al-brooks-course
10 - Scalping series- #02 Scalping 2-minute Emini Chart
Raw transcript and slide notes for 10 - Scalping series- #02 Scalping 2-minute Emini Chart.
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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 very much for watching this video.
00:05 - 00:09
EN: It’s the second part of a series on scalping.
00:09 - 00:12
EN: I’m using a 2-minute Emini chart as an example.
Slide 001
Time: 00:14
Bilingual Transcript
00:16 - 00:19
EN: If you’re interested in finding some detailed rules about scalping,
00:19 - 00:23
EN: you can look at the Brooks Trading Course, where you can see the basic rules
00:23 - 00:27
EN: and the free scalping rules video (Part 1 of this series).
00:27 - 00:28
EN: This is Part 2.
00:32 - 00:34
EN: I’m using a 2-minute chart as an example,
00:34 - 00:37
EN: but you trade it the same as you would a 5-minute chart,
00:37 - 00:40
EN: a 60-minute chart, a daily chart, or a weekly chart.
00:40 - 00:44
EN: If you watch television shows with professional traders,
00:44 - 00:49
EN: like on CNBC or Bloomberg or Fox, they sometimes will show hourly charts,
00:49 - 00:54
EN: sometimes daily charts, sometimes weekly charts, and sometimes monthly charts,
00:54 - 00:57
EN: and you don’t hear them say, “Oh, this is a weekly chart
00:57 - 01:01
EN: and therefore I’m going to trade it differently from how I trade a daily chart.”
01:01 - 01:03
EN: Everybody trades all charts the same.
01:03 - 01:08
EN: They’re all based upon human nature, rational human behavior.
01:08 - 01:10
EN: It doesn’t matter what the timeframe is.
01:13 - 01:16
EN: Here we have consecutive bear bars, and one of them is a very big bar
01:16 - 01:18
EN: and it’s closing near its low.
01:18 - 01:23
EN: For me, that’s the minimum that I want to see for a Sell The Close bear trend.
01:23 - 01:24
EN: Always In Short.
01:24 - 01:26
EN: A bear trend.
01:26 - 01:30
EN: I want to see 2 bear bars, one with a big body closing on or near its low.
01:30 - 01:33
EN: It can be the second bar like this, but it could also be the first bar.
01:33 - 01:37
EN: And sometimes both bars will be very big bear bars.
01:41 - 01:45
EN: Some traders, as soon as they see this close near the low of the bar,
01:45 - 01:47
EN: a second consecutive bear bar, big bar closing near its low,
01:47 - 01:49
EN: they’ll simply hit “Sell the market”
01:49 - 01:52
EN: and they’ll get filled around the open of the next bar.
01:52 - 01:56
EN: Others will trade with a stop 1 tick below the low of this bar.
01:57 - 02:02
EN: Most traders will make more money if they trade with stops.
02:03 - 02:06
EN: Sometimes the bars are extremely big and the market’s moving very fast,
02:06 - 02:11
EN: and when that’s the case, it’s usually better to trade with limit orders
02:11 - 02:15
EN: because the appearance of the bar can change dramatically in the final seconds,
02:15 - 02:19
EN: and you don’t know where the low of the bar will be until exactly when it closes.
02:19 - 02:22
EN: And then the next bar often moves very quickly,
02:22 - 02:25
EN: and you don’t have time from the close of the bar
02:25 - 02:28
EN: to place a stop 1 tick below the low of the bar.
Slide 002
Time: 02:30
Bilingual Transcript
02:30 - 02:34
EN: Here we have a big bear bar, and then this bar is inside.
02:34 - 02:35
EN: It’s an inside bar.
02:35 - 02:39
EN: Its low is above the low of that bar; its high is below the high of that bar.
02:39 - 02:41
EN: Then we have a second consecutive inside bar.
02:42 - 02:45
EN: Low above that low, high below that high.
02:45 - 02:51
EN: In general, if you have an ii (inside-inside), consecutive inside bar pattern,
02:51 - 02:56
EN: and the second bar is closing near its low, you would look to sell below it.
02:56 - 02:59
EN: It doesn’t matter if this is a bear flag in a bear trend.
02:59 - 03:02
EN: It doesn’t matter if it’s the top of a Buy Climax.
03:02 - 03:03
EN: It could be a reversal.
03:03 - 03:07
EN: In general, if you have a strong bear bar for the second bar,
03:07 - 03:10
EN: it’s better only to look to sell and not look to buy above.
03:10 - 03:12
EN: It’s a BreakOut Mode pattern.
03:12 - 03:14
EN: It’s a Triangle on a smaller timeframe chart,
03:14 - 03:17
EN: and some traders will simply trade it like a BreakOut Mode pattern.
03:17 - 03:20
EN: They’ll sell below, they’ll buy above.
03:21 - 03:24
EN: If it goes above, triggers the buy and reverses down,
03:24 - 03:28
EN: they’ll get out of longs and possibly reverse to short below.
03:28 - 03:33
EN: If it goes below and triggers the short and then goes above the high of the ii,
03:33 - 03:37
EN: the first bar, they’ll get out of shorts and many will go long.
03:40 - 03:44
EN: BreakOut Mode pattern, so it’s both a buy and a sell setup.
03:44 - 03:46
EN: Sell below, 1 tick below.
03:46 - 03:48
EN: Buy above, 1 tick above.
Slide 003
Time: 03:50
Bilingual Transcript
03:51 - 03:52
EN: And here we have a bear breakout.
03:52 - 03:55
EN: As I said, with the bear bar closing near its low,
03:55 - 03:59
EN: with the market below the 10-bar Exponential Moving Average,
03:59 - 04:02
EN: with a big bear bar here, we’re probably going
04:02 - 04:04
EN: to get a second leg sideways to down.
04:04 - 04:06
EN: This is a good-looking sell.
04:06 - 04:09
EN: Sell on a stop 1 tick below the low of that bar.
04:09 - 04:15
EN: And these bars are about 4 points tall, 3 points, 4 points, 5 points tall.
04:15 - 04:19
EN: You have to decide how much you want to scalp for if you’re scalping.
04:19 - 04:21
EN: In general, you’ll probably be scalping
04:21 - 04:24
EN: for about half the size of an average range.
04:24 - 04:28
EN: So if these bars are about 4 points, you might try to scalp out for 2 points.
04:30 - 04:34
EN: You sell on a stop 1 tick below that bar and you’d get filled right here.
04:36 - 04:40
EN: And you immediately place a bracket order, maybe a stop up here
04:40 - 04:43
EN: and a profit-taking limit order 2 points below.
04:43 - 04:47
EN: It fell 10 ticks below the low of that bar,
04:47 - 04:51
EN: which is exactly what it had to do for you to scalp out with 2 points.
04:51 - 04:55
EN: You sell 1 tick below that bar, and then if you’re trying to make 2 points,
04:55 - 04:57
EN: 8 ticks, it has to fall 8 ticks.
04:57 - 05:00
EN: And if you have a limit order to buy back your short,
05:00 - 05:04
EN: the limit order usually is not going to get filled unless it falls 1 more tick.
05:04 - 05:07
EN: So, the low of this bar has to be 10 or more ticks
05:07 - 05:11
EN: below the low of that bar for you to sell 1 tick below that bar
05:11 - 05:14
EN: and scalp out with 2 points (8 ticks).
05:19 - 05:21
EN: We’re in an early bear trend.
Slide 004
Time: 05:20
Bilingual Transcript
05:21 - 05:24
EN: We reversed down from the Moving Average,
05:24 - 05:27
EN: reversed down again near the Moving Average, reversed down again.
05:27 - 05:31
EN: It’s a Sell The Close bear trend, so traders will sell the market.
05:31 - 05:34
EN: They’ll sell as soon as a bear bar closes near its low,
05:34 - 05:36
EN: and they’ll sell with a stop below the low of the bar.
05:39 - 05:42
EN: Again, as I said, this is early in the day.
05:42 - 05:44
EN: The bars are big, and if you’re scalping,
05:44 - 05:47
EN: it’s probably good to scalp for 2 points.
05:47 - 05:51
EN: If the bars were 20 points tall, you might scalp for 5 or 10 points,
05:51 - 05:54
EN: about half as many points as there are in the average bar.
05:55 - 05:59
EN: If the bars are only 2 or 3 points tall, you’d scalp for 1 point.
06:02 - 06:05
EN: Here we have another big bear bar closing on its low.
Slide 005
Time: 06:04
Bilingual Transcript
06:06 - 06:08
EN: If you sold below the low of that bar
06:08 - 06:13
EN: and you had a limit order to take 2 points’ profit 8 ticks below your entry,
06:13 - 06:16
EN: you would have been filled on that bar.
06:16 - 06:17
EN: You’d scalp out with 2 points.
Slide 006
Time: 06:20
Bilingual Transcript
06:23 - 06:26
EN: We have another bar closing on its low.
06:26 - 06:27
EN: Good size bodies.
06:27 - 06:29
EN: It’s still a Sell The Close bear trend,
06:29 - 06:32
EN: so you could still sell the market on the close of the bar.
06:32 - 06:36
EN: Sell the market as the bar is forming or sell on a stop below the low of that bar.
06:43 - 06:44
EN: There’s a problem here.
06:44 - 06:47
EN: This could be forming a Micro Wedge on a smaller timeframe chart.
06:47 - 06:49
EN: We went down here, we went up here.
06:49 - 06:53
EN: We went down here, and we went up here.
06:53 - 06:57
EN: So this is actually a second leg down, and therefore this is a third leg down.
06:57 - 07:02
EN: Therefore, it’s a Micro Wedge, a small Wedge on a smaller timeframe chart,
07:02 - 07:05
EN: and that could attract some profit-takers,
07:05 - 07:07
EN: and therefore we may get a reversal soon.
07:07 - 07:09
EN: So if you sell below the low of this bar,
07:09 - 07:11
EN: you have to be able to make quick decisions.
07:11 - 07:15
EN: Also, the bodies are getting bigger – here, a little bit bigger here,
07:15 - 07:16
EN: and a little bit bigger here.
07:16 - 07:19
EN: So it’s accelerating down in a Parabolic Wedge,
07:19 - 07:22
EN: and that often attracts profit-takers.
07:22 - 07:27
EN: So if you’re selling down here, you only take the short below this bar
07:27 - 07:30
EN: if you can make quick decisions, because there’s a risk of a reversal.
07:30 - 07:36
EN: Also, an ii in a bear trend often is the final bear flag,
07:36 - 07:40
EN: so it breaks out below and then it comes back to the ii.
07:40 - 07:44
EN: Remember, an ii is a Triangle on a smaller timeframe chart.
07:44 - 07:46
EN: A Triangle is an area of agreement.
07:47 - 07:52
EN: Traders thought this was a fair price, and now it’s cheaper than a fair price,
07:52 - 07:56
EN: so bulls might start to buy aggressively and bears will stop selling,
07:56 - 08:00
EN: and it could come back to that ii, the apex of that Triangle.
08:02 - 08:04
EN: So there’s an increased risk here of a reversal.
08:10 - 08:12
EN: It was reasonable to sell below this bar
Slide 007
Time: 08:10
Bilingual Transcript
08:12 - 08:14
EN: because we could’ve just kept going down, down, down,
08:14 - 08:18
EN: and if you sold below and you have this bull bar closing on its high,
08:18 - 08:19
EN: it’s a credible buy.
08:19 - 08:23
EN: It’s a Parabolic Wedge and we have a magnet here, an ii.
08:23 - 08:28
EN: Traders thought this was a fair price and we might come back to that fair price,
08:28 - 08:30
EN: and we have a bull bar closing on its high.
08:30 - 08:33
EN: If you sold below that bar, you’d get out above that bar
08:33 - 08:36
EN: and you’d take an 11 tick loss.
08:36 - 08:40
EN: If you’re flat, you could go long above this bar,
08:40 - 08:43
EN: trying to get a scalp – either a 2 point scalp
08:43 - 08:46
EN: or maybe hold for a test of that Triangle.
08:51 - 08:56
EN: Could you hold short after a 7-bar bear Micro Channel, 7 bars,
08:56 - 08:59
EN: every high at or below the high of the prior bar?
08:59 - 09:04
EN: Well, usually the first reversal up from a 7-bar Micro Channel
09:04 - 09:07
EN: and reversal up after 3 big bear bars is going to be minor.
09:08 - 09:12
EN: We’ll go up a certain number of bars – I don’t know, 2 bars, 10 bars
09:12 - 09:15
EN: – but we’ll probably test back down at some point.
09:15 - 09:18
EN: So some bears will sell as it goes higher.
09:18 - 09:22
EN: Remember, some bears sold the close of this bar or below its low
09:22 - 09:24
EN: and they were disappointed by this bar.
09:24 - 09:28
EN: They never had an opportunity to get out breakeven.
09:28 - 09:32
EN: Most would get out here with a loss, but some will hold,
09:32 - 09:34
EN: expecting this close to get tested.
09:34 - 09:37
EN: So they’ll sell and then they’ll look to sell more higher,
09:37 - 09:40
EN: expecting the market to come back down around that close.
09:40 - 09:43
EN: That would allow them to get out breakeven on that sell,
09:43 - 09:45
EN: and with a profit on the higher sell.
09:46 - 09:48
EN: If you’re scalping, you don’t do that.
09:48 - 09:50
EN: You just quickly get in, you quickly get out.
09:50 - 09:52
EN: So if you sold below, you would get out above
09:52 - 09:55
EN: that bull bar or you’d even reverse to long.
09:57 - 10:00
EN: Remember in the first video on scalping, I talked about this.
10:00 - 10:03
EN: I said that when it’s near the Moving Average
10:03 - 10:06
EN: and you’re getting bear bars reversing down, you sell below.
10:07 - 10:10
EN: But if you’re reasonably far from the 10-bar Exponential Moving Average
10:10 - 10:12
EN: and you get a pretty good bull bar,
10:12 - 10:16
EN: the market usually tries to get back to the Moving Average, so bulls will buy.
10:20 - 10:24
EN: Parabolic Wedge, bull bar closing near its high.
10:24 - 10:27
EN: We’re far below the Moving Average, so it’s a climactic reversal up.
10:27 - 10:32
EN: And because it’s a Parabolic Wedge, we might get a couple legs sideways to up.
Slide 008
Time: 10:35
Bilingual Transcript
10:39 - 10:41
EN: We have a second bull bar closing on its high.
10:42 - 10:44
EN: Traders will buy above the high of that bar.
10:44 - 10:47
EN: And this bar closing on its high with a good size body,
10:47 - 10:49
EN: they’ll buy on the close of that bar.
10:49 - 10:53
EN: Some of the bulls who bought here have a limit order to get out with 2 points,
10:53 - 10:56
EN: so they’ll get out somewhere up in here with 2 points.
10:56 - 10:58
EN: Others will look at this and say, “That’s a pretty good bar.
10:58 - 11:00
EN: We have a magnet above the Moving Average.
11:00 - 11:02
EN: We have that ii.
11:02 - 11:05
EN: Maybe I’ll hold long, and maybe I’ll even buy more
11:05 - 11:07
EN: above a bull bar closing on its high.”
11:07 - 11:11
EN: So they might buy here and they might buy more here, expecting it to go up there.
11:12 - 11:17
EN: I said that if a trader sold below this bar and exited above this bar,
11:17 - 11:19
EN: he probably would not reverse.
11:19 - 11:23
EN: Most traders do not like to reverse because if you’re thinking short,
11:23 - 11:27
EN: it’s hard emotionally to be completely objective.
11:27 - 11:32
EN: Therefore, the probability of you making the correct assessment is lower.
11:32 - 11:35
EN: You don’t have much of an edge as a trader,
11:35 - 11:38
EN: and if at any time you feel less than at your best,
11:38 - 11:41
EN: it’s usually better not to take the trade.
11:41 - 11:43
EN: Most traders end up not reversing.
11:43 - 11:46
EN: They get out and then they wait a bar or two,
11:46 - 11:48
EN: and then they start trading in the new direction.
Slide 009
Time: 11:50
Bilingual Transcript
11:54 - 11:58
EN: Consecutive bull bars, decent size bodies, closing on the high.
11:58 - 12:00
EN: We’re probably Always In Long.
12:00 - 12:03
EN: We’re probably going up higher, maybe to the ii.
12:03 - 12:05
EN: It could be a bull trend.
12:05 - 12:09
EN: As I said, if you bought above this, you could try to scalp out with 2 points.
12:09 - 12:12
EN: Or you could look at this bar and say, “Well, we’re Always In Long.
12:12 - 12:14
EN: We’re probably going higher.
12:14 - 12:18
EN: I’m going to hold and get out maybe up here, or hold until it stalls
12:18 - 12:22
EN: and then get out, or possibly even buy more.”
12:25 - 12:26
EN: Another bull bar.
Slide 010
Time: 12:25
Bilingual Transcript
12:26 - 12:31
EN: A smaller body and a conspicuous tail on top, so a little bit of loss of momentum.
12:31 - 12:33
EN: It’s still Buy The Close.
12:33 - 12:37
EN: It’s still closing in the upper half, the upper third, but it’s less reliable.
12:39 - 12:43
EN: If you bought 1 tick above the high of that bar and you’re scalping for 2 points,
12:43 - 12:45
EN: you’d get out right there.
Slide 011
Time: 12:50
Bilingual Transcript
12:51 - 12:53
EN: It’s a Buy The Close bull trend.
12:53 - 12:55
EN: As I said, you do not have to get out.
12:55 - 13:00
EN: You could hold or you could buy more or you could buy more above this bar as well.
Slide 012
Time: 13:04
Bilingual Transcript
13:07 - 13:10
EN: Okay, so this is an example where you buy.
13:10 - 13:11
EN: You see a very strong bull bar.
13:11 - 13:13
EN: Consecutive strong bull bars.
13:13 - 13:14
EN: Now Always In Long.
13:14 - 13:16
EN: Probably we’ll get a couple legs up.
13:16 - 13:18
EN: You could buy more.
13:19 - 13:21
EN: This is a 2 minute chart.
13:21 - 13:23
EN: Everything happens very quickly.
13:23 - 13:25
EN: Also, the appearance of the bar very often
13:25 - 13:28
EN: changes dramatically in the final second or two.
13:29 - 13:34
EN: So when you’re looking at a picture like this, it’s easy to see where to enter.
13:34 - 13:36
EN: You sell below, sell below, buy above, buy above.
13:36 - 13:40
EN: But in real time, very often, probably most of the time,
13:40 - 13:43
EN: the bar does not look like this until the end of the bar.
13:44 - 13:47
EN: So you have to make quick decisions and place orders quickly.
Slide 013
Time: 13:50
Bilingual Transcript
13:55 - 13:59
EN: Now we have 3 consecutive bull bars, all closing on or near their highs,
13:59 - 14:05
EN: but we’re around a 50% pullback and we’re getting close to the ii, a magnet.
14:05 - 14:06
EN: Might get some profit-takers.
14:06 - 14:08
EN: And we’re at the average price.
14:08 - 14:09
EN: Might get some profit-takers.
14:09 - 14:10
EN: So it might stall here.
14:11 - 14:14
EN: Now, for the bears, they’re hoping it gets back to this close.
14:14 - 14:16
EN: They were disappointed by this bull bar.
14:16 - 14:18
EN: They never had a chance to get out breakeven.
14:18 - 14:20
EN: So some bears are holding short.
14:20 - 14:23
EN: If it comes down near that close, they’ll buy back their shorts.
14:23 - 14:26
EN: Some of them are looking to sell up here somewhere
14:26 - 14:28
EN: if they can get a bear bar closing near its low,
14:28 - 14:30
EN: taking a chance that we’ll come back down here.
14:31 - 14:34
EN: 3 consecutive bull bars after a Sell Climax.
14:34 - 14:37
EN: We should get a second leg up, and therefore,
14:37 - 14:41
EN: do you think there’ll be more buyers or sellers at the low of this bar?
14:41 - 14:45
EN: Probably buyers, so I would not place a stop order 1 tick below.
14:45 - 14:50
EN: Instead, if I’m scalping, I would put a limit order exactly at the low of the bar.
14:51 - 14:54
EN: It usually will have to go 1 tick below the low of that bar
14:54 - 14:55
EN: for my limit order to get filled.
14:59 - 15:02
EN: Bear bar closing on or near its low.
Slide 014
Time: 15:00
Bilingual Transcript
15:02 - 15:05
EN: We have Sell The Close bears here disappointed by this.
15:05 - 15:09
EN: They might sell more below here, hoping that it comes down here.
15:09 - 15:12
EN: They could get out breakeven on their first sell and with a profit on that sell.
15:12 - 15:16
EN: But now we’re Always In Long, and chances are we’re going to get a couple legs up,
15:16 - 15:20
EN: and therefore there are probably buyers not too far below the low of this bar.
15:21 - 15:23
EN: Can you buy with a limit order at the low of this bar?
15:23 - 15:25
EN: It’s a 5-bar bull Micro Channel.
15:25 - 15:29
EN: 5 bars, the lows are at or above the low of the prior bar.
15:30 - 15:31
EN: You’re at the Moving Average.
15:31 - 15:33
EN: We have a bear bar closing near its low.
15:33 - 15:34
EN: We have a magnet here.
15:34 - 15:38
EN: I think it’s probably not worth buying at the low of that bar.
15:38 - 15:43
EN: However, you might buy a point or two below and use a stop down below this.
15:43 - 15:46
EN: And for the bears, I don’t think it’s a very good short.
15:46 - 15:48
EN: We have 3 good bull bars, we’re Always In Long.
15:48 - 15:51
EN: A second leg sideways to up is likely.
15:51 - 15:54
EN: I usually like to trade in the direction of the trend,
15:54 - 15:56
EN: and I think the trend is now long.
16:01 - 16:05
EN: We have a bear trend, a pullback, so this is a Low 1 sell signal bar.
16:05 - 16:11
EN: But it’s also now Always In Long, so it could be a Small Pullback Bull Trend
16:11 - 16:15
EN: where the market just goes a little bit below this and keeps going up.
16:15 - 16:18
EN: In other words, we have an early bull trend, a reversal attempt,
16:18 - 16:21
EN: and it’s just a pullback in this.
16:21 - 16:23
EN: So it drops for a few ticks and then goes higher.
16:23 - 16:26
EN: Drops for a few ticks and then goes higher.
16:26 - 16:29
EN: So it could be the start of a Small Pullback Bull Trend.
16:32 - 16:36
EN: We went below the low of the bar and we reversed up.
Slide 015
Time: 16:34
Bilingual Transcript
16:37 - 16:39
EN: I said many bulls would not buy that low,
16:39 - 16:42
EN: but they might place a limit order to buy 1 point lower,
16:42 - 16:44
EN: 2 points lower, 3 points lower.
16:44 - 16:47
EN: And had they bought that low with a limit order,
16:47 - 16:51
EN: and it fell 4 ticks below that and now it’s back up there,
16:51 - 16:52
EN: they could’ve made 1 point.
16:52 - 16:57
EN: Other bulls would not buy at the low of a bear bar at the Moving Average,
16:57 - 16:59
EN: but they might start buying a point or two lower,
16:59 - 17:02
EN: and they made money when it got back up to the low of that bar.
17:07 - 17:10
EN: This low is 9 ticks below that low.
17:10 - 17:11
EN: It’s a 9-tick bear trap.
17:11 - 17:14
EN: Now, why do I call it a 9-tick bear trap?
17:14 - 17:16
EN: Remember what I said a few minutes ago?
17:16 - 17:19
EN: I said that if you sell on a stop below the low of a bar,
17:19 - 17:25
EN: the next bar has to fall 10 ticks below that low to scalp out for 2 points.
17:25 - 17:28
EN: There are a lot of bears that sold 1 tick below that bar.
17:28 - 17:32
EN: They placed a limit order to buy back their shorts 8 ticks below,
17:32 - 17:34
EN: and therefore there are a lot of bears
17:34 - 17:38
EN: with limit orders buying 9 ticks below that low.
17:38 - 17:41
EN: And if it hits their limit order, most of them will not get filled,
17:41 - 17:46
EN: and if it starts going up, the bears will panic and they’ll buy back their shorts.
17:48 - 17:51
EN: They’re trapped into a bad trade, and that’s why I call it a 9-tick trap.
17:53 - 17:56
EN: Now, we have a doji bar here, a doji bar here.
17:56 - 17:58
EN: Those are Trading Range bars.
17:58 - 18:01
EN: The market went down, it went up, it went down, it went up.
18:01 - 18:03
EN: So we’re getting a lot of reversals.
18:03 - 18:08
EN: These dojis could be a sign that we’re starting to enter a Tight Trading Range.
18:08 - 18:13
EN: If the market’s in a Tight Trading Range, traders will buy below, buy more lower.
18:13 - 18:15
EN: They’ll sell above, sell more higher.
18:16 - 18:17
EN: So what should you do here?
18:17 - 18:18
EN: Should you buy?
18:18 - 18:19
EN: Yes.
18:19 - 18:19
EN: Should you sell?
18:19 - 18:20
EN: Yes.
18:21 - 18:25
EN: If we’re in a Tight Trading Range, we’re probably not going to go all that far up
18:25 - 18:28
EN: or all that far down over the next few bars, so some traders will sell,
18:28 - 18:34
EN: sell more higher, buy, buy more lower, and then both will scalp.
18:41 - 18:46
EN: If a bull bought that low and bought more 2 points lower, it had to fall 9 ticks.
18:46 - 18:50
EN: If he buys that low, 2 points lower is 8 ticks below the low of that bar.
18:50 - 18:52
EN: It has to fall 9 ticks for him to get filled.
18:52 - 18:53
EN: He would be filled here.
18:53 - 18:58
EN: He could get out breakeven on his first buy and with a profit on his lower buy.
18:58 - 19:01
EN: But the stop order bears are trapped.
19:01 - 19:03
EN: It had to fall 10 ticks for them to make money.
19:03 - 19:05
EN: They sell 1 tick below.
19:05 - 19:09
EN: Limit order bulls buy at the low, not 1 tick below.
19:09 - 19:12
EN: So limit order bulls only needed it to fall 9 ticks
19:12 - 19:15
EN: for them to scale in 2 points below.
19:15 - 19:19
EN: Stop order bears need it to fall 10 ticks to make 2 points.
19:22 - 19:25
EN: Here we got a decent size bear bar.
19:25 - 19:30
EN: Closed in its lower half, but closed at the low of this bar, not below.
Slide 016
Time: 19:25
Bilingual Transcript
19:30 - 19:32
EN: So it’s not all that bearish.
19:32 - 19:34
EN: We’re probably still Always In Long.
19:34 - 19:38
EN: This looks more bullish than this looks bearish.
19:38 - 19:43
EN: Remember I said there were Sell The Close bears here who are upset by this,
19:43 - 19:45
EN: and they’re trying to get out breakeven.
19:45 - 19:48
EN: After all of this, instead of placing a limit order
19:48 - 19:50
EN: to get out breakeven at the close of that bar,
19:50 - 19:53
EN: they might be willing to take a small loss.
19:53 - 19:58
EN: They might place a limit order 2 or 3 or 4 ticks above the close of that bar,
19:58 - 20:00
EN: and if they did, they would’ve been filled here,
20:00 - 20:03
EN: and they bought back their shorts from here with a small loss.
20:04 - 20:08
EN: The stop order bears who sold below here now did make 2 points.
20:12 - 20:14
EN: 4 bars without a bull body.
20:15 - 20:19
EN: We’re still likely to get a second leg sideways to up after a Parabolic Wedge
20:19 - 20:24
EN: and a strong reversal up, but that’s not a good-looking stop entry buy.
20:24 - 20:26
EN: And for the bears, I think we’re still Always In Long.
20:26 - 20:29
EN: They have not had consecutive big bear bars closing
20:29 - 20:32
EN: on their lows – plus we’re still above that low.
20:32 - 20:34
EN: I would not be selling down here.
20:37 - 20:40
EN: Bulls, we got a big reversal up,
Slide 017
Time: 20:39
Bilingual Transcript
20:40 - 20:43
EN: and look where it reversed up from – from below that close.
20:43 - 20:49
EN: So the bears who held and sold more below here and they started
20:49 - 20:54
EN: to get out around breakeven, they were able to get out breakeven on the close
20:54 - 20:56
EN: that they sold here and a profit there.
20:57 - 21:02
EN: In part, this big tail, this reversal up, is from bears buying back shorts.
21:02 - 21:03
EN: Well, guess what?
21:03 - 21:05
EN: The bulls are not stupid.
21:05 - 21:09
EN: They know that the bears who sold this close were trapped,
21:09 - 21:12
EN: and those bears will be eager to buy at that close.
21:12 - 21:15
EN: So if you’re a bull, what are you going to do?
21:15 - 21:18
EN: You might place a limit order to buy at that close,
21:18 - 21:22
EN: or a tick or two above that close, thinking that a whole bunch of bears
21:22 - 21:23
EN: are going to buy back their shorts.
21:23 - 21:27
EN: The bears are saying, “Oh, thank you, I’m able to get out without a loss,”
21:27 - 21:30
EN: and they’re not eager to sell again.
21:30 - 21:36
EN: So this tail is caused both by these Sell The Close bears getting out,
21:36 - 21:38
EN: being thankful to be able to get out without a loss,
21:38 - 21:42
EN: and from bulls betting that the bears would panic out,
21:43 - 21:47
EN: buy back their shorts, and that we would get a second leg up after this.
21:48 - 21:50
EN: A good-looking buy signal bar.
21:50 - 21:51
EN: It could be better.
21:51 - 21:53
EN: A bar could close on its high.
21:53 - 21:55
EN: It could close at the Moving Average.
21:55 - 21:57
EN: But it’s still a pretty good buy signal bar.
21:57 - 22:00
EN: On a smaller timeframe chart, it’s probably a Wedge Double Bottom.
22:00 - 22:04
EN: We went down, we went up, we went down, we went up,
22:04 - 22:06
EN: and we went down, we’re going up.
22:06 - 22:10
EN: So it’s three legs down and it’s a Higher Low Double Bottom.
22:10 - 22:14
EN: That’s a pretty reliable and pretty common buy pattern
22:14 - 22:15
EN: and a very good buy signal bar.
22:15 - 22:17
EN: So it’s a credible buy here.
22:17 - 22:19
EN: And this could be a Major Trend Reversal.
22:20 - 22:25
EN: A Major Trend Reversal means a couple legs up, maybe 10 bars or more up.
22:26 - 22:29
EN: On a 2-minute chart, 10 bars is 20 minutes.
22:29 - 22:32
EN: On a 2-minute chart, it could be a major reversal,
22:32 - 22:35
EN: but on a 5-minute chart or a 15-minute chart,
22:35 - 22:38
EN: it would be a minor reversal, just a bar or two.
22:41 - 22:47
EN: So we have a Higher Low Double Bottom, a Parabolic Wedge selloff,
22:47 - 22:49
EN: and a reversal up with a pretty good bull bar.
22:50 - 22:54
EN: As I said, we could get a couple legs up over the next 10 bars,
22:54 - 22:58
EN: so you could buy that for a swing up or you could buy it for a scalp.
23:03 - 23:05
EN: You buy on a stop above the high of that bar.
23:06 - 23:10
EN: You’re disappointed that this bar is not all that big.
23:10 - 23:14
EN: If you took the buy, I would put the stop below the low of this bar.
23:18 - 23:19
EN: I talked about this.
23:19 - 23:22
EN: The bears who sold that close or below the low of that bar
23:22 - 23:25
EN: were able to get out around breakeven.
23:29 - 23:32
EN: Now, what do you do if you bought above the high of this bar?
Slide 018
Time: 23:30
Bilingual Transcript
23:32 - 23:35
EN: Is this very disappointing?
23:35 - 23:37
EN: Are you thinking, “Oh my gosh, I’ve got to get out”?
23:37 - 23:40
EN: Or are you thinking, “Eh, that’s not all that bearish,
23:40 - 23:41
EN: we should get a couple legs up;
23:41 - 23:44
EN: I’m going to keep a stop below this bar and take my chances”?
23:47 - 23:49
EN: Possible Small Pullback Bull Trend.
23:49 - 23:50
EN: Right now we have a Trading Range.
23:50 - 23:52
EN: We have a Double Bottom and a Double Top.
23:52 - 23:53
EN: It’s BreakOut Mode.
23:53 - 23:55
EN: But we’re Always In Long from this,
23:55 - 23:58
EN: and now we have a Higher Low Major Trend Reversal.
23:58 - 24:01
EN: So it’s slightly more bullish than bearish.
24:05 - 24:07
EN: You can call it a Triangle.
24:07 - 24:11
EN: We have three lows – one, two, and three – and two highs and a Trading Range.
24:11 - 24:14
EN: We have Lower High, Higher Low, Higher Low.
24:15 - 24:16
EN: BreakOut Mode.
24:16 - 24:18
EN: But slightly more bullish.
24:21 - 24:25
EN: That’s not a good-looking sell, and if it’s not a good-looking sell,
24:25 - 24:27
EN: there probably will be buyers below.
24:27 - 24:32
EN: So limit order bulls would place a limit order to buy at the low of that bar
24:32 - 24:33
EN: and put a stop down here.
24:33 - 24:35
EN: They might buy more a point or two lower.
Slide 019
Time: 24:40
Bilingual Transcript
24:40 - 24:43
EN: The bulls are hoping this is the start of a bull trend.
24:43 - 24:45
EN: They see this as a pullback.
24:45 - 24:47
EN: We now have an ioi.
24:47 - 24:49
EN: We have an outside bar and then an inside bar.
24:50 - 24:55
EN: The bar before an outside bar is always an inside bar, so it’s an ioi.
24:55 - 24:59
EN: It’s another BreakOut Mode pattern like an ii over here.
24:59 - 25:01
EN: It’s a bull bar closing near its high.
25:01 - 25:03
EN: When you have these small BreakOut Mode patterns
25:03 - 25:06
EN: and the third bar is a bull bar closing near its high,
25:07 - 25:08
EN: it’s better not to look to sell.
25:08 - 25:10
EN: It’s better only to look to buy.
25:10 - 25:14
EN: And here, a bar closing on its low below the Moving Average,
25:14 - 25:18
EN: it’s better only to look to sell below and not buy above.
25:18 - 25:21
EN: And now we’re above the Moving Average and we have an ioi
25:21 - 25:25
EN: and a bull bar closing near its high, so it’s a stop order buy above that high.
25:25 - 25:28
EN: We’re still in a Triangle, and we could stay more sideways,
25:28 - 25:30
EN: but it’s more bullish than bearish.
25:30 - 25:33
EN: If you take that buy above that bar,
25:33 - 25:35
EN: your stop is still probably below this low.
25:39 - 25:42
EN: The limit order bulls who bought at the low of that bar,
25:42 - 25:44
EN: they got filled over here.
25:44 - 25:46
EN: They could scalp out right here.
25:47 - 25:48
EN: They could also hold long.
25:53 - 25:58
EN: Again, as I said, this was an ioi, an outside bar followed by an inside bar.
25:58 - 26:02
EN: So the bar before the outside bar has to be inside.
26:02 - 26:05
EN: If this is outside, the bar before it has to be inside.
26:07 - 26:09
EN: We’re still on the Double Bottom here.
26:09 - 26:12
EN: We have the buy above the Double Bottom, and this is a pullback.
26:12 - 26:13
EN: It’s a bull flag.
26:13 - 26:16
EN: The bulls are hoping it’s a Small Pullback Bull Trend,
26:16 - 26:21
EN: so a bull trend where you get a small pullback, a bar or two, not too low,
26:21 - 26:23
EN: and you go up, and then another small pullback and you go up.
26:25 - 26:28
EN: Can you buy above the top of that ioi?
26:28 - 26:30
EN: I think it’s okay.
26:30 - 26:31
EN: It’s closing above the Moving Average.
26:31 - 26:33
EN: We’re Always In Long.
26:33 - 26:37
EN: The problem you have is you’re buying at the top of a Trading Range,
26:37 - 26:39
EN: top of a Triangle, and that’s somewhat lower probability.
26:42 - 26:44
EN: Now what do you do?
26:44 - 26:46
EN: We have another ii.
Slide 020
Time: 26:45
Bilingual Transcript
26:46 - 26:50
EN: Pair of inside bars, and it’s also an ioii.
26:50 - 26:55
EN: So we still have the ioi here, and now it’s ioii.
26:55 - 26:59
EN: It doesn’t matter that it’s now an inside bar; it’s still a BreakOut Mode pattern.
26:59 - 27:01
EN: It’s a bear bar closing near its low,
27:01 - 27:05
EN: so you will start to get some bears selling below the low of that bar.
27:05 - 27:08
EN: But we still have a bull bar closing near its high.
27:08 - 27:11
EN: You’ll get bulls buying above the high of that bar.
27:11 - 27:14
EN: Even though this bar is a bear bar, this bar is a pretty good bull bar.
27:14 - 27:15
EN: It’s BreakOut Mode.
27:15 - 27:19
EN: Traders will buy above that bull bar, which is also the high of that bear bar,
27:19 - 27:21
EN: and they’ll sell below that bar.
27:21 - 27:23
EN: Two legs up – one, pullback, two.
27:23 - 27:25
EN: Two legs up – one, pullback, two.
27:25 - 27:28
EN: Remember, down here I said the minimum goal for the bulls
27:28 - 27:31
EN: was a couple legs sideways to up, and that’s what we have.
27:31 - 27:32
EN: One, pullback, two.
27:32 - 27:36
EN: Right now it’s still on the buy above this and the buy above that.
27:36 - 27:39
EN: It’s slightly more bullish than bearish.
27:42 - 27:48
EN: It could not be going sideways if it was 60% or 70% certain that we were going up.
27:48 - 27:51
EN: It’s better than 50%, but not 60%.
27:54 - 27:56
EN: Now, can you take that sell?
Slide 021
Time: 27:55
Bilingual Transcript
27:56 - 27:57
EN: You can.
27:57 - 27:59
EN: The bars are pretty small.
27:59 - 28:02
EN: You might try to scalp for 2 points and may switch to 1 point
28:02 - 28:07
EN: since we’ve been in a Tight Trading Range for 8 bars here, from here to here.
28:07 - 28:09
EN: Not much profit potential.
28:09 - 28:14
EN: If you did sell below that bar, you’re probably disappointed by this.
28:14 - 28:16
EN: If you sold below it, it fell 6 ticks.
28:17 - 28:22
EN: If you’re scalping for 1 point, it has to fall 6 ticks to make 1 point.
28:22 - 28:26
EN: You sell 1 tick below the bear bar, it has to go 4 more ticks
28:26 - 28:30
EN: to reach your limit order, and it has to go 1 more tick to fill your limit order.
28:31 - 28:32
EN: It did exactly that.
28:32 - 28:34
EN: This low is exactly 6 ticks below that.
28:34 - 28:38
EN: So the bears who sold that were able to scalp out for 1 point.
28:38 - 28:39
EN: Now, what about the bulls?
28:39 - 28:41
EN: Will they buy above this bar?
28:41 - 28:42
EN: Well, we have consecutive bear bars.
28:42 - 28:44
EN: You could redraw the Triangle.
28:44 - 28:49
EN: Instead of one, two, three, it might now be one, two, and three.
28:49 - 28:53
EN: But 2 bear bars, not a very good stop entry buy.
28:53 - 28:57
EN: Because it’s a Tight Trading Range, you will get limit order traders buying.
28:57 - 28:59
EN: They might not buy the low of this bar,
28:59 - 29:03
EN: but they might buy a point or so below – 1 point below, 2 points below
29:03 - 29:06
EN: – betting that we’re going to continue to reverse.
29:11 - 29:15
EN: The bears who sold below the ii, the bars are getting smaller.
29:15 - 29:18
EN: If they scalped for 1 point, they would’ve made their 1 point.
29:23 - 29:27
EN: They would’ve gotten out here, 1 tick below the low of the bar.
29:29 - 29:33
EN: That tail on the bottom of the bar tells you that the bears
29:33 - 29:35
EN: who sold below that bear bar scalped.
29:35 - 29:37
EN: They scalped for 1 point.
29:37 - 29:38
EN: It fell 6 ticks and reversed up.
29:38 - 29:41
EN: That tells you there were a lot of buyers down there.
29:41 - 29:44
EN: Most of those buyers are bears scalping out.
29:44 - 29:49
EN: Some of those buyers are bulls buying a point or so below the low of that bear bar,
29:49 - 29:52
EN: betting that the bears would scalp out – and also,
29:52 - 29:53
EN: because it’s a Tight Trading Range,
29:53 - 29:57
EN: traders will buy below things and scale in lower.
29:59 - 30:01
EN: You can redraw the Triangle.
30:04 - 30:08
EN: Still a Tight Trading Range, since over here, but a bull bar.
Slide 022
Time: 30:05
Bilingual Transcript
30:08 - 30:09
EN: Not a good sell below.
30:09 - 30:10
EN: A bear bar.
30:10 - 30:12
EN: Not a good buy above.
30:12 - 30:17
EN: Probably more limit order traders, buying a point or two below a prior bar,
30:17 - 30:21
EN: selling a point or two above a prior bar, and trying to scalp out for 1 point.
30:24 - 30:27
EN: Stop order bulls, if they bought, they would’ve made 1 point.
30:28 - 30:32
EN: I’m not sure that it’s worth buying with a stop after 2 bear bars
30:32 - 30:33
EN: in the top of a Tight Trading Range.
30:39 - 30:41
EN: Big tail on top, so another reversal down.
30:41 - 30:43
EN: You can redraw the Triangle.
30:43 - 30:47
EN: Still BreakOut Mode, but I think we’re still Always In Long.
30:47 - 30:49
EN: A good reversal here and a good reversal here.
30:50 - 30:52
EN: This is not quite as good as that.
30:52 - 30:54
EN: This is not quite as good as that.
30:54 - 30:57
EN: So I think it’s still slightly more bullish.
30:57 - 31:00
EN: As I said, it’s barely better than 50/50.
31:01 - 31:04
EN: We could not be going sideways in a tight range if one side
31:04 - 31:08
EN: or the other side had a 60% or 70% chance of a breakout.
31:08 - 31:12
EN: If it was so obviously bullish or so obviously bearish,
31:12 - 31:13
EN: it would be breaking out right now.
31:13 - 31:15
EN: We would not be going sideways like this.
31:19 - 31:21
EN: Very good bar.
Slide 023
Time: 31:20
Bilingual Transcript
31:21 - 31:22
EN: Why?
31:22 - 31:23
EN: Well, look at the high of the bar.
31:23 - 31:26
EN: First of all, it’s a big bull bar closing on its high.
31:26 - 31:29
EN: Consecutive bull bars, and it closed above this high
31:29 - 31:33
EN: and it closed above that high, and it closed above these bars.
31:33 - 31:36
EN: So it closed above the high of the past 15 bars or so.
31:36 - 31:37
EN: Pretty good breakout bar.
31:37 - 31:40
EN: Some bulls will buy the close, some will buy on a stop above the high,
31:40 - 31:43
EN: hoping that we’re finally going up.
31:43 - 31:47
EN: We have a Double Bottom, a slightly Higher Low Major Trend Reversal,
31:47 - 31:49
EN: and a Trading Range.
31:49 - 31:52
EN: Couple legs down – one, pullback, two.
31:52 - 31:55
EN: Not a good buy signal bar, but now we’re breaking to the upside.
31:55 - 32:00
EN: When you’re looking to buy, you either want good-looking buy signal bars
32:00 - 32:03
EN: with good context – it has to make sense when you look to the left
32:03 - 32:05
EN: – or you wait for a strong breakout.
32:06 - 32:10
EN: This is an example of a bad buy signal bar, but a good breakout.
32:16 - 32:19
EN: Closed above all of these bars, all the way out here.
32:19 - 32:22
EN: That increases the chances that we’re going higher,
32:22 - 32:24
EN: so you will get bulls buying above the high of that bar.
32:24 - 32:27
EN: Some bulls will wait to see the follow-through bar,
32:27 - 32:30
EN: and if the follow-through bar is a big bull bar closing near its high,
32:30 - 32:33
EN: or even a small bull bar, they’ll buy the close of the bar,
32:33 - 32:35
EN: or they’ll buy above the high of the bar.
32:35 - 32:40
EN: Bars getting bigger again, so if you’re scalping, you go back to 2 points.
32:44 - 32:47
EN: Consecutive big bull bars closing on their highs.
Slide 024
Time: 32:45
Bilingual Transcript
32:47 - 32:49
EN: Two closes above the Trading Range.
32:49 - 32:51
EN: We’re probably going up.
32:51 - 32:54
EN: This is clearly a resumption of the bull trend,
32:54 - 32:56
EN: and it’s the strongest move up or down all day.
32:56 - 32:59
EN: So it’s Buy The Close, buy the market.
32:59 - 33:00
EN: You buy above bars.
33:05 - 33:07
EN: You can swing or scalp.
33:08 - 33:09
EN: It’s a bull surprise.
33:09 - 33:13
EN: This is a surprise, but now we have 2 big bull bars closing near their highs.
33:13 - 33:15
EN: That’s even more of a surprise.
33:15 - 33:19
EN: A surprise typically is going to have at least a couple legs sideways to up.
33:19 - 33:22
EN: Traders will buy the first attempt to reverse down,
33:22 - 33:24
EN: confident that we’ll get a second leg up.
33:27 - 33:31
EN: If you bought above the high of this bar, you could scalp out for 2 points,
33:31 - 33:33
EN: or you could hold for a swing.
33:34 - 33:38
EN: Once this bar closes, it’s another buy above the high of the bar
33:38 - 33:40
EN: or at the market as soon as the bar closes.
33:41 - 33:46
EN: If you bought above this bar and did not scalp out, you could buy more here.
33:46 - 33:51
EN: You could take several buys on the way up if your account size is big enough,
33:51 - 33:54
EN: and if you’re trading a small enough position.
33:57 - 33:59
EN: A bull bar, but a smaller bull bar.
33:59 - 34:02
EN: However, it’s still closing on or near its high
Slide 025
Time: 34:00
Bilingual Transcript
34:02 - 34:04
EN: and we’re breaking out to a new high of the day.
34:04 - 34:07
EN: It’s still Buy The Close, Buy The Market as soon as the bar closes
34:07 - 34:09
EN: or buy above the high of the bar.
34:09 - 34:13
EN: But possible Double Top here, so we might get some profit-taking soon.
34:18 - 34:20
EN: Bulls could buy above the high of that bar.
34:20 - 34:22
EN: They could buy above the high of this bar.
34:24 - 34:25
EN: Disappointment.
34:25 - 34:28
EN: So if you bought above the high of this bar and you did not scalp out,
Slide 026
Time: 34:25
Bilingual Transcript
34:28 - 34:30
EN: or if you bought above the high of this bar
34:30 - 34:35
EN: and you see a small bear doji reversing down, possible Double Top,
34:35 - 34:39
EN: a lot of the bulls will get out and then wait for the next buy signal.
34:39 - 34:40
EN: You don’t have to.
34:40 - 34:42
EN: We have 4 bull bars, a bull surprise.
34:42 - 34:44
EN: We should get a second leg up.
34:44 - 34:45
EN: You could use a wider stop.
34:46 - 34:52
EN: My general rule on the 2-minute chart is get out a tick below a strong bear bar;
34:52 - 34:57
EN: get out 4 ticks or so below a bull bar or a weak bear bar.
34:57 - 35:00
EN: So you might get out 4 ticks below that.
35:00 - 35:01
EN: What about shorting?
35:01 - 35:02
EN: A big Low 2.
35:02 - 35:05
EN: One leg up, pullback, second leg up.
35:05 - 35:06
EN: A Double Top.
35:06 - 35:07
EN: This is too strong.
35:07 - 35:08
EN: Remember, it’s a bull surprise.
35:08 - 35:10
EN: We should get a second leg up,
35:10 - 35:13
EN: and therefore I would not be selling below that bar.
35:16 - 35:18
EN: Some bulls bought above the high of the bar.
35:18 - 35:21
EN: They’re disappointed by the bar when it closed,
35:21 - 35:23
EN: and they might try to get out breakeven.
35:28 - 35:30
EN: They could exit breakeven.
35:31 - 35:33
EN: Once this bar closes, they could place a limit order to get out breakeven
35:33 - 35:35
EN: or with a tick or two loss.
35:36 - 35:40
EN: Or they could exit a point or two below the low of that bar.
35:42 - 35:45
EN: Chances are there’ll be buyers below that bar.
35:45 - 35:48
EN: It’s not a good-looking sell, and we have 4 bull bars,
35:48 - 35:50
EN: 3 closing on or near their highs.
35:50 - 35:53
EN: We should go higher, so there probably are more buyers
35:53 - 35:54
EN: than sellers below that bar.
35:54 - 35:59
EN: So some bulls will actually buy at that low or buy a point lower, 2 points lower.
36:04 - 36:09
EN: Higher High, so it’s a Higher High Double Top with a bear bar,
36:09 - 36:13
EN: but a 6-bar bull Micro Channel and very good reversal up.
36:13 - 36:17
EN: We should get a second leg up, so I would not be shorting yet.
Slide 027
Time: 36:20
Bilingual Transcript
36:24 - 36:26
EN: Now we have a 7-bar bull Micro Channel.
36:27 - 36:31
EN: The bull bar is closing in its upper half, but these 2 bars are small.
36:31 - 36:32
EN: The bodies are shrinking.
36:32 - 36:35
EN: Here, smaller, bear bar, small bar.
36:35 - 36:37
EN: So we’re getting some profit-taking here,
36:37 - 36:41
EN: and this is less reliable Buy The Close or buy above the high of the bar.
36:42 - 36:44
EN: We might be entering a Tight Trading Range.
36:44 - 36:47
EN: You could still buy, but you probably need a wide stop.
36:48 - 36:51
EN: A wide stop means different things to different people.
36:51 - 36:54
EN: In general, when you’re scalping for 2 points,
36:54 - 36:58
EN: it’s probably better to get out a point or two below a bull bar
36:59 - 37:02
EN: and a tick below a bear bar closing below its midpoint
37:02 - 37:04
EN: and having more than a 1 tick bear body.
37:09 - 37:10
EN: We have a decent bear bar.
Slide 028
Time: 37:10
Bilingual Transcript
37:10 - 37:13
EN: It’s reasonable to get out below the low of the bar.
37:13 - 37:15
EN: It did not go below the low of the bar.
37:16 - 37:17
EN: Why not?
37:17 - 37:19
EN: The bulls knew if it went below the low of that bar,
37:19 - 37:21
EN: a lot of the bulls would start to exit.
37:21 - 37:23
EN: So what did the bulls do?
37:23 - 37:25
EN: As soon as that bear bar closed, they bought.
37:25 - 37:28
EN: They did not want the next bar to go below its low.
37:28 - 37:29
EN: They don’t want to get out.
37:29 - 37:31
EN: They think we’re going to get a second leg up.
37:32 - 37:35
EN: The bulls who bought here, the bulls who bought above that bar got filled here.
37:35 - 37:37
EN: They could scalp out here.
37:37 - 37:41
EN: Now, this might be a third leg up – one, two, three.
37:41 - 37:44
EN: So we might get some profit-taking.
37:44 - 37:48
EN: There’s no reason to sell yet, but we’re getting bear bars here.
37:49 - 37:53
EN: We might start to get limit order bears – this is a High 1 bull flag.
37:53 - 37:55
EN: We have a bear bar here, a second bear bar.
37:55 - 37:57
EN: So you might start to get some bears selling,
37:57 - 38:01
EN: either at the high of this bar or a point or two above the high of the bar,
38:01 - 38:05
EN: betting that these bars are a sign that the market’s getting exhausted
38:05 - 38:07
EN: and we might enter a Trading Range.
38:16 - 38:19
EN: High 1, but 2 bear bars and a decent size bear bar
38:19 - 38:22
EN: and a third leg up – one, two, three.
38:22 - 38:26
EN: Remember, the bulls are looking for a second leg up after this.
38:26 - 38:27
EN: They have it.
38:27 - 38:29
EN: They might get a third and fourth and fifth leg up,
38:29 - 38:31
EN: but at a minimum they’re looking for a second leg up.
38:31 - 38:35
EN: Also, we spent a lot of time going sideways here.
38:35 - 38:38
EN: This might not end up as a very strong bull trend.
38:38 - 38:40
EN: It could soon enter a Trading Range.
Slide 029
Time: 38:44
Bilingual Transcript
38:47 - 38:51
EN: Now, some bears will sell that high and start to scale in higher,
38:51 - 38:56
EN: a point or two higher, betting that we’ll come back to these lows,
38:56 - 39:00
EN: that this is an area of agreement – 3 sideways bars and we have a Wedge.
39:01 - 39:05
EN: In general, when the market’s in a reasonably strong bull trend,
39:05 - 39:08
EN: you should not be selling with limit orders.
39:08 - 39:12
EN: Sometimes I’ll do it, but you have to be really careful.
39:12 - 39:16
EN: You have to be confident that this is not going to keep going up.
39:16 - 39:20
EN: There has to be some reason for you to think it’s not going to keep going up.
39:20 - 39:23
EN: Well, we had a lot of bear bars here, a Trading Range here,
39:23 - 39:26
EN: and now we’re starting to get bear bars here and it’s a third leg up.
39:26 - 39:32
EN: So some bears will sell that and sell more higher, or instead of selling here,
39:32 - 39:34
EN: they might start to sell 2 points higher.
39:38 - 39:42
EN: Traders don’t like to reverse, so the traders selling here
39:42 - 39:45
EN: are not bulls taking profits and reversing.
39:45 - 39:49
EN: These are simply bears betting that we’ll come down far enough for a scalp.
39:53 - 39:55
EN: Bear bar closing on its low.
Slide 030
Time: 39:54
Bilingual Transcript
39:55 - 39:56
EN: It’s actually an ioi.
39:56 - 39:59
EN: This is an outside bar, and now we have an inside bar.
39:59 - 40:01
EN: So theoretically it’s a sell below there.
40:01 - 40:06
EN: It’s a Low 2 top – Low 1, Low 2, plus we have a Wedge – one, two, and three.
40:07 - 40:09
EN: I’m not ready to sell with a stop.
40:09 - 40:12
EN: It’s still a Small Pullback Bull Trend, a Tight Bull Channel.
40:12 - 40:14
EN: For the bulls, this is a High 1,
40:14 - 40:17
EN: but we’re starting to get bear bars – here, here, here.
40:17 - 40:18
EN: The count may change.
40:18 - 40:22
EN: So it might be this is Leg 1, pullback, Leg 2, pullback, Leg 3.
40:22 - 40:25
EN: So instead of a Wedge being here – one, two, three
40:25 - 40:27
EN: – this might have started the count over again,
40:27 - 40:30
EN: so this is one, pullback, two, pullback, three.
40:30 - 40:36
EN: In general, if it’s a clear third leg up and you’re starting to get bear bars,
40:36 - 40:39
EN: you only take the buy if you can make very quick decisions,
40:39 - 40:42
EN: because very often it’ll only go up a bar or two
40:42 - 40:45
EN: and then reverse and get a couple legs down.
40:50 - 40:54
EN: Some bears sold this high, sold more higher, or they simply sold higher,
40:54 - 40:58
EN: and it had to drop 1 tick below the high of that bar for them to get out
40:58 - 41:02
EN: with a profit on their higher sell and breakeven on their first sell – and it did.
41:02 - 41:04
EN: This went just 1 tick below that,
41:04 - 41:08
EN: so the bears could get out with a profit on that sell and breakeven on that sell.
41:10 - 41:12
EN: Bears are starting to make money.
41:12 - 41:15
EN: If bears are starting to make money in a bull trend,
41:16 - 41:18
EN: the bull trend is becoming weaker,
41:18 - 41:21
EN: and it increases the chances that we’ll get a Trading Range soon.
41:25 - 41:30
EN: A High 1, but a third leg up – one, pullback, two, pullback, three.
Slide 031
Time: 41:25
Bilingual Transcript
41:30 - 41:33
EN: It’s a credible buy, but if you’re a bull who bought above that bar
41:33 - 41:36
EN: and you have this for your entry bar and then you have this,
41:36 - 41:39
EN: a lot of the bulls will try to get out around breakeven,
41:39 - 41:41
EN: thinking that we might start to pull back soon.
41:47 - 41:49
EN: 4 small bars in a Tight Trading Range
41:49 - 41:52
EN: and then 3 bars in a Tight Trading Range here.
41:52 - 41:55
EN: This is not good stop order trading.
41:55 - 41:58
EN: It’s more of a limit order market, a Tight Trading Range.
Slide 032
Time: 42:00
Bilingual Transcript
42:01 - 42:02
EN: And that’s what we did.
42:02 - 42:03
EN: We went sideways there.
42:05 - 42:06
EN: Tight Trading Range.
42:06 - 42:07
EN: It’s a limit order market.
42:07 - 42:10
EN: Traders buy below, buy more lower, scalp out.
42:10 - 42:13
EN: They sell above, sell more higher, and scalp out.
42:13 - 42:16
EN: Most traders should not trade in a Tight Trading Range,
42:16 - 42:18
EN: especially when the bars are small like this.
42:18 - 42:19
EN: They’ll lose money.
Slide 033
Time: 42:25
Bilingual Transcript
42:27 - 42:31
EN: This is about 2 hours of trading, and in this 2 hours,
42:31 - 42:34
EN: if you added up all the wins and losses,
42:34 - 42:37
EN: you would’ve ended up with 18 points in 2 hours.
42:37 - 42:42
EN: That’s about $900 in the Emini, and then you subtract out commissions.
42:42 - 42:43
EN: But if you traded it perfectly,
42:43 - 42:47
EN: you could’ve made $900 in a couple hours per contract.
42:53 - 42:59
EN: On the 2-minute chart, there are at least 50 or more reasonable scalps each day.
43:00 - 43:04
EN: A really aggressive scalper might take half of them or a third of them.
43:05 - 43:10
EN: Most traders who trade very intensely and aggressively do it for an hour or two
43:10 - 43:13
EN: at a time because it just becomes too stressful.
43:13 - 43:14
EN: They get tired.
43:14 - 43:16
EN: They have a hard time focusing.
43:16 - 43:17
EN: They lose their edge.
43:17 - 43:19
EN: They can’t make decisions fast enough.
43:19 - 43:23
EN: If they traded well, they already have a lot of profit, so there’s less incentive.
43:27 - 43:31
EN: Remember, when you’re trading, you have two goals.
43:31 - 43:34
EN: One is to make money and the other is to be happy.
43:35 - 43:38
EN: You’re planning to do this for a career, a long, long time,
43:38 - 43:41
EN: and you cannot be stressed out all the time.
43:41 - 43:44
EN: If you try to take every trade, you’ll be miserable.
43:44 - 43:46
EN: You won’t be able to do it.
43:46 - 43:51
EN: You can go on YouTube and watch that episode from “I Love Lucy” back in the 1950s,
43:52 - 43:56
EN: “I Love Lucy and the Chocolate Factory” episode,
43:56 - 44:00
EN: and it gives you an idea of what happens when you try to do too much.
44:00 - 44:04
EN: It’s only a 2-minute clip, so you might get a kick out of it.
44:07 - 44:10
EN: There are a lot of choices available for scalpers, right?
Slide 034
Time: 44:10
Bilingual Transcript
44:10 - 44:12
EN: There are different ways to do it.
44:12 - 44:17
EN: But this is one reasonable version of what scalpers would do.
44:17 - 44:19
EN: Again, most scalpers are not going to take all these trades,
44:20 - 44:24
EN: but a good scalper will take a lot of them and have a very high winning percentage.
44:27 - 44:28
EN: This is theoretical.
44:28 - 44:30
EN: It’s good practice to think about setups.
44:30 - 44:34
EN: It’s good to get quick at recognizing patterns.
44:34 - 44:39
EN: Most traders will make more money swing trading and entering with stops.
44:39 - 44:43
EN: However, there are some traders who are extremely good scalpers.
44:43 - 44:49
EN: They win 80%, 90% of the time and they might take 10, 20, 30 trades a day,
44:49 - 44:50
EN: and they can make a very good living.
44:51 - 44:56
EN: Most traders will be stressed out and not enjoy doing it.
44:57 - 45:02
EN: Most traders can’t do it, but those who can, a lot who can, will get stressed out.
45:02 - 45:07
EN: It’s okay to do it in spurts for a half hour or an hour or so,
45:07 - 45:10
EN: but to try to do it for a living, you’re not going to be able to do it.
45:10 - 45:13
EN: It’s much better to look for swing trades, enter with stops.
45:13 - 45:15
EN: Much less stress, much more profit.
45:19 - 45:20
EN: I scalp a lot.
45:20 - 45:24
EN: A lot of times I’ll take a trade that is a possible swing trade,
45:24 - 45:29
EN: but it disappoints me as soon as I enter, and I’ll end up scalping out.
45:29 - 45:32
EN: I have never scalped perfectly for an entire day,
45:32 - 45:35
EN: and I’ve been doing this now for close to 35 years.
45:35 - 45:39
EN: I’ve never met anyone who has scalped perfectly for an entire day.
45:39 - 45:42
EN: But if you’re a good scalper, you can make a lot of money
45:42 - 45:45
EN: if you take a lot of trades and manage them well.
45:50 - 45:52
EN: Again, I’m Al Brooks.
45:52 - 45:54
EN: Thank you so much for your attention.
45:54 - 45:56
EN: I hope that you find this video helpful.