Monthly Archives: January 2016

I’d Take These Trades EVERY TIME. Here’s Why…

 

Win, lose or draw!

I'd be happy to take these trades EVERY TIME.

Let's start with some much higher timeframes to give you some context.

I'd take these trades EVERY time.

I'd take these trades EVERY time.

I'd take these trades EVERY time.

So there is good potential for strong directional movement below prior lows.

Any break to new lows… I'll be all over any BPB weakness.

And even better… if the market sets up right I'll try to enter short pre-break (above the low of day) to profit as price breaks lower. 

Let's look to the Trading Timeframe chart to see what the market offered.

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Some Days Are Just A Grind!

 

I find it fascinating chatting with new traders in this industry. Typically when they come to me they've moved beyond the Holy Grail indicator and systems dream and have come to recognise that it's time to develop some skill instead. Skill in real-time reading of price action and market sentiment. What amazes me though, is the number that still hold some belief that once they learn price action, then the game will be easy.

Here's a reality check. It doesn't get easy. You just get better!

Sure, there are days when everything sets up perfectly and you're dancing in perfect step with the market.

But there are also days when you're completely out of sync and just tripping over your own feet.

And then there are the majority of days which fit somewhere in-between these two extremes, where you just do the best you can despite your imperfect decision making.

Let's look at one of these days. A day when I struggled to maintain confidence in my read of the market; and a day in which I struggled to execute well.

The result was a good profit (considering my poor performance). But it was messy. None of the trades were held for any significant distance, despite a nice trend.

The session was a recent FOMC day. I don't trade post-FOMC. It's 5am. Seriously… there's a limit to how late I can stay up.

I do trade the market prior to the FOMC though… but this is carried out with CAUTION.

My expectation for a session leading up to a significant news event is for a higher probability of a narrow range quiet market.

If that is what the market provides, then I have no interest in trading. Hindsight may well show there was opportunity available at the edge of the range structure, but I'd rather sit on the sidelines and survive to trade another day. A good result would be quick recognition of the narrow range environment, and NO trades.

However, if the market can show some directional conviction, then I'll trade this for as long as the directional move lasts and for as long as I have a good feel for the bias. And more often than not with reduced position size.

Here's the 5 minute chart (Higher Timeframe chart) which shows the session open through till just after midday (which is all I trade).

Higher Timeframe showing the opening hour trend

Let's examine the 1 minute Trading Timeframe trend within the first hour (and just beyond) and see how it was managed.

Trading timeframe

Trading timeframe

The outcome

Trading timeframe

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The First Loss – How Will You Let It Affect Your Mindset?

 

Last week's article led to an interesting comment about the sequence preceding the one discussed in that article.

Check it out here if you missed it – How to Enter When the Pullback Shows Strength!

The email feedback expressed an interest in the fact that the session started with a loss and yet I managed to quickly recover that loss.

  • "I particularly like the way you showed how you were wrong on the long but it did not affect your session, you focused on the price action projected, possible scenarios and continued to do your job."

So I thought we should look at this earlier sequence and see if there are any lessons available.

Let's begin with the trading timeframe, showing the price action which offered the initial loss and the subsequent two wins.

The first loss - how will you let it affect your mindset

Let's start by examining the LONG BPB trade.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

I'd love to be able to say I caught the SHORT entry as the breakout failed. But it was not to be. I was biased LONG. I was wrong.

Loss was minimised though. So this was a good trade.

Except for the fact that I've started the session in minor drawdown (which seems to be a habit lately!!!!)

Let's move on to the rest of the sequence.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

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