Trading Ranges (TRs) Flashcards
What the Goal of the market?
To maximize trading; find an agreement between Bulls & Bears
In a Strong Bulll Trend must Bulls take profits?
Yes a strong trend has periods of two-sided trading. Bulls have to take profits also when their stop is far too reduce risk. Profit taken creates PBs, and eventual TR
Define a TR?
Any area of two-sided trading is a TR. Even if it lasts for only a bar. TRs lasting only one bar is common. Small TRs are called PBs.
The term TR is to be used when there is less certainty that the market trend may continue.
The term TR is to be used when there is less certainty that the market trend may continue.
When more bars are added to a TR what does that do for a Trend?
The more bars added to a TR the more distant the trend becomes. and the less influence it has on the direction of the BO. After 20,30,40+ the probability of a trend resumption or reversal is now 50/50
Big up + Big down = (?) in the market & what does it usually result in?
Big up + Big down = Big confusion and it usually results in a TR and once the PB grows to 20-40+ bars it is in BO mode. If one side had a higher probability, the market would begin to go that way and not sideways as such on this chart for so many bars.
If I am looking at the markets and I feel confused or disappointed what are the chances that it is in a TR?
Odds are very high that the market is in a TR even if is not visibly clear to me at the present moment
Why is a TR hard to trade?
Confusion at the start of legs= rarely certain reversal has begun. Signal bars and setups are weak; trends are weak. Spends a lot of time in middle and not moving (as TRs spend A LOT of time in the middle), Bad follow-through after strong trend bars & BOs
Bad follow-through and constant disappointment mean what?
If I constantly seeing bad follow-through after BOs and Buyers and Sellers are both getting disappointed, I now know the market is in a TR
If Gaps and Negative Gaps are closing promptly on both sides and PBs are going through S/R odds are we are in a TR?
TRUE or FALSE?
TRUE = disappointment gaps on both sides are closing all the time means we are most likely in a TR
Disappointment: 80% of BO attempts in TR fail why?
TRs and Trends both resist change, the markets have inertia and tend to continue to keep doing what they have been doing opposed to change. (In the trend the reversal fails from it becoming a flag than the trend continues)
When I see what appears to be a Bull Trend but the Bull Bars have bad follow-through what is more likely?
It is more likely that this is a Bull leg in a TR rather than a Bull Trend
Strong BOs up and down but the gaps soon close & PBs going back beyond BO points, what does this mean?
The gaps closing consistently & PBs going back beyond BO points= probably in a TR
NOTE: TRs have Deep PBs beyond Support and Resistance
NOTE: TRs have Deep PBs beyond Support and Resistance
If I am confident the trend will resume when the price pulls back the pattern is what?
The pattern is a PB, the odds are very high the trend will resume it is a BULL flag on this chart.
If I am not confident9uncertain) the trend will resume when the price pulls back the pattern is what?
The pattern is a TR (bar/PB), I am uncertain the trend will resume or reverse, this makes the pattern a TR, Most channels are the beginning of a TR even though it still apart of the trend
In Small TRs what do traders believe?
In small TRs traders believe the trend will resume soon making the TR a PB (only trade in direction of the trend). However once unclear if the Trend will resume, and the PB has grown in a TR; traders stop using the term PB and now understand the market is in BO Mode
Once a Bull Trend falls below a Major Higher Low Stop what is likely to occur next?
Once the price falls below a stop at a Major Higher Low the market will enter a Bear trend or a TR
When a PB grows too long, what happens to the prior trend?
When a PB grows too long, the prior trend loses influence. BO is equally likely in either direction and the PB has evolved into a TR.
What is the minimum for a TR?
Usually, 3 Legs and 20 Bars, Confusion; Bears need to create enough doubt in the minds of the Bulls in a Bull trend. Remember a TR has to have both equally good Buy & Sell setups which = confusion. BLSHS
What kind of moves are TRs filled with?
TRs are-filled with 2-legged moves (2nd leg trap) Be very careful as the 2nd legs are usually stronger than the first and this tricks beginner traders all the time into thinking it is a successful BO. Ignoring the fact that 80% of TR BOs fail
2nd Leg Trap in a TR, what must I the trader pay attention to, to avoid getting trapped in the 2nd leg trap?
Pay attention to the context! The 2nd leg trap is a strong 2nd leg BO, but really it is just a vacuum test of S/R. Here, HL test of the bottom of the TR
Big Up, Big down reversal does what to a Trader?
Big confusion so it is probable the market is in a TR
a Bull BO above a bull channel fail what % of the time and within how many bars on average?
A Bull BO above a bull channel fails 75% pf time within 5 bars; the same thing if it was a bear BO
Q: 80% of TR BOs fail, expect when in BOM (BreakOutMode) when it’s in BOM what is the probability of a BO?
The probability of a BO when a TR is in BOM is 50% for the Bulls and the Bears
In a TR when scaling into a position what is best to use limit order buys or buy stop?
Use limit orders but stops are still good to use as well
Because 80% of the BO attempts fail in a TR what is the best strategy to trade a TR?
BLSHS, scalp do not swing trade as Most BOO attempts will fail. Moves will soon reverse back to the entry
Are the tops and bottom of a TR always clear?
No, most times the TR Top and Bottom are not clear. TR will eventually break out into a trend; 50% chance of a bull BO & 50% chance of a bear BO; with the eventual BO 80% of attempts will still fail with a 50% chance the 1st attempt will fail.
Is a TR a good reason to Buy or Sell?
Every TR has both a reasonable buy setup and a reason sell setup. Whenever good reason to buy and to sell, then the market is in a TR (80% of TR BO attempts will FAIL)
With this developing weak bear channel in comparison to the Strong Bear BO in the context, what can I expect to occur soon in the markets?
Expect a Bull BO soon (Bear Channels have a 70-75% chance of a Bull BO that eventually evolves into a TR or Bull Trend; however, in a Bull Trend pay attention to the previous Major LH as it could act as Resistance and keep the TR odds intact)
Strong Bear Trend (Micro Bear Channel) evolved into a Weaker Bear Trend, what is this likely to evolve into?
With the lack of consecutive Bear BO Bars with great follow-through in this channel in comparison to the micro bear channel in the context evolving into a TR is extremely likely.
a Strong Trend that is beginning to show signs of weakness that in which is likely to develop into a TR
a Strong Trend that is beginning to show signs of weakness that in which is likely to develop into a TR
Very good reversal and follow-through bar but still below the micro DT. What is likely to occur in the markets as a result of this Price Action?
This increases the chance that this reversal is just a test of the high and part of a developing Bear Channel or Bull Leg in a TR
Most of the time when the market is in a Broad Channel, what is it also often in at the same time?
It often also in a TR
Even though on this chart we are clearly going up in this Bull Channel, what signs of weakness are presenting themselves in this Bull Channel? (making it a probable Bull Leg in a TR)
No strong BO with follow-through above prior high, No consecutive big bull bars, small bodies, PBs every few bars, Many big reversals
Once the Bull Channel/Trend is of the Bears start selling with Stops orders above buy signal bars betting on a leg down (75% chance of a Bear BO in a Bull Channel)
TRUE or FALSE?
TRUE,
The bears see the 3 consecutive Bear Bars at the top of a Bull Channel and the aggressive Bears will start Betting on the Bear BO that will probably evolve into a TR