Last Friday at 9:28am, just two minutes before the Regular Trading Hours (RTH) Open, the market suddenly jumped.
That's right – it's a trap RIGHT BEFORE the regular session open.
See here if you missed the prior articles:
Here is the general idea, in both bullish and bearish form:
Well today we got the second version – a trap through overnight resistance which rapidly fails.
And so we'll be looking for opportunity to enter SHORT.
Let's try something different though…
Rather than sharing my trading, I'd like to share a chart from a trader who has recently been making good progress with the YTC Price Action Trader methodology.
Having read the recent "trap before RTH open" articles he's been aware of this opportunity, but hasn't managed to catch one prior to this session.
This time was different.
I hope you've had a great week.
I just wanted to follow up again to say THANK YOU! I've come so far in my trading since I purchased your book back in October. I read all of your Twitter posts and newsletters and the topic that kept standing out was the BOF just before the open and how to trade it. I kept watching it happen and would miss the opportunity to get involved. Consequently, that lead to me trying to find another BOF or TST in the opposite direction of the opening drive, which resulted in small losses that were frustrating. I finally decided that when I see this again, I will get involved on a PB or CPB and if I miss the trade then I miss the trade…put it behind you and move on.
Today I saw a BOF just prior to the open on the NQ (I'm still trading the MNQ). I was ready and I executed without hesitation. In hindsight I could've managed the trade a little better but I'm very happy the process I went through to execute this trade. I have you to thank for this. Please know that your posts and newsletters are more helpful than you can imagine…and I know I'm not the only one who feels that way. I attached my chart and this will definitely be one that I will reference regularly.
Thanks again for all you do…have a great weekend!
The "BOF" that he refers to is the YTC Price Action Trader name for the trap. The PB is the first setup short.
Hunter has included the following 30 second chart showing his trade entry and management. If you click on the chart it should open a full-size copy in your browser.
Hunter – well done! That is a great trade.
The only thing better than catching a trap before the open, is seeing someone else learn from my prior articles and actually catch one themselves.
Some final words from Hunter:
I really enjoy reading about other traders' experiences and I hope that my experience can help others as well. Just as a reference, in case anyone asks, I use Interactive Brokers for my charts and as my broker. I'm only trading 3 contract lots of the micro futures MNQ, MES, and M2K. I started with 2 contracts and will increase my contract size as I continue to progress. Again, thank you for your encouragement and for all that you do for the trading community. Have a great weekend!
I've been discussing this idea for quite a while now. The idea that there is GREAT VALUE in studying your charts post-session to identify the price sequences which offered the best trading conditions. And then… the structural features which might help you identify similar trading conditions next time they occur.
Just last week in our newsletter I shared the following social media post:
This is not just something we do for fun.
The exercise has clear and obvious benefits.
One of them being – when I see these patterns set up again they give me CONFIDENCE in the subsequent trend.
The image above gives one of these patterns.
Tuesday's trading gave us another…
Let's start with the 15 minute higher timeframe at the time of session open.
Not all trading conditions are equal. There will be times when the markets provide conditions that best suit our strategy. At these times we need to be focused. We need to know what we want to see to confirm these favourable conditions. And we need to be confident and ready to act decisively when they appear.
And there will be times when the market provides conditions that are less suited to our strategy. At these times we need to step back a little. Be happy to pass on anything that is not screaming out to be traded. If we miss opportunity, so be it. Let it go. And wait for something more favourable.
Post-session study lets you identify those sequences which best suit your style of trading. And to identify the structural features or patterns which might suggest a repeat of these conditions, should they set up again in the future.
For my own personal trading, I perform better in directional markets with nice smooth stable trends. The overnight volatility contraction is one pattern that has me primed and ready for potentially good trading conditions from the open. A pattern which provided me with confidence to TRUST the trend, should it develop from the open.
Are you aware of the conditions which you find most favourable? And the structural features or patterns which might help you identify these conditions again in the future?
If not, you have work to do. Study the charts for those areas where you see that "price moves best". And make sure that next time the market offers similar conditions, you're ready and focused, with the confidence necessary to attack that market opportunity.
Metagame Entry – Recognising that entry is not just about price or patterns, but about the people behind the price and patterns.
And in particular the times when they're experiencing frustration, pain and disappointment.
Because the best opportunity comes when I can feel someone on the other side of the market getting it REALLY wrong.
This was one of my favourite trades of the week. Partly because it wasn't in my original plan. But when it set up, it screamed out to be traded.
But then this happened…
And you'll note that the entry is exactly at the point I define as the LWP. Refer to Volume 3, Chapter 4, Pages 72-77 for discussion on the LWP concept.
This trade was not part of my plan at the market open. I was keen to trade once price broke the overnight chop-zone, either higher or lower.
But until then… watch and wait.
Because sometimes… price will set up right to sucker someone into a trap.
And when you see that trap, and feel their pain, you may well have found yourself some opportunity.