Market Structure and Price Action Journal Categories

 

I've long been an advocate of the importance of a Market Structure and Price Action Journal. There is no shortage of material on this topic if you want to search the YTC article archives. The best place to start might be with anything tagged "journals", which you'll find here.

So I'm pleased to have received this email question from a YTC reader.

  • "Sir, I have started a market structure journal but would be most grateful for some suggestion for topics or categories for journal entries."

 

No problems at all.  πŸ™‚

Some people prefer to make their journals completely free-form. That is, no categories at all. Just finding one item of interest each trading day and studying it in depth. That's great.

Others will prefer to pick a topic or two for intense study. Each day they'll find and study a market structure or price action sequence related to that topic. This will allow for quicker discovery of "rules of thumb" regarding how to identify and manage these particular market structure features or price action sequences. And when you're "done"… move on to a new category.

Just pick whichever approach you want. There is no right or wrong.

Ok… so the email question assumes you've chosen the second approach and want to focus on one particular category of journal entry at a time.

What should you chose?

Again, there is no right or wrong. Just make sure it's something relevant to your own approach to trading.

But let's list some categories to help you get started if you're new to journaling. Or if you already have a journal underway, perhaps the list will help you identify a new area for future exploration.

Support & Resistance Structure

This is the obvious starting point – the S/R Structure. Print examples and study them in detail. What makes a good level? When do they lose relevance? How does price interact with the level?

  • Level Definition – Which Levels Remain Valid For Further Touches?
  • Level Definition – When Do Levels Lose Relevance?
  • Resistance – Successful Break
  • Resistance – Failed Break
  • Resistance – Tested But Not Broken
  • Resistance – Becomes Support
  • Support – Successful Break
  • Support – Failed Break
  • Support – Tested But Not Broken
  • Support – Becomes Resistance

 

Specific Key Levels

You may wish to expand upon the basic S/R structure and study some specific levels in a little more detail.

  • Interaction with the Prior Day's High – from above the prior day's range
  • Interaction with the Prior Day's High – from within the prior day's range
  • Interaction with the Prior Day's Low – from below the prior day's range
  • Interaction with the Prior Day's Low – from within the prior day's range
  • Interaction with the Prior Week's High – from above the prior week's range
  • Interaction with the Prior Week's High – from within the prior week's range
  • Interaction with the Prior Week's Low  – from below the prior week's range
  • Interaction with the Prior Week's Low  – from within the prior week's range
  • Interaction with the Opening Range – Successful Break
  • Interaction with the Opening Range – Failed Break
  • Interaction with the Opening Range – Tested But Not Broken
  • Interaction with a very wide Opening Range
  • Interaction with the Key Overnight Levels

 

Day Type

Success at trading any particular environment requires that you recognise it's nature quickly and adapt tactics to suit. Find multiple examples of each environment type. Study them to find the common characteristics which will allow for quick recognition and adaptation. There are many ways you can classify the environment. Here is one such way that you might find useful:

  • Trending Market (Non-Volatile)
  • Trending Market (Volatile)
  • Ranging Market (Non-Volatile)
  • Ranging Market (Volatile)

You may also wish to explore specific types of days as follows:

  • Inside Day
  • Day After Inside Day (opening within the prior day's range)
  • Day After Inside Day (opening outside the prior day's range)
  • Outside Day
  • Day After Outside Day (opening within the prior day's range)
  • Day After Outside Day (opening outside the prior day's range)

 

Conditions

What market conditions are best suited to your trading style? What conditions should be avoided?

  • Conditions – Favourable
  • Conditions – Non-Favourable

 

Strength / Weakness Analysis

Classic YTC Price Action Trader stuff here! Find and study the textbook perfect examples.

  • Swing Strength Increasing (With Trend)
  • Swing Strength Decreasing (With Trend)
  • Swing Strength Increasing (Counter Trend)
  • Swing Strength Decreasing (Counter Trend)
  • Projection – Increasing
  • Projection – Decreasing
  • Depth – Increasing
  • Depth – Decreasing
  • Failure to Continue
  • Climactic Acceleration

 

Trend

Study changes in the nature of the TTF Trend and what that means for future trend projection and identification of trade opportunity.

  • Trend – Strengthening
  • Trend – Weakening
  • Trend – False Break
  • Trend – Transition to Range
  • Trend – Transition to Reverse Trend
  • Trend – Uncertain (because there will be times it's messy and unreadable!)

 

Range

Study changes in the nature of a TTF Sideways Trend and what that means for future trend projection and identification of trade opportunity.

  • Range – False Break
  • Range – Partial Rise
  • Range – Transition to Trend

 

Volatility

Effective trading requires that we adapt to changing conditions. Quickly recognising reducing volatility allows us to stand aside through much of the contraction, while also remaining focused for opportunity once volatility rapidly expands.

  • Volatility – Recognising Reducing Volatility
  • Volatility – Contraction to Expansion
  • Volatility – Retest of Point of Contraction

 

Market Internals

Study how market internals provide clues to continuation of current conditions, or warn of an upcoming change.

  • NYSE Tick
  • Advance / Decline Line

 

Pullbacks

Trend traders will REALLY want to focus here. Examine hundreds of pullbacks to identify clues as to the expected depth and duration and the best way to manage them.

  • Pullbacks – Deep
  • Pullbacks – Shallow
  • Pullbacks – Single Leg
  • Pullbacks – Multiple Leg
  • Pullbacks – First After a Change of Trend
  • Pullbacks – Last Before a Change of Trend

 

And in case you want to extend this idea to include trades and trade related topics…

Note: These are not just trade reviews. Rather they would be a study of textbook-perfect trade conditions and setups.

Setups

Of course, setups are the obvious inclusion. Study textbook-perfect examples. What conditions provided an A+ setup? Examine context in depth… not just the setup.

  • BOF
  • BPB
  • CPB
  • PB
  • TST
  • Other

 

Trade Entry

Again… textbook-perfect examples with a focus on the context within which they occur. How do these triggers provide an orderflow surge that will provide your trade with a positive start?

  • Entry – LTF – 123 Pattern
  • Entry – LTF – 3 Swing Retrace
  • Entry – LTF – Candlestick Pattern
  • Entry – LTF – DB or DT
  • Entry – LTF – Expansion Bar
  • Entry – LTF – Spike and Ledge
  • Entry – LTF – Spring or Upthrust
  • Entry – LTF – Test of Breakout Point
  • Entry – LTF – Narrow Range Bar
  • Entry – LTF – Scalper Limit
  • Entry – LTF – Scalper Pattern Breakout
  • Entry – TTF – LWP
  • Entry – TTF – NR Bar

 

Order Types

Again… learning to adapt to the conditions is essential if you wish to play with the professionals.

  • Order Types – Conditions Suggesting Limit Order Entry
  • Order Types – Conditions Suggesting Stop Order Entry
  • Order Types – Conditions Suggesting Market Order Entry
  • Order Types – Conditions Suggesting a Scaled In Approach (Working entry in an area)

 

Trade Management

Use this section to learn to adjust your trade management style to suit whatever the market throws at you.

  • Trade Management – Conditions Favouring Targets
  • Trade Management – Conditions Favouring Trailing Stops
  • Trade Management – Conditions Suggesting a Scratch & Reassessment
  • Trade Management – Conditions Suggesting Re-entry After an Initial Stop Out

 

Ok! That list is not complete. I'm sure with a little thought both you and I could come up with more. But it's a good starting place.

If you're new to journaling, pick a topic of interest and focus solely on that topic for the next month. Every day, find one example. Print it out. Add notes. And file it away.

Just imagine what a valuable resource you'll have on your hands if you do this each trading day for the next year!

Happy journaling,

Lance Beggs

 


 

Written by

YourTradingCoach - Admin

11 Comments to “Market Structure and Price Action Journal Categories”

  1. Marj says:

    Hi, thanks a lot for this post. I was also wondering about how to categorize my market structure journal. I am already exploring some of these ideas, but you have just given me a lot more to think about.

  2. Michelle says:

    Hi Lance,

    I found this article very useful for my own learning process. I just started working on my market structure and price action journal past week. Even though I have found it very helpful, I notice that it takes me a long time to complete each chart/trading session study. After a regular trading session, I spend about 3 hours of studying, but I can only study 1-2 charts per night because it takes me almost 2 hours to observe and write notes. I am not sure if I am doing it wrong. My notes are about 3-4 pages long for each chart. Just wonder if that is too much. Do I need to make it more concise? How long/short are your notes? I do notes following the questions you listed in your “The Greatest Trading Book” and “Effective Session Review.”

    Thank you,

    Michelle

    • Lance Beggs says:

      Hi Michelle,

      Thanks for great feedback. I’m pleased that you found this article useful.

      It’s most important with your journaling that you find something that is sustainable. You want this practice to continue for the long run. 3 hours may not be sustainable for you. I don’t know? Certainly for me that would be impossible to achieve and maintain.

      My whole review & replay process is usually complete within 2 hours total. The “MS/PA journaling” part of this will take only 15 minutes max. Usually, during the session, I’ll have identified what MS or PA feature I want to study. So it’s only a matter of screen capturing the chart and then completing the journal entry. For notes… these are typically whatever can fit on the chart. So it’s one page only. The same applies for a trades journal entry. One page, 15 mins max.

      It’s easy to say that the more you can do, the better the long term results. But sustainability is essential. You’ll need to find a nice balance that allows for effective learning within whatever time constraints your lifestyle and other family/job commitments allow.

      And of course it helps to systemise as much as possible via daily/weekly routines, standard templates etc.

      Best of luck,

      Lance

    • Michael says:

      Hi Michelle,

      another market student, here – I used to feel overwhelmed by information when I started my journaling, and as a result I was spending a lot of time attempting to capture every single detail from every single chart.

      With time, I found a balance by looking for only the one or two most obvious features on each chart, which is trivially easy to do with perfect post-session hindsight – totally different story when the market is evolving in real time, but that’s why we bother with journaling! πŸ™‚

      I personally found that market features that look “really obvious” are also the ones that tend to be most reliable and profitable for me; so as a rule of thumb, if I need too many details to identify and characterize a certain feature, then it’s not worth looking into. The less details I need, the more interested I am in cataloging. This streamlined my own journaling process a lot.

      Of course everyone is different and this is just my personal experience; nonetheless, I hope this helps somewhat!

      Michael

  3. Kailash says:

    Hi Lance,

    This Market structure journal idea is brilliant! Many mentors just say that you should improve your skills but do not provide an organized approach like you do! Thank you.

    I would like to start a MS journal which helps increasing my skill in spotting a trend that goes against my entry, so I can reverse my trade and recover the loss. This cannot be a mechanical criteria but a discretionary skill since the sooner I spot it, the faster the recovery.

    Can you suggest which categories would be best for this? Each day the market movement is different but there are clues to spot the switching between choppy market and trend developing later in the morning.

    Thank you for your help in advance,

    Kailash

    • Lance Beggs says:

      Hi Kailash,

      Thank you! I’m pleased you’ve found value in my writing.

      If I understand correctly (and I quite often don’t so please reply if I get it wrong) you’re interested in learning to quickly identify when the existing trend structure has changed, so that you can more quickly enter the new environment? Is that right?

      In that case, your focus should be on trend transitions.

      Study the point at which the environment changes.

      Uptrend -> Sideways Trend
      Uptrend -> Downtrend
      Downtrend -> Sideways Trend
      Downtrend -> Uptrend
      Sideways Trend -> Uptrend
      Sideways Trend -> Downtrend

      Look for the clues that pre-empt the change.
      Look for the signs that the change is occurring.
      Look for the signs that confirm the change is complete.

      Lots of examples!!!!

      Enjoy the process,
      Lance.

      • Kailash says:

        Thank you, Lance. You have covered all scenarios which result in a new trend! Appreciate it very much.

        My primary interest was the trend developing from the choppy market condition commonly present at Market Open at 9:30 AM EST in the TF futures market.

        I will look for all the different clues you have mentioned, so I am prepared to jump in as the trend is underway. Just plain Opening Range Breakout doesn’t do it for me!

        Thank you for your help.

        Kailash

        • Lance Beggs says:

          Hi Kailash,

          In this case your focus should be on studying market opens. What factors would lead you to rapid recognition of the trend. Most important… don’t forget context. Look wider than the current price action at the open.

          Best of luck,

          Lance

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