Tag Archives: Market Structure

Trading the Edges of a Sideways Market

 

When the market is stuck in a sideways trading range, the primary place to look for opportunity is at the upper and lower edges.

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

When the market is stuck in a sideways trading range, the primary place to look for opportunity is at the upper and lower edges.

Important References:

Sideways Trend definition: Volume 2, Chapter 3, Pages 99-102

3rd & 4th Principles of Future Trend Direction: Volume 2, Chapter 3, Pages 145, 149, 150

BOF Setup: Volume 3, Chapter 4, Pages 28-31

LTF Pattern entry: Volume 3, Chapter 4, Pages 86-93

Happy trading,

Lance Beggs

 


 

Find Your A+ Trades

 

Let's continue this recent theme…

  • Focus on the areas of the market structure that jump out at you. The sequences that are so obvious, so easy, that you'd be kicking yourself if you missed the trade.
  • Identify them. Study them. Learn from them.
  • And then trade ONLY them… until you've got a proven edge.

 

These are potentially your A+ Trades. The ones you will aim to master.

In last weeks article, I shared what I consider to be one of my A+ trades – http://yourtradingcoach.com/trading-process-and-strategy/focus-on-catching-these-trades-first/

This was followed up with a social media post on Tuesday, comparing the trade sequence from that article with another from a previous article.

Note the similarity…

<image: Your favourite trades should all look the same>

The key point, repeated for emphasis:

These trades come easy to me. The ones that come easy to you might differ from this. Your job is to find YOUR OWN A+ opportunity and get to know it in detail. There are more trades coming soon. You need to be ready.

Do you want another one?

<image: Your favourite trades should all look the same>

<image: Your favourite trades should all look the same>

<image: Your favourite trades should all look the same>

Note again how similar it looks in structure to the prior two trades. Your favourite trades will all share similar qualities.

And this first pullback after a change in structure IS one of my favourites.

It might not be one of your favourites. And that's fine. The idea is not that you should start trading these setups.

You need to find your own.

  • Focus on the areas of the market structure that jump out at you. The sequences that are so obvious, so easy, that you'd be kicking yourself if you missed the trade.
  • Identify them. Study them. Learn from them.
  • And then trade ONLY them… until you've got a proven edge.

 

If you're struggling, then please note that this could be the key insight you need. 

I received some great feedback from a YTC reader, TK, in response to last weeks article. Here's an excerpt from his email:

Hi Lance,

I just wanted to thank you for the last Friday's article and let you know that I find articles on this theme of great value.

This is exactly what makes all the difference for me. The shift in mindset that made me focus on the moves that I find obvious and easy has greatly improved my trading. I regularly come back to the article "Focus on the obvious moves first" that was the first article that made me review my trading and think about whether I take mostly the obvious trades or not. This has helped me to get rid of many marginal trades.

Last week's article reinforced this practice for me. I think that this may be a key thing that developing traders need to focus on. If I may, I would suggest that you follow up with more articles like this, that would be great.

This is the article he referred to, as being originally responsible for the new and better understanding – http://yourtradingcoach.com/trading-process-and-strategy/focus-on-the-obvious-moves-first/

Be sure to read it.

Why?

Repeating the key point from the email: "This is exactly what makes all the difference for me. The shift in mindset that made me focus on the moves that I find obvious and easy has greatly improved my trading."

Could this be the difference you need as well?

Happy trading,

Lance Beggs

 


 

Focus on Catching These Trades First

 

There are some trade ideas you look at with hindsight which are quite complex and which may have been difficult to execute.

And there are others which jump out at you as being really simple.

If you're not yet profitable, then focus on the SIMPLE trade ideas.

Identify them. Study them. Learn from them. And then trade ONLY them… until you've got a proven edge.

What you see as simple may be different to what I see as simple. But essentially, we're talking about those you would call your A+ trades.

Look at any historical chart. They're the trades which your eyes go straight to. The ones that are immediately obvious. The ones that you'd be kicking yourself if you missed.

They're the simple ones.

They're the ones you need to focus on first.

For me… one of my favourites is the first pullback following a significant change in structure.

<image: Focus on catching these trades first>

This trade… and every trade like it… jumps out of the chart at me.

If there is a "first pullback after a change of structure" trade that I miss, I'm seriously not impressed with myself.

Here's what I was seeing as it unfolded:

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

What trade opportunities jump out of the chart to you?

Identify them. Study them. Learn from them. And then trade ONLY them… until you've got a proven edge.

They're the simple ones.

They're the ones you need to focus on first.

Happy trading,

Lance Beggs

Additional Notes:

1. YTC Price Action Trader readers – From the YTC PAT perspective the trade is simply the first PB opportunity after a transition from uptrend to downtrend. The classification of uptrend is not immediately obvious due to the lack of structure this early in the session. In the absence of any pre-session data, I will usually make use of any opening gap and also an opening range bias. With both being bullish in this case, I'm happy to call an uptrend.

2. Note the similarity with the trade in this post. Even though it's pattern sets up on the higher timeframe chart, the concept is exactly the same. You'll start to notice that after a while – all your good trades share similar qualities.

3. The reference to 11:30 is of course my timezone (UTC+10). The time at the exchange is 09:30. This is the time that stocks commence trading on the Hong Kong Stock Exchange.

 


 

Simple Session Bias – 3 (Spot Forex)

 

I had no plans to continue this recent topic on use of the opening range to provide a quick and simple assessment of "bigger picture" session bias.

But I had a few traders ask how it should be applied to the forex markets.

You can see the two prior articles here, if you missed them. The first introduces the concept. The second expands upon the concept with some additional detail.

 

All examples from these prior articles were from the futures markets, with the opening range defined by the first 5 minute candle from the 0930 open.

So what do we do in the 24 hour spot forex markets?

Simple…

Set the opening range at whatever point is most relevant to the dataset you're trading.

Let's look at some examples. As we do so though, please note that I will not be marking up these charts beyond simple positioning of the opening range. This will allow YOU to analyse the charts to identify the directional bias (if any) plus assess the ease with which price moves from the opening range (if at all). And put some thoughts towards how tactics might vary to best suit these conditions. If you missed the prior articles, again I recommend you refer to them first, via the links above.

The plan again –

Set the opening range at whatever point is most relevant to the dataset you're trading.

Those trading daily or 4-hour charts might like to use a monthly opening range.

Simply take the first daily candle of the month and extend it forward.

<image: Simple Session Bias - Forex Monthly Opening Range>

Those trading 4-hour, 1-hour or 15-minute charts might like to use a weekly opening range.

Simply take the first 4-hour candle of the week and extend it forward.

<image: Simple Session Bias - Forex Weekly Opening Range>

Those trading 1-hour charts or lower might like to use a daily opening range.

Simply take the first hourly candle of the day and extend it forward. I've chosen to start the day from the Asian Session open. Adjust to whatever might be relevant to your trading.

<image: Simple Session Bias - Forex Daily Opening Range>

Lower timeframe traders (maybe 5M or 1M) might like to break the day down even further, into individual sessions.

Again, take the first 5-minute candle of the session and extend it forward.

<image: Simple Session Bias - Forex Asian Session Opening Range>

<image: Simple Session Bias - Forex European Session Opening Range>

<image: Simple Session Bias - Forex US Session Opening Range>

So yes… the opening range concept can be applied to 24 hour markets.

Set the opening range at whatever point is most relevant to the dataset you're trading.

Happy trading,

Lance Beggs

 

PS. You might also be interested in this old article from 2009 – Forex Opening Range Breakout Strategy

PPS: Intraday traders might also want to consider this idea shared in a couple of social media posts a few years ago:

<image: Displaying only EUR UK Session Data>

<image: Displaying only EUR UK Session Data>

 


 

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

 


 

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

 


 

Daily Market Structure & Price Action Study – 5

 

See here if you missed the earlier articles –
No. 1, No. 2, No. 3, No. 4

The concept:

I've been writing online for over a decade now. And for that whole time I've been promoting the idea of daily study in both Market Structure and Price Action.

It's a simple task that takes no more than five minutes, but which offers incredible value to your own learning and development.

Sometimes this study fits within certain themes, if there is a particular feature of market structure which I want to focus on for a period of time.

Often though, it's completely unstructured. Simply searching for whatever captures my attention.

Either way, every trading day after the session is over, I look to the charts to find something interesting. Having done this for so long the findings are usually just reinforcing prior lessons. But occasionally, they'll uncover something new which can lead to further exploration, further learning and further growth and development.

The following are examples of entries in my Market Structure & Price Action Journal; although tidied up and expanded upon slightly to make them more "educational".

I hope you find it useful. If you do, consider starting your own Market Structure & Price Action Journal.

 

Monday 25th June 2018:

I'm a big fan of the concept of "volatility contraction leads to volatility expansion".

Usually when I show examples of this it's in the form of a triangle pattern.

But there are other ways to see it, such as identifying very narrow range bars on a much higher timeframe.

I trade the 1-minute chart. The following is the 15-minute chart, so it's quite a bit higher in timeframe. Note the narrow range bar, in this case also an inside bar which makes it even better.

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

Obviously what is important here is the concept.

But let's see the outcome for this one particular example.

<image: Daily Market Structure and Price Action Study>

Lessons:

  • Volatility contraction leads to expansion.
  • While contraction is most-often seen through a triangle pattern, it can also be identified through an unusually narrow-range bar on any higher timeframe.
  • Context is important though – my personal preference is for a smooth-flowing directional market.
  • Look for entry either preempting the breakout or on the first pullback after the breakout.

 

Tuesday 26th June 2018:

One of my favourite topics of study is any blindingly obvious traps at the edges of the structure.

<image: Daily Market Structure and Price Action Study>

The reason for this structure – see Chapter 3, page 99, "Sideways Trend – Definition".

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

Lessons:

  • In a sideways market environment, primary trade opportunity is sought on price interaction with the range high and low boundaries.
  • Two potential features of a quality breakout failure are (a) price having to stretch to reach the breakout level, and (b) almost immediate lack of continuation following the breakout.

 

Happy trading,

Lance Beggs

 


 

Higher Timeframe Pattern Breakout – 2

 

Last week we looked at the following chart sequence showing an obvious symmetrical triangle pattern within my higher timeframe chart.

<image: Higher Timeframe Pattern Breakout>

See here if you missed the recent article – http://yourtradingcoach.com/trading-process-and-strategy/higher-timeframe-pattern-breakout/

I don't know if I was somehow influenced by that article. I don't usually look for patterns on the higher timeframe chart. It's primary purpose is for establishing an S/R framework.

But since putting that article together, I'm seeing them everywhere!  🙂

As I said last week… sometimes they just stand out as so obvious that you can't miss them. So I watch them for potential trade opportunity around the edges of the pattern structure. Usually for two alternatives – a breakout failure or a breakout pullback. 

So let's do one more example. A little different this time in that the breakout extends much further before commencing the pullback. The same concept applies though – take the first pullback against the edges of the structure.

Here's the higher timeframe chart…

<image: Higher Timeframe Pattern Breakout>

Zooming in now to the Trading Timeframe chart at the time of entry.

<image: Higher Timeframe Pattern Breakout>

<image: Higher Timeframe Pattern Breakout>

<image: Higher Timeframe Pattern Breakout>

Two steps:

(a) Higher Timeframe pattern

(b) Trade BPB / BOF around the edges of the structure.

It's not how I typically trade, but I expect a whole strategy could be based around the idea.

Happy trading,

Lance Beggs