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

 


 

Written by

YourTradingCoach - Admin

5 Comments to “The Other Trader (5)”

  1. Personally, I believe most short-term price movements are market inefficiencies. So I use Overbought and Oversold signals on entry and exit but stay with the longer-term trend.

  2. C says:

    Hi again Lance,

    A question:

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

    A feeling of having someone one of the big guys on the same side as us as well should also do, no? A with-the-trend trade for e.g.? I guess what I am asking is, should the statement be “If I can feel someone on the other side of the market is getting it really wrong, then there *is* a trade”? Or am I off?

    Thanks!
    ~C.

    • Lance Beggs says:

      This may be a way that you can sense the buying or selling pressure within the market. For me, I find it easier the other way. I place myself in the mindset of someone trying to trade against the trend and time my entry at the point of their maximum fear or disappointment. But by all means try the other way if you feel it makes more sense to you. The concept sounds fine. I just personally pick up on the signals better the other way.

      • Lance Beggs says:

        Actually, I might have misread your comment. Aren’t you saying exactly the same thing? “If I can’t feel… then there is no trade” is the same as “If I can feel… then there is a trade“.

        So yes, based on this realisation that we’re saying the same thing but just from opposite perspectives, then yes this is a valid way to think about it. Ignore my prior comment. πŸ™‚

  3. C says:

    Thanks Lance!

    I thought out loud in that comment and it probably came out all cryptic. πŸ™‚

    When I read “If I can’t feel…, then there is no trade”, I read it as you *only* trade a trap strategy. And “If I can feel…then there is a trade”, I would read as you *also* trade a trap strategy. But I think I got your point. It’s a matter of perspective. Even for a with-the-trend trade, there has to be someone on the other side. I tend to ignore who is on the other side if I have a feeling that there are some big guys with me on my side of the trade.

    Thanks!
    ~C.

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