Monthly Archives: May 2019

Traps just before RTH Open

 

I've written a lot about displaying patience at the open. About waiting till the bias is clear and trading conditions are favourable.

But there are some situations where I don't display patience.

Where I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

One of these situations is when the market sets up a trap just before or just after the RTH Open. (RTH = Regular Trading Hours).

Today we'll look at an example which sets up just before the open.

Here's the general concept:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

This concept can be applied in any market which offers pre-session trading leading into a clearly defined "regular" day session. Spot forex traders might apply it at the UK open, or the US open.

This example set up a break of the overnight low. Here's what I was seeing:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

(YTC PAT FTC Ref: Vol 2, Ch 3, P143))

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

Happy trading,

Lance Beggs

 


 

Embrace the Suck

 

Let's talk a little about mindset. Or more specifically about our expectations leading into the day.

Because I suspect that the way I approach the game differs quite a bit from many other traders.

The market has opened…

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

It's all about expectations.

I expect a really tough day…

and embrace the suck.

<image: Embrace the suck>

Source: Wiktionary

This difference in mindset is important.

Expecting simplicity leads more often than not to disappointment and frustration, as conditions do not turn out the way you expect.

And disappointment and frustration do NOT typically lead to effective decision making, as we analyse the market and identify and manage trade opportunity.

Expecting a challenge leads to a slightly more defensive mindset. One ready to survive through difficult conditions. And yet still open to potential large gains when the market surprises us with more favourable price movement.

Market conditions OFTEN suck.

The sooner you can accept and appreciate this. And in fact EXPECT it, the sooner you'll be able to get on with the job of managing it.

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

EMBRACE THE SUCK!

If the market provides massively favourable conditions… that's a bonus.

If my execution just happens to be flawlessly in sync with the price movement… that's a bonus.

But I don't ever expect it.

Confidence does not come from hoping or praying for A+ trading conditions.

It comes from knowing that even if the market conditions are crap, or your execution at times really stinks, you can adapt and overcome.

Embrace the suck!

Expect it.

And learn to prevail despite it.

That is how you develop unshakeable confidence.

Happy trading,

Lance Beggs

 


 

Quality Vs Quantity

 

Trading offers you incredible freedom of choice. You have almost complete control over when and where you will take on risk. And of course, how much risk.

<image: Quality Vs Quantity>

But while this freedom is great in theory, it's potentially devastating for many who are still searching for their edge.

I suspect MANY developing traders would find that there is great power in applying limits to this freedom.

I was chatting in recent weeks with a trader who made this breakthrough. His problem was a common one – overtrading. In particular when in drawdown, where he would keep grinding the session deeper and deeper into negative territory.

It was always obvious with the benefit of hindsight that he was out of sync with the price movement. The smart decision would have been to stand aside. But he was unable to accept this at the time, always sure that the next trade would be the one to turn everything around.

His solution… self-imposed limits to his trading.

Not just when in drawdown.

EVERY DAY!

<image: Quality Vs Quantity>

Feel free to change this to any other number which suits your needs. Maybe you'll prefer two. Maybe four or five.

All are fine, provided it's MUCH LESS than the typical number of trades you take each day when allowed free reign.

This provides are two key advantages.

Limiting the number of trades each day:

  • Allows you permission to wait for QUALITY trade ideas.
  • Limits the potential for deep drawdown through overtrading while out of sync with the market action.

 

Let's demonstrate through a hypothetical example:

"My Trade Plan – Today is FOMC Day, with the FOMC Statement due at 14:00 and the Press Conference at 14:30. I will stand aside prior to these events due to the increased potential for unfavourable price movement. From 14:30, I will seek a maximum of three trades only, noting that my best performing setup in post-news environments is the first pullback following commencement of a new directional trend (like demonstrated here)."

<image: Quality Vs Quantity>

<image: Quality Vs Quantity>

With great freedom comes great responsibility. (Thanks to Voltaire, Eleanor Roosevelt, Stan Lee and the many others who have expressed this idea in numerous forms!)

If you find yourself struggling through too many poor trade ideas, consider applying limits to your trading activity.

Allow yourself three trades per day.

Try it.

Maybe the solution to finding your edge will come through a focus on QUALITY rather than QUANTITY.

Happy trading,

Lance Beggs