I really like this statement from last week's article, where we discussed how I use "the other trader" to identify good trade opportunity.
If I can't feel someone on the other side of the trade getting it really wrong, there is no trade.
Step one in implementing this idea into your trading, is to learn to find these areas where "the other trader" might have got it really wrong, with the benefit of hindsight.
And to achieve that, I recommend you use one of my old favourites – your Market Structure & Price Action Journal.
Let's add a new category to our journal entries – "Places Other Traders Got It Really Wrong".
Print your trading timeframe chart. Cover it with notes. File it. And review it often.
You don't have to find every single occurrence.. Just the obvious ones which really stand out to you. Anything which immediately screams out to you, "that was a dumb place to trade!!!"
Here's an example covering the first hour and a half of the most recent session.
(Click on the image to open a full-size version in your browser)
What if you did this every session for the next few months?
Could the potential improvement in your edge more than justify the five minutes it may take each day?
What are you waiting for?
PS. It's important to note that in trading like this I rarely enter via a limit order placed ahead of time in the area of interest. My personal preference is to let price enter the area where I think other's might have got it wrong. And then watch to confirm the behaviour. Ideally I'll see some sort of stall or exhaustion, indicating a failure to continue further in this direction. That's my cue to enter. Sometimes it comes VERY quickly. Other times it provides a nice stall structure which allows entry as it breaks. With experience you'll know whether it has potential to snap back quickly or not. First step though… learn to see them with hindsight. So get started on your Market Structure & Price Action Journal.