Fading the edges of the market structure requires that you see the markets in a different way to the usual retail trader.
Strength in price movement towards a range boundary or an S/R level is not necessarily going to continue with strength following a breakout.
In the right context, this apparent strength can produce a nice trap at the edge of the market structure, providing breakout failure opportunity for anyone willing to fade the move back into the prior range.
Here's a great question I received via private message on Facebook during the week, which I think is relevant to all of us.
I'll make an assumption here that the intent is to talk about how to fit trading into "life". That is, how to find sufficient time for not only trading, but all the admin pre and post-session, plus the never-ending tasks of personal and professional learning and development.
Yeah… there is a lot to do.
There are no shortage of supposedly effective time management systems. These are two of the major systems I've tried over the years, both of which have a big following. But there are no shortage of others if you feel like searching Google for "time management".
So what system do I use?
None of them!
Whenever I implement a comprehensive system for managing my time, I end up spending too much time working and managing the system, rather than doing productive work.
But hey… maybe that's just me?
There are millions of people around the world who swear by these type of systems. Give them a try. Just because I didn't find them effective, doesn't mean you won't get great value out of them.
So what do I do then? Let's call it a "Time Management Non-System". I have general themes in life; things that are important to me. Family, trading, YTC, personal and spiritual growth & development, and a bunch of other stuff. And I just work on whatever I feel most motivated to work on at any particular time.
It's perhaps not as efficient as the above "systems". But it works for me.
Now… here's the important bit though, which was my motivation for sharing this via an article rather than just a private message reply.
Whether you operate with GTD or Agile or the "YTC Time Management Non-System", there is a foundation that needs to be in place first. It is the key that ensures you not only find time for all your trading activities, but that you also make maximum effective use of this time.
Without this foundation, you're wasting your time (pun intended!).
What really matters is NOT how you prioritise all your competing tasks and schedule them across your limited calendar.
Instead, what matters is how productive you are with the time you spend on each of your tasks.
Ultimately we are not managing time, but rather managing ourselves and how well we are able to apply ourselves to the task at hand.
And we do that by managing our ENERGY and our MOTIVATION.
Perfect prioritisation and scheduling of tasks is pointless if you don't have the energy to make productive use of the time.
Perfect prioritisation and scheduling of tasks is pointless if you don't have the motivation to work efficiently and effectively on the task.
Energy – Keep fit and healthy, in mind, body and soul. Sleep well. Keep hydrated. Eat healthy foods. Exercise. Maintain good relationships.
Motivation – Fill your life with reminders as to the "WHY" that drives all your efforts towards trading success.
If you lack energy and motivation, it doesn't matter what task you allocate to a particular block of time. It will be poorly executed.
But if you have high energy and are bursting with motivation, you'll ensure efficient and effective use of your time.
So if you wish to be effective in completing all daily trading routines and also allowing time for personal and professional development, then work to first ensure high energy levels, and do ALL YOU CAN to ensure massive motivation towards your trading goals.
The task for you now, if you haven't already done so, is to spend some time thinking about how you can improve your life in terms of both ENERGY and MOTIVATION FOR TRADING.
Because I don't believe it matters which time management system you ultimately choose to use. Or even if you choose to live without one. If you are highly energised and motivated, you'll not only find the time needed to work on your trading, but you'll also quite likely be unstoppable.
Just do it!
PS. None of these ideas are mine. I don't know where they originally came from, but if you do Google "time management" you'll surely find people discussing these ideas as well. There is a lot of great material out there on productivity. Schedule some time to study the topic and to experiment with different approaches till you find the one that best works for you. 🙂
I trade low timeframes. Maybe you've noticed? 🙂
But I've always said that no one timeframe is better than any other. There are professional traders operating across the full spectrum, from watching the tape move tick by tick, right up to daily and weekly charts. There is no "best"; only what is best for our own personality, needs and circumstances.
And I've always said that the ideas expressed in the YTC blog (and also in the YTC Price Action Trader) are applicable across all timeframes. Ok… maybe not the screen-watching ideas from last week's article. But the VAST MAJORITY of what I discuss can be applied to other markets and other timeframes, with only a little extra thought about how it might be adapted.
So I absolutely LOVE getting emails from traders who realise this fact. And who have applied the ideas. And who have found some success.
Here is an extract from an email conversation I had during the week with Anatoliy, who trades forex markets on daily timeframes.
I've been reading your blog for more than a year now, and along with Trading in the Zone it's been one of the bigger reasons for considerable improvement in my trading.
Even though I am hardly ever looking below D1 timeframe, the principles all stay the same. Trading long term allows me to analyze all 28 major forex trading pairs for entry opportunities.
Anyway, just wanted to share two pictures with you, inspired by your November blog post: http://yourtradingcoach.com/trading-process-and-strategy/who-would-buy-here/
The post is so simple, but I have to say, it is one of my favorites. There are at least 5 long term entries I am taking per month just based on this principle.
Thank you once again for sharing all your knowledge, experience and ideas.
There were two images attached to the email. I've had to shrink the images to fit here.
If you click on the images, they will open a full-size copy in your browser.
One of the advantages of low timeframes is that you can FEEL the price action.
By "low timeframes", I'm referring to any timeframe which allows you to watch the screen continuously. So we're probably talking anything in the range of 5 minute charts and lower.
Operating on higher timeframe charts, where you're only getting a visual sense of the price movement as each candle closes, you're missing out on the real-time feel for sentiment that comes through experiencing the way price moves in creating that candle.
Let's look at an example…
The following YTC Social Media post was just about a perfect example of the concept of trading failed expectations.
I received a question on the facebook post about trade entry. So let's look at the trade I took in this area – a test of Low-of-Day support.
Noting of course that there is one significant difference. I traded the 1 minute timeframe; not the 3 minute timeframe.
The 3 minute chart was used for the facebook and twitter post, simply because it beautifully demonstrated the concept that I was trying to highlight. It wasn't about my trade or my timeframes. It was about the general concept of looking for opportunity in places where "obvious expectations" are proven wrong.
The same idea applies on the 1 minute chart, of course. And it's the reason underlying my trade.
But this time… it's a WHOLE LOT MESSIER!
The good trades move quickly to the targets. But we don't always get good trades. And there's not much to learn from them. The messy trades though… much more common and much better for "lessons".
Here's the same test of Low-of-Day support in the one minute chart:
The strong drive towards the support level appears as before, creating an expectation in the mind of many market participants for continuation lower. Personally, I expect that as well (YTC PAT Sixth Principle). And my plan is to wait for the break and assess the likelihood of either breakout failure or breakout pullback potential.
But when a move this strong stalls… and breaks back above the next TTF candle… well this is NOT what would be expected of a "strong" bearish market.
Let's wait and see what happens on a retest. If the retest continues with strength, I'm back with the original plan (watching for breakout failure or breakout pullback potential). But if the retest cannot continue lower… well I just love these setups. They can snap back higher quickly. So I'll be looking to enter LONG on a test of the support level, based upon the fact that the market has shown it can't go lower and the prior bearish strength was an illusion (liquidity vacuum perhaps!).
The market sets up that scenario nicely, as we see in the above image with the first failure to continue lower. Look for lower timeframe entry in the shaded region.
In this case though, there is no quick movement higher. And the market falls for a second attempt to break support.
This provides a second opportunity to get long, as the market is once again unable to continue lower. But it's quite a messy one with some chop at the turning point.
This is the reality of the markets. We all want trades that move quickly to their target. But that's not what we always get. You need to decide how you will deal with these "messy" setups. Some people prefer wider stops, to allow for chop and imperfect decision making at the entry zone, willing to accept the reduction in R:R potential. Others, like me, prefer to keep the stops tighter. But to be effective in that regard you need to be willing to scratch and re-enter. Don't let an initial failure prevent you from trading the second chance entry.
My entry is triggered on the lower timeframe charts (a combination of 15 second and YTC Scalper 2-Range). But for the sake of this article I'm going to show the 30 second chart, which displays all the information you need to see while also fitting nicely on the one image. So let's check it out.
The following image was posted on YTC Social Media on Tuesday… and I think it makes such an important point that I want to expand upon it in today's article.
First… here's the image:
All trading conditions are NOT equal.
Sometimes the environment is well suited to your trading strategy, your style and your personality.
Other times it is clearly not suited.
What difference could it make to your results, if you were to start each session with a game plan. Something like this, for example:
As always, the game plan is subject to change during the session. But it's a useful starting place.
It will have you ready to engage the market without hesitation, should price move into areas with potential for ideal trading conditions.
And it will have you operating cautiously at all other times.
But how do you learn to identify these areas?
This is a good goal for your Market Structure & Price Action Journal!
What if you did this every day…
What if you added a short task to your session review procedure? Just a couple of minutes to review the higher timeframe and trading timeframe charts.
What if you identified the areas on the charts which provided ideal trading conditions? The price action with clear directional conviction, smooth flow and ideal pace (or whatever other conditions you prefer). Just the absolute BEST!
What if you studied the market structure, noting on the chart the features or conditions that led to creating this ideal environment. Typically these might be areas that spring an HTF trap, or areas of significant breakout.
What if you studied the price action, noting how to best exploit the trade opportunity to maximise profits while minimising any risk.
What if you printed the charts, along with your market structure and price action notes, and filed it into a ring binder or folder?
What if… after doing this for a year… you realised that you had a document with maybe a hundred or so examples of ideal trading conditions, along with notes on how to identify them, and how to exploit them once they're confirmed. (Yes there are well over 200 sessions a year, but not every session will provide an area of "ideal" trading conditions!)
What if you used this resource to document some rules-of-thumb for identifying potential areas of ideal conditions, allowing you to commence each session with a game plan just like the example listed above?
Would that perhaps be useful?
Let's look at another example using the same market as in the above image, but from the very next day.
Seriously… who would buy here?
Ok… enough talking in general concepts. I always get in trouble when I do this, because someone will email me including a chart which shows an exception to the rule.
Generally… it's not wise to buy in these areas.
And this brings us to the point of the article.
Consider it a "rule of thumb" for finding good trade locations.
One way to find areas on the chart which may show potential for a short entry, is to find the places on the chart where you think, "Who would BUY here?"
One way to find areas on the chart which may show potential for a long entry, is to find the places on the chart where you think, "Who would SELL here?"
Let's look at a trade based upon this idea.
I love this quote:
“Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending.”
… Carl Bard
Whenever I wish to do so, I am free to reset today to DAY ONE!
Whatever happened last week, last month, or last year no longer matters.
My new trading career begins now.
Hit the reset button. Clean the slate. And build again… better and smarter than ever before.
But here's what I'm thinking…
What if I did this every day?
What if EVERY TRADING SESSION was a new beginning?
I am forgiven my imperfections.
I am forgiven my failures.
Today is a new day… I can start from now and make a brand new ending.
Better… and smarter… than ever before.
Today I will begin work with sufficient rest and relaxation to ensure a healthy body and mind.
Today I will complete my pre-session routines in full, prior to the session open.
Today I will approach the session open with a clear idea of my game plan for the day; and a willingness to amend that plan if price has other ideas.
Today I will eliminate all distractions; maintaining the conditions essential to attaining my Ideal Trading State.
Today I will enjoy the challenges which the market provides.
Today I will flow with the shifting sentiment of the market; adapting tactics to suit the conditions the market provides.
Today I will engage the markets with controlled and focused aggression – standing aside patiently when the market offers nothing but risk, accepting that risk when the market provides opportunity, and attacking the market in force should it provide perfect trading conditions.
Today I will complete my post-session routines in full, allowing me to learn from my data recording and review processes.
Today I will forgive myself my imperfections; and celebrate my successes.
Well tomorrow is a new day.
And tomorrow I get to start again; better and smarter than ever before.