Monthly Archives: April 2015

Spring the Trap

 

I'm not a pattern trader. I look at the internal strength and weakness within the price movement; seeking opportunity at places of traps or weakness against the bias.

But there are some patterns that are based around similar concepts, such as the Wyckoff Spring and Upthrust. If you trade patterns, these are two which you should have in your trading arsenal.

I recently received the following message from another trader, showing an excellent example of a Spring.

Trapped Traders - Spring Pattern

Let's zoom in on the image a little:

Trapped Traders - Spring Pattern

There are two absolute facts here!

First, at around 3:20am in my timezone, this was 20 minutes after my session had finished.  (I can't stay up all night!!!)

And secondly, it is a beautiful example of a spring. I immediately thought I had to share this one. Part of what appeals to me is the rather "messy" price action – it's a REAL example, not a textbook perfect example.

So let's look at the charts in a little more detail.

Higher Timeframe first in order to get a little context…

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Anticipate – Don’t React

 

Here's a great question I received recently from another trader.

Anticipate - Don't React

Let's start by defining the terms, as it's obvious that any decision to enter must be a reaction to some "decision making input". But that is not what was meant.

The question is asking:

  • Do I anticipate every setup, meaning that it's pre-considered and pre-planned ahead of time before price gets to the area? For example… "The rally is slowing. If we get weakness on a break of the next swing high I'll be looking to enter SHORT."
  • Or do I sometimes just react emotionally to the current price bar without any pre-considered thought and planning? For example, "Wow… that's a huge red bar… I'm getting in SHORT!".

As I mentioned in response to the question… I always anticipate.

Let's look at a recent example. It's a sequence from last week which nicely illustrates the concept of "Anticipate – Don't React", showing how keeping my focus ahead of price ensures I don't chase or emotionally over-react to any sudden movement.

As a bonus it also demonstrates the idea that "sometimes a trade idea requires more than one entry attempt!"

Anticipate - Don't React

Anticipate - Don't React

We pick up the sequence with price rallying up towards area F.

We'll view this sequence via the 30 second chart rather than the 1 minute (trading timeframe) chart. It provides a little more feel for the internal movement of the TTF and will make the article a little shorter than if I shared a combination of TTF and LTF each time (I'm all about saving time & effort!).

Anticipate - Don't React

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