Probability of success

Question 1

What is an Aleph trade and probability?

Answer 1

60% * Buying a high 2 pullback to the moving average in a bull trend. * Selling a low 2 pullback to the moving average in a bear trend.

Question 2

What is a Beth trade and probability?

Answer 2

60% * Buying a wedge bull flag pullback in a bull trend. * Selling a wedge bear flag pullback in a bear trend.

Question 3

What is a Gimel trade and probability?

Answer 3

60%* Buying a breakout pullback from a breakout of a bull flag in a bull trend. * Selling a breakout pullback from a breakout of a bear flag in a bear trend.

Question 4

What is a Daleth trade and probability?

Answer 4

60% * Buying a high 1 pullback in a strong bull spike in a bull trend, but not after a buy climax. * Selling a low 1 pullback in a strong bear spike in a bear trend, but not after a sell climax.

Question 5

What is a Heh trade and probability?

Answer 5

60%* Shorting at the top of a trading range, especially if it is a second entry. * Buying at the bottom of a trading range, especially if it is a second entry.

Question 6

What is a Vau trade and probability?

Answer 6

60%.* Trend reversals: * After a strong break of the trend line, look for a reversal after a test of the trend’s extreme where there is a good reversal signal bar. Traders are looking to buy a higher low or a lower low at a bottom, or to short a higher high or a lower high at a top.

Question 7

What is a Zain trade and probability?

Answer 7

60%* Strong final flag reversal.

Question 8

What is a Lamed trade and probability?

Answer 8

60%* Buying a third or fourth push down in a bear stairs pattern for a test of the low of the prior push down. * Selling a third or fourth push up in a bull stairs pattern for a test of the high of the prior push up.

Question 9

What is a Teth trade and probability?

Answer 9

60% *Limit Order * Buying a bull spike in a strong bull breakout at the market or at the close of the bar, or on a limit order at or below the low of the prior bar (entering in spikes requires a wider stop and the spike happens quickly, so this combination is difficult for many traders). * Selling a bear spike in a strong bear breakout at the market or at the close of the bar, or on a limit order at or above the high of the prior bar (entering in spikes requires a wider stop and the spike happens quickly, so this combination is difficult for many traders).

Question 10

What is a #Yod trade and probability?

Answer 10

60% *Limit Order * Buying a bear breakout at around a measured move, if the breakout is not too strong—for example, if the range is about four points tall in the Emini, buying on a limit order at four points below the range, risking four points, and expecting a test of the breakout point. Only very experienced traders should consider this. * Selling a bull breakout at around a measured move, if the breakout is not too strong—for example, if the range is about four points tall in the Emini, selling on a limit order at four points above the range, risking four points, and expecting a test of the breakout point. Only very experienced traders should consider this.

Question 11

What is a Cheth trade and probability?

Answer 11

60% *Limit Order * Buying at or below a low 1 or 2 weak signal bar on a limit order in a possible new bull trend after a strong reversal or at the bottom of a trading range. * Shorting at or above a high 1 or 2 weak signal bar on a limit order in a possible new bear trend after a strong reversal or at the top of a trading range.

Question 12

What is a Mem trade and probability?

Answer 12

60% *Limit Order * Buying at or below the prior bar on a limit order in a quiet bull flag at the moving average. * Shorting at or above the prior bar on a limit order in a quiet bear flag at the moving average.

Question 13

What is a Nun trade and probability?

Answer 13

60% *Limit Order * Buying below a bull bar that breaks above a bull flag, anticipating a breakout pullback. * Selling above a bear bar that breaks below a bear flag, anticipating a breakout pullback.

Question 14

What is a Samehk trade and probability?

Answer 14

50% * The initial entry when scaling into a position in a trading range.

Question 15

What is a Ayin trade and probability?

Answer 15

50% * Buying or selling in a tight trading range, expecting a breakout that would result in a profit that is several times greater than your risk

Question 16

What is a Peh trade and probability?

Answer 16

50% * Shorting a lower high in a trading range when the trend might be reversing down, or buying a higher low when the trend might be reversing up. Since the entry is in the middle of the trading range, the probability is 50 percent, but the reward is usually twice the risk.

Question 17

What is a Tzaddi trade and probability?

Answer 17

40% * Buying at the bottom of a bear trend or shorting at the top of bull trend where the reversal trade allows for a small risk and a very large reward—for example, shorting a rally to a clear resistance level, entering on a limit order at one tick below the resistance, and having a protective stop at one or two ticks above it. There are several examples in the chapter on entering on limit orders. Probability of success of 40 percent to 60 percent, depending on circumstances (reward has to be at least twice the size of risk to break even when the probability is only 40 percent)

Question 18

What is a Qoph trade and probability?

Answer 18

40% * Buying a breakout test in a bull trend on a limit order as the market is falling, or shorting a breakout test in a bear trend on a limit order as the market is rising.

Question 19

What is a Resh trade and probability?

Answer 19

40% * Buying below a low 1 or 2 signal bar, even if it is not weak, on a limit order (a potential higher low) in a new bull trend or at the bottom of a trading range, or shorting above a high 1 or 2 signal bar, even if it is not weak, on a limit order (a potential lower high) in a new bear trend or at the top of a trading range. For example, if the market might be completing a wedge reversal top in a bull trend and pulls back for a bar or a few bars, shorting above the high 1 and high 2 signal bars is shorting in what you hope is a new bear swing.

Question 20

What is a Shin trade and probability?

Answer 20

40% * Fading magnets, like shorting at a measured move up in a bull trend or buying at a measured move down in a bear trend.

Question 21

What is a Tau trade and probability?

Answer 21

40% * Buying a sell climax around the close of an unusually large bear trend bar in an area of support in an overdone bear trend (climaxes are discussed in book 3). * Selling a buy climax around the close of an unusually large bull trend bar in an area of resistance in an overdone bull trend.