You asked[B][U]“Why would OTE or SMT actually work?”
OTE and SMT go hand in hand. Separately they are cool but I honestly do not see any meaning. Together they have a logical and reasonable explanation as follows:
Rules of all trading:
Retail traders do not impact the market due to having an incredibly small foot print with the money they use. Professional traders always buy low and sell high.
When the majority buy price is pushed higher. When the majority sell price is pushed lower.
GBPUSD and EURUSD are highly correlated.
Putting these simple and commonly understood rules together:
When we look at the SMT divergences between EURUSD and GBPUSD and we see GU making lower lows and EU making higher lows the reasoning for us to side with a buy for EU is because the professional traders would not be adding more sells to the GU. That would be selling low. Professionals do not sell low. It would be logical to assume that professional money was buying into EU because it was going higher.
As professional money is buying into EU it is being pushed up, but because professional money is pushing price up it fails to make the same lower lows as GU.
It is at this point where you see and OTE and SMT come together. This is when it matters because the OTE is created by the buying pressure it’s actually really strong evidence of a lot of money going in to buying it. If OTE is not accompanied with and SMT divergence what does it mean? Well it’s a good place to enter sure because of targets but you would be hoping that professional money will go in based on fibbs repeating in nature and because it looks like a nice place to enter. You don’t have any evidence to suggest it has done because you lack the SMT divergence. As is said in many of the videos: SMT used for conformation.
I hope piphanger you read this and see reason in it. This trading is not all about faith, belief and blind following of systems without and understanding of why. ICT really knows how to trade and obviously has a life so has not been able to explain everything in extensive detail like a school teacher. So a lot of what he teaches I cannot use because I lack the understanding of why it works. But in time i’m sure i’ll learn more. Why something works is a vital question I have to have answered before I can follow something. I need reasonable and logical explanations for what is going on before I can believe it. OTE and SMT have this logical explanation. So I bloody love them!
[B][U]Why would kill zones work?[/U][/B]
Like any job a futures trader at a fund is going to have a boss telling them what to do. As they come into work they star immediately. As soon as they are set up they enter their orders for the day. They don’t hang about for a couple of hours because their planning is pretty much all done. So they enter. It is during these killzones we see OTE and SMT go hand in hand. We actually see the reaction in price of the big money investors starting work pretty much because their boss would be pissed if they were sitting on their hands. lol
This is obviously a simplification but those time periods specifically LO are key points when trades are entered and where the days volume really begins. Seriously add the bar volume with right click properties. Have a look on a 1 hour chart at when every single day market volatility begins and ends. Its always LO and LC. Always without fail. Head to 4h charts and you’ll see the volume bars looking like saw teeth.
I’m saying all this because i’m sure everything ICT teaches has sound logic behind it. If it didn’t he would be broke!