Tag Archives: Market Structure

Using Pre-Session Data to Confirm Levels

 

The following text and image were shared recently through both the YTC facebook and twitter pages.

  • My first action on Monday mornings upon opening my charting platform…

 

My first action on Monday mornings upon opening my charting platform...

Actually, it's one of the first things I do every day.

This is the key part we're discussing today:

Using pre-session data to confirm levels

Let's stick with the same timeframe but move forward to the market open at 09:30am.

Using pre-session data to confirm levels

Sometimes analysis of pre-session data offers nothing at all to confirm the relevance of previous session levels.

Sometimes it will allow us to invalidate these levels, when we see price slice through them with absolutely no reaction at all.

And sometimes, like in this case, it helps to validate a level as being still "potentially" significant.

Friday's low will be on my mind as I commence trading today.

Let's see how the opening sequences played out on the trading timeframe.

Using pre-session data to confirm levels

Using pre-session data to confirm levels

(If you're not sure what I'm looking for, see here to find out how I trade!)

Using pre-session data to confirm levels

Using pre-session data to confirm levels

Sometimes analysis of pre-session data offers nothing at all to confirm the relevance of previous session levels.

Sometimes it will allow us to invalidate these levels, when we see price slice through them with absolutely no reaction at all.

And sometimes, like in this case, it helps to validate a level as being still "potentially" significant.

If you prefer to trade with RTH data (pit session data) in order to take advantage of opening gaps, that is absolutely fine.

But at least take a quick look at the ETH data (overnight). See where it has traded with respect to the prior day. Where did it find movement quite easy. And where did it find did it find support or resistance.

This might just provide important information that can help once the opening bell has rung and trading has commenced.

Happy trading,

Lance Beggs

 


 

Trading the Retest of a Point of Structural Change

 

One of our aims in trading the financial markets is to make sure that we're trading in the right places on the price chart.

Places which make sense when viewed from the perspective of the psychology of the market participants.

Places which make sense when viewed from the perspective of the structure of the market.

Today we look at one of these places – the retest of a point of structural change.

We've addressed this concept briefly in the past. If you haven't seen this prior article you may wish to review it first.

http://yourtradingcoach.com/trading-process-and-strategy/retesting-the-point-of-structural-change/

The prior article summarised the concept as follows: 

Retesting the point of structural change

All examples in that article dealt with structural patterns on the trading timeframe.

But the same concept can be applied across a much larger time scale, with trade opportunity found as markets retest a point of higher timeframe structural change.

That was the idea behind the following trade.

We'll start by examining a much higher timeframe in order to see the structure develop over the prior four days.

Retesting the point of structural change

Volatility contraction is never fun to trade. Monday was slow and boring. Tuesday was worse.

But in the back of my mind at these times is an expectation that this volatility contraction must end at some stage.

And the expansion of volatility on a break from these patterns can provide great
trading conditions.

So let's move forward to Wednesday to see how the breakout eventually occurs. And to see whether or not it then offers us a nice BPB setup entry long.

Retesting the point of structural change

Damn! We missed it.

Or maybe not?

Let's move ahead 30 minutes into Wednesday's session.

Retesting the point of structural change

From a structural perspective, this is a beautiful place to be seeking opportunity long. Previous resistance often provides support once broken and retested.

From the metagame perspective, it's also a beautiful place to be seeking opportunity long.

Anyone with a bullish bias who missed the overnight breakout has now been gifted an ideal "second chance" entry opportunity.

Those already holding a long position have been provided an ideal scenario to add to their position.

And for those who managed to get short from the open on Wednesday, the market is at the ideal area for profit taking (ie. buy orders).

There is good reason to be buying here.

Let's look to the trading timeframe to see how it played out.

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Not All Sessions Provide Equal Opportunity

 

On Thursday morning I woke to find two emails somewhat related to the same topic – the challenging trading conditions we've experienced so far this week.

So my first thoughts were to expand upon a topic I shared via social media a bit over a week ago. Because I know that only a small fraction of you receive my social media posts.

And this one is important!

Here's the post which shows the daily chart for NQ as at the 1st of June. The same concept applies for ANY market.

Not all trading sessions provide equal opportunity

Let's first talk about what is showing in the bottom half of the image. And then we'll get to "what it means".

The daily chart overlay

It's simple to set up:

Setting up the Range Indicator

Setting up the Channel Indicator

Nice and easy.

And it gives an immediate comparison of the current days range versus the average over the last month.

So let's see exactly what prompted the email concern over challenging trading conditions.

The emails related to ES and CL, but I'll start by updating the earlier social media post.

This is NQ as at the time of writing, early on the 9th of June 2016:

NQ - low daily ranges so far this week

ES - low daily ranges so far this week

CL - low daily ranges so far this week

Of course, low daily ranges DO NOT necessarily mean a tough session. There are other factors involved as well.

But for many of us, who operate a strategy that requires price movement to profit, there's a high likelihood that narrow range days are those that get on our nerves.

Narrow range = limited opportunity = frustration!

Here's the thing though…

It's completely normal. Narrow ranges are a part of the game. And we need to learn to work with them.

We need to learn to profit over the longer time scale… comprising periods of both wider range markets and lower range markets.

The good news though, if you're stuck in a period of quiet markets and narrow ranges, is that it won't last. At some point the markets WILL move. 

So what do we do with this data?

1. Use it manage expectations.

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Let It Turn. Then Find Your Entry.

 

The best entries lean against some recent structure which limits movement against the position and provides a logical place for the stop.

Unfortunately though, the market cares little for what we want to see in an entry.

So how do we get in when there is no recent structure and we're trying to time entry to a market that is still pulling back against our expected trade direction?

Let's start with the Higher Timeframe Chart to get some context.

Let it turn. Then find your entry.

Let it turn. Then find your entry.

Let it turn. Then find your entry.

Let it turn. Then find your entry.

Let's go to the Trading Timeframe Chart now. And we'll move forward a little to see the rally up to the general setup area.

Because there are some concerns about exactly where we should be looking for the trade entry.

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I’d Take These Trades EVERY TIME. Here’s Why…

 

Win, lose or draw!

I'd be happy to take these trades EVERY TIME.

Let's start with some much higher timeframes to give you some context.

I'd take these trades EVERY time.

I'd take these trades EVERY time.

I'd take these trades EVERY time.

So there is good potential for strong directional movement below prior lows.

Any break to new lows… I'll be all over any BPB weakness.

And even better… if the market sets up right I'll try to enter short pre-break (above the low of day) to profit as price breaks lower. 

Let's look to the Trading Timeframe chart to see what the market offered.

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The First Loss – How Will You Let It Affect Your Mindset?

 

Last week's article led to an interesting comment about the sequence preceding the one discussed in that article.

Check it out here if you missed it – How to Enter When the Pullback Shows Strength!

The email feedback expressed an interest in the fact that the session started with a loss and yet I managed to quickly recover that loss.

  • "I particularly like the way you showed how you were wrong on the long but it did not affect your session, you focused on the price action projected, possible scenarios and continued to do your job."

So I thought we should look at this earlier sequence and see if there are any lessons available.

Let's begin with the trading timeframe, showing the price action which offered the initial loss and the subsequent two wins.

The first loss - how will you let it affect your mindset

Let's start by examining the LONG BPB trade.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

I'd love to be able to say I caught the SHORT entry as the breakout failed. But it was not to be. I was biased LONG. I was wrong.

Loss was minimised though. So this was a good trade.

Except for the fact that I've started the session in minor drawdown (which seems to be a habit lately!!!!)

Let's move on to the rest of the sequence.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

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Fading the Edges of the Market Structure

 

Fading the edges of the market structure requires that you see the markets in a different way to the usual retail trader.

Strength in price movement towards a range boundary or an S/R level is not necessarily going to continue with strength following a breakout.

In the right context, this apparent strength can produce a nice trap at the edge of the market structure, providing breakout failure opportunity for anyone willing to fade the move back into the prior range.

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Happy trading,

Lance Beggs

 


 

YTC Ideas on Forex Daily Charts

 

I trade low timeframes. Maybe you've noticed?     🙂

But I've always said that no one timeframe is better than any other. There are professional traders operating across the full spectrum, from watching the tape move tick by tick, right up to daily and weekly charts. There is no "best"; only what is best for our own personality, needs and circumstances.

And I've always said that the ideas expressed in the YTC blog (and also in the YTC Price Action Trader) are applicable across all timeframes. Ok… maybe not the screen-watching ideas from last week's article. But the VAST MAJORITY of what I discuss can be applied to other markets and other timeframes, with only a little extra thought about how it might be adapted.

So I absolutely LOVE getting emails from traders who realise this fact. And who have applied the ideas. And who have found some success.

Here is an extract from an email conversation I had during the week with Anatoliy, who trades forex markets on daily timeframes.

 

Hi Lance,

I've been reading your blog for more than a year now, and along with Trading in the Zone it's been one of the bigger reasons for considerable improvement in my trading.

Even though I am hardly ever looking below D1 timeframe, the principles all stay the same. Trading long term allows me to analyze all 28 major forex trading pairs for entry opportunities.

Anyway, just wanted to share two pictures with you, inspired by your November blog post: http://yourtradingcoach.com/trading-process-and-strategy/who-would-buy-here/

The post is so simple, but I have to say, it is one of my favorites. There are at least 5 long term entries I am taking per month just based on this principle.

Thank you once again for sharing all your knowledge, experience and ideas.

 

There were two images attached to the email. I've had to shrink the images to fit here.

If you click on the images, they will open a full-size copy in your browser.

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Who Would Buy Here?

 

Seriously… who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

 

Ok… enough talking in general concepts. I always get in trouble when I do this, because someone will email me including a chart which shows an exception to the rule.

Whatever!

Generally… it's not wise to buy in these areas.

And this brings us to the point of the article.

Consider it a "rule of thumb" for finding good trade locations.

  • One way to find areas on the chart which may show potential for a short entry, is to find the places on the chart where you think, "Who would BUY here?"

  • One way to find areas on the chart which may show potential for a long entry, is to find the places on the chart where you think, "Who would SELL here?"

Let's look at a trade based upon this idea.

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False Breakout Trap Review

 

I received an email last week from a student of the YTC Price Action Trader, which I ABSOLUTELY LOVE.

Actually, I receive a lot of email which I absolutely love. But sometimes they just stand out immediately as something really special.

It was a simple email, containing just one image (shown below).

And the only text was in the subject line: Thank You

Yeah, that made my day! 🙂

False Breakout Trap

Let's look at the trade, using this 1 minute timeframe as the Trading Timeframe (noting that this is more a YTC Scalper timeframe than YTC Price Action Trader). If you use a higher timeframe, that's fine. Don't discount the lesson. Look to the ideas and concepts and apply them to your own trading timeframe.

What I love is the simple fact that to most newbies, or most traders of simple text-book style technical analysis, there is no obvious reason to short.

The newbies have a limited view of price movement and opportunity

Let's look at how I see this price movement.

What immediately excited me was WHEN this trade occurred. So we'll start with that.

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