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When your Trap Radar needs Recalibration!

 

Let's start with the daily chart for a bit of context…

I know right! When was the last time we looked at a daily chart?

No need to panic. Oxygen masks have not dropped from the ceiling. And we'll only spend a short time at these heights.

<image: When your Trap Radar needs Recalibration>

You know those days where you've got a feeling in your gut that tells you the market is DEFINITELY setting up a trap?

Well my Trap Radar had activated and the alarm was deafening.

My gut feel was "It's a trap! Fade the market!"

<image: When your Trap Radar needs Recalibration>

So let's step down from these heights and get back to the more comfortable Trading Timeframe and watch the opening sequence play out…

<image: When your Trap Radar needs Recalibration>

<image: When your Trap Radar needs Recalibration>

<image: When your Trap Radar needs Recalibration>

Here's the thing…

Way back in the early days I would have shorted this thing at every swing high, grinding my way towards the session stop.

But not now.

I recognise that it's normal to have these strong gut feelings from time to time.

Some people say to ignore them. I don't think we can. Nor do I think we should. Sometimes they're right.

I listen to it. I consider what it's saying. And I plan my trading in case it's right.

BUT… I also have a plan for those times it's wrong.

Having a gut feeling about market bias is fine.

But alongside that you must know the following:

(a) What price action would confirm this bias. And how you will trade it.

(b) What price action would indicate that the bias is wrong. And how you will trade it.

Let's step back to the open:

<image: When your Trap Radar needs Recalibration>

<image: When your Trap Radar needs Recalibration>

So having pre-accepted the potential for my gut feeling to be invalid, I was easily able to drop it and reassess the market structure.

<image: When your Trap Radar needs Recalibration>

For PB and CPB descriptions, see here.

<image: When your Trap Radar needs Recalibration>

<image: When your Trap Radar needs Recalibration> 

<image: When your Trap Radar needs Recalibration> 

Repeating the key points:

Having a gut feeling about market bias is fine.

But alongside that you must know the following:

(a) What price action would confirm this bias. And how you will trade it.

(b) What price action would indicate that the bias is wrong. And how you will trade it.

One of the greatest habits you can get into is always considering, "What if I'm wrong?" 

You are NOT smarter than the market. If it's not confirming your gut feeling, then YOU are wrong. Drop that bias and realign with what is actually happening.

Happy trading,

Lance Beggs

 


 

Trend Change Study

 

Do you ever experience the joy that comes from watching a price sequence develop and feeling that it is just technically "beautiful"?

No? Maybe it's just me.

But I do really love this sequence.

And I think it is a good one for those new to the YTC Price Action Trader methodology who might still be getting used to the ideas of strength and weakness analysis.

Sorry for those who don't have the YTC Price Action Trader. This article won't be relevant. We'll get back to usual programming next week!

Here's the price sequence we're going to study:

<image: Trend Change Study>

Click here if you wish to open a larger chart image in your browser. Or right click to download.

Pattern traders call this a Rounded Top.

For me, it's a transition from Uptrend to Sideways Trend (very briefly) and then into Downtrend.

But what makes it great for review is the fact that the whole transition occurs in slow motion, with gradual changes from swing to swing, rather than a sudden and dramatic break of structure.

Price just rolls slowly over from Uptrend… to Sideways… and to Downtrend.

So… study time!

A primary aim in my own personal trading is to get "in sync" with the price movement. This is not just assessing the trend direction as up, down or sideways. But at a deeper level, aligning myself and connecting with the underlying bullish or bearish sentiment within the trend. The result being a strong sense for whether the trend itself is stable, or perhaps weakening, stalling or at risk of reversing.

The aim of this exercise: To start developing these same skills through studying a reversal price sequence, identifying the signs within the swing structure that could have helped you sense the trend weakening and rolling over eventually into a new downtrend.

Please note: (a) Our concern is NOT with how this structure might be traded. Just with keeping yourself aligned with price as it flows. (b) And while we recognise that we're missing the "feel" that comes from watching this occur live, there is still value for new traders in historical chart study. Knowing what to look for is step one. Then we progress to learning to see it unfold in real-time.

Let's go:

1. Examine the price swings as they move from start to finish, using only one single method of strength and weakness analysis at a time.

(a) Momentum slope – bullish swing comparison

(b) Momentum slope – bearish swing comparison

(c) Projection

(d) Depth

Take note of any signs that each method might offer, alerting you to a weakening of the uptrend and gradual rolling over into a downtrend. (Noting of course that not every swing gives clear evidence of change. You're looking for gradual changes across multiple price swings.)

Now let's try to make it a little more realistic…

2. Real analysis, conducted in real-time at the hard right edge of the charts, actually considers all methods of strength and weakness analysis as a whole. So this time, step through the chart swing by swing and let all four methods create a "picture" in your mind. Allow yourself to feel the uptrend weakening, rolling over to the sideways. And then again rolling over to a downtrend.

If you want to review the text first, refer to sections 3.3.1 and 3.3.2 (pages 113 to 144).

If you have a couple of hours to spare you may feel like replaying the sequence (NQ, 3rd June 2019). But for those of us with better things to be doing on the weekend, simply stepping swing by swing through the chart from left to right should provide sufficient learning opportunity.

Happy trading,

Lance Beggs

 


 

Traps at the Open – 2

 

I had no plans to continue the recent article series but the market had different ideas, so here we are!

First, if you missed the prior articles then see here – http://yourtradingcoach.com/trading-process-and-strategy/traps-just-before-rth-open/

And here – http://yourtradingcoach.com/trading-process-and-strategy/traps-at-the-open/

And that brings us to today's sequence…

We'll start with a quick look at the prior day and overnight session, for a bit of "bigger picture" context.

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

I hesitated to show this example, as it's really a very quick and small trap. And a difficult entry based on a very minor lower-timeframe stall.

But sometimes that is all the market offers. And given the potential for a trap at the open to provide a nice momentum drive, it's one that I had to take.

Part of me wonders whether I'd take this entry anyway even if there had not been a trap. I had a bullish bias due to the pre-session action holding above the prior day's range. Plus the fact that I expected some range expansion on the open following a narrow range holiday session.

We'll never know for sure. Perhaps I would have taken it. I suspect not though. The lower timeframe trigger pattern was a little "smaller" and less defined than I would perhaps have liked. It really was the presence of the trap, albeit small, that provided the confidence to go for it.

For me… a trap entry prior to or right on the open is something that will often have me taking the quick early trade. Without that, I prefer to sit and wait. Let any opening congestion clear itself. Let the structure develop. And then trade once I have some clarity regarding the bias and market conditions.

Happy trading,

Lance Beggs

 


 

Traps at the Open

 

Our last article discussed one of the times when I show no patience at the open. One of the times when I'm keen to get a trade on as soon as I can.

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

You can see it here if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/traps-just-before-rth-open/

That article dealt with a trap in the market structure JUST BEFORE the RTH open. (RTH = Regular Trading Hours)

Today let's look at a situation very closely related to that. It's a trap IMMEDIATELY AFTER the RTH open. It's another situation in which I don't wait for the market to establish a clear trend structure.

Here was the concept from last week:

<image: Traps JUST BEFORE the Open>

But what if the open comes… and the market hasn't provided that trap?

<image: Traps JUST AFTER the Open>

That's fine.

If it's a good level, I prepare myself for for a trap anyway in the opening few price bars. If the market is nice enough to offer that, I'll be ready to get in on the first available opportunity.

<image: Traps JUST AFTER the Open>

Let's look at an example…

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

Personal preference – I don't just hit BUY MARKET. I prefer to find a way to better control risk through certain TTF/LTF patterns, as outlined in the YTC Price Action Trader.

If I miss the move, so be it. Let it go. It wasn't mine to catch.

But otherwise, remain patient and watch for a retest of the range highs.

<image: Traps JUST AFTER the Open>

If ever in doubt about the structure of the market, don't rush to trade. There is no hurry. Let the market open and complete the first swing or two. Let the structure develop and then trade once you have some clarity.

But sometimes, when the pre-market sets up just right, there will be opportunity available within that opening sequence.

One of my favourites is a trap in the market structure, setting up just before, or just after the market open.

Keep an eye out for this concept, in your market and your timeframes.

Happy trading,

Lance Beggs

 


 

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

 


 

Sideways Trend into the Open

 

On Monday, prior to the market open, I shared the following YTC article via social media – http://yourtradingcoach.com/trading-process-and-strategy/patience-at-the-open/

The title of the article is "Patience at the Open".

And that pretty much sums up my intent in sending out that link. Simply trying to slow down the excitement and stop you jumping into the market prematurely, on the first day back from a long-weekend.

If you trade as I do, taking pieces out of the trend structure as it unfolds at the RHS of the screen, there is often no hurry to catch the first trade of the day.

If the bias is immediately clear, by all means trade.

But if there is any uncertainty, the superior play is often to stand aside and wait. Remain patient. Allow the uncertainty to resolve itself.

This will typically only take a few minutes.

The prior article outlined two of the "warning signs" which have me standing aside. Firstly, bias conflict. And secondly, seriously bad-looking price action (choppy with much overlap). Review the article if you missed it.

But in a great example of the market rhyming, rather than repeating, Monday offered a slightly different scenario. It's a variation of bias conflict, but unlike the prior example which had a directional trend into the open, this time we had a sideways market.

We manage this exactly the same way though. Remain patient. And allow any conflict or uncertainty to resolve itself.

Let's step through the open on Monday.

<image: Sideways Trend into the Open>

<image: Sideways Trend into the Open>

See here for rules on defining the trend structure.

Let's zoom in a little…

<image: Sideways Trend into the Open>

<image: Sideways Trend into the Open>

<image: Sideways Trend into the Open>

<image: Sideways Trend into the Open>

<image: Sideways Trend into the Open>

<image: Sideways Trend into the Open>

<image: Sideways Trend into the Open>

See here for the six YTC Principles for future trend direction.

This is a really easy concept. Our aim is simply to stand aside and wait, whenever there is uncertainty in the opening market bias.

There may be no uncertainty. You might have a directional market into the open with a momentum drive in the same direction. Go for it. There's no need to wait.

But if there is any doubt, or confusion, or uncertainty, then stand aside. Wait till it resolves itself. Wait till there is some clarity. And wait till you have confidence in your read of the market action.

Happy trading,

Lance Beggs

 


 

First Pullback in a NEW Directional Trend

 

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

REFERENCE: Definition of a sideways trend – Vol 2, Ch 3, Pages 99-102

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

Not all trade setups are equal.

You need to collect and review your stats to determine which setups provide your A+ MUST-NOT-MISS potential opportunity of the day.

For me, the first pullback in a NEW directional trend is one of these MUST-NOT-MISS setups.

No, they do not always profit. And sometimes they offer profits, but I mismanage the opportunity.

But when they do run and I perform well enough to catch them, the profits can more than make up for any other failed attempts. As always, we profit over a series of trades. Individual trades are irrelevant.

Check your own charts, in your own market and timeframes. Note any sideways trend environments. Find a breakout which occurs with some strength, which holds the break. And see if you can also find edge on the first pullback into this new directional trend.

Happy trading,

Lance Beggs