Tag Archives: Mindset

Two Attempts – Then Reassess (2)

 

The quicker you can recognise that you're wrong… the quicker you can become right.

Here is a useful rule:

  • Two Attempts – Then Reassess!

After two attempts at a trade idea, if it hasn’t worked, it’s clear that something is not right. You’re not in sync with the market.

Either:

  • You have misread the situation and you're wrong, or
  • Your timing is out (which still means you're wrong).

 

Break the pattern!

Two Attempts – Then Reassess!

Confirm your position is flat.

Step away from the charts.

Clear your mind.

Then reassess from first principles.

Try to see the picture from the perspective of someone who might have the opposite bias to you. What are they seeing? Could they be right?

You may choose to get back in for a further trade (assuming session drawdown limits are not hit).

But you may also have prevented a meltdown; stopping a good trade idea which didn’t work from turning into an absolute mess of a session.

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

 

The quicker you can recognise that you're wrong… the quicker you can become right.

Here is your rule:

  • Two Attempts – Then Reassess!

Happy trading,

Lance Beggs

 

Previous Article: http://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess/

 


 

It Wasn’t Mine To Take. But the Next One Will Be.

 

You can't catch every good price move.

<Image: It wasn't mine to take. If it was, I would have caught it.>

<Image: It wasn't mine to take. If it was, I would have caught it.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

 

You can't catch everything. If you miss a good move, remind yourself:

  • It wasn't mine to take. If it was, I would have caught it.

 

Now focus. There is more opportunity coming and it needs your full attention.

Happy trading,

Lance Beggs

 


 

Is This a Trade You Would Take if You Were in Drawdown?

 

Some of my better trades lately seem to occur after a string of marginal trades which either stop out or seriously underperform.

Mostly because of my rule which says that after two poor trades I need to step aside, clear my mind and reassess the situation.

Time out!

Reassess!

It prevents a downward spiral of emotional revenge trading.

And allows me to return to the market with a new plan. Usually, a plan which waits for a change of structure and takes the first pullback opportunity within that new market regime.

<image: Two trades placing me in drawdown.>

<image: Time out. Reassess.>

<image: Consider the options when price breaks current structure.>

<image: Entry>

<image: Exit>

So this brings me to an idea that may help me cut out some of the more marginal trades.

And perhaps may help you with improving your trade quality as well.

Rather than waiting for two marginal trades to place me in drawdown, maybe I could trade "AS IF" I were already in that situation.

Prior to entry, ask:

  • "Is this a trade I would take if I were in drawdown?"

 

If so, go for it.

But if not, maybe pause and reassess.

Sometimes it will keep you out of a winner. That's how this game of probabilities works.

But if it's keeping you out of a number of marginal trades then there could well be a positive change to your edge.

If the idea appeals to you, give it a try. But track the impact it has on your edge over a series of "avoided trades".

Prior to entry, ask:

  • "Is this a trade I would take if I were in drawdown?"

 

<image: This IS a trade I'd take in drawdown.>

Happy trading,

Lance Beggs

 


 

Trading Alongside the Uncertainty and Fear

 

I shared the following post via social media on Wednesday:

<image: What if it's ok to feel uncertain?> 

Without doubt, this is one of the key lessons we must learn on the way to becoming a professional trader.

And so I was incredibly pleased to get the following reply:

<image: What if instead we learn to operate alongside the uncertainty and fear?>

Brilliant!

Thanks A.H.

This is exactly the right approach to the presence of the fear and doubt.

1. Recognise the emotion.

Just briefly, bring your focus back from the external (charts) to the internal (your body and mind). Notice what you're feeling.

2. Acknowledge the emotion.

Accept it. You can't fight it. You may as well welcome it.

If it helps… verbalise it.

3. Understand the emotion.

What is it trying to tell you? There is information there. Find it!

4. Review the trade premise.

Often you will find that steps one to three will significantly reduce the severity of emotion.

So the final step – review the trade premise from an objective chart-based perspective.

With the emotion acknowledged and diminished, does the trade premise actually contain edge?

If so, go for it.

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

If it helps, consider creating a "pre-entry mantra" to shift your focus inside and recognise, acknowledge and understand any emotion that may impact upon your trading decisions and actions.

With experience (and of course proper risk control) fear and emotion will reduce. But it never completely goes away.

You can't fight it.

Accept it. And learn to work alongside it.

Happy trading,

Lance Beggs

 


 

Sometimes You Get It Wrong Before You Get It Right

 

On Tuesday I shared one of my older facebook posts via social media. Copied here:

Stop expecting perfection. Instead, learn to manage your imperfection. 

Repeating the key points for effect:

  • Learn to survive… and even occasionally profit… in the times when your read of the market is wrong.
  • And that will leave you with confidence to attack the opportunity available at the times when you are in sync with the market.

 

I sought out this old post in response to a similar sequence on Monday.

One in which I was positioned wrong in the market. Not once, but twice.

Before taking a step back from the charts and looking with a wider perspective and switching to the right side.

Here is Monday's opening sequence:

Wrong - Wrong - Right

In email Q&A with a reader (Josh) during the week, he asked me the following question, "Do you feel like you're in sync with the market everyday?"

Great question.

The reality is that no, I'm not in sync with the market every day.

There are many times when I've approached the market in a "less than ideal" mental or physical state and it has clearly influenced my ability to get in sync with price movement.

And even when in an optimal state, there are many price sequences which are not simple to read.

That's the nature of price movement – traps, retests, fakeouts.

The market seems at times to take great delight in deceiving us.

So our job as traders includes the following:

  • Managing those times when we're not in sync with the market to ensure we contain any loss and prevent it getting out of hand. Profiting of course, if possible, but our priority is to limit the downside and stay in the game.
  • And then recognising when we are in sync with the market so that we can squeeze as much profit out of it as possible.

 

Wrong - Wrong - Right

Wrong - Wrong - Right

Here is the link to last week's article if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/trading-an-uncertain-trend/

Wrong - Wrong - Right

Wrong - Wrong - Right

Wrong - Wrong - Right

Wrong - Wrong - Right

Wrong - Wrong - Right

Once more:

  • Learn to survive… and even occasionally profit… in the times when your read of the market is wrong.
  • And that will leave you with confidence to attack the opportunity available at the times when you are in sync with the market.

 

Don't expect to always be in sync with the market.

Sometimes you have to get it wrong a few times, before you can get it right.

Happy trading,

Lance Beggs

 


 

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