There are some common themes that run through the articles I produce at YTC. One of these, which has been here since the beginning, is the importance of creating a Market Structure & Price Action Journal.
Every day, find something that amazes you in the charts. Print it out. Cover it with notes. Study it. File it. And review your journal often. It really will be the greatest trading book… EVER!
Over time, I promise you will start to see patterns within the market structure or price action, which repeat themselves again and again and again.
Like this, which we shared via social media way back in 2015:
This is a structural feature that I see repeated again and again and again.
Here's another previous example – https://yourtradingcoach.com/trading-process-and-strategy/trading-failed-expectations/
And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.
But let's look to an example which occurred last week, on a higher timeframe chart.
Yes… it's an idea which you will find in all markets and all timeframes!
Happy trapping,
Lance Beggs
From YTC you explain the metagame …I can understand how the traps of new shorts, create a orderflow with your stops.
But you can explain to me, as “traps out the old LONGS”, it has the potential to drive the higher price.
Best regards
Francisco, great question. Anyone trapped out of a position will only have further influence on the orderflow IF they decide to get back in, as their new BUY order helps add bullish pressure. So it won’t be everyone – just those frustrated and annoyed at having got stopped out, only to then see price start to move again in the direction they were originally positioned. Old longs in particular. If they’ve been holding from much lower, they’re stopped out for a profit anyway. It’s an easier decision for them to get back in, compared to a late long who might not have got in till right at the end of the bullish move, stopping out for a full size loss.
As always, we can’t know the exact motives of those who really comprise the orderflow. But it’s a useful model based upon human nature, and how people make emotional buy/sell decisions.