Yearly Archives: 2017

The Key to Effective Active Trade Management

 

Here was the general plan:

The key to effective Active Trade Management

The key to effective Active Trade Management

The key to effective Active Trade Management

The key to effective Active Trade Management

I won't go into detail regarding the wider market environment and context within which the trade occurred. It's not the point of the article.

Truth be told – it was a marginal trade at best.

Ideally such a trade would be taken in a market with a strong bearish conviction.

But that wasn't the case.

The environment was poor. There was no clear trend structure in place. And the bias was uncertain, with price showing no clear dominant strength with either bulls or bears.

But I was aware of this. I was in "trade cautiously" mode. Standing aside mostly. With a plan that if I did take a trade it was to be with a smaller position size. This would continue until there was a clear trend structure and some good directional conviction.

We could argue back and forth all day as to whether or not the trade idea had edge. I will accept it was marginal.

But I took the trade.

And it contains a good lesson on active trade management.

So we will discuss it today.

Here are the charts just prior to my entry:

The key to effective Active Trade Management

Here's the entry:

The key to effective Active Trade Management

Here is what I'd like to see happen:

The key to effective Active Trade Management

But what we want to happen, doesn't always happen.

And that brings us to today's lesson:

The key to effective Active Trade Management is knowing what SHOULD NOT happen.

There are two outcomes that SHOULD NOT happen, if my trade premise is still valid.

(1) Price will immediately smash higher and stop me out. Should that happen, I'll just take the loss. It's unlikely that I will have the opportunity to work a better exit.

(2) Price will stall towards the upper edge of the congestion area and then break higher.

The key to effective Active Trade Management

Here's the outcome:

The key to effective Active Trade Management

The key to effective Active Trade Management

The key to effective Active Trade Management is knowing what SHOULD NOT happen.

Then recognising it.

And acting to contain any damage.

If your edge is gone, GET OUT.

Happy trading,

Lance Beggs

 


 

How to Kick-Start Your Growth and Development

 

If your progress has stalled in any way, it is just SO IMPORTANT to realise the following truth:

Progress comes from your growth and development plan, not from your strategy.

This just won't work:

The typical failed process

Hoping, wishing and praying doesn't work.

Just trying harder doesn't work.

You need something ACTIONABLE.

Let's fix it NOW:

STEP ONE: Implement a growth and development plan based upon GROUPS OF TRADES.

Here is the concept. Review the following articles:

(a)  http://yourtradingcoach.com/trading-business/its-time-to-fight-to-get-to-the-next-level/ 

(b)  http://yourtradingcoach.com/trading-business/its-time-to-fight-to-get-to-the-next-level-examples/

(c)  http://yourtradingcoach.com/trading-business/you-can-do-this/

(d)  http://yourtradingcoach.com/trading-business/consistency-its-a-necessary-part-of-the-process/

(e)  http://yourtradingcoach.com/trading-business/before-making-changes-to-your-strategy/

A GROUP OF TRADES Growth and Development Process

Also… any changes you're making…  consider making them the stretch goal for your next group.

See here – http://yourtradingcoach.com/trading-business/stretching-to-the-next-level/

A stretch goal - just a little stretch beyond current capabilities

Most importantly, major process changes can only occur at the end of each group. And they must be based upon proper review and analysis of your group stats and journal entries.

STEP TWO: Intra-group, monitor daily to ensure consistent implementation of your process.

No major process changes occur here.

Only tweaks or minor changes to how you execute your processes.

A daily review to improve implementation of your processes

Now move the response to question three to tomorrow's pre-session planning.

Remember:

Progress comes from your growth and development plan, not from your strategy.

If you're not progressing, then something HAS TO CHANGE.

Something actionable.

Something concrete.

Between groups, you MUST identify a concrete, actionable improvement to process.

Within groups, you MUST monitor consistency in implementing process, and tweak as required to improve implementation.

Hoping, wishing and praying that somehow this time it will be different, doesn't work.

Just trying harder, doesn't work.

Find something REAL that you can implement.

It won't always be easy. In fact it will rarely be easy. But damn it, you can't progress by just continuing on the same treadmill.

Fight to find an actionable change that progresses you in the right direction. Implement it. Repeat.

You can do this, 

Lance Beggs

 


 

Employing a Self-Distancing Strategy to Improve Journaling and Review

 

Close your eyes and imagine a really bad trading session. You might have a recent example you can use. Or if not, just make one up.

The details don't matter. They'll vary for each of us. Just make it bad.

Maybe this:

"I drag myself into the office and throw my bag on the floor. Feeling crap with a hangover and too little sleep due to last night's celebrations. It's 10 minutes till market open. No problems. I'll catch up on the pre-session admin later and just wing it. I'm on my third coffee already – this should help me make it through ok."

The market opens and drives higher with strength. "Suckers… it's right into resistance. I'll short here and catch the move back down to the market open."

Of course, it loses!

As does the second attempt. And the third. And the fourth, which had the stop pulled even higher, because "this damn thing is so overbought".

Or maybe your example is something much worse.

Whatever it is, close your eyes and visualise it. And feel every feeling that such a session would bring.

Disgust! Anger! Frustration!

Now, the session is over. You've smashed your keyboard and it's time for review. Close your eyes and imagine yourself critiquing your performance.

SERIOUSLY!

Close your eyes, visualise this scenario. And then critique your performance.

Now let's shift the scenario slightly.

This time the session went exactly the same, but you weren't the trader. The trader was the person you most love in life. Your partner. Your Mum. Whoever you care the most for.

And you're their coach. The person they come to after each session to discuss their performance and to plan the way forward.

Close your eyes and imagine how you would handle their performance review.

Visualise it.

Feel it.

If you've been honest with yourself, it's likely that the first scenario would have been far more emotional. Quite likely an explosive, self-critical and self-deprecating review.

Whereas the second, while still noting that the performance was unacceptable and must lead to change, would likely be more calm and rational. With a more considered review of both the reasons for the poor performance and the solution that is necessary to prevent recurrence.

This simple shift in the scenario has created some space, or distance, between our rational mind and the emotion associated with the trade performance.

 

Self-Distancing Strategies

I absolutely love this article by Brad Stulberg in NYMag.com:

http://nymag.com/scienceofus/2017/02/self-distancing-will-help-you-make-smarter-deciions.html

Please read it. It will take about 10 minutes, tops.

Some key excerpts:

  • Collectively referred to as “self-distancing,” practices like those outlined above and Rusch’s “pretend you’re talking to a friend” allow us to remove our emotional selves from intense situations, paving the way for more thoughtful insight and subsequent decision-making.
  • Employing a self-distancing strategy allows you to evaluate activities or situations that are rife with passion from an entirely different perspective, one that includes logic alongside emotion.
  • “I talk to myself all the time,” says Rusch. “It’s just that when I talk to myself as myself, I tend to be negative and not so helpful. But when I talk to myself as if I were talking to a friend, my words are motivating, forgiving, and far more productive.”

 

Employing Self-Distancing Strategies to Improve Journaling and Review

I will be employing these ideas in two ways:

(1) Journaling

Here's another excerpt from the article:

  • Similar studies show that when individuals think, or journal, in the third person rather than in first person — for example, “John is running into challenges with his business that seem insurmountable” versus “I am running into challenges with my business that seem insurmountable” —they, too, evaluate themselves and their situations more clearly and with more wisdom.

 

I now journal in the third person.

Give it a try for a month. You can always go back to normal if you don't like it.

(2) Reviews

All reviews (session reviews and longer term reviews) will now be conducted as if I am the "Performance Coach" reviewing a trader within my firm.

Again, give it a try for a month. You've got nothing to lose.

And if you can separate your rational and logical side from the emotion of the session, just a little, there is a WHOLE LOT to potentially gain.

 

Why Not Get Started Right Now?

That trading you did so far this year is no longer yours. It was done by your best friend, your partner, or some other loved one.

You are now the performance coach.

And it's time for you to honestly review their trading business.

Close your eyes and imagine the review session. And answer the following questions.

  1. Did they approach these recent months with clear and realistic goals for growth and development?
  2. Did their performance drive them successfully towards achievement of their goals?
  3. Are the goals still appropriate, or do they need amending?
  4. What action must be taken in the coming months to take decisive steps forward?

 

Calmer. More rational. More logical.

And far more likely to lead to practical and effective decision making.

Give it a try!

Happy trading,

Lance Beggs

 


 

Studying a Higher Timeframe Trap

 

There are some common themes that run through the articles I produce at YTC. One of these, which has been here since the beginning, is the importance of creating a Market Structure & Price Action Journal.

Every day, find something that amazes you in the charts. Print it out. Cover it with notes. Study it. File it. And review your journal often. It really will be the greatest trading book… EVER!

Over time, I promise you will start to see patterns within the market structure or price action, which repeat themselves again and again and again.

Like this, which we shared via social media way back in 2015:

What doesn't happen... is important information! 

This is a structural feature that I see repeated again and again and again.

Here's another previous example – http://yourtradingcoach.com/trading-process-and-strategy/trading-failed-expectations/

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.

But let's look to an example which occurred last week, on a higher timeframe chart.

Yes… it's an idea which you will find in all markets and all timeframes!

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Happy trapping,

Lance Beggs

 


 

If You Suffer From Too Much Impulsive Trading…

 

The following was a social media post that I sent out just before my trading session on the 6th of February.

It was my first session following a two week holiday… and I was more than keen to get back into the markets.

If you suffer from too much impulsive trading... 

Click on the image or this link here if you wish to read the article – Patience is a Key Component of your Edge.

It was a simple reminder to myself that:

  • The real source of my edge is not in my strategy, but in ME.
  • Patience plays an important part in realising that edge.
  • And most importantly – I don't have to trade every price sequence.

 

In other words… knowing that I'm susceptible to emotional, impulsive trading when I first come back from a break, I reminded myself to slow down. And wait till I was truly in sync with the market.

As I write this it's now the 21st of February. It's the first trading day following a long weekend. I'm keen to trade. I'll be giving myself the same reminder pre-session.

And again next week. I'll be admitted to hospital next Tuesday for some very minor day surgery (nothing to worry about). But I'll likely need a day or two off trading as I recover. Again, I'll be giving myself this same reminder.

Slow down. And wait till I'm truly in sync with the market.

HOWEVER…

This is not all I do.

There is a simple "hack" which I've used for a few years now which provides exceptional help in overcoming my impulsive desire to trade.

I've thought about sharing it a few times, but to be honest it seems so obvious that I thought it would be a stupid topic for an article. My stats clearly show that readers prefer charts… and this is not a chart.

But it's so important. And such a great help. And given that I'll be applying the hack again today… I figure you should get it too.

This will be of most relevance to short timeframe day traders; those of us who "screen watch". But the general concept can be adapted for use by longer timeframe traders as well. We'll talk about that later.

Interestingly, there has been some exceptional discussion on this topic in other blogs in recent weeks. I'm not going to duplicate their advice. It's great work and you should go directly to their blogs to read their suggestions and solutions.

http://www.smbtraining.com/blog/a-solution-to-improve-your-patience-as-a-trader

http://tradingcomposure.com/traders-impulsivity/

Visualisation, meditation, mindfulness, and all the other methods discussed… they're very important and a key part of your solution. I particularly LOVE the technique provided by Dr Steenbarger, in the SMB Training link. I'll make you click to get that one! (Ha ha).

But I was surprised to see that my little impulsivity hack was not presented.

So here we go.

What is the solution? How do I reduce the likelihood of emotional, impulsive reaction to price movement?

I create a physical barrier between my desire to trade and my ability to execute.

If you suffer from too much impulsive trading...

In other words… I step back about a metre and conduct all analysis out of reach of the keyboard and mouse.

I know… right!

LAME!

No, seriously. Work with me here.

The key problem is NOT our impulsive desire to trade. It's the fact that we react to that desire by clicking the mouse and entering.

The solution is to put a barrier in place. Something that forces a break between your desire to trade and your ability to enter.

It does not need to be a massive barrier. This solution is about as small a barrier as we can get. It's simply space. And only one metre. But it's enough.

  • Step back from the keyboard and mouse.
  • Conduct your analysis.
  • When you feel that desire to trade, don't. You can't reach it. And you're not allowed to step forward. So just pause and reassess.
  • And ONLY step forward once that pause and reassessment screams out, "Yes! This is the opportunity I've been waiting for. This is an A+ setup. This does provide edge."

 

Discipline and patience are not just a function of willpower. You can create physical barriers to limit impulsive trading.

A physical barrier between your desire to trade and your ability to execute.

Just a small barrier. But just enough to have you pause and reassess.

Longer timeframe traders… clearly stepping back one metre is not likely to help you. After all, you've got a lot of time to make decisions anyway. But the same concept applies – adjust your environment to provide a barrier between decision and execution. One possible solution – conduct your analysis and trade decisions on a separate platform that does not allow execution. Once trade decisions are made and written down, open up your broker's execution platform and reassess the quality of your decisions. Only enter if they're still A+ ideas.

I'm sure you can find other solutions that better suit your particular trading setup.

The key concept applies though, regardless of who we are and how we trade – create a physical barrier between your desire to trade and your ability to execute.

It's not a full solution. See the links posted earlier for some other key parts in managing impulsivity. But it's a simple "hack" that I've found to be exceptionally effective.

I'll be using it tonight, as I trade the first session back after a long-weekend.

I hope you find the idea effective as well.

Happy trading,

Lance Beggs

 


 

Start Your Session With IF-THEN Scenarios

 

Last Sunday I shared one of my old articles via social media.

Start your session with IF-THEN analysis

Click on the image, or this link here, if you wish to read the old article.

This is such an important part of my pre-session preparation.

Why?

It simply aims to get my session off to a good start – so very important for maintaining an effective mindset throughout the trading day.

This is not prediction. This is simply forward planning… developing “IF-THEN” scenarios based upon your assessment of the likely future price action.

If your “read” of price movement proves correct, you will have trade opportunity. If it proves incorrect, you stand aside and reassess.

This will ensure your actions in the market are pre-considered and your trades only occur when the market has confirmed your expectations.

And you will be less likely to be caught in a trap through impulsive reaction to unexpected price movement.

NOTE: What I am doing here with my IF-THEN analysis is NOT the same as the Game Planning / Hypos that you see other traders doing. Typically they're looking at much higher timeframes or Market/Volume Profile tools to determine a likely hypothesis for the WHOLE DAY.

I'm looking at the trading timeframe and where the market opens with respect to key levels, and assessing likely movement for the OPENING FEW PRICE SWINGS ONLY.

There is of course nothing to stop you using both. Whole session, higher-timeframe game planning plus opening sequence trading-timeframe IF-THEN scenarios.

It's just important here for me to point out the difference.

These are not meant to define the whole session. They just aim to get you off to a good start.

And from there, the picture keeps updating bar by bar in accordance with the YTC Six Principles of Future Trend Projection.

Anyway, let's look at my opening IF-THEN scenarios for the week to date, in the emini-NASDAQ (NQ) market:

Monday – 13th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Tuesday – 14th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Wednesday – 15th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Thursday – 16th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

So as we head towards the open on Friday, why not consider creating your own IF-THEN statements for the opening couple of price swings.

They won't always be right.

But when they are, it means that your actions in the market are pre-considered and your trades only occur when the market "makes sense".

And when the market offers something different, you simply stand aside and reassess.

It's all about getting your session off to the best start possible, through minimising emotional reaction to surprising and unexpected price movement.

Give it a try. You may just like the idea.

Happy trading,

Lance Beggs

 


 

A BOF Trade with Many YTC Concepts

 

Let's look over a trade I particularly like, from earlier this week.

It's nothing special in terms of returns. But it took an otherwise dull session from breakeven into profits.

And it displays many of the concepts that we have discussed here in the newsletter over the last few years.

So I particularly like this one. And I thought it's a good one to share to reinforce some of these key lessons.

The trade is a Breakout Failure trade following price interaction with the Prior Day's High resistance.

Breakout Failure Review 

Let's see what I liked about this trade…

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review 

Let's see the outcome…

Breakout Failure Review

Breakout Failure Review 

Happy trading,

Lance Beggs

 


 

An Exceptional Example of Historical Chart Study

 

Today I want to share with you some examples of the work done by Johnny, as he learns to read and trade the charts as taught in the YTC Price Action Trader ebook series.

Chapter 17 of Volume 5 of the ebook series provides a graduated development plan.

Before you trade live you must prove success on the sim.

And before you trade on the sim, you must ensure complete understanding of the analysis and trade concepts via historical chart study.

Johnny is working through that first stage, through detailed study of prior sessions in his chosen market (YM) and timeframe (3 minute TTF, 1 minute LTF).

His work so far is of the HIGHEST STANDARD. So much so that I absolutely had to seek permission to share it.

If you're just starting out in your journey as well, whether with my strategy or with one you developed yourself, set Johnny's work as the benchmark that you try to also achieve.

Imagine doing this for 100 prior sessions, before you even hit the sim. Yes, there are completely new challenges at the hard, right hand edge of the screen. But you'll be tackling those challenges with complete confidence in knowing what it is you're looking for. And more importantly, why!

The following charts have been compressed in size in order to fit on the webpage. If you click each image it will open a larger copy in a new browser window.

You'll note that they all examine the exact same price sequence, from a number of different perspectives – (a) Trend Assessment, (b) Clues and Observations, (c) Changes in Sentiment, (d) Changes in Structure, and (e) Setup Areas.

I hope you get great value out of this. If it inspires even just one of you to improve the quality of your own learning, this will have been a massive success. Thanks Johnny!

Enjoy…

 

TREND

An Exceptional Example of Historical Chart Study 

CLUES AND OBSERVATIONS

An Exceptional Example of Historical Chart Study

CHANGES IN SENTIMENT

An Exceptional Example of Historical Chart Study

CHANGES IN STRUCTURE

An Exceptional Example of Historical Chart Study

SETUP AREAS

An Exceptional Example of Historical Chart Study

LOWER TIMEFRAME CHARTS  (note: there is some overlap from one chart to the next)

An Exceptional Example of Historical Chart Study

An Exceptional Example of Historical Chart Study

An Exceptional Example of Historical Chart Study

An Exceptional Example of Historical Chart Study

 

Happy trading,

Lance Beggs

 


 

Leaning Your Entry Against Other Price Action

 

Sometimes you're just not 100% sure.

Not quite ready to pull the trigger.

At these times it's best to wait.

Remember this – "If I could only take one trade this hour, would I be happy to make it this one? If not, pass."

Clearly if you're hesitating then the trade does not meet this criteria.

Let it pass.

And maybe… just maybe… the next couple of price bars will offer up something that makes the decision easier.

Like this…

Leaning your entry against other price action

Leaning your entry against other price action

Leaning your entry against other price action

Leaning your entry against other price action

Leaning your entry against other price action

Leaning your entry against other price action

Leaning your entry against other price action

Leaning your entry against other price action

If I'm unsure about a trade then I'm happy to pass.

If I miss the trade, so be it. I don't have to take every trade. I plan to trade for several more decades. My career is unlikely to be defined by this one potential trade. Let it go. And prepare for the next.

But sometimes just another few candles is all it takes. If it offers some price action structure to lean against, I'll attack that opportunity. And manage whatever follows.

Consider watching for this in your charts.

Happy trading,

Lance Beggs

PS. The following were some earlier articles "loosely related" to this idea, although exploring the concept on the Trading Timeframe chart rather than the Lower Timeframe chart. Either way, it's all about letting the market turn first and then entering on a slight retest, with other price action at your back. Enjoy…

 


 

It is NOT your job to win on any particular trade!

 

Before you can consistently win, you're going to have to learn how to lose really well.

That is…

  • Completely accepting losses as a normal part of the game.
  • And containing the damage to pre-accepted limits.

 

This has been one of my favourite themes of the last year or so. Let's go over it one more time.

It really is that important!

Here's an extract from an email discussion I had on Wednesday with another trader in response to a really challenging sequence of price action.

(5) This point may not be a problem for you. You might understand it completely. But in my experience, while the vast majority of "developing" traders say they do understand this, the reality is that very few traders actually do REALLY GET it at a deeper level. Their actions and decisions prove they don't get it. And often when I'm sent an email asking "why didn't this trade win", it's obvious that this is the case – they don't really understand the game.

It is not your job to win on any particular trade.

It is your job to identify opportunity that contains edge. And to take it and manage it well. Some will win. Some will lose.

Our aim is not to profit on any particular trade. But rather to profit over a series of trades.

Feel free to define a "series of trades" based upon whatever number you consider provides a sufficient sample size. For the sake of this email, let's assume it's 20 trades, which is the absolute minimum I'd consider as sufficient.

So we aim to profit over 20 trade groupings. Within each group there will be some winners. There will be some losers. Both are absolutely fine. They're meant to be there.

And in fact, there will likely be strings of losers, from times when either the market environment was not optimal. Or our decision making was suboptimal.

Again, that is completely normal.

So our decision making pre-entry should be in confirming that (a) the trade idea has edge, and (b) regardless of whether it wins or loses, it's a trade that we really want contributing to our 20 trade sample.

And during the trade management stage, at the forefront of our mind is always the thought about whether or not we still want this contributing to our 20 trade sample.

The reason for bringing this up, is because the interaction with S/R that you have provided in your example, is rather messy. We don't know that will be the case until after the fact, when we can view the charts with the benefit of hindsight. But it's not unusual in messy price sequences to end up with two, or maybe even three losses or scratched trades. This is completely normal. And it should be absorbed within the 20 trade sample, with other better sequences providing sufficient profits to overcome them.

This is also why I will typically only limit myself to two attempts at a trade idea. Three at most (if the prior losses are less than 1R each). If after these 2-3 attempts, I've not captured a good entry, then I'm clearly not reading the market well. Stand aside. And wait for the structure to change. If one further entry would have been sufficient to capture the planned move, and it now occurs without me, so be it. It wasn't mine to catch. Let it go and move on to the next.

 This is VERY IMPORTANT. In fact, key to success. ALWAYS be thinking about the larger sample of trades. Is the current trade one you want contributing to the sample? And if it's one of the losers, keep it small so that it can be easily overcome. And if it's one of the winners, work to take as much out of it as you can.

 

There is no need to review the sequence from that email.

Let's instead look at a few trades in the first hour on Tuesday.

Trades in which there is nothing particularly special. They're just normal run-of-the-mill trades.

Some lose. Some win.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

Let's look at the two losses…

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

Here's the plan:

KEEP THE LOSSES SMALL.

CONTAIN THE DAMAGE.

SO THAT IT ONLY TAKES ONE OR TWO SMALL WINNERS TO MORE THAN MAKE UP FOR THEM.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

Before you can consistently win, you're going to have to learn how to lose really well.

That is…

  • Completely accepting losses as a normal part of the game.
  • And containing the damage to pre-accepted limits.

 

Stop worrying about profiting on every single trade.

Aim instead to just manage them well.

And seek to profit over a larger SERIES of trades.

Happy trading,

Lance Beggs