Tag Archives: Market Structure

Learning from the Must-Trade Price Sequences

 

Almost all trading sessions will contain one to two price sequences which are absolutely the best.

These can be the difference between an average session where you just grind out a small positive result and a great session where you hit it out of the ballpark.

The price sequences which make your day.

How you define a "must-trade" price sequence will vary from trader to trader. But for most of us they will be the largest and most directional price swings, with smooth price flow at a nice pace. Everything just right!

There can be value in reviewing these post-session.

  • Which were the Must-Trade Price Sequences?
  • Did I capture them?
  • If so, how well did I perform? How did I recognise the opportunity? How could I have done better?
  • If not, was it reasonable to expect that I should have caught them? Why did I fail to capture them? How could I have done better?

 

Let's look at a couple of examples.

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

 

Another example:

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Learning from the MUST-TRADE price sequences

Consider adding this to your post-session review, if you think it will offer value:

  • Which were the Must-Trade Price Sequences?
  • Did I capture them?
  • If so, how well did I perform? How did I recognise the opportunity? How could I have done better?
  • If not, was it reasonable to expect that I should have caught them? Why did I fail to capture them? How could I have done better?

 

Happy trading,

Lance Beggs

 


 

A Simple Alternative Means of Assessing Short-Term Bias & Market Strength/Weakness – Part 2

 

I've long been a fan of Opening Range (OR) theory and the way that it allows us to quickly and easily identify a "bigger picture" session bias.

So last week we played around with that concept and explored it's application in new areas of the chart.

We took the concept of OR theory and applied it not just to the opening bar of the session, but to multiple bars throughout the session as well.

In my own trading, using the 1-minute Trading Timeframe, I apply this to the opening candle for every 30 minute block of data.

This allows me to not only have the "bigger picture" session-wide bias, but to also get a feel for the bias on a shorter timescale as well.

Think of it as being like multiple-timeframe analysis. The standard OR provides a bigger picture session-wide bias. The 30 minute OR’s provide a picture of the shorter-term bias “inside” that bigger picture bias.

You can find last week's article here if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/a-simple-alternative-means-of-assessing-short-term-bias/

At the most basic level, analysis of a single 30M OR block can provide us with two primary pieces of information:

  1. A sense for the short-term directional bias. Price movement above the OR is bullish. Price movement below the OR is bearish. And price movement stuck at the OR is neutral.
  2. A feel for the underlying strength or weakness within this directional bias. Fast-flowing price movement with little overlap shows a strong supply/demand imbalance. Whereas overlapping, choppy action suggests a much more balanced market.

 

Let's look at some examples of this information as applied to individual 30M blocks:

Analysis of Individual 30M OR Blocks

Analysis of Individual 30M OR Blocks

Analysis of Individual 30M OR Blocks

Analysis of Individual 30M OR Blocks

The real strength of this method though, is not in analysis of an individual 30M OR block.

Rather it comes through assessing the information from the current OR block within the context of either the overall session bias or the preceding couple of OR blocks.

Resolving Bias Conflict.

Resolving Bias Conflict.

Resolving Bias Conflict.

Resolving Bias Conflict.

Resolving Bias Conflict. 

If you like this, I highly encourage you to play around with the charts and see what other information you can gather, in relating one single OR block to those preceding it.

Again though, to reinforce a point from our prior article…

This is not my primary tool for conducting analysis.

I assess short-term bias through six "rules of thumb" which allow me to project the current trend forward in time, identifying the highest probability path for the next couple of price swings. I share this method in my eBook series (Chapter 3). The same applies for the method I use to assess strength and weakness within the trend. Also Chapter 3.

Short-term OR Theory is something that has crept into my analysis process over time, which acts to nicely complement the existing methods.

Sometimes it acts simply to confirm my other analysis. And other times it provides a slightly different perspective.

Either way, I find it adds value.

If this idea appeals to you, try it alongside your current methods of analysis and see if you find the same benefits.

Happy trading,

Lance Beggs

 


 

A Simple Alternative Means of Assessing Short-Term Bias & Market Strength/Weakness

 

I highly recommend spending some time every now and then just playing with your charts.

Try something new.

Or see if you can apply old ideas in new ways.

Just occasionally, you may find something useful.

Today I'd like to share a simple tool that I've been using for the last few years, alongside my existing approach to assessing short-term market bias and the strength or weakness within the price action.

IMPORTANT NOTE: This is not my primary tool for conducting analysis.

I assess short-term bias through six "rules of thumb" which allow me to project the current trend forward in time, identifying the highest probability path for the next couple of price swings. I don't share this in the newsletter or blog (sorry!). If you're interested you'll need to see my ebook series (Chapter 3). The same applies for the methods I use to assess strength and weakness within the trend. Also Chapter 3.

What we discuss today is something that has crept into my analysis process over time, which acts to nicely complement the existing methods.

Sometimes it acts simply to confirm my other analysis. And other times it provides a slightly different perspective.

Either way, it adds value.

This discovery came about through "playing" with Opening Range theory and seeing where else it could be applied.

We've discussed the Opening Range previously in a few articles if you want some background reading – http://yourtradingcoach.com/tag/opening-range/.

Here is the general concept:

Standard Opening Range theory 

So now, let's apply this in a new way.

I first hinted at this idea way back in 2013 via a series of two facebook posts:

First this one…  (and I guess I've kind of given away the answer!!!)

An Alternative Use for Opening Range theory

 

And then the next day, this post:

 

An Alternative Use for Opening Range theory

I've never seen anyone else do this. I'm not sure why? I think it's an absolutely brilliant method of maintaining an intra-session bias. And it works just beautifully as an additional method to support other YTC Price Action Trader analysis.

The hourly open is a significant occurrence, visible to traders on all timeframes from 1H down to 1M. As such, opening range theory applied to the first Trading Timeframe candle at this point works well in giving a quick indication of current bias as either bullish, bearish or neutral.

The same applies for 30 minute opens, if you prefer to look at this even more short-term. My preference has shifted to using the opening 1 minute candle, each 30 minutes. I find this works well for the 1 minute trading timeframe. If your trading timeframe is higher then just increase the size of the segment as appropriate. Those trading 3 or 5 min charts will likely find one hour segments better than 30 minute segments. Higher trading timeframes may even find value with 2H or 4H groups.

Again… I'm not sure why we don't see this used more often. Give it a try! I love it!

I'm not going to reveal all I've found in using this approach. I want you to play with it. Explore the idea on some charts. Run it alongside your current methods. If it adds no value, drop it. But maybe… and I suspect this will be the case for many… it will become a quite useful tool in your trading toolkit.

A quick starting point though:

Within the context of the "bigger picture" session bias and other analysis information available from standard opening range theory, we now have a method of assessing the same information on a shorter timescale.

So as with the standard approach, price movement from the 1H or 30M Opening Range gives us insight into either bullish or bearish or neutral bias. And the ease with which price moves away gives insight into the strength and weakness.

But now, instead of just being able to reference price to the Opening Range, we also have the ability to:

(a) Reference the shorter-term 1H or 30M bias information to the longer-term session bias information, as the shorter-term acts to move with or against the longer-term bias.

(b) Reference the current 1H or 30M bias information to that obtained from the previous one or two 1H or 30M segments.

That is, we get information into the way that price is moving. Is it stable, maintaining previous direction, pace and volatility? Or is something changing?

I might leave this here for now.

Again, rather than provide examples, I'd like you to play with this idea and see what you think.

Plot an opening range box around the first "trading timeframe" candle each 30 minutes (or one hour).

If there seems to be any interest then I'll follow up with a part-two in coming weeks, looking at the short-term 30M Opening Range on a few price charts.

Happy trading,

Lance Beggs

 


 

Momentum Doesn’t Always Continue

 

I love these patterns so much. Let's do it one more time.

Momentum doesn't always continue

I know… we've done this a couple of times already – see here – and here.

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143, for the same idea expressed on the Trading Timeframe.

But I want to do it one more time, just to really emphasise the point.

In the right context these Test/Breakout Failures of momentum extremes can provide GREAT opportunity.

Regardless of your chosen market and timeframe, if this idea appeals to you then I highly recommend you look through your charts (both trading and higher timeframes) and study some historical examples. You may then want to keep an eye out for them in future.

So to look at yet another market, let's see one that occurred in the emini Dow (YM) futures earlier this week.

I watch for this on both higher timeframes AND on the trading timeframe. This example actually occurs on both. Let's start with a higher timeframe, using the 15 minute as it provides a good "fit" on the image.

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

I mentioned earlier that this momentum drive also offered a Trading Timeframe example. That would be for those on the 1 minute YTC Scalper timeframes. You'll note if you look at the 15 minute charts above you'll see the momentum low actually included two candles with bottoming tails. On the lower timeframe chart this is yet another example of this same pattern. Let's look at the 1 minute chart showing the "internal detail" comprising these bottoming tail lows.

Momentum doesn't always continue

Keep an eye out for large momentum moves. Those on the trading timeframe can offer nice movement for a swing or two. Those on the higher timeframe structure can offer a clear directional bias for a longer period of time, often a whole session.

  1. A strong momentum drive.
  2. The first pullback does not lead to immediate continuation.
  3. An eventual break of the momentum extreme, which rapidly fails.
  4. Potential opportunity!

 

Happy trading,

Lance Beggs

 


 

Higher Timeframe Forex – When The Market Can’t Push Lower

 

One of the key tasks I was looking forward to this last week, having recently overcome my long-term internet outage, was in catching up with Aaron Fifield's Chat With Traders podcast.

And I must say it was AWESOME to come across episode 117 with Larry Alintoff.   (Yeah… I'm a long way behind!!!)

The reason…

Despite the fact that we likely trade very different timeframes, markets and methods, I was really pleased to hear Larry describe one way that he seeks trade opportunity – when things that "should" happen, don't happen.

That is one of the themes I've shared through YTC over the last few years.

To have a trader of such high regard validate this idea… well I must say I felt just a little pleased with myself!   🙂

You'll find dozens of references to this idea if you search back through the archives, in either the blog or my social media posts.

The most recent, from memory, would probably be this one – http://yourtradingcoach.com/trading-process-and-strategy/studying-a-higher-timeframe-trap/

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.

So I thought, why not look at another example of this idea.

GBP/USD offered an interesting example during the last week. One which is perhaps not as obvious as some of the prior examples.

Let's look to the 4 hour chart at the close last Friday, 9th March.

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

So let's look at Monday's data, still on the 4 hour chart.

Higher Timeframe Forex - When the Market Can't Push Lower

And now Tuesday…

Higher Timeframe Forex - When the Market Can't Push Lower

Ha ha!

Ok, it's not all bad.

This is why I wanted to share this one. It makes a nice difference from the previous one which I linked to above (here again if you missed it).

In that prior article, price did break the swing low.

This was the setup in that prior article.

Higher Timeframe Forex - When the Market Can't Push Lower

As we've seen though, it doesn't always happen this nicely.

Sometimes price doesn't quite break that low.

But it doesn't matter.

Often, just trying to break that low is sufficient.

YTC Price Action Trader readers – see Figure 3.78 on page 143 for another example.

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Let's drop down to a typical trading timeframe chart, the 5 Min chart, to see how we could have recognised this failure to continue lower.

Higher Timeframe Forex - When the Market Can't Push Lower

In fact, just the day before, on Monday, I'd shared this example from the emini Nasdaq futures, via social media:

Higher Timeframe Forex - When the Market Can't Push Lower

Here is the outcome…

Higher Timeframe Forex - When the Market Can't Push Lower

A strong momentum drive often leaves an expectation in many traders of continuation, should price break the momentum drive extreme. Any failure of that break, or an inability to even quite get that far, can provide a reasonable move back in the opposite direction.

I'm a big fan of this concept – when things that "should" happen, don't happen.

Keep an eye out for it in your markets and your timeframes. Archive and study a few examples. And consider adding it to your trading toolkit, should you also find them to offer great opportunity.

Higher Timeframe Forex - When the Market Can't Push Lower

Happy trading,

Lance Beggs

 


 

Trade Opportunity at Spike Highs

 

The market has opened and rallied. Not with great strength. In fact it's quite slow. But it rallies with a clear bullish bias.

It's clear of all S/R levels, above the prior day's high resistance (now support) and well short of the next higher timeframe resistance level.

Trade Opportunity at Spike Highs

Trade opportunity in such a case is ideally sought in the bullish direction.

YTC Price Action Trader readers – the first and second principles apply here and we're looking ideally for PB/CPB opportunity, with the trend.

However, there are times when I'll also look to take counter-trend opportunity, within this market environment.

Not always. But sometimes it's just screaming out to be traded. This is one of those times.

And not with any intention of catching a reversal. Just a scalp from the edges back to the mean.

Here's what I was seeing. We'll look at the TTF first, but we'll follow that up with the HTF chart, because it stands out better there and is much easier to see.

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Keep watch on the charts for anything unusual. Anything that is different.

It may just provide trade opportunity.

Happy trading,

Lance Beggs

 


 

The Key to Early Recognition of Potential Change in Structure

 

The key to early recognition of potential change in structure is in observing and identifying "SOMETHING DIFFERENT".

I absolutely love this example which has been building now since the beginning of the year.

The key to early recognition of potential change in structure

This does not mean that the uptrend will end.

It's just a warning sign.

A clue that the sentiment driving the market prior to this date has changed in some way.

A clue that there is "potential" for a change in market structure.

And for those of you who recognise this clue, the potential to more quickly adapt to any change in structure as it happens, or even before the technical change has occurred.

(By the time I publish this article the market may well have made this change. Be sure to check out the charts if you wish to see what happens next.)

For those of you who wish to join the ranks of professional traders, this is a skill you need to build. Quickly recognising and adapting to changes in the market.

And step one in that process is early recognition of "something different".

All markets.

All timeframes.

The key to early recognition of potential change in structure

I'm just stunned by that last fact.

Skip the table below if you wish, but I personally find it amazing!  (Yep… I'm a charting nerd!)

3rd Jan: Mid-Close Range 1st Feb: Mid-Close Bull 1st Mar: Mid-Close Bull
4th Jan: High-Close Bull 2nd Feb: Low-Close Range 2nd Mar: Low-Close Range
5th Jan: High-Close Bull 3rd Feb: Mid-Close Range 3rd Mar: High-Close Range
6th Jan: High-Close Bull 6th Feb: High-Close Range 6th Mar: High-Close Range
9th Jan: High-Close Bull 7th Feb: Low-Close Bull 7th Mar: Low-Close Range
10th Jan: Mid-Close Bull 8th Feb: High-Close Range 8th Mar: Mid-Close Range
11th Jan: High-Close Range 9th Feb: High-Close Bull 9th Mar: High-Close Range
12th Jan: High-Close Range 10th Feb: High-Close Bull 10th Mar: Mid-Close Bull
13th Jan: High-Close Bull 13th Feb: High-Close Bull 13th Mar: High-Close Bull
16th Jan: Low-Close Range 14th Feb: High-Close Bull 14th Mar: High-Close Range
17th Jan: Mid-Close Bear 15th Feb: High-Close Bull 15th Mar: High-Close Bull
18th Jan: High-Close Bull 16th Feb: Mid-Close Range 16th Mar: Mid-Close Range
19th Jan: Mid-Close Range 17th Feb: High-Close Bull 17th Mar: Low-Close Range
20th Jan: Mid-Close Range 20th Feb: High-Close Bull 20th Mar: Mid-Close Range
23rd Jan: High-Close Range 21st Feb: Mid-Close Range 21st Mar: Low-Close Bear
24th Jan: High-Close Bull 22nd Feb: High-Close Range  
25th Jan: High-Close Bull 23rd Feb: Mid-Close Bear  
26th Jan: Low-Close Range 24th Feb: High-Close Range  
27th Jan: High-Close Range 27th Feb: High-Close Bull  
30th Jan: Mid-Close Bear 28th Feb: Mid-Close Range  
31st Jan: High-Close Range    

 

(See here if you're not familiar with this form of candlestick classification – Parts: One Two Three Four Five )

The key to early recognition of potential change in structure is in observing and identifying "SOMETHING DIFFERENT".

In a stable trend, watch for changes in volatility, or in the pace of the trend. Watch for changes in the way that price swings project beyond the previous swing high or low. Or in changes to the depth of pullbacks. Or, as in today's example, watch for a sudden and strong move counter-trend.

In a stable sideways market, watch again for sudden changes in volatility. Or sudden and dramatic increases in volume. Or (one of my favourites) watch for signs of price compression towards either the upper or lower boundaries of the range.

Something different in the way that price has been moving.

Observe it.

Question it. What could it mean? Could this in any way provide a clue to a potential change in structure?

Now… watch and adapt.

The key to early recognition of potential change in structure

The key to early recognition of potential change in structure

The key to early recognition of potential change in structure

Happy trading,

Lance Beggs

 


 

Studying a Higher Timeframe Trap

 

There are some common themes that run through the articles I produce at YTC. One of these, which has been here since the beginning, is the importance of creating a Market Structure & Price Action Journal.

Every day, find something that amazes you in the charts. Print it out. Cover it with notes. Study it. File it. And review your journal often. It really will be the greatest trading book… EVER!

Over time, I promise you will start to see patterns within the market structure or price action, which repeat themselves again and again and again.

Like this, which we shared via social media way back in 2015:

What doesn't happen... is important information! 

This is a structural feature that I see repeated again and again and again.

Here's another previous example – http://yourtradingcoach.com/trading-process-and-strategy/trading-failed-expectations/

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.

But let's look to an example which occurred last week, on a higher timeframe chart.

Yes… it's an idea which you will find in all markets and all timeframes!

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Happy trapping,

Lance Beggs

 


 

Start Your Session With IF-THEN Scenarios

 

Last Sunday I shared one of my old articles via social media.

Start your session with IF-THEN analysis

Click on the image, or this link here, if you wish to read the old article.

This is such an important part of my pre-session preparation.

Why?

It simply aims to get my session off to a good start – so very important for maintaining an effective mindset throughout the trading day.

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 confirmed your expectations.

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

NOTE: What I am doing here with my IF-THEN analysis is NOT the same as the Game Planning / Hypos that you see other traders doing. Typically they're looking at much higher timeframes or Market/Volume Profile tools to determine a likely hypothesis for the WHOLE DAY.

I'm looking at the trading timeframe and where the market opens with respect to key levels, and assessing likely movement for the OPENING FEW PRICE SWINGS ONLY.

There is of course nothing to stop you using both. Whole session, higher-timeframe game planning plus opening sequence trading-timeframe IF-THEN scenarios.

It's just important here for me to point out the difference.

These are not meant to define the whole session. They just aim to get you off to a good start.

And from there, the picture keeps updating bar by bar in accordance with the YTC Six Principles of Future Trend Projection.

Anyway, let's look at my opening IF-THEN scenarios for the week to date, in the emini-NASDAQ (NQ) market:

Monday – 13th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Tuesday – 14th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Wednesday – 15th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Thursday – 16th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

So as we head towards the open on Friday, why not consider creating your own IF-THEN statements for the opening couple of price swings.

They won't always be right.

But when they are, it means that your actions in the market are pre-considered and your trades only occur when the market "makes sense".

And when the market offers something different, you simply stand aside and reassess.

It's all about getting your session off to the best start possible, through minimising emotional reaction to surprising and unexpected price movement.

Give it a try. You may just like the idea.

Happy trading,

Lance Beggs

 


 

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