al-brooks-course
05 - Trading Tight Trading Ranges on the Open
Raw transcript and slide notes for 05 - Trading Tight Trading Ranges on the Open.
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Transcript 001
Time: 00:02
Bilingual Transcript
00:02 - 00:03
EN: I’m Al Brooks.
00:03 - 00:05
EN: Thank you for watching the Brooks Trading Course.
00:05 - 00:10
EN: This is a bonus video on trading Tight Trading Ranges on the open.
00:10 - 00:14
EN: Sometimes they last all day, and I will talk about that as well.
Slide 001
Time: 00:15
Bilingual Transcript
00:18 - 00:20
EN: The easiest type of day to trade is a day
00:20 - 00:22
EN: where there are no reversals on the open.
00:22 - 00:25
EN: You get a bull trend or a bear trend from the open,
00:25 - 00:28
EN: and sometimes it lasts all day.
00:28 - 00:30
EN: You get about one of those days a week.
00:31 - 00:35
EN: 80% of opens have at least two reversals: a Double Top,
00:35 - 00:38
EN: a Wedge Top, a Double Bottom, or a Wedge Bottom.
00:38 - 00:42
EN: Those are very important, but I’m not going to be talking about those today.
00:42 - 00:44
EN: Today I’m going to be talking about Trading Range opens
00:44 - 00:47
EN: where there are five or more reversals.
00:47 - 00:52
EN: Sometimes it lasts all day; sometimes it lasts for an hour or two.
00:53 - 00:56
EN: Finally, I’m going to be talking about a Tight Trading Range open
00:56 - 01:00
EN: where there is no breakout, there is no trend, there is no swing trade.
01:00 - 01:02
EN: The Tight Trading Range just continues all day.
01:07 - 01:11
EN: I want to begin by talking about days where there is no reversal on the open.
01:11 - 01:14
EN: You get a trend from the very first bar.
Slide 002
Time: 01:14
Bilingual Transcript
01:17 - 01:21
EN: Here’s an example of a trend from the first bar that was a bull trend.
01:25 - 01:30
EN: About 20% of the days have a trend from the first bar that lasts all day,
01:30 - 01:32
EN: so it’s about once a week.
01:36 - 01:39
EN: If you have a gap down and you have a bull bar
01:39 - 01:41
EN: and a possible bull trend from the open,
01:41 - 01:44
EN: traders will buy on a stop 1 tick above the high of a big bull bar
01:44 - 01:46
EN: closing on its high,
01:50 - 01:52
EN: and they’ll continue to buy
01:52 - 01:55
EN: above bull bars closing near their highs all day long.
01:57 - 02:02
EN: Then late in the day, there’s often some profit-taking if you get a bear bar,
02:02 - 02:03
EN: some kind of a Wedge Top.
02:03 - 02:06
EN: It’s reasonable to exit your long at the end of the day.
02:07 - 02:12
EN: You do not take all of these entries, but it’s important to take at least one,
02:12 - 02:14
EN: and if you get out and the bull trend
02:14 - 02:17
EN: from the open is continuing, look to buy again.
02:17 - 02:20
EN: Any of these are reasonable entries.
02:25 - 02:28
EN: Everybody likes this kind of a day because there are very few decisions.
02:28 - 02:34
EN: You know that it’s going up, and the only choice you have is where to buy.
02:34 - 02:37
EN: There’s a high probability of profit, and if you buy early,
02:37 - 02:41
EN: the profit can be very big, and you end up feeling like a professional trader.
02:41 - 02:42
EN: It’s fun.
02:44 - 02:46
EN: This is a bear example of the same thing.
Slide 003
Time: 02:45
Bilingual Transcript
02:52 - 02:53
EN: A bear trend from the open.
02:54 - 02:55
EN: Strong bear trend.
02:55 - 02:58
EN: We have several bear bars closing on or near their lows.
02:59 - 03:01
EN: Once you have the first two bars with bear bodies
03:01 - 03:04
EN: and then one of them closing on or near its low,
03:04 - 03:07
EN: you’ve got to be thinking about the possibility of a bear trend from the open,
03:07 - 03:09
EN: and traders will start to sell.
03:12 - 03:16
EN: It’s reasonable to sell below the low of that second bear bar closing
03:16 - 03:19
EN: on its low and take a chance that you’ll get a swing down.
03:23 - 03:27
EN: As long as the bear trend continues, you can take any of these shorts.
03:27 - 03:30
EN: Look for a bear bar closing below its midpoint,
03:30 - 03:32
EN: preferably near the low of the bar,
03:32 - 03:36
EN: and you simply place an order to go short 1 tick below the low of the bar.
03:36 - 03:39
EN: And you can do that all day long, as long as the trend continues.
03:44 - 03:48
EN: 80% of opens have at least two reversals.
Slide 004
Time: 03:49
Bilingual Transcript
03:51 - 03:55
EN: Here are examples of opens above the Moving Average,
03:55 - 03:59
EN: and the bulls look for the market to go sideways to down
03:59 - 04:00
EN: to get near the Moving Average,
04:00 - 04:03
EN: and they look for either a Double Bottom or a Wedge Bottom.
04:04 - 04:09
EN: The bears hope that there is a Double Top or a Wedge Top and then a swing down.
04:13 - 04:17
EN: 80% of days test support or resistance in the first 90 minutes,
04:20 - 04:23
EN: and if there’s a reversal from that support or resistance,
04:23 - 04:26
EN: I call it an opening reversal.
04:29 - 04:33
EN: The reversal often becomes the high or low of the day.
04:33 - 04:37
EN: Here, we reversed down on the open; it became the high of the day.
04:37 - 04:41
EN: Here, we reversed up from support and it became the low of the day.
04:44 - 04:48
EN: As I said, bulls look to buy a Wedge Bottom or a Double Bottom
04:48 - 04:53
EN: near the Moving Average, and the bears look for a Double Top
04:53 - 04:57
EN: or a Wedge Top and hope that the market reverses down.
05:00 - 05:03
EN: If you have two to four reversals on the open,
05:03 - 05:06
EN: you’re probably going to get one of these patterns – Double Top,
05:06 - 05:09
EN: Double Bottom, Wedge Top, Wedge Bottom.
Slide 005
Time: 05:12
Bilingual Transcript
05:12 - 05:16
EN: Here are examples where the open is below the Moving Average.
05:16 - 05:19
EN: The bears look for a Double Top or a Wedge Top
05:19 - 05:22
EN: near the Moving Average and then a swing down.
05:22 - 05:26
EN: The bulls hope for a Wedge Bottom or a Double Bottom and then a swing up.
05:35 - 05:37
EN: Trading Range open.
05:38 - 05:43
EN: That’s a term that I use when there are five or more reversals on the open.
Slide 006
Time: 05:45
Bilingual Transcript
05:45 - 05:47
EN: Here are some examples.
05:47 - 05:51
EN: Market’s sideways for an hour or two in all of these examples.
05:51 - 05:54
EN: These are examples above the Moving Average.
05:54 - 05:56
EN: Here, there was a bull breakout.
05:56 - 05:58
EN: Here, there was a bull breakout and it failed.
05:59 - 06:04
EN: Here, here was a bear breakout, and here, there was a bear breakout that failed.
06:08 - 06:12
EN: If you have five or more reversals and the range is tight,
06:12 - 06:14
EN: I call it a Tight Trading Range open,
06:14 - 06:17
EN: or you could simply call it a Trading Range open.
06:18 - 06:20
EN: Here we have a lot of little reversals.
06:20 - 06:22
EN: We’re up and we’re down, we’re up and we’re down,
06:22 - 06:24
EN: and there were more than five reversals.
06:24 - 06:27
EN: That is a typical Trading Range open.
06:29 - 06:34
EN: Sometimes you’ll get a pattern that is contracting, and it can be a Triangle.
06:35 - 06:39
EN: But it does not matter what you call it; it’s a BreakOut Mode pattern.
06:39 - 06:41
EN: You’re expecting a breakout.
06:44 - 06:46
EN: Whenever you have a BreakOut Mode pattern,
06:47 - 06:52
EN: you have to accept that there’s a 50% chance the breakout will be up,
06:52 - 06:54
EN: 50% chance it’ll be down.
06:58 - 07:00
EN: In addition, you have to believe
07:00 - 07:04
EN: that the first breakout has only a 50% chance of success.
07:04 - 07:08
EN: 50% chance the breakout will fail.
07:08 - 07:10
EN: A bear breakout, it failed.
07:10 - 07:12
EN: A bull breakout, it failed.
Slide 007
Time: 07:15
Bilingual Transcript
07:15 - 07:20
EN: Here are some opens that are mostly below the Moving Average – a Triangle,
07:21 - 07:23
EN: and we have a Double Top and a Double Bottom.
07:23 - 07:26
EN: Again, five or more reversals.
07:26 - 07:29
EN: Here we have a bear breakout that got a swing down.
07:29 - 07:34
EN: Here we have a failed bear breakout, down here at the low, and it reversed up.
07:34 - 07:39
EN: We have a bull breakout that failed up here, we reversed down.
07:39 - 07:43
EN: And here we ultimately had a successful bull breakout.
07:43 - 07:44
EN: We had a breakout below the Triangle
07:44 - 07:48
EN: that failed, but not a breakout below the entire range.
07:48 - 07:51
EN: So bull breakout, failed bull breakout,
07:51 - 07:53
EN: bear breakout, failed bear breakout.
07:58 - 08:03
EN: Again, five or more reversals, and it’s sideways.
08:03 - 08:05
EN: It’s a Trading Range open.
08:05 - 08:08
EN: You can call it a Tight Trading Range open if it’s fairly tight.
08:12 - 08:14
EN: Again, does not matter what you call it;
08:14 - 08:17
EN: all that matters is you realize it’s BreakOut Mode.
08:19 - 08:23
EN: 50% chance of a bull breakout, 50% chance of a bear breakout,
08:23 - 08:28
EN: and 50% chance the first breakout will fail and reverse.
08:32 - 08:34
EN: Many reversals here.
08:34 - 08:38
EN: We have a Tight Trading Range, a lot of reversals.
Slide 008
Time: 08:35
Bilingual Transcript
08:38 - 08:41
EN: That is a typical Trading Range type of open.
08:47 - 08:50
EN: A lot of times you can tell within the first bar or two
08:50 - 08:53
EN: or three that it’s going to be a Trading Range open.
08:53 - 08:58
EN: The minimum you need for any Trading Range is a market going sideways
08:58 - 09:01
EN: with two or more reversals after the first bar.
09:01 - 09:02
EN: Here’s the first bar.
09:02 - 09:05
EN: After the first bar, we reversed up, we reversed down.
09:05 - 09:08
EN: So that’s already a Trading Range open.
09:12 - 09:17
EN: When the market’s in a Trading Range, it typically has two to four reversals,
09:17 - 09:20
EN: and it forms a Double Top or a Double Bottom, or both.
09:21 - 09:24
EN: If it’s only two to four reversals, I typically call it
09:24 - 09:28
EN: either a Double Top or a Double Bottom instead of a Trading Range open.
09:29 - 09:31
EN: Once it has five or more reversals,
09:31 - 09:34
EN: then I start referring to it as a Trading Range open.
09:35 - 09:37
EN: At this point I would call it a Double Bottom.
09:38 - 09:40
EN: At this point I’d call it a Double Top.
09:40 - 09:41
EN: So a Double Bottom, Double Top.
09:41 - 09:42
EN: It’s a Trading Range.
09:43 - 09:44
EN: BreakOut Mode.
09:44 - 09:49
EN: But once you start to get more reversals, I’ll use the term “Trading Range open.”
09:52 - 09:54
EN: Here we have three legs up – one, two, three.
09:54 - 09:55
EN: There’s a Wedge.
09:55 - 09:57
EN: There’s an Expanding Triangle.
09:57 - 10:00
EN: There’s a Double Bottom, there’s a Double Top.
10:00 - 10:02
EN: It doesn’t matter what you call it; you just have to recognize
10:02 - 10:05
EN: that you have five or more reversals in a tight range,
10:05 - 10:08
EN: and that tells you that it could last a long time.
10:08 - 10:09
EN: It could last a couple hours.
10:09 - 10:11
EN: It could even last all day.
10:11 - 10:14
EN: Do not get too eager to enter.
10:20 - 10:21
EN: We have an Expanding Triangle.
10:21 - 10:23
EN: We have a contracting Triangle.
10:23 - 10:25
EN: If you want, you can call that a diamond pattern.
10:29 - 10:31
EN: Different computers focus on different patterns.
Slide 009
Time: 10:35
Bilingual Transcript
10:36 - 10:38
EN: Now, how long can a Trading Range open last?
10:40 - 10:43
EN: Sometimes it’ll be pretty brief, 5 to 10 bars.
10:43 - 10:44
EN: Lots of little reversals.
10:44 - 10:46
EN: Every bar here, it’s reversing.
10:46 - 10:50
EN: Other times, the Trading Range open lasts all day.
Slide 010
Time: 10:57
Bilingual Transcript
11:03 - 11:07
EN: When you have an open that looks like it’s going to be a Tight Trading Range open,
11:08 - 11:11
EN: you’re hoping for a breakout, but until there is a breakout,
11:11 - 11:16
EN: there is no breakout, and traders bet on reversals and they take quick profits.
11:16 - 11:17
EN: They scalp.
11:17 - 11:22
EN: The Tight Trading Range is the chart pattern, and the style of trading
11:22 - 11:26
EN: that you use if you’re trading it is a limit order market type of trading.
11:26 - 11:28
EN: You’re looking for limit order trades.
11:28 - 11:30
EN: Most traders should not do that.
11:30 - 11:34
EN: They should wait until the market converts from a Trading Range into a trend.
11:40 - 11:42
EN: Limit order market.
11:42 - 11:44
EN: If you’re a limit order scalper,
11:44 - 11:50
EN: then you’re constantly expecting attempts to form a trend to fail.
11:50 - 11:54
EN: Therefore, if there is a bull close, they’ll sell the bull close.
11:54 - 11:57
EN: If there’s a bear close, they’ll buy the bear close.
11:57 - 11:59
EN: They’re doing the exact opposite of what you would do
11:59 - 12:01
EN: if you were expecting a trend.
12:03 - 12:06
EN: Also, if the market breaks out below a prior low,
12:06 - 12:09
EN: they’ll place a limit order to buy at that low.
12:09 - 12:12
EN: If it’s starting to break out above a prior high,
12:12 - 12:14
EN: they’ll place limit orders to sell at prior highs,
12:14 - 12:16
EN: betting that the breakouts will fail.
12:16 - 12:17
EN: They’re betting on reversals.
12:17 - 12:19
EN: Here, they buy at that low.
12:19 - 12:21
EN: They’ll buy at any low.
12:21 - 12:23
EN: They’ll sell at any prior high.
Slide 011
Time: 12:25
Bilingual Transcript
12:28 - 12:30
EN: A limit order market,
12:30 - 12:34
EN: that means you’re betting against a successful breakout and a trend.
12:34 - 12:38
EN: You’re betting on continuation of the reversals
12:38 - 12:40
EN: and continuation of the Trading Range.
12:45 - 12:49
EN: Most traders will lose money if they trade a Trading Range open.
12:49 - 12:52
EN: Most traders will lose money if they trade any kind
12:52 - 12:56
EN: of a Tight Trading Range – one, for example, that lasts all day.
12:56 - 12:59
EN: They should instead look for a stop order market,
12:59 - 13:04
EN: a market that is on the verge of trending or is clearly trending.
13:06 - 13:08
EN: If you’re trading with stop orders – for example,
13:08 - 13:11
EN: buying above a bar – you’re expecting the market to go higher.
13:11 - 13:12
EN: You’re expecting a bull trend.
13:13 - 13:17
EN: If you’re selling above a bar, you’re betting on a reversal,
13:17 - 13:20
EN: a Trading Range type of market, a limit order market.
13:20 - 13:23
EN: Most traders should not trade that kind of a market.
Slide 012
Time: 13:25
Bilingual Transcript
13:27 - 13:30
EN: A lot of reversals inside a Trading Range.
13:30 - 13:32
EN: It’s a Trading Range open.
13:35 - 13:37
EN: Most traders should be entering only with stop orders.
13:38 - 13:44
EN: Sometimes you’re lucky; you’ll get a decent buy signal bar
13:44 - 13:47
EN: near the bottom of the range for a buy.
13:47 - 13:49
EN: That is a reasonable stop entry buy.
13:49 - 13:54
EN: Otherwise, you can wait for a breakout and then look for pullbacks to buy.
13:54 - 13:56
EN: Buy above bull bars closing on or near their highs.
13:56 - 13:58
EN: Here are some examples.
14:05 - 14:08
EN: You don’t simply buy above the first bull bar that you see.
14:09 - 14:12
EN: Here, you could buy above this bar, a Double Bottom.
14:12 - 14:14
EN: It might be okay, hoping for a Double Bottom.
14:14 - 14:18
EN: But then you get that and that, and you start to wonder, did you make a mistake?
14:18 - 14:23
EN: You have another bull bar here, but it has a prominent tail on top.
14:23 - 14:26
EN: And just because it’s a bull bar at the bottom of the range,
14:26 - 14:28
EN: does not make it a reasonable buy.
14:28 - 14:32
EN: That big tail is a sign that the bar is part of a Trading Range,
14:32 - 14:35
EN: and there might be more sellers than buyers above its high.
14:35 - 14:39
EN: Better to wait for a good-looking bull bar closing on
14:39 - 14:42
EN: or near its high at the bottom of the range for a buy,
14:42 - 14:47
EN: or a bear bar closing on or near its low at the top of the range for a sell.
14:47 - 14:49
EN: Or you wait for the breakout.
14:54 - 14:58
EN: If you take this buy, we have a failed breakout below the range.
14:58 - 15:01
EN: It’s reasonable to put a stop just below the low of that bar.
15:03 - 15:07
EN: It doesn’t matter if you bought here or here or here;
15:07 - 15:11
EN: your stop is still at the bottom of the bull trend.
15:15 - 15:18
EN: We have a Trading Range open and a Triangle.
Slide 013
Time: 15:15
Bilingual Transcript
15:18 - 15:19
EN: We have a bear bar.
15:19 - 15:20
EN: You might sell that.
15:20 - 15:23
EN: It’s not a very big bear bar, but it’s closing on or near its low.
15:23 - 15:25
EN: You have a second bear bar.
15:25 - 15:28
EN: Traders will start to be more aggressive with selling.
15:28 - 15:30
EN: 2 bear bars closing near their lows, 3.
15:30 - 15:32
EN: Traders will start to sell below bear bars.
15:38 - 15:39
EN: Tight Trading Range.
15:39 - 15:43
EN: The market tried to reverse down, tried to reverse down a second time,
15:43 - 15:46
EN: and it’s now trying to reverse down a third time,
15:46 - 15:48
EN: and you have a decent sell signal bar.
15:48 - 15:49
EN: It’s reasonable to take that short.
15:49 - 15:53
EN: Or you could wait until the market has clearly broken
15:53 - 15:55
EN: below the bottom of the range, or wait
15:55 - 15:58
EN: until you have 3 or 4 consecutive bear bars and then start to short.
16:05 - 16:07
EN: It doesn’t matter which of these shorts you take;
16:07 - 16:13
EN: you put your stop 1 tick above the top of the selloff, which is right up here.
Slide 014
Time: 16:15
Bilingual Transcript
16:22 - 16:25
EN: Most traders should be looking for stop entries like these,
16:25 - 16:27
EN: and they should be swing trading.
16:27 - 16:29
EN: By a swing trade, in the Emini,
16:29 - 16:33
EN: I mean you’re looking for a move that has two or more legs
16:33 - 16:38
EN: and you’re looking for a profit that is 4 points or more,
16:38 - 16:42
EN: and usually the trade will be 10 bars or more.
16:43 - 16:46
EN: These are the kinds of trades that beginner traders should look for.
16:46 - 16:49
EN: They should look for swing trades and they should look for stop entries.
16:49 - 16:54
EN: On an average day, they might have one, two, or three trades that are reasonable.
16:59 - 17:02
EN: Once the trader becomes consistently profitable,
17:02 - 17:07
EN: they can begin to take other setups as well, and they can add some scalps,
17:07 - 17:11
EN: and they can end up taking, three, five, ten trades a day.
Slide 015
Time: 17:15
Bilingual Transcript
17:17 - 17:20
EN: As you probably know, I have a classification of patterns
17:20 - 17:23
EN: for swing traders, my encyclopedia.
17:23 - 17:25
EN: There are four versions of every pattern.
17:25 - 17:30
EN: There’s a buy, there’s a sell, there’s a failed buy, and a failed sell.
17:30 - 17:34
EN: I have about 100 basic patterns, four versions of each,
17:34 - 17:38
EN: so about 400 total sections to the encyclopedia.
17:41 - 17:43
EN: If a trader recognizes a pattern,
17:43 - 17:48
EN: he can look at examples of that pattern to get an idea of what might follow.
Slide 016
Time: 17:50
Bilingual Transcript
17:51 - 17:53
EN: Again, Trading Range open.
17:58 - 18:02
EN: You can often predict that an open is going to be a Trading Range open.
18:03 - 18:06
EN: For example, if the open is around yesterday’s close,
18:06 - 18:11
EN: and if yesterday finished with small bars, prominent tails,
18:11 - 18:14
EN: and sideways trading, that increases the chances
18:14 - 18:16
EN: that today’s open will be a Trading Range open.
18:24 - 18:27
EN: There are lots of things you can look for to tell you
18:27 - 18:29
EN: if the market might be in a Trading Range open,
18:29 - 18:32
EN: and if it is, you have to be patient.
18:32 - 18:33
EN: Sometimes you have to wait a couple hours
18:33 - 18:36
EN: before you find a reasonable stop entry trade.
18:37 - 18:41
EN: If the first bar is not particularly big, if most of the bars
18:41 - 18:45
EN: mostly overlap the prior bars, if the bodies are small
18:45 - 18:50
EN: and the tails are pretty prominent, if you have reversals every bar or two
18:50 - 18:54
EN: – down, up, and down, up – those are all signs
18:54 - 18:57
EN: that the market is in a Tight Trading Range open.
18:57 - 19:03
EN: If you see buy signal bars, but the buy signal bar does not look quite good
19:03 - 19:06
EN: – for example, here’s an outside up bar, but a big tail on top.
19:06 - 19:09
EN: Here’s a big bull bar, but it’s forcing you
19:09 - 19:10
EN: to buy at the top of a Tight Trading Range.
19:11 - 19:15
EN: Bears, they have a big bear bar closing on its low,
19:15 - 19:19
EN: but fairly prominent tail at the bottom of a Tight Trading Range.
19:19 - 19:23
EN: Selling below the low of that bar right here, probably not all that good.
19:24 - 19:28
EN: If you have big trend bars and they reverse on the next bar – big bull bar,
19:28 - 19:33
EN: then a bear bar; big bear bar and then a bull bar – that is a 2 bar reversal.
19:33 - 19:37
EN: On the next higher timeframe chart, it would be simply a tail.
19:37 - 19:41
EN: So on a 10-minute chart, this would be a tail, just like this is a tail.
19:41 - 19:42
EN: So down and up.
19:43 - 19:48
EN: If you see Double Tops and Double Bottoms, Wedge Tops and Wedge Bottoms,
19:48 - 19:53
EN: and the signal bars are not very good, if you see five or more reversals
19:53 - 19:56
EN: and the range is fairly tight and sideways, those are all signs
19:56 - 20:00
EN: of a Trading Range open, and better to be very patient.
20:00 - 20:04
EN: Or if you’re an experienced trader, you can trade them with limit orders.
Slide 017
Time: 20:10
Bilingual Transcript
20:14 - 20:17
EN: A lack of a clear, sustained trend.
20:17 - 20:19
EN: 3 bull bars, but the bodies are shrinking.
20:19 - 20:24
EN: 2 bear bars, but the bodies shrank, and the next bar is a bull bar.
20:24 - 20:28
EN: If there are no consecutive big bull trend bars closing on their highs
20:28 - 20:33
EN: or consecutive big bear bars closing on their lows, probable Trading Range open.
20:33 - 20:37
EN: If the bulls and bears repeatedly are alternating control
20:37 - 20:41
EN: – bull bars and bear bars – if most of the bars overlap one another,
20:41 - 20:45
EN: which is a sign that the bulls and bears agree that the price is fair,
20:46 - 20:50
EN: and therefore there’s no urgency to make the market go up or down
20:50 - 20:54
EN: – again, reversals every few bars, prominent tails.
20:54 - 20:56
EN: A tail is a reversal within a bar.
20:56 - 21:00
EN: A tail on the top of the bar means the market went up and went down.
21:00 - 21:04
EN: A tail on the bottom of the bar means the market went down and it went up.
21:04 - 21:06
EN: Trading Range type of price action.
21:06 - 21:07
EN: Reversals.
Slide 018
Time: 21:10
Bilingual Transcript
21:16 - 21:18
EN: Whenever the market’s in a Trading Range,
21:18 - 21:23
EN: it’s always better to buy low, sell high, and take quick profits (scalp).
21:23 - 21:27
EN: But beginners should be patient and wait for stop entry setups,
21:27 - 21:31
EN: trending type of price action instead of Trading Range price action.
21:31 - 21:35
EN: It can be really difficult to wait, because Tight Trading Ranges
21:35 - 21:38
EN: can be boring and they can last a long time.
21:39 - 21:42
EN: Again, if the market is trending, it’s a lot easier.
21:42 - 21:45
EN: It’s more profitable, it’s more fun, it’s more exciting.
21:45 - 21:48
EN: But you have to trade the market that is in front of you
21:48 - 21:50
EN: and not the market that you hope it becomes.
21:56 - 22:00
EN: It’s really easy for a beginning trader to see a bull bar
22:00 - 22:02
EN: closing near its high, he buys it.
22:02 - 22:05
EN: A bear bar closing below its midpoint near its low, he sells it.
22:05 - 22:10
EN: He can do that three or four times, and he can be so far in the red
22:10 - 22:14
EN: that he’ll never make money for the rest of the day, and he’ll feel terrible.
22:14 - 22:16
EN: He’ll feel terrible for the next day.
22:16 - 22:18
EN: Do not be too eager to trade.
22:18 - 22:22
EN: If you recognize signs of a Trading Range open, be patient.
22:23 - 22:28
EN: Wait to see if you can get a small bull bar near the bottom to buy with a stop,
22:29 - 22:34
EN: or a small bear bar near the top that allows you to sell near the top of the range.
22:35 - 22:38
EN: The one thing you do not want to be doing is looking
22:38 - 22:41
EN: at trend bars at the top and bottom and betting on a breakout.
22:41 - 22:45
EN: So you do not sell below a big bear bar near the low,
22:45 - 22:48
EN: and you do not buy above a big bull bar near the top.
22:48 - 22:51
EN: Remember, you want to buy low, not sell low.
22:51 - 22:54
EN: You want to sell high, not buy high.
Slide 019
Time: 23:00
Bilingual Transcript
23:01 - 23:03
EN: Different ways to draw lines.
23:03 - 23:06
EN: One is possible trend line across the top.
23:06 - 23:09
EN: Another is a line across that high.
23:09 - 23:12
EN: In either case, we have a Double Bottom
23:12 - 23:16
EN: at the Moving Average after a gap up – good for the bulls.
23:16 - 23:19
EN: We have a buy signal bar here, but not very good.
23:19 - 23:20
EN: A better one here.
23:20 - 23:22
EN: This is a reasonable stop entry buy.
23:22 - 23:26
EN: And then we have this: a very big bull bar closing on its high,
23:26 - 23:30
EN: closing far above the high of the bear bar, closing above that high as well.
23:30 - 23:34
EN: It’s closing above the tops of 8 consecutive bars,
23:34 - 23:36
EN: and it’s breaking above the bull trend line.
23:37 - 23:39
EN: This is a trend type of bar.
23:39 - 23:43
EN: It’s an indication that the Tight Trading Range might be ending
23:43 - 23:46
EN: and we might be beginning a bull trend.
23:51 - 23:55
EN: Here, I said I would not buy above that bull doji,
23:55 - 23:58
EN: but now we’re at the Moving Average and we have a bull bar closing
23:58 - 24:02
EN: near its low toward the bottom of the range, if you want to call it a Triangle.
24:02 - 24:04
EN: That’s a reasonable stop entry buy.
24:07 - 24:11
EN: Higher probability: you wait to see consecutive bull bars
Slide 020
Time: 24:10
Bilingual Transcript
24:11 - 24:13
EN: closing on or near their highs.
24:19 - 24:22
EN: And then you simply start buying above bull bars.
24:22 - 24:24
EN: Here, buy above a bull bar closing near its high.
24:24 - 24:27
EN: That, possibly even that as well.
24:28 - 24:31
EN: Never worry about missing the earliest entry.
24:31 - 24:33
EN: If you get a breakout that’s reasonably strong,
24:33 - 24:36
EN: the odds are the market will go at least a little bit higher.
24:38 - 24:43
EN: Whenever you have a lot of sideways trading, the market is in agreement.
24:43 - 24:45
EN: It thinks the price is fair.
24:45 - 24:50
EN: That reduces the chances of a big trend day up or down, and therefore,
24:50 - 24:55
EN: if you get a strong breakout like this, it may not lead to a bull trend.
24:55 - 24:59
EN: It probably will have some follow-through, but not necessarily a bull trend.
24:59 - 25:04
EN: So a lot of early Trading Range trading reduces the chances
25:04 - 25:07
EN: that the day will be a big trend day.
Slide 021
Time: 25:10
Bilingual Transcript
25:11 - 25:14
EN: You can see the bulls got some follow-through here,
25:14 - 25:17
EN: they got a second leg up here, but that was it.
25:17 - 25:19
EN: Then the market was sideways.
25:24 - 25:27
EN: Again, stop entry, not very good.
25:27 - 25:30
EN: But you have a second buy signal bar closing on its high,
25:30 - 25:34
EN: bigger body, and a reversal up from the Moving Average.
25:34 - 25:37
EN: Sometimes you get a third entry as well, but a second entry,
25:37 - 25:40
EN: especially with a better-looking buy signal bar,
25:40 - 25:42
EN: is a higher probability stop entry buy.
25:46 - 25:49
EN: Higher probability, after you see a pair of big bull bars
25:49 - 25:51
EN: closing on their highs, you can buy.
25:51 - 25:52
EN: High probability.
25:53 - 25:55
EN: Risk is bigger because your stop is further below,
25:55 - 25:58
EN: but the probability of making money is greater,
25:58 - 26:01
EN: and it’s a good setup for traders to buy.
26:01 - 26:04
EN: High probability trades are always good.
Slide 022
Time: 26:10
Bilingual Transcript
26:13 - 26:16
EN: Higher probability, you wait for the breakout, you wait for the follow-through.
26:16 - 26:22
EN: Yes, the risk is bigger, but you have a much better chance of making money
26:22 - 26:25
EN: if you buy after you see the 2 bull bars.
26:29 - 26:34
EN: If you have a Trading Range open or any kind of a setup
26:34 - 26:38
EN: – a bear trend – and then you see a pair of big bull bars like this closing
26:38 - 26:40
EN: on their highs, consecutive bull bars closing on their highs,
26:41 - 26:44
EN: if you’re short, you have to get out, and if you’re flat,
26:44 - 26:45
EN: it’s reasonable to get long.
26:45 - 26:48
EN: The opposite is true if you’re in a Trading Range
26:48 - 26:53
EN: or a bull trend and then you get a couple big bear bars closing on their lows.
26:57 - 27:02
EN: On this breakout, you can either buy the close of the bar
27:02 - 27:04
EN: – right when the bar closes, you hit “Buy the Market,”
27:04 - 27:07
EN: right before the bar closes, you hit “Buy the Market,”
27:07 - 27:10
EN: or you can buy with a stop 1 tick above the high of the bar.
27:13 - 27:15
EN: Different ways to draw lines.
Slide 023
Time: 27:15
Bilingual Transcript
27:15 - 27:18
EN: Bull trend line, very Tight Bull Channel,
27:18 - 27:22
EN: and then possibly the bottom of an upper Trading Range.
27:22 - 27:23
EN: Here’s a lower Trading Range.
27:28 - 27:29
EN: Consecutive big bear bars.
27:29 - 27:33
EN: Here we have 3, but after you’ve had 2 consecutive big bear bars closing on
27:33 - 27:38
EN: or near their lows, especially if the closes are below support,
27:38 - 27:42
EN: like the bottom of this Trading Range, the bull trend line,
27:42 - 27:47
EN: this bull trend line, you have to get out of longs if you’re still long,
27:47 - 27:49
EN: and you have to be thinking about shorting,
27:49 - 27:52
EN: because you’re probably going to get follow-through selling.
27:59 - 28:02
EN: If you’re long – let’s say you’re still long from this
28:02 - 28:04
EN: – and you get that, you get out.
28:05 - 28:08
EN: If you’re flat, reasonable to get short.
28:08 - 28:11
EN: This bar closed below the low of about 20 bars.
28:11 - 28:15
EN: It closed below this bull trend line and below that bull trend line.
28:15 - 28:18
EN: We’re probably going to have at least a small second leg down.
28:18 - 28:22
EN: The breakout grew 1 more bar, pullback, second leg down.
28:28 - 28:35
EN: Closed below these lows and below the low of the past 25 bars,
28:35 - 28:37
EN: consecutive bear bars closing on their lows.
28:37 - 28:40
EN: High probability that we’re going at least a little bit lower,
28:40 - 28:41
EN: so reasonable to get short.
Slide 024
Time: 28:44
Bilingual Transcript
28:46 - 28:47
EN: Trading Range open.
28:47 - 28:49
EN: Lots of small bars, prominent tails.
28:49 - 28:51
EN: A lot of overlapping bars.
28:51 - 28:52
EN: BreakOut Mode.
28:52 - 28:56
EN: Do you want to buy this? Well, you’ve got 3 bear bars here,
28:56 - 28:57
EN: 2 other bear bars here.
28:57 - 28:59
EN: Probably not a good stop entry buy.
28:59 - 29:03
EN: Do you want to be buying up here? Well, the rally’s not all that strong,
29:03 - 29:06
EN: and it could be a 50% pullback from the selloff.
29:06 - 29:08
EN: So, not good stop entry buying.
29:08 - 29:10
EN: Do you want to sell below this bull bar? No.
29:10 - 29:11
EN: You’ve got 4 bull bars.
29:11 - 29:15
EN: You’re not going to take that sell, and you don’t want to sell below a bear doji.
29:15 - 29:16
EN: Low probability.
29:16 - 29:18
EN: So you just patiently wait.
29:22 - 29:24
EN: We have a weak sell signal bar.
29:25 - 29:27
EN: Fairly prominent tail and a small body.
29:32 - 29:35
EN: Higher probability to wait for some kind of a breakout.
29:35 - 29:40
EN: Here we have a small breakout, not below the entire range, but look to the left.
29:41 - 29:43
EN: It’s a breakout below all of these bars,
29:43 - 29:46
EN: and it’s closing below all of those bars as well.
29:46 - 29:50
EN: The next bar has a bear body, so that is a follow-through bar.
29:50 - 29:54
EN: The market’s Always In Short, and probably it’ll go at least a little lower.
29:54 - 29:56
EN: Here it went a lot lower.
30:00 - 30:05
EN: This bar closed below the low of the past 12 bars and it had a follow-through bar.
30:05 - 30:09
EN: Some traders will sell the close of that bar or sell below its low.
30:09 - 30:11
EN: Others will wait for the close of the follow-through bar.
30:11 - 30:14
EN: If it has a bear body, they’ll sell the close of that bar.
30:19 - 30:23
EN: A lot of Trading Range trading for the first 20 bars today.
30:23 - 30:28
EN: It reduces the chances that today is going to be a big trend day up or down.
30:28 - 30:33
EN: If you get a breakout, it probably will not lead to a bear trend that will last all day.
30:33 - 30:37
EN: You’ll probably end up with a lot more Trading Range trading later in the day.
30:42 - 30:44
EN: Bear breakout, bear follow-through,
30:44 - 30:48
EN: and now we have a couple more bear bars closing on or near their lows.
30:48 - 30:54
EN: It’s reasonable to sell below any of these bear bars, looking for a swing down.
30:54 - 30:56
EN: You get a bull bar here closing near its high.
30:56 - 31:00
EN: If you short for any reason, you get out above that bull bar.
31:08 - 31:12
EN: I want to talk a little bit now about how a limit order trader
31:12 - 31:15
EN: will trade a Trading Range open, and a Trading Range
31:15 - 31:18
EN: open that lasts all day (a Trading Range day).
Slide 025
Time: 31:19
Bilingual Transcript
31:21 - 31:22
EN: Here’s an example.
31:22 - 31:26
EN: Trading Range open, and it just kept in a Trading Range all day.
31:32 - 31:36
EN: Whenever you have a lot of early Trading Range trading
31:36 - 31:40
EN: – big tails, reversals – you’re probably not going to get a swing.
31:40 - 31:44
EN: So if the first 5 to 10 bars look like that,
31:44 - 31:46
EN: it’s usually better to go for a scalp.
31:47 - 31:50
EN: The bars in the first hour are normally big enough,
31:50 - 31:53
EN: and the moves in the first hour are normally big enough, to scalp for 2 points.
32:00 - 32:03
EN: So for example, we have a reversal up, a big bull bar.
32:03 - 32:05
EN: We have an attempt to reverse down.
32:05 - 32:07
EN: It triggered, and then we reversed up a second time.
32:08 - 32:13
EN: It’s reasonable to buy above that bull bar, 1 tick above that bull bar.
32:13 - 32:17
EN: But with all of the Trading Range open from yesterday and then today,
32:17 - 32:20
EN: it’s probably not going to be the start of a bull trend.
32:20 - 32:23
EN: But the bars are big enough, and there’s enough room to the Moving Average,
32:23 - 32:27
EN: to buy above that and look for maybe a 2 point scalp.
32:31 - 32:35
EN: So you can place a limit order to take profits about 2 points above your entry.
Slide 026
Time: 32:40
Bilingual Transcript
32:43 - 32:45
EN: And the bears can do the same thing.
32:45 - 32:48
EN: We’re getting a reversal down from the Moving Average,
32:48 - 32:53
EN: and we’ve had three reversals down today – one and two and three.
32:53 - 32:56
EN: It doesn’t look like a Wedge, but it’s a Wedge.
32:56 - 32:58
EN: You can also say we’re up here, we’re down here.
32:58 - 32:59
EN: Up here, down here.
32:59 - 33:01
EN: Up here, down here.
33:01 - 33:03
EN: So Parabolic Wedge – one, two, three.
33:03 - 33:05
EN: A bear bar closing near its low.
33:05 - 33:07
EN: Reasonable to take that short.
33:07 - 33:12
EN: But it’s probably a Trading Range open, not the start of a bear trend,
33:12 - 33:15
EN: especially with several pretty good bull bars.
33:15 - 33:19
EN: If you take the short, you’re probably going to go for a couple points’ profit.
33:21 - 33:26
EN: Place a limit order to buy back your shorts 2 points below your entry price.
Slide 027
Time: 33:30
Bilingual Transcript
33:32 - 33:35
EN: After the first hour, when the bars start to get smaller,
33:35 - 33:40
EN: if you’re still looking for scalps, it’s better to switch to 1 point scalps.
33:45 - 33:48
EN: Here we have consecutive inside bars and a pretty good rally.
33:48 - 33:50
EN: We’re probably going up at least a little bit more.
33:51 - 33:53
EN: It’s reasonable to switch to a 1 point scalp.
33:53 - 33:57
EN: So if you buy with a stop above the ii bull flag,
33:57 - 34:05
EN: you place a limit order to get out about 1 point higher, and you’d get out there.
34:05 - 34:08
EN: This is not the kind of trading that most traders should be doing.
34:08 - 34:11
EN: If you have a lot of Trading Range trading,
34:11 - 34:15
EN: buying with a stop at the top of the Trading Range right at the Moving Average
34:15 - 34:17
EN: – not an ideal thing to do as a scalper.
34:18 - 34:21
EN: But an experienced scalper who’s willing to use wide stops,
34:22 - 34:26
EN: maybe down here or down here, and who’s willing to scale in,
34:26 - 34:28
EN: can take that kind of a trade.
34:35 - 34:39
EN: Scalpers, if you’re taking this bar, your stop is down here.
34:39 - 34:43
EN: If you’re going for a 1 point scalp, your risk is many times greater
34:43 - 34:48
EN: than your reward, and that’s why most traders should not take this kind of a trade.
34:48 - 34:52
EN: If you’re going for a reward that is very small,
34:52 - 34:56
EN: you need very high probability to trade it successfully.
34:56 - 34:59
EN: To get that high probability, you have to be willing to scale in
34:59 - 35:03
EN: and use wide stops, and most traders cannot do that,
35:03 - 35:06
EN: so most traders should not buy this for a scalp.
35:06 - 35:08
EN: They might buy that for a swing, but I would not.
35:09 - 35:10
EN: We’re right at the Moving Average.
35:10 - 35:12
EN: We have a lot of reversals.
35:12 - 35:14
EN: It’s probably a Trading Range day, and you’re buying near the top.
35:16 - 35:20
EN: Not a good swing trade for most traders, and most traders should not be scalping,
35:20 - 35:23
EN: especially at the top of a Tight Trading Range open,
35:23 - 35:26
EN: and therefore most traders should not take that buy.
Slide 028
Time: 35:30
Bilingual Transcript
35:34 - 35:38
EN: If you are looking for stop entries and you have a Trading Range open,
35:38 - 35:41
EN: possible Trading Range day, there are usually
35:41 - 35:44
EN: about five or ten opportunities for stop entries.
35:44 - 35:46
EN: Buy above that, sell below that.
35:46 - 35:49
EN: I think that’s less good, to be buying that high up,
35:49 - 35:53
EN: but selling below that, near the top of the range, makes sense.
35:53 - 35:56
EN: Try to buy a reversal up here from the bottom of the range,
35:56 - 35:58
EN: buy a reversal up here.
35:58 - 36:00
EN: Typical day, even if it’s a Tight Trading Range day,
36:00 - 36:05
EN: you’ll have five to ten stop entry setups for scalps.
Slide 029
Time: 36:15
Bilingual Transcript
36:18 - 36:22
EN: Limit order traders, on the other hand, love days like this.
36:22 - 36:25
EN: It’s a Trading Range day, Tight Trading Range day.
36:26 - 36:31
EN: Far easier to make money with limit orders, and far more setups.
36:31 - 36:33
EN: Very hard to do.
36:33 - 36:36
EN: Most traders should never do it because they’ll make too many mistakes.
36:36 - 36:39
EN: But if you’re a consistently profitable trader
36:39 - 36:45
EN: and you have the emotional makeup that allows you to buy as the market’s falling,
36:45 - 36:49
EN: use a wide stop, and scale in, sell as the market is rallying
36:49 - 36:54
EN: and use a wide stop and scale in, then you can do pretty well on a day like this.
37:01 - 37:02
EN: For limit order traders,
37:02 - 37:06
EN: there are usually 20 or more signals in a Trading Range day.
37:06 - 37:08
EN: I want to concentrate on three.
37:09 - 37:13
EN: You want to fade bad flags near the top or the bottom.
37:13 - 37:15
EN: By fade, I mean do the opposite.
37:15 - 37:18
EN: If there’s a bad bull flag at the top, you sell it.
37:18 - 37:21
EN: If there’s a bad bear flag near the bottom, you buy it.
37:22 - 37:27
EN: You want to fade big bull bars near the top and big bear bars near the bottom.
37:27 - 37:31
EN: If there’s a big bull bar near the top, you have to bet the breakout will fail.
37:31 - 37:33
EN: You’re looking to sell.
37:33 - 37:36
EN: If there’s a big bear bar near the bottom, you have to bet
37:36 - 37:39
EN: that the bear breakout attempt will fail, and you have to look to buy.
37:39 - 37:40
EN: Fade the move.
37:41 - 37:46
EN: Then finally, you fade breakouts of prior swing highs and swing lows.
37:46 - 37:50
EN: If the market goes below a prior low, you look to buy it.
37:50 - 37:55
EN: If it goes above a prior high, you look to sell, use a wide stop, and scale in.
37:58 - 38:02
EN: First I want to talk about fading big trend bars at the top and bottom.
Slide 030
Time: 38:00
Bilingual Transcript
38:09 - 38:12
EN: A very big bull trend bar with a lot of Trading Range trading.
38:13 - 38:16
EN: It makes more sense to sell the close of the bar.
38:16 - 38:19
EN: Just sell at the market as soon as you see a big bull bar closing on
38:19 - 38:23
EN: or near the Moving Average – a little bit below, a little bit above.
38:23 - 38:26
EN: You just sell every big bull bar near the Moving Average,
38:26 - 38:28
EN: use a wide stop, and you scale in.
38:28 - 38:32
EN: So you sell this, you sell more here, and you look for a scalp.
38:36 - 38:39
EN: Opposite’s true if you see a big bear bar near the bottom of the range.
38:39 - 38:44
EN: You start to buy closes of big bear bars, betting that you’ll get a reversal.
38:44 - 38:47
EN: Buy the bear close, bet on the reversal.
38:47 - 38:53
EN: You can see there were lots of opportunities here to sell big bull bars at the top
38:54 - 38:57
EN: and buy the closes of big bear bars near the bottom.
Slide 031
Time: 39:00
Bilingual Transcript
39:01 - 39:04
EN: Next, it’s good to fade prior highs and lows.
39:11 - 39:15
EN: Again, much better if you can use a wide stop and scale in.
39:16 - 39:20
EN: When the market’s going up, you place a limit order to sell at that high,
39:20 - 39:23
EN: use a wide stop, and scale in if you have to.
39:23 - 39:26
EN: If it immediately goes down, you get your scalp.
39:29 - 39:32
EN: The bears can do that with any prior high, all day long.
39:32 - 39:34
EN: Here’s a high; we sold off.
39:34 - 39:37
EN: Place a limit order to sell at that high.
39:37 - 39:40
EN: Any of these highs, you can sell with a limit order,
39:40 - 39:41
EN: use a wide stop, and scale in.
39:41 - 39:43
EN: That high, same thing.
39:43 - 39:45
EN: You can do that all day long.
39:49 - 39:50
EN: The bulls will do the opposite.
39:51 - 39:53
EN: If the market’s going down, they’ll place limit orders
39:53 - 39:58
EN: to buy at a prior low – at that low or this low or that low.
39:58 - 40:00
EN: They’ll buy there, looking for a scalp.
40:00 - 40:03
EN: Or this low, buy there, look for a scalp.
40:05 - 40:08
EN: Lots of opportunities to do that as well.
Slide 032
Time: 40:10
Bilingual Transcript
40:16 - 40:21
EN: Finally, you want to fade flags near the top and bottom, betting on reversals.
40:21 - 40:25
EN: Look for a bull flag near the top that doesn’t look quite right,
40:25 - 40:29
EN: and then you sell above the bull flag instead of buying it,
40:29 - 40:33
EN: and then you look for a bad looking bear flag at the bottom
40:33 - 40:35
EN: and you buy below it instead of selling.
40:36 - 40:37
EN: You’re betting on a reversal.
40:40 - 40:42
EN: Here’s a bull flag at the top.
40:43 - 40:45
EN: A bear bar, a doji bar.
40:45 - 40:49
EN: Not a strong buy, so bears will sell with a limit order at the high of that bar,
40:49 - 40:51
EN: and they’ll sell more higher,
40:51 - 40:55
EN: and then when it comes down far enough for a scalp, they’ll take their profit.
40:57 - 40:57
EN: A doji bar.
40:57 - 40:59
EN: Not a very good buy signal bar.
40:59 - 41:00
EN: A bear bar.
41:00 - 41:02
EN: Not a good buy signal bar.
41:02 - 41:04
EN: A doji bar near the top of the range.
41:04 - 41:06
EN: Not a good buy signal bar.
41:06 - 41:08
EN: Traders will place a limit order to sell its high
41:08 - 41:13
EN: and then wait for a 1 point move down and scalp out.
41:16 - 41:21
EN: Here we’re near the bottom of the range, and the market has a bull inside bar,
41:21 - 41:25
EN: so it’s a Low 1 sell signal bar, a bear flag.
41:25 - 41:29
EN: It’s a bad looking sell signal bar at the bottom of a Trading Range.
41:29 - 41:32
EN: Bulls will place a limit order to buy at the low of that bar,
41:32 - 41:33
EN: and they’ll get filled here,
41:33 - 41:37
EN: betting that the market will soon reverse up and they can make a scalp.
41:41 - 41:43
EN: Another bull bar.
41:43 - 41:45
EN: A bad bear flag near the bottom of the range.
41:45 - 41:46
EN: Same with this.
41:46 - 41:51
EN: Here, you have a big bear bar, but it’s following an even bigger bull bar.
41:51 - 41:54
EN: So you’ll get bulls willing to buy at the low of that bar,
41:54 - 41:56
EN: betting the bear reversal will fail.
41:57 - 42:01
EN: And you can see lots of opportunities to do that as well.
42:05 - 42:07
EN: If you just look at this chart at the end of the day, you’ll say,
Slide 033
Time: 42:05
Bilingual Transcript
42:07 - 42:09
EN: “Wow, there wasn’t much to do.”
42:09 - 42:13
EN: But if you look at all the little things that I talked about today,
42:13 - 42:17
EN: in fact, there were many opportunities for limit order scalpers.
42:29 - 42:33
EN: In a limit order market like this, a Trading Range open
42:33 - 42:38
EN: and it just remains a Trading Range all day, nothing looks good enough.
42:38 - 42:44
EN: But if you’re organized and you go in with a plan, betting on reversals,
42:44 - 42:46
EN: and you’re able to trade limit orders,
42:46 - 42:49
EN: there are many, many opportunities to make money.
42:49 - 42:53
EN: Remember, markets have inertia.
42:53 - 42:55
EN: They resist change.
42:55 - 42:57
EN: When a market’s in a bull trend,
42:57 - 43:01
EN: it’s going to resist a reversal down into a bear trend.
43:01 - 43:03
EN: If it’s in a bear trend, it’s going to resist
43:03 - 43:07
EN: every reversal attempt and it will continue lower.
43:07 - 43:09
EN: But when it’s in a Tight Trading Range,
43:09 - 43:13
EN: it’ll also resist attempts to break into a trend.
43:13 - 43:17
EN: If you’re going to trade a day like this, yes,
43:17 - 43:20
EN: it’s fine to take stop order entries – and in fact,
43:20 - 43:22
EN: most traders should only take the stop order entries
43:22 - 43:25
EN: – but limit order traders love days like this.
43:25 - 43:28
EN: There are many, many opportunities to make money.
Slide 034
Time: 43:30
Bilingual Transcript
43:35 - 43:38
EN: I’m going to show you now all the trades
43:38 - 43:43
EN: that I have been showing over the past several slides to demonstrate that.
43:43 - 43:48
EN: In fact, if you are a limit order scalper on a day like this,
43:48 - 43:51
EN: there are usually 30 or 40 opportunities to make money,
43:51 - 43:54
EN: and that’s 1 point per trade.
43:54 - 43:55
EN: So if you’re an aggressive trader,
43:55 - 43:58
EN: theoretically you could make 30 or 40 points on a day
43:58 - 44:02
EN: that looks like there’s nothing to do for most traders.
44:08 - 44:12
EN: In general, pretty much any setup – stop entry setup,
44:12 - 44:18
EN: limit order setup – will have between a 40% to 60% chance of success.
44:18 - 44:22
EN: If you can use wide stops and scale in and trade with limit orders,
44:22 - 44:24
EN: you can make that probability quite a bit higher,
44:25 - 44:29
EN: and that’s how limit order scalpers trade on days like this.
44:29 - 44:33
EN: They use the wide stops, they scale in, and they’re confident
44:33 - 44:37
EN: that the market will resist breaking into a trend.
44:37 - 44:42
EN: So they’re constantly betting that every attempt to sell off will fail,
44:42 - 44:46
EN: so they’re looking to buy, and every attempt to become a bull trend will fail,
44:46 - 44:47
EN: and they look to sell.
Slide 035
Time: 44:50
Bilingual Transcript
44:51 - 44:55
EN: I began by talking about a trend from the first bar.
44:56 - 45:00
EN: They happen about 20% of the time, and you trade them like a trend.
45:00 - 45:03
EN: You constantly look for trades in the direction of the trend.
45:04 - 45:09
EN: I then talked about how 80% of opens have at least two reversals
45:09 - 45:12
EN: – either a Double Top, a Double Bottom, or a Wedge Bottom.
45:12 - 45:16
EN: Then the focus of my talk today was on Trading Range opens,
45:16 - 45:20
EN: a Trading Range where there are five or more reversals.
45:20 - 45:25
EN: Most traders should patiently wait for a good bull bar near the bottom
45:25 - 45:29
EN: and buy with a stop above its high, or a good bear bar near the top
45:29 - 45:34
EN: and sell with a stop below its low, or wait for a strong breakout
45:34 - 45:37
EN: and then trade in the direction of the breakout.
45:37 - 45:40
EN: If the breakout fails, you trade in the opposite direction.
45:40 - 45:44
EN: Sometimes a Trading Range open will last all day,
45:44 - 45:48
EN: and you continue to trade it like a Trading Range open all day
45:48 - 45:50
EN: if you are a limit order trader.
45:50 - 45:55
EN: There usually will be five to ten stop order scalps as well,
45:55 - 45:58
EN: but if you’re a limit order trader, you can do extremely well,
45:58 - 46:01
EN: betting that every attempt to rally will reverse down,
46:01 - 46:04
EN: every attempt to convert into a bear trend,
46:04 - 46:06
EN: break into a bear trend, will reverse up.
46:11 - 46:12
EN: I’m Al Brooks.
46:12 - 46:14
EN: Thank you for watching for this bonus video.
46:14 - 46:18
EN: I talked today about trading Tight Trading Ranges on the open
46:18 - 46:21
EN: and Tight Trading Ranges that last all day.