Tag Archives: Risk Management

Adding to a Position

Posted in: Trading Process and Strategy | , by
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From time to time I get asked how I add to positions. That is, entering a new trade while the prior trade is still open.

So I thought it might be a good idea to outline my response here. Then I can just link straight to the article in future. (Time management WINNER!)

The plan is nice & easy. Because this is not something I do very often.

<image: Adding to a Position> 

Ok… not always… sometimes I will hold a partial position for a larger move. But mostly that is how I operate. It's how my trading has evolved over time.

All in, scale out.

Wait for the next one.

If you wish to chase larger trends and hold through multiple price swings and retracements, pyramiding into a larger position with numerous entries along the way, then you should seek guidance elsewhere. It's not a part of my plan.

But still… I do add on the rare occasion.

So here's how it works.

Pre-conditions:

  • The existing trade MUST be in profit.
  • The existing trail exit MUST be in a position such that even if both trades stop out immediately, I will still profit overall from the combined sequence. Or at least not lose!
  • And most importantly, the added position MUST be a valid trade in its own right.

 

That last point is critical for me. The added trade MUST be one that I would want to take, even if I missed the original entry. 

Let's look at an example.

<image: Adding to a Position> 

<image: Adding to a Position>

<image: Adding to a Position>

<image: Adding to a Position>

<image: Adding to a Position>

<image: Adding to a Position>

<image: Adding to a Position>

<image: Adding to a Position>

You won't see many examples on my site, where I have added to an existing position.

But all of them will (or should) have the following in common:

  • The existing trade MUST be in profit.
  • The existing trail exit MUST be in a position such that even if both trades stop out immediately, I will still profit overall from the combined sequence. Or at least not lose!
  • And most importantly, the added position MUST be a valid trade in its own right.

 

Happy trading,

Lance Beggs

 

 

High Volatility – Thoughts for Developing Traders

Posted in: Trading Business | , by
8 comments

 

We have been blessed with some absolutely amazing markets lately.

<image: High Volatility - Be Careful Out There>

<image: High Volatility - Be Careful Out There>

<image: High Volatility - Be Careful Out There>

<image: High Volatility - Be Careful Out There>

Incredible daily ranges. Incredible opportunity.

And incredible risk, if not played wisely.

So while it's tempting to use today's article as an ego-boosting review of a couple of winning trades, that's not really what motivates me with my YTC writing.

I'm more concerned about your journey. I want you to succeed LONG-TERM. And I'm worried that right now there is more potential for damage than there is good.

So today – something a little different and perhaps unexpected.

For the developing traders… the ones who are still working towards either finding their edge or consistently applying their edge… I'm going to try to talk you out of trading these markets.

This week's action is already gone. But I have a suspicion that there is more volatility to come. And even if I'm wrong and it's all over for now, there will again be times in the future when markets crash and this article can make a timely comeback.

Here is what I'm thinking:

<image: High Volatility - Be Careful Out There>

<image: High Volatility - Be Careful Out There>

<image: High Volatility - Be Careful Out There>

<image: High Volatility - Be Careful Out There>

I'd be impressed if I received this email or private message: "Lance, I've worked my backside off for the last year and managed to grind out wins every week for the last quarter. But this last week – I've stood aside. I'm not ready for that pace yet."

This would not impress me at all: "Lance, these markets are frickin' awesome. My trading has been crap for months, but I just smashed it today. $5000 profits. I think I've finally turned a corner and have got this game worked out."

I'd back the first trader to succeed long term, over the second.

Repeating…

<image: High Volatility - Be Careful Out There>

Trading is never compulsory. At any time if you feel the conditions are beyond your current levels of skill and experience, then the RIGHT decision is to stand aside.

However this does not mean you close up shop for the day. There is still valuable work to be done in building experience and expanding your skill levels, so that when these conditions return again in the future you will be ready and able to thrive in the opportunity they present.

So here's the plan:

  • Put aside any feelings of FOMO. One day these will be your markets, but not today. Let it go.
  • And use these sessions SOLELY as learning opportunities.

 

There are many options for learning:

  • Do not trade at all. Simply follow the market attempting to stay in sync with the price flow. Build confidence in your ability to not only read the current trend but to also keep your mind ahead of the market, through projecting the current trend forward and identifying the most probable future path.
  • Or SIM trade, if you feel you've already advanced beyond that first idea. Build skill in trading at these new levels of pace and volatility, without risking actual funds.
  • Or maybe a combination of the two. Watch price live, but record data so that you can trade key sequences through post-session repay.

 

I'm sure you can come up with numerous other options.

The key point is…

Trading is optional. Learning is not.

Maybe I'm wrong. But I don't think so. You know your own level of skill and experience and are big enough and old enough to make your own decisions. Perhaps you think you'll be fine in these markets. All I ask is you consider the risk. Play these markets wrong, and let them put you into tilt where you start compounding bad decision after bad decision, and these sessions can destroy you.

We often know when we're about to have one of these high volatility days. The gaps overnight and the news leading into the session made it obvious that Monday and Tuesday were going to be highly emotional sessions. There is little to lose by choosing to stand aside. Choose to focus your live trading on more "normal" sessions. And use these higher volatility sessions as a learning opportunity.

It's your choice though.

So having said that, let me add a few thoughts for those who do trade these sessions:

  • Structure your trading so that individual trade risk and session risk still fit within their normal parameters. This will typically require reducing position sizes and widening stops, in order to cater for the greatly increased volatility. Some may also prefer reductions in chart timeframes, noting that this can create its own challenges through speeding up the whole process.
  • Don't get stuck in "prediction mode". The market doesn't care where you think it should be going. Even in a crash, the market can have massive rips higher. Ensure that your game plan is visualised pre-session and you have clear guidelines for how to recognise the ACTUAL direction of the market and how to align with that direction, despite what you feel it should be doing.
  • Recognise that the simpler opportunity is almost always going to be WITH the market direction, not against. If you're a counter-trend trader, consider countering the pullbacks for continuation in the larger session-bias direction.
  • Before placing any trade, KNOW WHERE YOU ARE WRONG. And do not hold beyond that point. Standard practice really, but especially important in these environments.
  • And finally, most importantly of all, never forget that your number one aim each and every day is to SURVIVE TO TRADE ANOTHER DAY.

 

Take care out there,

Lance Beggs

 

PS. At the risk of repeating everything above, let me share the post that was sent out Monday morning prior to the open. (Sign up for YTC social media here)

<image: High Volatility - Be Careful Out There>

 

 

Bridging the Gap between Sim and E-minis

Posted in: Trading Business | , by
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I make it a practice to never recommend any particular market as being suitable for your trading. It's none of my business what you choose to trade. I don't offer financial advise and to do so would be completely irresponsible as I have no insight into your individual needs or circumstances. (For more, see here for my Disclaimer and Terms & Conditions.)

However, I do care that you survive the learning curve.

So if you've made an independent decision to trade a market, and there is a lower risk option available, then please start there.

Prove success at the smaller level first. And build up to full size contracts and larger position sizes.

E-mini traders – don't trade the E-mini's until you've confirmed you can trade the Micro E-mini's. Forex traders – don't trade full size lots until you've confirmed you can trade the mini or micro lots.

If you do have edge, you'll transition quickly to larger size.

But until that is proven, please:

LOWER RISK.

AND INCREASE YOUR ODDS OF SURVIVING THE LEARNING CURVE.

The gap between sim and full-size contracts is quite large (in terms of risk). Make use of these "smaller" markets to bridge the gap and make the transition to live trading just a little smoother.

I was contacted by a trader who has recently gone live but then preceded to bleed his account into a 30% drawdown.

He's not trading the YTC strategy. I was pleased to hear that!

And I was most pleased to hear that he was smart enough to stop trading at 30% loss.

But here's what really annoyed me.

Although his 5-figure account size is sufficient for trading E-minis with 3 contracts, as a new trader he has no right to be starting there when other options are available.

New traders – PLEASE – always start live with the smallest position sizes available. And build from there, slowly and incrementally, as success and consistency are proven at each level.

Since May, the CME has offered Micro E-mini contracts.

MES – Micro E-Mini S&P 500 – the micro equivalent of the ES

MYM – Micro E-Mini Dow – the micro equivalent of the YM

MNQ – Micro E-Mini NASDAQ – the micro equivalent of the NQ

M2K – Micro E-Mini Russell – the micro equivalent of the RTY

All micro contracts being 10 times smaller in size than the equivalent E-mini.

See here for contract specifications – MES, MYM, MNQ, M2K.

Yes… the same markets… almost exactly the same charts… but 10 times smaller.

The number one rule for trading is to survive to trade another day (IIRC this was a lesson I got from Larry Williams). I highly recommend you adopt this rule in your own trading. But as a new trader who has yet to establish a proven track record, it's even more important.

Start small. And build from there slowly and incrementally.

I've finally managed to play with the MNQ in recent weeks.

The following was the 14th October, the Columbus Day holiday. Holidays are typically a "stand aside" day for me due to the potential for low volume, narrow range and largely unfavourable conditions.

So I just "played" with MNQ while doing other work.

<image: Micro E-Mini Futures>

<image: Micro E-Mini Futures>

<image: Micro E-Mini Futures>

<image: Micro E-Mini Futures>

<image: Micro E-Mini Futures>

<image: Micro E-Mini Futures>

<image: Micro E-Mini Futures>

<image: Micro E-Mini Futures>

 

I'm going to use MNQ for testing, alongside NQ. New trade ideas. And different trade management plans.

I've never been good at trading multiple markets at once, on these low timeframes. But with this idea the analysis for both is essentially the same, so I'm aiming to trade NQ and "test and develop" MNQ at the same time.

I'm also going to include more MNQ trades in the newsletter and blog, to hopefully show you that it's not only ok to trade, but a damn good market for bridging the gap from sim to E-minis.

Back to our trader with the drawdown.

He's taking a break to:

  • Clear his mind
  • Replenish his funds
  • Review the cause of his failure
  • Define solutions
  • Restart on sim
  • And transition to micro contracts, building slowly from there, increasing size incrementally as success and consistency is proven at each level.

 

A smarter plan.

A more survivable plan.

If you're just starting out, or approaching the stage where you transition from sim to live markets, consider adopting a similar slow and steady progression plan.

Lower risk. And increase your odds of surviving the learning curve.

Happy trading,

Lance Beggs

 

 

Three Key YTC Lessons in this Opening Price Sequence!

Posted in: Trading Process and Strategy | , by
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Lesson 1: When two trade ideas fail to work, consider a break. When three trade ideas fail to work, force a break.

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

Lesson 2: When the pullback is deeper and stronger than expected, let it roll over. Get in on the other side.

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

Lesson 3: An exit is not necessarily final. Remain focused and consider re-entry if the premise is proven to still be valid.

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

<image: Three key YTC lessons>

Happy trading,

Lance Beggs

 

 

Pre-Acceptance of Trade Risk

Posted in: Trader | , by
4 comments

 

I will NEVER take a trade without having pre-accepted the potential for trade loss.

Because the fact is that MANY will lose.

<image: Pre-Acceptance of Trade Risk>

<image: Pre-Acceptance of Trade Risk>

Pre-acceptance of trade risk means that I am comfortable with taking the loss and will do so immediately without hesitation.

Pre-acceptance of trade risk means that I'm not overly concerned with the monetary loss and can keep my focus on the process of analysis and effective decision making.

My focus remains on process, rather than outcome!

<image: Pre-Acceptance of Trade Risk>

Ask yourself before entry, "Am I comfortable with this trade losing?"

If you're not comfortable with this trade losing then you've likely not yet achieved sufficient confidence in your strategy, or you're trading with too much risk.

You will likely hesitate to take the exit, ensuring a greater than necessary loss.

And you will likely carry some psychological baggage into the next trade, increasing the chance of poor analysis or decision making and greatly increasing the chance of further losses.

<image: Pre-Acceptance of Trade Risk>

<image: Pre-Acceptance of Trade Risk>

Before any trade, pause to confirm:

  • A full loss on this trade will not break any session drawdown limits.
  • A full loss on this trade is PERSONALLY acceptable. I am completely comfortable taking the loss and moving on to the next trade.

 

Because if either of these are not true, then you have no business taking the trade.

Good trading,

Lance Beggs

 

 

Order Entry Error – Again

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

 

I seem to average an order entry error maybe once every two months. That's not too bad considering entry is via a single click. But it's something I will continue to work at improving.

In the meantime, it's an opportunity to again present my ideas on how to best manage those times when you somehow find yourself trading in the wrong direction.

Those times when order entry gives way to confusion, as things just don't look right, and then to shock as you realise you're short when you expected to be long (or vice versa).

Common advice is to IMMEDIATELY hit the CLOSE button. Accept any loss (or bonus profit). It's not part of your edge so you have no business trading it. Then try to get back in; this time in the right direction.

If you want to do that – fine. There are no problems with this.

I prefer something a little different. Maybe the idea will appeal to you as well.

The general idea is to use your skill to make a real-time contextual risk management decision. You can do this. Your brain is better at pattern recognition than you realise.

  • Is the position in immediate threat? (ie. Is price likely to continue to move against you?)
  • If so, then exit immediately
  • If not, then see if you can actively work a better exit, or even turn it into a profitable trade.

 

Think of it this way. What percentage of your trade ideas lose?

50%, 40%, 30%?

Whatever it is, there's a reasonable chance that this trade idea could fall on the losing side.

Which means, now that you're trading in the wrong direction, you might actually be able to get a profit.

Low odds perhaps. But you've found yourself in this situation. So why not try to turn it into a positive.

Don't jump straight for the CLOSE button if there is no immediate threat.

Pause. Assess the situation. And allow yourself to make a real-time decision as to whether to close or whether to manage any further risk and opportunity.

Here's the trade idea:

<image: Order entry error - and how I manage it...>

Reference for CPB setup: YTC Price Action Trader Vol 3 Ch 4 P38

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

<image: Order entry error - and how I manage it...>

Use your skill to make a real-time contextual risk management decision.

  • Is the position in immediate threat? (ie. Is price likely to continue to move against you?)
  • If so, then exit immediately
  • If not, then see if you can actively work a better exit, or even turn it into a profitable trade.

 

Happy trading,

Lance Beggs

 

 

Two Attempts – Then Reassess (2)

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

 

The quicker you can recognise that you're wrong… the quicker you can become right.

Here is a useful rule:

  • Two Attempts – Then Reassess!

After two attempts at a trade idea, if it hasn’t worked, it’s clear that something is not right. You’re not in sync with the market.

Either:

  • You have misread the situation and you're wrong, or
  • Your timing is out (which still means you're wrong).

 

Break the pattern!

Two Attempts – Then Reassess!

Confirm your position is flat.

Step away from the charts.

Clear your mind.

Then reassess from first principles.

Try to see the picture from the perspective of someone who might have the opposite bias to you. What are they seeing? Could they be right?

You may choose to get back in for a further trade (assuming session drawdown limits are not hit).

But you may also have prevented a meltdown; stopping a good trade idea which didn’t work from turning into an absolute mess of a session.

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

<Image: Two Attempts - Then Reassess>

 

The quicker you can recognise that you're wrong… the quicker you can become right.

Here is your rule:

  • Two Attempts – Then Reassess!

Happy trading,

Lance Beggs

 

Previous Article: https://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess/

 

 

It is NOT your job to win on any particular trade!

Posted in: Trading Business | , by
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Before you can consistently win, you're going to have to learn how to lose really well.

That is…

  • Completely accepting losses as a normal part of the game.
  • And containing the damage to pre-accepted limits.

 

This has been one of my favourite themes of the last year or so. Let's go over it one more time.

It really is that important!

Here's an extract from an email discussion I had on Wednesday with another trader in response to a really challenging sequence of price action.

(5) This point may not be a problem for you. You might understand it completely. But in my experience, while the vast majority of "developing" traders say they do understand this, the reality is that very few traders actually do REALLY GET it at a deeper level. Their actions and decisions prove they don't get it. And often when I'm sent an email asking "why didn't this trade win", it's obvious that this is the case – they don't really understand the game.

It is not your job to win on any particular trade.

It is your job to identify opportunity that contains edge. And to take it and manage it well. Some will win. Some will lose.

Our aim is not to profit on any particular trade. But rather to profit over a series of trades.

Feel free to define a "series of trades" based upon whatever number you consider provides a sufficient sample size. For the sake of this email, let's assume it's 20 trades, which is the absolute minimum I'd consider as sufficient.

So we aim to profit over 20 trade groupings. Within each group there will be some winners. There will be some losers. Both are absolutely fine. They're meant to be there.

And in fact, there will likely be strings of losers, from times when either the market environment was not optimal. Or our decision making was suboptimal.

Again, that is completely normal.

So our decision making pre-entry should be in confirming that (a) the trade idea has edge, and (b) regardless of whether it wins or loses, it's a trade that we really want contributing to our 20 trade sample.

And during the trade management stage, at the forefront of our mind is always the thought about whether or not we still want this contributing to our 20 trade sample.

The reason for bringing this up, is because the interaction with S/R that you have provided in your example, is rather messy. We don't know that will be the case until after the fact, when we can view the charts with the benefit of hindsight. But it's not unusual in messy price sequences to end up with two, or maybe even three losses or scratched trades. This is completely normal. And it should be absorbed within the 20 trade sample, with other better sequences providing sufficient profits to overcome them.

This is also why I will typically only limit myself to two attempts at a trade idea. Three at most (if the prior losses are less than 1R each). If after these 2-3 attempts, I've not captured a good entry, then I'm clearly not reading the market well. Stand aside. And wait for the structure to change. If one further entry would have been sufficient to capture the planned move, and it now occurs without me, so be it. It wasn't mine to catch. Let it go and move on to the next.

 This is VERY IMPORTANT. In fact, key to success. ALWAYS be thinking about the larger sample of trades. Is the current trade one you want contributing to the sample? And if it's one of the losers, keep it small so that it can be easily overcome. And if it's one of the winners, work to take as much out of it as you can.

 

There is no need to review the sequence from that email.

Let's instead look at a few trades in the first hour on Tuesday.

Trades in which there is nothing particularly special. They're just normal run-of-the-mill trades.

Some lose. Some win.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

Let's look at the two losses…

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

Here's the plan:

KEEP THE LOSSES SMALL.

CONTAIN THE DAMAGE.

SO THAT IT ONLY TAKES ONE OR TWO SMALL WINNERS TO MORE THAN MAKE UP FOR THEM.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

It is not your job to win on any particular trade.

Before you can consistently win, you're going to have to learn how to lose really well.

That is…

  • Completely accepting losses as a normal part of the game.
  • And containing the damage to pre-accepted limits.

 

Stop worrying about profiting on every single trade.

Aim instead to just manage them well.

And seek to profit over a larger SERIES of trades.

Happy trading,

Lance Beggs

 

 

Fighting to Regain Losses

Posted in: Trader | , by
3 comments

 

I had an interesting email exchange with a trader a couple of weeks ago, who is struggling with occasional massive losses.

email excerpts

email excerpts

I've had the opportunity to speak to a LOT of traders over the last 8 years of writing these articles. You'd be surprised at how common this problem is.

We discussed several options to investigate further, related to money and risk management, strategy, and of course psychology.

What I wanted to share with you all today though, was just one simple concept that might help, should you ever find yourself suffering from a similar problem.

It's just a slight shift in mindset. It may not be easy. It certainly won't be the full solution. But it could well play a part in overcoming the problem.

Here is what is happening right now:

The current plan

I get it.

Losing sucks. We don't want to lose.

And even more than losing, we don't want to admit we were wrong.

So we fight! We double down on our earlier decision, hoping, wishing and praying that the market will turn. Just enough to get us back to breakeven.

There is a problem though.

IT'S NOT WORKING.

You said that yourself!

But it's not working!

Sure, sometimes it will work out just fine, but it's only a matter of time till the market provides another extended drawdown which takes you out of the game.

Your current money and risk management plan provides you with NO EDGE.

And here's a key part of the problem:

Here is part of the reason why...

Let's repeat that for effect!

  • When you FIGHT to get back to breakeven, you're doing so at a time when the market environment is NOT working in your favour.

 

Seriously!

You're fighting against a strong and persistent trend!

I'm not saying don't fight. But if you're going to fight to get back to breakeven, let's see if we can do it a bit smarter. Let's rethink this concept.

Let's break the current plan into three stages.

The current plan (in stages)

What if we planned our fight differently?

A better plan

Use HOPE as the trigger.

Any time you find yourself HOPING that an extra "unplanned" entry might just help you get out at breakeven… EXIT.

Take some time out to clear your mind.

And resume the fight at a time and place when the market movement and price conditions are IN YOUR FAVOUR.

Don't make this game any harder than it needs to be. Fight to regain losses at a time and place of YOUR CHOOSING.

It's the same challenge; taking a drawdown back to breakeven and maybe even positive territory. But you're doing so when the odds are more in your favour.

And even if four out of five times the market would have got you out at breakeven, had you just entered one more time, ignore it. Remind yourself that averaging down has proven to have NO EDGE. Because the fifth time will not only blow out to a huge loss, but will also take away all these previous gains.

If you're going to fight to regain losses… do so at a time and place of YOUR CHOOSING.

Step aside. Clear your mind. And resume the fight at a time and place when the market movement and price conditions are IN YOUR FAVOUR.

It's just a slight shift in mindset. But it can make a really big difference.

Good luck,

Lance Beggs

 

PS. A pro-trader will NEVER EVER let a single trade, or a sequence of trades, take them out of the game. Always, before any other goal, your priority is to survive to trade another day. If your current money management plan involves adding to positions just based out of hope and fear, then your money management plan sucks. Fix it. Or you're unlikely to last long in this business.

 

 

You WILL Have Trade Sequences Where You Are Out Of Sync With The Market

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

 

Let's examine the opening hour and a half of the emini Dow from Tuesday's session.

As seen in the charts below, the session commenced with a sequence of trades where I was out of sync with the bias of the market. And then another when I was completely in tune with the market.

You WILL have trade sequences where you are out of sync with the market.

So you'd better learn to recognise this ASAP in order to minimise any damage.

Ok, so the sequence where I was out of sync still resulted in a small profit. That's cool. I'm certainly not complaining.

But the fact is that there is potential for significant damage to an account balance if you don't quickly recognise and adapt to this "out of sync" issue. In the past, I'd usually take several losses out of a sequence like this, typically trying to fade the move two or three times before giving up in frustration.

So, there are some lessons to be learnt.

First though… what exactly was going on that resulted in me being out of sync with the bias?

Let's start with the daily and 30 minute charts, in order to get some context.

You WILL have trade sequences where you are out of sync with the market.

You WILL have trade sequences where you are out of sync with the market.

You WILL have trade sequences where you are out of sync with the market.

There is a saying in the trading industry:

  • "Trade what you see, not what you think"

 

What this means is… since I can see the the market is moving higher with a BULLISH bias then I should trade from the LONG direction. It doesn't matter at all what I think the market should be doing. Trade what I see.

And yes, normally that is not a problem. I'm usually ok with dropping my expectations and trading in accordance with the market bias.

But not this day. The feeling was too strong.

And although I was able to enter LONG on two really good signals, I just wasn't able to hold. The trades were scratched for small profits.

So I decided to stand aside and wait for the market to turn.  (Accepting of course that if it just trended higher all day then I'd miss the bulk of the move. No problems. I'm fine with that.)

As a discretionary trader, you WILL have trade sequences in which you're completely out of sync with the market movement. It's a fact!

This internal feeling of unease WILL act as an input to your decision making. And it will influence both entry and trade management decisions.

Your job is to learn to recognise this as quickly as possible. And if you can't shift to the correct bias then take immediate action to mitigate the risk. Otherwise… you may find yourself quickly on the way to your session drawdown limit.

Set a trigger to catch yourself as soon as possible, when you do find yourself fighting the market.

One of our recent articles is perfect for this – https://yourtradingcoach.com/trading-process-and-strategy/two-attempts-then-reassess/

After two poor trades… pause and reassess.

Is your gut feeling about market direction causing you problems? If so, take action to limit the risk.

Possible actions:

  • Reduce position size for all further trades.
  • Limit trade direction to the with-trend direction only, and adopt a passive hands-off trade management style. Set the trade and walk away.
  • Or… best of all… just stand aside and wait for something easier. You don't have to trade every day. There is always more opportunity coming along in future.

 

You should aim to stack the odds as much as possible in your favour. A MASSIVE part of that is having a good read on market bias.

So you'd better learn to recognise this ASAP in order to minimise any damage.

Happy trading,

Lance Beggs

 

PS. To take it to the next level, consider adding this to your post-session routine:

1. Take note of any price sequences which resulted in multiple attempts to trade the market from the wrong side.

2. Review the conditions – market structure, price action and human performance factors – which may have influenced your decision making.

3. Document your findings.

4. Over time, you'll start to identify those conditions which have the potential to put you out of step with the market, allowing you to recognise and adapt more quickly in future.