Monthly Archives: August 2016

You WILL Have Trade Sequences Where You Are Out Of Sync With The Market

 

Let's examine the opening hour and a half of the emini Dow from Tuesday's session.

As seen in the charts below, the session commenced with a sequence of trades where I was out of sync with the bias of the market. And then another when I was completely in tune with the market.

You WILL have trade sequences where you are out of sync with the market.

So you'd better learn to recognise this ASAP in order to minimise any damage.

Ok, so the sequence where I was out of sync still resulted in a small profit. That's cool. I'm certainly not complaining.

But the fact is that there is potential for significant damage to an account balance if you don't quickly recognise and adapt to this "out of sync" issue. In the past, I'd usually take several losses out of a sequence like this, typically trying to fade the move two or three times before giving up in frustration.

So, there are some lessons to be learnt.

First though… what exactly was going on that resulted in me being out of sync with the bias?

Let's start with the daily and 30 minute charts, in order to get some context.

You WILL have trade sequences where you are out of sync with the market.

You WILL have trade sequences where you are out of sync with the market.

You WILL have trade sequences where you are out of sync with the market.

There is a saying in the trading industry:

  • "Trade what you see, not what you think"

 

What this means is… since I can see the the market is moving higher with a BULLISH bias then I should trade from the LONG direction. It doesn't matter at all what I think the market should be doing. Trade what I see.

And yes, normally that is not a problem. I'm usually ok with dropping my expectations and trading in accordance with the market bias.

But not this day. The feeling was too strong.

And although I was able to enter LONG on two really good signals, I just wasn't able to hold. The trades were scratched for small profits.

So I decided to stand aside and wait for the market to turn.  (Accepting of course that if it just trended higher all day then I'd miss the bulk of the move. No problems. I'm fine with that.)

As a discretionary trader, you WILL have trade sequences in which you're completely out of sync with the market movement. It's a fact!

This internal feeling of unease WILL act as an input to your decision making. And it will influence both entry and trade management decisions.

Your job is to learn to recognise this as quickly as possible. And if you can't shift to the correct bias then take immediate action to mitigate the risk. Otherwise… you may find yourself quickly on the way to your session drawdown limit.

Set a trigger to catch yourself as soon as possible, when you do find yourself fighting the market.

One of our recent articles is perfect for this – http://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess/

After two poor trades… pause and reassess.

Is your gut feeling about market direction causing you problems? If so, take action to limit the risk.

Possible actions:

  • Reduce position size for all further trades.
  • Limit trade direction to the with-trend direction only, and adopt a passive hands-off trade management style. Set the trade and walk away.
  • Or… best of all… just stand aside and wait for something easier. You don't have to trade every day. There is always more opportunity coming along in future.

 

You should aim to stack the odds as much as possible in your favour. A MASSIVE part of that is having a good read on market bias.

So you'd better learn to recognise this ASAP in order to minimise any damage.

Happy trading,

Lance Beggs

 

PS. To take it to the next level, consider adding this to your post-session routine:

1. Take note of any price sequences which resulted in multiple attempts to trade the market from the wrong side.

2. Review the conditions – market structure, price action and human performance factors – which may have influenced your decision making.

3. Document your findings.

4. Over time, you'll start to identify those conditions which have the potential to put you out of step with the market, allowing you to recognise and adapt more quickly in future.

 

 


 

Where Price Can’t Go

 

I'm always VERY interested in these places on the chart – the places where price can't go. The places where it tries… it pushes… but it just can't go there.

This is opportunity.

Let's start with the Higher Timeframe chart…

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Let's switch now to the trading timeframe… 

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Reference… this is a BOF Setup as described in YTC Price Action Trader Volume 3, page 28.

Happy trading,

Lance Beggs

 


 

Why Did I Not Enter Short on Rejection from Resistance?

 

This short article is to share some excellent Q&A following our recent series on "patience".

Check out the prior articles if you missed them:

Part 1 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-1/

Part 2 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-2/

In particular, it relates to last week's trade sequence:

Patience - you don't have to trade every price sequence

 

Q. Why did I not enter SHORT on the initial rejection of session high resistance?

Patience - you don't have to trade every price sequence

I was really happy to get this question. It shows people are thinking!  🙂

Here's an excerpt from the email:

(more…)

A Tactical Withdrawal

 

This short article is to share some excellent Q&A following our recent series on "patience".

Check out the prior articles if you missed them:

Part 1 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-1/

Part 2 – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-2/

In particular, it relates to the period of "emotional reaction" in last week's trade sequence:

Patience - you don't have to trade every price sequence

 

Q. Won't I be annoyed if I don't take a third attempt short and the market moves lower without me?

So this is what we're talking about here:

This is what happened

But what if this happened

Would I be annoyed?

(more…)

Patience is a Key Component of your Edge (Part 2)

 

Last week we discussed the idea that PATIENCE plays an important role in trading.

A key component of edge comes from recognising and accepting that you do NOT have to trade every price sequence.

When the bias is unclear, stand aside or trade another market.

When the pace of price flow is too fast or too slow for your liking, stand aside or trade another market.

When the price action is choppy rather than flowing smoothly, stand aside or trade another market.

And we looked at an example in which I waited on the sidelines for over an hour, before finding price movement that was screaming out to be traded. Good pace, good structure and easier to read. Something that I felt nicely in sync with.

Patience - you don't have to trade every price sequence

Check out that article first, if you missed it – http://yourtradingcoach.com/trader/patience-is-a-key-component-of-your-edge-part-1/..

So I closed out that article by promising that we would discuss another session in which I did not act with good patience, but instead reacted emotionally and chased opportunity where there was none.

In fact, it happened the day immediately following our prior example.

The session started in a quite similar fashion with a strong bearish drive. My expectations were exactly the same – look for PB/CPB trade opportunity.

Patience - you don't have to trade every price sequence

YTC Price Action Trader references:

The First and Second Principles – Volume 2, Page 145-148

The PB & CPB Setups – Volume 3, Pages 34-40

The market pulled higher to offer the first trade entry.

Patience - you don't have to trade every price sequence

I should have got it. But I didn't.

That's fine. Let it go.

Let's see what follows…

(more…)