Tag Archives: Environment

Be Water My Friend


Last Sunday I shared this great video on YTC Facebook and YTC Twitter:

It led to an email discussion with a YTC newsletter reader who accepts the value of motivation to a trader, but couldn't see the relevance of the Bruce Lee quote in the middle.

The quote commences at 1:37, if you wish to skip forward in the video to listen to it.

But I'll copy it here anyway…


IF-THEN Analysis at Session Open


Continuing a theme from previous articles – here and here.

  • Keep your focus ahead of price
  • Never let price action take you somewhere your brain didn’t get to five minutes earlier.

This is not just a concept to apply during the trading session.

It also applies at session open.

Start the session with some thought as to likely expectations for the type of environment and for likely initial price action sequences.

This can be done for markets which have a defined pit-session opening time and for 24 hour markets at the time of major session openings (eg. UK, US forex session opening times).

  • Where is price going?
  • How is it likely to act? Why?
  • Will that provide trade opportunity?
  • What will it look like if my analysis is correct?
  • What will price look like if I’m wrong?
  • What else could it do?

This is not prediction. This is simply forward planning… developing “IF-THEN” scenarios based upon your assessment of the likely future price action.

If your “read” of price movement proves correct, you will have trade opportunity. If it proves incorrect, you stand aside and reassess.

This will ensure your actions in the market are pre-considered and your trades only occur when the market has conformed to your expectations.

And you will be less likely to be caught in a trap through impulsive reaction to unexpected price movement.

(** Important Note: This is only our initial expectation. Ongoing bar-by-bar analysis will adjust our expectations if price provides something different from our initial analysis. Don’t rigidly stick to your initial expectations against all evidence to the contrary.)

We saw an example of an opening IF-THEN scenario in last week’s article where we discussed an early-session trade opportunity in the SPI futures.

late session breakout provides early session opportunity

See here if you wish to review that article in full: http://yourtradingcoach.com/trading-process-and-strategy/late-session-breakout-early-session-opportunity/

But let’s look at another example.

This time from the Crude Oil market as it opened today, Monday 9th June 2014.

We’ll start with the Higher Timeframe in order to get a picture of the structure of the market.


Late Session Breakout – Early Session Opportunity – Email Q&A


Last week we examined an early-session opportunity in the Australian SPI futures market.

See here if you missed the article: http://yourtradingcoach.com/trading-process-and-strategy/late-session-breakout-early-session-opportunity/

Over the weekend I received an email from a reader asking an excellent question. I thought I should share it with you all.


Hi Lance,

You mentioned that there were 2 opportunities to go long.

Would you have taken the first one?

The pullback “B to Open” was weak, then the impulse move “Open to BOF” appears quite bearish, though you do get the BOF set up.

Image from Prior Article:

late session breakout provides early session opportunity



Late Session Breakout – Early Session Opportunity


Every day you should look for one quality trade opportunity and study it. Print it out, review it, learn from it and file it in your Trades Journal.

It doesn’t have to be one you traded.

If it is, that’s great.

But it doesn’t have to be. There is still opportunity to learn.

It doesn’t even need to be in the markets you trade.

I look at several markets for my daily “trade” lesson. Primarily CL and TF because they’re my current focus for trading. But I also have a quick scan through ES, SPI and GBP/USD. And any others that may have significant news influence.

Here’s one from last Monday which I particularly love, from the Australian SPI futures market.

late session breakout provides early session opportunity

What do I love about this?


Would Re-Entry Improve Your Edge?

I had an opportunity this week to review and comment on some trades, from a trader who is using the YTC Price Action Trader strategy in the emini-Russell futures markets.

While not yet achieving consistent profitability, there are very strong signs of this potential in the future.

One strength that was clear from the start was that, in the vast majority of trades, this trader is clearly identifying the right market bias and generally reasonable trade locations.

He is picking areas in the chart that in most cases offer follow through of at least two times risk.

But there is also a weakness that was clearly evident. These multiple-R opportunities were not being captured.

Trades were typically stopped out or scratched early, leaving the trader to watch from the sidelines as price moves on to profits without him.


Isn’t Buying at the Lower Low just Trying to Catch a Falling Knife?

The following image was a part of last week's newsletter article, "Real Opportunity is Found at the Edges of Market Structure".

Following the publishing of that article, I received a great question via email…


"Isn't buying at the lower low (D) just trying to catch a falling knife?

If a downtrend consists of LL’s and LH’s, I don't understand why are you advocating to buy at a lower low in a downtrend?"



Real Opportunity is Found at the Edges of Market Structure

The following image was a recent post at YourTradingCoach Facebook.

Despite what the majority will tell you, Confirmation is Risk

If you want to check the pattern out, it's 11th Dec 2013; GBPUSD; 3 min TTF; at 09:51 UTC.

Today I'd like to discuss the statement within the yellow box, "Real opportunity is found at the edges of market structure, where the risk is smallest and the profit potential the greatest".

I recall back in the early days of my own trading, I had the opportunity to look at a chart of a professional trader, which contained annotations showing his entry and exit points. Talk about cognitive dissonance! That was truly an uncomfortable experience as the reality of what I was seeing did not in any way match what I believed to be true about trading.

I just didn't get it at the time.

In fact, I convinced myself that the chart was fake. There was (in my opinion at the time) ABSOLUTELY NO WAY that entries could be taken at the places marked on the chart. They were too close to the actual turning points. I'd studied Technical Analysis quite extensively. I knew that there were no TA methods to identify a turn point so accurately. You HAVE TO wait for confirmation of the move. There was no way on earth this guy actually took these trades.

Of course… I was wrong.

My own knowledge and experience were not sufficiently developed at the time to understand what I was seeing.

The reality, for swing traders, is that opportunity is found at the edges of market structure where the risk is smallest and the profit potential the greatest.

Most traders seek confirmation… by which they mean that "they need to see price having already moved in their expected direction". They enter simply in the hope that this movement will continue.

This is a psychological crutch. It offers them nothing from a reward:risk perspective. It usually offers them very little in terms of greater win percentage. But it eases their uncomfortable feelings. They see that others have already entered, so they feel comfortable following the crowd.

But who do you think has caused the initial movement? Who do they think created the confirmation?

It can't be those who only enter after confirmation. It has to be those who have a deeper
understanding of how price actually works.


Expecting a Breakout Failure

I recently posted the following image on the YourTradingCoach Facebook page.

For the sake of this article, ignore the text in the yellow box.

Actually… don't ignore it… put it aside for now but do think about it later. It's incredibly important and may well reveal to you the real essence of trading psychology.

But for the sake of this article, let's focus on the trade.

The facebook post generated the following comment from a reader:

There is no reason to buy till I can recognize a changeover of power!

This is an absolutely valid comment given the lack of context provided in the facebook image, as touched upon in my reply:

This chart is missing all the wider context that comes from HTF and earlier TTF price action. Any discussion of long vs short vs stand aside is not really possible just from this small snapshot of data. The point of the post though was not the trade, but the text regarding fear and trading psychology. (There was good reason to go long though!)

So let's look at the trade in a little more detail.

It's important, because it reveals a different way of thinking that doesn't necessarily require you to wait for a clear and definitive "changeover of power".

First let's look at the higher timeframe S/R framework:


Reviewing Key Price Action Sequences

A great way to learn to read price action is to review your historical price charts, with a focus on the price action at key structural locations.

Find and review anything which fits these categories.

  • tests of significant levels
  • breaks of significant levels
  • traps
  • transitions between trends and ranges
  • transitions from volatility contraction to expansion
  • and in fact anything else that stands out on the chart


Each day, identify a key price sequence.

Study it and learn.

It only takes a minute.

Let's look at an example in which Crude Oil breaks higher in Monday's session, into layered levels of range resistance, before falling back into the range.