Let's continue with an old article series – the metagame – trading AGAINST other traders who find themselves on the wrong side of the market.
Because…
If I can't feel someone on the other side of the market getting it really wrong, there is no trade.
You can see the prior articles here if you missed them – One – Two – Three – Four – Five.
Here is the general concept for today's trade…
In playing the metagame, we aim to place ourselves in the mindset of any trader who bought late in the move, at or soon after the breakout. Feel their stress build as price stalls. And stalls. And stalls. Feel their pain as their "sure thing" collapses back below the stall region. And find a way to profit from their pain.
Yes, trading is a predatory game!
Let's see some charts.
We'll be seeking BOF Setup opportunity at this point here:
The key part I want to emphasise today is the following:
Let's play the metagame and put ourselves in the mindset of those who entered LONG on the breakout.
Trading the metagame…
If I can't feel someone on the other side of the market getting it really wrong, there is no trade.
Let someone trap themselves in a low-probability position.
Place yourself into their mindset.
Feel their pain.
And when it gets to the point where they've lost all hope, STRIKE.
Go get 'em,
Lance Beggs
“If I can’t feel someone on the other side of the market getting it really wrong, there is no trade.”
What a great quote!!!! Thanks for sharing this and the charts that go along with it!!!
Thanks Robert. I’m glad you enjoyed the article. 🙂
I got your point,it seems like your assumption is good,
But my question is on every movement someone is trapped, thats why price move because of orderflow imbalance and transaction between buyers and sellers.
If price goes up, it means the volume it has taken for going up, in that volume buying quantity are more in number but sellers are also there thats why transaction happens, as buying quantity is more thats why price go up, but sellers are too there,
Which means they are caught on the wrong side of market direction.
So my point is on every movement someone is one the wrong side,some one is in pain so,
By your assumption we must enter on every tick move..
Hope you get my point,
If am wrong please, enlighten me..
You need to consider context. You say, “By your assumption we must enter on every tick move”. But there is a big difference between a “single tick move” in a meaningless part of the chart and a failure of a structural move such as shown here. Breakout failures are not the only way this plays out, but it’s one of the easiest to visualise.
The breakout attracts new participation. The breakout failure forces them back out AND attracts new participation in the opposite direction. There is an urgency to trade in a stop location that is not evident in every “single tick move”. That is what we’re seeking. Chart structure that almost demands that people trade, RIGHT NOW.
And, in the ideal setup if we have the context right, this will be places where this initial surge of orderflow creates movement that then brings in more orderflow. Triggering wider stops, or bringing in new traders from higher t/f (eg 5m, 15m etc). Essentially creating a cascade effect. Momentum leading to more momentum.
So yes, any single tick movement will move some participants into more profit, and others into less profit or more loss. But not every single tick movement is creating a real urgency to trade. Look to bigger picture context and ask what that single tick movement will mean to the larger group of traders. It’s not about the P&L. It’s about the urgency to trade.