Category Archives: Trader

Trader – In this category our interest is in exploring all aspects of peak human performance, including: (a) Examination of the human body and mind and the ways that they impact upon our trading results, both positively and negatively. (b) Exploration of learning theory and the ways to maximise the development of knowledge and skill.

Pre-Accept All Possible Losses

 

Last week we discussed a simple technique that helps keep my mindset focused on the price action, rather than on my P&L, after suffering a trade loss.

<image: Pre-Accept All Possible Losses>

You'll find last week's article here if you missed it – http://yourtradingcoach.com/trader/its-how-you-choose-to-react-that-makes-all-the-difference/

So this week… I want to go a little deeper.

Because there is something that needs to be in place BEFORE this technique is applied, if I really want to gain maximum benefit from its use.

A belief system.

At the core of my approach to engaging and acting in the markets.

And that is…

Accept all possible losses before entering the battle!

We have talked about pre-acceptance of individual trade risk before – http://yourtradingcoach.com/trader/pre-acceptance-of-trade-risk/

But today's idea goes well beyond that.

It is about ALL possible losses.

It is about establishing a mindset during pre-session preparation, before the market is open, where I am completely at ease with the idea of MULTIPLE trade losses and closing out the day at the maximum loss limit.

Complete acceptance!

Of all possible losses.

This is the first of six parts of Richard McCall's ACTION Plan, from "The Way of the Warrior-Trader", for developing an effective performance mindset. I highly recommend this book if you're into the idea of applying lessons from samurai philosophy to the trading arena. And of course to get the final five parts of his ACTION Plan.

Accept all possible losses before entering the battle!

In fact, I take it a little beyond acceptance.

I EXPECT it.

It's like acknowledging that the default future is for a full session loss… decreed by the Trading Gods as inevitable unless I can demonstrate sufficient skill to prevent it.

Most traders operate like this:

<image: Pre-Accept All Possible Losses>

And the result is performance anxiety, doubt, hesitation, FOMO and all myriad of other problems.

My plan is to operate like this:

<image: Pre-Accept All Possible Losses>

This doesn't mean I want to end in drawdown. I will do everything in my power to defy the Trading Gods and finish the day somewhere to the right of that line.

It simply means that I'm absolutely fine with the day ending at a complete loss. I've pre-considered the outcome. And accepted that this is something I can manage. Something I can survive. And something that I can overcome.

<image: Pre-Accept All Possible Losses>

Maybe it's just me? Maybe I'm wired a bit strange?

But I don't think so.

If you struggle with the idea of loss, maybe you need to reconsider your relationship to risk. And maybe you could give this a try. I believe it helps me. Maybe it will help you too.

Pre-session… I cast my mind forward several hours and imagine a full session loss. How does that feel? Can I accept that?

If not, then I have no business trading today.

But if I can accept this outcome, then it's game on. Because while the Trading Gods might be planning a full session loss, I'll be damned if I'm going to go there without a fight.

Happy trading,

Lance Beggs

 


 

It’s How You Choose To React That Makes All The Difference

 

I love it when we can start off a session with a nice winner.

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

It would be nice to always start off a session with a winner.

But that's not how this works. You WILL start off some days with a losing trade.

And it's how you choose to react that makes all the difference.

You have two primary options:

1. You can take the negative path. The path where you are not in control. The victim mindset where you personalise the loss and make it all about you. "Here we go again. I'm such a loser."

2. You can take the positive path. The path where you remain in control. The mindset where you take the loss as information and use it to drive yourself to higher levels of performance.

The first will increase the likelihood of poor decision making in the next trade sequence.

The second will heighten your level of focus and increase the likelihood of quality decisions and actions.

You do have a choice. And while your subconscious reaction will at times tip you towards a negative outcome, this is a skill which can be developed and improved over time.

Yes, how you react to a setback IS a skill. And you can improve it.

I want to share with you today one technique that I have found useful in shifting my reaction away from the negative and more towards the positive.

It's an initial and immediate conscious recognition of respect for my opponent (the market).

A little smile, a nod, a tip of my hat.

It takes the focus off me. And onto the market.

In a sporting context, it's a bit like pitching a ball to a much younger kid, who not only connects with it but smashes it out of the park. You're not getting down on yourself. Instead, there's a smile. And a nod of the head. And a "Damn! This kid's got some skills!". There is sudden, increased respect. And motivation to get yourself back into the game with increased focus and awareness.

In a market context, you've just taken a loss. Get the focus off yourself and onto the market, through a conscious recognition of respect for your opponent.

Smile. Nod your head. "Damn! Nicely done. I'll give you that one!".

And then focus. There are more trades coming and they need your full attention.

Give it a try.

<image: It's how you choose to react that makes all the difference>

<image: It's how you choose to react that makes all the difference>

Happy trading,

Lance Beggs

 


 

The Hardest Trade

 

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

What do we do here?

Well there's not a lot we can do. It's missed opportunity.

And yes, I know that with hindsight we can look at the lower timeframes and find ways we "could" have got in. But we're not hindsight traders!

It's missed opportunity. It's gone. And our job is now to get on with the business of being a trader.

We've covered this scenario before.

See here for example, where we discussed an effective mindset hack through affirming – "It was never mine to take. If it was, I would have taken it. Let it go!"

So I did this.

I let it go.

I took a quick walk and cleared my head. And came back to the screens.

But let's be realistic here.

This next trade… is NOT going to be easy.

The first trade after missed opportunity can be one of the hardest trades.

The last thing I want to do is get smashed twice. Following up the missed opportunity with a losing trade.

I know… this shouldn't be any concern… every trade is independent and our edge plays out over a series of trades!

But I'm human… and even having carried out my regroup & focus routines… I recognised residual emotion.

So what to do?

Here were my actions:

1. Extend the break – NO TRADING. Let this whole price swing play out with no intentions to trade.

2. Use this time to absorb myself in the price movement. Watch and feel the bullish and bearish pressure play out within each candle.

3. When this price swing is complete AND I feel in sync with the price movement, it's GAME ON. Define the new trend structure. Project it forward. And seek the next trade opportunity.

The intent here is to get myself "out of my own head" and focused back on the price movement.

<image: The hardest trade>

Be careful in the pullback from here. Initial strength in the rally was news driven. But note how it weakened into the top of the swing. YTC PAT readers – this is a Second Principle scenario. Not First Principle. Be patient here.

And if it goes too deep, consider the possibility of this eventually transitioning into a sideways trend.

Until then though, I'm still looking for buy opportunity for continuation higher.

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

<image: The hardest trade>

Well done to anyone who might have traded something like an opening range breakout strategy, off the first 5 minute candle. You got a home run trade today.

For me though – it's one of those days with missed opportunity.

That happens. It's part of the game.

What is important though, is how we respond.

Take a break. Remind yourself – "Let it go. It wasn't mine to catch. If it was, I would have caught it."

And if there is still residual emotion, just watch and wait and let the next swing (or two or three) play out. There is no hurry to trade. Absorb yourself in the price movement. And then… when the structure becomes clear and you feel in sync with the price movement… only then is it time to trade.

Happy trading,

Lance Beggs

 


 

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

 


 

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

 


 

Resume the Fight at a Time of YOUR Choosing

 

I sent the following post out via social media on Tuesday, prompted by some discussion with a trader who dug himself into quite a hole through doubling down on losses.

This message is so important I thought I'd share it with my larger audience here in the newsletter. And also take the opportunity to expand upon the idea a little.

<image: Resume the Fight at a Time of YOUR Choosing>

This is one of the key advantages you have as a discretionary trader.

YOU get to decide when and where you will play this game.

If the current conditions are not to your liking, NO-ONE is forcing you to play.

Get out of there.

Take a break. Clear your mind.

And come back at a time of YOUR choosing, when the conditions are more suited to your style of trading.

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

I have clear guidelines in my own trading plan:

<image: Resume the Fight at a Time of YOUR Choosing> 

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing> 

 

ACTION ITEM:

Schedule some time to review or amend your Trading Plan.

Make sure to include guidelines or rules for the following:

(a) At what point intra-session will you stand aside and force a break from trading? What changes need to occur before you will allow yourself to resume trading?

(b) At what level of intra-session drawdown will you force a stop for the day?

And longer term:

(c) At what level of drawdown will you force a break from all trading, in order to review your performance and reconsider your plan?

Happy trading,

Lance Beggs

PS: For those concerned that trading should never be a fight… it's simply an analogy that I find particularly useful. See here – http://yourtradingcoach.com/trading-process-and-strategy/trading-is-a-fight/ . The concept is still relevant even if you prefer to not view the game in this manner. If you're out of sync with the market, step away. Come back and play at a time of your choosing, when the conditions are more suited to your style of trading and your preference for market conditions.

 


 

Mindset – You vs Me

 

Your mindset is either working for you or against you. To some degree, you get to choose.

<image: Mindset - You vs Me>

<image: Mindset - You vs Me>

<image: Mindset - You vs Me>

<image: Mindset - You vs Me>

<image: Mindset - You vs Me>

<image: Mindset - You vs Me>

<image: Mindset - You vs Me>

<image: Mindset - You vs Me>

NOTE: An essential ingredient in operating with a mindset of wonder is a pre-acceptance of risk. We discussed this recently here.

Before any trade you must pause to confirm that:

  • A full loss on this trade will not break any session drawdown limits, and
  • A full loss on this trade is personally acceptable. I am completely comfortable taking the loss and moving on. (Typically because I expect that any loss will be contained and easily overcome by the next positive trades.)

 

With the above preconditions in place, reframe any nerves you feel as WONDER. And watch fascinated as the future unfolds before your eyes.

Happy trading,

Lance Beggs

 


 

Wait till it’s Clear of Recent Structure

 

I don't know if you're like me, but if you are then you'll have this dark-side of your personality that surfaces from time to time. A side that just WANTS TO TRADE. A side which doesn't so much care about the conditions of the market. Given the slightest hint of opportunity, it wants to get into a position and trade.

And of course, while that will from time to time capture the good moves, it also means you're often stuck in a fight for survival through the all of the market chop that you just KNOW is better avoided.

I'm much better at managing this now. One of the most significant changes to my trading over recent years has been an increasing ability to accept less trades.

But I do need to remind myself of this from time to time. Occasionally that impulsive side of my personality finds itself in control of the mouse, despite my better intentions.

One of these times is the "first day back" after a break. Hence my social media reminder on Monday…

<image: Patience... there is no hurry!>

Yes, often my social media posts are written for me.    🙂

And then again on Tuesday…

<image: Wait till it's clear of recent structure>

But often a simple reminder to be patient is not enough. So here's another of the things I will often do to slow down that impulsive side of my nature.

A tactic I use when first coming back from a break. And also from time to time intra-session if I find myself frustrated and struggling to read the price action.

WAIT TILL IT'S CLEAR OF RECENT STRUCTURE.

Look at either the Trading or Higher Timeframe Charts. Find areas above and/or below recent structure which offer clear space and potential for an obvious directional bias.

Firstly, this gives me permission to "sit on my hands" until an area of the chart with greater potential for ideal trading conditions.

And secondly, this gives me time to just watch price, getting in flow with the movement and the pace, so that when good conditions are present and a trade opportunity sets up, I'm ready to attack.

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

<image: Wait till it's clear of recent structure.>

Define the places you want to trade, clear of any recent structure. Sit back and relax and enjoy the show. Let price do it's thing. Someone else can trade here. Just watch and get in sync with the movement, so that when price decides to play in YOUR playground, you're ready.

Good trading,

Lance Beggs

 


 

Pre-Acceptance of Trade Risk

 

I will NEVER take a trade without having pre-accepted the potential for trade loss.

Because the fact is that MANY will lose.

<image: Pre-Acceptance of Trade Risk>

<image: Pre-Acceptance of Trade Risk>

Pre-acceptance of trade risk means that I am comfortable with taking the loss and will do so immediately without hesitation.

Pre-acceptance of trade risk means that I'm not overly concerned with the monetary loss and can keep my focus on the process of analysis and effective decision making.

My focus remains on process, rather than outcome!

<image: Pre-Acceptance of Trade Risk>

Ask yourself before entry, "Am I comfortable with this trade losing?"

If you're not comfortable with this trade losing then you've likely not yet achieved sufficient confidence in your strategy, or you're trading with too much risk.

You will likely hesitate to take the exit, ensuring a greater than necessary loss.

And you will likely carry some psychological baggage into the next trade, increasing the chance of poor analysis or decision making and greatly increasing the chance of further losses.

<image: Pre-Acceptance of Trade Risk>

<image: Pre-Acceptance of Trade Risk>

Before any trade, pause to confirm:

  • A full loss on this trade will not break any session drawdown limits.
  • A full loss on this trade is PERSONALLY acceptable. I am completely comfortable taking the loss and moving on to the next trade.

 

Because if either of these are not true, then you have no business taking the trade.

Good trading,

Lance Beggs

 


 

Missed Opportunity Mindset Hack

 

<image: Missed Opportunity Mindset Hack>

<image: Missed Opportunity Mindset Hack>

<image: Missed Opportunity Mindset Hack>

The end result is that I still have a profit. And yet I feel crap. And my mind starts beating me up for not doing better.

All part of being human, I guess.

But not ideal if you wish to be an effective trader.

There is very little to be gained by carrying negativity into the rest of the trading session.

So here's what I do.

FIND A POSITIVE. ANY POSITIVE.

Break the cycle of negativity as soon as you can. Actively, consciously, seek out and focus on something positive.

Here's one I use in situations like the above trade example, where I've taken some good profits but left a whole lot more on the table.

Immediately… look left and find an earlier multiple-trade losing sequence.

Does the trade I just took completely cover that multiple-trade loss and still provide profits? If so, that's awesome. Great trade. Move on.

Let's check the charts…

<image: Missed Opportunity Mindset Hack>

If there isn't an earlier losing sequence, then find something else positive. Anything.

Even if it's just something basic like, "There was a time in the past when I wouldn't have caught that at all. I did today. Awesome! Great Trade! Move on!"

Whenever you find yourself with some negativity… break the pattern!

Find a positive. Any positive.

Enjoy the positive.

And consciously declare, "Great trade! Move on!"

There are more trades coming and they need your full attention, with a positive and focused mindset.

Happy trading,

Lance Beggs