Tag Archives: Post-Session Procedure

Reviewing Key Price Action Sequences

A great way to learn to read price action is to review your historical price charts, with a focus on the price action at key structural locations.

Find and review anything which fits these categories.

  • tests of significant levels
  • breaks of significant levels
  • traps
  • transitions between trends and ranges
  • transitions from volatility contraction to expansion
  • and in fact anything else that stands out on the chart

 

Each day, identify a key price sequence.

Study it and learn.

It only takes a minute.

Let's look at an example in which Crude Oil breaks higher in Monday's session, into layered levels of range resistance, before falling back into the range.

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Post-Session Chart Review

We recently shared some post-trade reviews from Josh, who is doing exceptional work in creating a trade review journal for his longer timeframe forex trading (daily charts).

See the trade reviews here if you missed them: http://www.yourtradingcoach.com/trading-business/Trade-Review-Examples/

But a trade review journal is not the only option you have.

Today I'd like to share a chart that came to me with some email Q&A, from Greg, who also operates in the forex markets but on much shorter timeframes.

What I like about this is the fact that Greg produces a chart like this after EVERY session. He keeps them in a personal blog; but you could do the same via any journaling application or even printouts stored in a binder. 

Greg displays the trading timeframe chart overlayed with the following information:

  • Key support and resistance levels

  • One or two key price action or market structure observations (eg. something that stands out with regards strength / weakness analysis, traps or price interaction with key levels)

  • Setup opportunity (with a hindsight bias)

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Trade Review Examples

The following trade review examples have been taken (with permission) from some email conversations with Josh, a trader of the YTC Price Action Trader methodology.

He's still in the early stages of his development, developing confidence in his strategy and processes through historical chart review. He's doing this using ForexTester software which allows for trading of historical charts as if it were a live market environment.

Josh has been making tremendous progress. The two most recent months results were as follows:

March:

  • 25 trades
  • 16 winners
  • 9 losers
  • Average win: $249.42
  • Average loss: $141.94
  • win%: 64%
  • win/loss size ratio: 1.75 : 1

April:

  • 13 trades
  • 9 winners
  • 4 losers
  • Average win: $401.72
  • Average loss: $190.28
  • win%: 69%
  • win/loss size ratio: 2.11 : 1

In both cases the win percentage is really healthy. And the winners are significantly larger than the losers. Too many people over-analyse their individual loses in attempt to avoid them in future. By all means analyse them and improve your knowledge and skill. But accept as well that you'll always have losses. And as long as you manage them, as Josh has been doing (ensuring they're cut short and that the winners are held for larger profits) then the losses are quite acceptable.

What is not to love about those stats. Josh has a great edge here… evidenced as well by the nicely rising equity curves for each month, and the distribution graph showing larger bars on the winning size (also included in his email but not shown here).

This is great trading.

My advice to him: Continue exactly as he's been going.Set this as his benchmark (or even set slightly worse) and continue from here aiming for consistency in results. If he can maintain this approximate performance for another 18 hindsight based months, I'd want to then see him transition to forward testing. (Note: a month of hindsight based trading using forextester does NOT take a month… just in case you were worried about how long this might take!)

But that's not the point of this article!

Rather, I want to talk about a key part of the process that Josh used to get to this point.

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How Could I Have Analysed This Better?

Here's an example of someone who's coming along quite nicely with their development as a trader.

The following two images are from a YTC Price Action Trader reader who sent an email, asking the following:

I'm not sure if this method of thinking can be used to go against my premise in the future? What I was really wanting to see was a spring bear trap to go long.

Thank you Lance

B.M.

reader analysis - image 1

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What is Market Replay?

Recent articles on my session review process mentioned the use of a market replay feature. I’ve been asked for some information on this tool. Not surprising really – it’s something that most forex traders will not have experienced.

Market replay is a feature that has appeared on many futures platforms in recent years.

It allows you to replay the trading session in a simulated environment. Price bars appear tick by tick, exactly as they did when trading live.

It will typically offer controls, as displayed below for play, pause and fast-forward, as well as a slide control to move to any particular chart time period.

We are also able to re-enter and manage trades all over again, this time in a simulated environment.

This is an ideal tool for implementing deliberate practice methods of learning.

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My Post-Session Routine – Reader Tips

I’d like to share an email provided by a YTC-newsletter reader, Alex, in response to the recent article on post-session analysis. In this email, Alex presents a method he used to improve his trading through effective post-session analysis and review. All effective review involves (in my opinion) some form of comparison of actual performance with hindsight performance. Alex offers a great technique for achieving this aim.

Thanks Alex… Great stuff.

Email extract…

I would like to share an element of post-session analysis which I came up with by accident (many good things happen that way, e.g. 3M sticky notes 😉

I am usually printing out unmarked candlestick charts at the end of the day, cover them with a blank sheet, and uncover bar by bar, marking my analysis and entries. I would then mark my trade management decisions too (moving SL and taking (partial) exits or making add-ons to the position. One day I printed, by mistake, 3 copies of the same chart. I used one for the analysis on that day; the other two copies were left on the table. A few days later, I printed "fresh" (then current) charts out and put them on the table on top of those extra "leftover" copies from a few days earlier.

I then started doing my bar-by-bar analysis, and at the end of it thought that some charts looked familiar. It was then that I realized that there were some old charts in that batch. Out of curiosity, I compared freshly marked chart with my analysis of the same chart which I made a few days earlier. I was surprised to see that only a half of the setups on both charts were "overlapping" (i.e. were marked in the same way). That made me think.

I started doing that as a deliberate exercise: print out 2-3 copies of a chart, do analysis on that day and keep the other copies for a few days, then analyze them again. Gradually, I realized that I can consistently mark certain types of setups. I decided to focus more on those setups as the ones I could recognize better. Gradually, I increased consistency of my analysis to about 70%. During that exercise, the most consistent setups were distilled and my trading is now centered around them.

With that trick my thought was (still is) – if I cannot achieve at least 70-75% consistency with identifying setups during a bar-by-bar analysis on a printed chart, how can I get it right with all the pressure of live trading.

Another trick to share: I grab a snapshot of each setup live (I use http://www.techsmith.com/jing/) to be able to review it at a "face value" – when you review trades post factum seeing how things indeed developed, it’s hard not to allow the "hindsight bias" to cloud your analysis. i.e. sometimes a setup looks bad with a hindsight, but makes perfect sense when taken – even great setups do fail from time to time.


My Post-Session Routine

 I operate my trading business in accordance with my Procedures Manual, which documents the procedural steps I will carry out in order to complete:

  • My pre-session routine

  • My during-session routine

  • My post-session routine

  • My contingency management procedures

We discussed the pre-session routine in a previous article – http://yourtradingcoach.com/trading-business/my-pre-session-routine/

In this article, I’d like to discuss my post-session routine. Feel free to use whatever parts you find useful for documenting your own routine. Feedback is always welcome. I love to hear how others manage their trading as well (through co-operation we can all improve as traders).

Post-session involves any trading work done after completion of the days trading session. This involves two main components:

  1. Immediately After

  2. Before Bed

 

Immediately After: (with additional comments or links in italics when clarification is required)

  1. Relaxation and Breathing Session (quick – 2 to 3 minutes max)

  2. Administration (approx 5 mins)

    1. Export transactions from broker

    2. Confirm my trade log matches the broker’s transactions

    3. Complete any post-session trading log and spreadsheet entries (usually little to do here, as this is completed during session when time is available)

    4. Print charts and mark the trades (usually completed during session, if it allows time)

    5. Review P&L

    6. Update calendar with Green/Red profit or loss indicator

  3. Trading Session Review (approx 45 mins+; document any significant findings in the Trading Log under the heading TS Review)

    1. Market Environment Review

      1. With hindsight, how would you define the market environment?

      2. How successful were you in identifying the market environment during the trading session?

      3. What signs were present to indicate this environment?

      4. What key pattern features were present and how could they have been used to identify the market trend and bias?

      5. Step manually through the chart bar by bar, or use a market replay feature to step through the chart at high speed, observing the market environment and the signals that identify that environment, trend and bias.

      6. Print the chart and add appropriate notes to your Market Structure Journal. 

    2. Trades Taken

      1. With the benefit of hindsight, was your trade based on a valid setup for that market environment?

      2. If this was a valid trade:

        1. Review the signals that led you to identify the trade opportunity?

        2. What was the ideal entry point? How does that compare to your entry? What signals (if any) did the market provide, which could have led to an improved entry?

        3. Was the initial stop location appropriate? Was it in accordance with your trading plan? Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?

        4. What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? How does that compare to your trade management strategy? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?

        5. What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?

      3. If this was not a valid trade:

        1. What signals were present that should have led you to avoid that trade?

        2. Having got into the trade, was the initial stop location appropriate? Was it in accordance with my trading plan? Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?

        3. What was the optimal way to manage this trade, in order to minimize risk when wrong or maximize gain when right? How does that compare to your trade management strategy? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?

        4. What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?

      4. Replay that portion of the trading session, making optimal decisions for valid trades and avoiding invalid trades, either by stepping manually through the chart bar by bar, or use a market replay feature. 

    3. Trades Missed

      1. With the benefit of hindsight, where were the valid trade opportunities that were missed?

      2. For each of these trade opportunities:

        1. What signals did the market provide that should have alerted me to the trade setup?

        2. What was the ideal entry point? What signals (if any) did the market provide, which could have led to identify this ideal entry?

        3. Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?

        4. What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?

        5. What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide to identify these ideal exit locations?

      3. Replay the trade, making optimal decisions, either by stepping manually through the chart bar by bar, or use a market replay feature. 

    4. Summarise this session’s performance in the trading log.

  4. Physical and Psychological Performance Review (approx 2-3 mins; document any observations in my trading log under the heading Perf Review)

    1. Were my fatigue levels appropriately managed?

    2. Was I in optimal physical condition? What can I do to improve?

    3. Was my ability to sustain focus at an acceptable level? What can I do to improve?

    4. Was I accepting of emotion during the trading session, without letting it unduly influence decision making? What can I do to improve?

    5. Was my mental state during trade execution one of confidence and self-belief, or one of fear? Why? What can I do to improve?

    6. Am I satisfied with my performance during this trading session? What can I do to improve?

    7. Do I feel I am making progress in my trading performance from day to day? What can I improve?

    8. Write summary notes.

  5. Next Session Preparation (approx 2 to 3 mins; document in my trading log under the heading Next Session)

    1. Document any goals for the next session (process goals, not outcome) 

  6. Final Relaxation and Breathing Session (quick – 2 to 3 minutes max)

  7. Completely let go of whatever happened during the trading session

 

Before Bed:

  1. Relaxation and Breathing Session (quick – 2 to 3 minutes max)

  2. Visualisation of success – achievement of my outcome goals

  3. Completely let go of whatever happened during the day

 

That’s it. Nice & simple. With experience it will typically take around 60 mins. You don’t need to sim replay EVERY trade (although if you have time then that would be great). I’d suggest sticking to just those that offer the most learning potential, and could have been managed better. In fact, run through them several times if you can, for maximum benefit.

Happy trading,

Lance Beggs.

 

P.S. For an example of the Trade Review part of this process, see the previous articles here:

 

How to Conduct an Effective Trading Session Review – 2 of 2

Trade Session Review Example

Following on from Part One at this link: http://yourtradingcoach.com/trading-business/how-to-conduct-an-effective-trading-session-review-1-of-2/, let’s look at an example of a missed trade.

The example is the open of the UK session on April 6th, 2010, which provided us with a beautiful Asian session breakout failure trade.

The three blue horizontal lines represent pre-session support and resistance, the upper two bracketing the Asian session price action. The green bullish breakout candle was actually the last minute PRIOR TO the commencement of the UK session (07:59 GMT). And it was failure of this breakout that set up the best opportunity of this session. Assuming then that we missed the trade, let’s conduct a review to see how we should have seen it.

We’ll look at the one minute chart for detail. (NOTE: I’m using timeframes that I trade, but of course when you do it the principles should be applied to whatever timeframes and markets you personally trade)

And we’ll work through the Q&A that we used as an example in Part One:

  • What signals did the market provide that should have alerted me to the trade setup?
  • What was the ideal entry point? What signals (if any) did the market provide, which could have led to identify this ideal entry?
  • Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?
  • What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?
  • What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide to identify these ideal exit locations?

 

What signals did the market provide that should have alerted me to the trade setup?

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How to Conduct an Effective Trading Session Review – 1 of 2

One of the greatest processes you have at your disposal, for maximizing your learning and fast-tracking your development as a trader, is your review process.

Let’s have a look at how I recommend you carry out this often-neglected part of your daily trading routine…

For too many traders, the review process is simply entering their trading results into their trading journal spreadsheet and then looking at their daily P&L. While that is important, as part of your daily admin and longer-term strategy review processes, it’s not a session-review process.

The important principle behind an effective daily review process, in my opinion, is carrying out a comparison between your performance and perfect performance. That is, looking at the session with the benefit of hindsight and asking some hard questions about both your read of the market environment and your ability to trade that environment.

The following are some examples of session review Q&A which you may wish to consider, based on a discretionary trading strategy. Of course, you’ll need to adjust, add or delete as required to suit your own trading style.

Market Environment

  • With hindsight, how would you define the market environment?
  • How successful were you in identifying the market environment during the trading session?
  • What signs were present to indicate this environment?
  • What key pattern features were present and how could they have been used to identify the market trend and bias?
  • Step manually through the chart bar by bar, or use a market replay feature to step through the chart at high speed, observing the market environment and the signals that identify that environment, trend and bias.
  • Print the chart and add appropriate notes to your Market Structure Journal.

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The Greatest Trading Book – Ever!

 

“Repeticio est mater studiorum.”

(Repetition is the mother of all learning)

…Saint Thomas Acquinas

 

If you’ve noticed the small size of this article, you may suspect that this article itself is NOT the Greatest Trading Book – Ever!

And you’d be correct. But don’t worry; there’s a simple explanation. This article will explain exactly how you can create The Greatest Trading Book – Ever!

You see, it’s not a book you can buy. It’s something you create.

Let me explain…

Your “Market Structure Journal”

Over the last decade I have easily read well over a hundred trading books.

And while I consider a small handful of those to be absolute ‘must read’ books (see http://yourtradingcoach.com/bookstore/ for a list), there’s one book that I continue to refer to almost daily which has had a far greater influence on my results than any other book.

That book is my “Market Structure Journal”.

A “Market Structure Journal” is a folder containing printouts of charts, along with notes detailing my observations about market structure and price movement.

Why do I rate this book so highly?

Because one of the keys to trading success, in my opinion, is to develop the ability to read the market – feeling and understanding the flow of price as it unravels at the hard-right edge of the chart.

Simple setups do not work; consistently failing to adapt to the ambiguous and uncertain nature of market price action.

Real opportunity is found through developing a feel for the nature of the market environment and how the current price action is flowing within that environment – commonly referred to as understanding the market context.

Expertise in reading the market doesn’t come naturally, and doesn’t come easily. It’s a skill we must learn through experience. If used correctly, the “Market Structure Journal” can be an effective tool for helping to fast-track your experience and your expertise.

Seeking Expertise

As Dr Brett Steenbarger states below, expertise requires a sustained period of time immersed in market activity.

“Could it be that greatness in trading follows the same patterns observed among artists, scientists, and squash players? If so, one would expect the expert trader to have spent a sustained period of time immersed in the markets, following market action, practicing trading, and maintaining a high level of focus and concentration. These are the very same conditions that generate optimal implicit learning. Expertise appears to be gained by maximizing the number of learning trials and by maximizing one’s focus during these learning trials so as to extract the most learning possible. When this can be sustained over a lengthy period, the result is an internalized set of skills that, like the competence of the violinist, cannot be readily captured in verbal form.”

… Dr Brett Steenbarger, “The Psychology of Trading”

While the ideal learning environment is live trading, or simulation trading, this is just not possible to achieve 24 hours a day.

A Market Structure Journal offers another opportunity to immerse yourself in price action, increasing your number of ‘learning trials’ and your opportunities for implicit learning.

Creating Your “Market Structure Journal”

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