commodities. Now, when we look at the opening range for bonds, what I like to do is I like to define the opening range with much like I did the Asian range. I look for the bodies but also incorporate wicks. And then I also incorporate previous highs and lows that are just to the left of 8 to 9 a.m. New York time. Notice that we have the highs formed between 2 a.m. and 12 a.m. to the left of the chart. We have equal highs there just below 154.19.

With that high, I'm going to incorporate the wick in between 8 and 9 a.m. That's why that's being defined there. Notice also that reference point becomes an issue for stop rating later on in the evening during the Asian session time period.

When we look for opportunities, we're blending kind of like the Asian range perspective in Forex.

We're looking for that same general theme occur with the 8 to 9 a.m. time period in the bond market. Now, I like to see signals form at 8.20 or after. They can occur as early as 8 a.m. and sometimes a little bit before, just like a New York session open at 7 a.m. But I generally prefer to see it occur between 8 a.m. and 8.30. Basically, the target time is 8.20 or CME opening.

See, there's a blending of that time element again. If we know that there's a strong influx of

New York traders coming in at 8.20 New York time, London traders are still awake. They're still on the clock looking to take some trading. If UK traders or European traders want to be participating in the Treasury markets, and it's a very big market. It's not as big as Forex, but it's very liquid. One of the wonderful things about the bond market, it's the least manipulated of all markets. Now, think about that. Remember, I made my career focus in the commodity markets with the bonds. I like the bond market because it had the least in terms of manipulation. You don't get a lot of tomfoolery in that market compared to others. Now, it does not mean that there is a lack of manipulation. It just means on par with all the asset classes.

Generally, you see the least with the bond market.

Now, when we go into FOMC or interest rate based reports or approaching those types of things, the bond market can get a little wonky. It can get a little silly. It can do things that doesn't make any sense. The easiest way to avoid that is simply stay out of that particular asset class ahead of those news events. Once the news event drops, FOMC numbers are released or the announcement or rate decision, anything like that. Non-farm payroll as well, there's nothing sparing the bond market when it comes to NFP. Those environments are still much like I've mentioned in other teachings regarding the Forex. You don't want to be trading in around those environments because it's illiquid. The market is going to gap to wherever the liquidity is, and chances are, it's going to be against your position. It's just better not to be trading at all around those times. If we know out of the commodity markets as a whole, if you want to carve out a career as a one focused market trader, there is a plethora of opportunities for trading the bond market.

It's highly liquid. It's really nice when it's trending. When it starts to move in one direction, it generally stays in that direction. When it goes into consolidation, it can be a little choppy, but if you know what you're looking in terms of fair value gaps or turtle soups, using equilibrium ideas, there's certainly no reason why you can't carve out a small little amount of pips or ticks, in this case, for this particular asset. Now, obviously, everyone wants to be a trader for the bond market. They want to capture 32 ticks or a full handle and try to capture $1,000 per contract. This market generally doesn't have a large daily range.

If you can capture anywhere between five to eight ticks as the intraday day trade, there's certainly nothing wrong with that. If you can get 1630 seconds, that's $500 per contract.

That's a good day. A large range day is when you get a full handle or 32 ticks or $1,000 per contract.

They don't happen all the time, but there can be sustained moves that create that opportunity, but that's not the normal. It's an asset class that allows for low expectations in terms of the daily range. It has respect of liquidity pools, liquidity gaps, fair value gaps. All the things that we taught with Forex, they still occur in this asset class, but you don't see a whole lot of the things like you do in the Forex market, where it can spike down, do some really crazy stuff, and then go right back in the direction you were trading in. Will it run your stop sometimes?

Yes. Will you sometimes see something in the chart and it doesn't materialize and goes the other way? Yes. Will you see order blocks that don't go up, just go sideways? Yes, and reverse head for bearish order blocks. Nothing about this asset class makes it perfect, but if Forex was ever to go into a meltdown or I was unable to trade Forex, I would go back to trading bonds without skipping a beat. It would be no problem at all for me to go back to trading bonds because it's a very good trading market. It can be swing traded, it can be short-term traded, it certainly can be day traded, and when the conditions are right, you can be in positions and hold them for longer term, dare I say it, several months. I've never been able to do that personally, but it can be done because it's like a currency, sometimes it trends very, very well.

Now you have a beginning basis point to start looking at the bond market, and you can pull up barchart.com and look at a 15-minute time frame for one day, pull up the ZBU17, and as we go forward in time, just go to the next month out, and if we go into 2018, you're just going to change the 17 to 18 or whatever the year is, respectively, and you can keep a running journal of what the bond market's doing.

Now I'm going to counsel you to do this just as a general daily procedure, even if your intentions are never to day trade or trade the bond market. Say you never want to do it right now. I promise you by looking at it on a day-by-day basis, it will increase your price action skills, it will develop a greater appreciation for this particular asset for commodities, for interest rates, and you're also going to start studying this in relationship to what the dollar's doing, what gold's doing, and the foreign currencies as a whole. So hopefully this has been a good introduction to the bond market and one of the most basic concepts I use when doing analysis on it. In the next lesson, we're going to talk about split session rules.