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Two Attempts – Then Reassess (2)

 

The quicker you can recognise that you're wrong… the quicker you can become right.

Here is a useful rule:

  • Two Attempts – Then Reassess!

After two attempts at a trade idea, if it hasn’t worked, it’s clear that something is not right. You’re not in sync with the market.

Either:

  • You have misread the situation and you're wrong, or
  • Your timing is out (which still means you're wrong).

 

Break the pattern!

Two Attempts – Then Reassess!

Confirm your position is flat.

Step away from the charts.

Clear your mind.

Then reassess from first principles.

Try to see the picture from the perspective of someone who might have the opposite bias to you. What are they seeing? Could they be right?

You may choose to get back in for a further trade (assuming session drawdown limits are not hit).

But you may also have prevented a meltdown; stopping a good trade idea which didn’t work from turning into an absolute mess of a session.

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

 

The quicker you can recognise that you're wrong… the quicker you can become right.

Here is your rule:

  • Two Attempts – Then Reassess!

Happy trading,

Lance Beggs

 

Previous Article: http://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess/

 


 

Is This a Trade You Would Take if You Were in Drawdown?

 

Some of my better trades lately seem to occur after a string of marginal trades which either stop out or seriously underperform.

Mostly because of my rule which says that after two poor trades I need to step aside, clear my mind and reassess the situation.

Time out!

Reassess!

It prevents a downward spiral of emotional revenge trading.

And allows me to return to the market with a new plan. Usually, a plan which waits for a change of structure and takes the first pullback opportunity within that new market regime.

<image: Two trades placing me in drawdown.>

<image: Time out. Reassess.>

<image: Consider the options when price breaks current structure.>

<image: Entry>

<image: Exit>

So this brings me to an idea that may help me cut out some of the more marginal trades.

And perhaps may help you with improving your trade quality as well.

Rather than waiting for two marginal trades to place me in drawdown, maybe I could trade "AS IF" I were already in that situation.

Prior to entry, ask:

  • "Is this a trade I would take if I were in drawdown?"

 

If so, go for it.

But if not, maybe pause and reassess.

Sometimes it will keep you out of a winner. That's how this game of probabilities works.

But if it's keeping you out of a number of marginal trades then there could well be a positive change to your edge.

If the idea appeals to you, give it a try. But track the impact it has on your edge over a series of "avoided trades".

Prior to entry, ask:

  • "Is this a trade I would take if I were in drawdown?"

 

<image: This IS a trade I'd take in drawdown.>

Happy trading,

Lance Beggs

 


 

The Other Trader (5)

 

Let's continue with a series we started last year – the metagame – trading AGAINST other traders who find themselves on the wrong side of the market.

Because…

If I can't feel someone on the other side of the market getting it really wrong, there is no trade.

You can see the prior articles here if you missed them – OneTwoThreeFour.

Let's set up the scenario…

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

(Source: YTC Price Action Trader Vol 2 Ch 3 P99-102)

<image - metagame trading - the other trader 5>

(Source: YTC Price Action Trader Vol 2 Ch 3 P145-153)

From a metagame perspective, this is the scenario we're looking at. We aim to place ourselves in the mindset of any trader who bought late in the move, at or soon after the breakout. Feel their stress build as price stalls. And stalls. And stalls. Feel their pain as their "sure thing" collapses back below the stall region. And find a way to profit from their pain.

<image - metagame trading - the other trader 5> 

Let's zoom in a bit. And take on the mindset of the novice retail trader who entered late in the move (let's say right on the break).

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

Trading the metagame…

If I can't feel someone on the other side of the market getting it really wrong, there is no trade.

Fast, sudden price moves don't always continue.

Quite often, someone is getting trapped.

And that… is opportunity.

Go get 'em,

Lance Beggs

 


 

LTF Entry Patterns can also trigger Exit

 

Lower timeframe (LTF) entry patterns can also trigger exit.

Perhaps that's obvious? Perhaps not?

In any case, as I used an LTF trigger pattern for exit during the week the following thought crossed my mind – "I don't recall discussing this via the newsletter"

So here we are…

There are MANY entry trigger patterns. For those with the YTC Price Action Trader, refer to Chapter 4, pages 87-90 for a diagram summary of all the patterns I watch out for.

By far the majority of discussion with lower timeframe patterns is always with respect to entry.

So let's start with an entry example.

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit> 

 

BUT…

The exact same trigger pattern can also be used to trigger EXIT from an earlier (opposite direction) trade.

Let's assume now that we were SHORT much earlier, trading down into the lows.

<image: LTF Entry Patterns can also trigger Exit>

<image: LTF Entry Patterns can also trigger Exit> 

 

Happy trading,

Lance Beggs

 


 

Trading Alongside the Uncertainty and Fear

 

I shared the following post via social media on Wednesday:

<image: What if it's ok to feel uncertain?> 

Without doubt, this is one of the key lessons we must learn on the way to becoming a professional trader.

And so I was incredibly pleased to get the following reply:

<image: What if instead we learn to operate alongside the uncertainty and fear?>

Brilliant!

Thanks A.H.

This is exactly the right approach to the presence of the fear and doubt.

1. Recognise the emotion.

Just briefly, bring your focus back from the external (charts) to the internal (your body and mind). Notice what you're feeling.

2. Acknowledge the emotion.

Accept it. You can't fight it. You may as well welcome it.

If it helps… verbalise it.

3. Understand the emotion.

What is it trying to tell you? There is information there. Find it!

4. Review the trade premise.

Often you will find that steps one to three will significantly reduce the severity of emotion.

So the final step – review the trade premise from an objective chart-based perspective.

With the emotion acknowledged and diminished, does the trade premise actually contain edge?

If so, go for it.

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

If it helps, consider creating a "pre-entry mantra" to shift your focus inside and recognise, acknowledge and understand any emotion that may impact upon your trading decisions and actions.

With experience (and of course proper risk control) fear and emotion will reduce. But it never completely goes away.

You can't fight it.

Accept it. And learn to work alongside it.

Happy trading,

Lance Beggs

 


 

Let It Fail First – Then Get In

 

Although we trade very differently, I am quite a fan of Al Brooks first book, "Reading Price Charts Bar by Bar".

One of his quotes which has stuck with me over the years is the following:

  • Countertrend setups in strong trends almost always fail and become great With Trend setups.

 

This quote came to mind earlier in the week, as I took a counter-trend entry against a strong trend, despite my predominant thought prior to entry being "This is too obvious. It has to be a trap!".

<Let it fail first - then get in>

The drop from point 2 was just over 30pts (120 ticks) in 15 minutes. Ok, it's maybe not the strongest trend. But there was very little opportunity in the way of pullback entries SHORT. And bears still felt in control.

<Let it fail first - then get in>

<Let it fail first - then get in>

<Let it fail first - then get in> 

And that's when the Al Brooks quote came to mind.

  • Countertrend setups in strong trends almost always fail and become great With Trend setups.

 

<Let it fail first - then get in>

The outcome:

<Let it fail first - then get in>

<Let it fail first - then get in>

<Let it fail first - then get in> 

Happy trading, 

Lance Beggs

 


 

Reverse Trendline Breakout Failure

 

The market opened and settled quickly into an uptrend.

It was an environment I found difficult to trade for some reason. Decision making was poor. And I just couldn't get in sync with the price movement.

This was a fact that became clearly obvious after two suboptimal trades (small profit so it's all good).

So here's the plan on recognising the fact that I'm out of sync with the market:

  • Stand aside until price breaks from the current structure.

 

Here's what I mean:

The current structure was an uptrend. But not a nice one. Small swings, getting smaller.

I don't use trendlines, but they will help show what I was seeing within the structure, as the trendlines above and below price both converge on each other.

(Reverse Trendline Breakout Failure)

This is what I wait for:

(Reverse Trendline Breakout Failure)

(Reverse Trendline Breakout Failure)

This time we got a break of the reverse trendline.

(Reverse Trendline Breakout Failure)

From a strength/weakness perspective, an acceleration of price like this gives an appearance of strength, but it's not usually the case. Such a steepening of price is unsustainable and will exhaust itself. Any strength is actually short-lived and will often (but not always) provide opportunity back to the last area of congestion prior to breakout.

(Reverse Trendline Breakout Failure)

Here is the outcome:

(Reverse Trendline Breakout Failure)

Lessons:

1. Two suboptimal trades are an indication that you're potentially out of sync. Pause. Step back from the charts. And reassess.

2. When you recognise yourself being out of sync with the market, consider standing aside until price breaks from the current structure.

3. A reverse trendline breakout is usually played initially for reversion to the mean, with the remainder held for potential reversal (until proven otherwise).

Happy trading,

Lance Beggs

 


 

Clues to a Quiet Trading Session

 

Some days the market offers complete rubbish.

Monday was one of those days.

Clues to a quiet trading session 

Clues to a quiet trading session

Clues to a quiet trading session

Clues to a quiet trading session

Clues to a quiet trading session

Clues to a quiet trading session

Clues to a quiet trading session

Clues to a quiet trading session

Clues to a quiet trading session

So far we mentioned the following price action clues which helped form my decision to stand aside and watch and wait for better conditions.

  • Overlapping price bars with little directional conviction
  • Plus narrow range price swings
  • Both combining to form a narrow range channel which just drifts slowly in one direction

 

In addition, a big part of the decision is the following:

  • "Feel" – The price movement itself intra-candle just "feels" slow and sluggish. And while it's present through all price movement, it's particularly felt when sitting in a position and it's just NOT moving the way you like.

 

However, there is another quite important input into my decision, which I haven't mentioned yet. (This was actually the whole point of the article when I conducted my planning… yes, I've digressed again!!!)

It's a factor which gradually became clear between 5 and 30 minutes after the session open.

So let's get to the whole point of my article and check this out.

We'll begin by looking at the DAILY chart.

Clues to a quiet trading session

Of note is the fact that the volume of the day (with hindsight) turned out to be the lowest volume in a LONG TIME (excluding holiday sessions). I don't know how long. I'm not a stats person. If you are, feel free let me know how long!  🙂

But it was a long time since we've seen the daily volume so low.

And low volume is often (not always) an indication of a dull, lifeless session. Just the kind of session I prefer to avoid.

Of course, the exchange does not publish the end-of-day volume before the session starts.

But it's not all bad.

Here's a tip I learnt many years ago:

  • The opening 30 minute volume gives a clue as to the kind of day we'll get. A very low opening 30 minute volume suggests low participation and (in the absence of any reason for this to change) a higher likelihood of a lower volume day.

 

In other words, if the 30 minute volume is really low, expect dull, lifeless conditions ahead.

So here's the opening 30 minute volume. Again, very low compared with recent historical averages.

Clues to a quiet trading session

And rather than wait till 30 minutes, we can take a quick peek at 5 and 15 minutes into the session.

Clues to a quiet trading session

Clues to a quiet trading session

There is no need to build and display these chart templates which show only the first 5, 15 and 30 minutes of data. Just glance at the volume after 5, 15 and 30 minutes and you'll get a feel for whether it's low, about average or high.

A low opening five minute volume is a warning sign. Participation is low. Interesting! Take note.

If it continues after 15 minutes, this is a bigger warning sign. Take care in these markets.

And if the volume remains low at the 30 minute mark, when compared with historical averages, expect a potentially dull and lifeless session. At least until something shocks the market out of it's slumber and shifts the sentiment of the market participants.

TRADE WITH CAUTION.

A+ SETUPS ONLY.

Or not at all.

Sometimes it feels good to take hold of your small profits and call it a day. There is a life to be lived out there, away from the charts.

On this particular Monday, the volume was low after 5 minutes. And again at the 15 minute mark. Price action had felt slow and sluggish. In particular when in a trade. Price structure had the appearance of potential grind – one of my least favourite trading environments. And then at the 30 minute mark, volume was clearly the lowest for at least the last few months.

There was no need to trade any further.

Tomorrow will be a whole new day and a chance for much more favourable trading conditions.

Happy trading, 

Lance Beggs

 


 

Sometimes You Get It Wrong Before You Get It Right

 

On Tuesday I shared one of my older facebook posts via social media. Copied here:

Stop expecting perfection. Instead, learn to manage your imperfection. 

Repeating the key points for effect:

  • Learn to survive… and even occasionally profit… in the times when your read of the market is wrong.
  • And that will leave you with confidence to attack the opportunity available at the times when you are in sync with the market.

 

I sought out this old post in response to a similar sequence on Monday.

One in which I was positioned wrong in the market. Not once, but twice.

Before taking a step back from the charts and looking with a wider perspective and switching to the right side.

Here is Monday's opening sequence:

Wrong - Wrong - Right

In email Q&A with a reader (Josh) during the week, he asked me the following question, "Do you feel like you're in sync with the market everyday?"

Great question.

The reality is that no, I'm not in sync with the market every day.

There are many times when I've approached the market in a "less than ideal" mental or physical state and it has clearly influenced my ability to get in sync with price movement.

And even when in an optimal state, there are many price sequences which are not simple to read.

That's the nature of price movement – traps, retests, fakeouts.

The market seems at times to take great delight in deceiving us.

So our job as traders includes the following:

  • Managing those times when we're not in sync with the market to ensure we contain any loss and prevent it getting out of hand. Profiting of course, if possible, but our priority is to limit the downside and stay in the game.
  • And then recognising when we are in sync with the market so that we can squeeze as much profit out of it as possible.

 

Wrong - Wrong - Right

Wrong - Wrong - Right

Here is the link to last week's article if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/trading-an-uncertain-trend/

Wrong - Wrong - Right

Wrong - Wrong - Right

Wrong - Wrong - Right

Wrong - Wrong - Right

Wrong - Wrong - Right

Once more:

  • Learn to survive… and even occasionally profit… in the times when your read of the market is wrong.
  • And that will leave you with confidence to attack the opportunity available at the times when you are in sync with the market.

 

Don't expect to always be in sync with the market.

Sometimes you have to get it wrong a few times, before you can get it right.

Happy trading,

Lance Beggs