Monthly Archives: September 2018

What Puts You In Sync (or Out of Sync) With Price Flow?

 

I sent out the following post via social media earlier this week. It's a theme I've pushed quite a bit over the last few years because I feel it's incredibly important.

No matter what markets you trade. No matter what timeframe you trade. No matter what strategy you trade.

There will be price sequences where you are in sync with the movement and smashing it out of the ballpark.

And there will be price sequences where you are out of sync and just nothing seems to ever go right.

Here's the post:

<image: Not all conditions are equal>

Why is this important?

The quicker you can recognise change to favourable or unfavourable conditions, the quicker you can adapt tactics to suit.

In response to the post, I received the following question on twitter:

  • What are some things one can do to put together a framework for identifying these transitions?

 

Great question!

Here's one thing that you can do…

Before you can study the transitions, you need to know what type of price sequences lead to you underperforming. And which lead to exceptional performance. From that foundation, you can study the transitions in and out of these sequences.

So here is the plan…

Something you might want to consider post-session…

Examine the price sequences where you just couldn't read the market bias!

These are the sequences where you have no idea what is going on. "It's bullish. No… it's bearish. No… wait.. hang on…it's going… damn it! I have no idea at all."

The sooner you can recognise this (and accept it) the sooner you can stand aside and limit damage, waiting until some clarity returns to the market.

Post-Session:

1. Take note of any price sequences which resulted in complete uncertainty about the directional bias.

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 sync with the market, allowing you to recognise and adapt more quickly in future.

Examine the price sequences in which you found yourself fighting the bias for multiple trades!

These are the sequences in which you were confident that you had picked a market direction, but then got stopped out of one trade… and then another… and maybe more… as you fought what was in reality a completely opposite bias. Hindsight is a beautiful thing. But it's also where we learn. Study these sequences and learn what puts you 180 degrees out of sync.

Post-Session:

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 sync with the market, allowing you to recognise and adapt more quickly in future.

Examine the price sequences in which you read the market bias well but just couldn't execute in sync with the market!

These are the sequences in which were 100% spot-on regarding the market bias, but just couldn't get those trades going. Choppy price action leading to hesitation. Or maybe tripping stops and leaving you watch from the sidelines while it goes to the target without you.

Post-Session:

1. Take note of any price sequences which resulted in a correct bias but a complete inability to profit from your market read.

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 sync with the market, allowing you to recognise and adapt more quickly in future.

Examine the price sequences in which you read the market bias well AND executed well.

These are the sequences in which you just smash it out of the ballpark. Not only can you see the market bias, but every fibre of your being senses it as well. And your timing just fits perfectly.

Post-Session:

1. Take note of any price sequences which resulted in A+ trading and clear outperformance.

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 quickly in sync with the market, allowing you to recognise and exploit the situation more quickly in future.

A whole lot of work, but it will pay you back a thousand-fold.

Happy trading,

Lance Beggs

 


 

How I Think on Trade Exit

 

Context:

<image: How I Think on Trade Exit>

The trade idea:

<image: How I Think on Trade Exit>

The entry:

<image: How I Think on Trade Exit>

Out:

<image: How I Think on Trade Exit>

How I think on trade exit:

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

All exits are temporary.

Pause and reassess.

Consider re-entry if the premise remains valid.

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

<image: How I Think on Trade Exit>

Sometimes it takes two entries. Sometimes it takes three.

There are no ways around this.

In the uncertainty of market action it's unreasonable to expect that we will always get a perfect entry.

So we're left with two options. Either we spread the entry via multiple parts across a general entry "area". Or we try for all-in precision but accept the fact that sometimes we'll need two or even three attempts to catch the move.

Although I sometimes trade the first method, my preference is for the second. All-in entries, accepting that it may take multiple attempts.

All exits are temporary. Pause and reassess. Consider re-entry if the premise remains valid.

Happy trading,

Lance Beggs

 


 

Traps Immediately After the Open

 

The open can be a time of great opportunity. But you need to be prepared.

My default option is to always wait for the Trading Timeframe (TTF) to develop some structure. To wait until the initial trend is clear and obvious.

But there are some times when I'll trade earlier, before the TTF settles into the day's trend.

Like here…

<image: Traps Immediately After the Open>

There are generally three situations where I'll take an early trade.

The only way I can catch them is to be prepared. BEFORE THE OPEN!

I will ask some questions:

(1) Is there some exceptional pre-session structure to trade off?

<image: Traps Immediately After the Open>

(2) If price drives strongly, will it be driving into clear space that offers good potential for continuation?

<image: Traps Immediately After the Open>

(3) If price offers a trap immediately after the open, would the structure offer a multiple-R potential?

<image: Traps Immediately After the Open>

If none of these three questions suggest good trade opportunity, then I will happily sit back and relax until there is some structure in play.

But if the answer to any of these questions is YES, then I will pre-consider how the price action will need to set up. And I will prepare myself for potential opportunity very quickly after the open.

Today I will remain alert and ready for a possible trap opportunity.

<image: Traps Immediately After the Open>

<image: Traps Immediately After the Open>

<image: Traps Immediately After the Open>

<image: Traps Immediately After the Open>

See here for more on PB Setups.

<image: Traps Immediately After the Open>

<image: Traps Immediately After the Open>

<image: Traps Immediately After the Open>

(1) Is there some exceptional pre-session structure to trade off?

(2) If price drives strongly, will it be driving into clear space that offers good potential for continuation?

(3) If price offers a trap immediately after the open, would the structure offer a multiple-R potential?

If the answer to any of these is YES, then pre-consider how the price action will need to set up. You might just find some opportunity very quickly after the open.

But if the answer to all three is NO, then sit back and relax. Let the open play out and wait until some new structure develops.

Happy trading,

Lance Beggs

 


 

It’s All About Real-Time Contextual Decision Making

 

You've learnt the pattern or setup. Great. But that's not trading.

Now work on the real-time contextual decision making around that pattern or setup.

Look beyond the pattern itself to the wider context.

Where is the pattern occurring within the larger timeframe market structure? What structure will suggest avoiding this particular setup? What structure might suggest caution, or reduced position sizing? What structure might suggest increased odds and the potential to really press the trade for a larger gain?

Where is the pattern occurring within time? Are there news influences which suggest passing on the trade? Are their time-of-day / week / month factors which might suggest standing aside?

Consider the behaviour of price movement – the pace, the volatility, smooth vs choppy price action.

What conditions might suggest adjustments to the default plan? All-in vs scaling in? All-out vs scaling out? Closer stops vs wider stops? Closer targets vs extended targets?

Consider the real-time decision making once in a trade.

What signs might suggest a loss of edge? How will you react to this new information?

What signs might suggest greater potential than originally perceived? How will you react to this new information?

What conditions suggest a re-entry attempt should be taken, if stopped out of the position? And how many re-entry attempts are appropriate?

Trading is not about simplistic patterns. It's about real-time contextual decision making.

If you've been on the wrong path then it's time to make a change. It's time to do the real work.

Best of luck,

Lance Beggs