Tag Archives: Setup

When Obvious Expectations Are Wrong

 

There is market opportunity available when "obvious" expectations turn out to be WRONG.

You've no doubt experienced this. Those times when the market provides almost certain evidence that it IS going somewhere… but then it doesn't.

I can promise you – if you sense these "obvious" expectations then you're not the only one. Others will sense it too.

And the stronger the feeling, the better. Because more people will act on it.

And then when it fails… there's your opportunity.

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

Opportunity exists at the places where a lot of people get it WRONG.

So when you sense a sudden shift in the market sentiment… that surely must lead to obvious movement (through a key level or in a new direction), take a pause for a second.

Maybe it will follow through with these obvious expectations. Project ahead and plan how you will react.

But also – keep in the mind the fact that obvious expectations also fail.

And that can provide exceptional opportunity.

Project that forward as well. Visualise where and how that might provide opportunity. And focus. Hopefully you will be ready to act, a little quicker than I was with this one.

Happy trading,

Lance Beggs

 


 

Market Open Traps

 

Market Open Traps are by far my favourite opening play right now.

I've demonstrated these quite a bit over the last year or two. Sorry for the repetition – but they're just working so well lately.

Not always for massive profits. The two shown today are definitely singles, rather than home runs.

But they're reliable. And while they keep working, I'll keep watching every open to see if I can catch one.

Here's the general concept.

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

The opposite applies as well. Price approaching a level of significant overnight resistance, breaking it just prior to or immediately after the open, and then smashing lower and trapping any LONGS in a losing position.

My plan of action upon seeing this set up is to prepare for either BOF or first PB trade opportunity, as taught here.

Let's start with Monday 24th February 2020…

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

And again the very next day…

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

Simple PB setup opportunity… but within the unique context of a trap setting up just before or immediately after the market open.

They're not always home run trades, as we've seen. But they're reliable. And right now, they're certainly my favourite opening play.

Review your charts and see whether you can apply this concept in your own markets and your own timeframes.

And if so, be ready, watching and waiting prior to the open.

Market open traps are a great way to get a quick and early entry into the market's opening trend.

Happy trading,

Lance Beggs

 


 

When the Pullback moves TOO DEEP TOO FAST

 

Let's look at a trade from Tuesday which was quite challenging to take.

One in which the pullback moves too deep… and WAY TOO FAST.

One which triggers the question in your mind – "Is this a pullback or is it the start of a complete reversal?"

Every trader is familiar with this feeling! It's NOT nice.

Let's look at how I timed the entry.

First though – a little context via the 15 minute timeframe:

<image: When the Pullback moves too deep too fast...>

I love an open like this. A real shock to the system. And potential for emotion to drive price with strong directional conviction.

I am secretly hoping for strong continuation lower. Blood in the water. Panic selling driving a massive trend day lower.

But I've been around long enough to know that this is not the only option from a large gap down.

Social media posts on Tuesday and Wednesday covered this. (Facebook: Tuesday, Wednesday. Twitter: Tuesday, Wednesday)

So let's look to the 1 minute Trading Timeframe chart to see the opening price sequence.

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

For readers of the YTC Price Action Trader, please refer to Volume 3, Chapter 4, page 81.

Note the very first item listed under the title "Entry Preconditions".

Candlesticks A to C do NOT satisfy this entry precondition requirement.

Following the pop higher with D, price then attempts a second push lower at E.

This candle (E) DOES satisfy the entry precondition requirement.

Take the trade!

Also – Page 89, Figure 4.65 (part 3 of 4). The third diagram is the LTF entry pattern.

<image: When the Pullback moves too deep too fast...>

Our plan is to understand the trend structure, project it forward and identify potential trade opportunity (should subsequent price movement confirm our projection).

Often though, price will decide to present us with something a little different.

No problem!

PAUSE & REASSESS.

If you find you're out of sync with the price movement and it doesn't make sense, then stand aside and wait for further price structure to develop.

But otherwise, you have processes in place. Carry them out again with this new information. Recognise the changes. Adapt. And take action.

Happy trading,

Lance Beggs

 


 

Enter LONG When it Can’t Go Lower

 

Today let's look at the art of entry timing… with one of my favourite ways to get into the market.

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

<image: Enter LONG when it can't go lower>

It's not the only way to enter. But it's one I love.

If the market can print a candle (or sequence of candles) which strongly suggest that "it's moving lower".

But then can't.

Enter LONG when it can't go lower!

Happy Trading,

Lance Beggs

 


 

Step Back and Reassess

 

Let's start with a daily chart to get some "bigger picture" context…

<image: Step back and Reassess>

<image: Step back and Reassess>

And now down to the trading timeframe…

<image: Step back and Reassess>

A little side note regarding the entry: While it may not be immediately obvious, this trade is a variation on the YTC Price Action Trader PB Setup. The pullback is all occurring within the one single TTF candle (in this case the green one prior to entry). While that is not ideal and we would prefer to see an actual pullback of at least 2 or 3 candles on the TTF, the fact remains that in an opening momentum drive this is often all you will get. So we either miss out entirely, or adapt. In an opening drive, I'll be looking to the LTF data for the first pullback. Everything else (eg. LWP entry timing) is as per normal.

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

If you've lost all feel for what is happening in the chart…

(1) Step back.

(2) Define the edges of the structure.

(3) And wait.

Whatever happens within that no-trade zone, is none of your concern.

Let it break and then reassess.

Only then, if the market structure and price movement makes sense, is it game on.

Assess the trend structure. Project it forward. Identify your opportunity. And strike!

Happy trading,

Lance Beggs

 


 

Traps Just Before RTH Open – 5

 

Last Friday at 9:28am, just two minutes before the Regular Trading Hours (RTH) Open, the market suddenly jumped.

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

That's right – it's a trap RIGHT BEFORE the regular session open.

See here if you missed the prior articles:

 

Here is the general idea, in both bullish and bearish form:

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

Well today we got the second version – a trap through overnight resistance which rapidly fails.

And so we'll be looking for opportunity to enter SHORT.

<image: Traps Just Before RTH Open>

Let's try something different though…

Rather than sharing my trading, I'd like to share a chart from a trader who has recently been making good progress with the YTC Price Action Trader methodology.

Having read the recent "trap before RTH open" articles he's been aware of this opportunity, but hasn't managed to catch one prior to this session.

This time was different.

His email:

Hi Lance,

I hope you've had a great week.

I just wanted to follow up again to say THANK YOU! I've come so far in my trading since I purchased your book back in October. I read all of your Twitter posts and newsletters and the topic that kept standing out was the BOF just before the open and how to trade it. I kept watching it happen and would miss the opportunity to get involved. Consequently, that lead to me trying to find another BOF or TST in the opposite direction of the opening drive, which resulted in small losses that were frustrating. I finally decided that when I see this again, I will get involved on a PB or CPB and if I miss the trade then I miss the trade…put it behind you and move on.

Today I saw a BOF just prior to the open on the NQ (I'm still trading the MNQ). I was ready and I executed without hesitation. In hindsight I could've managed the trade a little better but I'm very happy the process I went through to execute this trade. I have you to thank for this. Please know that your posts and newsletters are more helpful than you can imagine…and I know I'm not the only one who feels that way. I attached my chart and this will definitely be one that I will reference regularly.

Thanks again for all you do…have a great weekend!

Hunter

The "BOF" that he refers to is the YTC Price Action Trader name for the trap. The PB is the first setup short.

Hunter has included the following 30 second chart showing his trade entry and management. If you click on the chart it should open a full-size copy in your browser.

<image: Traps Just Before RTH Open>

Awesome!

Hunter – well done! That is a great trade.

The only thing better than catching a trap before the open, is seeing someone else learn from my prior articles and actually catch one themselves.

Some final words from Hunter:

I really enjoy reading about other traders' experiences and I hope that my experience can help others as well. Just as a reference, in case anyone asks, I use Interactive Brokers for my charts and as my broker. I'm only trading 3 contract lots of the micro futures MNQ, MES, and M2K. I started with 2 contracts and will increase my contract size as I continue to progress. Again, thank you for your encouragement and for all that you do for the trading community. Have a great weekend!

Happy trading,

Lance Beggs

 


 

Traps Just Before RTH Open – 4

 

Traps immediately before the open… we've discussed them a number of times over the last year.

Here are some of the previous discussions, if you missed them:

 

And you'll probably find a few more examples if you scroll back through the social media feeds.

The thing is though – the market keeps presenting us with this great opportunity. And they do say that repetition is the mother of all learning. So let's look at another example, from last Monday.

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

From a YTC Price Action Trader perspective, it's simply a first PB in a new trend. But as the last image states – it was caught because I recognised the trap before RTH open, which had me primed, ready and waiting for the opportunity LONG.

Trades like this ONLY happen because of my Market Structure & Price Action (MSPA) Journal. If you don't have one, then I highly recommend you start. Every day – make at least one entry into the journal. Find something interesting within either the structure of the chart, or the way price moves, and document it.

Over time, you'll start to notice repetition of ideas.

And that is where you find opportunity.

Study them inside and out. Set up rules or guidelines for ways to exploit that opportunity. Implement, test and develop.

Today's article gives you two areas of exploration, in starting your own MSPA Journal.

(1) Traps before (or immediately after) RTH Open.

(2) Opening Momentum Drives.

If you follow me on social media, you will recall the following two posts in recent weeks:

<image: Opening Drive Study>

<image: Opening Drive Study>

Well now you have a third opening drive to study. And I promise you the market will provide more.

This is the path to learning.

Every day – find something interesting. Document it. Study it. And then when you start to see repetition of ideas – dig deeper and find a way to exploit that opportunity.

Happy trading,

Lance Beggs

 


 

Traps Just Before RTH Open – 3

 

This has been a favourite topic of mine throughout the last year. We explored the idea here and here, along with a bunch of other examples on social media.

But then the market just keeps providing more examples.

So let's look one more time.

The general concept is a trap that occurs through failure of a significant break, very late in the pre-session market and just before RTH Open (RTH = Regular Trading Hours; ie. the pit session).

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

Our most recent example fits in the second category – a break to new overnight highs, failing on or shortly after the session open, giving us opportunity to enter SHORT.

Let's begin… with the NQ 1 minute chart on Friday 15th November, 2019.

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

I've written a lot about displaying patience at the open. About waiting till the bias is clear and trading conditions are favourable.

But there are some situations where I don't display patience.

Where I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

One of these situations is when the market sets up a trap just before or just after the RTH Open.

Keep an eye out for similar opportunity in your own trading.

Happy trading,

Lance Beggs

 


 

One Winner One Loser

 

A question received last Monday: "Are you trading today? It's a holiday but the market is open."

For future readers… Monday was 11th November 2019. Veterans Day.

And yes, the economic calendar which I use also has this listed as a US holiday. But the market is definitely open all day (or at least the index futures which I trade).

Here's my plan for holidays, because as the question noted, there are different kinds of holidays:

  • Holidays where the market is closed – no trading!  (Duh!)
  • Holidays where the market is open for one of those "half day" sessions – no trading! I don't care if it does move. That's the low probability outcome. More likely it will be dull, lifeless, narrow range chop.
  • Holidays where the market is open all day – My preference is to avoid it, but if I've got nothing better to do then let the opening structure play out and then make an assessment.

 

I had nothing better to do. So I let the opening structure play out. And then assessed.

How much opening structure? There's no rule here. Make an judgment call as to how much is necessary to see if there is sufficient liquidity, pace, volatility etc.

If the market opens with a gap outside the prior day's range, and outside any higher timeframe congestion, I might be satisfied just with the opening TTF price swing, or just waiting a short time period like 5-15 minutes. Then assessing.

Or on days like today, where the market opened within the prior days range, I will wait a bit longer.

<image: One Winner One Loser>

 

I was completely comfortable with no trades. But if I could see edge, then let's play.

<image: One Winner One Loser>

<image: One Winner One Loser>

 

For readers of the YTC Price Action Trader – The Principle being applied here, and in fact the reason for the whole trade, should be obvious. If not, email me.

<image: One Winner One Loser>

<image: One Winner One Loser>

<image: One Winner One Loser>

<image: One Winner One Loser>

<image: One Winner One Loser>

<image: One Winner One Loser>

 

One winner. And one loser. Just a small day, but it is a "holiday" session and I'm happy with nothing.

Of great importance though – the loser is much smaller in size than the winner.

Which reminds me of one of the most important points I've shared over the years at YTC, accepting of course that a two trade sample size is way too small (but the concept is what is important)… what if you could be happy with a 50% win rate, and learn to profit from a positive Win/Loss Size Ratio?

Ok, so back to the main point of the article:

Here's my plan for holidays, because as the question noted, there are different kinds of holidays:

  • Holidays where the market is closed – no trading!  (Duh!)
  • Holidays where the market is open for one of those "half day" sessions – no trading! I don't care if it does move. That's the low probability outcome. More likely it will be dull, lifeless, narrow range chop.
  • Holidays where the market is open all day – My preference is to avoid it, but if I've got nothing better to do then let the opening structure play out and then make an assessment.

 

Happy trading,

Lance Beggs