Monthly Archives: April 2016

There is NO SUCH THING as Missed Opportunity

 

I missed this opening drive.

I missed this opening drive.

I was fine with this. There was no real signal for me to enter. And I prefer not to chase a price move.

But then I missed this one.

But then I missed this one.

This one did provide a setup. And I attempted entry, only to miss.

^&#%#%@%@

Naturally, this one was followed by a few choice swear words.

But then I was reminded of my recent facebook and twitter post:

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CONSISTENCY – It’s a NECESSARY part of the process!

 

In a previous article we discussed the various levels you need to pass through on the way to achieving your long-term trading goals:

It's Time to Fight to Get to the Next Level

See here if you wish to explore this path in greater detail – http://yourtradingcoach.com/trading-business/its-time-to-fight-to-get-to-the-next-level/

And we also discussed the process required to drive your development through each of these levels:

Manage your growth and development via twenty trade groupings

This has been discussed a number of times, but I believe the flowchart was first used here – http://yourtradingcoach.com/trading-business/you-can-do-this/

20 trades is of course the absolute minimum required. Feel free to increase it if you prefer larger sample sizes. But do not reduce it. Any less that 20 and your sample size is too small to provide useful data.

Anyway, today I want to discuss a NECESSARY component of this 20 trade review process.

I had a chance to speak to a trader this week who was not progressing well, despite tracking stats for 20 trades at a time.

Here's the thing though…

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Reversals Often Give Multiple Clues

 

In the absence of any unexpected news event, or some other reason to shock the market, a reversal will usually not just appear out of nowhere.

V-Turn reversals happen. But they're not the usual outcome.

More often than not, there will be multiple clues in the lead-up to the reversal.

The challenge for you, as a trader, is to learn to read the clues as they're presented and adjust your bias and trade expectations to suit.

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

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Traps – This One Needed Patience

 

It seems that most of the examples of market traps which I've shared over the years, were all traps which trigger very quickly.

We all like the quick ones. They're easy. Like this one:

Traps - They don't always play out straight away!

See here for the TST, BOF & BPB Setups.

Let's see what happens as price breaks the swing high at C:

Traps - They don't always play out straight away!

And the outcome:

Traps - They don't always play out straight away!

Interestingly, had I not been trading this trap opportunity, would I perhaps have seen the even better one that followed immediately after?

Traps - They don't always play out straight away!

We all love the traps that trigger quickly and move immediately in the positive direction. 

But traps don't always spring quickly.

Sometimes they require a little patience.

Sometimes they play out slowly.

Like this one which occurred a bit later:

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Order Entry Error – Immediate Actions & Working an Exit

 

I thought it would be good to expand upon some of the ideas discussed on YTC social media last weekend.

Here are the three social media posts first…

26th March:

Order Entry Error - Immediate Actions - Post 1

27th March:

Order Entry Error - Immediate Actions - Post 2

28th March:

Order Entry Error - Immediate Actions - Post 3

There are two main points that I'd like to examine in a little more detail.

  1. Immediate Actions
  2. Working an Exit

 

Immediate Actions

So let's say you've traded the sequence above, and just recognised the entry error. What are your actions?

The obvious advice is to scratch immediately. It's what most educators will suggest. And often it is good advice. Immediately take responsibility for the error and take your loss.

I won't ever have a problem with someone who does this.

Especially in the following cases:

  • Your trading session is in drawdown and has reached your daily loss limit. You're clearly not in sync with the market today. Take the loss. And get away from the screen for a while.
  • Your mindset is already a mess. You're frustrated! You're angry! Whatever the reason, take the loss. And get away from the screen for a while.

 

For these occurrences, immediately scratching is likely the best option. Take the loss. And review the whole session at a later time (or even the next day) when it can be looked at with an objective and clear mind.

But in all other cases, I think we can improve on this.

Here's the thing… there is often no need to panic.

You will often have sufficient time to make a quick assessment and determine whether or not the position is an immediate threat… or not.

That is… does the current situation have a high probability of rapidly getting worse? Or is it maybe not so bad? Can you maybe even recover the situation?

Let's change the context a little. We'll start with some very simple examples.

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