I find it interesting that VERY FEW people discussing their trades with me ever talk about "the other trader". They always talk about the technicals – the price patterns and (if a little more astute) the strength / weakness analysis.
I get it. That stuff is important.
I suppose I'm guilty of this as well. Most of the time when I write an article or put together a social media post, I tend to focus on the technicals. That seems to be what people want to read about.
BUT… it's "the other trader" which is the most important part of my decision making.
Every time I trade, "the other trader" is at the forefront of my mind.
Who is on the other side of my trade? Are they trapped? Are they feeling stress? Where is the point of extreme stress at which they'll bail out of their position?
Because that's where I want to trade… where someone else is suffering! (Yeah… this business is predatory!)
If I can't feel someone on the other side of the trade getting it really wrong, there is no trade.
The obvious example is anyone fading a strong trend. Who does that? I want to trade against them.
Or anyone trading late on an overextended move into an area of prior strong supply/demand imbalance. Again, who does that? I want to trade against them.
But it's also a factor in all less obvious and less spectacular trades. The boring day-to-day ones that never make it onto articles or blog posts. Let's look at one here:
(For readers of the YTC Price Action Trader, the decision to call a "potential" sideways trend fits under the topic discussed in Chapter 3, Pages 104-107)
If you're not achieving the results you wish to achieve, consider placing more thought towards who is on the other side of your trade.
It may be the paradigm shift you're seeking to take your trading to new levels.
Happy trading,
Lance Beggs
Lance,
Very nice article, you are right, you tend to forget there is generally a smart guy (in this case trapped trader) on the other side of the trade. If you keep reminding yourself that, then you will probably have a different view of the trades you take.
Thanks
Thanks vs, I’m glad you enjoyed this article. 🙂
Lance, man you are my inspiration for taking trades like false breakouts and profiting from trapped traders. just found your blog and am visiting here daily, keep posting and in return i’ll help you when i have something to share any valuable stuff, God bless you.
Thanks ArJuN.
Much appreciated.
I’m glad you’re enjoying my writing. 🙂
Hi Lance,
I have been following over couple of months and really like what I see. Rather than using magical indicators or fibonacci, you explain exactly why are you looking to trade. My question is do you trade the NQ now? Do you not trade GBP/USD any more? Your book and previous charts were mainly on GBPUSD. Curious as to why it is NQ now. Thanks
Hi Francis,
My trading transitioned from GBPUSD across to fx futures (6B primarily with a little 6E) and then to various other futures markets (YM, TF, CL) but ultimately settled on NQ. It’s not a matter of it being the “best” market. There is no such thing. Rather it’s the best that I’ve found for me, at this stage of my trading journey. For you – it could be something else. Schedule some time to play around with alternates on sim, till you find the best combination of liquidity, pace, volatility etc. Again, there is no “best” otherwise we’d all just trade that market. Instead, find the market that is made for you.
Best of luck,
Lance.
Thanks Lance, I am trading GBPUSD at the moment, I was looking at futures as you have access to more info like volume etc. Thanks for your reply