12 - Quarterly Theory (QT)
12.1 - Overview of Quarterly Theory (QT)
- Quarterly Theory (QT) presents a novel approach to understanding market cycles through a temporal lens, segmenting time into distinct quarters for a detailed analysis of price fluctuations. This theory posits that market prices exhibit discernible patterns within these quarter divisions, offering traders a strategic advantage in predicting and capitalizing on market movements.
- The versatility of QT lies in its compatibility with various trading methodologies and timeframes, making it a flexible tool for a wide range of trading strategies.
- By introducing precise, time-based markers, QT effectively reduces uncertainty and enhances clarity, aiding traders in pinpointing optimal moments for market entry.
12.2 - QT Terminology
12.2.1 - QT Phases
| Phase | Name | Description |
|---|---|---|
| A | Accumulation Phase | QT traders typically avoid initiating new trades |
| M | Manipulation Phase | Ideal for identifying new trading opportunities |
| D | Distribution Phase | Ideal for identifying new trading opportunities |
| X | Continuation or Reversal Phase | QT traders typically avoid initiating new trades |
12.2.2 - QT Quarters
| Quarter | Name | Possible Phases |
|---|---|---|
| Q1 | The First Quarter | (A) Accumulation or (X) Continuation/Reversal |
| Q2 | The Second Quarter | (M) Manipulation or (A) Accumulation |
| Q3 | The Third Quarter | (D) Distribution or (M) Manipulation |
| Q4 | The Fourth Quarter | (D) Distribution or (X) Continuation/Reversal |
12.3 - Time Cycles
| Cycle | Duration | Description |
|---|---|---|
| Yearly cycle | 4 quarters, 3 months each | N/A |
| Monthly cycle | 4 quarters, 1 week each | Starts on the first full week |
| Weekly cycle | 4 quarters, 1 day each | Monday-Thursday |
| Daily cycle | 4 quarters, 6 hours each | Aligned with trading sessions |
| 90-minute cycle | N/A | Within each trading session |
12.4 - 90-minute Cycle Zone Timings
All times are according to New York local time.
12.4.1 - Asian Cycle
- Q1: 18:00 to 19:30
- Q2: 19:30 to 21:00
- Q3: 21:00 to 22:30
- Q4: 22:30 to 00:00
12.4.2 - London Cycle
- Q1: 00:00 to 01:30
- Q2: 01:30 to 03:00
- Q3: 03:00 to 04:30
- Q4: 04:30 to 06:00
12.4.3 - New York AM Cycle
- Q1: 06:00 to 07:30
- Q2: 07:30 to 09:00
- Q3: 09:00 to 10:30
- Q4: 10:30 to 12:00
12.4.4 - New York PM Cycle
- Q1: 12:00 to 13:30
- Q2: 13:30 to 15:00
- Q3: 15:00 to 16:30
- Q4: 16:30 to 18:00
12.5 - QT Profiles
12.5.1 - AMDX Profile
| Quarter | Phase | Description |
|---|---|---|
| Q1 | Accumulation (A) | Usually a tight range, indicating consolidation |
| Q2 | Manipulation (M) | Market tends to reverse after a liquidity grab |
| Q3 | Distribution (D) | Market trends in one direction, offering clear trading opportunities |
| Q4 | Continuation/Reversal (X) | Market either continues the distribution direction or reverses |
12.5.2 - XAMD Profile
| Quarter | Phase | Description |
|---|---|---|
| Q1 | Continuation/Reversal (X) | Market either continues the previous trend or reverses |
| Q2 | Accumulation (A) | Typically a big range, indicating significant market consolidation |
| Q3 | Manipulation (M) | Market tends to reverse after a liquidity grab |
| Q4 | Distribution (D) | Market trends in one direction, providing clear trend-following opportunities |
12.6 - The QT True Open
-
In the context of Quarterly Theory (QT), the 'True Open' for each trading cycle, whether following the AMDX or XAMD pattern, is established by the opening price at the beginning of the second quarter (Q2). This is abbreviated as Q2OP.
-
As a strategic approach, QT traders typically seek buy opportunities when the market price falls below the Q2 opening level, and look for sell opportunities when the market price rises above this key Q2 opening price.
12.7 - Conclusion
In conclusion, the Quarterly Theory (QT) stands as a robust and insightful framework for traders seeking to navigate the complexities of market cycles with greater precision and understanding. By breaking down time into distinct quarters and aligning these with specific market phases, QT offers a structured approach to analyzing price movements and identifying potential trading opportunities. The versatility of QT, applicable across various timeframes and trading styles, makes it a valuable tool for a wide range of traders, from short-term day traders to long-term investors.
The guide's exploration of the different QT phases and profiles, along with the concept of the 'True Open', equips traders with a deeper understanding of market dynamics and the ability to make more informed decisions. Whether it's recognizing the subtle signs of the Accumulation phase or capitalizing on the trends of the Distribution phase, QT provides a comprehensive lens through which market behavior can be interpreted. As traders continue to navigate the ever-changing landscapes of financial markets, the principles and strategies outlined in this guide offer a pathway to not only understand but also to leverage the rhythmic patterns of market cycles to their advantage.
It is crucial for traders to understand that while Quarterly Theory (QT) offers valuable insights into market cycles, it is not a standalone solution for successful trading. To effectively utilize QT, traders must integrate it into a well-defined trading strategy and a robust trading model. QT should be viewed as a complementary tool that enhances decision-making within the context of a broader trading plan. Additionally, effective risk management is paramount. Traders should not rely solely on QT for making trading decisions but should also consider market volatility, economic indicators, and their own risk tolerance. Implementing sound risk management practices, including setting stop-loss orders and managing trade sizes, is essential to protect investments and ensure long-term trading sustainability. Remember, no trading method, including QT, can guarantee success, and it is vital to approach trading with caution, knowledge, and a clear understanding of the risks involved.