Trading Tight Bear Channels Flashcards
Bear Channels can be TIGHT or BROAD
In a Tight Bear Channel I should be looking for ANY reason to SELL
In a Broad Bear Channel it is a 2 sided Channel, I can Buy and Sell however it is still a Bear Channel so it is Better to SELL and trade in the direction of the Trend (Perhaps for a Swing)
Bear Channels can be TIGHT or BROAD
In a Tight Bear Channel I should be looking for ANY reason to SELL
In a Broad Bear Channel it is a 2 sided Channel, I can Buy and Sell however it is still a Bear Channel so it is Better to SELL and trade in the direction of the Trend (Perhaps for a Swing)
If I am unsure if the Channel is Tight or Broad I must assume the Channel is Tight and only Trade in the Direction of the Trend
If I am unsure if the Channel is Tight or Broad I must assume the Channel is Tight and only Trade in the Direction of the Trend
Only Reason to distinguish a Tight Channel from a Broad Channel is because traders TRADE THEM DIFFERENTLY
Only Reason to distinguish a Tight Channel from a Broad Channel is because traders TRADE THEM DIFFERENTLY
How do you know if the channel is tight?
PBs last mostly 1 - 3 Bars
Size of PB is less than 2 -3 times as big as smallest scalp
Size of PB is less than 2x the size of avg bar (2-2.5 points)
If it is a Tight Bear Channel trade with it do NOT fight it
Do not look to Buy a wedge bottom in a tight Bear Trend unless the Swings are big
If it is a Tight Bear Channel trade with it do NOT fight it
Do not look to Buy a wedge bottom in a tight Bear Trend unless the Swings are big
a Buy Signal Bar in a Tight Bear Channel with a wedge bottom
Is this a Good buy?
No it is not a good buy as it is a Tight Bear Channel with no buying pressure to help support a Long Trade
Sellers waiting above this Buy Signal Bar in a Tight Bear Channel
Sellers waiting above this Buy Signal Bar in a Tight Bear Channel
Tight Bear Channel is always a BO on a Higher TF
Tight Bear Channel is always a BO on a Higher TF
If it is difficult to source a trade consider trading on a Higher TF
If it is difficult to source a trade consider trading on a Higher TF
Tight Bear Channel
a Bear Flag
an Endless PB & Reversal
Once it grows to 10 bars traders being to wonder if it is an Endless PB & start of bull trend
Tight Bear Channel
a Bear Flag
an Endless PB & Reversal
Once it grows to 10 bars traders being to wonder if it is an Endless PB & start of bull trend
What is a Tight Bear Channel in a Bull Trend?
In a Bull Trend a Tight Bear Channel is a Bull Flag
The BEST the Bears can get from this is a TR until either a bear BO or MTR
Tight Bear Channel in a Bear Trend = Sell in Bear Trend
Tight Bear Channel in a Bear Trend = Sell in Bear Trend
If a Channel is not clearly Broad what should I then assume it is?
If not clearly Broad assume the Channel is Tight
Only trade it in the direction of the trend, trade it like a BO
When I feel anxious to sell, what does this usually mean?
It means it is time to SELL
IS it time to enter?… If waiting for a PB, don’t wait
IS it time to enter?… If waiting for a PB, don’t wait
Small Risk for Bears
Small Risk for Bears
First Reversal up probably will be SOLD
First Reversal up probably will be SOLD
Near the End of the day A LOT of Traders look to take profits
Near the End of the day A LOT of Traders look to take profits
If I sell at the bottom of a BO, the probability of making money is high but so is the risk
If I sell at the bottom of a channel, the probability of profit is usually not as hig
If I sell at the bottom of a BO, the probability of making money is high but so is the risk
If I sell at the bottom of a channel, the probability of profit is usually not as hig
Is the first reversal up usually Major or Minor?
The First Reversal up is usually Minor
Tight Channel usually becomes a TR before the Bulls have a chance of Reversing the market, therefore the bears have time to exit with a low probability of stop being hit
No Clear MTR Pattern or no Wedge Bottom there the reversal up has a 70% chance of being minor and being followed by a test of the bottom of the Bear Trend
Probability favors a trend Resumption Down
Tight Channel usually becomes a TR before the Bulls have a chance of Reversing the market, therefore the bears have time to exit with a low probability of stop being hit
No Clear MTR Pattern or no Wedge Bottom there the reversal up has a 70% chance of being minor and being followed by a test of the bottom of the Bear Trend
Probability favors a trend Resumption Down
Stop placement location often has TWO Good Choices
Stop placement location often has TWO Good Choices
After a Minor Reversal up if there is a Trend Resumption where should I look to take Profits?
Look to take Profits at the Test of the low and perhaps look to sell again below the test of the low if the market breaks it
Tight Bear Channel = BO on Higher TF
Trade just like a BO, the market is AIS; SELL FOR ANY REASON
Tight Bear Channel = BO on Higher TF
Trade just like a BO, the market is AIS; SELL FOR ANY REASON
After a BO in the market phase (1st Phase of the market cycle)
When does the 2nd Phase start in the cycle?
After there is a PB it is the start of the Channel Phase, the 2nd Phase in the Market Cycle
If the Bull Scalpers can make a Profit then we are in a Channel not a BO
It is 2-sided trading as the Bulls and Bears can make money
In a BO only the Bears or Bulls can make money in that moment
If the Bull Scalpers can make a Profit then we are in a Channel not a BO
It is 2-sided trading as the Bulls and Bears can make money
In a BO only the Bears or Bulls can make money in that moment
Lower Probability than a BO but still Strong Bear
Lower Probability than a BO but still Strong Bear
ven though there is a Risk of a Deep PB in the Tight Channel it is still more likely a TR is emerge opposed to a Bull Trend
*Remember 75% of Bears Channels have a Bull BO
ven though there is a Risk of a Deep PB in the Tight Channel it is still more likely a TR is emerge opposed to a Bull Trend
*Remember 75% of Bears Channels have a Bull BO
a Tight Channel is a Strong Trend but it is WEAKER than a BO
Signs that then Trend is weakening and The Bear Traders are disappointed by:
Tails on the bottom
Bad follow-through after strong bear bars (small bear bodies , tails below, bull bars present)
Lack of very big bear bars
Lack of consecutive, big bear bars closing on lows
a Tight Channel is a Strong Trend but it is WEAKER than a BO
Signs that then Trend is weakening and The Bear Traders are disappointed by:
Tails on the bottom
Bad follow-through after strong bear bars (small bear bodies , tails below, bull bars present)
Lack of very big bear bars
Lack of consecutive, big bear bars closing on lows
What is the difference between a very strong bear trend & a BO?
In a BO traders will sell at prior lows betting that they are going lower
In a channel they start to buy at prior lows to take profits & than sell rallies at the midpoint of the prior leg
In a Tight Bear Channel most Bulls do not Buy, but some will Scalp
In a Tight Bear Channel most Bulls do not Buy, but some will Scalp
For me to conclude that the market is going lower and is in for example a tight bear channel I only have to be at least 60% certain.
So 60% probability of profit
For me to conclude that the market is going lower and is in for example a tight bear channel I only have to be at least 60% certain.
So 60% probability of profit
Tight Bear Channel = Trade like a BO (ALMOST!)
The most important thing to do when trading a tight bear channel is to determine where the most reasonable Protective Stop goes, I than can figure out position size based on the Risk
TRUST YOUR STOP!
Tight Bear Channel = Trade like a BO (ALMOST!)
The most important thing to do when trading a tight bear channel is to determine where the most reasonable Protective Stop goes, I than can figure out position size based on the Risk
TRUST YOUR STOP!
Most great Traders rarely reverse
Most great Traders rarely reverse
Aggressive Bulls Scale in with a Wide Stop
Aggressive Bulls Scale in with a Wide Stop
Why do Low 2 Sell Signals work so well in tight bear channels?
They work so well because they are able to see if a bull bought that was followed by a bad-follow through with a sell signal bar closing on its low the Bulls and Bears will sell at the same time
Bulls will give up and the Bears will get short
If it is difficult for the Bulls to make money Bulls will stop Buying
If the Bulls stop Buying the odds of a Bear BO with follow-through greatly increase, this also leads to a minimum of goal of at least two legs down.
If it is difficult for the Bulls to make money Bulls will stop Buying
If the Bulls stop Buying the odds of a Bear BO with follow-through greatly increase, this also leads to a minimum of goal of at least two legs down.
If it is Difficult for the Bulls to make money = BEARS ARE VERY STRONG
AIS - Only look to Sell
If the Bulls cannot make money chances are we are going quite a bit lower
If it is Difficult for the Bulls to make money = BEARS ARE VERY STRONG
AIS - Only look to Sell
If the Bulls cannot make money chances are we are going quite a bit lower
Bear BO but weak bear follow-through
Small bars, bull bars, tails below
If buying low in a tight bear channel and the Bulls can make money this is a sign that the market is transitioning into a TR
Bear BO but weak bear follow-through
Small bars, bull bars, tails below
If buying low in a tight bear channel and the Bulls can make money this is a sign that the market is transitioning into a TR
High Probability can offset Bad Risk/Reward
High Probability can offset Bad Risk/Reward
To scale in I would need a Probability of 80% or more for a win or else I will lose
To scale in I would need a Probability of 80% or more for a win or else I will lose
Only for Experts since risk is Bigger than Reward
Only for Experts since risk is Bigger than Reward
Until there is a Strong Bear BO Bulls will Buy Lows and Scale in Lower
Until there is a Strong Bear BO Bulls will Buy Lows and Scale in Lower
In a Tight Bear Channel should Bulls Buy with Stops?
No Bulls should not Buy with Stops in a Tight Bear Channel as there is not enough room to make a Profit in a tight channel.
However most Traders should not be buying in a tight bear channel
PBs are frequent but SMALL
When a channel is tight usually every reversal is minor
Until I get a very strong minor reversal can I start thinking of a swing up
PBs are frequent but SMALL
When a channel is tight usually every reversal is minor
Until I get a very strong minor reversal can I start thinking of a swing up
After a trend lasts about 20+ bars, look for signs that it might soon evolve into a TR
Once it becomes a TR stop Trading like you are in a trend
After a trend lasts about 20+ bars, look for signs that it might soon evolve into a TR
Once it becomes a TR stop Trading like you are in a trend
a Sign that the Channel is Weakening is that Rallies begin to break above TLs
Creates a less steep bear trend and eventual TR
a Sign that the Channel is Weakening is that Rallies begin to break above TLs
Creates a less steep bear trend and eventual TR
Swing Trade until no Longer in a Bear Trend
Swing Trade until no Longer in a Bear Trend
All Trends Eventually End
After a Trend lasts about 20+ Bars, look for signs that it might evolve into a TR
All Trends Eventually End
After a Trend lasts about 20+ Bars, look for signs that it might evolve into a TR
Minimum Profit Target is rarely the best choice
It is good math to scalp part of trade at 1x or 2x Actual or Initial Risk and swing the rest
Minimum Profit Target is rarely the best choice
It is good math to scalp part of trade at 1x or 2x Actual or Initial Risk and swing the rest
Taking Profits Using Initial Risk
Taking Profits Using Initial Risk
Taking Profits using ACTUAL RISK
Once I see a Strong BO and follow-through there is a 60% probability that I am going to make a Reward at least as great as my Risk
Therefore making the Reward Target equal to Actual Risk has a 60% chance of probability
Taking Profits using ACTUAL RISK
Once I see a Strong BO and follow-through there is a 60% probability that I am going to make a Reward at least as great as my Risk
Therefore making the Reward Target equal to Actual Risk has a 60% chance of probability
Any Reasonable Stop is Good
Any Reasonable Stop is Good
After each new Strong Bear BO what should I do with my stop?
After each new strong BO, especially if to a new low, lower stop to above the high of the BO
6 bar PB near the bottom of the trend
Probably transitioning into a TR
6 bar PB near the bottom of the trend
Probably transitioning into a TR
Sell above PB and above 2nd Bar in PB
why?
Because the PBs DO NOT LAST LONG, when the channel is tight, bears usually reverse down after 1 - 3 bar PBs
Sell above PB and above 2nd Bar in PB
why?
Because the PBs DO NOT LAST LONG, when the channel is tight, bears usually reverse down after 1 - 3 bar PBs
In any channel Tight or Broad there is always PBs
PBs are usually 33% - 50% (33 = 1/3 one third : 50= 1/2 one half)
When the channel is tight, PB usually reverses down after 33%-50% rally
In any channel Tight or Broad there is always PBs
PBs are usually 33% - 50% (33 = 1/3 one third : 50= 1/2 one half)
When the channel is tight, PB usually reverses down after 33%-50% rally
In a Strong Bear Trend it is ok to sell at ANY Time but it is better to sell a PB than a BO
In a Strong Bear Trend it is ok to sell at ANY Time but it is better to sell a PB than a BO
a Channel has many PBs and many chances to sell above a Low
a Channel has many PBs and many chances to sell above a Low
There are many ways to Sell in a Tight Bear Channel
There are many ways to Sell in a Tight Bear Channel
Selling PBs is a good strategy in a Bear Channel
Bet bull reversal attempts will fail
Sell BO below Low 1 and Low 2 bear Flags
Selling with STOPS below Bear Bars to reduce the trade going against me often upon entry
Selling PBs is a good strategy in a Bear Channel
Bet bull reversal attempts will fail
Sell BO below Low 1 and Low 2 bear Flags
Selling with STOPS below Bear Bars to reduce the trade going against me often upon entry
Near the top of a Tight Bear Channel, ALWAYS Try to SELL
Beginners often are afraid to sell as the market is Rallying
The Math is good in a bear channel so I can Rely on my Stop
Near the top of a Tight Bear Channel, ALWAYS Try to SELL
Beginners often are afraid to sell as the market is Rallying
The Math is good in a bear channel so I can Rely on my Stop
