IOF + STANDARD
DEVIATION THEORY
Mentor & Concept Credits: Michael
Huddleston & TraderDext3r
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TABLE OF CONTENTS
DISCLAIMER:
2
TABLE OF CONTENTS
3
Introduction
4
Institutional Order Flow (IOF)
5
Interbank Price Delivery Algorithm
6
Examples
7
Examples Cont.
8
Trade Breakdown: A Full Step by Step Guide
8
Trade Breakdown: Weekly Timeframe
9
Trade Breakdown: Daily Timeframe
10
Trade Breakdown: Standard Deviations + PO3
11
Trade Breakdown: Standard Deviation Cont.
12
Introduction
Hello, welcome to the second instalment of Standard Deviation Theory. This
pdf will be an in-depth guide to Institutional Order Flow (IOF) + Standard
Deviation Theory. If you haven’t already, I recommend reading the
previous PDF: ‘Standard Deviation + PO3’. These concepts were initially
outlined/discovered by ICT (Michael Huddleston) however have been
taken further with the independent research of TraderDext3r (MonsterLab).
Please watch MonsterLab’s IOF + STDV Youtube Video with this PDF to
further your studies.
TraderDext3r - MonsterLab Founder
🧪
ICT Charter / 4.5 Years Experience
STDV Theory
Before we dive into the concepts I need to
give full credit to Dexter, please see the QR
Code for all the links to his social media.
Be sure to follow, subscribe and study his
content.
Who am I? - po3trader
Day trader of Indices & Forex markets
6 years trading experience
Primarily trades PO3 during NY AM session
Pairs I trade: NAS, SPX & GU
Entry Model: 4H PO3 + STDv
Student of ICT / MonsterLab Trader
🧪
Institutional Order Flow (IOF)
What is IOF?
The Directional movement of Price to seek Liquidity to the Upside or the Downside.
-
Where did Price come from?
-
Where is Price now?
-
Where is Price likely to go?
The Market Efficiency Paradigm - Change your perspective
The Market Efficiency Paradigm is a representation of how Smart Money (large
banks & institutions) interprets price & influences uninformed money (retail).
Retail believe that their actions of buying/selling pressure move the market
because of their sheer numbers. (depicted as the large circle in the diagram)
However it is the Smart Money who are the real influencers of price, they seek and
draw price to the Liquidity.
Think like Smart Money.
Interbank Price Delivery Algorithm
Also known as the ‘Algo’ is the AI that delivers price. It is
designed to deliver price as efficiently as possible.
How does it do it? IPDA will be drawn to Liquidity in the form of
SSL & BSL (Old Highs & Lows) or Inefficiencies/Imbalances
(FVG/LV etc).
Why is it important? Market Efficiency Paradigm & IPDA are key
to understanding Institutional Order Flow. You want to
establish bias? This is how…
To simplify even further, price only does two things:
Moves from Internal Range Liquidity > External Range Liquidity.
Moves from External Range Liquidity > Internal Range Liquidity.
When Internal Range Liquidity is taken, External Range Liquidity becomes
the draw.
When External Range Liquidity is taken, Internal Range Liquidity becomes
the draw.
IRL = Internal Range Liquidity
ERL = External Range Liquidity
Where did price come from? IRL (SIBI + LV)
Where is it now? ERL (Old Low)
Where is price likely to go? Back to IRL:
- Our draw is Internal (back into the Dealing Range) so our bias is Bullish unless
price says otherwise.
Examples
We marked out our current Dealing
Range with Premium & Discount.
I selected 2 FVGs (IRL) within a Premium
(above Equilibrium).
Now we ask those same 3 questions:
Where did Price come from? ERL (Old Low)
Where is Price now? IRL (FVG)
Where is Price likely to go? Back to External Range Liquidity (Relative Equal Lows)
Our bias would switch to Bearish:
ERL taken, price has moved from a
Premium back down to a Discount.
Where do we look next? We are at ERL
so now we look back to IRL.
Examples Cont.
Last example, IRL taken > ERL.
We could do this all day so I hope you now have a greater understanding of how
to determine bias. Remember price is fractal so this applies to any timeframe.
Trade Breakdown: A Full Step by Step Guide
Now is the time to watch the IOF + STDV video on MonsterLab’s Youtube and refer
to these notes. We are just applying the process.
Case study: S&P 500 E-mini Futures
Starting on the Monthly Timeframe:
ERL taken, look Internally to IRL BISI.
Our draw on Liquidity is the BISI = We have a
Bearish Bias.
This is our Long Term Bias.
Trade Breakdown: Weekly Timeframe
Scaling down to the Weekly Chart we can deploy the same process to find a
Shorter Term Draw that is closer to price.
Same process, ERL High taken > Look Internally to the Weekly BISI.
Institutional Order Flow is clearly Bearish.
Trade Breakdown: Daily Timeframe
Now you will start to see clear Order Flow. You will see Bearish PD Arrays being
respected & Bullish PD Arrays being disrespected. Look for -Orderblocks (last
up-candles) to create ‘Resistance’ for new Selling.
We have clearly identified the Institutional Order Flow and now is the time to drop
to the Lower Timeframes to look for Structure, Standard Deviations and look for PD
Arrays.
Note: Institutional Order Flow comes first. No narrative, no trade.
Trade Breakdown: Standard Deviations +
PO3
This process is the same as outlined in the first PDF, whatever discipline you chose
to trade, it is the same. Using the 8H Timeframe we are looking at the 3M PO3 in
development:
The large candle to the right of the price action represents the 3 Month Candle.
The Accumulation & Manipulation phase have been completed, and we are now
anticipating the Distribution phase.
Price is inside the Silver Bullet Zone (1-1.5 STDV) of the Distribution Phase.
IOF = Bearish so price should disrespect all Bullish PD Arrays. When price breaks
through the Bullish FVG we have a new Support Natural or Inversion FVG to take
Shorts from & target the 2-2.5 STDV in line with the HTF PO3.
Note: Any IRL within 1-1.5 STDV is a potential Entry point.
Trade Breakdown: Standard Deviation Cont.
This is the Standard Deviation in confluence with HTF Institutional Order Flow, 3
Month PO3 in development:
You can see how we can combine Institutional Order Flow to build narrative and
give us a Directional Bias, with this bias we can use Standard Deviations and take
advantage of any PO3 of your preference/discipline and use HTF Draws on
Liquidity as targets.
This was an example of a HTF PO3 Case Study but it is not limited to this, please
reference the first PDF. These same principles can be applied to LTF PO3 to scale
into entries.
Thank for reading
🧪 -po3trader