Your Trading Coach
Because you'd rather be trading for a living...
Live by Acting, Not by Thinking About Acting
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Tuesday 10th January 2012
Let's talk about mindset at the time of required action (cause this one p****d me off today)!
This is a short-timeframe example, but the same concept applies regardless of your preferred market and timeframe.
Two potential entry areas. Two very different outcomes.
My mind was in the wrong place for the first. The second was right.
At C, I was thinking about trading, instead of trading.
The thinking had already occurred. The bias was established. The trade idea was determined. The market had acted in accordance with the plan. Price provided a suitable pullback opportunity offering sufficient R:R.
THERE IS NO MORE TIME FOR THINKING. THE ENTRY ZONE IS A TIME FOR ACTION.
Place the damn order... trust myself and my strategy... enjoy the uncertainty... and manage whatever the market throws at me.
Live by acting, not by thinking about acting.
"A man of knowledge lives by acting, not by thinking about acting."...Carlos Castaneda (who quite possibly would have made a great trader)
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January 11, 2012 4:11 AM
Great article. This happens to 95% of traders, why? because they have no plan.You may say you had a plan, but when you don't follow the plan equal to NO PLAN.
It is all about psychology of trading. In order for us as traders to become like robots and trade according to the plan, we should practice trading the plan and never miss one entry. even if that entry will become a loss, we still have to trade according to the plan. When we enter once and the next time when your plan tells you to enter on signal and you don't, you just tempered with your strategy and the probability of your strategy.
we all know what is right and what is wrong, but we still do the wrong thing even though we know that following the plan with discipline and good money management pays at the end. People know that somking is not good for their health but they still smoke, others know that when they drive over the speed limit they may get a ticket or worst get involved in an accident, but they still do it.
regards,
January 11, 2012 1:12 PM
Hi Adam,
Unfortunately it's never going to be possible for us to trade like robots and take 100% of the trades that we know we should (with hindsight). Denise Shull talks about this really well in her webinars. Our brain knows that the market is not a purely probabilistic environment (uncertainty is different) and so it will always look for context in making its decisions. It's our job to (a) place ourselves in the best physical and mental state such that we maximise our ability to make quality decisions, and (b) learn as best we can to differentiate from those times when our hestitation is based on perception of contextual information that is trying to rightly keep us out of a bad trade vs when it's just based upon fear in one of its many forms. In my case with this particular setup, it was simply fear based. Hence my disatisfaction with my performance.
Cheers,
Lance
January 12, 2012 5:38 PM
ahh massive issue for me in this wacky environment - finding myself second guessing and missing a lot
January 14, 2012 5:40 AM
Hi Lance - Great article. You have a very good knack of explaining stuff. I agree with your title message. But I am not sure about hesitating at C as not right call. May be it is, if it is part of planned setup.
The way I see, at C market is ambiguous i.e., the chart was in uptrend, just had a trap at A. So you are fighting uptrend AND more importantly fighting against a trap (i.e., A). Whereas on next signal i.e., the one after C, you are not fighting uptrend, not fighting trap and you have a trap (i.e., C shorts trap) supporting you.
From your past posts, my understanding is you like traps very much. So I find that could be a subtle reason for hesitation at C. If there was hesitation on the next signal as well then I would agree this post as right example for the message.
Wish you good health and trading!
Regards
January 15, 2012 1:37 PM
Hi DS,
Thanks. Very valid points. And if I did hesitate due to concern over a possible trap then I'd have no problems with that. There are many trades I miss due to concern over possible traps. You don't see that in the blog because they're just part of the game. Nothing special. But in this case it was just simple fear-based irrationality that caused some temporary hesitation.
I do love traps - they're an instrumental part of my trading approach.
My assessment in this case was that A was not the trap, but rather C was the trap, and price should then continue in the direction of A. In hindsight I was correct and the market moved without me.
I would much rather enter based upon my convictions and be proven wrong, than fail to enter due to fear of loss and be subsquently proven to be right. Trading is a game that requires decisive action - I failed to do so at this time.
You're right though that the second entry, which I did get, was the much better entry with a much clearer signal.
Cheers,
Lance.
January 15, 2012 1:55 PM
Hi Lance.
Thanks. Your assessment of C being a trap is right. Actually C location is a problem area in my trading i.e., how to recognize C is the trap or atleast that A is not a trap. I appreciate if you can share your thoughts on this price action subtlety in one of your future posts.
Regards
January 15, 2012 3:51 PM
DS,
Sometimes it will be evident through momentum analysis (trade with strength and against weakness). On these shorter timeframes, sometimes you'll get an additional sign through speed of movement in one direction vs another.
Sometimes you won't be sure - there will be no clear signal - but then it'll set up a doji or some other pause right at what I call a tipping point. C is one of these tipping points, where if it breaks higher, this should trigger some longs. And if it breaks lower this should trigger more shorts. See this article for an example of a tipping point: http://www.yourtradingcoach.com/Articles-Strategy/Who-Will-Give-Up-First.html
Cheers,
Lance
January 16, 2012 8:20 AM
Hi Lance - Thanks for the pointers and your time. I appreciate it.
Regards
February 20, 2012 9:17 AM
Hi Lance.great points.sometimes in such situations when we look at higher timeframe we see reversal candle (hammer at point A in 3M timeframe for example) and it causes hesitation.in this example are you considered higher timeframe and there was no such a reversal candle?
February 20, 2012 10:28 PM
Hi Mahan,
Using YTC scalper timeframes, the lower timeframe was a combination of both 2-range and 20-tick charts, the trading timeframe was 1-min and the higher timeframe 5-min. As per the YTC PAT & Scalper approach, patterns within the higher t/f price action are not considered. Higher t/f provides the S/R framework within which price moves.
The session was also over a month ago now, so I don't recall the pattern displayed by the 1-min chart. However what is relevent is noting the fact that I'm not a pattern-trader. What is more important is the way that price moved in forming that pattern and the context within which that pattern is occurring. And in this case, those two factors clearly had me expecting a short. If it had displayed a 1-min hammer, then these pattern traders would be the ones I'd be aiming to take profits from.
Cheers,
Lance Beggs