Tag Archives: Traps

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

 


 

Momentum Doesn’t Always Continue

 

I love these patterns so much. Let's do it one more time.

Momentum doesn't always continue

I know… we've done this a couple of times already – see here – and here.

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143, for the same idea expressed on the Trading Timeframe.

But I want to do it one more time, just to really emphasise the point.

In the right context these Test/Breakout Failures of momentum extremes can provide GREAT opportunity.

Regardless of your chosen market and timeframe, if this idea appeals to you then I highly recommend you look through your charts (both trading and higher timeframes) and study some historical examples. You may then want to keep an eye out for them in future.

So to look at yet another market, let's see one that occurred in the emini Dow (YM) futures earlier this week.

I watch for this on both higher timeframes AND on the trading timeframe. This example actually occurs on both. Let's start with a higher timeframe, using the 15 minute as it provides a good "fit" on the image.

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

Momentum doesn't always continue

I mentioned earlier that this momentum drive also offered a Trading Timeframe example. That would be for those on the 1 minute YTC Scalper timeframes. You'll note if you look at the 15 minute charts above you'll see the momentum low actually included two candles with bottoming tails. On the lower timeframe chart this is yet another example of this same pattern. Let's look at the 1 minute chart showing the "internal detail" comprising these bottoming tail lows.

Momentum doesn't always continue

Keep an eye out for large momentum moves. Those on the trading timeframe can offer nice movement for a swing or two. Those on the higher timeframe structure can offer a clear directional bias for a longer period of time, often a whole session.

  1. A strong momentum drive.
  2. The first pullback does not lead to immediate continuation.
  3. An eventual break of the momentum extreme, which rapidly fails.
  4. Potential opportunity!

 

Happy trading,

Lance Beggs

 


 

Higher Timeframe Forex – When The Market Can’t Push Lower

 

One of the key tasks I was looking forward to this last week, having recently overcome my long-term internet outage, was in catching up with Aaron Fifield's Chat With Traders podcast.

And I must say it was AWESOME to come across episode 117 with Larry Alintoff.   (Yeah… I'm a long way behind!!!)

The reason…

Despite the fact that we likely trade very different timeframes, markets and methods, I was really pleased to hear Larry describe one way that he seeks trade opportunity – when things that "should" happen, don't happen.

That is one of the themes I've shared through YTC over the last few years.

To have a trader of such high regard validate this idea… well I must say I felt just a little pleased with myself!   🙂

You'll find dozens of references to this idea if you search back through the archives, in either the blog or my social media posts.

The most recent, from memory, would probably be this one – http://yourtradingcoach.com/trading-process-and-strategy/studying-a-higher-timeframe-trap/

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.

So I thought, why not look at another example of this idea.

GBP/USD offered an interesting example during the last week. One which is perhaps not as obvious as some of the prior examples.

Let's look to the 4 hour chart at the close last Friday, 9th March.

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

So let's look at Monday's data, still on the 4 hour chart.

Higher Timeframe Forex - When the Market Can't Push Lower

And now Tuesday…

Higher Timeframe Forex - When the Market Can't Push Lower

Ha ha!

Ok, it's not all bad.

This is why I wanted to share this one. It makes a nice difference from the previous one which I linked to above (here again if you missed it).

In that prior article, price did break the swing low.

This was the setup in that prior article.

Higher Timeframe Forex - When the Market Can't Push Lower

As we've seen though, it doesn't always happen this nicely.

Sometimes price doesn't quite break that low.

But it doesn't matter.

Often, just trying to break that low is sufficient.

YTC Price Action Trader readers – see Figure 3.78 on page 143 for another example.

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Higher Timeframe Forex - When the Market Can't Push Lower

Let's drop down to a typical trading timeframe chart, the 5 Min chart, to see how we could have recognised this failure to continue lower.

Higher Timeframe Forex - When the Market Can't Push Lower

In fact, just the day before, on Monday, I'd shared this example from the emini Nasdaq futures, via social media:

Higher Timeframe Forex - When the Market Can't Push Lower

Here is the outcome…

Higher Timeframe Forex - When the Market Can't Push Lower

A strong momentum drive often leaves an expectation in many traders of continuation, should price break the momentum drive extreme. Any failure of that break, or an inability to even quite get that far, can provide a reasonable move back in the opposite direction.

I'm a big fan of this concept – when things that "should" happen, don't happen.

Keep an eye out for it in your markets and your timeframes. Archive and study a few examples. And consider adding it to your trading toolkit, should you also find them to offer great opportunity.

Higher Timeframe Forex - When the Market Can't Push Lower

Happy trading,

Lance Beggs

 


 

Metagame Entry – After You’ve Made a Dumb Trade!

 

I often talk about identifying the areas where "other traders" are trading in really dumb places. Places where they've found themselves trapped in a really low odds trade. Or trapped out of a position they wished they were in.

Places of emotion – fear, anger, regret!

These areas of the chart often provide us with great trade opportunity.

But one thing I don't recall discussing is the obvious fact that sometimes we find ourselves taking these dumb trades.

We all do it!

The trapper… becomes trapped.

But that's fine. It's information. We read the market wrong. Now we've got feedback that helps correct our bias. And sometimes, if we've maintained a calm mindset, we might still find trade opportunity as price retests the area of our dumb trade.

Let's look at an example…

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Metagame Entry - After You've Made a Dumb Trade!

Too often we let a losing trade get to us. Especially when it's immediately clear that it's a dumb trade.

We can't allow any negativity to remain for long though.

It is IMPERATIVE that you have some kind of routine in place to briefly get away from the charts and clear your mind.

YTC Price Action Traders, refer to the FOCUS and REGROUP sections in Volume 4, Pages 49-50. Maybe consider printing out those two pages and sticking them on your wall.

Shake off that loss. It's small. It will be overcome by one good trade. Now focus. And prepare yourself for the next trade.

If the context suggests potential for a second chance entry, it could be coming up VERY SOON.

Happy trading,

Lance Beggs

 


 

Trade Opportunity at Spike Highs

 

The market has opened and rallied. Not with great strength. In fact it's quite slow. But it rallies with a clear bullish bias.

It's clear of all S/R levels, above the prior day's high resistance (now support) and well short of the next higher timeframe resistance level.

Trade Opportunity at Spike Highs

Trade opportunity in such a case is ideally sought in the bullish direction.

YTC Price Action Trader readers – the first and second principles apply here and we're looking ideally for PB/CPB opportunity, with the trend.

However, there are times when I'll also look to take counter-trend opportunity, within this market environment.

Not always. But sometimes it's just screaming out to be traded. This is one of those times.

And not with any intention of catching a reversal. Just a scalp from the edges back to the mean.

Here's what I was seeing. We'll look at the TTF first, but we'll follow that up with the HTF chart, because it stands out better there and is much easier to see.

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Keep watch on the charts for anything unusual. Anything that is different.

It may just provide trade opportunity.

Happy trading,

Lance Beggs

 


 

Opportunity Exists where you find Frustrated Traders – Part 2

 

Feedback suggests that people got a lot out of last week's article, so let's continue with that topic one more time.

Check it out here if you missed it – http://yourtradingcoach.com/trading-process-and-strategy/opportunity-exists-where-you-find-frustrated-traders/

This was the general idea though –

I'm always looking at the market from the perspective of "the other trader".

In particular, seeking out the places on the chart where others might become frustrated.

Where is someone stuck out of a trade they wished they were in?

Where is someone stuck in a trade they wished they weren't in?

That's where I want to trade!

This concept can be applied on any timeframe. You can use it on the Trading Timeframe to find quality trade locations. You can use it on the Lower Timeframe to time your entry.

It's this Lower Timeframe application that I want to look at today.

Timing an entry at the point of maximum frustration for our poor friend, "the other trader".

Let's start with the general trade idea.

Opportunity exists where you find frustrated traders

And so let's now step through the data to see how this trade idea unfolded.

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Happy trading,

Lance Beggs

 


 

Opportunity Exists where you find Frustrated Traders

 

I'm always looking at the market from the perspective of "the other trader".

In particular, seeking out the places on the chart where others might become frustrated.

Where is someone stuck out of a trade they wished they were in?

Where is someone stuck in a trade they wished they weren't in?

That's where I want to trade!

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Opportunity exists where you find frustrated traders

Happy trading,

Lance Beggs

 


 

Studying a Higher Timeframe Trap

 

There are some common themes that run through the articles I produce at YTC. One of these, which has been here since the beginning, is the importance of creating a Market Structure & Price Action Journal.

Every day, find something that amazes you in the charts. Print it out. Cover it with notes. Study it. File it. And review your journal often. It really will be the greatest trading book… EVER!

Over time, I promise you will start to see patterns within the market structure or price action, which repeat themselves again and again and again.

Like this, which we shared via social media way back in 2015:

What doesn't happen... is important information! 

This is a structural feature that I see repeated again and again and again.

Here's another previous example – http://yourtradingcoach.com/trading-process-and-strategy/trading-failed-expectations/

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.

But let's look to an example which occurred last week, on a higher timeframe chart.

Yes… it's an idea which you will find in all markets and all timeframes!

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Happy trapping,

Lance Beggs

 


 

A BOF Trade with Many YTC Concepts

 

Let's look over a trade I particularly like, from earlier this week.

It's nothing special in terms of returns. But it took an otherwise dull session from breakeven into profits.

And it displays many of the concepts that we have discussed here in the newsletter over the last few years.

So I particularly like this one. And I thought it's a good one to share to reinforce some of these key lessons.

The trade is a Breakout Failure trade following price interaction with the Prior Day's High resistance.

Breakout Failure Review 

Let's see what I liked about this trade…

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review

Breakout Failure Review 

Let's see the outcome…

Breakout Failure Review

Breakout Failure Review 

Happy trading,

Lance Beggs