The Inner Circle Trader's Millionaire Traders Guild

[FXTraderCro]

@ cs

SMT Divergence is a crack in correlation between two closely correlated pairs like EUR/USD & GBP/USD. If the Fiber is making a lower low, while the Cable is making a higher low, this is bullish for the pairs. If the Fiber is making a higher high, while the Cable is making a lower high, this is bearish for the pairs. The same applies if you switch the pairs. ICT teaches the concept is only useful when used at a key support/resistance level.

Here is an example for yesterday’s London Open. Fiber made a lower high going into LO while the Cable made a higher high. Note that we were at key resistance for both pairs - 1.30 Fiber, 1.6050 Cable.

There is also USDX SMT Divergence. You can use any pair that has a reverse correlation with the US Dollar. Unlike the Correlated Pair Divergence, you are here comparing high vs. lows and vice-versa.

If the USD makes a lower low, while the Foreign Currency makes a lower high, this is bullish for the USD.
If the USD makes a lower high, while the Foreign Currency makes a lower low, this is bearish for the USD.
If the USD makes a higher low, while the Foreign Currency makes a higher high, this is bullish for the USD.
If the USD makes a higher high, while the Foreign Currency makes a higher low, this is bearish for the USD.

A/D is divergence between the Accumulation/Distribution indicator and price action. If you see price going higher, while the A/D indicator is going lower, this is bearish for the pair. Reversed, if price is going lower and the A/D indicator is moving higher, this is bullish for the pair. This is also best to use at key S/R levels.

Here is an example for the Cable, 1.6180 was a predetermined resistance level and we can note A/D divergence at that point.

I have summarized this based on my notes from the ICT videos, if anyone finds a mistake, please share it.

[Sageone]

@ cs

SMT Divergence is a crack in correlation between two closely correlated pairs like EUR/USD & GBP/USD. If the Fiber is making a lower low, while the Cable is making a higher low, this is bullish for the pairs. If the Fiber is making a higher high, while the Cable is making a lower high, this is bearish for the pairs. The same applies if you switch the pairs. ICT teaches the concept is only useful when used at a key support/resistance level.

Here is an example for yesterday’s London Open. Fiber made a lower high going into LO while the Cable made a higher high. Note that we were at key resistance for both pairs - 1.30 Fiber, 1.6050 Cable.

There is also USDX SMT Divergence. You can use any pair that has a reverse correlation with the US Dollar. Unlike the Correlated Pair Divergence, you are here comparing high vs. lows and vice-versa.

If the USD makes a lower low, while the Foreign Currency makes a lower high, this is bullish for the USD.
If the USD makes a lower high, while the Foreign Currency makes a lower low, this is bearish for the USD.
If the USD makes a higher low, while the Foreign Currency makes a higher high, this is bullish for the USD.
If the USD makes a higher high, while the Foreign Currency makes a higher low, this is bearish for the USD.

A/D is divergence between the Accumulation/Distribution indicator and price action. If you see price going higher, while the A/D indicator is going lower, this is bearish for the pair. Reversed, if price is going lower and the A/D indicator is moving higher, this is bullish for the pair. This is also best to use at key S/R levels.

Here is an example for the Cable, 1.6180 was a predetermined resistance level and we can note A/D divergence at that point.

I believe you have a mistake in the last chart, you must compare the highs for the A/D divergence in your example. However in your last image both the lows and highs posted a divergence.

[FXTraderCro]

Thank you Sageone, I have corrected the chart.

[kjsymes]

Kjsymes,

Thank you so much for your post. It’s very helpful for a newbie like me. I have a couple of questions on divergence. If there is a way to send you an email, I would have done that so that I don’t flood the thread with such basic questions. I have seen Mike’s video on Correlation concepts and still missing something on this subject

1. SMT divergence is divergence between, let us say, Eur/Usd and Gbp/Usd pairs?
2. USDX divergence means the divergence between, let us say, Eur/Usd and Usdx? Is this correct?
3. What is A/D divergence?

Thank you so much for all your help.

Csk.

Excellent answers/examples given. Does that answer it for you Csk?

For more info on trading A/D check ICT’s livestream channel and the video titled “Trading Accumulation Distribution”

[cskrishna]

Kjsymes,

Yes, Thank you so much.

Csk.

[tycoon83]

@tycoon83

Trend has been down this week but what will happen tomorrow?!
Here is what I can see on the chart, can you blame me for looking for a buy?

18 above the 40 moving average, fractal low formed, and it was a hammer on the daily candle yesterday

A Judas down in LO tomorrow with some SMT divergence between Fiber or USDX will certainly tempt me.

Ok so i’ve just gone long on the cable at 1.6102 fig. For the reasons above stated yesterday plus the is a big OTE from Wednesdays low to thursdays high as show on chart below. I’m posting two charts below showing SMT divergence between fibre and cable at the figure. i waited for a further OTE shown in the second chart.
im wary of the stops at 1.690 and i have a feeling we may raid them before going higher so my stop is 25 pips away from entry hopefully this will be enough.

[PIP-JITSU]

I took the very same trade. Hope it works out:) Good Luck

[tycoon83]

@tycoon83

Ok so i’ve just gone long on the cable at 1.6102 fig. For the reasons above stated yesterday plus the is a big OTE from Wednesdays low to thursdays high as show on chart below. I’m posting two charts below showing SMT divergence between fibre and cable at the figure. i waited for a further OTE shown in the second chart.
im wary of the stops at 1.690 and i have a feeling we may raid them before going higher so my stop is 25 pips away from entry hopefully this will be enough.

Quick update
50% just taken off at 20 pips, moved stop to break even, letting rest ride… its a good feeling when you get to this stage, no pressure!

[PIPhanger]

you have this going for your trade also…

[tycoon83]

Quick update
50% just taken off at 20 pips, moved stop to break even, letting rest ride… its a good feeling when you get to this stage, no pressure!

i’m stopped out on remainder, sidelines for me.

[tycoon83]

… i waited for a further OTE shown in the second chart.
im wary of the stops at 1.690 and i have a feeling we may raid them before going higher so my stop is 25 pips away from entry hopefully this will be enough…

looks like it is gunning for those stops at 1.6090 that i mentioned before (marked with the little red X), it will probably take off upwards after that. i’m staying on sidelines, took my 1% for the day.

[SteveB]

Interesting to see the slight candle differences between your screen shot and mine, I am uk based using Alpari.

[FXTraderCro]

@FXTraderCro

First trade of the week. I went short AUD/USD at the OTE from the 05/08 swing point to the recent low. I’m looking for 1.0050 as TP1 and will trail the remaining 50 % if it will move lower. Can’t post chart as I’m trading on my smartphone.

Got my one shot-one kill trade: Net profit is 80 pips and it’s the only trade I took this week.

Reasons for the short entry:

• Pivot Sell Zone
• Market Flow Bearish
• Optimal Trade Entry from 05/08 swing point to the 05/09 low.

[Ridethetrend]

@FXTraderCro

Got my one shot-one kill trade: Net profit is 80 pips and it’s the only trade I took this week.

Reasons for the short entry:

• Pivot Sell Zone
• Market Flow Bearish
• Optimal Trade Entry from 05/08 swing point to the 05/09 low.

Good trade, have a good weekend

[vladul11]

@FXTraderCro

Got my one shot-one kill trade: Net profit is 80 pips and it’s the only trade I took this week.

Reasons for the short entry:

• Pivot Sell Zone
• Market Flow Bearish
• Optimal Trade Entry from 05/08 swing point to the 05/09 low.

How many of you ICT followers also saw and profitably took this trade? How many of you are capable of applying ICT’s concepts in live action ?( cause in hindsight its very easy to apply these ICT tools/concepts to explain anything that the market is doing) I’m curios who is actually capable of using the right tools at the right time.

GLGT!

[bobmaninc]

How many of you ICT followers also saw and profitably took this trade? How many of you are capable of applying ICT’s concepts in live action ?( cause in hindsight its very easy to apply these ICT tools/concepts to explain anything that the market is doing) I’m curios who is actually capable of using the right tools at the right time.

GLGT!

I did not take this trade but I was waiting for it to set up. It finally set up while I was at work and could not trade. However I did take a short on this pair on monday using these concepts. I left a short over the weekend and when the pair opened for the week it had a huge gap down. Knowing price likes to close the gaps I moved stop loss to the middle of the gap and let price stop me out. Now if you look on a chart if the gap was to close it would set up a perfect OTE on a pivot. So I just waited for price to close the gap and got back short. Rode that trade most of the week and was stopped on Wendsday. I was hoping to get back in on that setup he took and ride it down to pairty but as stated I missed the setup. I have put a few trades on here with the before and after shots. I think a lot on here dont get these concepts because they are trying to line up all these concepts to enter a trade. Instead if you just sit back and let the concepts line themselves up you will have lot better results.

[SteveB]

Hi vladul11,

Took a London open trade on EURUSD today Got the entry a bit wrong and it took all day, but made a profit in the end.

Opened at 12:02 GMT @ 1.29451
Closed at 19:08 GMT @ 1.29180

+27.1

Very Very slow today, but pair has only moved 53 since the open

[sladhaFX]

What I still want to see is the complete transaction history of an account that he trades. I’m talking lot sizes, entry prices, exit prices, time stamps… The whole 9 yards.

Maybe then I could actually figure out how he achieves the level of performance that he does

ICT stays out of the market when he needs to. He anticipates levels of price reaction and waits for the market to offer high probability trade setups at those levels. It seems as though a lot of us feel the need to be in the market too often so we don’t miss out on “the move.” I’ve learned/am learning to suppress this urge and only identify high probability trade setups in advance. Granted, I haven’t made many trades in recent weeks, but it has exposed me to a lot less risk and has helped me to identify profitable opportunities.

It may help to try finding just 1 or 2 setups on both Cable and Fiber a few days in advance. If you get your anticipated trade setups at those levels, go for it. If the entire week goes by without those setups materializing, you’ve preserved your capital, and that’s a win.

His pre-market analysis the past few weeks have been pretty accurate. I don’t think we need to see the complete transaction history, I fail to see how that would help with one’s trading. Actually, come to think of it, I think at one point he did show all his trades from the million dollar account project in a video. Also, although he often posts his trades after taking them, many times he still shows the buy/sell orders.

With all these tools, trading the high probability setups are not exceedingly difficult. The difficult part is controlling the urge to be in the market so you don’t miss a move, or settling for less than high probability setups. Tame that, and you have an edge.

GL.

[SanJ]

ICT stays out of the market when he needs to. He [I][B]anticipates levels of price reaction and waits for the market to offer high probability trade setups at those levels. It seems as though a lot of us feel the need to be in the market too often so we don’t miss out on “the move.”[/B][/I] I’ve learned/am learning to suppress this urge and only identify high probability trade setups in advance. Granted, I haven’t made many trades in recent weeks, but it has exposed me to a lot less risk and has helped me to identify profitable opportunities.

It may help to try finding just 1 or 2 setups on both Cable and Fiber a few days in advance. If you get your anticipated trade setups at those levels, go for it. If the entire week goes by without those setups materializing, [I][B]you’ve preserved your capital, and that’s a win. [/B][/I]

His pre-market analysis the past few weeks have been pretty accurate. I don’t think we need to see the complete transaction history, I fail to see how that would help with one’s trading. Actually, come to think of it, I think at one point he did show all his trades from the million dollar account project in a video. Also, although he often posts his trades after taking them, many times he still shows the buy/sell orders.

With all these tools, trading the high probability setups are not exceedingly difficult. [I][B]The difficult part is controlling the urge to be in the market so you don’t miss a move, or settling for less than high probability setups. Tame that, and you have an edge.[/B][/I]

GL.

Awesome post… I think that’s still one of my biggest problems… My anticipated levels - when they eventually pay off, reward me nicely, but its the other times when i feel as if ‘im missing the move’ is what usually accounts for my losses…

I can only of course speak for myself, but i would go out on a limb and say i think this is something which is a lot of people’s downfall…

I think i said a couple weeks ago, at first i thought it was knowing how and when to get in the market, but im at a stage know where i realize its more important knowing when to stay out…

:57:

[tycoon83]

I Agree with sladhaFX and SanJ!

By the way is anyone else worried about ICT or am I being a bit paranoid? I hope he is ok and this absence is just him testing our paitience or something