Tag Archives: Market Structure

Traps Just Before RTH Open – 2

 

A few months ago we examined the concept of traps occurring in the price action just before, or immediately after, the RTH Open (RTH = Regular Trading Hours).

I'll place links to the prior articles at the bottom of this one, if you want to review them.

Today, let's look at another example of a breakout very late in the pre-session market, just before the RTH Open.

This is something which I absolutely LOVE to see. Because if that breakout fails, then it often sets up quite favourable conditions from the open. And so I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

Here's the general concept:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

This concept can be applied in any market which offers pre-session trading leading into a clearly defined "regular" day session. Spot forex traders might apply it at the UK open, or the US open.

Today's example set up a break of the overnight high. That is, the same concept as the second image above.

Let's start by looking at a higher timeframe chart, to get some wider context.

<image: Traps just before RTH Open>

And the breakout on the Trading Timeframe chart:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open> 

I've written a lot about displaying patience at the open. About waiting till the bias is clear and trading conditions are favourable.

But there are some situations where I don't display patience.

Where I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

One of these situations is when the market sets up a trap just before or just after the RTH Open.

Keep an eye out for similar opportunity in your own trading.

Happy trading,

Lance Beggs

 

Prior Articles:

Traps Just Before RTH Open – http://yourtradingcoach.com/trading-process-and-strategy/traps-just-before-rth-open/

Traps At The Open – http://yourtradingcoach.com/trading-process-and-strategy/traps-at-the-open/

Traps At The Open 2 – http://yourtradingcoach.com/trading-process-and-strategy/traps-at-the-open-2/

 


 

Targeting the Overnight High or Low – 2

 

Last week we discussed one of my current favourite plays for the first 30-60 minutes of the session – targeting the overnight high (ONH) or overnight low (ONL).

You can review last week's discussion here.

Just a few hours after sending out that email the market opened again. And the same concept played out once more. Let's check it out.

<image: Targeting the Overnight High or Overnight Low>

<image: Targeting the Overnight High or Overnight Low>

<image: Targeting the Overnight High or Overnight Low>

You don't have to manage your trades like this. It's just the way that makes most sense to me. If there is any threat of a trade moving into negative territory, I prefer to scratch it and reassess, rather than holding and hoping for it to recover.

Sometimes that works to my advantage. Other times it doesn't.

This method of trade management does require you to be completely comfortable with re-entering.

If you're not able to easily re-enter, you'll be better operating with a wider stop and a more passive set & forget style. On this particular day, your trade would have worked out fine.

Back to the trade…

<image: Targeting the Overnight High or Overnight Low>

<image: Targeting the Overnight High or Overnight Low>

As mentioned in the prior article, there is a very high probability that the overnight high or overnight low will be hit at some point during the session.

And a good probability that it will occur within the opening hour of the session.

I could give you stats for the last few months. But I'd rather you find them yourself. You'll learn more this way.

If it interests you, spend some time over the weekend to review the prior two to three months to get an idea of just how high these probabilities are.

And then monitor the concept in coming weeks in your own markets. Perhaps you'll also find the overnight high or overnight low provide nice targets for early trade opportunity.

Please realise though – this is NOT the setup. The concept we're discussing here is simply selection of a high probability target. Take whatever setups you normally take from the open. Manage risk as you normally would, because they won't all work. But when they do work, the fact that the target is backed by some really high probability stats, can make it quite easy to hold.

Sometimes they work really well:

<image: Targeting the Overnight High or Overnight Low>

But occasionally, not so well.

The very next day fails to reach both the ONH and ONL. If you held a trade for either of these targets, it would have fallen well short.

<image: Targeting the Overnight High or Overnight Low>

There are NEVER certainties. No matter how high the probability, some targets will fall on the losing side of the stats. So manage risk, as per normal. And expect a challenge. If it hits the target quickly, as it sometimes will, consider it a bonus.

Happy trading,

Lance Beggs

 


 

Targeting the Overnight High or Low

 

I've become rather fond of targeting either the overnight high (ONH) or overnight low (ONL) during early session trading.

If you're new to this idea, schedule some time to look back at the last few weeks of charts and take note of how many times they hit. For the ten sessions leading up to today's trading, nine sessions have hit either the ONH or ONL. Six of these occurring in the opening 30 minutes of the trading session. Seven within the opening hour.

So not only can we use the ONH/ONL as levels to trade off. But they also offer a price target for PB/CPB trade opportunity early in the session.

Of course, some happen too quickly to offer any opportunity. But otherwise, if the bias is clear and a valid setup is in place with sufficient room to the level, take the trade.

Let's start with a 30 minute chart to get some "bigger picture" context.

<image: Targeting the Overnight High or Low>

Dropping to the 1 minute trading timeframe:

<image: Targeting the Overnight High or Low>

<image: Targeting the Overnight High or Low>

<image: Targeting the Overnight High or Low>

<image: Targeting the Overnight High or Low>

<image: Targeting the Overnight High or Low>

Before you even consider looking for a trade entry, you need a target. You should have some sense of WHERE the market is going.

The ONH and ONL are two levels which I like to use as a price target in the opening 30-60 minutes of a session.

Have a look at recent sessions in your preferred markets. How many times has the market hit the ONH or ONL? How soon within the session?

Perhaps you'll also find they act as good initial price targets for early session trades.

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

 


 

Traps at the Open – 2

 

I had no plans to continue the recent article series but the market had different ideas, so here we are!

First, if you missed the prior articles then see here – http://yourtradingcoach.com/trading-process-and-strategy/traps-just-before-rth-open/

And here – http://yourtradingcoach.com/trading-process-and-strategy/traps-at-the-open/

And that brings us to today's sequence…

We'll start with a quick look at the prior day and overnight session, for a bit of "bigger picture" context.

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

<image: Traps at the Open>

I hesitated to show this example, as it's really a very quick and small trap. And a difficult entry based on a very minor lower-timeframe stall.

But sometimes that is all the market offers. And given the potential for a trap at the open to provide a nice momentum drive, it's one that I had to take.

Part of me wonders whether I'd take this entry anyway even if there had not been a trap. I had a bullish bias due to the pre-session action holding above the prior day's range. Plus the fact that I expected some range expansion on the open following a narrow range holiday session.

We'll never know for sure. Perhaps I would have taken it. I suspect not though. The lower timeframe trigger pattern was a little "smaller" and less defined than I would perhaps have liked. It really was the presence of the trap, albeit small, that provided the confidence to go for it.

For me… a trap entry prior to or right on the open is something that will often have me taking the quick early trade. Without that, I prefer to sit and wait. Let any opening congestion clear itself. Let the structure develop. And then trade once I have some clarity regarding the bias and market conditions.

Happy trading,

Lance Beggs

 


 

Traps at the Open

 

Our last article discussed one of the times when I show no patience at the open. One of the times when I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

You can see it here if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/traps-just-before-rth-open/

That article dealt with a trap in the market structure JUST BEFORE the RTH open. (RTH = Regular Trading Hours)

Today let's look at a situation very closely related to that. It's a trap IMMEDIATELY AFTER the RTH open. It's another situation in which I don't wait for the market to establish a clear trend structure.

Here was the concept from last week:

<image: Traps JUST BEFORE the Open>

But what if the open comes… and the market hasn't provided that trap?

<image: Traps JUST AFTER the Open>

That's fine.

If it's a good level, I prepare myself for for a trap anyway in the opening few price bars. If the market is nice enough to offer that, I'll be ready to get in on the first available opportunity.

<image: Traps JUST AFTER the Open>

Let's look at an example…

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

<image: Traps JUST AFTER the Open>

Personal preference – I don't just hit BUY MARKET. I prefer to find a way to better control risk through certain TTF/LTF patterns, as outlined in the YTC Price Action Trader.

If I miss the move, so be it. Let it go. It wasn't mine to catch.

But otherwise, remain patient and watch for a retest of the range highs.

<image: Traps JUST AFTER the Open>

If ever in doubt about the structure of the market, don't rush to trade. There is no hurry. Let the market open and complete the first swing or two. Let the structure develop and then trade once you have some clarity.

But sometimes, when the pre-market sets up just right, there will be opportunity available within that opening sequence.

One of my favourites is a trap in the market structure, setting up just before, or just after the market open.

Keep an eye out for this concept, in your market and your timeframes.

Happy trading,

Lance Beggs

 


 

Traps just before RTH Open

 

I've written a lot about displaying patience at the open. About waiting till the bias is clear and trading conditions are favourable.

But there are some situations where I don't display patience.

Where I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

One of these situations is when the market sets up a trap just before or just after the RTH Open. (RTH = Regular Trading Hours).

Today we'll look at an example which sets up just before the open.

Here's the general concept:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

This concept can be applied in any market which offers pre-session trading leading into a clearly defined "regular" day session. Spot forex traders might apply it at the UK open, or the US open.

This example set up a break of the overnight low. Here's what I was seeing:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

(YTC PAT FTC Ref: Vol 2, Ch 3, P143))

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

Happy trading,

Lance Beggs

 


 

First Pullback in a NEW Directional Trend

 

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

REFERENCE: Definition of a sideways trend – Vol 2, Ch 3, Pages 99-102

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

Not all trade setups are equal.

You need to collect and review your stats to determine which setups provide your A+ MUST-NOT-MISS potential opportunity of the day.

For me, the first pullback in a NEW directional trend is one of these MUST-NOT-MISS setups.

No, they do not always profit. And sometimes they offer profits, but I mismanage the opportunity.

But when they do run and I perform well enough to catch them, the profits can more than make up for any other failed attempts. As always, we profit over a series of trades. Individual trades are irrelevant.

Check your own charts, in your own market and timeframes. Note any sideways trend environments. Find a breakout which occurs with some strength, which holds the break. And see if you can also find edge on the first pullback into this new directional trend.

Happy trading,

Lance Beggs

 


 

One of the Best Habits I Acquired along my Trading Journey

 

I posted the following image on social media on Tuesday, showing a nice example of a false breakout and reversal from a period of volatility contraction.

<image: One of the best habits I acquired along my trading journey>

The important point though… and the one which offers the most value to you… is not the image itself but rather the text that was posted alongside the image.

  • One of the best habits I acquired in my trading journey – EVERY DAY I find at least one price sequence which I find interesting and STUDY IT. Consider whether or not you might also benefit from actively developing this habit.

I received the following questions on Twitter:

<image: One of the best habits I acquired along my trading journey>

(1) What does my price sequence study involve?

The study relates to observations in price action or market structure. It does not typically involve study of the trades taken during the session. I have a separate part of my review process for trades.

Sometimes it is structured and will focus on a particular topic for a week or so. Maybe I will decide to study transitions from one market environment to another. Or to study price behaviour on the break from a higher timeframe trap. Or maybe… well you get the point. If there is a particular topic of interest to me then I might focus solely on that topic for a period of time.

See here if you want a list of possible "categories" for your Market Structure & Price Action study – http://yourtradingcoach.com/trading-business/market-structure-and-price-action-journal-categories/

But other times, when there is no particular topic of interest, the study will be unstructured and based on any observation which I find interesting. Often this will be a sequence which I didn't read well. Perhaps something I didn't see coming. Or something I didn't react to quick enough.

For example, the shift in sentiment occurring from point B to C in the volatility contraction above, is one that I was too slow to recognise and react to. So it became the focus of my study that day.

(2) How much time do I devote to this study?

Typically no more than 10 minutes. The topic will become obvious during the session. All it typically takes is a quick review, along with identification and recording of lessons learnt.

(3) What are some questions I ask?

That is largely going to depend upon the topic you're studying. And it should be self-evident. But it should relates to (a) how did price behave, (b) how could I have recognised this more quickly, and (c) how should I have responded to this information?

Let's look at a few more examples from Tuesday and Wednesday this week:

Tuesday:

Tuesday offered a brilliant example of the saying, "The market doesn't repeat, it rhymes".

Note the similarity – volatility contraction, expansion, and then opportunity available in the opposite direction as the expansion leg fails.

<image: One of the best habits I acquired along my trading journey>

Let me be perfectly clear – I am NOT a pattern trader. But volatility contraction and subsequent expansion is one pattern that I do often see. And one that I do often take advantage of.

Typically it's through seeking YTC PAT PB opportunity, on the first pullback after the breakout, expecting the expansion leg to continue to drive with momentum.

For whatever reason, I've been slow to react to a failure of the expansion, for two days in a row now. I missed it on Monday. I missed it on Tuesday. Through reinforcing this lesson, I aim to ensure I will NOT miss it again.

Wednesday:

Thankfully, I'm not going to bore you with another example of a false breakout from volatility contraction.

Let's start with a higher timeframe chart:

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

Ok, so nothing surprising so far. The review basically confirmed my real-time thinking.

But then the review also picked up something that I "should have" been aware of intra-session, but did not consider at all.

Let's look at the overnight data leading into the session open.

<image: One of the best habits I acquired along my trading journey>

Nothing changes here in terms of decision making. The failure of the second break is still the critical point at which I should accept that my "feeling" of a bearish market bias was wrong.

But this additional information does add weight to the earlier analysis. And it's information I should have been aware of intra-session.

If the market sentiment was indeed bearish, then one of these breaks of a key overnight level, SHOULD have held. The fact that they couldn't hold confirms that my "feeling" about market sentiment is likely wrong. Watch for a break to the upside and further dominance by the bulls.

I do take note of key overnight levels pre-session. It's clear though, with hindsight, that this information did not make it into the session (at least not in the forefront of my mind).

Lesson: Greater emphasis is required on pre-session levels.

Bonus Entry:

I'm not going to do another. But I just can't resist sharing this.

From Thursday, on the 3 minute timeframe:

<image: One of the best habits I acquired along my trading journey>

This is one of the key benefits of a Market Structure & Price Action Journal. Over time you start to see familiar patterns of price behaviour. All of which builds skill in real-time assessment of market bias and real-time recognition of opportunity.

Now it's your turn:

I received this request on Facebook, following the original social media post: "Please post something on Indian markets like NIFTY or BANKNIFTY. Thanks".

My response: "I don't trade the Nifty so can't help you with that market. But I highly recommend you commence creation of your own Market Structure & Price Action Journal. You'll achieve far greater value from that daily practice, than from anything I could provide."

Re-emphasising the point from the original social media post:

  • One of the best habits I acquired in my trading journey – EVERY DAY I find at least one price sequence which I find interesting and STUDY IT. Consider whether or not you might also benefit from actively developing this habit.

Regardless of your market, your timeframe, or your strategy. Give it a try and see if you get the same benefit that I received.

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