Trading Tight Bull Channels Flashcards
Bull Channels can be Tight or Broad
Bull Channels can be Tight or Broad
Tight Channel Vs. Broad Channels
Tight Channel Vs. Broad Channels
How do you know if a Channel is Tight?
When I think a channel may be tight I must look for characteristics that tell me it is actually tight. Some of those characteristics are…
PBs last mostly 1-3 bars
Size of PB is less than 2-3 times as big as big as smallest scalp (1 Point)
Size of PB is less than 2x the size of avg bar
Sell setups using stop entries are mostly losers, even if it is a strong signal bar
(more reasons on chart below)
Whenever it is difficult for the Bears to make money the market is telling me it is only better to make money by Buying with the Bulls
Whenever it is difficult for the Bears to make money the market is telling me it is only better to make money by Buying with the Bulls
You will LOSE Money if you sell in a Tight Bull Channel - Do not Fight the Trend
You will LOSE Money if you sell in a Tight Bull Channel - Do not Fight the Trend
If there is a Sell Signal Bar in a Tight Bull Channel where are the Buyers waiting?
The Buyers are below the sell signal bars waiting to go Long as the probably is SO BIG for the Bulls in a Tight Bull Channel
Beginners are heavily ATTRACTED to Strong Signal bars (opposed to the current Trend) and Wedge Tops
It is important to trade in synchronicity of the current market conditions and cycle
If in a Tight Bull Channel - DO NOT SELL
Beginners are heavily ATTRACTED to Strong Signal bars (opposed to the current Trend) and Wedge Tops
It is important to trade in synchronicity of the current market conditions and cycle
If in a Tight Bull Channel - DO NOT SELL
Tight Channel = BO on Higher Timeframe
Tight Channel = BO on Higher Timeframe
If Difficult - Consider Trading on a Higher TF
If Difficult - Consider Trading on a Higher TF
Whenever the market is in a Bull Trend the odds are the Reversal will Fail and Traders will look to buy trend resumption reversals up
Tight Bear Channel usually Bull Flag or Endless PB and Reversal
Once a PB grows to 10+ bars, traders begin to wonder if it is an Endless PB and start of a bear trend
Whenever the market is in a Bull Trend the odds are the Reversal will Fail and Traders will look to buy trend resumption reversals up
Tight Bear Channel usually Bull Flag or Endless PB and Reversal
Once a PB grows to 10+ bars, traders begin to wonder if it is an Endless PB and start of a bear trend
Every Bull Trend Bar = a BO and a Buy Climax
Every Bull Trend Bar = a BO and a Buy Climax
What is a Tight Bull Channel in a Bear Trend?
It is a Bear Flag
When a bull channel forms in a strong bear trend, market is AIS
the Channel is a Bear Flag and a minor Reversal (best the Bulls will get is a TR until either a bull BO or MTR)
Tight Bull Channel in Bull Trend (after Bull BO) = Buy
Tight Bull Channel in Bull Trend (after Bull BO) = Buy
If a Channel is not Cleary a Broad Channel, what should I then assume?
Assume the Channel is TIGHT
Only Trade in direction of the Trend (Trade like a BO on HTF)
Try to Swing all of Part of your trade
I can use my feelings as a type of Radar
When I feel anxious to Buy than it is most likely time to Buy
I can use my feelings as a type of Radar
When I feel anxious to Buy than it is most likely time to Buy
If you Feel like you are waiting too long = this means the trend is STRONG; SO ENTER !
Buy at least a small position at the market
If you Feel like you are waiting too long = this means the trend is STRONG; SO ENTER !
Buy at least a small position at the market
Even if I bought at the worst place there is a 70% chance that the 1st reversal down will test back up and allow me to exit break even
Even if I bought at the worst place there is a 70% chance that the 1st reversal down will test back up and allow me to exit break even
Profit Taking sometimes is at the END of the Days Session especially when Swing Trading
Profit Taking sometimes is at the END of the Days Session especially when Swing Trading
IF bought at top of BO, probability of profit is HIGH = so the risk is to
IF bought at top of the channel, probability of profit is not as high = Risk is less; lower probability of making money
IF bought at top of BO, probability of profit is HIGH = so the risk is to
IF bought at top of the channel, probability of profit is not as high = Risk is less; lower probability of making money
The first reversal down from a bull trend/channel is usually what?
It is usually Minor
With no clear MTR or Broad Wedge Top the Reversal down has a 70% chance of being minor and being followed by a test of top of the bull trend
The tight reversal channel usually becomes a TR before bear trend
If I purchase the High Bull and more at the High 2 Bull Flag exit at the test of the High as the Break of the Bull Trend signals that the Bull trend May be over
I am also getting out Breakeven on the 1st entry and with a scalp profit on the 2nd entry
Some bears will sell sine possible small LH MTR
If I purchase the High Bull and more at the High 2 Bull Flag exit at the test of the High as the Break of the Bull Trend signals that the Bull trend May be over
I am also getting out Breakeven on the 1st entry and with a scalp profit on the 2nd entry
Some bears will sell sine possible small LH MTR
Bull BO = BUY
Bull BO = BUY
After a BO that then Pullback what phase is the market entering?
The market is now entering the Channel Phase
The PB is the Strat of a Channel
If the Bear Scalpers can make a profit is the market in a BO or a Channel?
If the Bear Scalpers can make money we are than in a Channel
This is a sign that the Bull Channel is weak and we will soon transition into a TR
If you know it is a Trend
You therefore believe there is a 60% chance of more Trend
Yet, it never feels 60% certain
60% is as good as trading gets, so TRADE!!
If you know it is a Trend
You therefore believe there is a 60% chance of more Trend
Yet, it never feels 60% certain
60% is as good as trading gets, so TRADE!!
Once the market is in a Channel Phase it is less likely to extend up higher(lower) in price than it would if it is in a BO Phase
Once the market is in a Channel Phase it is less likely to extend up higher(lower) in price than it would if it is in a BO Phase
Risk of Deep PB - But a TR is more likely than a Bear Trend after a break of the Bull Trend Line
Risk of Deep PB - But a TR is more likely than a Bear Trend after a break of the Bull Trend Line
a Tight Channel is a STRONG TREND, but WEAKER than a BO
a Tight Channel is a STRONG TREND, but WEAKER than a BO
Unlike BO Phase - Bulls Sell above Highs and Take Partial Profits
Unlike BO Phase - Bulls Sell above Highs and Take Partial Profits
In a Tight Bull Channel most Bears DO NOT SELL but some do Scalp
In a Tight Bull Channel most Bears DO NOT SELL but some do Scalp
When the Market is in a Bull Trend PBs do occur frequently and this is what creates a channel but they are small in a Tight Bull Channel
When the PBs are small like this most Bears will not short until they see evidence that the Bears can make money selling
Until the Bears can make money selling the Bulls will keep Buying aggressively
When the Market is in a Bull Trend PBs do occur frequently and this is what creates a channel but they are small in a Tight Bull Channel
When the PBs are small like this most Bears will not short until they see evidence that the Bears can make money selling
Until the Bears can make money selling the Bulls will keep Buying aggressively
Tight Bull Channel - The Bears should not Sell with Stops
When a tight bull channel has a Bear break it most likely will only be a minor reversal
Tight Bull Channel - The Bears should not Sell with Stops
When a tight bull channel has a Bear break it most likely will only be a minor reversal
Until Strong Bull BO, Bears Scale In above the High
Until Strong Bull BO, Bears Scale In above the High
*Only for Experts
Since Risk Bigger Than Reward
*Only for Experts
Since Risk Bigger Than Reward
If you’re taking the Scale In Trade opposed to a Trend you have to have a 80-90% Chance you are going to make money
If you’re taking the Scale In Trade opposed to a Trend you have to have a 80-90% Chance you are going to make money
An Expert only Scales in if he can Structure the trade to have realistic Traders Equation
“Structure” means to have a plan with several alternatives
This is too difficult for a beginner
An Expert only Scales in if he can Structure the trade to have realistic Traders Equation
“Structure” means to have a plan with several alternatives
This is too difficult for a beginner
In a Broad Channel a skilled Trader can win 90% of these trades
Avg win might be about 3 points
In a Tight Bull Channel, Bears are often disappointed and exit around breakeven, not at 1st entry
*In general only trade in the direction of the tight channel for long term success trading
In a Broad Channel a skilled Trader can win 90% of these trades
Avg win might be about 3 points
In a Tight Bull Channel, Bears are often disappointed and exit around breakeven, not at 1st entry
*In general only trade in the direction of the tight channel for long term success trading
If the market is in a Bull Trend and the Bears are having a difficult time making money this tells me two things …
What are they?
- I do not want to be shorting
- I can Buy for any reason at anytime and I will have a very good chance at making money
If it is difficult for the Bears to make money selling prior highs what should the Bears Stop doing?
The Bears should STOP Selling new highs
Bulls see how hard it is for the bears to make money and become more confident and are more willing to swing more legs up long
Many Scale In Bears wait for a Stop Entry
Many Scale In Bears wait for a Stop Entry
Bull BO and Follow - Through, Reverse Short to Long
Many Bears exit once they see a bull close of the follow-through bar after the Bull BO
Bull BO and Follow - Through, Reverse Short to Long
Many Bears exit once they see a bull close of the follow-through bar after the Bull BO
Every Bear Channel is what?
Every Bear Channel is a Bull Flag
When a Bull Flag occurs after 20 or more bars in a bull trend, it might be the Final bull flag
Bears losing money consistently in a Tight Bull Channel eventually it is best to stop trying to short in the the tight bull channel
Bears losing money consistently in a Tight Bull Channel eventually it is best to stop trying to short in the the tight bull channel
Most Great Traders rarely Reverse a position
Most Great Traders rarely Reverse a position
When it is really hard to make money selling this is the market telling me it is only time to BUY
Buy exactly where you’re selling
When it is really hard to make money selling this is the market telling me it is only time to BUY
Buy exactly where you’re selling
What do ALL Tight Channels eventually evolve into?
They eventually evolve in TRs
How should I Trade a Tight Channel?
Trade a Tight Channel like a BO
In a Trend so there is a 60% Probability of Profit of more trend
In a Trend so there is a 60% Probability of Profit of more trend
Near the bottom of a channel what should I try and do?
Near the bottom of the channel always try and buy PBs
In a Tight Channel there are many ways to buy
a Channel has frequent PBs so many opportunities to buy below the high
In a Tight Channel there are many ways to buy
a Channel has frequent PBs so many opportunities to buy below the high
In a Bull tight channel it ok to BUY at any time but it is better to BUY PBs over BOs in the Tight Bull Channel
*Reason being is because every Bull Channel eventually evolves into a TR so buying a BO could be me buying at the high of a TR
In a Bull tight channel it ok to BUY at any time but it is better to BUY PBs over BOs in the Tight Bull Channel
*Reason being is because every Bull Channel eventually evolves into a TR so buying a BO could be me buying at the high of a TR
In a Tight Channel when do PBs usually reverse?
The PBs in a tight Channel usually reverse up after failing 33%-50%
It is difficult for limit order bears to make money in a tight bull channel so bulls but every reversal down
Buy Below PB and Below 2nd Bar in PB
When you have several reasons to buy CHOOSE 1 not all of them as an entry into the market
Buy Below PB and Below 2nd Bar in PB
When you have several reasons to buy CHOOSE 1 not all of them as an entry into the market
When the Channel is tight, the bull usually resumes up after 1 - 3 bar PB
When the Channel is tight, the bull usually resumes up after 1 - 3 bar PB
When there is Bad Follow - Through Disappointed Bulls Exit
When there is Bad Follow - Through Disappointed Bulls Exit
Stops … Trail Them !
Stops … Trail Them !
If I Buy late in the Trend it is ok to put the stop just below the most recent strong BO
If I Buy late in the Trend it is ok to put the stop just below the most recent strong BO
When Taking Profits ALWAYS have a PLAN
When Taking Profits ALWAYS have a PLAN
Minimum Profit is Rarely the Best Choice
Most Traders should be swinging at least half of their positions
Minimum Profit is Rarely the Best Choice
Most Traders should be swinging at least half of their positions
Every Channel Eventually ends
25% of Channels Break to the Strong Side of the Channel and have a Trend Resumption
75% of Channels Break to the opposite direction of the Channel and Evolve into a TR and sometimes a Trend Reversal
Every Channel Eventually ends
25% of Channels Break to the Strong Side of the Channel and have a Trend Resumption
75% of Channels Break to the opposite direction of the Channel and Evolve into a TR and sometimes a Trend Reversal
Whenever a Channel goes on for 20 or more bars Traders should look for signs that it might evolve into a TR
Whenever a Channel goes on for 20 or more bars Traders should look for signs that it might evolve into a TR
If the market has a High 2 late in a bull trend/channel what can it possibly be?
It is possible that it is the Final Bull Flag
Late in the Trend look for signs that it might be the Ending of the TREND
Late in the Trend look for signs that it might be the Ending of the TREND
How long should I hold my swing trades for in a Bull Trend?
Swing until no longer a Bull Trend
Bear BO; Remaining Bulls Give Up
Do not RELY on your STOP in this situation (in a Long Trade) Exit longs due to the Big Bear Bar & BO below bottom of TR
Sell on close of big bear bar if Flat (now AIS)
Bear BO; Remaining Bulls Give Up
Do not RELY on your STOP in this situation (in a Long Trade) Exit longs due to the Big Bear Bar & BO below bottom of TR
Sell on close of big bear bar if Flat (now AIS)
Breaking the TL creates a FLATTER Channel and then a TR
One sign of a channel weakening is that it begins to break below trend lines
Creates a less steep bull trend & Eventually becomes a TR AND once it enters a TR after 10+ Bars it is now in BOM
Breaking the TL creates a FLATTER Channel and then a TR
One sign of a channel weakening is that it begins to break below trend lines
Creates a less steep bull trend & Eventually becomes a TR AND once it enters a TR after 10+ Bars it is now in BOM
Once the Channel Becomes a TR, STOP Trading it like a Trend
Once the Channel Becomes a TR, STOP Trading it like a Trend
Tight Channels often Evolves into a Broad Channel
All Channels eventually end with 25% of the breaking into strength for trend resumption and 75% become flatter and broader & eventually become a TR
SOMETIMES it transitions into a Broad Channel before evolving into a TR
Tight Channels often Evolves into a Broad Channel
All Channels eventually end with 25% of the breaking into strength for trend resumption and 75% become flatter and broader & eventually become a TR
SOMETIMES it transitions into a Broad Channel before evolving into a TR
