Mastering the Central Bank Dealers Range Trading Strategy By CkTradeZone

ICT Mentorship: Central Bank Dealers Range (CBDR) Day Trading Model

Introduction

In this lesson, ICT introduces the Central Bank Dealers Range (CBDR), a key component of his day trading model. The CBDR helps traders identify the likely high or low of the day based on a specific time window (2 PM - 8 PM New York time).

📍 Entry Criteria

Before taking a trade using the CBDR model, the following must align:

• Valid CBDR Formation
  • Time Window: 2 PM – 8 PM New York time
  • Range Size: Ideally 20–30 pips, never exceeding 40 pips.
• Directional Bias Confirmation
  • Bullish markets → Look for lows in London.
  • Bearish markets → Look for highs in London.
• Standard Deviation Projections
  • 1st SD: Add CBDR range to high (for sell days)
  • 2nd & 3rd SD: Extend the range further.

Example of Central Bank Dealers Range with standard deviation projections

Key Concepts

1. CBDR

A consolidation range between 2 PM - 8 PM NY used to project highs/lows.

2. Standard Deviations

1 SD = CBDR range in pips projected above/below.

3. Judas Swing

A false breakout beyond CBDR before reversing.

Step-by-Step Process

1

Identify CBDR (2 PM - 8 PM NY)

Mark the highest high & lowest low (preferably using candle bodies). Ensure range is 20-30 pips (max 40 pips).

Identify CBDR (2 PM - 8 PM NY)

How to Identify the CBDR

• Time Window: Mark 2 PM to 8 PM New York time on your chart.
• Range Measurement: Measure the highest high and lowest low (preferably using candle bodies, not wicks).
• Pip Range: Calculate the total range (high to low). Ideal: 20-30 pips. Maximum: 40 pips.
• Visual Marking: Highlight the range with a shaded rectangle or horizontal lines.

Where to Apply CBDR

• Currency Pairs: Best for major forex pairs (EUR/USD, GBP/USD, USD/JPY).
• Timeframes: Use 15M, 30M, or 1H charts for precision.
• Session Transition: CBDR forms during the late NY session and is used to project moves into the London session.
• Broker Compatibility: Ensure your broker’s feed aligns with New York time (GMT-4/GMT-5).

Why the CBDR Matters

• Institutional Activity: This window captures bank dealers' liquidity adjustments before session close.
• Predictive Power: Projects where price may reverse or extend in the next session (London highs/lows).
• Risk Management: Tight ranges (20-30 pips) offer clear stop-loss and take-profit levels.
• Bias Confirmation: Combines with PD Arrays, seasonality, and order flow for high-probability trades.

Key Factors for Valid CBDR

• Range Size: Must be ≤40 pips (20-30 pips ideal). Larger ranges are unreliable.
• Clean Price Action: Avoid ranges with excessive spikes or news volatility.
• Alignment with Bias: CBDR must agree with the higher timeframe trend (e.g., bullish PD Arrays = look for London lows).
• Time Accuracy: Strictly 2 PM - 8 PM NY. Adjust for DST changes if needed.

📘 How to Trade Using CBDR (US100Cash Example)

Step 1: Identify the CBDR (2 PM – 8 PM NY)

Example for US100Cash:

• Locate the 2 PM – 8 PM NY time window on your chart
• Mark the highest body close and lowest body close (ignore wicks)
• Ideal Range: 20–30 points
• Reject if Range > 40 points
  (ICT: "Larger than 30 Pips can tend to be unfruitful")

Step 2: Project Standard Deviation Levels

US100Cash Calculation:

If CBDR range = 25 points (high: 18,250, low: 18,225):

• 1st SD Above: 18,250 + 25 = 18,275
• 2nd SD Above: 18,275 + 25 = 18,300
• 1st SD Below: 18,225 – 25 = 18,200

(ICT: "One standard deviation above and below would be the same range added to the high... and subtract that range from the low")

Step 3: Trade Execution in London Session

📉 Bearish Day Example (Sell Setup):

• Price reaches 18,275 (1st SD) during London session
• Look for rejection patterns (e.g., bearish engulfing, pinbar)
• Enter short, stop above 18,300 (2nd SD)
• Target: CBDR midpoint or 18,225 (CBDR low)

(ICT: "Most sell days will create the high of the day from the CBDR up to three standard deviations")

📈 Bullish Day Example (Buy Setup):

• Price drops to 18,200 (1st SD below) during London session
• Watch for bullish reversal patterns
• Enter long, stop below 18,175 (2nd SD)
• Target: 18,250 (CBDR high) or 18,275 (1st SD above)

(ICT: "Ideal buy days will create the low of the day no less than two standard deviations below")

📌 Key Factors from ICT Transcript

• Time: "CBDR range is from 2 PM to 8 PM New York time"
• Range Size: "Ideally 20 to 30 Pips... larger than 30 tends to be unfruitful"
• Projections: "Add range to the high, subtract from the low for SDs"
• London Session: "Most sell days make the high in London... buy days make the low"

Example: CBDR (blue box) with 25-pip range measured from candle bodies (2 PM - 8 PM NY).

Pro Tip

Use the body of candles (not wicks) to measure the CBDR. Wicks often reflect retail stop hunts, while bodies show institutional accumulation/distribution.

2

Calculate Standard Deviations

1 SD = CBDR range added to high (for sells) or subtracted from low (for buys). Repeat for 2nd & 3rd SDs.

Calculating Standard Deviations: The Complete Guide

1 How to Calculate

Step-by-Step Formula:

1. Measure CBDR range (High - Low) in pips
2. 1st SD Above: CBDR High + (Range × 1)
3. 1st SD Below: CBDR Low - (Range × 1)
4. Repeat: For 2nd SD (×2), 3rd SD (×3), etc.

Example: If CBDR range is 25 pips, 1st SD above = High + 25 pips

2 Where to Apply

London Session

Project SD levels from NY close (8PM) to London open (2AM NY)

Key Levels

Watch for reactions at round numbers near SD projections

3 Why It Works

Institutional Logic:

• Banks use statistical models to place orders at calculated deviations
• Retail traders get stopped out beyond these levels
• Creates "fair value gaps" between SD zones

4 Key Factors

!

Range Size ≤40p

✓

Body vs Wicks

3

Max 3 SDs

"Most highs/lows form within 1-2 SDs. 4th SD indicates extreme conditions." — ICT

How to Calculate Standard Deviations (US100Cash Example)

Why Standard Deviations Matter

Standard deviations help quantify where price is most likely to reverse based on the CBDR's range. Institutional traders use these levels as profit-taking zones and liquidity pools. The tighter the CBDR range (20–30 pips), the more accurate the projections.

Key Factors in Calculation

• Precision Timing: Must use exact 2PM–8PM NY candles
• Clean Range: Ignore spikes/wicks unless they close outside body
• Instrument-Specific: US100Cash moves differently than Forex pairs

Step-by-Step Calculation (US100Cash Example)

Example Data (June 15, 2024):

• CBDR High: 18,250 (2PM–8PM NY candle close)
• CBDR Low: 18,220 (2PM–8PM NY candle close)
• Total Range: 30 points (ideal 20–30 range)

1st Standard Deviation

Bullish Projection:

18,220 (Low) - 30 = 17,990

Bearish Projection:

18,250 (High) + 30 = 18,280

2nd Standard Deviation

Bullish:

17,990 - 30 = 17,960

Bearish:

18,280 + 30 = 18,310

How This Played Out

Actual London Session:

• Price dipped to 17,995 (5 pts above 1st SD)
• Reversed sharply to 18,300 by NY open
• Perfect institutional buy zone at discount

⚠️ US100Cash Specifics

Unlike Forex, US100Cash often shows:

• Wider spreads during CBDR formation
• More volatile London reactions
• News sensitivity (FOMC, NFP impact projections)

How to Trade with Standard Deviations (US100 Cash Example)

📍 Key Factors for US100 Cash

• Time Window: 2PM-8PM NY (CBDR formation period)
• Ideal Range: 15-25 points (US100 moves faster than Forex)
• London Focus: 2AM-5AM NY for reactions
• News Awareness: NASDAQ futures gaps affect cash open

US100 Cash Trade Example

1

Identify CBDR (Feb 5, 2024)

Between 2PM-8PM NY:
High: 17,525
Low: 17,505
Range: 20 points

2

Calculate Deviations

1SD Long: 17,505 - 20 = 17,485
1SD Short: 17,525 + 20 = 17,545
2SD Short: 17,545 + 20 = 17,565

US100 Cash showing CBDR range (blue box) and 1SD/2SD projections

Trade Execution

🟢 Bullish Setup (Feb 6)

• Price dipped to 17,482 (1SD)
• 15-min bullish engulfing candle
• Entry: 17,490 with stop at 17,470
• TP1: 17,525 (CBDR high)
• TP2: 17,550 (next liquidity pool)

🔴 Bearish Setup (Feb 1)

• Price rejected at 17,562 (2SD)
• Wick into London session high
• Entry: 17,550 with stop at 17,580
• TP1: 17,505 (CBDR low)
• TP2: 17,450 (prev. day low)

🔍 Key Observations for US100

• Faster Moves: Often reaches 2SD quicker than Forex
• News Impact: CPI/NFP cause 4SD extensions
• Overnight Gaps: Monitor NASDAQ futures for cash open levels
• Liquidity Zones: Round numbers (17,500) act as magnets

⚠️ Pro Tip: US100 often shows cleaner CBDR patterns during NY afternoon (2PM-8PM) when European banks are still active but US liquidity is winding down

Step-by-Step: Trading the Judas Swing with CBDR (US100Cash Example)

1

Identify Valid CBDR (2PM–8PM NY)

US100Cash Example: Between 2PM–8PM NY, price consolidates in a 20–30 pip range. Mark the high at 18240, low at 18210.

✓ Valid Range: 30 pips (18240–18210)
✗ Invalid Range: If > 40 pips (per ICT rule)

2

Project Standard Deviations

US100Cash Calculation:

• 1st SD Above: 18240 + 30 = 18270
• 1st SD Below: 18210 − 30 = 18180

"Most sell days create highs within 1–2 SDs above CBDR" — ICT

3

Watch for Judas Swing in London

US100Cash Scenario:

1. Price breaks above CBDR high (18240) in Asian session
2. Spikes to 18265 (near 1st SD at 18270) but fails to close above
3. Forms bearish rejection candle with wick into 1st SD

Judas Swing Confirmation: False breakout above CBDR high that reverses back into range ("traps retail traders" — ICT)

4

Entry & Management

US100Cash Trade Execution:

• Sell Entry: After close below CBDR high (18240) post-spike
• Stop Loss: 5–10 pips above Judas swing high (18265 → SL ~18275)
• Target: CBDR low (18210) or 1st SD below (18180)

"Price can come down to the fourth standard deviation to create a New York session market reversal profile" — ICT

US100Cash Judas Swing Example

CBDR High: 18240 Judas Spike: 18265 1st SD: 18270

Price spikes above CBDR then reverses (London Session)

Download CBDR Cheat Sheet

Step-by-Step: Trading the Judas Swing with CBDR (EURUSD Example)

📘 Key Definition from ICT:

"A false breakout beyond CBDR before reversing (traps retail traders)."

1

Identify Valid CBDR (2PM–8PM NY)

• EURUSD forms 20–30 pip range between 2PM–8PM NY
• Measure body highs/lows (not wicks) for cleaner institutional levels
• Example: CBDR high: 1.0850, low: 1.0825 (25 pip range)

2

Project Standard Deviations

• 1st SD above: 1.0850 + 25 pips = 1.0875
• 1st SD below: 1.0825 - 25 pips = 1.0800
• ICT Quote: "Most sell days create highs within 1–2 SDs above CBDR"

3

Watch for Judas Swing in London

• Bullish: Breaks below CBDR low (1.0825) to 1.0815 then reverses
• Bearish: Breaks above CBDR high (1.0850) to 1.0865 then reverses
• ICT Rule: "Judas swing traps retail traders before institutional reversal"

EURUSD Judas Swing Example

Context: Bearish weekly bias, expecting lower close

1. CBDR forms 1.0850–1.0825 (25 pips) from 2PM–8PM NY
2. London opens → Price rallies to 1.0865 (near 1st SD)
3. Rejection candle at 1.0865 (wick to 1.0870)
4. Price reverses below CBDR high (1.0850)
5. Entry: Sell at 1.0849 (back inside CBDR)

"When price exceeds CBDR then fails to hold, it confirms the Judas swing reversal" — ICT

Key Factors from Transcript

• Time: Judas swings occur in London session (2AM–8AM NY)
• Depth: False break usually extends 10–15 pips beyond CBDR
• Confirmation: Requires close back inside CBDR range
• Ideal Range: CBDR must be <40 pips (best is 20–30 pips)

Step-by-Step Process with Killzone Examples

📌 Key Rules from ICT Transcript

• Central Bank Dealers Range: 2 PM - 8 PM NY time
• London Killzone: 2 AM - 5 AM NY time (High/Low setups)
• New York Killzone: 7 AM - 11 AM NY time (Reversals)
• Ideal CBDR range: 20-30 pips (Max: 40 pips)

📊 US100 Cash Examples

🔹 London Killzone (2 AM - 5 AM NY)

• Price hits 1st SD above CBDR
• Wick rejection at key level
• Bearish order block forms

Entry: Sell at retest of liquidity sweep (stop above 2nd SD)

Avoid: If range >40 pips or no rejection

🔹 NY Killzone (7 AM - 11 AM NY)

• Price sweeps 4th SD post-news
• Bullish engulfing at London low
• PD array shows discount

Entry: Buy after liquidity grab below Asian low

Avoid: Without a clear reversal candle

💱 EURUSD Examples

🔹 London Killzone

• CBDR = 22 pips (ideal)
• Price tags 2nd SD below
• Bullish mitigation block

Entry: Buy at retest of broken London high

Perfect Time: 3:30 AM NY

🔹 NY Killzone

• Judas swing above CBDR high
• Bearish FVG at 1st SD
• NY rejection of highs

Entry: Sell at FVG fill, stop above swing

Avoid: If London range >40 pips

🔹 London-NY Transition

• Consolidation at CBDR midpoint
• Equal lows in Asian range
• Seasonal bias confirms trend

Entry: Buy stop above consolidation

Perfect Time: 6:15 AM NY

✅ Perfect Entry Checklist (ICT Rules)

• When: First 90 mins of London/NY sessions
• Where: At 1st–3rd SD levels from CBDR
• Confirm: Order block or FVG + Liquidity sweep
• Avoid: News spikes hitting 4th SD or more

"Most sell days create highs within 1–2 SDs above CBDR, buy days create lows within 1–2 SDs below." — ICT

Final Notes & Warnings

• ✅ Trade only high-probability days (not every day works)
• ❌ Avoid CBDR trades if range exceeds 40 pips
• ⚠️ Be cautious around high-impact news (can push price to 4th SD)