Tag Archives: Market Structure

When the Trap Entry is itself a Trap

Posted in: Trading Process and Strategy | , by
No comments

 

Let's start by viewing the market right as it opens:

<image: When the trap entry is itself a trap>

<image: When the trap entry is itself a trap>

Readers of the YTC Price Action Trader have several principles they use for projecting the upcoming price swings and identifying areas of potential trade opportunity.

<image: When the trap entry is itself a trap>

<image: When the trap entry is itself a trap>

BUT WAIT!

There is something else that should be jumping out at you as relevant as well.

Something that we have discussed numerous times over the last couple of years.

That's right – it's a trap RIGHT BEFORE the regular session open.

See here if you missed the prior articles:

 

Here is the general idea:

<image: Traps Just Before RTH Open>

This is a feature of the open, long recognised through my daily Market Structure & Price Action Journal practice.

Traps just before the open can often provide nice follow-through, when the breakout fails in the opening price sequence.

<image: When the trap entry is itself a trap>

Wait!

What?

Why not today?

Because there is a price action feature that suggests the trap is itself potentially a trap.

It's IMPORTANT to look at the area the trap is moving into.

While normally I only put minor weighting on overnight price structure, there are some times it offers clear warning signs.

Like this:

<image: When the trap entry is itself a trap>

<image: When the trap entry is itself a trap>

<image: When the trap entry is itself a trap>

Let's move forward and see the outcome.

<image: When the trap entry is itself a trap>

<image: When the trap entry is itself a trap>

<image: When the trap entry is itself a trap>

A break of a significant level just immediately prior to the RTH open, or immediately after the open, should have you considering the potential for trap-driven opportunity. But just pause for a second and check the context. Does the pre-open structure provide a potential barrier to movement? The trap concept will still apply. However you might just need to widen the area and hold off on entry, until the barrier is also broken.

Because otherwise, you might find that the trap you're seeking to trade is itself a trap!

Happy trading,

Lance Beggs

 

 

Opening Structure Trap

Posted in: Trading Process and Strategy | , by
No comments

 

I do very much like a large Gap Open with a strong Opening Drive.

<image: Opening Structure Trap>

But do you know what's better than a large Gap Open with a strong Opening Drive?

How about a large Gap Open with Opening Drive failure and reversal to the opposite direction!

<image: Opening Structure Trap>

We have discussed traps at (or just before) the RTH Open quite a lot over the last year.

<image: Market Open Traps>

But if I recall correctly, the vast majority of these trap examples occur within the opening 1-5 minutes, or so.

The concept today is the same. The reason it works so well is the same.

IT TRAPS SOMEONE IN A LOSING POSITION.

It just happens over a slightly longer time period.

<image: Opening Structure Trap>

There's a key point here related to trading success. A big part of success comes from minimising damage during those times when your plan is out of sync with the actual market conditions. Conduct your analysis and trade accordingly. But always keep in mind the following: (a) What do I need to see to know I'm right? (b) What conditions will confirm I'm wrong, or at least raise some doubt and allow me to contain risk?

And by minimising damage I mean not just to your account, but also to your mindset. Both are essential for profiting from the subsequent momentum drive, once the trap is sprung.

Let's step through the trade sequence.

<image: Opening Structure Trap>

<image: Opening Structure Trap>

<image: Opening Structure Trap>

<image: Opening Structure Trap>

<image: Opening Structure Trap>

<image: Opening Structure Trap>

What is better than a large Gap Open with a strong Opening Drive?

A large Gap Open with Opening Drive failure and reversal to the opposite direction!

But only if you don't destroy your account or mindset, during the times when you're wrong.

Happy trading,

Lance Beggs

 

 

Market Open Traps

Posted in: Trading Process and Strategy | , by
No comments

 

Market Open Traps are by far my favourite opening play right now.

I've demonstrated these quite a bit over the last year or two. Sorry for the repetition – but they're just working so well lately.

Not always for massive profits. The two shown today are definitely singles, rather than home runs.

But they're reliable. And while they keep working, I'll keep watching every open to see if I can catch one.

Here's the general concept.

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

The opposite applies as well. Price approaching a level of significant overnight resistance, breaking it just prior to or immediately after the open, and then smashing lower and trapping any LONGS in a losing position.

My plan of action upon seeing this set up is to prepare for either BOF or first PB trade opportunity, as taught here.

Let's start with Monday 24th February 2020…

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

And again the very next day…

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

<image: Market Open Traps>

Simple PB setup opportunity… but within the unique context of a trap setting up just before or immediately after the market open.

They're not always home run trades, as we've seen. But they're reliable. And right now, they're certainly my favourite opening play.

Review your charts and see whether you can apply this concept in your own markets and your own timeframes.

And if so, be ready, watching and waiting prior to the open.

Market open traps are a great way to get a quick and early entry into the market's opening trend.

Happy trading,

Lance Beggs

 

 

Step Back and Reassess

Posted in: Trading Process and Strategy | , by
5 comments

 

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

 

 

Traps Just Before RTH Open – 5

Posted in: Trading Process and Strategy | , by
One comment

 

Last Friday at 9:28am, just two minutes before the Regular Trading Hours (RTH) Open, the market suddenly jumped.

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

That's right – it's a trap RIGHT BEFORE the regular session open.

See here if you missed the prior articles:

 

Here is the general idea, in both bullish and bearish form:

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

Well today we got the second version – a trap through overnight resistance which rapidly fails.

And so we'll be looking for opportunity to enter SHORT.

<image: Traps Just Before RTH Open>

Let's try something different though…

Rather than sharing my trading, I'd like to share a chart from a trader who has recently been making good progress with the YTC Price Action Trader methodology.

Having read the recent "trap before RTH open" articles he's been aware of this opportunity, but hasn't managed to catch one prior to this session.

This time was different.

His email:

Hi Lance,

I hope you've had a great week.

I just wanted to follow up again to say THANK YOU! I've come so far in my trading since I purchased your book back in October. I read all of your Twitter posts and newsletters and the topic that kept standing out was the BOF just before the open and how to trade it. I kept watching it happen and would miss the opportunity to get involved. Consequently, that lead to me trying to find another BOF or TST in the opposite direction of the opening drive, which resulted in small losses that were frustrating. I finally decided that when I see this again, I will get involved on a PB or CPB and if I miss the trade then I miss the trade…put it behind you and move on.

Today I saw a BOF just prior to the open on the NQ (I'm still trading the MNQ). I was ready and I executed without hesitation. In hindsight I could've managed the trade a little better but I'm very happy the process I went through to execute this trade. I have you to thank for this. Please know that your posts and newsletters are more helpful than you can imagine…and I know I'm not the only one who feels that way. I attached my chart and this will definitely be one that I will reference regularly.

Thanks again for all you do…have a great weekend!

Hunter

The "BOF" that he refers to is the YTC Price Action Trader name for the trap. The PB is the first setup short.

Hunter has included the following 30 second chart showing his trade entry and management. If you click on the chart it should open a full-size copy in your browser.

<image: Traps Just Before RTH Open>

Awesome!

Hunter – well done! That is a great trade.

The only thing better than catching a trap before the open, is seeing someone else learn from my prior articles and actually catch one themselves.

Some final words from Hunter:

I really enjoy reading about other traders' experiences and I hope that my experience can help others as well. Just as a reference, in case anyone asks, I use Interactive Brokers for my charts and as my broker. I'm only trading 3 contract lots of the micro futures MNQ, MES, and M2K. I started with 2 contracts and will increase my contract size as I continue to progress. Again, thank you for your encouragement and for all that you do for the trading community. Have a great weekend!

Happy trading,

Lance Beggs

 

 

Confidence in the Trend

Posted in: Trading Process and Strategy | , by
No comments

 

I've been discussing this idea for quite a while now. The idea that there is GREAT VALUE in studying your charts post-session to identify the price sequences which offered the best trading conditions. And then… the structural features which might help you identify similar trading conditions next time they occur.

Just last week in our newsletter I shared the following social media post: 

<image: Where does price move best?>

This is not just something we do for fun.

The exercise has clear and obvious benefits.

One of them being – when I see these patterns set up again they give me CONFIDENCE in the subsequent trend.

The image above gives one of these patterns.

Tuesday's trading gave us another…

Let's start with the 15 minute higher timeframe at the time of session open.

<image: Where does price move best?> 

<image: Where does price move best?>

<image: Where does price move best?>

<image: Where does price move best?>

<image: Where does price move best?>

<image: Where does price move best?>

<image: Where does price move best?>

<image: Where does price move best?>

<image: Where does price move best?> 

Not all trading conditions are equal. There will be times when the markets provide conditions that best suit our strategy. At these times we need to be focused. We need to know what we want to see to confirm these favourable conditions. And we need to be confident and ready to act decisively when they appear.

And there will be times when the market provides conditions that are less suited to our strategy. At these times we need to step back a little. Be happy to pass on anything that is not screaming out to be traded. If we miss opportunity, so be it. Let it go. And wait for something more favourable.

Post-session study lets you identify those sequences which best suit your style of trading. And to identify the structural features or patterns which might suggest a repeat of these conditions, should they set up again in the future.

For my own personal trading, I perform better in directional markets with nice smooth stable trends. The overnight volatility contraction is one pattern that has me primed and ready for potentially good trading conditions from the open. A pattern which provided me with confidence to TRUST the trend, should it develop from the open.

Are you aware of the conditions which you find most favourable? And the structural features or patterns which might help you identify these conditions again in the future?

If not, you have work to do. Study the charts for those areas where you see that "price moves best". And make sure that next time the market offers similar conditions, you're ready and focused, with the confidence necessary to attack that market opportunity.

Happy trading,

Lance Beggs

 

 

Traps Just Before RTH Open – 4

Posted in: Trading Process and Strategy | , by
No comments

 

Traps immediately before the open… we've discussed them a number of times over the last year.

Here are some of the previous discussions, if you missed them:

 

And you'll probably find a few more examples if you scroll back through the social media feeds.

The thing is though – the market keeps presenting us with this great opportunity. And they do say that repetition is the mother of all learning. So let's look at another example, from last Monday.

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

From a YTC Price Action Trader perspective, it's simply a first PB in a new trend. But as the last image states – it was caught because I recognised the trap before RTH open, which had me primed, ready and waiting for the opportunity LONG.

Trades like this ONLY happen because of my Market Structure & Price Action (MSPA) Journal. If you don't have one, then I highly recommend you start. Every day – make at least one entry into the journal. Find something interesting within either the structure of the chart, or the way price moves, and document it.

Over time, you'll start to notice repetition of ideas.

And that is where you find opportunity.

Study them inside and out. Set up rules or guidelines for ways to exploit that opportunity. Implement, test and develop.

Today's article gives you two areas of exploration, in starting your own MSPA Journal.

(1) Traps before (or immediately after) RTH Open.

(2) Opening Momentum Drives.

If you follow me on social media, you will recall the following two posts in recent weeks:

<image: Opening Drive Study>

<image: Opening Drive Study>

Well now you have a third opening drive to study. And I promise you the market will provide more.

This is the path to learning.

Every day – find something interesting. Document it. Study it. And then when you start to see repetition of ideas – dig deeper and find a way to exploit that opportunity.

Happy trading,

Lance Beggs

 

 

Recognise the Current Conditions. And Adapt.

Posted in: Trading Process and Strategy | , by
No comments

 

I'm displaying charts without any trade markers here, so that you can focus on the price action without any distraction.

Because there is a very important fact that not everyone gets. And rarely is it displayed in such a simple and obvious manner, as it is with the two charts we'll discuss today.

That fact is that NOT ALL DAYS ARE EQUAL.

Regardless of your approach to trading, some sessions will provide structure and conditions which are highly favourable. In these sessions you want to actively and aggressively engage the markets. You want to press your advantage.

Some sessions will be highly unfavourable. In these sessions you want to step back and limit engagement. Your primary aim is to minimise any damage and survive to trade another day.

And of course the majority of sessions will fit somewhere in-between – at times slightly more favourable – and at times slightly more unfavourable.

Your job is to recognise the current conditions. And adapt.

Most people focus far too much on their setups. And focus far too little on the context of the market – the background structure and conditions within which they're seeking to trade their setups.

The following two charts display the E-mini NASDAQ (NQ) 1-minute chart from 09:30 till midday. This is my primary trading period. The two charts cover Monday the 2nd and Tuesday the 3rd of December. Of note, the vertical price scale (RHS) is the same on each chart.

<image: Recognise the Current Conditions. And Adapt.>

<image: Recognise the Current Conditions. And Adapt.>

Perhaps what you consider favourable and unfavourable will differ from my preferences Perhaps if you have a preference for counter-trend mean-reversion scalping, then you'll prefer Tuesday's action to Monday's.

Regardless… the same point still applies.

Most people focus far too much on their setups. And focus far too little on the context of the market – the background structure and conditions within which they're seeking to trade their setups.

Spend some time identifying the structure and conditions in which you're most in sync with the market and most easily able to trade. And also, the structure and conditions which cause you problems.

Set up "rules" to allow quick recognition of the current state of the market. And guidelines for how you will trade.

The sooner you can recognise the current state of the market, the sooner you can adapt.

And perhaps you can stop giving back all of your "favourable day profits" when you find yourself chopped up in an unfavourable session.

Happy trading,

Lance Beggs

 

 

Step Back – Define the Edges – and Wait

Posted in: Trader | , by
No comments

 

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