Tag Archives: Setup

Structure within Structure

 

The following image was sent out via social media on the 14th of February.

And shared again in last week's newsletter (23rd of February).

<image: Emotion can be a great driver of the market>

In response to these postings, I received the following question via email:

  • "Wondering about today's FB post about emotion driving the market. In the chart example you have given, is there any entry for YTC traders at all?"

 

Great question!

And very applicable, not just to this example, but to ANY TIME when a news reaction completely disrupts the normal price structure.

The quick answer is yes, there are YTC trades here.

Firstly, let's note that this was a 5 minute chart, in order to fit all the data on one picture. Those trading lower timeframes will have additional structure to work with.

As I trade the 1 minute timeframe, I'm going to use that timeframe for all further charts. However, the same concept applies no matter what timeframe you use.

Here's the structure at the time of RTH open (09:30am ET).

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

Happy trading,

Lance Beggs

References:

(a) Sideways Trend Definition – Page 101 (and Fig 3.44) of Chapter 3 of the YTC Price Action Trader.

(b) Uptrend Definition – Page 92 (and Fig. 3.34) of Chapter 3 of the YTC Price Action Trader.

 


 

Don’t Overcomplicate Things – 3

 

Let's go over this key concept one more time.

  • Don't overcomplicate things.
  • Keep in mind a visualisation (or a series of visualisations) which broadly capture the vast majority of your trades.
  • It can help provide confirmation of the trade idea as it's setting up.
  • And more importantly, confidence in execution.

 

We discussed this recently via two articles – part one and part two.

Both articles discussed the fact that the majority of my trades lately seem to fit within one of two broad categories.

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

(For those with the YTC Price Action Trader, the first category will include all variations of PB, CPB and BPB trades. The second category will include all variations of TST, BOF and any "reversion to the mean" scalp against an existing trend. For the second category, note that I will rarely be entering against strength. Look within the TTF/LTF to see weakness late in the over-extension, or on a subsequent retest. But the whole sequence should be over-extended.)

The first article in this series shared a type-1 trade.

The second article in this series compared three type-2 trades.

Today I thought we could look at one more type-1 trade.

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

Ok, so the trade didn't reach it's ultimate target in this case. But "active trade management" recognised the failure to push lower and scratched the position, locking in some good profits anyway.

Key points:

(1) Note how "a clear directional bias" does not necessarily mean a strong and persistent downtrend. In this case we have a somewhat sideways market, shifting from initial downtrend to uptrend and then back again to downtrend. The "clear directional bias" occurred at the point of failure of the uptrend, when anyone holding a long position would have found themselves trapped. When they knew without doubt that they were sitting on a loser and had no choice but to get out.

It's the trap in this case which creates the "clear directional bias".

And it's the pullback against that bias, towards the point of break of the topping pattern, which offers my trade opportunity.

(2) And most importantly, I want you to take note of the similarity with the trade from the first article in this series.

<image: Don't Overcomplicate Things>

This is one of the key points to take away from this series:

  • They all look much the same.

 

It helps with identifying the setup. And it helps with confidence in execution.

Because I've seen it all before.

So once again:

  • Don't overcomplicate things.
  • Keep in mind a visualisation (or a series of visualisations) which broadly capture the vast majority of your trades.
  • It can help provide confirmation of the trade idea as it's setting up.
  • And more importantly, confidence in execution.

 

Happy trading,

Lance Beggs

 


 

Focus on the Obvious Moves First

 

A reader recently sent me a question which I think we can all learn from.

Let's start with the higher timeframe first to get a bit of context. It's the YM (emini Dow) on the 24th of January 2018, if you wish to look at your own charts.

<image: Focus on the Obvious Moves First>

And now let's examine the 1 minute Trading Timeframe where I'll explain the question:

<image: Focus on the Obvious Moves First>

Great question!

But one I didn't properly answer.

The reason is that they are in early stages of their development and not yet capturing the OBVIOUS and SIMPLE moves.

There is a common error I see in price action traders in their early stages of development.

They often have a belief that they should AT ALL TIMES know what is happening in the market.

And they often have a belief that they should be able to capture EVERY MOVE in the market.

Neither of these is true.

You do NOT have to know what is happening in the market at all times.

And you absolutely do NOT have to be able to capture every move in the markets.

By all means… learn from every sequences that offers learning potential. This is a never-ending process of skill development.

But almost every session contains price moves that, when viewed with the benefit of hindsight, are OBVIOUS and SIMPLE to see.

Priority ONE in developing is learning to see and capture these obvious and simple moves first. Get profitable on them. And then later, if you wish to target the more complex moves, go for it. But work on the simpler opportunity first.

If you need to ask someone how a move could have been caught, then it's not an obvious and simple one. Focus on those which jump out of the chart and scream at you, "Why didn't you see me? Why didn't you capture me?"

The reader asked how they could have identified the shorting opportunity from point (E) in the above image. I responded with, "Looking at the whole chart, there is one absolutely OBVIOUS short. Can you identify that for me please?"

They correctly identified the following area:

<image: Focus on the Obvious Moves First>

Exactly right!

Nice work.

Simple and easy.

This is where they should have been focusing, aiming to discover why they did NOT capture this short.

You don't have to foresee the initiation of EVERY move. Especially those which break some form of price structure. Often in these cases the simpler option is to seek entry on the first pullback.

Here are some of the key points from the remainder of my response, in image form:

<image: Focus on the Obvious Moves First>

<image: Focus on the Obvious Moves First> 

<image: Focus on the Obvious Moves First>

<image: Focus on the Obvious Moves First>

<image: Focus on the Obvious Moves First>

Repeating:

You do NOT have to know what is happening in the market at all times.

And you absolutely do NOT have to be able to capture every move in the markets.

Improve to the point where you are capturing as much of the obvious and simple stuff as possible. Only then, worry about those moves which are more complex and difficult to see.

Personal opinion only, of course!  🙂

Best of luck,

Lance Beggs

 


 

Don’t Overcomplicate Things – 2

 

Just over a month ago we discussed the fact that the majority of my trades lately seem to fit within one of two broad categories.

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

(For those with the YTC Price Action Trader, the first category will include all variations of PB, CPB and BPB trades. The second category will include all variations of TST, BOF and any "reversion to the mean" scalp against an existing trend. For the second category, note that I will rarely be entering against strength. Look within the TTF/LTF to see weakness late in the over-extension, or on a subsequent retest. But the whole sequence should be over-extended.)

The prior article offered an example of of the first type of trade. If you missed that article, you can find it here – http://yourtradingcoach.com/trading-process-and-strategy/dont-overcomplicate-things-1/

In the week's since then we have focused on something different. A series of three articles showing breakout failure trades – here, here and here.

The focus of these articles was on using the lower timeframe chart to confirm a lack of buying interest after the break. And for timing the entry at the point where we feel any later buyers have completely given up all hope of their trade working.

But there is another VERY important point from these three breakout failure trades, that I think we need to discuss. You may have noticed it. I HOPE you noticed it.

But just in case you didn't…

  • They all look much the same.

 

They all fit (perhaps loosely) into the broad description for the second type of trade.

<image: Don't Overcomplicate Things>

Let's examine all three from this perspective.

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

Don't overcomplicate things.

Keep in mind a visualisation (or a series of visualisations) which broadly capture the vast majority of your trades.

It can help provide confirmation of the trade idea as it's setting up.

And more importantly, confidence in execution.

Happy trading,

Lance Beggs

 


 

Watch Post-Breakout Behaviour – 3

 

This is what I like to see in a breakout…

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

This is a prime target for a breakout failure.

But I don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, I watch post-breakout behaviour and CONFIRM that there are no signs of strength.

<image: Watch Post-Breakout Behaviour> 

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

Don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, watch post-breakout behaviour and CONFIRM that there are no signs of strength.

Happy trading,

Lance Beggs

 


 

Watch Post-Breakout Behaviour – 2

 

This is what I like to see in a breakout…

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

This is a prime target for a breakout failure.

But I don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, I watch post-breakout behaviour and CONFIRM that there are no signs of strength.

<image: Watch Post-Breakout Behaviour> 

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

Don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, watch post-breakout behaviour and CONFIRM that there are no signs of strength.

Happy trading, 

Lance Beggs

 


 

Watch Post-Breakout Behaviour – 1

 

This is what I like to see in a breakout…

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

This is a prime target for a breakout failure.

But I don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, I watch post-breakout behaviour and CONFIRM that there are no signs of strength.

<image: Watch Post-Breakout Behaviour> 

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

Don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, watch post-breakout behaviour and CONFIRM that there are no signs of strength.

Happy trading,

Lance Beggs

 


 

Don’t Overcomplicate Things – 1

 

The vast majority of my trades lately, maybe 95%, fit within one of two broad categories.

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

(For those with the YTC Price Action Trader, the first category will include all variations of PB, CPB and BPB trades. The second category will include all variations of TST, BOF and any "reversion to the mean" scalp against an existing trend. For the second category, note that I will rarely be entering against strength. Look within the TTF/LTF to see weakness late in the over-extension, or on a subsequent retest. But the whole sequence should be over-extended.)

Let's look at an example and see how it fits within one of these categories.

Today… category 1 (the bearish version).

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

 

Let me highlight two key points.

<image: Don't Overcomplicate Things>

<image: Don't Overcomplicate Things>

Happy trading,

Lance Beggs

PS. On Tuesday I posted a repeat of an old 2015 Facebook post. You can see it here. Note the similarity in concept. Don't overcomplicate things. Simpler is better.