Tag Archives: Setup

Sometimes It Takes Multiple Attempts – 2

 

Tuesday's trade sequence reminded me of this article from last year – Sometimes It Takes Multiple Attempts.

Where the market reminds us that it doesn't give a damn about our expectations for a quick move from entry to the target.

And that sometimes, it would rather play a bit first and see if it can stop us out. 

<image: Higher Timeframe Context> 

I just love these narrow range holiday sessions. They provide a good "line in the sand" from which we can determine bigger-picture sentiment – bullish above and bearish below.

So yes, despite the low volume I do consider them relevant enough to mark on my charts as S/R. 

And so, prior to the session open, I sent out the following social media post. Please note that this is a repeat of a 2019 post so the price action is different to today's action. But it's the concept that is relevant.

<image: Question - Do I use the narrow range holiday sessions as SR?> 

So here's the plan today:

<image: The Trading Plan> 

<image: The Trading Plan> 

Sounds easy, right?

Let's drop now to the 1 minute Trading Timeframe:

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts>

<image: Sometimes it takes multiple attempts> 

A few thoughts post-session:

(a) It's unrealistic to expect that every trade will go immediately to your target. Sometimes a trade idea will require multiple attempts.

(b) Two failures – stop and reassess. Reconsider the original trade premise, but also be sure to consider the idea that you are completely wrong. And also that maybe you have no idea of what is happening and need to stand aside.

(c) Three failures – time out. Wait for a change of structure and only then look for the next trade idea.

(d) And maybe… consider the idea that a key goal in your trading should be to not only know how to find quality trade ideas, but also to get good at surviving those times when the trade idea doesn't quite match what the market is actually offering.

Because sometimes… it takes multiple attempts!

Happy trading,

Lance Beggs

 


 

When the Pullback Hits Harder than Expected

 

Pullbacks… a simple retracement structure depicted in textbooks as smooth flowing and simple to read.

Reality though, is usually not so kind.

Far too often these pullbacks will be a mess. Full of chop, false-starts and stop-outs. Or unexpected and sudden shifts in pace or volatility.

Price action seemingly designed to confuse you and cause you to react emotionally and impulsively. Tempting you to enter too early and stop out. Or hesitate and miss the entry entirely.

In time, with experience, you'll improve your ability to read the market. And your ability to perceive edge.

And develop some rules-of-thumb for how to best manage these situations, when it seems the market is putting up a fight.

Let's look at one example of a rule, which guides me through a pullback that hits harder than expected.

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

<image: Pullback Entry Timing>

When the pullback hits harder than expected – step aside.

Don't be tempted to chase the first entry. If it v-turns and you miss the trade, let it go. It wasn't yours to catch.

The far better option is to wait for a second push lower and reassess.

Consider whether or not this rule might add value to your trading.

And then when you're comfortable with this, see if you can expand your skill level to find the exceptions to the rule. Those times and places where you might take that first entry. Because they exist as well.

Happy trading,

Lance Beggs

 


 

Until it Breaks and Holds, Exercise Extreme Caution!

 

This image was posted on social media recently, to highlight the way that the opening range can help minimise early damage to your P&L.

<image: Using the opening range to minimse damage in unfavourable opening conditions>

I received a message in response to the post:

This has me curious. Did you trade it? Can you show us the trades? If you did stand aside, at what point did you know to stop?

I did take two trades. Neither went to the targets as planned, but active trade management meant I was not in drawdown. I'm happy with both trades. They were the right decision.

I then stood aside and waited for the break.

So let's look back at the market and discuss my decision making. In particular, when I "called" price as stuck in the opening range. And when I stood aside.

Because it's rarely obvious that there will be opening range chop, until after the fact. And quite often it's only obvious after we've taken a loss or two.

As we work through this price sequence, it might be helpful to think of me as transitioning through three stages:

1. Fully engaged in the price action right from the open. Ready to react to any potential early trade opportunity, should the market drive with strength.

2. Recognising a chop-zone, with price stuck in the opening range, but still allowing limited engagement.

3. Recognising a chop-zone, and standing aside because I see greater potential for damage than profits.

Let's look at the market and work our way from stage 1 through to stage 3.

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

<image: Using the opening range to minimse damage in unfavourable opening conditions>

Happy trading,

Lance Beggs

 


 

Adding to a Position

 

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

 


 

The Day After a Bad Performance Day

 

Last week we looked at a session that caused me some troubles. See here if you missed it – Good Trading Isn't Just About Winning Trades.

It wasn't a losing day. A "bad" day isn't necessarily a losing day. This one profited. Cycling from negative to positive and back again to negative and then to positive, before I finally called it a day.

What makes it a "bad" day was my poor performance.

My poor decision making. My poor execution.

<image: The Day After a Bad Performance Day

It happens. I just wasn't with it that day.

Sometimes I can brush it off easily. Especially when it didn't lose.

Laugh at myself. Get over it. And move on.

But other times… like this time… that's not so easy.

Perhaps it's the ongoing COVID-19 isolation fatigue? Who knows?

All I know is that I can't let it infect the next session.

So here's the plan for "The Day After a Bad Performance Day":

I can't do anything to influence the market, obviously. So the focus needs to be on me and on my interaction with the market. The things that I can control.

Fixing your Mindset

The problem here is simply that the mind is "stuck". It's anchored to the negative outcome from one single session.

We can fix this with two steps:

(1) Let's shift the mind from its current negative feelings to something more positive.

I recommend you keep a folder containing printouts (charts, trades, stats, whatever) that show examples of you at your absolute best. A "highlights" folder. Best trades. Best sessions. Equity curves overcoming drawdown.

And most importantly for our current situation, include at least one example covering two sessions where poor performance in the first session was followed by good performance in the second.

Keep this in your trading room. It will become your GO-TO tool for shifting focus quickly.

A reminder that the performance yesterday was an aberration. And that you are capable of so much more – because you've done it before.

And if you haven't done it before, then make it up. Because you WILL in time. You just haven't done it yet. Perhaps two printouts of yesterday's performance, one showing actual results and one showing ideal performance. It's something you may not have achieved yet but you know you damn well can next time.

A "highlights" folder. Create one if you don't have one.

And then use it.

(2) Let's shift the mind away from its single-session focus.

Yesterday was one day. If all goes well, I'll be trading a few thousand more days over coming decades. Yesterday is insignificant.

Take a calendar or diary covering at least a year into the future. And skim forward in time and have a look at a whole lot of days to come. And ask yourself, given all those days available to improve on your recent performance, does yesterday really matter?

And then turn today's page. This is the only day that matters now. And it's a blank sheet. And it offers a perfect opportunity to create a new entry in your "highlights" folder, as you follow up yesterday's poor performance with an example of you trading at your best.

Planning your Interaction with The Market

The aim here is to simply ensure you get the session off to a good start. That doesn't necessarily mean a winning trade. The outcome is somewhat out of our control. But it means A GOOD TRADE.

However you define them. An A+ Trade.

One that you would be happy to print and put on your wall. One that you would be happy to screenshot and send to me.

Even if it loses. A trade that you know that you HAD to take. It had edge. It was the right thing to do at that time and that place.

To give yourself the best chance of achieving this, you need to slow down. Be comfortable with no trades at all, until sufficient structure is in place such that you have a GOOD READ on the market and are completely in sync with the price movement. No trades at all, until you find one that you'd be happy to take if you were only allowed to take one trade this day.

That's all you need:

  1. Focus on the positives by skimming through your "highlights" folder.
  2. Recognise yesterday as insignificant in the context of a multiple-decade career. And see today as an opportunity to add to your "highlights" folder.
  3. And then slow yourself down. Commit to no trades, until the market is screaming out to be traded with an A+ trade opportunity.

 

So let's trade…

<image: The Day After a Bad Performance Day

<image: The Day After a Bad Performance Day

<image: The Day After a Bad Performance Day

<image: The Day After a Bad Performance Day

Moving forward a few minutes… and compressing the data slightly so that I can fit more price action…

<image: The Day After a Bad Performance Day

<image: The Day After a Bad Performance Day

<image: The Day After a Bad Performance Day

<image: The Day After a Bad Performance Day

There were no real secrets here in managing my performance, on the day after a bad performance day. Just a short process to get my mindset right. And to take my time, happy with no trades at all if conditions were poor. Waiting and watching until a trade set up that I knew I could look back upon in the post-session and say with 100% certainty that it's a good trade. Win or lose, it wouldn't matter.

I guess the obvious comment is: "Shouldn't all trades be like that? And shouldn't all sessions be traded with this patience?"

Yeah, sure!

But let's be real.

They're not all like that. There are always going to be some that are a bit questionable.

The aim on a day after a bad performance day, is to just slow down a little and make sure that the first trades today are NOT questionable at all.

Three simple steps:

  1. Focus on the positives by skimming through your "highlights" folder.
  2. Recognise yesterday as insignificant in the context of a multiple-decade career. And see today as an opportunity to add to your "highlights" folder.
  3. And then slow yourself down. Commit to no trades, until the market is screaming out to be traded with an A+ trade opportunity.

 

Happy trading,

Lance Beggs

 


 

Opening Structure Trap

 

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

 


 

Don’t Chase the Missed Entry… Unless Price does This…

 

The session begins…

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

<image: Don't chase the missed entry>

Don't chase the missed entry.

But remain focused.

Because sometimes, while price has still not reached the expected target area, it might offer a nice lower timeframe structure. Something that you can lean an entry against, which offers an acceptable level of risk. Something that still offers potential rewards, sufficient to justify the risk, should price break from that structure.

And if not… too bad. Let it go. There will be more opportunity available shortly. Always is!

Happy trading,

Lance Beggs

 


 

When Obvious Expectations Are Wrong

 

There is market opportunity available when "obvious" expectations turn out to be WRONG.

You've no doubt experienced this. Those times when the market provides almost certain evidence that it IS going somewhere… but then it doesn't.

I can promise you – if you sense these "obvious" expectations then you're not the only one. Others will sense it too.

And the stronger the feeling, the better. Because more people will act on it.

And then when it fails… there's your opportunity.

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

<image: Opportunity exists at the times and places where obvious expectations are wrong.>

Opportunity exists at the places where a lot of people get it WRONG.

So when you sense a sudden shift in the market sentiment… that surely must lead to obvious movement (through a key level or in a new direction), take a pause for a second.

Maybe it will follow through with these obvious expectations. Project ahead and plan how you will react.

But also – keep in the mind the fact that obvious expectations also fail.

And that can provide exceptional opportunity.

Project that forward as well. Visualise where and how that might provide opportunity. And focus. Hopefully you will be ready to act, a little quicker than I was with this one.

Happy trading,

Lance Beggs

 


 

Market Open Traps

 

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

 


 

When the Pullback moves TOO DEEP TOO FAST

 

Let's look at a trade from Tuesday which was quite challenging to take.

One in which the pullback moves too deep… and WAY TOO FAST.

One which triggers the question in your mind – "Is this a pullback or is it the start of a complete reversal?"

Every trader is familiar with this feeling! It's NOT nice.

Let's look at how I timed the entry.

First though – a little context via the 15 minute timeframe:

<image: When the Pullback moves too deep too fast...>

I love an open like this. A real shock to the system. And potential for emotion to drive price with strong directional conviction.

I am secretly hoping for strong continuation lower. Blood in the water. Panic selling driving a massive trend day lower.

But I've been around long enough to know that this is not the only option from a large gap down.

Social media posts on Tuesday and Wednesday covered this. (Facebook: Tuesday, Wednesday. Twitter: Tuesday, Wednesday)

So let's look to the 1 minute Trading Timeframe chart to see the opening price sequence.

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

<image: When the Pullback moves too deep too fast...>

For readers of the YTC Price Action Trader, please refer to Volume 3, Chapter 4, page 81.

Note the very first item listed under the title "Entry Preconditions".

Candlesticks A to C do NOT satisfy this entry precondition requirement.

Following the pop higher with D, price then attempts a second push lower at E.

This candle (E) DOES satisfy the entry precondition requirement.

Take the trade!

Also – Page 89, Figure 4.65 (part 3 of 4). The third diagram is the LTF entry pattern.

<image: When the Pullback moves too deep too fast...>

Our plan is to understand the trend structure, project it forward and identify potential trade opportunity (should subsequent price movement confirm our projection).

Often though, price will decide to present us with something a little different.

No problem!

PAUSE & REASSESS.

If you find you're out of sync with the price movement and it doesn't make sense, then stand aside and wait for further price structure to develop.

But otherwise, you have processes in place. Carry them out again with this new information. Recognise the changes. Adapt. And take action.

Happy trading,

Lance Beggs