Trading Broad Bear Channels & TRs Flashcards
Broad Bear Channels are not common on 5 minute chart as these charts usually have about 100 Bars on the screen and Broad Bear Channels usually have more bars on the screen to show the Broad Channel
Broad Bear Channels are not common on 5 minute chart as these charts usually have about 100 Bars on the screen and Broad Bear Channels usually have more bars on the screen to show the Broad Channel
Broad Channels are still a Bear Trend
Therefore Traders find it easier to make money by Selling
Broad Channels are still a Bear Trend
Therefore Traders find it easier to make money by Selling
Bear Channels can be Tight or Broad
Bear Channels can be Tight or Broad
Broad Channels are similar to TRs
Broad Channels are similar to TRs
Broad Channels and TRs are the same for about 90% of the Bars
Broad Channels and TRs are the same for about 90% of the Bars
Broad Channels are Tight Channels on Higher TFs
Broad Channels are Tight Channels on Higher TFs
Broad Channel is Mostly in one or more TRs
The more the bars look like they are in a TR, the more traders will trade them like they are in a TR (BLSHS)
Broad Channel is Mostly in one or more TRs
The more the bars look like they are in a TR, the more traders will trade them like they are in a TR (BLSHS)
a Broad Bear Channel is Simply TR that is slightly tilted down
a Broad Bear Channel is Simply TR that is slightly tilted down
Broad Channels, How do you know when it is Broad?
Legs up and down lasting mostly 5 or more Bars
Size of avg leg is at least 3 times bigger than the smallest scalp (1 point in eMini)
Size of leg is at least 2-3 times the size of avg Bar
PB often more than 50% and sometimes 100%
1 or more rallies strong enough for may traders to see AIL
In a Broad Bear Trend there are times when it is actually in AIL
Bulls and Bears can make MONEY
In a Broad Bear Trend there are times when it is actually in AIL
Bulls and Bears can make MONEY
In Broad Bear Channels usually PBs OVERLAP BO Points
Broad Bear Channels often contain many TRs as they have many TR qualities to it
In Broad Bear Channels usually PBs OVERLAP BO Points
Broad Bear Channels often contain many TRs as they have many TR qualities to it
5 Minute Chart with Broad Channel = Typically a Wedge Bottom Pattern
It is important to keep in mind with the 3rd push down in the Wedge nearing the end of the day; there is not much more time for the swing down to contain so this increases the odds of a successful wedge bottom reversal
5 Minute Chart with Broad Channel = Typically a Wedge Bottom Pattern
It is important to keep in mind with the 3rd push down in the Wedge nearing the end of the day; there is not much more time for the swing down to contain so this increases the odds of a successful wedge bottom reversal
Broad Channels are not common on 5 minute charts, how come … ?
Usually can not clearly form a Broad Channel on a 5 minute chart in one day unless there are 100+ bars
To believe it is a bear channel and not a a TR, usually need at least 3 Legs Up and 3 Legs Down
Broad Channels are not common on 5 minute charts, how come … ?
Usually can not clearly form a Broad Channel on a 5 minute chart in one day unless there are 100+ bars
To believe it is a bear channel and not a a TR, usually need at least 3 Legs Up and 3 Legs Down
5 Minute Day Traders should just Trade Each Segment (Trade what is infront of you)
5 Minute Day Traders should just Trade Each Segment (Trade what is infront of you)
Broad Channels on 5 Minute Charts usually takes 2 or More Days to form on a 5 Minute Charts
Broad Channels on 5 Minute Charts usually takes 2 or More Days to form on a 5 Minute Charts
When there is a Broad Channel on 5 minute Chart that is over the course of several days consider using the 60 Minute Chart instead
When there is a Broad Channel on 5 minute Chart that is over the course of several days consider using the 60 Minute Chart instead
5 Minute Broad Channel = Can be a Tight Channel on the 60 Minute Chart
5 Minute Broad Channel = Can be a Tight Channel on the 60 Minute Chart
Major High; Leads to Strong Bear BOs and usually a new Low
Major High; Leads to Strong Bear BOs and usually a new Low
Minor Highs often get Failed BOs Above
In Broad Channels it is common for the market to be in a Channel, Bull Trend and a TR
Minor Highs often get Failed BOs Above
In Broad Channels it is common for the market to be in a Channel, Bull Trend and a TR
Broad Bear Channels contain Bull Trends and TRs
Broad Bear Channels contain Bull Trends and TRs
The First 6 Days of a 9 Day Broad Bear Channel have a lot of variety
The First 6 Days of a 9 Day Broad Bear Channel have a lot of variety
Most Traders Trade Each Day by itself and Not apart of the 9 Day Broad Bear Channel
Most Traders Trade Each Day by itself and Not apart of the 9 Day Broad Bear Channel
All Major Reversals are relatively long in probability
40% Chance of becoming a Trend
They are an OK buy if I hold for a REWARD that is 2x Actual Risk
All Major Reversals are relatively long in probability
40% Chance of becoming a Trend
They are an OK buy if I hold for a REWARD that is 2x Actual Risk
Possible TR so will the Bulls Buy?
Yes they will as they see TWO Legs down with a lot over overlap among the bars with big tails. So they conclude this may be a TR and the will begin to buy reversals up from Two Legs down and Sell Reversals down from Two Legs up
When not clearly in Broad Bear Channel, TRADE WHAT IS CLEAR
When not clearly in Broad Bear Channel, TRADE WHAT IS CLEAR
In general you should want to see 3 pushes down before I conclude the market is in a Broad Bear Channel
Then it is @ a Wedge bottom and traders look to buy reversal up
In general you should want to see 3 pushes down before I conclude the market is in a Broad Bear Channel
Then it is @ a Wedge bottom and traders look to buy reversal up
What part of the Market Cycle? You always want to early diagnosis what cycle the market is in
What part of the Market Cycle? You always want to early diagnosis what cycle the market is in
In general you should want to see 3 pushes down before I conclude the market is in a Broad Bear Channel
Then it is @ a Wedge bottom and traders look to buy reversal up
In general you should want to see 3 pushes down before I conclude the market is in a Broad Bear Channel
Then it is @ a Wedge bottom and traders look to buy reversal up
When not clearly in Broad Bear Channel, TRADE WHAT IS CLEAR
When not clearly in Broad Bear Channel, TRADE WHAT IS CLEAR
Possible TR so will the Bulls Buy?
Yes they will as they see TWO Legs down with a lot over overlap among the bars with big tails. So they conclude this may be a TR and the will begin to buy reversals up from Two Legs down and Sell Reversals down from Two Legs up
All Major Reversals are relatively long in probability
40% Chance of becoming a Trend
They are an OK buy if I hold for a REWARD that is 2x Actual Risk
All Major Reversals are relatively long in probability
40% Chance of becoming a Trend
They are an OK buy if I hold for a REWARD that is 2x Actual Risk
Broad Bear Channel is a BEAR TREND so look to SELL
Broad Bear Channel is a BEAR TREND so look to SELL
Stairs Pattern = PB goes back beyond BO Points
Stairs Pattern = PB goes back beyond BO Points
Once there is a Deep PB or AIL, the Bulls will BUY Selloffs
Some bulls buy below prior low
Some bears buy below prior low to take profits
Once there is a Deep PB or AIL, the Bulls will BUY Selloffs
Some bulls buy below prior low
Some bears buy below prior low to take profits
Once there is a Deep PB or AIL, the Bulls will BUY New LOW
Bulls buy @ new low expecting PB above BO point like the last time
Once there is a Deep PB or AIL, the Bulls will BUY New LOW
Bulls buy @ new low expecting PB above BO point like the last time
Never certain but each bar gives new information
Traders are constantly trying to decide if probability is 60% for the next few bars going up or down
Never certain but each bar gives new information
Traders are constantly trying to decide if probability is 60% for the next few bars going up or down
Some computers see this as AIL
Some computers see this as AIL
Most Broad Channels are also in TRs
Most Broad Channels are also in TRs
The market is in BOM but there is a slight higher probability for the Bears due to the CONTEXT
With it being a Tight TR in the Pattern it is probably better to Sell for a Swing down opposed to a Scalp
The market is in BOM but there is a slight higher probability for the Bears due to the CONTEXT
With it being a Tight TR in the Pattern it is probably better to Sell for a Swing down opposed to a Scalp
Weak Selloff = Possible Sell Leg in a Big TR
The Nested Wedge Bottom is a great sign for the Bears to Take Profits and Bulls to Buy for a Swing or Scalp up
Weak Selloff = Possible Sell Leg in a Big TR
The Nested Wedge Bottom is a great sign for the Bears to Take Profits and Bulls to Buy for a Swing or Scalp up
All Trends eventually END
Look for MM targets to Take Profits on a MTR
All Trends eventually END
Look for MM targets to Take Profits on a MTR
Some traders do not like to take many trades (In and Out, In and Out)
Afraid they will not be able to re-enter the market and might miss a big swing
So this is why it is better for traders to swing trade with a Wide Stop
Some traders do not like to take many trades (In and Out, In and Out)
Afraid they will not be able to re-enter the market and might miss a big swing
So this is why it is better for traders to swing trade with a Wide Stop
Entering with a Limit Orders make sure to use a Reasonable Stop
Entering with a Limit Orders make sure to use a Reasonable Stop
Scale In to increase chance of profitability
Some bulls will buy more lower and this increases the chances of profit, this increases risk so trade small enough so that risk is acceptable
Scale In to increase chance of profitability
Some bulls will buy more lower and this increases the chances of profit, this increases risk so trade small enough so that risk is acceptable
Taking Profits in a TR; many Traders will Scalp
It is ok to Scalp out at 1 - 2x Actual Risk as long as it is Bigger that the minimum Emini Scalp (1 Point)
*Remember that minimum needed for a profitable Trader’s Equation; the minimum is rarely the best choice
Taking Profits in a TR; many Traders will Scalp
It is ok to Scalp out at 1 - 2x Actual Risk as long as it is Bigger that the minimum Emini Scalp (1 Point)
*Remember that minimum needed for a profitable Trader’s Equation; the minimum is rarely the best choice
Taking Profits in a TR has many Logical Choices
Taking Profits in a TR has many Logical Choices
Swing Trades = 4+ Points / Scalp = 1 - 3 Points
Swing Trades = 4+ Points / Scalp = 1 - 3 Points
Take Profits at Big Swings Up and Down, so Many Traders will Swing
Take Profits at Big Swings Up and Down, so Many Traders will Swing
TR Day often gets a Late Test of the Open of the Day
TR Day often gets a Late Test of the Open of the Day
TRs are very Forgiving to Limit Order Traders who are able to use WIDE STOPS and Scale In
Good Management is NECESSARY
TRs are very Forgiving to Limit Order Traders who are able to use WIDE STOPS and Scale In
Good Management is NECESSARY
TRs can be a Tight Trading Range (TTR)
a Tight TR is a Limit Order Market
TRs can be a Tight Trading Range (TTR)
a Tight TR is a Limit Order Market
TTR most Traders should NOT TRADE
But to Trade in a TTR you want the Height of the TR to be at least either 3 times the size of the avg bar or 3 times the size of a minimum Scalp (1 point) so 3 points
TTR most Traders should NOT TRADE
But to Trade in a TTR you want the Height of the TR to be at least either 3 times the size of the avg bar or 3 times the size of a minimum Scalp (1 point) so 3 points
TR = LOM
TR = LOM
ALL TRs eventually BO into Trends
When the BO successfully occurs with the BO Bar closing near its low with strong follow-through; EXIT POSITION at the market DO NOT WAIT for a better Exit
YOU are WRONG, GET OUT it is ok to be wrong
ALL TRs eventually BO into Trends
When the BO successfully occurs with the BO Bar closing near its low with strong follow-through; EXIT POSITION at the market DO NOT WAIT for a better Exit
YOU are WRONG, GET OUT it is ok to be wrong
In a TR when the Bulls have a BO the Bears will SELL it betting on the reversal down
AND when the Bears have a BO the Bulls will BUY it betting on the reversal up
In a TR when the Bulls have a BO the Bears will SELL it betting on the reversal down
AND when the Bears have a BO the Bulls will BUY it betting on the reversal up
BOs can be made of a Channel and many Small BARS
BOs can be made of a Channel and many Small BARS
Strong 2nd Leg is a Trap - Hopeful Beginner Bets on a Trend in a Rally
Strong 2nd Leg is a Trap - Hopeful Beginner Bets on a Trend in a Rally
Most Swings have 2 Legs or Wedges, especially swings UP/DOWN in TRs
Many Legs subdivide into 2 or 3 Legs
It is very common to have Legs that are Wedges in TRs
Most Swings have 2 Legs or Wedges, especially swings UP/DOWN in TRs
Many Legs subdivide into 2 or 3 Legs
It is very common to have Legs that are Wedges in TRs
Trend Bars in a TR = EXPECT BAD FOLLOW - THROUGH
Trend Bars in a TR = EXPECT BAD FOLLOW - THROUGH
Strong 2nd Leg is a Trap - Hopeful Beginner Bets on a Trend in a Selloff
Strong 2nd Leg is a Trap - Hopeful Beginner Bets on a Trend in a Selloff
a Beginner gets Trapped when Buying High and/or Selling Low in a TR
a Beginner gets Trapped when Buying High and/or Selling Low in a TR
a Beginner gets Trapped when Buying High and/or Selling Low
a Beginner gets Trapped when Buying High and/or Selling Low
Fade BOs (Bet they will FAIL)
An Expert will Fade a BO betting of Trapped Traders
Fade BOs (Bet they will FAIL)
An Expert will Fade a BO betting of Trapped Traders
An Expert Trader knows that an Exhaustion Gap is more likely than a Measuring Gap when the market is in TR and they look to sell Reversals Down and Up
An Expert Trader knows that an Exhaustion Gap is more likely than a Measuring Gap when the market is in TR and they look to sell Reversals Down and Up
An Expert will Fade a BO betting of Trapped Traders
An Expert will Fade a BO betting of Trapped Traders
Timing for an Entry in a TR can be difficult
Waiting for a 2nd Entry in a TR yields a lot greater success especially if not confident!
A Skilled traders often uses a Wide Stop or Scales in
Timing for an Entry in a TR can be difficult
Waiting for a 2nd Entry in a TR yields a lot greater success especially if not confident!
A Skilled traders often uses a Wide Stop or Scales in
Stop Order entries work in TR when the market is going in my desired direction
Stop Order entries work in TR when the market is going in my desired direction
Strong Leg in a TR = Wait for 2nd Signal
When a First leg is strong wait for a 2nd entry buy signal, like a Micro DB or strong bull BO
When a First leg is strong wait for a 2nd entry sell signal, like a Micro DT or strong bear BO
Strong Leg in a TR = Wait for 2nd Signal
When a First leg is strong wait for a 2nd entry buy signal, like a Micro DB or strong bull BO
When a First leg is strong wait for a 2nd entry sell signal, like a Micro DT or strong bear BO
Protective Stops beyond Signal Bar
Protective Stops beyond Signal Bar
Protective Stops, Not too Wide
Protective Stops, Not too Wide
Scaling In in TRs increases probability BUT adds Risk
Scaling In in TRs increases probability BUT adds Risk
Scaling In is only for Expert Traders Only
Scaling In is only for Expert Traders Only
The reasons Traders Scale In is to increase probability of profits or to reduce size/probability of loss and Pay for this with increased risk SO trade SMALL
The reasons Traders Scale In is to increase probability of profits or to reduce size/probability of loss and Pay for this with increased risk SO trade SMALL
Most Traders never plan for a WIDE STOP to get HIT
Usually it is better to exit with a loss when I believe the trade is bad
Exit on the close of the follow-through bar against my trade direction
Most Traders never plan for a WIDE STOP to get HIT
Usually it is better to exit with a loss when I believe the trade is bad
Exit on the close of the follow-through bar against my trade direction
Scaling In has many CHOICES
Scaling In has many CHOICES
Using a Wide Stop protects against Black Swan Catastrophes
Using a Wide Stop protects against Black Swan Catastrophes
What is the purpose of me using a Wide Stop?
The purposes of a wide stop are to give time to make decisions, and to protect against black swan events
A Trader always plans to exit before wide stop is hit
Sell Zones in a Bear BO or Tight Channel
When selloff is strong, bears look to sell PB to middle of prior leg (SELL ZONE)
Sell with limit order @ 50% PB
Sell reversal down
Sell Zones in a Bear BO or Tight Channel
When selloff is strong, bears look to sell PB to middle of prior leg (SELL ZONE)
Sell with limit order @ 50% PB
Sell reversal down
Sell Zone in Top 3rd which when the market appears in more of a TR then a Channel & PN
Sell above LH
Sell with limit order at 60-70% PBs rally more than 50% & above prior significant highs, bears look to sell in top 3rd of prior leg(Sell Zone)
Sell Zone in Top 3rd which when the market appears in more of a TR then a Channel & PN
Sell above LH
Sell with limit order at 60-70% PBs rally more than 50% & above prior significant highs, bears look to sell in top 3rd of prior leg(Sell Zone)
Bear Trend so you can SELL at ANY TIME
Bear Trend so you can SELL at ANY TIME
In a Broad Bear Channel it is better to Sell PBs than BOs
Similar to TRs it is easier to make money if I wait for PB to sell
DO NOT SELL BO below Prior Low
In a Broad Bear Channel it is better to Sell PBs than BOs
Similar to TRs it is easier to make money if I wait for PB to sell
DO NOT SELL BO below Prior Low
Profit Taking Zones Below Low
Profit Taking Zones Below Low
Broad Bear Channels expect DEEP PBs (Bear Rallies)
Broad Bear Channel just a TR that is sloped down
Bears expect deep PBs (rallies)
Broad Bear Channels expect DEEP PBs (Bear Rallies)
Broad Bear Channel just a TR that is sloped down
Bears expect deep PBs (rallies)
Strong Bulls BO Attempts REVERSE DOWN QUICKLY
Because Bears expect deep PBs and often wait to sell until in the it reaches in the top half, there can be a lack of sellers in the BOTTOM HALF
This often Creates a Buy Vacuum and Strong Bull BO making bulls think they’ve won
Once the bull BO reaches the sell zone(top2/3rds) bears SELL AGGRESSIVELY and overwhelm the bulls, and create another LH
Strong Bulls BO Attempts REVERSE DOWN QUICKLY
Because Bears expect deep PBs and often wait to sell until in the it reaches in the top half, there can be a lack of sellers in the BOTTOM HALF
This often Creates a Buy Vacuum and Strong Bull BO making bulls think they’ve won
Once the bull BO reaches the sell zone(top2/3rds) bears SELL AGGRESSIVELY and overwhelm the bulls, and create another LH
Sometimes there is 2 Choices for a Stop, they are both REASONABLE
- Major LH - new high or strong rally, followed by a strong bear BO to a new low in the trend
- Minor LH - PB in bear leg
- Using the Tighter Stop lose less money BUT lose more often
- Using the Wider Stop lose more money BUT lose less often
Sometimes there is 2 Choices for a Stop, they are both REASONABLE
- Major LH - new high or strong rally, followed by a strong bear BO to a new low in the trend
- Minor LH - PB in bear leg
- Using the Tighter Stop lose less money BUT lose more often
- Using the Wider Stop lose more money BUT lose less often
50% PB Why Sell?
If bear channel, then bear trend, even if it is weak
Bear Trends means the probability of new low are greater than probability of a new high & @ 50% PB the Risk equals the Reward
Take Profits @ prior low or on Reversal up
50% PB Why Sell?
If bear channel, then bear trend, even if it is weak
Bear Trends means the probability of new low are greater than probability of a new high & @ 50% PB the Risk equals the Reward
Take Profits @ prior low or on Reversal up
Minor 50% PBs are STILL A GOOD SELL
Minor 50% PBs are STILL A GOOD SELL
@ 50% PB the Risk equals the Reward
@ 50% PB the Risk equals the Reward
Broad Channel has TRs than BOs
ANY Broad Channel is gong to have SEVERAL TRs
Broad Channel has TRs than BOs
ANY Broad Channel is gong to have SEVERAL TRs
TRs are typically in BOM
Every Bear Trend TRs contains Bottoming Patterns
TRs are typically in BOM
Every Bear Trend TRs contains Bottoming Patterns
A PATTERN often has 2 or more ways to label it
DO NOT LOSE SIGHT OF THE GOAL
A PATTERN often has 2 or more ways to label it
DO NOT LOSE SIGHT OF THE GOAL
Every Bear BO is a Failed Bottom
When a bottom fails, bulls give up and sell out with a LOSS
Bears sell BO, looking for a MM down
Every Bear BO is a Failed Bottom
When a bottom fails, bulls give up and sell out with a LOSS
Bears sell BO, looking for a MM down
Every Rally in a Bear Trend is a BEAR FLAG
Every Rally in a Bear Trend is a BEAR FLAG
Every TR in a Bear Trend contains a Bear Flag
Even though TR is in BOM and the probability is 50/50 for Bulls and Bears
as long as the market is still making LHs, then it is still in a bear trend
And it is easier for the Bears to make money, at least on higher TF charts
Every TR in a Bear Trend contains a Bear Flag
Even though TR is in BOM and the probability is 50/50 for Bulls and Bears
as long as the market is still making LHs, then it is still in a bear trend
And it is easier for the Bears to make money, at least on higher TF charts
On 5minute charts, trade each day as each swing develops
About as easy to make money buying or selling
On 5minute charts, trade each day as each swing develops
About as easy to make money buying or selling
Bear BO of Broad Bear Channel usually FAILS!
Bear BO below a bear channel has a 75% chance of reversing back up within about 5 bars(on the highest TF with the pattern)
Only a 25% chance of a successful bear BO below a Bear Channel
BO eventually is followed by a another bear channel and MM down
Bear BO of Broad Bear Channel usually FAILS!
Bear BO below a bear channel has a 75% chance of reversing back up within about 5 bars(on the highest TF with the pattern)
Only a 25% chance of a successful bear BO below a Bear Channel
BO eventually is followed by a another bear channel and MM down
Trade a Bear BO from a Bear Channel like any other BO
Sell for any reason and hold for swing down
Trade a Bear BO from a Bear Channel like any other BO
Sell for any reason and hold for swing down
Bear Channels evolve in TRs or Bull Trend
Channels DO NOT last forever
Bear Channels evolve in TRs or Bull Trend
Channels DO NOT last forever
Sell Zones in Broad Bull Channels = Bears start to sell somewhere in the middle 3rd
Sell Zones in TRs = Bears will look to sell further up, maybe in the top 3rd
Traders are ALWAYS LOOKING to SELL 50% PBs because they know the market is in a Bear Trend, AIS so there is a 60% chance the market will fall lower
Sell Zones in Broad Bull Channels = Bears start to sell somewhere in the middle 3rd
Sell Zones in TRs = Bears will look to sell further up, maybe in the top 3rd
Traders are ALWAYS LOOKING to SELL 50% PBs because they know the market is in a Bear Trend, AIS so there is a 60% chance the market will fall lower
