It’s Monday morning and the markets open with a Simple Pullback Entry LONG.
BUT I DIDN’T TAKE IT.
Because it didn’t set up right for me.
A key principle in how I trade is keeping my awareness AHEAD of price.
No trade should be taken unless I saw it coming well before the entry candle.
We discussed this quite a few years ago – here and here. And in a “kind-of†related manner here and here.
In conducting my analysis my aim is to always think several candles ahead. Constantly updating the picture in my mind.
– – –
Three steps:
(1) Given the current price action and market context:
- Where is price going? (next 1-2 price swings)
- How do I expect it to get there? What should the price movement look like?
- Will that provide trade opportunity, if price confirms my expectations?
- What price behaviour would indicate I’m wrong?
The principles I use for projection are discussed in the YTC Price Action Trader (see the discussion on Future Trend projection).
(2) Price must then move into the setup area in the expected manner.
If it doesn’t, repeat step 1 and adjust the forward projection in light of this new information.
(3) And finally, I must be able to find a way to enter within the TTF/LTF structure.
– – –
So if I miss a trade, it’s because either (a) I couldn’t see it coming, (b) I didn’t like how price moved into the area, or (c) I just couldn’t find a way in that I liked.
What looks like a perfect trade on a hindsight post-session chart, often looks very different at the hard right-hand edge of the screen.
Let’s get back to today’s trade.
As price rallied from the open, this is where my focus was:
I’d like to think that without the overnight high at that location I would have easily been LONG from the first pullback after the opening drive.
And in fact when assessing with the benefit of hindsight, I should have really placed far less weighting on that level anyway. The overnight action was rallying and any RTH continuation would seriously be expected to break the overnight high.
But we don’t trade with hindsight.
We trade what we see at the time.
Project -> Confirm -> Trade.
And if no confirmation, let it go. Reassess and project forward again, in light of this new information.
And if it takes close to 30 minutes (or even longer) for the first trade, so be it.
Project -> Confirm -> Trade.
Project -> Non-Confirmation -> NO TRADE.
And if that means you miss one, so be it. Let it go. It wasn’t yours to take. Move on.
Happy trading,
Lance Beggs