Tag Archives: Mindset

Metagame Entry – After You’ve Made a Dumb Trade!

 

I often talk about identifying the areas where "other traders" are trading in really dumb places. Places where they've found themselves trapped in a really low odds trade. Or trapped out of a position they wished they were in.

Places of emotion – fear, anger, regret!

These areas of the chart often provide us with great trade opportunity.

But one thing I don't recall discussing is the obvious fact that sometimes we find ourselves taking these dumb trades.

We all do it!

The trapper… becomes trapped.

But that's fine. It's information. We read the market wrong. Now we've got feedback that helps correct our bias. And sometimes, if we've maintained a calm mindset, we might still find trade opportunity as price retests the area of our dumb trade.

Let's look at an example…

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Too often we let a losing trade get to us. Especially when it's immediately clear that it's a dumb trade.

We can't allow any negativity to remain for long though.

It is IMPERATIVE that you have some kind of routine in place to briefly get away from the charts and clear your mind.

YTC Price Action Traders, refer to the FOCUS and REGROUP sections in Volume 4, Pages 49-50. Maybe consider printing out those two pages and sticking them on your wall.

Shake off that loss. It's small. It will be overcome by one good trade. Now focus. And prepare yourself for the next trade.

If the context suggests potential for a second chance entry, it could be coming up VERY SOON.

Happy trading,

Lance Beggs

 


 

An Entry Mindset with a Whole Lot Less Fear

 

The whole analysis process for a novice trader is aimed towards finding a winning trade.

Sure, they know intellectually that not all trades will win.

But surely this one… the one they worked so hard for… the one that all their analysis says is a good trade… it's just got to win!

And then they enter the trade…

An Entry Mindset with a Whole Lot Less Fear

Gripped by the fear that comes with every tick of price movement, they increase the risk of mismanaging the trade. They increase the likelihood of underperforming. And they risk potential damage to their self-belief.

What if there was another way?

What if you had a different mindset?

What if you stopped trying to find winners?

An Entry Mindset with a Whole Lot Less Fear

An Entry Mindset with a Whole Lot Less Fear

An Entry Mindset with a Whole Lot Less Fear

That's a key difference.

A novice is trying to find a trade that will win.

I'm trying to find an entry that is worthy of being one of twenty.

I don't need a winner.

I place all the odds in my favour. And I take the trade.

An Entry Mindset with a Whole Lot Less Fear

This is an entry that is worthy of being one of 20 within the group.

It doesn't need to be a winner.

The whole group of 20 needs to win.

So this trade just needs to get me off to a good start – profiting if it can, and just minimising the damage if it can't.

A slightly different mindset…. but with a whole lot less fear.

Happy trading,

Lance Beggs

 


 

You Can’t Catch Them All

 

Never judge a missed trade by how it looks AFTER THE SESSION.

Always judge a missed trade by how it looked AT THE RIGHT-HAND SIDE OF THE SCREEN AT THE TIME OF ENTRY.

This article is in response to a question I received based upon the following image, from this prior article – http://yourtradingcoach.com/trading-process-and-strategy/how-do-you-find-time-to-plan-a-trade-on-a-1-minute-timeframe/

I didn't get an entry SHORT here... 

Here is the question I received:

  • Thank you Lance, again, for your recent article. One question that has stuck in my mind comes from the second image where you talk about the earlier missed entry. You said you can see it's an obvious trap entry point. But you weren't looking for that. Why not? Why did you miss the trade? Because, I agree with what you said. It looks obvious.

 

Check the prior article if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/how-do-you-find-time-to-plan-a-trade-on-a-1-minute-timeframe/.

Ok, this is a common error.

It's so easy to look back at a chart post-session and find the largest and smoothest price swings. And then analyse the entry point to find the obvious way to get into that trade.

Followed shortly after by calling ourselves all kinds of names for having missed such a blindingly obvious entry. And then vowing to never make such a newbie error again.

Let's try it with this trade…

You can't catch them all

You can't catch them all

You can't catch them all

But it's not like that.

Trades look different at the hard right edge of the screen.

Here is the same missed trade from a different perspective, looking back at some earlier structure and positioning the entry point at the right-hand side.

You can't catch them all

You can't catch them all

You can't catch them all

You can't catch them all

I'm ok with missing this trade. I feel my assessment at the hard right edge was reasonable. I accept that you can't catch them all. And this is simply one that was not mine to catch. Hopefully you were able to catch it and profit from the whole move.

YES… we must review our charts post-session.

And it's very important to review the strongly directional price swings that were missed.

But make sure that the primary part of this review occurs at the hard right-hand edge of the screen.

Is it really something you should have caught? Or are you influenced by the hindsight view of the trade outcome?

Because the simple fact is….

as much as you'd love to…

You can't catch them all.

Happy trading,

Lance Beggs

 


 

Employing a Self-Distancing Strategy to Improve Journaling and Review

 

Close your eyes and imagine a really bad trading session. You might have a recent example you can use. Or if not, just make one up.

The details don't matter. They'll vary for each of us. Just make it bad.

Maybe this:

"I drag myself into the office and throw my bag on the floor. Feeling crap with a hangover and too little sleep due to last night's celebrations. It's 10 minutes till market open. No problems. I'll catch up on the pre-session admin later and just wing it. I'm on my third coffee already – this should help me make it through ok."

The market opens and drives higher with strength. "Suckers… it's right into resistance. I'll short here and catch the move back down to the market open."

Of course, it loses!

As does the second attempt. And the third. And the fourth, which had the stop pulled even higher, because "this damn thing is so overbought".

Or maybe your example is something much worse.

Whatever it is, close your eyes and visualise it. And feel every feeling that such a session would bring.

Disgust! Anger! Frustration!

Now, the session is over. You've smashed your keyboard and it's time for review. Close your eyes and imagine yourself critiquing your performance.

SERIOUSLY!

Close your eyes, visualise this scenario. And then critique your performance.

Now let's shift the scenario slightly.

This time the session went exactly the same, but you weren't the trader. The trader was the person you most love in life. Your partner. Your Mum. Whoever you care the most for.

And you're their coach. The person they come to after each session to discuss their performance and to plan the way forward.

Close your eyes and imagine how you would handle their performance review.

Visualise it.

Feel it.

If you've been honest with yourself, it's likely that the first scenario would have been far more emotional. Quite likely an explosive, self-critical and self-deprecating review.

Whereas the second, while still noting that the performance was unacceptable and must lead to change, would likely be more calm and rational. With a more considered review of both the reasons for the poor performance and the solution that is necessary to prevent recurrence.

This simple shift in the scenario has created some space, or distance, between our rational mind and the emotion associated with the trade performance.

 

Self-Distancing Strategies

I absolutely love this article by Brad Stulberg in NYMag.com:

http://nymag.com/scienceofus/2017/02/self-distancing-will-help-you-make-smarter-deciions.html

Please read it. It will take about 10 minutes, tops.

Some key excerpts:

  • Collectively referred to as “self-distancing,” practices like those outlined above and Rusch’s “pretend you’re talking to a friend” allow us to remove our emotional selves from intense situations, paving the way for more thoughtful insight and subsequent decision-making.
  • Employing a self-distancing strategy allows you to evaluate activities or situations that are rife with passion from an entirely different perspective, one that includes logic alongside emotion.
  • “I talk to myself all the time,” says Rusch. “It’s just that when I talk to myself as myself, I tend to be negative and not so helpful. But when I talk to myself as if I were talking to a friend, my words are motivating, forgiving, and far more productive.”

 

Employing Self-Distancing Strategies to Improve Journaling and Review

I will be employing these ideas in two ways:

(1) Journaling

Here's another excerpt from the article:

  • Similar studies show that when individuals think, or journal, in the third person rather than in first person — for example, “John is running into challenges with his business that seem insurmountable” versus “I am running into challenges with my business that seem insurmountable” —they, too, evaluate themselves and their situations more clearly and with more wisdom.

 

I now journal in the third person.

Give it a try for a month. You can always go back to normal if you don't like it.

(2) Reviews

All reviews (session reviews and longer term reviews) will now be conducted as if I am the "Performance Coach" reviewing a trader within my firm.

Again, give it a try for a month. You've got nothing to lose.

And if you can separate your rational and logical side from the emotion of the session, just a little, there is a WHOLE LOT to potentially gain.

 

Why Not Get Started Right Now?

That trading you did so far this year is no longer yours. It was done by your best friend, your partner, or some other loved one.

You are now the performance coach.

And it's time for you to honestly review their trading business.

Close your eyes and imagine the review session. And answer the following questions.

  1. Did they approach these recent months with clear and realistic goals for growth and development?
  2. Did their performance drive them successfully towards achievement of their goals?
  3. Are the goals still appropriate, or do they need amending?
  4. What action must be taken in the coming months to take decisive steps forward?

 

Calmer. More rational. More logical.

And far more likely to lead to practical and effective decision making.

Give it a try!

Happy trading,

Lance Beggs

 


 

“But it’s scary!” “What if it fails?”

 

I received some interesting comments about a trade in a recent article – http://yourtradingcoach.com/trading-business/the-good-the-bad-and-the-ugly/

Here's an image from the article, showing the entry SHORT against a single wide-range bullish candle.

Single candle pullback

Review the original article if you want to see the context behind the trade.

For now though, I want to discuss some concerns that a few people expressed. Because I imagine there are a whole lot more who felt the same thing.

The feedback was quite varied in nature.

A couple of people really "got it". They understood that while the candle appears to show great bullish strength, the internal movement didn't necessarily suggest that was the case.

But many more expressed concern, either commenting on the post or via email. Some short extracts:

  • "I don't understand, how you are comfortable to take up the 2nd setup"
  • "But it's scary."
  • "What if it fails?"

 

I get it!

Here's the thing…

YES…

It is scary if all you see is the strong bullish candle.

BUT…

It's in a good contextual location. It has a good R:R. And I don't just place a limit order and let it get overrun. I'm watching and waiting to see some inability to continue further before placing the entry order.

SOME IMPORTANT POINTS:

  • These are some of the toughest trades that I do take (from a psychological perspective).
  • They're simple in concept. But they are not easy.
  • They're not for new traders.
  • If you're not comfortable with them, don't take them. Stick to the easier ones. But learn from them. Maybe take note of them when you do see them and then study them post-session. As you gain experience it might be something you one day add to your game plan.
  • Again… let me reinforce the last point. You don't have to trade these if your skill level is not ready for them. There are much easier setups available.

 

I went looking for something similar over the last fortnight, so that we could work through another example. But there hasn't really been a great example since then.

But then I thought maybe this one will help.

The context is different. But the fear is much the same.

Whenever I've posted these type of trades in the past I tend to get much the same feedback – "There is no way you can enter here!", "You're stepping in front of a freight train!", "It's too scary!", "But what if it fails?"

One other thing I like about this example is that it slows the process down, with the end of the pullback occurring over 3 candles. This might make things a little easier to see.

So anyway… here it is…

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

But it's scary! What if it fails?

As we discussed here in these articles, until I see evidence of the break lower holding these levels, I'm expecting a break like this to fail.

 

It's a simple shift in mindset that makes these traps easier to enter.

Of course, it's never completely comfortable.

The move down to the level does display some bearish strength. And as readers of my ebook series will note, I'm not a fan of fading strength.

But in the case of a break of a level like this, at the end of a long move, it's the behaviour of price AFTER THE BREAK that really matters.

Will price show continued bearish strength and drop like a ton of bricks? Or will it stall and then break back higher?

As I noted earlier, I do NOT just place a limit order in a situation such as this and hope that it all works out ok.

I watch. I wait. And if I see evidence that the selling is perhaps all done, only then will I consider entry.

Let's move forward and see what happens.

But it's scary! What if it fails?

But it's scary! What if it fails?

Here's the outcome:    (clearly underperforming when you see the TTF eventually break to new highs… but still it's a good trade!)

But it's scary! What if it fails?

I mentioned earlier…

It's in a good contextual location. It has a good R:R. And I don't just place a limit order and let it get overrun. I'm watching and waiting to see some inability to continue further before placing the entry order.

This applied with the trade two weeks ago.

And it applied with today's trade.

This is what gives me confidence to enter.

And if it fails?

So what? It's one trade.

If it loses, I'll keep the loss small.

This is not a game of certainty. The market environment is uncertain. Some trades will win. Some will lose. Work to keep the average loss smaller than the average win.

But it's scary! What if it fails?

Let's wrap up…

Yes, it's hard to enter against a break. Or against a strong single candle pullback.

If you're not comfortable with this, stand aside and wait for something easier. But observe them. Make decisions as you watch them live. And take notes. Study them post-session. As you gain confidence, you might want to consider sim trading a few. And eventually trying them live (small size).

But if it's in a good contextual location. And if the R:R is acceptable. Then watch. And wait. And if price shows that it's given all it's got, and appears unable to move any further in the pullback direction, then take the trade.

Manage it.

Keep the losses tight. And if it wins, then squeeze it for all the profits you can get.

Happy trading,

Lance Beggs

 


 

A 50% Win Rate IS Enough

 

I love this recent email exchange with a new trader…

Email received: (We'll come in mid-stream as the earlier conversation is not relevant to this article!)

Great Lance, thanks for responding and giving me all this information.

I plan on trading highly liquid stocks and probably the intraday with the occasional swing trade. I've been out of the market for a while so I am going through some of the reads you have recommended. Come Into My Trading Room is excellent.

My problem is that I need to fine tune my studies because what I think works ends up not 50% of the time.

I love how you explain things and looking forward to buying your strategies. Your emails are great also. Thanks Lance.

 

My response:

Thanks. I'm glad you're finding value in my writing.

You said, "My problem is that I need to fine tune my studies because what I think works ends up not 50% of the time."

Obviously I don't have an real insight into how you're trading. But here is a different way of thinking of the problem…

What if 50% winners was enough? What if you could work to capture more of the move in those that did win. And cut the losses quickly on those that lost.

That is, accepting 50/50 and profiting from a higher win/loss size ratio.

Seriously… 50% can be enough.

See here also: http://yourtradingcoach.com/trading-process-and-strategy/stop-hoping-your-trade-will-win/

 

His response:

I have never thought of it in that way but now I will!!

 

Awesome! This is one of the many important breakthroughs that we need to achieve along our path to professional trading.

It's such a simple concept. But it's hard to see. In some ways it goes against our natural desire to win. And we're bombarded daily with advertising copy promoting high win percentage strategies.

But the fact is that long-term profitability is not just a function of our win rate. Just as important is the Win/Loss Size Ratio (WLSR).

  • WLSR = Average Win / Average Loss

 

If you achieve a 50% win rate across a series of trades you can still profit provided your average win is greater than your average loss.

In my own trading, the win rate is the least important of these trade statistics.

In a 20 trade sample I expect to achieve a win rate anywhere between 40 to 70 percent. But I aim to profit by keeping the average win greater than the average loss.

Yes… 50% can be enough.

50% winners across a whole month can be profitable, provided your average win is greater than your average loss.

50% winners across a whole year can be profitable, provided your average win is greater than your average loss.

50% winners across your career can be profitable, provided your average win is greater than your average loss.

Let's look at a few trades. Obviously eight trades are too small a sample size to really concern ourselves with the stats.

But it's eight trades that provided four wins and four losses.

And yet it profited.

Because the average win was greater than the average loss.

A 50 percent win rate is enough

A 50 percent win rate is enough

A 50 percent win rate is enough

A 50 percent win rate is enough

A 50 percent win rate is enough

A 50 percent win rate is enough

A 50 percent win rate is enough

A 50 percent win rate is enough

 

By all means, aim for as high a win rate as you can achieve.

But seriously… 50% can be enough.

Happy trading,

Lance Beggs

 

PS. Note: This discussion has excluded consideration of commissions and other business expenses, as they will vary from trader to trader. Obviously while a series of trades may well be profitable in and of themselves, a business profit is only achieved if these trade profits are sufficient to overcome commissions and other expenses. But the fact remains, a 50% win rate will still be sufficient. You'll just need a slightly higher WLSR to cover these costs.

 


 

I Was Wrong Again

 

You won't be successful as a trader until you're comfortable with the idea of being wrong.

I'm wrong EVERY DAY.

Numerous times.

I'm ok with that.

And that's part of why I'm successful.

Trading success requires that you accept and understand that success...

comes over a series of trades.

Individual trades are irrelevant.

You will be wrong!

I was wrong again.

Part of the position was stopped out at -2.0 points; the rest was at -2.25 points.

Whatever!!!

I step aside.

I regroup.

And I return and do it right.

Because, you know what? One trade does not define the success or failure of my trading business.

A trading edge plays out over a SERIES OF TRADES.

Often!

It took me two more trades to get back in front.

One that almost did it… it's just the commissions that kept me in slight drawdown.

Accept it. And...

What was I saying before about "right but mismanaged"?

Thankfully there was opportunity to re-enter!

learn to profit despite your imperfection in decision making and trade execution.

Yep… playing The Fourth Principle would have worked out so much better.

But instead, I'm left with a whole lot of IMPERFECT DECISION MAKING!!!

And yet… that's reality.

I'd love to show you only the "perfect" trade sequences.

But that would be doing you a disservice.

Reality is sometimes messy. You need to accept that.

And you need to learn to profit DESPITE your imperfection.

So if you find yourself overly frustrated after a trade loss, and unable to get back in while the premise is still valid, ask yourself why?

Do you not believe in your edge?

Do you not believe in your ability to trade your edge?

Are you trading too much size, such that a single loss actually HURTS?

Or have you not yet truly understood and accepted the long-term nature of this business (aiming for positive results over a series of trades rather than on every single trade)?

You won't be successful as a trader until you're comfortable with the idea of being wrong.

I'm wrong EVERY DAY.

Numerous times.

I'm ok with that.

And that's part of why I'm successful.

Happy trading,

Lance Beggs

 


 

Fighting to Regain Losses

 

I had an interesting email exchange with a trader a couple of weeks ago, who is struggling with occasional massive losses.

email excerpts

email excerpts

I've had the opportunity to speak to a LOT of traders over the last 8 years of writing these articles. You'd be surprised at how common this problem is.

We discussed several options to investigate further, related to money and risk management, strategy, and of course psychology.

What I wanted to share with you all today though, was just one simple concept that might help, should you ever find yourself suffering from a similar problem.

It's just a slight shift in mindset. It may not be easy. It certainly won't be the full solution. But it could well play a part in overcoming the problem.

Here is what is happening right now:

The current plan

I get it.

Losing sucks. We don't want to lose.

And even more than losing, we don't want to admit we were wrong.

So we fight! We double down on our earlier decision, hoping, wishing and praying that the market will turn. Just enough to get us back to breakeven.

There is a problem though.

IT'S NOT WORKING.

You said that yourself!

But it's not working!

Sure, sometimes it will work out just fine, but it's only a matter of time till the market provides another extended drawdown which takes you out of the game.

Your current money and risk management plan provides you with NO EDGE.

And here's a key part of the problem:

Here is part of the reason why...

Let's repeat that for effect!

  • When you FIGHT to get back to breakeven, you're doing so at a time when the market environment is NOT working in your favour.

 

Seriously!

You're fighting against a strong and persistent trend!

I'm not saying don't fight. But if you're going to fight to get back to breakeven, let's see if we can do it a bit smarter. Let's rethink this concept.

Let's break the current plan into three stages.

The current plan (in stages)

What if we planned our fight differently?

A better plan

Use HOPE as the trigger.

Any time you find yourself HOPING that an extra "unplanned" entry might just help you get out at breakeven… EXIT.

Take some time out to clear your mind.

And resume the fight at a time and place when the market movement and price conditions are IN YOUR FAVOUR.

Don't make this game any harder than it needs to be. Fight to regain losses at a time and place of YOUR CHOOSING.

It's the same challenge; taking a drawdown back to breakeven and maybe even positive territory. But you're doing so when the odds are more in your favour.

And even if four out of five times the market would have got you out at breakeven, had you just entered one more time, ignore it. Remind yourself that averaging down has proven to have NO EDGE. Because the fifth time will not only blow out to a huge loss, but will also take away all these previous gains.

If you're going to fight to regain losses… do so at a time and place of YOUR CHOOSING.

Step aside. Clear your mind. And resume the fight at a time and place when the market movement and price conditions are IN YOUR FAVOUR.

It's just a slight shift in mindset. But it can make a really big difference.

Good luck,

Lance Beggs

 

PS. A pro-trader will NEVER EVER let a single trade, or a sequence of trades, take them out of the game. Always, before any other goal, your priority is to survive to trade another day. If your current money management plan involves adding to positions just based out of hope and fear, then your money management plan sucks. Fix it. Or you're unlikely to last long in this business.

 


 

It’s Not About Being Right

 

One of the great things about being involved in trading education is that it provides me with the ability to chat with a LOT of developing traders.

Common themes appear over time. This is one of them…

"Can you review this trade. It's a trade idea which I thought was good, but it just didn't work out."

They want to know where they failed with their analysis or decision making. They want to know what they did wrong.

But often, there was nothing wrong with their analysis or decision making.

Here's the reality of this game – we won't always get it right.

But we don't have to.

That is not what this game is about.

I can understand it. We're wired that way. We like to win. We don't like to lose.

We like to be right in our analysis and trade decisions. We don't like to be wrong.

And there's a whole technical analysis and trading education industry out there, which promises to "show you how to find winning trades".

But that's not what this game is about.

It's not about being right.

Not EVERY TIME.

It's about profiting over a SERIES OF TRADES.

A series that includes both winning trades AND losing trades.

It's about ensuring that when you are right you take as much out of the market as you can. And when you're wrong you cut the loss as much and as quickly as you can. So that, when the whole series of trades is done, the end result is a profit.

Let's look at a very short series of trades from Wednesday night. It's a sequence in Crude Oil which occurred in the hour immediately following the Crude Oil Inventories report.

This is a very low timeframe. And it's high volatility, fast pace stuff. Don't be put off by that if you trade other markets, other timeframes, or in fact other strategies. The concept still applies. It's not about being right. It's about managing the winners and losers such that you profit over a series of trades.

In this sequence, EVERY TRADE ENTRY DECISION I MADE, EXCEPT ONE, WAS WRONG.

But it still provides a profit.

It's not about being right!

This was the only entry decision that actually worked out according to plan

Arrgggggh! Wrong direction!

Wrong!

Wrong!

And wrong again!

And yet the whole sequence shows a profit!

Stop trying to be right.

Instead, try to find the places on the chart where you can win bigger (when right) than you lose (when wrong).

It's only a slight shift in perspective. But it makes a massive difference in how you see this game.

Happy trading,

Lance Beggs

 

Related Articles:

 


 

You WILL Have Trade Sequences Where You Are Out Of Sync With The Market

 

Let's examine the opening hour and a half of the emini Dow from Tuesday's session.

As seen in the charts below, the session commenced with a sequence of trades where I was out of sync with the bias of the market. And then another when I was completely in tune with the market.

You WILL have trade sequences where you are out of sync with the market.

So you'd better learn to recognise this ASAP in order to minimise any damage.

Ok, so the sequence where I was out of sync still resulted in a small profit. That's cool. I'm certainly not complaining.

But the fact is that there is potential for significant damage to an account balance if you don't quickly recognise and adapt to this "out of sync" issue. In the past, I'd usually take several losses out of a sequence like this, typically trying to fade the move two or three times before giving up in frustration.

So, there are some lessons to be learnt.

First though… what exactly was going on that resulted in me being out of sync with the bias?

Let's start with the daily and 30 minute charts, in order to get some context.

You WILL have trade sequences where you are out of sync with the market.

You WILL have trade sequences where you are out of sync with the market.

You WILL have trade sequences where you are out of sync with the market.

There is a saying in the trading industry:

  • "Trade what you see, not what you think"

 

What this means is… since I can see the the market is moving higher with a BULLISH bias then I should trade from the LONG direction. It doesn't matter at all what I think the market should be doing. Trade what I see.

And yes, normally that is not a problem. I'm usually ok with dropping my expectations and trading in accordance with the market bias.

But not this day. The feeling was too strong.

And although I was able to enter LONG on two really good signals, I just wasn't able to hold. The trades were scratched for small profits.

So I decided to stand aside and wait for the market to turn.  (Accepting of course that if it just trended higher all day then I'd miss the bulk of the move. No problems. I'm fine with that.)

As a discretionary trader, you WILL have trade sequences in which you're completely out of sync with the market movement. It's a fact!

This internal feeling of unease WILL act as an input to your decision making. And it will influence both entry and trade management decisions.

Your job is to learn to recognise this as quickly as possible. And if you can't shift to the correct bias then take immediate action to mitigate the risk. Otherwise… you may find yourself quickly on the way to your session drawdown limit.

Set a trigger to catch yourself as soon as possible, when you do find yourself fighting the market.

One of our recent articles is perfect for this – http://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess/

After two poor trades… pause and reassess.

Is your gut feeling about market direction causing you problems? If so, take action to limit the risk.

Possible actions:

  • Reduce position size for all further trades.
  • Limit trade direction to the with-trend direction only, and adopt a passive hands-off trade management style. Set the trade and walk away.
  • Or… best of all… just stand aside and wait for something easier. You don't have to trade every day. There is always more opportunity coming along in future.

 

You should aim to stack the odds as much as possible in your favour. A MASSIVE part of that is having a good read on market bias.

So you'd better learn to recognise this ASAP in order to minimise any damage.

Happy trading,

Lance Beggs

 

PS. To take it to the next level, consider adding this to your post-session routine:

1. Take note of any price sequences which resulted in multiple attempts to trade the market from the wrong side.

2. Review the conditions – market structure, price action and human performance factors – which may have influenced your decision making.

3. Document your findings.

4. Over time, you'll start to identify those conditions which have the potential to put you out of step with the market, allowing you to recognise and adapt more quickly in future.