Context, setup and execution. A good trade will have considered all three areas before entry. And a good trade will have elements of all three playing their part in the outcome.

The best read on market context will be worthless if you’re choosing the wrong setup for that environment (eg. constantly fighting a strong trend). Or if your execution does not adjust to suit the conditions (eg. scratching too quickly in slower, overlapping markets).

The best setup (text-book quality when looked at solely from the TTF perspective) will likely underperform if you’re trading it in a contextual location that offers marginal or non-existent edge (eg. continuation pullback in an overextended trend right into S/R). Or if your execution is impacted by emotion (eg. hesitation leading to missed entry then frustration and then chasing the market and paying extremely late retail prices).

And the best execution? Well it is at least likely limit any real damage. But it is also unlikely to provide much opportunity if it’s applied to setups and context offering no edge.

When taking a trade in real-time, you need to consider all three.

When reviewing a trade post-session, you need to assess all three.

They don’t exist in isolation.

A quick pre-entry checklist might include these questions:

(1) Do I have a good read of the structure and context of the market?

(2) Does this trade idea make sense in this structure and context?

(3) Does my entry plan make sense in the current conditions?

(4) How should I manage the trade in these current conditions?

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

Refer to the YTC Price Action Trader as follows: Chapter 2 for an understanding of how and why price moves. Section 3.2 for S/R and trend structure. Section 3.3 for the principles used in forward projection. Section 4.3 for setups. And section 4.4 for entry, including the LTF trigger patterns.

Let’s step forward and see a trade that worked… but didn’t necessarily go as smoothly as we’d like. A trade that profited BECAUSE I was aware of the good context underlying the trade and had a clear execution plan that, while expecting immediate follow-through lower, was prepared for when the market offered a little more chop than anticipated.

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

<image: Context - Setup - Execution>

Context, setup and execution.

When taking a trade in real-time, you need to consider all three.

When reviewing a trade post-session, you need to assess all three.

Happy trading,

Lance Beggs

 


 

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