Tag Archives: Traps

When the Trap Entry is itself a Trap

 

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

 

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

 


 

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

 


 

Traps Just Before RTH Open – 5

 

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

 


 

Metagame Entry

 

Metagame Entry – Recognising that entry is not just about price or patterns, but about the people behind the price and patterns.

And in particular the times when they're experiencing frustration, pain and disappointment.

Because the best opportunity comes when I can feel someone on the other side of the market getting it REALLY wrong.

This was one of my favourite trades of the week. Partly because it wasn't in my original plan. But when it set up, it screamed out to be traded.

<image: Metagame Entry>

<image: Metagame Entry>

But then this happened…

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

<image: Metagame Entry>

For those with the YTC Price Action Trader, the setup should be obvious. Refer to Volume 3, Chapter 4, Pages 28-31.

And you'll note that the entry is exactly at the point I define as the LWP. Refer to Volume 3, Chapter 4, Pages 72-77 for discussion on the LWP concept.

 

This trade was not part of my plan at the market open. I was keen to trade once price broke the overnight chop-zone, either higher or lower.

But until then… watch and wait.

Remain focused!

Because sometimes… price will set up right to sucker someone into a trap.

And when you see that trap, and feel their pain, you may well have found yourself some opportunity.

Happy trading,

Lance Beggs

 


 

Traps Just Before RTH Open – 4

 

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

 


 

Traps Just Before RTH Open – 3

 

This has been a favourite topic of mine throughout the last year. We explored the idea here and here, along with a bunch of other examples on social media.

But then the market just keeps providing more examples.

So let's look one more time.

The general concept is a trap that occurs through failure of a significant break, very late in the pre-session market and just before RTH Open (RTH = Regular Trading Hours; ie. the pit session).

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

Our most recent example fits in the second category – a break to new overnight highs, failing on or shortly after the session open, giving us opportunity to enter SHORT.

Let's begin… with the NQ 1 minute chart on Friday 15th November, 2019.

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

<image: Traps Just Before RTH Open>

I've written a lot about displaying patience at the open. About waiting till the bias is clear and trading conditions are favourable.

But there are some situations where I don't display patience.

Where I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

One of these situations is when the market sets up a trap just before or just after the RTH Open.

Keep an eye out for similar opportunity in your own trading.

Happy trading,

Lance Beggs

 


 

It’s Game On! Let’s Trade!

 

I operate with three general levels of engagement – Trading, Trade with Caution, and Stand Aside.

Because not all conditions in the market are the same.

If you haven't done so, I highly recommend adopting a similar practice. Take some time to consider the factors that might trigger each level of engagement in your own trading business.

Today let's look at three factors which had me in "Trading" mode right at the market open. No delays. No hesitation.

With these three factors in play, I wanted to be in the first opportunity I could find.

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

A gap open, from a strong and persistent overnight uptrend, with a recent trap showing an inability to drop.

There is emotion in the market.

And I want to trade.

(See here for prior articles on traps just before the open – here and here).

<image: It's Game On! Let's Trade!>

(NB. YTC Price Action Trader concepts – The First Principle is in play, PB setup)

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

<image: It's Game On! Let's Trade!>

I don't want to trade all market opens.

There are many that I classify as "Trade with Caution". Think of the opposite of today's example – a market opening in the middle of the prior day's range, following a dull and lifeless sideways overnight session. There is no emotion driving the market. And so I have no business in taking a position until something changes. Wait patiently. Let the opening structure form (5 minutes, 15 minutes, 30 minutes… or as long as it takes). And then trade off that structure.

But there are other days when I don't want to wait. Market sentiment appears to be strong and potentially one-sided. This is not a time to wait. This is not a time to "Trade with Caution".

Today was not one for waiting. It's game on. Let's trade.

Again, if you haven't done so, I highly recommend adopting a similar practice of classifying three general levels of engagement – Trading, Trade with Caution, and Stand Aside.

Take some time to consider the factors which might trigger each level of engagement in your own trading business.

Happy trading,

Lance Beggs