Video 37 A & B: How to Trade

Question 1

Low probability events trap traders into thinking the market is doing something it cannot do. No matter how unlikely something appears to be, believe the chart and not your instinct. Trade what you see an now what you hope to see or expect to see.

Answer 1

If the market is going down, you have to sell.

Their denial costs them money because the market is creating a Pain TRade.

Question 2

When looking at every chart, classify each piece of price action into… (4 cases)
This slide is very important!!!!!

Answer 2

Bull Breakout. Strong momentum: Buy anytime, for any reason. Hold for swing.
Tight Bull Channel: Only buy, especially pullbacks. This is a breakout on a higher time frame chart. Take partial profits at new highs.
Broad Bull Channel: Mostly buy, but can sell. Scalp more, swing less. Use limit orders and scale in more.
Trading Range. Traders want value.: Buy low, Sell high and Scalp. Do not believe that moves will go far, so scalp.

Question 3

Al’s Rules for Trading:

Answer 3

1. Don’t lose money
2. Make money
3. Least important is make a lot of money

Question 4

In general, a trader should avoid risking more than ___% of his account.

Answer 4

If $10,000 account, do not risk more than $300.
The distance from the current price to my stop is the risk.
So in this case, the distance from price to the stop should not exceed $300.

Question 5

Al says it’s best to give yourself binary decisions

Answer 5

Is it a bull trend or bear trend?
Is it a bull leg or bear leg in a trading range?
If bull trend, then is it a Breakout or a Channel?
Bull Breakout? Need to get long for any reason. Buy at least small at the market, or on pullback.

Question 6

The market keeps recycling the same patterns over and over again.

Answer 6

The market is in a never ending cycle

Question 7

Sell Zone is the top / of the most recent leg down. See Photo

Answer 7

2/3rd

At every low, there is a bounce up