Tag Archives: Price Action

First Pullback in a NEW Directional Trend

 

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

REFERENCE: Definition of a sideways trend – Vol 2, Ch 3, Pages 99-102

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

Not all trade setups are equal.

You need to collect and review your stats to determine which setups provide your A+ MUST-NOT-MISS potential opportunity of the day.

For me, the first pullback in a NEW directional trend is one of these MUST-NOT-MISS setups.

No, they do not always profit. And sometimes they offer profits, but I mismanage the opportunity.

But when they do run and I perform well enough to catch them, the profits can more than make up for any other failed attempts. As always, we profit over a series of trades. Individual trades are irrelevant.

Check your own charts, in your own market and timeframes. Note any sideways trend environments. Find a breakout which occurs with some strength, which holds the break. And see if you can also find edge on the first pullback into this new directional trend.

Happy trading,

Lance Beggs

 


 

One of the Best Habits I Acquired along my Trading Journey

 

I posted the following image on social media on Tuesday, showing a nice example of a false breakout and reversal from a period of volatility contraction.

<image: One of the best habits I acquired along my trading journey>

The important point though… and the one which offers the most value to you… is not the image itself but rather the text that was posted alongside the image.

  • One of the best habits I acquired in my trading journey – EVERY DAY I find at least one price sequence which I find interesting and STUDY IT. Consider whether or not you might also benefit from actively developing this habit.

I received the following questions on Twitter:

<image: One of the best habits I acquired along my trading journey>

(1) What does my price sequence study involve?

The study relates to observations in price action or market structure. It does not typically involve study of the trades taken during the session. I have a separate part of my review process for trades.

Sometimes it is structured and will focus on a particular topic for a week or so. Maybe I will decide to study transitions from one market environment to another. Or to study price behaviour on the break from a higher timeframe trap. Or maybe… well you get the point. If there is a particular topic of interest to me then I might focus solely on that topic for a period of time.

See here if you want a list of possible "categories" for your Market Structure & Price Action study – http://yourtradingcoach.com/trading-business/market-structure-and-price-action-journal-categories/

But other times, when there is no particular topic of interest, the study will be unstructured and based on any observation which I find interesting. Often this will be a sequence which I didn't read well. Perhaps something I didn't see coming. Or something I didn't react to quick enough.

For example, the shift in sentiment occurring from point B to C in the volatility contraction above, is one that I was too slow to recognise and react to. So it became the focus of my study that day.

(2) How much time do I devote to this study?

Typically no more than 10 minutes. The topic will become obvious during the session. All it typically takes is a quick review, along with identification and recording of lessons learnt.

(3) What are some questions I ask?

That is largely going to depend upon the topic you're studying. And it should be self-evident. But it should relates to (a) how did price behave, (b) how could I have recognised this more quickly, and (c) how should I have responded to this information?

Let's look at a few more examples from Tuesday and Wednesday this week:

Tuesday:

Tuesday offered a brilliant example of the saying, "The market doesn't repeat, it rhymes".

Note the similarity – volatility contraction, expansion, and then opportunity available in the opposite direction as the expansion leg fails.

<image: One of the best habits I acquired along my trading journey>

Let me be perfectly clear – I am NOT a pattern trader. But volatility contraction and subsequent expansion is one pattern that I do often see. And one that I do often take advantage of.

Typically it's through seeking YTC PAT PB opportunity, on the first pullback after the breakout, expecting the expansion leg to continue to drive with momentum.

For whatever reason, I've been slow to react to a failure of the expansion, for two days in a row now. I missed it on Monday. I missed it on Tuesday. Through reinforcing this lesson, I aim to ensure I will NOT miss it again.

Wednesday:

Thankfully, I'm not going to bore you with another example of a false breakout from volatility contraction.

Let's start with a higher timeframe chart:

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

<image: One of the best habits I acquired along my trading journey>

Ok, so nothing surprising so far. The review basically confirmed my real-time thinking.

But then the review also picked up something that I "should have" been aware of intra-session, but did not consider at all.

Let's look at the overnight data leading into the session open.

<image: One of the best habits I acquired along my trading journey>

Nothing changes here in terms of decision making. The failure of the second break is still the critical point at which I should accept that my "feeling" of a bearish market bias was wrong.

But this additional information does add weight to the earlier analysis. And it's information I should have been aware of intra-session.

If the market sentiment was indeed bearish, then one of these breaks of a key overnight level, SHOULD have held. The fact that they couldn't hold confirms that my "feeling" about market sentiment is likely wrong. Watch for a break to the upside and further dominance by the bulls.

I do take note of key overnight levels pre-session. It's clear though, with hindsight, that this information did not make it into the session (at least not in the forefront of my mind).

Lesson: Greater emphasis is required on pre-session levels.

Bonus Entry:

I'm not going to do another. But I just can't resist sharing this.

From Thursday, on the 3 minute timeframe:

<image: One of the best habits I acquired along my trading journey>

This is one of the key benefits of a Market Structure & Price Action Journal. Over time you start to see familiar patterns of price behaviour. All of which builds skill in real-time assessment of market bias and real-time recognition of opportunity.

Now it's your turn:

I received this request on Facebook, following the original social media post: "Please post something on Indian markets like NIFTY or BANKNIFTY. Thanks".

My response: "I don't trade the Nifty so can't help you with that market. But I highly recommend you commence creation of your own Market Structure & Price Action Journal. You'll achieve far greater value from that daily practice, than from anything I could provide."

Re-emphasising the point from the original social media post:

  • One of the best habits I acquired in my trading journey – EVERY DAY I find at least one price sequence which I find interesting and STUDY IT. Consider whether or not you might also benefit from actively developing this habit.

Regardless of your market, your timeframe, or your strategy. Give it a try and see if you get the same benefit that I received.

Happy trading,

Lance Beggs

 


 

First Pullback after Significant Structural Change

 

I don't often trade after midday Eastern Time. It's the middle of the night here and I'd much prefer to get some sleep.

But from time to time I'm alert and awake and there is no chance I'd be able to sleep even if I tried.

So I'll complete some of my post-session review and then go on with other work, while keeping an eye on the markets.

The default intent is to NOT trade… unless it's screaming out to be traded.

What does that look like?

Here's one example. A trade that is so damn obvious I would have been kicking myself if I missed it.

It's a YTC PB trade. But what is important is not so much the trade itself, but WHERE it happens in the "bigger picture" market structure.

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

Dropping down to the Trading Timeframe to see the outcome:

<image: First Pullback after Significant Structural Change>

<image: First Pullback after Significant Structural Change>

1. Structure!!!

2. Break of structure.

3. First pullback against the break of structure.

It's no Holy Grail. Sometimes there will be losses. And sometimes you'll miss the trade.

But it's opportunity I do NOT want to miss.

Happy trading, 

Lance Beggs

 


 

Three Key YTC Lessons in this Opening Price Sequence!

 

Lesson 1: When two trade ideas fail to work, consider a break. When three trade ideas fail to work, force a break.

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

Lesson 2: When the pullback is deeper and stronger than expected, let it roll over. Get in on the other side.

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

Lesson 3: An exit is not necessarily final. Remain focused and consider re-entry if the premise is proven to still be valid.

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

Happy trading,

Lance Beggs

 


 

Traps on a Retest of a Level

 

My normal trading times are between 09:30am and 12:00 midday US Eastern Time. You won't see many trades after midday because in my timezone that is 3:00am. It's time to complete my post-trading routine before getting some well deserved rest.

But occasionally circumstances allow me to push a little beyond this midday (3:00am) time limit.

This occurs ONLY in those times when (a) I'm feeling wide awake and alert, (b) the market is directional with smooth price flow, and (c) something is screaming out to be traded.

So that raises a good question. What exactly is something that is screaming out to be traded? Unfortunately that's difficult to define. Essentially it's a feeling. Let me explain.

The default option is to stand aside. Most setups I just leave alone. I'd rather get on with my post-trading routine.

But from time to time the market sets up in such a way that I just KNOW… I have to be in this trade. This one is so good. It's an A+ trade. An edge that is so obvious that I'd be a fool to miss it.

A trade which I'd rather enter and take a loss than miss the opportunity entirely.

Think carefully about that last statement if you're new to trading!

From a technical perspective though, they will almost always involve a trap of some kind.

You need to sense the blood in the water. Someone, somewhere, has got themselves caught. There is pain. There is emotion. And for me… there is opportunity.

Today… we get to see one of these trades.

A trap on a retest of a level. A setup that was screaming out to be traded.

<image: Traps on a Retest of a Level>

<image: Traps on a Retest of a Level>

<image: Traps on a Retest of a Level>

<image: Traps on a Retest of a Level>

<image: Traps on a Retest of a Level>

<image: Traps on a Retest of a Level>

<image: Traps on a Retest of a Level>

<image: Traps on a Retest of a Level>

NOTE: Complex pullbacks plus the strength/weakness analysis used in this example are all covered in the YTC Price Action Trader.

Happy trading,

Lance Beggs

 


 

Trading the Price Spike High or Low

 

Let's start with a little disclaimer – I didn't trade this price sequence. I took a break on Friday 18th of January in an effort to manage my fatigue levels. But this does not mean that I don't review the session. The next day I scheduled some time to look over the charts in a number of markets in order to (a) see how I would have traded them, and (b) complete an entry in my Market Structure & Price Action Journal.

Yes… just because you skip a session it doesn't mean you get to skip the study!

One of the very first things to jump out of the screens at me, upon opening the 1-minute Emini-Dow futures chart, was an awesome price spike at 10:19am. This became the focus of some extra study, for my journal. And I thought I should discuss it with you here today as well.

I love price spikes – a sudden and dramatic expansion in price range and volume. Because they often create a shift in the market structure. And they allow you to immediately identify two potentially great trade locations.

Let's have a look at the charts.

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

<image: Trading the Price Spike High or Low>

Happy trading,

Lance Beggs

 


 

Patience at the Open

 

Until you have a good read of the market, there is NO TRADE.

  • Confidence in your real-time understanding of the market structure.
  • Confidence in your real-time understanding of the nature of price movement.
  • Confidence in your real-time assessment of market bias.
  • Confidence in your projection of that market bias forward in time and price.

 

And most importantly:

  • An understanding of how future price movement should behave if your forward projection has some validity.
  • And confidence in your ability to adjust your understanding (and your trading decisions) should price movement offer something unexpected.

 

In simpler language… if you don't know what's going on… you have no business trading.

Watch and wait until some clarity appears, in terms of structure, price movement and opportunity.

The market open is one time which has great potential for confusion, doubt and uncertainty.

I remind myself before the open that there is no need to rush the first trade. If it screams out to be taken, then take it. But otherwise, be patient and allow myself time to get in sync with the flow of price.

Here are two of the market opening "warning signs" that have me keeping my trigger finger well clear of the mouse.

1. Bias Conflict

During the session I maintain a sense of the bias through the YTC Price Action Trader rules for trend projection.

At the session open though, I like to complement this with a really simple and objective method – the opening range breakout.

If they're in agreement, it's game on.

But if they conflict, it's a sign to be patient and wait till they come into alignment.

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

2. Seriously BAD LOOKING Price Action

Not just bad looking price action. We're talking seriously bad looking price action.

<image: Patience at the Open>

<image: Patience at the Open>

Remain Patient. Watch and Wait.

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

<image: Patience at the Open>

Happy trading,

Lance Beggs

 


 

Daily Market Structure & Price Action Study – 5

 

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

The concept:

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

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

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

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

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

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

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

 

Monday 25th June 2018:

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

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

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

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

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

Obviously what is important here is the concept.

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

<image: Daily Market Structure and Price Action Study>

Lessons:

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

 

Tuesday 26th June 2018:

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

<image: Daily Market Structure and Price Action Study>

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

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

<image: Daily Market Structure and Price Action Study>

Lessons:

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

 

Happy trading,

Lance Beggs

 


 

Daily Market Structure & Price Action Study – 4

 

Week 4 of 4 while I'm away from home…

From the original post:

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

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

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

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

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

As I'm away from home for the month of April, celebrating my 50th birthday, and unable to prepare any new articles for the YTC newsletter, I though I'd simply preload the email system and blog with a few articles which share some daily market structure and price action study.

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

 

Tuesday 20th March 2018:

The first step in managing difficult trading conditions is to QUICKLY recognise potential for difficult trading conditions.

Let's look at a higher timeframe (15minute chart).

<image: Daily Market Structure and Price Action Study>

Notes:

  • A = A very neutral open. There is no suggestion of any emotion or directional sentiment in the market. Note it's position is approximately the middle of the prior day's range (from B to C). Note also the fact that it has barely moved from the prior day's close at D.
  • E = A sideways narrow range overnight session. Again, there is no suggestion of any emotion or directional sentiment in the market.
  • Review of the scheduled economic news events for the day show nothing of interest.
  • F = Subsequent price action throughout the session displayed no clear or persistent directional bias.

 

Lessons:

  • A neutral open can be a sign of a potentially slow day with potentially difficult trading conditions (non-trending chop).
  • The default option given a neutral open is to expect difficult conditions UNTIL PROVEN OTHERWISE.
  • Prioritise defence over attack. Survive to trade another day. But always remain alert for a change of conditions. Anything can change at any time.

 

Tuesday 20th March 2018:

Sometimes the simplest ideas are the best.

Here's an example which stood out while flicking through other markets. It's from the EUR/USD spot forex 3 minute chart.

(Do not be afraid to extend your Market Structure & Price Action study to markets and timeframes beyond those which you usually trade.)

<image: Daily Market Structure and Price Action Study>

Notes:

  • A = Choppy, narrow-range difficult conditions (yellow shaded region)
  • B = Lower boundary of the sideways chop environment.
  • C = Break from through the boundary level.
  • D =
    BPB opportunity SHORT.

 

Lessons:

  • Sometimes the simplest ideas are the best.
  • When a market is choppy and tough to read, consider standing aside: (a) define the "edges" of the structure, (b) wait patiently for a break from the structure, and (c) only then seek trade opportunity.

 

Happy trading,

Lance Beggs