Tag Archives: Bias

Simple Session Bias – 2

 

Last week I introduced two quick and simple methods for establishing the "bigger picture" bias for the trading session.

Let's look at this concept one more time, reviewing all sessions since last week's publication.

We will focus this time on the opening range method (my preferred method) and go into a little more detail.

Friday 3rd August 2018

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

Monday 6th August 2018

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

Tuesday 7th August 2018

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

Of note… this session was also the focus of a social media post. You can see it here on either twitter or facebook.

Wednesday 8th August 2018

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

Thursday 9th August 2018

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

Next Step…

Now it's time for you to take action.

If you like the idea, start applying it to your markets for a few weeks to see if it adds value to your own analysis and trade decision making.

Maintaining context is essential for effective price action trading. The "bigger picture" session bias is a key part of this context. And will hopefully have you trading (more often than not) on the right side of the market.

Happy trading,

Lance Beggs

 


 

Simple Session Bias

 

Maintaining context is essential for effective price action trading.

And while that is true for all timeframes, it's especially so in the lower intraday timeframes where you can easily get caught up in the tick-by-tick battle between the bulls and bears.

My primary tools for context are the trend structure which I view on the trading timeframe chart and a support and resistance framework on a higher timeframe chart. All revealed here if you're interested.

But over time I've adopted a slight addition to this plan.

One additional piece of context data.

Very quick to establish. And very simple.

It essentially provides me with an immediate "bigger picture" assessment as to whether the session as a whole should be considered bullish, bearish or neutral.

I don't restrict trading to this session bias direction (although some people may choose to do so). I trade with reference to the trend and S/R structure, as discussed earlier. But the session bias helps to weight my preference slightly to this "bigger picture" direction.

When trading with the session bias I might show a little more patience in letting a trade prove itself. And a little more confidence in holding for larger targets.

Against the session bias, I might prefer to limit myself to A+ quality trades only. I might require them to prove themselves more quickly, or else I'll be scaling back the risk. And I might be satisfied with closer targets.

The method is simple – just display the opening range on a higher timeframe chart. Price holding above the opening range is bullish. Price holding below is bearish. Stuck at the opening range (or in the vicinity) is neutral.

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

VWAP works great as well. Again, price above VWAP is bullish and below is bearish. While price oscillating around the VWAP is more neutral.

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias>

<image: Simple Session Bias> 

Interestingly, you will note that both methods produce a slightly different result, at times, in particular immediately following the session open. That's completely normal. And it's fine (we're only getting a feel for a "bigger picture" bias here). Just be consistent in whichever you use.

Play with some charts and explore the use of either the opening range or VWAP. Or find your own method. There are many options.

Whatever you choose, just keep it simple.

No "analysis" required. Just an immediate visual assessment of bullish, bearish, or neutral.

Happy trading,

Lance Beggs

 


 

Patience at the Open

 

Until you have a good read of the market, there is NO TRADE.

  • Confidence in your real-time understanding of the market structure.
  • Confidence in your real-time understanding of the nature of price movement.
  • Confidence in your real-time assessment of market bias.
  • Confidence in your projection of that market bias forward in time and price.

 

And most importantly:

  • An understanding of how future price movement should behave if your forward projection has some validity.
  • And confidence in your ability to adjust your understanding (and your trading decisions) should price movement offer something unexpected.

 

In simpler language… if you don't know what's going on… you have no business trading.

Watch and wait until some clarity appears, in terms of structure, price movement and opportunity.

The market open is one time which has great potential for confusion, doubt and uncertainty.

I remind myself before the open that there is no need to rush the first trade. If it screams out to be taken, then take it. But otherwise, be patient and allow myself time to get in sync with the flow of price.

Here are two of the market opening "warning signs" that have me keeping my trigger finger well clear of the mouse.

1. Bias Conflict

During the session I maintain a sense of the bias through the YTC Price Action Trader rules for trend projection.

At the session open though, I like to complement this with a really simple and objective method – the opening range breakout.

If they're in agreement, it's game on.

But if they conflict, it's a sign to be patient and wait till they come into alignment.

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

2. Seriously BAD LOOKING Price Action

Not just bad looking price action. We're talking seriously bad looking price action.

<image: Patience at the Open>

<image: Patience at the Open>

Remain Patient. Watch and Wait.

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

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

 


 

A Simple Alternative Means of Assessing Short-Term Bias & Market Strength/Weakness – Part 2

 

I've long been a fan of Opening Range (OR) theory and the way that it allows us to quickly and easily identify a "bigger picture" session bias.

So last week we played around with that concept and explored it's application in new areas of the chart.

We took the concept of OR theory and applied it not just to the opening bar of the session, but to multiple bars throughout the session as well.

In my own trading, using the 1-minute Trading Timeframe, I apply this to the opening candle for every 30 minute block of data.

This allows me to not only have the "bigger picture" session-wide bias, but to also get a feel for the bias on a shorter timescale as well.

Think of it as being like multiple-timeframe analysis. The standard OR provides a bigger picture session-wide bias. The 30 minute OR’s provide a picture of the shorter-term bias “inside” that bigger picture bias.

You can find last week's article here if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/a-simple-alternative-means-of-assessing-short-term-bias/

At the most basic level, analysis of a single 30M OR block can provide us with two primary pieces of information:

  1. A sense for the short-term directional bias. Price movement above the OR is bullish. Price movement below the OR is bearish. And price movement stuck at the OR is neutral.
  2. A feel for the underlying strength or weakness within this directional bias. Fast-flowing price movement with little overlap shows a strong supply/demand imbalance. Whereas overlapping, choppy action suggests a much more balanced market.

 

Let's look at some examples of this information as applied to individual 30M blocks:

Analysis of Individual 30M OR Blocks

Analysis of Individual 30M OR Blocks

Analysis of Individual 30M OR Blocks

Analysis of Individual 30M OR Blocks

The real strength of this method though, is not in analysis of an individual 30M OR block.

Rather it comes through assessing the information from the current OR block within the context of either the overall session bias or the preceding couple of OR blocks.

Resolving Bias Conflict.

Resolving Bias Conflict.

Resolving Bias Conflict.

Resolving Bias Conflict.

Resolving Bias Conflict. 

If you like this, I highly encourage you to play around with the charts and see what other information you can gather, in relating one single OR block to those preceding it.

Again though, to reinforce a point from our prior article…

This is not my primary tool for conducting analysis.

I assess short-term bias through six "rules of thumb" which allow me to project the current trend forward in time, identifying the highest probability path for the next couple of price swings. I share this method in my eBook series (Chapter 3). The same applies for the method I use to assess strength and weakness within the trend. Also Chapter 3.

Short-term OR Theory is something that has crept into my analysis process over time, which acts to nicely complement the existing methods.

Sometimes it acts simply to confirm my other analysis. And other times it provides a slightly different perspective.

Either way, I find it adds value.

If this idea appeals to you, try it alongside your current methods of analysis and see if you find the same benefits.

Happy trading,

Lance Beggs

 


 

A Simple Alternative Means of Assessing Short-Term Bias & Market Strength/Weakness

 

I highly recommend spending some time every now and then just playing with your charts.

Try something new.

Or see if you can apply old ideas in new ways.

Just occasionally, you may find something useful.

Today I'd like to share a simple tool that I've been using for the last few years, alongside my existing approach to assessing short-term market bias and the strength or weakness within the price action.

IMPORTANT NOTE: This is not my primary tool for conducting analysis.

I assess short-term bias through six "rules of thumb" which allow me to project the current trend forward in time, identifying the highest probability path for the next couple of price swings. I don't share this in the newsletter or blog (sorry!). If you're interested you'll need to see my ebook series (Chapter 3). The same applies for the methods I use to assess strength and weakness within the trend. Also Chapter 3.

What we discuss today is something that has crept into my analysis process over time, which acts to nicely complement the existing methods.

Sometimes it acts simply to confirm my other analysis. And other times it provides a slightly different perspective.

Either way, it adds value.

This discovery came about through "playing" with Opening Range theory and seeing where else it could be applied.

We've discussed the Opening Range previously in a few articles if you want some background reading – http://yourtradingcoach.com/tag/opening-range/.

Here is the general concept:

Standard Opening Range theory 

So now, let's apply this in a new way.

I first hinted at this idea way back in 2013 via a series of two facebook posts:

First this one…  (and I guess I've kind of given away the answer!!!)

An Alternative Use for Opening Range theory

 

And then the next day, this post:

 

An Alternative Use for Opening Range theory

I've never seen anyone else do this. I'm not sure why? I think it's an absolutely brilliant method of maintaining an intra-session bias. And it works just beautifully as an additional method to support other YTC Price Action Trader analysis.

The hourly open is a significant occurrence, visible to traders on all timeframes from 1H down to 1M. As such, opening range theory applied to the first Trading Timeframe candle at this point works well in giving a quick indication of current bias as either bullish, bearish or neutral.

The same applies for 30 minute opens, if you prefer to look at this even more short-term. My preference has shifted to using the opening 1 minute candle, each 30 minutes. I find this works well for the 1 minute trading timeframe. If your trading timeframe is higher then just increase the size of the segment as appropriate. Those trading 3 or 5 min charts will likely find one hour segments better than 30 minute segments. Higher trading timeframes may even find value with 2H or 4H groups.

Again… I'm not sure why we don't see this used more often. Give it a try! I love it!

I'm not going to reveal all I've found in using this approach. I want you to play with it. Explore the idea on some charts. Run it alongside your current methods. If it adds no value, drop it. But maybe… and I suspect this will be the case for many… it will become a quite useful tool in your trading toolkit.

A quick starting point though:

Within the context of the "bigger picture" session bias and other analysis information available from standard opening range theory, we now have a method of assessing the same information on a shorter timescale.

So as with the standard approach, price movement from the 1H or 30M Opening Range gives us insight into either bullish or bearish or neutral bias. And the ease with which price moves away gives insight into the strength and weakness.

But now, instead of just being able to reference price to the Opening Range, we also have the ability to:

(a) Reference the shorter-term 1H or 30M bias information to the longer-term session bias information, as the shorter-term acts to move with or against the longer-term bias.

(b) Reference the current 1H or 30M bias information to that obtained from the previous one or two 1H or 30M segments.

That is, we get information into the way that price is moving. Is it stable, maintaining previous direction, pace and volatility? Or is something changing?

I might leave this here for now.

Again, rather than provide examples, I'd like you to play with this idea and see what you think.

Plot an opening range box around the first "trading timeframe" candle each 30 minutes (or one hour).

If there seems to be any interest then I'll follow up with a part-two in coming weeks, looking at the short-term 30M Opening Range on a few price charts.

Happy trading,

Lance Beggs

 


 

The Key to Early Recognition of Potential Change in Structure

 

The key to early recognition of potential change in structure is in observing and identifying "SOMETHING DIFFERENT".

I absolutely love this example which has been building now since the beginning of the year.

The key to early recognition of potential change in structure

This does not mean that the uptrend will end.

It's just a warning sign.

A clue that the sentiment driving the market prior to this date has changed in some way.

A clue that there is "potential" for a change in market structure.

And for those of you who recognise this clue, the potential to more quickly adapt to any change in structure as it happens, or even before the technical change has occurred.

(By the time I publish this article the market may well have made this change. Be sure to check out the charts if you wish to see what happens next.)

For those of you who wish to join the ranks of professional traders, this is a skill you need to build. Quickly recognising and adapting to changes in the market.

And step one in that process is early recognition of "something different".

All markets.

All timeframes.

The key to early recognition of potential change in structure

I'm just stunned by that last fact.

Skip the table below if you wish, but I personally find it amazing!  (Yep… I'm a charting nerd!)

3rd Jan: Mid-Close Range 1st Feb: Mid-Close Bull 1st Mar: Mid-Close Bull
4th Jan: High-Close Bull 2nd Feb: Low-Close Range 2nd Mar: Low-Close Range
5th Jan: High-Close Bull 3rd Feb: Mid-Close Range 3rd Mar: High-Close Range
6th Jan: High-Close Bull 6th Feb: High-Close Range 6th Mar: High-Close Range
9th Jan: High-Close Bull 7th Feb: Low-Close Bull 7th Mar: Low-Close Range
10th Jan: Mid-Close Bull 8th Feb: High-Close Range 8th Mar: Mid-Close Range
11th Jan: High-Close Range 9th Feb: High-Close Bull 9th Mar: High-Close Range
12th Jan: High-Close Range 10th Feb: High-Close Bull 10th Mar: Mid-Close Bull
13th Jan: High-Close Bull 13th Feb: High-Close Bull 13th Mar: High-Close Bull
16th Jan: Low-Close Range 14th Feb: High-Close Bull 14th Mar: High-Close Range
17th Jan: Mid-Close Bear 15th Feb: High-Close Bull 15th Mar: High-Close Bull
18th Jan: High-Close Bull 16th Feb: Mid-Close Range 16th Mar: Mid-Close Range
19th Jan: Mid-Close Range 17th Feb: High-Close Bull 17th Mar: Low-Close Range
20th Jan: Mid-Close Range 20th Feb: High-Close Bull 20th Mar: Mid-Close Range
23rd Jan: High-Close Range 21st Feb: Mid-Close Range 21st Mar: Low-Close Bear
24th Jan: High-Close Bull 22nd Feb: High-Close Range  
25th Jan: High-Close Bull 23rd Feb: Mid-Close Bear  
26th Jan: Low-Close Range 24th Feb: High-Close Range  
27th Jan: High-Close Range 27th Feb: High-Close Bull  
30th Jan: Mid-Close Bear 28th Feb: Mid-Close Range  
31st Jan: High-Close Range    

 

(See here if you're not familiar with this form of candlestick classification – Parts: One Two Three Four Five )

The key to early recognition of potential change in structure is in observing and identifying "SOMETHING DIFFERENT".

In a stable trend, watch for changes in volatility, or in the pace of the trend. Watch for changes in the way that price swings project beyond the previous swing high or low. Or in changes to the depth of pullbacks. Or, as in today's example, watch for a sudden and strong move counter-trend.

In a stable sideways market, watch again for sudden changes in volatility. Or sudden and dramatic increases in volume. Or (one of my favourites) watch for signs of price compression towards either the upper or lower boundaries of the range.

Something different in the way that price has been moving.

Observe it.

Question it. What could it mean? Could this in any way provide a clue to a potential change in structure?

Now… watch and adapt.

The key to early recognition of potential change in structure

The key to early recognition of potential change in structure

The key to early recognition of potential change in structure

Happy trading,

Lance Beggs

 


 

Is this Market Bullish or Bearish?

 

For all those times I'm asked by email, "Why were you selling today when the market is bullish?" or "Why were you buying today when the market is bearish?"

Bullish or bearish?

Bullish or bearish?

Bullish or bearish?

So when someone says that a market is bullish… or that a market is bearish… that actually means nothing without some idea of time scale.

Cheers,

Lance Beggs