Tag Archives: Setup

Where Price Can’t Go

 

I'm always VERY interested in these places on the chart – the places where price can't go. The places where it tries… it pushes… but it just can't go there.

This is opportunity.

Let's start with the Higher Timeframe chart…

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Let's switch now to the trading timeframe… 

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Where Price Can't Go...

Reference… this is a BOF Setup as described in YTC Price Action Trader Volume 3, page 28.

Happy trading,

Lance Beggs

 


 

The Other Trader (3)

 

In recent months we looked at a number of metagame examples – trading at places where the "the other trader" feels extreme stress or fear.

You'll find some of these articles, if you missed them, here, here and here.

Today, I thought we could look at another one. Because I just LOVE these setups.

You might recall this general concept from prior articles:

Trading based upon feeling the stress and fear of "the other trader"

Things don't always go according to plan though.

Trading based upon feeling the stress and fear of "the other trader"

If you missed the entry… no problems.

Let it go. It wasn't yours to catch.

There will be MANY other trade opportunities. Stay focused.

In fact… sometimes that next opportunity comes along VERY quickly.

Trading based upon feeling the stress and fear of "the other trader"

Trading based upon feeling the stress and fear of "the other trader"

Let's look at an example, a BOF setup on break of the high of day.

We'll start with the higher timeframe chart to get some context. And then move on to the trading timeframe and lower timeframe charts to discuss the trade opportunity.

Trading based upon feeling the stress and fear of "the other trader"

Trading based upon feeling the stress and fear of "the other trader"

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The Other Trader (2)

 

As price moves into my setup areas, "the other trader" is always at the forefront of my mind.

Who created this recent move against market bias? Are they trapped? Are they feeling stress? Where is the point of extreme stress at which they'll bail out of their position?

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

In recent weeks we've looked at some examples which include a break of a key level, which then stalls and fails.

The other trader - trapped on a break of a level

You can see these recent articles here:

http://yourtradingcoach.com/trading-process-and-strategy/the-other-trader/

http://yourtradingcoach.com/trading-process-and-strategy/metagame-trading/

These type of trap scenarios provide some of my favourite trade entries.

The other trader - trapped on a break of a level

But we don't always need a break of a level in order to find trade opportunity.

What we're looking for is a move, against market bias, into a REALLY LOW PROBABILITY place to trade.

Like this, for example:

The other trader - trapped on a move into an area of prior congestion

Reality is never as nice as these "text book" line diagrams though.

So let's look at a real-world example.

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Reversals Often Give Multiple Clues

 

In the absence of any unexpected news event, or some other reason to shock the market, a reversal will usually not just appear out of nowhere.

V-Turn reversals happen. But they're not the usual outcome.

More often than not, there will be multiple clues in the lead-up to the reversal.

The challenge for you, as a trader, is to learn to read the clues as they're presented and adjust your bias and trade expectations to suit.

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

Reversals often give multiple clues

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Traps – This One Needed Patience

 

It seems that most of the examples of market traps which I've shared over the years, were all traps which trigger very quickly.

We all like the quick ones. They're easy. Like this one:

Traps - They don't always play out straight away!

See here for the TST, BOF & BPB Setups.

Let's see what happens as price breaks the swing high at C:

Traps - They don't always play out straight away!

And the outcome:

Traps - They don't always play out straight away!

Interestingly, had I not been trading this trap opportunity, would I perhaps have seen the even better one that followed immediately after?

Traps - They don't always play out straight away!

We all love the traps that trigger quickly and move immediately in the positive direction. 

But traps don't always spring quickly.

Sometimes they require a little patience.

Sometimes they play out slowly.

Like this one which occurred a bit later:

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The Other Trader

 

I find it interesting that VERY FEW people discussing their trades with me ever talk about "the other trader". They always talk about the technicals – the price patterns and (if a little more astute) the strength / weakness analysis.

I get it. That stuff is important.

I suppose I'm guilty of this as well. Most of the time when I write an article or put together a social media post, I tend to focus on the technicals. That seems to be what people want to read about.

BUT… it's "the other trader" which is the most important part of my decision making.

Every time I trade, "the other trader" is at the forefront of my mind.

Who is on the other side of my trade? Are they trapped? Are they feeling stress? Where is the point of extreme stress at which they'll bail out of their position?

Because that's where I want to trade… where someone else is suffering!  (Yeah… this business is predatory!)

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

The obvious example is anyone fading a strong trend. Who does that? I want to trade against them.

Or anyone trading late on an overextended move into an area of prior strong supply/demand imbalance. Again, who does that? I want to trade against them.

But it's also a factor in all less obvious and less spectacular trades. The boring day-to-day ones that never make it onto articles or blog posts. Let's look at one here:

The Other Trader

The Other Trader

The Other Trader

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The First Loss – How Will You Let It Affect Your Mindset?

 

Last week's article led to an interesting comment about the sequence preceding the one discussed in that article.

Check it out here if you missed it – How to Enter When the Pullback Shows Strength!

The email feedback expressed an interest in the fact that the session started with a loss and yet I managed to quickly recover that loss.

  • "I particularly like the way you showed how you were wrong on the long but it did not affect your session, you focused on the price action projected, possible scenarios and continued to do your job."

So I thought we should look at this earlier sequence and see if there are any lessons available.

Let's begin with the trading timeframe, showing the price action which offered the initial loss and the subsequent two wins.

The first loss - how will you let it affect your mindset

Let's start by examining the LONG BPB trade.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

I'd love to be able to say I caught the SHORT entry as the breakout failed. But it was not to be. I was biased LONG. I was wrong.

Loss was minimised though. So this was a good trade.

Except for the fact that I've started the session in minor drawdown (which seems to be a habit lately!!!!)

Let's move on to the rest of the sequence.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

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Fading the Edges of the Market Structure

 

Fading the edges of the market structure requires that you see the markets in a different way to the usual retail trader.

Strength in price movement towards a range boundary or an S/R level is not necessarily going to continue with strength following a breakout.

In the right context, this apparent strength can produce a nice trap at the edge of the market structure, providing breakout failure opportunity for anyone willing to fade the move back into the prior range.

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Fading the Edges of the Market Structure

Happy trading,

Lance Beggs

 


 

Trading Failed Expectations

 

The following YTC Social Media post was just about a perfect example of the concept of trading failed expectations.

Obvious expectations - proven wrong

I received a question on the facebook post about trade entry. So let's look at the trade I took in this area – a test of Low-of-Day support.

Noting of course that there is one significant difference. I traded the 1 minute timeframe; not the 3 minute timeframe.

The 3 minute chart was used for the facebook and twitter post, simply because it beautifully demonstrated the concept that I was trying to highlight. It wasn't about my trade or my timeframes. It was about the general concept of looking for opportunity in places where "obvious expectations" are proven wrong.

The same idea applies on the 1 minute chart, of course. And it's the reason underlying my trade.

But this time… it's a WHOLE LOT MESSIER!

The good trades move quickly to the targets. But we don't always get good trades. And there's not much to learn from them. The messy trades though… much more common and much better for "lessons".

Here's the same test of Low-of-Day support in the one minute chart:

The same pattern on the 1 minute chart

The strong drive towards the support level appears as before, creating an expectation in the mind of many market participants for continuation lower. Personally, I expect that as well (YTC PAT Sixth Principle). And my plan is to wait for the break and assess the likelihood of either breakout failure or breakout pullback potential.

But when a move this strong stalls… and breaks back above the next TTF candle… well this is NOT what would be expected of a "strong" bearish market.

Let's wait and see what happens on a retest. If the retest continues with strength, I'm back with the original plan (watching for breakout failure or breakout pullback potential). But if the retest cannot continue lower… well I just love these setups. They can snap back higher quickly. So I'll be looking to enter LONG on a test of the support level, based upon the fact that the market has shown it can't go lower and the prior bearish strength was an illusion (liquidity vacuum perhaps!).

The market sets up that scenario nicely, as we see in the above image with the first failure to continue lower. Look for lower timeframe entry in the shaded region.

In this case though, there is no quick movement higher. And the market falls for a second attempt to break support.

This provides a second opportunity to get long, as the market is once again unable to continue lower. But it's quite a messy one with some chop at the turning point.

This is the reality of the markets. We all want trades that move quickly to their target. But that's not what we always get. You need to decide how you will deal with these "messy" setups. Some people prefer wider stops, to allow for chop and imperfect decision making at the entry zone, willing to accept the reduction in R:R potential. Others, like me, prefer to keep the stops tighter. But to be effective in that regard you need to be willing to scratch and re-enter. Don't let an initial failure prevent you from trading the second chance entry.

My entry is triggered on the lower timeframe charts (a combination of 15 second and YTC Scalper 2-Range). But for the sake of this article I'm going to show the 30 second chart, which displays all the information you need to see while also fitting nicely on the one image. So let's check it out.

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Who Would Buy Here?

 

Seriously… who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

Who would buy here?

 

Ok… enough talking in general concepts. I always get in trouble when I do this, because someone will email me including a chart which shows an exception to the rule.

Whatever!

Generally… it's not wise to buy in these areas.

And this brings us to the point of the article.

Consider it a "rule of thumb" for finding good trade locations.

  • One way to find areas on the chart which may show potential for a short entry, is to find the places on the chart where you think, "Who would BUY here?"

  • One way to find areas on the chart which may show potential for a long entry, is to find the places on the chart where you think, "Who would SELL here?"

Let's look at a trade based upon this idea.

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