al-brooks-course
52B - Losing When Good Trade Goes Bad
Raw transcript and slide notes for 52B - Losing When Good Trade Goes Bad.
Overview
- Slides: 21
- Transcript segments: 435
- Status: 自动按 slide 时间线归档；核心概念和长期笔记可以在每个 slide 的
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Transcript 001
Time: 00:02
Bilingual Transcript
00:02 - 00:03
EN: This is Al Brooks.
00:03 - 00:05
EN: Thank you for watching the Brooks Trading Course.
00:05 - 00:10
EN: This is the second of two videos on losing when a good trade goes bad.
Slide 001
Time: 00:13
Bilingual Transcript
00:14 - 00:16
EN: Whenever you’re trading and your premise changes,
00:16 - 00:19
EN: you have to change the style that you’re trading.
00:20 - 00:23
EN: Next, I want to talk about how traders can get trapped
00:23 - 00:26
EN: and the importance of recognizing the trap as soon as possible,
00:26 - 00:30
EN: and then working your way out of a bad trade.
Slide 002
Time: 00:31
Bilingual Transcript
00:34 - 00:36
EN: The market’s in a bear trend.
00:36 - 00:40
EN: There’s a bear breakout, pair of bear bars, decent follow-through.
00:47 - 00:49
EN: However, now the market is starting to go sideways
00:49 - 00:52
EN: and the pullback is lasting a lot of bars.
00:52 - 00:56
EN: We have prominent tails, small bars, dojis.
00:56 - 00:58
EN: The market’s starting to enter a Tight Trading Range.
00:58 - 01:02
EN: It’s still Always In Short, so your premise of a bear trend is still valid.
01:02 - 01:05
EN: However, if you want you can exit, for example,
01:06 - 01:09
EN: on a second leg up above a bull bar, get out here.
01:09 - 01:13
EN: If you want to be trading Always In, you simply look to sell again
01:13 - 01:16
EN: below a bear bar on a reversal back down.
01:17 - 01:20
EN: Is this a good trade that has gone bad?
01:20 - 01:23
EN: Well, it’s certainly not behaving the way you want it to behave,
01:23 - 01:25
EN: but your premise is still valid.
01:25 - 01:26
EN: It’s still a bear trend.
01:26 - 01:27
EN: It’s still Always In Short.
01:28 - 01:32
EN: As long as it stays below this stop and does not start to accelerate
01:32 - 01:38
EN: to the up side, the odds are it’ll either go down or down and sideways.
01:45 - 01:47
EN: This is a big Low 2 short.
01:47 - 01:51
EN: Two legs up – one, pullback, two – a decent sell signal bar.
01:51 - 01:54
EN: The second leg up had two smaller legs – one, pullback, two.
01:54 - 01:56
EN: That’s good for the bears.
01:56 - 01:58
EN: You have a sell signal bar closing on its low.
01:59 - 02:00
EN: Reasonable to go short.
02:01 - 02:03
EN: If a person got out,
02:03 - 02:06
EN: this is a reasonable sell setup looking for a second leg down.
02:07 - 02:10
EN: One, pullback, and two.
02:11 - 02:13
EN: You’re getting a second signal.
02:13 - 02:17
EN: Theoretically bears who sold here would consider adding on,
02:18 - 02:20
EN: but usually if they’re going to add on to their position,
02:20 - 02:24
EN: they want the second signal to be the size of a scalp higher
02:24 - 02:27
EN: or two to three times the size of a scalp higher.
02:27 - 02:29
EN: Most traders would not add to a short here,
02:29 - 02:32
EN: but if they did get out here and they looked at this
02:32 - 02:37
EN: and saw it as a large Low 2 bear flag and the market’s still Always In Short,
02:37 - 02:40
EN: it’s reasonable to sell below the low of that bear bar.
02:44 - 02:47
EN: At the end of the session, the bulls are getting bull bars
02:47 - 02:52
EN: here, here, here, closing on its high, big bull body
02:52 - 02:57
EN: - and now we get a Micro Double Bottom with a bull bar closing on its high.
02:57 - 02:59
EN: Reasonable to get out of your trade right here.
03:03 - 03:05
EN: The bears have a Double Top.
Slide 003
Time: 03:05
Bilingual Transcript
03:05 - 03:07
EN: The bulls have a Double Bottom.
03:07 - 03:08
EN: The bulls have a breakout,
03:08 - 03:11
EN: and they have the minimum follow-through that they need.
03:11 - 03:16
EN: They have the absence of a bear body, a close above the top of the Double Top.
03:16 - 03:18
EN: It’s Always In Long.
03:18 - 03:21
EN: At this point you know one of two things is likely:
03:21 - 03:24
EN: either the market’s going to continue higher (bull trend),
03:24 - 03:27
EN: or you’re going to get a deep pullback and a Trading Range.
03:27 - 03:30
EN: At this point, the likelihood of a bear trend is small.
03:36 - 03:40
EN: Because of that, you can buy the close of this bar or the close
03:40 - 03:43
EN: of the follow-through bar and use an appropriate stop
03:43 - 03:47
EN: below the bottom of the bull trend, betting that even if we reverse down,
03:47 - 03:50
EN: it’ll be a bear leg in a Trading Range and it would be followed
03:50 - 03:53
EN: by a bull leg in a Trading Range, and that would get him back
03:53 - 03:57
EN: to his original entry price and he could get out breakeven or with a small loss.
03:57 - 04:01
EN: If he scaled in lower, he could get out with a profit on his lower entry.
04:02 - 04:06
EN: He’s buying here because he’s hoping the market goes straight up.
04:07 - 04:11
EN: He’s confident that if it reverses down, it’ll form a Higher Low
04:11 - 04:13
EN: and come back to his entry price.
04:16 - 04:17
EN: Reasonable to take the buy.
04:21 - 04:24
EN: You have a Double Top and a Double Bottom,
04:24 - 04:26
EN: and the bulls broke above the Double Top.
04:26 - 04:29
EN: This high is the neckline of this Double Bottom.
04:29 - 04:34
EN: It’s the highest price between these two lows, a reasonable buy.
04:34 - 04:37
EN: Close above the high, a second close above the high.
Slide 004
Time: 04:40
Bilingual Transcript
04:42 - 04:45
EN: Strong reversal down, a pair of decent size bear bodies.
04:45 - 04:48
EN: The bear bodies are increasing in size.
04:49 - 04:53
EN: A doji and then a small bear bar, and then a bigger bear body,
04:53 - 04:56
EN: and then an even bigger bear body closing on its low
04:56 - 05:00
EN: - but it’s still above the stop and it’s not enough to convince traders
05:00 - 05:02
EN: that the bears have taken control.
05:02 - 05:06
EN: Remember, the bulls who bought here knew the odds favored either
05:06 - 05:12
EN: a second leg up or a deep pullback and a Trading Range, which is what they got
05:12 - 05:16
EN: - and ultimately there was a second leg up later in the session.
05:20 - 05:21
EN: Is it Always In Short?
05:21 - 05:22
EN: No.
05:22 - 05:25
EN: Therefore the bulls can still stay long and rely on their stop.
05:25 - 05:30
EN: They can even buy this close, betting that the bear reversal attempt will fail.
05:36 - 05:40
EN: The selloff is strong enough \ so the traders believe at this point
05:40 - 05:42
EN: that it’s no longer going to be a bull trend,
05:42 - 05:44
EN: that we’re probably going to go sideways.
05:45 - 05:49
EN: When you have 5 bars down and the bear bodies are increasing in size
05:50 - 05:54
EN: and the bull trend resumes up, the resumption is usually a minor reversal
05:54 - 05:57
EN: in a Trading Range, and it probably will be followed
05:57 - 05:58
EN: by at least one more leg down.
06:02 - 06:04
EN: Big up, big down, big confusion.
06:04 - 06:05
EN: Trading Range likely.
06:06 - 06:09
EN: Therefore, traders will change their trading strategy.
06:09 - 06:14
EN: Instead of buying at any price, including high, betting on higher prices,
06:14 - 06:17
EN: now they’d rather buy low and sell high.
Slide 005
Time: 06:20
Bilingual Transcript
06:26 - 06:30
EN: If a trader bought this close and he sees the strong selloff,
06:30 - 06:35
EN: he can buy more above a good bull bar, expecting that the selloff
06:35 - 06:36
EN: will be a bear leg in a Trading Range
06:36 - 06:39
EN: and the market will come back to his original price.
06:39 - 06:41
EN: He can get out breakeven on his first entry
06:41 - 06:44
EN: and with a small profit on his second entry.
06:57 - 07:00
EN: If the bull who bought here and bought more here
07:00 - 07:04
EN: was extremely disappointed by this, he might be afraid the market
07:04 - 07:06
EN: might not rally back to his original price.
07:07 - 07:10
EN: He might instead try to scale in to avoid a loss,
07:11 - 07:14
EN: try to get out at the midpoint between his two buys
07:14 - 07:17
EN: - here and here, and here’s his average price.
07:17 - 07:19
EN: He could get out here and avoid a loss.
07:20 - 07:23
EN: If he exits here, he gets out breakeven on his first buy
07:23 - 07:25
EN: and with a profit on his lower buy.
Slide 006
Time: 07:30
Bilingual Transcript
07:32 - 07:36
EN: Whenever there’s a strong reversal down like that right after you buy,
07:36 - 07:40
EN: it’s okay to exit, and then if you do you can look
07:40 - 07:42
EN: to buy again if the bull trend resumes.
07:48 - 07:50
EN: For example, this is 5 bars down.
07:50 - 07:52
EN: The bear bodies are increasing.
07:52 - 07:54
EN: The bears have two decent size bodies.
07:54 - 07:58
EN: It’s reasonable to exit on the close of that bear bar.
07:58 - 08:00
EN: However, the market’s still Always In Long.
08:00 - 08:04
EN: There are scale-in bulls who bought here and who are looking for a bull bar,
08:04 - 08:06
EN: and they’ll buy more above the bull bar.
08:06 - 08:10
EN: If a trader exited here, he could buy again above that bull bar,
08:10 - 08:13
EN: knowing that a lot of bulls will be buying looking
08:13 - 08:15
EN: for a test back up to the high close.
08:15 - 08:19
EN: The bears who shorted are going to be taking profits.
08:22 - 08:25
EN: The bulls who bought buy more.
08:25 - 08:29
EN: The bulls who got out buy more above a bull bar since it’s still Always In Long.
08:29 - 08:31
EN: Now we have a Double Bottom.
08:31 - 08:33
EN: They could buy here as well.
Slide 007
Time: 08:40
Bilingual Transcript
08:40 - 08:43
EN: 3 consecutive, reasonably strong bear bars.
08:43 - 08:46
EN: Good size bodies, 2 of them closing near their lows,
08:46 - 08:48
EN: 1 closing just below the midpoint.
08:49 - 08:52
EN: It’s a possible Sell The Close bear trend
08:52 - 08:56
EN: even though we have not yet closed below all the bars to the left.
08:59 - 09:02
EN: Some bears will sell that close, hoping that this Double Top
09:02 - 09:06
EN: will break below the neckline and fall for at least a Measured Move down.
09:08 - 09:12
EN: Reasonable to put your stop above the top of the bear reversal.
09:17 - 09:22
EN: If a bear who sold that close now sees this big doji bar,
09:22 - 09:26
EN: he knows the market rallied strongly and came back down here.
09:26 - 09:30
EN: He might be concerned that he’s buying the bottom of a Trading Range.
09:30 - 09:35
EN: This reversal up was more than what the bears who sold this close wanted.
Slide 008
Time: 09:40
Bilingual Transcript
09:45 - 09:48
EN: Some bears, whenever they see a Sell The Close bar, will place a limit order
09:48 - 09:54
EN: to sell more one or two times minimum scalp size higher – for example, right here.
09:54 - 09:57
EN: If it was a Forex market, this might be 10 pips higher.
09:57 - 10:00
EN: If it’s the Emini, it might be 1 or 2 points higher.
10:01 - 10:04
EN: They do that betting that the first reversal up will fail
10:04 - 10:06
EN: and the market will have to test this close.
10:06 - 10:10
EN: Some traders will simply place a limit order to sell at the high of the bear bar,
10:10 - 10:14
EN: betting that it’s a bad buy signal bar and therefore more sellers above.
10:19 - 10:23
EN: A lot of the traders would be concerned that the market rallied
10:23 - 10:28
EN: that far up after the 3 bear bars and the break below the earlier low.
10:29 - 10:32
EN: Their premise therefore might now be that we’re in a Trading Range
10:32 - 10:37
EN: or creating a Double Bottom instead of in a Sell The Close bear trend.
10:37 - 10:40
EN: Many of these bears who sold this close
10:40 - 10:43
EN: will now place a limit order to get out at that close.
10:44 - 10:48
EN: The market has to go 1 tick below the close for them to get out, which it did,
10:48 - 10:50
EN: and then you see this strong reversal.
10:50 - 10:52
EN: The remaining bears are giving up.
10:52 - 10:53
EN: A Give-up Bar.
10:53 - 10:56
EN: Chances are we’re going at least a little higher.
Slide 009
Time: 11:00
Bilingual Transcript
11:04 - 11:08
EN: We have a strong reversal down, decent size bear bars,
11:08 - 11:10
EN: closing at or near their lows.
11:10 - 11:12
EN: We have 4 consecutive bear bars.
11:12 - 11:15
EN: The odds are the first reversal up will be minor
11:15 - 11:17
EN: and the best the bulls will get is a Trading Range.
11:18 - 11:22
EN: That is what the odds are, but it’s not a guarantee.
11:22 - 11:24
EN: In any case it’s a Sell The Close bear trend
11:24 - 11:27
EN: either starting here or starting here.
11:27 - 11:28
EN: Doji bar.
11:28 - 11:30
EN: A lot of bears would not sell this close.
11:30 - 11:33
EN: They would be concerned that the market might be getting a pullback.
11:33 - 11:37
EN: But let’s say a bear did sell one of those two low closes.
11:40 - 11:42
EN: He’s hoping that the market will keep going down.
11:42 - 11:47
EN: He’s confident that if it starts to go up, if he manages his trade correctly,
11:47 - 11:50
EN: he can avoid a loss – and he might even be able to make a profit.
11:57 - 12:02
EN: Therefore, the bear might place a limit order to scale in at least
12:02 - 12:05
EN: the size of a minimum scalp above his first entry,
12:06 - 12:10
EN: looking to get out breakeven on his first entry and with a profit on his second.
12:11 - 12:15
EN: So, let’s say he sold the size of a scalp above his first entry at this close,
12:16 - 12:18
EN: and then he places a limit order to get out at this close.
12:19 - 12:23
EN: To get filled, the market has to fall just below that close.
12:28 - 12:29
EN: But look what happened.
12:29 - 12:31
EN: Look at this low, look at that close.
12:31 - 12:33
EN: It did not fall below that close.
12:39 - 12:42
EN: What do you think the disappointed bears are going to do?
12:43 - 12:45
EN: They tried to get out breakeven and they could not.
12:45 - 12:48
EN: Now they’re concerned that they might be trapped.
12:48 - 12:55
EN: They might then raise their limit order from this close to a little bit above,
12:55 - 12:57
EN: maybe a tick or two above or a pip or two above,
12:58 - 13:01
EN: hoping to get out with a profit on their second entry
13:01 - 13:02
EN: and breakeven on their first.
Slide 010
Time: 13:05
Bilingual Transcript
13:10 - 13:13
EN: The bears who tried to get out with their limit order did not get filled,
13:13 - 13:16
EN: and therefore a lot of them will raise their limit order.
13:22 - 13:23
EN: But look what happened here.
13:24 - 13:28
EN: The market came down to just above that low, but not down to that low,
13:28 - 13:32
EN: and chances are the bears who raised their limit order trying
13:32 - 13:34
EN: to get out with a small profit here
13:34 - 13:37
EN: and a small loss here were unable to get filled.
13:37 - 13:38
EN: The market rallied again.
13:39 - 13:40
EN: What’s going to happen here?
13:40 - 13:42
EN: The bears are going to give up.
13:42 - 13:45
EN: So, they gave up here, and the other bears gave up here.
13:47 - 13:51
EN: So, if you see Sell The Close bears unable to get out once,
13:51 - 13:55
EN: and then if they raise their limit order, unable to get out a second time,
13:55 - 13:59
EN: they’re going to give up, and that usually creates a reversal.
14:07 - 14:11
EN: Therefore, if you’re short for any reason – let’s say you sold this close
14:11 - 14:15
EN: and you have your stop up here – you know that bears are getting trapped.
14:15 - 14:19
EN: They’re unable to get out, and they’re unable to get out at an even worse price.
14:19 - 14:21
EN: They’re going to give up.
14:21 - 14:25
EN: Therefore, if you’re still short and you did not get out, you have to get out,
14:25 - 14:28
EN: for example, above this second bull bar.
14:33 - 14:35
EN: I’m always paying attention to trapped traders
14:35 - 14:39
EN: because if there are trapped traders, then there’s fuel,
Slide 011
Time: 14:35
Bilingual Transcript
14:39 - 14:41
EN: there’s energy for the market to make a move.
Slide 012
Time: 14:42
Bilingual Transcript
14:44 - 14:48
EN: We know that the bears who sold this close failed to get out here.
14:48 - 14:49
EN: They were trapped.
14:49 - 14:52
EN: They raised their limit order, and they’re still trapped.
14:52 - 14:53
EN: Still did not get filled.
14:54 - 14:57
EN: That increases the chances that we’re going to get a reversal.
15:06 - 15:07
EN: Tight Bear Channel.
15:08 - 15:11
EN: Even if we do get a reversal, it probably will be minor,
15:11 - 15:13
EN: which means the best the bulls probably
15:13 - 15:16
EN: will get is a Trading Range – and they did.
15:16 - 15:20
EN: This went above this high, but it still stayed sideways for about 30 or 40 bars.
15:25 - 15:29
EN: Bears who twice tried to get out without a loss failed,
15:29 - 15:32
EN: and therefore they should get out, take the loss
15:32 - 15:35
EN: rather than risk having it become a big loss.
15:35 - 15:37
EN: You don’t want it to hit the stop.
15:37 - 15:40
EN: If you know that you’re wrong and the market’s telling you
15:40 - 15:44
EN: that you’re wrong to be short, don’t wait for your stop to get hit.
15:44 - 15:45
EN: Simply get out.
Slide 013
Time: 15:50
Bilingual Transcript
15:56 - 15:59
EN: The bulls see that the bears are trapped, and they expect
15:59 - 16:03
EN: that the market’s going to rally far enough up for them to make at least a scalp,
16:03 - 16:06
EN: and they’re going to buy exactly where the bears are getting out.
16:06 - 16:10
EN: Some of the bulls placed limit orders to buy at this close,
16:10 - 16:14
EN: expecting that after this bull bar, the bears would try to buy at that close.
16:14 - 16:19
EN: If the bears are going to buy instead of sell, bulls want to buy as well.
16:19 - 16:22
EN: So, they were buying at that close or just a little bit above,
16:22 - 16:27
EN: and then after this reversal, they know the bears would be more scared
16:27 - 16:30
EN: and the bulls who were flat would raise their limit order
16:30 - 16:33
EN: to buy a little bit above that close, just the way the bears did.
16:34 - 16:39
EN: Then stop order bulls would buy above this pair of bull bars closing
16:39 - 16:41
EN: on their highs after seeing trapped bears,
16:41 - 16:44
EN: knowing that the bears would give up and buy back their shorts.
16:53 - 16:57
EN: 3 consecutive bull bars closing above their midpoints, near their highs.
16:57 - 16:59
EN: If you’re still short, you have to get out.
16:59 - 17:01
EN: You cannot wait for your stop to be hit
17:01 - 17:04
EN: because your stop is probably going to get hit.
17:04 - 17:07
EN: Your premise of a strong bear trend is no longer valid.
17:07 - 17:09
EN: The market is telling you that you’re wrong.
Slide 014
Time: 17:15
Bilingual Transcript
17:19 - 17:23
EN: Whenever you take a reasonable trade and you get an immediate reversal,
17:23 - 17:27
EN: 90% of the time the market will let you out without a loss
17:27 - 17:29
EN: if you manage your trade correctly,
17:29 - 17:32
EN: which means you use an appropriate stop and you scale in.
17:34 - 17:38
EN: Sometimes you may not be able to get out without a loss for a lot of bars
17:38 - 17:42
EN: - 10, 20, or 30 bars – and that was the case here.
17:48 - 17:53
EN: A test of your entry does not mean the market falls below your close.
17:53 - 17:56
EN: It means that it gets near your close.
17:56 - 18:00
EN: Close enough so that traders start to buy back their shorts if they’re short.
18:00 - 18:04
EN: Close enough so bulls will buy, betting that the bears will be trapped.
Slide 015
Time: 18:10
Bilingual Transcript
18:14 - 18:16
EN: The bears were trapped twice.
18:16 - 18:18
EN: Could not get out here.
18:18 - 18:20
EN: Could not get out even when they raised their limit order.
18:21 - 18:23
EN: They’re trapped into a losing trade.
18:31 - 18:35
EN: Whenever the bears are trapped and you know they’re buying back their shorts,
18:35 - 18:38
EN: they’re not going to be eager to sell again a bar or two later.
18:38 - 18:41
EN: The odds are you’re going to get at least two legs up.
18:42 - 18:46
EN: The bulls who did not buy know the bears are trapped.
18:46 - 18:51
EN: They know that the bears will buy back their shorts on any minor reversal down,
18:51 - 18:54
EN: and the bulls therefore will buy as well.
Slide 016
Time: 19:00
Bilingual Transcript
19:04 - 19:06
EN: At this point is it a Buy The Close bull trend?
19:07 - 19:09
EN: I would not call it a Buy The Close bull trend.
19:09 - 19:15
EN: It’s a Tight Bull Channel, but big tail on top and big down, big up, big confusion.
19:15 - 19:17
EN: Probably a Trading Range.
19:18 - 19:22
EN: Strong enough rally, first reversal down probably minor.
19:23 - 19:26
EN: That means either a bull flag or a Trading Range,
19:26 - 19:29
EN: and therefore the risk of buying that close is not great.
19:29 - 19:31
EN: If you manage your trade correctly,
19:31 - 19:35
EN: you’ll either make a profit or you’ll avoid a loss.
19:41 - 19:46
EN: A bull who bought here probably would put a stop all the way down here.
19:46 - 19:50
EN: Big down, big up, Trading Range likely, and if you’re buying
19:50 - 19:53
EN: at the top of the range hoping that the market’s entering a bull trend,
19:53 - 19:56
EN: you need a stop below the bottom of the range.
19:56 - 20:00
EN: After this big bear bar, these bulls were disappointed.
20:00 - 20:03
EN: They concluded that instead of the market going straight up,
20:03 - 20:05
EN: we’re probably going sideways.
20:05 - 20:08
EN: A lot of them simply placed a limit order to get out breakeven
20:08 - 20:10
EN: because their premise of a bull trend is wrong.
20:10 - 20:11
EN: They see that it’s wrong.
20:11 - 20:14
EN: This bear bar tells them that it’s wrong,
20:14 - 20:17
EN: and therefore it’s a Trading Range and they’re long at the top.
20:17 - 20:21
EN: They’ll try to get out breakeven at the top because you don’t want to be long
20:21 - 20:26
EN: or holding long or buying at the top of a developing Trading Range.
20:38 - 20:43
EN: If the bulls did not take their profit here, they got trapped.
20:43 - 20:45
EN: You can see how the market immediately reversed down
20:45 - 20:47
EN: once it got above that close.
20:48 - 20:51
EN: A lot of the ones who were hoping for a bull trend, after they see this,
20:51 - 20:54
EN: will place a limit order to get out at that close,
20:54 - 20:58
EN: and you can see it went just above the close and sold off a second time.
20:58 - 21:03
EN: That tells you that the bulls do not want to be holding long at this price,
21:03 - 21:05
EN: and therefore bulls are not going to be buying here.
21:05 - 21:07
EN: They’re going to be looking to buy lower.
21:08 - 21:12
EN: The bulls who did not get out here or here will give up,
21:12 - 21:14
EN: and we’ll probably get a couple legs sideways to down.
21:16 - 21:19
EN: Some will get out below this Micro Double Top
21:19 - 21:22
EN: and then we have a pullback with a bear bar closing on its low.
21:22 - 21:23
EN: Some will get out here.
21:24 - 21:28
EN: They’re doubtful that we’re going to go very far up, and therefore the ones
21:28 - 21:31
EN: who did not get out, some of them will sell out of their longs
21:31 - 21:35
EN: above this bull bar, trying to minimize their loss.
Slide 017
Time: 21:40
Bilingual Transcript
21:41 - 21:43
EN: Buy The Close bull trend.
21:43 - 21:45
EN: Not all that strong, but certainly reasonable to buy.
21:45 - 21:49
EN: The bulls who were buying here are hoping the market continues up.
21:50 - 21:53
EN: They’re confident that the rally is strong enough
21:53 - 21:57
EN: so that even if it reverses down, the reversal will be minor,
21:57 - 22:02
EN: stay above this low, and it’ll be followed by a test back up to this high
22:02 - 22:04
EN: - maybe a resumption of the bull trend.
22:09 - 22:13
EN: If you were a Buy The Close bull and you happened to buy this close
22:13 - 22:15
EN: and then you see this bear bar, you’re disappointed.
22:16 - 22:20
EN: A lot of the bulls who buy here will wait to see if we get 3 or 4 bear bars
22:20 - 22:22
EN: and then they’ll get out at the market.
22:22 - 22:25
EN: They’re confident the reversal is still minor,
22:25 - 22:27
EN: and they’ll look to buy again on a resumption back up,
22:27 - 22:31
EN: especially above a decent bull bar, like above this bar or above this bar.
22:33 - 22:35
EN: Reasonable to buy the close.
22:35 - 22:38
EN: Whenever you have a reasonable Buy The Close entry,
22:38 - 22:42
EN: 90% of the time you can manage your trade well enough
22:42 - 22:45
EN: to either make a profit or avoid a loss.
22:45 - 22:50
EN: Therefore, the Buy The Close bulls, they never really had a chance to get out.
22:50 - 22:52
EN: It never went back above this close.
22:52 - 22:54
EN: It immediately turned down.
22:54 - 22:56
EN: Maybe they could’ve gotten out here.
22:56 - 22:59
EN: I don’t think this bear bar was enough to disappoint a lot of them,
22:59 - 23:02
EN: so it’s reasonable for them to hold long,
23:02 - 23:05
EN: betting that even if we sell off for 10 or 20 bars,
23:05 - 23:07
EN: it’ll come back up to that close.
23:07 - 23:11
EN: They’re betting that instead of a bear trend, after such a strong rally
23:12 - 23:15
EN: the first reversal down will be minor and we should get back up
23:15 - 23:19
EN: to that close again and form a Trading Range instead of a bear trend.
23:25 - 23:28
EN: Some computers will read this as a Parabolic Wedge
23:28 - 23:33
EN: - one, two, three, four or one, two, and then three.
23:34 - 23:38
EN: With that, a lot of bulls will get out simply below the bear bar
23:38 - 23:40
EN: because of a possible Parabolic Wedge Top.
23:40 - 23:42
EN: But they don’t have to.
23:46 - 23:50
EN: Some will wait until three or four bear closes and then get out,
23:50 - 23:53
EN: afraid that we’ll have an endless pullback and then a bear breakout.
24:00 - 24:04
EN: Others say, yeah, it’s 3 bars, 4 bear bars, but none of them is very big.
24:05 - 24:07
EN: Some of them are not closing on their lows.
24:08 - 24:11
EN: This selloff looks weaker than this rally.
24:11 - 24:13
EN: We’re probably going to get a Higher Low
24:13 - 24:15
EN: and a Trading Range instead of a bear trend.
Slide 018
Time: 24:20
Bilingual Transcript
24:21 - 24:25
EN: Let’s say you look at this and say, “Oh, that’s a Buy The Close bull trend.
24:25 - 24:28
EN: Breaking out to a new high of the day, we’ve got 3 consecutive bull bars.”
24:29 - 24:31
EN: Let’s say you happen to buy this close.
24:31 - 24:35
EN: It’s not a great buy because we’ve got a large two-legged move
24:35 - 24:39
EN: - one, pullback, two – possible Tight Trading Range, Final Flag,
24:39 - 24:42
EN: and two Buy Climaxes – here, pause, here.
24:42 - 24:45
EN: However, it’s not unreasonable to take that buy hoping
24:45 - 24:47
EN: that we’re going to keep going up.
24:50 - 24:53
EN: Reasonable to put a stop below the bottom of the tight range,
24:53 - 24:56
EN: below this breakout, below the bottom of this bull swing.
24:56 - 24:58
EN: All reasonable choices.
24:58 - 25:02
EN: However, once you conclude that your premise is no longer valid,
25:02 - 25:06
EN: it’s better just to get out instead of letting your stop get hit.
25:09 - 25:14
EN: This Buy The Close bar was followed by a big bear bar closing on its low.
25:14 - 25:16
EN: It’s two legs up – one, pullback, two.
25:16 - 25:21
EN: Each subdivided into two – one, pullback, two, and then one, pullback, two.
25:22 - 25:25
EN: That increases the chances that we’re going to get a deeper pullback.
25:25 - 25:28
EN: With a strong bear bar, it’s reasonable
25:28 - 25:31
EN: to get out below the low of that bear bar and just take a loss.
25:41 - 25:45
EN: Possible Parabolic Wedge here – one, two, three
25:46 - 25:48
EN: - and then a bear bar closing on its low.
25:48 - 25:50
EN: It is reasonable to get out here.
25:50 - 25:52
EN: However, the bull channel is tight.
25:52 - 25:56
EN: A lot of bulls would like more confirmation that the bears are taking control.
25:56 - 26:00
EN: They’ll wait for 3 or 4 bear bars and then get out.
26:00 - 26:02
EN: Their loss is still not particularly big,
26:02 - 26:04
EN: especially if they’re looking for a swing up.
26:11 - 26:14
EN: So, some will get out on the second consecutive big bear bar.
26:14 - 26:16
EN: Others will get out on the third.
26:16 - 26:18
EN: The ones who did not gave up here.
26:18 - 26:23
EN: You can see this bar is bigger, and it represents the final bulls giving up.
26:24 - 26:27
EN: The bears, once they see 3 bear bars closing on their lows
26:27 - 26:31
EN: with reasonable context for the bears, they’ll start selling closes.
26:31 - 26:35
EN: Once they saw this close, a lot of bears sold the market.
26:35 - 26:37
EN: The remaining bulls sold as well.
26:37 - 26:39
EN: We have a breakout bar here.
Slide 019
Time: 26:45
Bilingual Transcript
26:46 - 26:50
EN: Bears are selling exactly where the bulls are getting out,
26:50 - 26:51
EN: especially by this third close.
26:51 - 26:55
EN: A lot of bears believe we’re going to get at least two legs down,
26:55 - 26:57
EN: and therefore if we try to resume up,
26:57 - 27:01
EN: we’ll get a Lower High and then another leg down.
27:10 - 27:12
EN: By this third close, the market’s Always In Short.
27:13 - 27:14
EN: If you’re a Buy The Close bull,
27:14 - 27:19
EN: you cannot be holding long once you believe the market’s Always In Short,
27:20 - 27:24
EN: and therefore you get out exactly where the bears took control,
27:24 - 27:26
EN: and that’s by the close of this third bar.
27:26 - 27:30
EN: You get out no later than here, and don’t wait for your stop to get hit
27:30 - 27:33
EN: because the market’s Always In Short, it’s probably going lower,
27:33 - 27:36
EN: and your stop probably will get hit.
27:36 - 27:38
EN: Maybe this stop will get hit as well – and it did.
Slide 020
Time: 27:40
Bilingual Transcript
27:45 - 27:49
EN: When the bulls give up, chances are we’re going to get a swing down
27:49 - 27:53
EN: and at least two legs, maybe 10 bars, two legs, as a minimum goal.
27:58 - 28:02
EN: If a bull did get out below this bear bar or on the second or third bear close
28:02 - 28:07
EN: and there’s a good-looking buy signal bar, the bulls can always buy back again.
28:12 - 28:15
EN: If you buy the close and it reverses down strongly,
28:15 - 28:18
EN: you missed a topping pattern and a sell signal.
28:24 - 28:27
EN: Even if you do not see the sell signal,
28:27 - 28:30
EN: you can see that you’re clearly wrong and you have to get out.
28:36 - 28:39
EN: Don’t wait and say “My gosh, it’s reversing down.
28:39 - 28:42
EN: There has to be some pattern here that I’m not seeing.”
28:42 - 28:44
EN: You don’t have to see that.
28:44 - 28:48
EN: Once you see 3 bear bars closing on their lows, the market’s going down.
28:48 - 28:50
EN: You have to get out of any longs.
Slide 021
Time: 28:55
Bilingual Transcript
28:55 - 28:59
EN: Whenever you’re trading and your premise changes,
28:59 - 29:00
EN: you have to change what you’re doing.
29:00 - 29:05
EN: If you’re buying thinking it’s a bull trend and now it’s clearly a Trading Range,
29:05 - 29:07
EN: you have to modify your style of trading
29:07 - 29:10
EN: and make it appropriate for a Trading Range.
29:10 - 29:14
EN: Trapped traders provide fuel for a trade.
29:14 - 29:18
EN: If bears sell at the bottom and the market’s starting to reverse up,
29:18 - 29:21
EN: the bears are going to be trapped and they have to buy back their shorts.
29:21 - 29:24
EN: If the bulls buy and the market immediately reverses down,
29:24 - 29:26
EN: they have to get out as well.
29:26 - 29:30
EN: For example, if you’re long and the bears get 3 consecutive bear bars
29:30 - 29:34
EN: closing on their lows, don’t wait for your stop to get hit.
29:34 - 29:36
EN: The market has changed what it’s doing.
29:36 - 29:39
EN: Your premise is no longer valid, and you have to get out.
29:39 - 29:44
EN: You just sell out of your long at the market, on the close of that third bear bar.
29:48 - 29:49
EN: This is Al Brooks.
29:49 - 29:52
EN: Thank you for watching the Brooks Trading Course.
29:52 - 29:56
EN: This is the second of two videos on losing when a good trade goes bad.