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Al Brooks - How to Trade Price Action - Khoi > Trading Tight Bear Channels > Flashcards

Trading Tight Bear Channels Flashcards

1
Q

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)

A

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)

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2
Q

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

A

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

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3
Q

Only Reason to distinguish a Tight Channel from a Broad Channel is because traders TRADE THEM DIFFERENTLY

A

Only Reason to distinguish a Tight Channel from a Broad Channel is because traders TRADE THEM DIFFERENTLY

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4
Q

How do you know if the channel is tight?

A

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)

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5
Q

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

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

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6
Q

a Buy Signal Bar in a Tight Bear Channel with a wedge bottom

Is this a Good buy?

A

No it is not a good buy as it is a Tight Bear Channel with no buying pressure to help support a Long Trade

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7
Q

Sellers waiting above this Buy Signal Bar in a Tight Bear Channel

A

Sellers waiting above this Buy Signal Bar in a Tight Bear Channel

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8
Q

Tight Bear Channel is always a BO on a Higher TF

A

Tight Bear Channel is always a BO on a Higher TF

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9
Q

If it is difficult to source a trade consider trading on a Higher TF

A

If it is difficult to source a trade consider trading on a Higher TF

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10
Q

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

A

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

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11
Q
A
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12
Q

What is a Tight Bear Channel in a Bull Trend?

A

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

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13
Q

Tight Bear Channel in a Bear Trend = Sell in Bear Trend

A

Tight Bear Channel in a Bear Trend = Sell in Bear Trend

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14
Q

If a Channel is not clearly Broad what should I then assume it is?

A

If not clearly Broad assume the Channel is Tight

Only trade it in the direction of the trend, trade it like a BO

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15
Q

When I feel anxious to sell, what does this usually mean?

A

It means it is time to SELL

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16
Q

IS it time to enter?… If waiting for a PB, don’t wait

A

IS it time to enter?… If waiting for a PB, don’t wait

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17
Q

Small Risk for Bears

A

Small Risk for Bears

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18
Q

First Reversal up probably will be SOLD

A

First Reversal up probably will be SOLD

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19
Q

Near the End of the day A LOT of Traders look to take profits

A

Near the End of the day A LOT of Traders look to take profits

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20
Q

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

A

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

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21
Q

Is the first reversal up usually Major or Minor?

A

The First Reversal up is usually Minor

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22
Q

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

A

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

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23
Q

Stop placement location often has TWO Good Choices

A

Stop placement location often has TWO Good Choices

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24
Q

After a Minor Reversal up if there is a Trend Resumption where should I look to take Profits?

A

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

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25
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
26
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
27
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
28
Lower Probability than a BO but still Strong Bear
Lower Probability than a BO but still Strong Bear
29
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
30
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
31
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
32
33
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
34
Whenever the market is in a Tight Bear Channel Reversals are Minor
Whenever the market is in a Tight Bear Channel Reversals are Minor
35
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
36
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!
37
When a Channel is Tight ONLY LOOK TO SELL
When a Channel is Tight ONLY LOOK TO SELL
38
Most great Traders rarely reverse
Most great Traders rarely reverse
39
Aggressive Bulls Scale in with a Wide Stop
Aggressive Bulls Scale in with a Wide Stop
40
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
41
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.
42
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
43
DO NOT BUY LOWS when I have identified a Tight Channel
DO NOT BUY LOWS when I have identified a Tight Channel
44
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
45
High Probability can offset Bad Risk/Reward
High Probability can offset Bad Risk/Reward
46
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
47
Only for Experts since risk is Bigger than Reward
Only for Experts since risk is Bigger than Reward
48
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
49
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
50
Evrey Bear Trend is constantly forming Wedge Bottoms AND Every Bull Trend is constantly forming Wedge Tops a Wedge Bottom/Top does not mean the Reversal will be Major
Evrey Bear Trend is constantly forming Wedge Bottoms AND Every Bull Trend is constantly forming Wedge Tops a Wedge Bottom/Top does not mean the Reversal will be Major
51
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
52
53
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
54
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
55
Swing Trade until no Longer in a Bear Trend
Swing Trade until no Longer in a Bear Trend
56
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
57
Every Trend eventually ends and usually it ends by evolving into a TR which it then decides what will occur next TR Day , Trend Reversal or Resumption
Every Trend eventually ends and usually it ends by evolving into a TR which it then decides what will occur next TR Day , Trend Reversal or Resumption
58
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
59
Taking Profits Using Initial Risk
Taking Profits Using Initial Risk
60
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
61
Any Reasonable Stop is Good
Any Reasonable Stop is Good
62
Placing Stops correctly is very important And I must always be looking for reasons to take profits because if not they will QUICKLY disappear
Placing Stops correctly is very important And I must always be looking for reasons to take profits because if not they will QUICKLY disappear
63
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
64
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
65
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
66
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
67
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
68
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
69
There are many ways to Sell in a Tight Bear Channel
There are many ways to Sell in a Tight Bear Channel
70
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
71
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

Al Brooks - How to Trade Price Action - Khoi (18 decks)

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