Tag Archives: Setup

Seeking Entry on the Wholesale Side of the Market Structure

 

I absolutely LOVE IT when people send me charts and emails full of excitement at new discoveries or new ways of "seeing" the price movement.

I received one last week that I just had to share.

It's such a great example of seeking entry on the wholesale side of the market structure. I love it.

An email came from G.N. with the following chart. Of interest was the upthrust pattern allowing entry short, in line with the ideas discussed in prior articles – Professionals Traded Here and Confirmation is Risk.

(Note: The image here is compressed to fit the page. If you click on the image it will open an original-size image in your browser. Or refer to GBP/USD on the 2nd November, 1 min chart, if you wish to look at your own charting platform.)

<image: Seeking Entry on the Wholesale Side of the Market Structure>

Actually, let's zoom in a little to identify the upthrust area.

<image: Seeking Entry on the Wholesale Side of the Market Structure>

So here is what I ABSOLUTELY LOVED about receiving this image and email from GN:

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

This chart provides an awesome example of entry on the wholesale side of the market structure. Here's what I love about this particular trade idea:

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

<image: Seeking Entry on the Wholesale Side of the Market Structure>

Just beautiful!

It's been one of my favourite concepts for years.

The idea of watching breakouts against market bias for failure. And using that to trigger entry back in the direction of the original market bias.

Keep an eye out for it in your markets and your timeframes.

Happy trading,

Lance Beggs

 


 

Caught on the Wrong Side of the HTF Trap

 

Last week we profited from recognising and exploiting a Higher Timeframe (HTF) trap. Check it out here if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/higher-timeframe-trap-everyone-long-above-this-level-is-wrong/

This week, let's look at the other side of traps.

The fact that sometimes… the trapper becomes trapped.

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

<image: Caught on the Wrong Side of the HTF Trap>

Repeating for effect:

  • You don't always get it right.
  • Sometimes you're "the other trader" that's caught in the trap.
  • The key to surviving and minimising damage is in quickly recognising when price movement is NOT behaving as it should if the premise is correct.
  • Recognise and adapt.

Happy trading,

Lance Beggs

 


 

Higher Timeframe Trap – Everyone Long Above This Level is WRONG!

 

Most of the traps I trade come from the Trading Timeframe or Lower Timeframe charts.

I don't watch the higher timeframe for traps.

However, I do see them from time to time. And they can provide some nice trading opportunity.

<image: Higher Timeframe Trap>

Ok, "wrong" is probably a poor choice of word. The reality is that we don't know their strategy and their timeframe.

But let's just say that they're in a drawdown.

And if they're operating on similar timeframes to us, their position is NOT looking good.

They'll likely be under a significant amount of stress. And probably hoping, wishing and praying for some way to get out of the position closer to breakeven.

Let's drop down to the Trading Timeframe chart to see where we currently stand.

<image: Higher Timeframe Trap>

<image: Higher Timeframe Trap>

<image: Higher Timeframe Trap>

<image: Higher Timeframe Trap>

From a Trading Timeframe perspective, this was simply a BPB of a sideways range boundary.

But from a wider context perspective, it was also triggering a trap on the higher timeframe chart. Those betting on a gap-open continuation higher suddenly found their trade premise threatened.

And this makes our range breakout SHORT just a whole lot sweeter.

It pays to always be asking, "Is anyone trapped?"

And while our focus should primarily be on the Trading Timeframe chart, we should ensure our scan also extends to the Higher Timeframe chart. At least once per new higher timeframe candle.

Maintain a feel for context. Where is the current price action occurring within the higher timeframe structure? Sometimes this wider situational awareness will keep you out of a bad trade. Other times, as here, it can add additional fuel to our trade idea.

Always be asking, "Is anyone trapped?"

Happy trading,

Lance Beggs

 


 

Stop – Pause to Reassess – Reverse

 

I get asked from time to time whether I ever "stop and reverse" a trade.

That is, enter SHORT when stopped out of a LONG position. Or enter LONG when stopped out of a SHORT position.

The reality is that I don't do that often.

The failure of one trade is usually NOT an indication of potential in the opposite direction.

The only time there may be potential is when the CONTEXT suggests the new trade is a valid trade in its own right. So the trade validity has little (or nothing) to do with the failed trade preceding it.

For example, if I'm fading a strongly directional market and recognise that I'm wrong, then I might use the stop to reverse to a with-trend trade. In this case, the with-trend trade is a completely valid trade in its own right. It's a with-trend trade I'd be happy to take, even had I not taken the earlier counter-trend trade.

But as I said, I don't tend to do this often. It's not always easy to shift bias so quickly.

There is however a closely related trade, which is a little more common.

It's more of a "Stop – Pause to Reassess – Reverse".

A common place for these is a key level of some kind, such as an S/R level or range boundary, where we might be assessing two potential opposite biases through either a breakout failure or breakout pullback.

Let's look at one example:

<image: Stop - Pause to Reassess - Reverse>

<image: Stop - Pause to Reassess - Reverse>

<image: Stop - Pause to Reassess - Reverse>

<image: Stop - Pause to Reassess - Reverse>

<image: Stop - Pause to Reassess - Reverse>

<image: Stop - Pause to Reassess - Reverse>

<image: Stop - Pause to Reassess - Reverse>

 

Key points:

1. Failure of one trade does not imply potential in the opposite direction, unless the context suggests the new trade is a valid trade in its own right.

2. A stop and reverse does not need to happen at the same time. Often a better option is "Stop – Pause to Reassess – Reverse". Give yourself an opportunity to reassess the situation with a clear mind, as a result of having no exposure to the market.

Happy trading,

Lance Beggs

 


 

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

 


 

The Other Trader (5)

 

Let's continue with a series we started last year – the metagame – trading AGAINST other traders who find themselves on the wrong side of the market.

Because…

If I can't feel someone on the other side of the market getting it really wrong, there is no trade.

You can see the prior articles here if you missed them – OneTwoThreeFour.

Let's set up the scenario…

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

(Source: YTC Price Action Trader Vol 2 Ch 3 P99-102)

<image - metagame trading - the other trader 5>

(Source: YTC Price Action Trader Vol 2 Ch 3 P145-153)

From a metagame perspective, this is the scenario we're looking at. We aim to place ourselves in the mindset of any trader who bought late in the move, at or soon after the breakout. Feel their stress build as price stalls. And stalls. And stalls. Feel their pain as their "sure thing" collapses back below the stall region. And find a way to profit from their pain.

<image - metagame trading - the other trader 5> 

Let's zoom in a bit. And take on the mindset of the novice retail trader who entered late in the move (let's say right on the break).

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

<image - metagame trading - the other trader 5>

Trading the metagame…

If I can't feel someone on the other side of the market getting it really wrong, there is no trade.

Fast, sudden price moves don't always continue.

Quite often, someone is getting trapped.

And that… is opportunity.

Go get 'em,

Lance Beggs

 


 

Let It Fail First – Then Get In

 

Although we trade very differently, I am quite a fan of Al Brooks first book, "Reading Price Charts Bar by Bar".

One of his quotes which has stuck with me over the years is the following:

  • Countertrend setups in strong trends almost always fail and become great With Trend setups.

 

This quote came to mind earlier in the week, as I took a counter-trend entry against a strong trend, despite my predominant thought prior to entry being "This is too obvious. It has to be a trap!".

<Let it fail first - then get in>

The drop from point 2 was just over 30pts (120 ticks) in 15 minutes. Ok, it's maybe not the strongest trend. But there was very little opportunity in the way of pullback entries SHORT. And bears still felt in control.

<Let it fail first - then get in>

<Let it fail first - then get in>

<Let it fail first - then get in> 

And that's when the Al Brooks quote came to mind.

  • Countertrend setups in strong trends almost always fail and become great With Trend setups.

 

<Let it fail first - then get in>

The outcome:

<Let it fail first - then get in>

<Let it fail first - then get in>

<Let it fail first - then get in> 

Happy trading, 

Lance Beggs

 


 

Reverse Trendline Breakout Failure

 

The market opened and settled quickly into an uptrend.

It was an environment I found difficult to trade for some reason. Decision making was poor. And I just couldn't get in sync with the price movement.

This was a fact that became clearly obvious after two suboptimal trades (small profit so it's all good).

So here's the plan on recognising the fact that I'm out of sync with the market:

  • Stand aside until price breaks from the current structure.

 

Here's what I mean:

The current structure was an uptrend. But not a nice one. Small swings, getting smaller.

I don't use trendlines, but they will help show what I was seeing within the structure, as the trendlines above and below price both converge on each other.

(Reverse Trendline Breakout Failure)

This is what I wait for:

(Reverse Trendline Breakout Failure)

(Reverse Trendline Breakout Failure)

This time we got a break of the reverse trendline.

(Reverse Trendline Breakout Failure)

From a strength/weakness perspective, an acceleration of price like this gives an appearance of strength, but it's not usually the case. Such a steepening of price is unsustainable and will exhaust itself. Any strength is actually short-lived and will often (but not always) provide opportunity back to the last area of congestion prior to breakout.

(Reverse Trendline Breakout Failure)

Here is the outcome:

(Reverse Trendline Breakout Failure)

Lessons:

1. Two suboptimal trades are an indication that you're potentially out of sync. Pause. Step back from the charts. And reassess.

2. When you recognise yourself being out of sync with the market, consider standing aside until price breaks from the current structure.

3. A reverse trendline breakout is usually played initially for reversion to the mean, with the remainder held for potential reversal (until proven otherwise).

Happy trading,

Lance Beggs