Tag Archives: Decision Making

Good Trading Isn’t Just About Winning Trades

 

There were two lines in last week's article, which I want to continue exploring today.

Good trading isn't just about winning trades.

Just as important is managing yourself during those times when you don't have a good read on the market.

This business is HARD. And I tend to perhaps focus on the negatives a little more than some readers like. But this aspect of the game fascinates me.

Anyone can talk about the easy sessions, with directional markets and quick profits. But I want to talk about those times when we struggle. How we make decisions when under pressure. And how we can best manage our performance to safely close out the day and survive to trade again tomorrow.

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

So let's have a look at Wednesday and see how I managed my performance, on a day when fate decreed that very little should go right.

And yet, I somehow managed to get out of it with a slight positive result. I guess, as per the notes in the image above, that makes this a damn good day.

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

<image: Managing your performance when it's just not working to plan>

Wrong direction entries – they happen.

Neutral openings chopping above and below the opening range – they happen.

Impulsive entries, in places and times you had no intention of trading – they happen.

Your job is to manage your performance such that these things do not destroy you.

Recognise… and adapt.

The key lesson to surviving days like this is simply the following – recognise it happening quickly – and STOP TRADING.

The odds are that the longer you continue to trade in these conditions, the greater the likelihood that you'll grind your way down to your daily drawdown limit. That is not a good outcome for your account. And not a good outcome for your mindset.

You've got to stop.

You don't have to trade every market sequence. And you don't have to trade a full session every day.

If the market is offering crap conditions or if you're just out of sync with the flow of the price action, get out of there.

Come back tomorrow, when everything is new and you're ready to start again with a clear mind and a positive attitude..

<image: Managing your performance when it's just not working to plan>

Good trading isn't just about winning trades.

Just as important is managing yourself during those times when you don't have a good read on the market.

Recognise that it's not working. And STOP.

Tomorrow is a new day.

Happy trading,

Lance Beggs

 


 

Recognise when it’s not working – and ADAPT

 

The plan was simple. Catch the opening drive. And bask in the glory of a winning start to the new session!

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

Three failures… compulsory time-out!

Note that this doesn't necessarily mean three losses. The first two were small wins. The last was a small loss.

I'm still in front.

And now have some important information.

THE MARKET IS NOT IN AN OPENING DRIVE.

So it's time to put the mouse down. Step away and clear my mind (it doesn't take long – I was gone for maybe 30 seconds at most).

And then reassess.

There are generally two ways I'll play this.

Option 1 is to just pack up for the day. Today is too early for this. But if I hit a stretch where I'm out of sync with the market, say as it's approaching midday, I see no problems with just calling it a day and making sure that the small profit does not turn into a loss.

Option 2 is to bracket the whole area and then wait for price to break clear and show improved conditions. In particular smoother price flow! Then it's game-on. Reassess the trend, project it forward and identify the next trade opportunity.

<image: When you're out of sync with the market - recognise it and ADAPT!>

<image: When you're out of sync with the market - recognise it and ADAPT!>

Good trade.

Unfortunately this was the extent of the directional move and the market settled into some sideways ranging action.

<image: When you're out of sync with the market - recognise it and ADAPT!>

I'm actually quite happy with this trading.

Six trades. Only ONE went to plan.

Of the other five, one was a loss but the other four all provided partial small wins.

When you're not reading the market well, anything positive is a winner.

Lessons today…

Good trading isn't just about winning trades.

Just as important is managing yourself during those times when you don't have a good read on the market.

Because they DO happen.

Recognise when it's not working. And ADAPT.

Protect any profits, if you're lucky enough to have them. Or if you're on a loss, stop the bleeding.

Step aside. Clear your mind.

And if you want to continue, do so on YOUR terms.

Bracket the area which is causing your problems. And visualise. When price eventually breaks clear of this current chop, what conditions do you need to see before you will engage the market again?

Recognise when it's not working. And ADAPT.

Happy trading,

Lance Beggs

 


 

Step Back and Reassess

 

Let's start with a daily chart to get some "bigger picture" context…

<image: Step back and Reassess>

<image: Step back and Reassess>

And now down to the trading timeframe…

<image: Step back and Reassess>

A little side note regarding the entry: While it may not be immediately obvious, this trade is a variation on the YTC Price Action Trader PB Setup. The pullback is all occurring within the one single TTF candle (in this case the green one prior to entry). While that is not ideal and we would prefer to see an actual pullback of at least 2 or 3 candles on the TTF, the fact remains that in an opening momentum drive this is often all you will get. So we either miss out entirely, or adapt. In an opening drive, I'll be looking to the LTF data for the first pullback. Everything else (eg. LWP entry timing) is as per normal.

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

<image: Step back and Reassess>

If you've lost all feel for what is happening in the chart…

(1) Step back.

(2) Define the edges of the structure.

(3) And wait.

Whatever happens within that no-trade zone, is none of your concern.

Let it break and then reassess.

Only then, if the market structure and price movement makes sense, is it game on.

Assess the trend structure. Project it forward. Identify your opportunity. And strike!

Happy trading,

Lance Beggs

 


 

Step Back – Define the Edges – and Wait

 

Let's talk about recovery from a poor start to a trading session.

Like this one…

<image: Step Back - Define the Edges - and Wait>

<image: Step Back - Define the Edges - and Wait>

<image: Step Back - Define the Edges - and Wait>

<image: Step Back - Define the Edges - and Wait>

So here's the plan in three stages…

<image: Step Back - Define the Edges - and Wait>

<image: Step Back - Define the Edges - and Wait>

<image: Step Back - Define the Edges - and Wait>

<image: Step Back - Define the Edges - and Wait>

<image: Step Back - Define the Edges - and Wait>

Whenever you step away from a chart and miss a sequence of price action, you can almost always look back at it with hindsight and see opportunity that you could have taken.

Ignore it.

It wasn't yours to take.

When you've started a session poorly and have struggled to get in sync with the price movement, your job is to step back and clear your mind. Any opportunity you miss during that period of recovery is irrelevant. Let it go.

Step back. Clear your mind.

Define the edges of the structure which caused you problems.

And then wait until price has broken that structure and the market has shown you the directional bias.

Only then is it time to trade.

Happy trading,

Lance Beggs

 


 

Managing Trading Decisions with Simple Compliance Checks

 

I want to share a simple process used by a reader in addressing a recurring problem in his trading. I was happy to see him use this approach, because it references a post-session technique I shared quite a few years back.

And perhaps it will be useful to you as well, in ensuring compliance with any changes you wish to make to your trading.

Problem:

With-Trend (WT) trades were providing positive stats but he was consistently giving too much back through his Counter-Trend (CT) trades. The CT trades show some promise so he's not quite willing to abandon them entirely. But he wants to cut back on the number.

So here's the plan:

(a) No CT trades unless the daily P&L is positive.

(b) Aim to ensure that there are more WT trades than CT trades.

The plan for this month is to ensure 100% compliance. Item (a) will avoid his tendency to dig himself into a hole occasionally in fading a trending market. And item (b) will ensure that he is trading (more often than not) in the direction that "should" offer the most opportunity.

One month only. Then reassess.

In particular item (b) because he does recognise that some days are quite rotational and may be better suited to CT trading.

But that's for the future. For this month, 100% compliance. And let's see if that provides improvement to the trading results.

Implementation:

Pre-Session:

  • Reading the plan and making a verbal declaration of intent to comply with both items.

 

In-Session

  • A single sheet of paper with two columns – WT and CT. Place a checkmark after each trade. The aim is to ensure more checkmarks in the WT column than the CT column.

 

Post-Session

  • Addition of two Compliance Check questions to his post-session routine.
    • (1) Were any CT trades taken with P&L at or below zero? If so, why?
    • (2) Did the WT trades outnumber the CT trades? If not, why not?
  • Marking up a calendar with a large green tick if he complied with both items.

 

The use of the calendar is something we discussed here – https://yourtradingcoach.com/trading-business/dont-break-the-chain-a-simple-tool-to-improve-consistency/. The original discussion aimed to ensure consistency in completing each part of your daily routine. What he is doing differently is using this same technique to ensure compliance with desired changes in his decision making. Effectively, using it as a reward or punishment system to guide and shape changes in the way he trades.

I also love the use of green ticks rather than the red crosses we used in the original article. Green ticks provide a more "positive" reinforcement than red crosses.

At Month End:

  • Review the outcome, ideally achieving both WT and CT profits, but at the very least ensuring that CT losses are somewhat contained and do not completely erode the WT profits.
  • Assess the effectiveness of the plan in making positive changes to the trade results.
  • Continue or amend, as required.

 

It's Your Turn to Take Action:

What trading behaviour do you need to reinforce on a daily basis? Is there something you know you need to change, only to find yourself repeating the old behaviour over and over again?

Consider trying a similar process, as described above. Just for a month.

Pre-Session declaration of intent. In-Session tracking to manage your decision making. Post-Session confirmation of compliance and a visual reward system to track your progress.

See if you can keep those green ticks going for the whole month!

It only adds a couple of minutes to your trading routines. But if it can help to reshape your behaviour away from destructive practices, then the benefits could be priceless.

<image: Managing Trading Decisions with Simple Compliance Checks>

Happy trading,

Lance Beggs

 


 

Embrace the Suck

 

Let's talk a little about mindset. Or more specifically about our expectations leading into the day.

Because I suspect that the way I approach the game differs quite a bit from many other traders.

The market has opened…

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

It's all about expectations.

I expect a really tough day…

and embrace the suck.

<image: Embrace the suck>

Source: Wiktionary

This difference in mindset is important.

Expecting simplicity leads more often than not to disappointment and frustration, as conditions do not turn out the way you expect.

And disappointment and frustration do NOT typically lead to effective decision making, as we analyse the market and identify and manage trade opportunity.

Expecting a challenge leads to a slightly more defensive mindset. One ready to survive through difficult conditions. And yet still open to potential large gains when the market surprises us with more favourable price movement.

Market conditions OFTEN suck.

The sooner you can accept and appreciate this. And in fact EXPECT it, the sooner you'll be able to get on with the job of managing it.

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

<image: Embrace the suck>

EMBRACE THE SUCK!

If the market provides massively favourable conditions… that's a bonus.

If my execution just happens to be flawlessly in sync with the price movement… that's a bonus.

But I don't ever expect it.

Confidence does not come from hoping or praying for A+ trading conditions.

It comes from knowing that even if the market conditions are crap, or your execution at times really stinks, you can adapt and overcome.

Embrace the suck!

Expect it.

And learn to prevail despite it.

That is how you develop unshakeable confidence.

Happy trading,

Lance Beggs

 


 

Resume the Fight at a Time of YOUR Choosing

 

I sent the following post out via social media on Tuesday, prompted by some discussion with a trader who dug himself into quite a hole through doubling down on losses.

This message is so important I thought I'd share it with my larger audience here in the newsletter. And also take the opportunity to expand upon the idea a little.

<image: Resume the Fight at a Time of YOUR Choosing>

This is one of the key advantages you have as a discretionary trader.

YOU get to decide when and where you will play this game.

If the current conditions are not to your liking, NO-ONE is forcing you to play.

Get out of there.

Take a break. Clear your mind.

And come back at a time of YOUR choosing, when the conditions are more suited to your style of trading.

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

I have clear guidelines in my own trading plan:

<image: Resume the Fight at a Time of YOUR Choosing> 

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing>

<image: Resume the Fight at a Time of YOUR Choosing> 

 

ACTION ITEM:

Schedule some time to review or amend your Trading Plan.

Make sure to include guidelines or rules for the following:

(a) At what point intra-session will you stand aside and force a break from trading? What changes need to occur before you will allow yourself to resume trading?

(b) At what level of intra-session drawdown will you force a stop for the day?

And longer term:

(c) At what level of drawdown will you force a break from all trading, in order to review your performance and reconsider your plan?

Happy trading,

Lance Beggs

PS: For those concerned that trading should never be a fight… it's simply an analogy that I find particularly useful. See here – https://yourtradingcoach.com/trading-process-and-strategy/trading-is-a-fight/ . The concept is still relevant even if you prefer to not view the game in this manner. If you're out of sync with the market, step away. Come back and play at a time of your choosing, when the conditions are more suited to your style of trading and your preference for market conditions.

 


 

Applying a Degree of Confidence to Price Targets

 

I don't care how good your analysis is. There are NEVER any certainties that a target will be hit.

So let's look at a little technique which can help your decision making during both the trade planning and trade management phases.

This article idea was prompted by some great email Q&A I received recently.

Let's start with the email question and response. I'll then expand upon part of my reply, as I think it's an important topic that deserves further discussion.

EMAIL IMAGES:

The email included a 30-minute Higher Timeframe chart. It's not reproduced here. It's sufficient to know that the higher timeframe is in an uptrend.

The following is the 3-minute Trading Timeframe chart showing the prior day in the left half and the current day to the right.

Click on the image if you want to open a larger copy in your browser… or just skip down lower to where I've zoomed in to the current session.

<image: Email Trade Image>

Let's zoom in now to show just the current session:

<image: Email Trade Image>

The question is quite clear from the text on the image, but just to be sure I'll include the email text as well:

EMAIL TEXT:

As per chart on 17th I was long on the days range low also the price was above the previous day close. So decided to go long on range low (865 with sl 862) as the major trend in 30min was in up trend. So I was right in my analysis however and kept my position open even though price hit the range high of the day with the expectation of reaching the target of 874. However it didn't went as per the expected and my SL got hit and post my SL hit , price went till 875 and hit achieved my TGT. Sir if I m wrong and my SL get hit I can understand that, however if I m right and my SL space is right and my Sl get hit and post that TGT is achieved . How to handle these kind of situation?

SO HERE'S THE SITUATION:

<image: Email Trade Expectation and Outcome>

I must say… I love the trade entry. From a YTC perspective it's aBOF of the low of day support, coinciding with the prior day's high resistance, in the direction of a longer-term uptrend.

Very nice trade idea!

The following was my response:

EMAIL RESPONSE:

You ask, "How to handle this kind of situation?"

There is no "situation" here. What has happened is completely normal in the markets. The nature of price is that it often involves tests, retests, probes, spikes and all manner of action that traps people and stops them out before going on to the target. This is completely common.

How I would handle it (accepting that this is hindsight analysis and I didn't actually trade this market):

(a) The market on this trading timeframe is ranging. You entered beautifully. But I would have taken at least partial profits at the range high. It's the nature of ranging markets that they will continue to range, until orderflow triggers the breakout. There are no certainties in the market. So while you identified a good target much higher than the upper range boundary, surely you MUST have in mind the potential for the range resistance to hold. In that case, take part of the position off.

(b) And then being stopped out on the remainder, why did you not get back in? There's a beautiful re-entry just after 14:00.

Look back through my site. There are numerous articles along the theme of sometimes trades take multiple attempts. Here's one of the recent ones – https://yourtradingcoach.com/trader/how-i-think-on-trade-exit/

Sometimes a trade takes two attempts!

LET'S EXPAND UPON ONE KEY POINT

This is the point of today's article.

As mentioned earlier… I don't care how good your analysis is. There are NEVER any certainties that a target will be hit.

So here's a little tip which can improve your decision making regarding targets. After selecting your target, apply a degree of confidence.

For the example above, instead of saying "the price target is 874", the trader might have said "the price target is 874, with a 70% degree of confidence".

Or whatever other percentage they thought was appropriate.

The thing is – it's NEVER 100%.

In fact, I'd go as far as to say you should never select more than maybe 80%.

How does this benefit you?

It forces your mind to accept the possibility that the target may not be hit. If we selected the target with a 70% degree of confidence, then this means there is a 30% chance it won't be hit. So in planning out the trade we might consider alternate IF-THEN scenarios involving possible exits at the range highs, should they fail to break.

Give it a try. See if this helps improve both your trade planning and your subsequent trade management decisions.

And for more advanced application… continue to update that degree of confidence as more data unfolds in real-time.

Good trading,

Lance Beggs

 


 

It’s All About Real-Time Contextual Decision Making

 

You've learnt the pattern or setup. Great. But that's not trading.

Now work on the real-time contextual decision making around that pattern or setup.

Look beyond the pattern itself to the wider context.

Where is the pattern occurring within the larger timeframe market structure? What structure will suggest avoiding this particular setup? What structure might suggest caution, or reduced position sizing? What structure might suggest increased odds and the potential to really press the trade for a larger gain?

Where is the pattern occurring within time? Are there news influences which suggest passing on the trade? Are their time-of-day / week / month factors which might suggest standing aside?

Consider the behaviour of price movement – the pace, the volatility, smooth vs choppy price action.

What conditions might suggest adjustments to the default plan? All-in vs scaling in? All-out vs scaling out? Closer stops vs wider stops? Closer targets vs extended targets?

Consider the real-time decision making once in a trade.

What signs might suggest a loss of edge? How will you react to this new information?

What signs might suggest greater potential than originally perceived? How will you react to this new information?

What conditions suggest a re-entry attempt should be taken, if stopped out of the position? And how many re-entry attempts are appropriate?

Trading is not about simplistic patterns. It's about real-time contextual decision making.

If you've been on the wrong path then it's time to make a change. It's time to do the real work.

Best of luck,

Lance Beggs