Tag Archives: Context

It’s Game On! Let’s Trade!

 

I operate with three general levels of engagement – Trading, Trade with Caution, and Stand Aside.

Because not all conditions in the market are the same.

If you haven't done so, I highly recommend adopting a similar practice. Take some time to consider the factors that might trigger each level of engagement in your own trading business.

Today let's look at three factors which had me in "Trading" mode right at the market open. No delays. No hesitation.

With these three factors in play, I wanted to be in the first opportunity I could find.

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

A gap open, from a strong and persistent overnight uptrend, with a recent trap showing an inability to drop.

There is emotion in the market.

And I want to trade.

(See here for prior articles on traps just before the open – here and here).

<image: It's Game On! Let's Trade!>

(NB. YTC Price Action Trader concepts – The First Principle is in play, PB setup)

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

I don't want to trade all market opens.

There are many that I classify as "Trade with Caution". Think of the opposite of today's example – a market opening in the middle of the prior day's range, following a dull and lifeless sideways overnight session. There is no emotion driving the market. And so I have no business in taking a position until something changes. Wait patiently. Let the opening structure form (5 minutes, 15 minutes, 30 minutes… or as long as it takes). And then trade off that structure.

But there are other days when I don't want to wait. Market sentiment appears to be strong and potentially one-sided. This is not a time to wait. This is not a time to "Trade with Caution".

Today was not one for waiting. It's game on. Let's trade.

Again, if you haven't done so, I highly recommend adopting a similar practice of classifying three general levels of engagement – Trading, Trade with Caution, and Stand Aside.

Take some time to consider the factors which might trigger each level of engagement in your own trading business.

Happy trading,

Lance Beggs

 


 

Overnight Range Double Break

 

There were three NQ sessions in the last two weeks which broke both sides of the overnight range. Let's check them out.

The following are all Higher Timeframe 15 minute charts. I chose this timeframe simply because it fits on the image quite nicely. Whatever higher timeframe you use, is fine. The concept here is the same.

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

<image: Overnight Range Double Break>

Does this always happen?

No.

Does this mean that when it does happen that the trend always will be smooth and easy to trade?

No.

But you can bet your whole account on the fact that when it does happen, I'll be prepared, focused and ready to exploit any trend that does develop.

YTC Price Action Trader with-trend setups ONLY.

Until the market proves otherwise.

Have a look through some of the charts in your own markets and see if you can identify a similar feature. Forex traders will want to use a break of both sides of a narrow range Asian session.

Happy trading,

Lance Beggs

 


 

Choose YOUR Playing Field

 

One of the most obvious changes in my own trading over the last decade is a willingness to take fewer trades.

It used to be that if there was a price swing… I wanted to trade it.

On the plus side this meant that I was there for everything that did move to good profits. But it also meant that I had to suffer through many sequences where the market went nowhere and the best I could hope for was to grind out a breakeven result.

Now, I'm quite content to let the market play without me. If I miss opportunity, so be it.

I don't need to trade everything that moves.

Instead, I aim to stick to the easier sequences. The times in the market that typically have greater range. And the places within the structure that are more likely to offer favourable conditions.

I choose MY playing field. And I play MY game. What the market does outside of this game, is of no concern at all.

Let's start by looking at a Higher Timeframe chart to get some context:

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

<image: Choose YOUR playing field>

You don't have to trade every price sequence.

Choose YOUR playing field.

And make sure you're playing YOUR game, not the markets.

Happy trading,

Lance Beggs

 


 

Higher Quality Breakout Failure Trades

 

One of the aims of your journaling process is to build a collection of near textbook-perfect examples of each of your trade setups.

And from these, develop awareness of the factors which lead to increased odds of success.

Friday, 21st June, offered an absolutely beautiful Breakout Failure setup.

Let's start with a 5 minute chart to get some context:

<image: Higher Quality Breakout Failure Trades>

The important factor that I wish to highlight today is not where the trade occurred.

But rather – how price got there.

One of the key features I like to see, which suggests potentially increased odds of success, is price not only having to travel a long way to reach the level, but to have also STRETCHED to do so.

<image: Higher Quality Breakout Failure Trades>

Looking at the 1 minute chart (my preferred Trading Timeframe in this market):

<image: Higher Quality Breakout Failure Trades>

This is a Breakout Failure that I DO NOT want to miss.

Additional study for those with the YTC Price Action Trader:

<image: Higher Quality Breakout Failure Trades>

<image: Higher Quality Breakout Failure Trades>

<image: Higher Quality Breakout Failure Trades>

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

 


 

Trading a Massive Increase in Emotion

 

I want to write a short followup to last week's article – First Pullback After Significant Structural Change.

Email feedback during the week made it clear to me that some information which I'd assumed was obvious, was not actually obvious to all readers.

And as with most assumptions, it's actually INCREDIBLY IMPORTANT.

The article dealt with a trade taken well after my usual "stop trading" time of 12:00ET. This is normally time for my post-trading routines before heading off to bed.

But on this day I wasn't tired, so I went on with other work while keeping one eye on the markets. Not with any real intent to trade. Just to follow along. Unless of course an A+ trade opportunity came along, screaming out to be traded, and then it's game on.

So here's what happened (from a higher timeframe chart perspective)…

<image: Trading a massive increase in emotion>

If you want to see the trade, check out the original article – First Pullback After Significant Structural Change.

So this led to a reader asking why I didn't trade LONG from the obvious level of support?

<image: Trading a massive increase in emotion>

Great question!

My error last week was in approaching the trade and surrounding context purely from the technical charting perspective.

1. Obvious structure.

2. Break from obvious structure.

3. Trade the first pullback.

I didn't sufficiently explain the underlying reason WHY I consider this an A+ opportunity. And why opportunity LONG from the obvious level of support was something I was happy to pass on.

An excerpt from my response:

I think the cause of the misunderstanding here is that you're failing to appreciate how little I wanted to be trading. My trading was over. I had almost zero interest in trading. I had better things to be doing. UNLESS something absolutely amazing set up.

So yes, had I been trading from 12:00 I would have been seeking entry LONG, as you've suggested. Price held that level nicely.

But this is not the kind of action I want to take after a trading session is over. Can you see the difference between the two sequences? The sequence from 12:00 to 15:00 is just a continuation of the earlier session bias. But the move after support was broken is different. Suddenly A WHOLE LOT of traders are wrong. Everyone who is still holding a longer-term long position, established at any time in the last 3 hours, is suddenly in a drawdown. This is the kind of action I want to trade. Something that traps a whole lot of people. Something that shocks the market. Otherwise, I'll pass.

 

The break of support is something which SHOCKS the market.

Something that results in a massive increase in emotion.

<image: Trading a massive increase in emotion>

<image: Trading a massive increase in emotion>

<image: Trading a massive increase in emotion>

<image: Trading a massive increase in emotion>

<image: Trading a massive increase in emotion>

Viewing charts from the perspective and emotion of "the other trader" is the key premise underlying my whole trading approach in the YTC Price Action Trader. Outlined in Chapter Two and then evident in the whole analysis and trade process.

The same applies with every trade you see within my newsletter and blog posts. Even, as in the case of last week's article, where the discussion focused solely on the technical aspects of charting. Look to my charts from the perspective of "the other trader". It will be there somewhere.

Happy trading,

Lance Beggs

 


 

First Pullback after Significant Structural Change

 

I don't often trade after midday Eastern Time. It's the middle of the night here and I'd much prefer to get some sleep.

But from time to time I'm alert and awake and there is no chance I'd be able to sleep even if I tried.

So I'll complete some of my post-session review and then go on with other work, while keeping an eye on the markets.

The default intent is to NOT trade… unless it's screaming out to be traded.

What does that look like?

Here's one example. A trade that is so damn obvious I would have been kicking myself if I missed it.

It's a YTC PB trade. But what is important is not so much the trade itself, but WHERE it happens in the "bigger picture" market structure.

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

Dropping down to the Trading Timeframe to see the outcome:

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

1. Structure!!!

2. Break of structure.

3. First pullback against the break of structure.

It's no Holy Grail. Sometimes there will be losses. And sometimes you'll miss the trade.

But it's opportunity I do NOT want to miss.

Happy trading, 

Lance Beggs

 


 

It’s All About Real-Time Contextual Decision Making

 

You've learnt the pattern or setup. Great. But that's not trading.

Now work on the real-time contextual decision making around that pattern or setup.

Look beyond the pattern itself to the wider context.

Where is the pattern occurring within the larger timeframe market structure? What structure will suggest avoiding this particular setup? What structure might suggest caution, or reduced position sizing? What structure might suggest increased odds and the potential to really press the trade for a larger gain?

Where is the pattern occurring within time? Are there news influences which suggest passing on the trade? Are their time-of-day / week / month factors which might suggest standing aside?

Consider the behaviour of price movement – the pace, the volatility, smooth vs choppy price action.

What conditions might suggest adjustments to the default plan? All-in vs scaling in? All-out vs scaling out? Closer stops vs wider stops? Closer targets vs extended targets?

Consider the real-time decision making once in a trade.

What signs might suggest a loss of edge? How will you react to this new information?

What signs might suggest greater potential than originally perceived? How will you react to this new information?

What conditions suggest a re-entry attempt should be taken, if stopped out of the position? And how many re-entry attempts are appropriate?

Trading is not about simplistic patterns. It's about real-time contextual decision making.

If you've been on the wrong path then it's time to make a change. It's time to do the real work.

Best of luck,

Lance Beggs

 


 

Trade When You See Edge. Stand Aside When You Don’t!

 

A few weeks back we discussed a quick and simple method for identifying a "bigger picture" directional bias.

See here if you missed it and want to review the idea – Part 1, Part 2.

The second article generated quite a bit of good email conversation, with several traders now adding this to their current trading process.

One email included a brief question, which I feel it is important to discuss with all of you today.

  • "I always looked at the opening range as something that worked some times (when the market did move) and didn't work other times (when the market didn't move). So you taught me a great lesson here. It works all the time, because that failure of price to move from the opening range is the information we need to identify a lack of directional bias. What I would love to see though is how you traded one of these days that were neutral bias throughout the whole day. Like on the Tuesday for example, you said "My preference is to stand aside". Does that mean you didn't trade at all? Or at what point did you stop? Or if you did trade at any time, what was the reasoning at the time?"

 

Nice question!

Let's look back at the session on that Tuesday. This was the higher timeframe chart, with the opening range, as discussed in the prior article series.

<image: Trade when you see edge. Stand aside when you don't.>

Clearly a neutral bias throughout the vast majority of the session.

But yes, I DID make some trades.

Before we examine the trades, there are two key points I want to make.

Firstly, we need to remember that the image above is the HIGHER TIMEFRAME chart. Trading decisions and actions are based upon the Trading Timeframe chart, within the context of the structure provided by the Higher Timeframe chart.

And secondly, we need to remember that the session bias is something which gradually reveals itself over time.

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

Let's look at the Trading Timeframe Chart…

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

<image: Trade when you see edge. Stand aside when you don't.>

With hindsight there will ALWAYS be a ton of opportunity you can see.

By all means learn from it post-session if it's opportunity you want to catch in future.

But when you're operating LIVE at the hard right hand edge of the screen, it can help to remind yourself that you don't have to trade every price sequence.

When price is moving nicely and you feel in sync with the movement… when you see edge… only then do you trade.

All other times… when you don't see edge… shift that chair back so that you're out of reach of the mouse. Watch and wait for something better.

Or call it a day.

You don't have to trade every sequence. Trade when you see edge. Stand aside when you don't.

Happy trading,

Lance Beggs

 


 

Seeking Entry on the Wholesale Side of the Market Structure

 

I absolutely LOVE IT when people send me charts and emails full of excitement at new discoveries or new ways of "seeing" the price movement.

I received one last week that I just had to share.

It's such a great example of seeking entry on the wholesale side of the market structure. I love it.

An email came from G.N. with the following chart. Of interest was the upthrust pattern allowing entry short, in line with the ideas discussed in prior articles – Professionals Traded Here and Confirmation is Risk.

(Note: The image here is compressed to fit the page. If you click on the image it will open an original-size image in your browser. Or refer to GBP/USD on the 2nd November, 1 min chart, if you wish to look at your own charting platform.)

<image: Seeking Entry on the Wholesale Side of the Market Structure>

Actually, let's zoom in a little to identify the upthrust area.

<image: Seeking Entry on the Wholesale Side of the Market Structure>

So here is what I ABSOLUTELY LOVED about receiving this image and email from GN:

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

This chart provides an awesome example of entry on the wholesale side of the market structure. Here's what I love about this particular trade idea:

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

Just beautiful!

It's been one of my favourite concepts for years.

The idea of watching breakouts against market bias for failure. And using that to trigger entry back in the direction of the original market bias.

Keep an eye out for it in your markets and your timeframes.

Happy trading,

Lance Beggs