The following image was a recent post at YourTradingCoach Facebook.
If you want to check the pattern out, it's 11th Dec 2013; GBPUSD; 3 min TTF; at 09:51 UTC.
Today I'd like to discuss the statement within the yellow box, "Real opportunity is found at the edges of market structure, where the risk is smallest and the profit potential the greatest".
I recall back in the early days of my own trading, I had the opportunity to look at a chart of a professional trader, which contained annotations showing his entry and exit points. Talk about cognitive dissonance! That was truly an uncomfortable experience as the reality of what I was seeing did not in any way match what I believed to be true about trading.
I just didn't get it at the time.
In fact, I convinced myself that the chart was fake. There was (in my opinion at the time) ABSOLUTELY NO WAY that entries could be taken at the places marked on the chart. They were too close to the actual turning points. I'd studied Technical Analysis quite extensively. I knew that there were no TA methods to identify a turn point so accurately. You HAVE TO wait for confirmation of the move. There was no way on earth this guy actually took these trades.
Of course… I was wrong.
My own knowledge and experience were not sufficiently developed at the time to understand what I was seeing.
The reality, for swing traders, is that opportunity is found at the edges of market structure where the risk is smallest and the profit potential the greatest.
Most traders seek confirmation… by which they mean that "they need to see price having already moved in their expected direction". They enter simply in the hope that this movement will continue.
This is a psychological crutch. It offers them nothing from a reward:risk perspective. It usually offers them very little in terms of greater win percentage. But it eases their uncomfortable feelings. They see that others have already entered, so they feel comfortable following the crowd.
But who do you think has caused the initial movement? Who do they think created the confirmation?
It can't be those who only enter after confirmation. It has to be those who have a deeper
understanding of how price actually works.