End-of-Day Bull and Bear Traps - Al Brooks

Summary

En este video, Al Brooks explora el concepto de 'trampas' en el trading, específicamente trampas al final del día. Expone cómo las trampas ocurren cuando un breakout no se sostiene y se reverte en lugar de continuar en la dirección iniciada. Analiza diferentes escenarios, incluyendo trampas en tendencias alcistas y bajistas, y cómo los traders pueden identificar y utilizar estas situaciones para tomar decisiones más informadas en el mercado. Brooks enfatiza la importancia del contexto y la necesidad de observar la conducta del mercado leading up to the breakout para predecir con mayor precisión el resultado de un potencial movimiento.

Takeaways

• 🔍 Un 'trampa' en el mercado es simplemente un breakout que falla.
• 🌟 Las 'trampas' pueden ocurrir al final del día, en un rango de trading o en una tendencia alcista o bajista.
• 📉 Las 'trampas alcistas' son rallys al final del día que parecen continuar subiendo pero en realidad se revierten hacia abajo.
• 🔻 Las 'trampas bajistas' son sell-offs al final del día que parecen continuar bajando pero en realidad se revierten hacia arriba.
• 📊 La regla del 80%: Si el mercado está en un rango de trading, el 80% de las intentos de breakout fallarán.
• 📈 En un trend, el 80% de los intentos de reversión de la tendencia fallarán, incluso si el intento de reversión parece muy fuerte.
• 🛑 Si ves una barra de tendencia en el gráfico, no es suficiente con solo ver el breakout, debes conocer el contexto previo al breakout.
• 🔄 Las trampas ocurren cuando hay un cambio repentino en la dirección del mercado que hace que los traders muestren una señal de compra o venta, pero la tendencia se revierte en su contra.
• 📌 Los traders deben estar alerta a las barras que cierran cerca de sus niveles mínimos o máximos, ya que pueden ser indicadores de trampas.
• ⏰ Las trampas pueden ocurrir en cualquier momento del día, pero se enfocan en los que suceden al final del día debido a la toma de decisiones de profit taking.
• 🔄 Si bien las trampas pueden engañar a los traders, también pueden ser señales de un cambio real en la tendencia del mercado.

Q & A

¿Qué es un 'trap' en el contexto del trading?

Un 'trap' es un breakout que falla. Se refiere a una situación en la que parece que comienza una nueva tendencia, pero en realidad se reverte en la dirección opuesta.

Cuál es la diferencia entre un 'bull trap' y un 'bear trap'?

Un 'bull trap' es un rally al final del día que parece continuar hacia arriba pero en realidad se reverte hacia abajo, mientras que un 'bear trap' es un sell-off al final del día que parece continuar hacia abajo pero en realidad se reverte hacia arriba.

¿Qué sucede si el mercado está en un rango de trading?

Si el mercado está en un rango de trading, el 80% de las veces los intentos de breakout fallarán y se mantendrá el rango de trading continuo.

Qué es la 'regla del 80%' mencionada por Al Brooks?

La 'regla del 80%' de Al Brooks indica que si el mercado está en un rango de trading, el 80% de las veces los intentos de breakout fallarán, y si está en una tendencia y está tratando de revertirse, el 80% de los intentos de reversión de la tendencia fallarán.

¿Cómo se identifica un 'trap' en un gráfico de precios?

Para identificar un 'trap' en un gráfico de precios, es necesario observar no solo los breakouts, sino también el contexto que los precede. Si hay una tendencia alcista y se produce un rally que parece ser un inicio de una tendencia bajista, pero en realidad continúa subiendo, ese rally podría ser un 'bull trap'. Del mismo modo, si hay una tendencia bajista y se produce un sell-off que parece ser un inicio de una tendencia alcista, pero en realidad continúa bajando, ese sell-off podría ser un 'bear trap'.

¿Qué es un 'trend bar' y cómo se relaciona con un 'trap'?

Un 'trend bar' es un candlestick que representa una dirección de tendencia específica, ya sea alcista o bajista. Un 'trap' se produce cuando se espera que un 'trend bar' continúe en esa dirección, pero en cambio se reverte en la dirección opuesta.

¿Qué es un 'gap' en el trading?

Un 'gap' en el trading se refiere a una brecha en el gráfico de precios donde no hay transacciones en un cierto rango de precios. Esto puede ocurrir debido a noticias o eventos que afectan al mercado y pueden indicar un cambio en la tendencia o una posible oportunidades de trading.

¿Qué es un 'wedge' y cómo se relaciona con los 'traps'?

Un 'wedge' es una forma de gráfico que se forma cuando los precios se están moviendo en una cierta dirección, pero la volatilidad está disminuyendo, creando una apariencia de forma de cinta. Esto puede indicar un posible cambio en la tendencia o una señal de 'trap' si la forma del 'wedge' se rompe en la dirección opuesta a la tendencia actual.

¿Qué es un 'double top' o 'double bottom' en el trading?

Un 'double top' o 'double bottom' es un patrón de gráfico que se forma cuando los precios tocan dos veces un nivel específico de resistencia o soporte, respectivamente. Estos patrones pueden ser indicativos de un posible cambio en la tendencia o una señal de 'trap' si el segundo toque no rompe el nivel y los precios se reverten en la dirección opuesta.

¿Cómo los traders pueden evitar caer en 'traps'?

Los traders pueden evitar caer en 'traps' analizando cuidadosamente el contexto y la formación de los gráficos, utilizando herramientas de análisis técnico y manteniendo un stop loss adecuado para minimizar las pérdidas. También es importante ser consciente de las noticias y eventos que pueden afectar el mercado y adaptarse rápidamente a los cambios en la tendencia.

¿Qué es 'short covering' y cómo se relaciona con los 'traps'?

El 'short covering' es cuando los traders que han tomado posiciones de venta (short) compran de vuelta sus posiciones para cerrarlas, generalmente después de que el precio ha subido y están tratando de minimizar sus pérdidas. Esto puede causar un rally o una caída repentina en los precios, y si los traders esperan una continuación de esta acción pero en realidad se reverte, pueden haber caído en un 'trap'.

Outlines

00:00

📉 Análisis de trampas al final del día en el mercado

Se discute el concepto de trampa en el contexto del trading, definiendo una trampa como un breakout que falla. Se enfoca en trampas que ocurren cerca del final del día, distinguiendo entre trampas de alcista (bull traps) y trampas de bajista (bear traps). Se menciona la importancia de entender el contexto que precede al breakout para prever si será una trampa o un cambio de tendencia. Se aplica una regla del 80% en relación con las probabilidades de éxito de los intentos de breakout en rango de trading y en tendencias.

05:02

📈 Ejemplos de trampas y análisis de situaciones de trading

Se presentan ejemplos de trampas en gráficos de precios, ilustrando cómo las trampas pueden manifestarse en diferentes contextos de trading. Se describen situaciones en las que los traders pueden sentirse atrapados en posiciones de trading adversas, ya sea esperando una continuación de una tendencia que no ocurre o vendiendo demasiado temprano en una tendencia que continúa. Se enfatiza la importancia de identificar las señales correctas para evitar these trampas.

10:03

💰 Gestión de riesgos y consideraciones estratégicas

Se aborda la gestión de riesgos en el trading, destacando la importancia de no arriesgarse más del 2% o 3% del capital de la cuenta en una sola operación. Se sugiere que en situaciones donde el riesgo es alto, es mejor no tomar la operación y esperar una señal más adecuada. Se discuten estrategias para tomar decisiones en el trading basadas en la observación de patrones de precios y comportamiento del mercado.

15:04

📊 Identificación de patrones de trampas y tendencias en el mercado

Se continúa el análisis de trampas y tendencias en el mercado, identificando patrones como el de un canal de trading en el que los traders esperan una fuerte alza para tomar posiciones. Se discute la importancia de la confirmación de patrones a través de la observación de cierres de precios y la identificación de niveles de soporte y resistencia. Se presentan estrategias para los traders de cómo manejar las posiciones en función de estas observaciones.

20:06

🛑 Reconocimiento de trampas versus inicio de nuevas tendencias

Se explica que aunque las trampas pueden ser comunes en el mercado, también pueden haber situaciones en las que una ralentización en la tendencia actual podría indicar el inicio de una nueva tendencia opuesta. Se discuten estrategias para distinguir entre una trampa y el comienzo de una nueva tendencia, como la observación de la fuerza de seguimiento y la posición relativa a niveles clave de precios.

25:06

📉 Análisis de trampas en diferentes escenarios de trading

Se profundiza en el análisis de trampas en diferentes contextos de trading, incluyendo escenarios en los que las trampas pueden ocurrir en rango de trading y en tendencias. Se discute la importancia de la percepción del mercado y la interpretación de las señales para anticipar movimientos y evitar las trampas. Se presentan ejemplos específicos y estrategias para manejar estas situaciones.

30:11

🤔 Reflexión sobre las trampas y el comportamiento del mercado

Se realiza una reflexión sobre las trampas y cómo pueden ser utilizadas por el mercado para engañar a los traders. Se discute la importancia de estar alerta ante las señales de trampa y de tener en cuenta el comportamiento general del mercado. Se enfatiza la necesidad de una estrategia sólida y la habilidad de adaptarse rápidamente a los cambios en el mercado.

Keywords

💡Traps

En el contexto del video, 'traps' se refiere a situaciones en las que el comportamiento del mercado parece indicar el comienzo de una tendencia, pero en realidad se reverte en la dirección opuesta. Son eventos engañosos que pueden llevar a los traders a tomar decisiones equivocadas, como comprar en un momento en que parece ser el inicio de una tendencia alcista (bull trap) o vender en un momento en que parece ser el inicio de una tendencia bajista (bear trap). El video explica cómo identificar estos traps y cómo pueden ser utilizados para tomar decisiones de trading más informadas.

💡Breakout

Un 'breakout' es un momento en el cual el precio de un activo rompe un nivel de resistencia o soporte previamente establecido. En el video, se discute cómo los breakouts pueden ser engañosos y transformarse en traps. Un breakout exitoso marca el inicio de una nueva tendencia, mientras que un breakout fallido, que es un trap, se revertirá rápidamente y continuará la tendencia previa.

💡Trading Range

Un 'trading range' es un período en el cual los precios de un activo oscilan dentro de un rango específico sin establecer una clara dirección de tendencia. El video destaca la importancia de identificar los trading ranges para entender mejor las probabilidades de que los breakouts sean o no exitosos. Si el mercado está en un trading range, es más probable que los intentos de breakout fallen a menos que haya una clara señal de cambio de tendencia.

💡Bull Trend

Un 'bull trend' se refiere a una tendencia alcista en el mercado donde los precios del activo suben continuamente en un período de tiempo. En el video, se discuten las situaciones en las que un bull trend puede comenzar o continuar, así como los casos en los que un movimiento看似alcista en realidad es un 'bull trap', engañando a los traders en creer que se está iniciando una tendencia alcista mientras que en realidad se revertirá a la baja.

💡Bear Trend

Un 'bear trend' es una tendencia bajista en la que los precios del activo disminuyen de manera continua en un período de tiempo. En el video, se abordan situaciones en las que un bear trend puede comenzar o continuar, y cómo un 'bear trap' puede ocurrir, engañando a los traders en creer que se está iniciando una tendencia bajista, cuando en realidad se revertirá a la alta.

💡Short Covering

El 'short covering' es el proceso en el cual los traders que han vendido corto (es decir, han vendido un activo que no poseen, esperando que su precio disminuya) compran el activo para cubrir sus posiciones abiertas. Esto suele ocurrir cuando un activo comienza a aumentar en precio y los traders cortos quieren minimizar sus pérdidas. En el video, se menciona que el short covering puede ser un factor clave en el inicio de un bull trend, ya que puede indicar una inversión de tendencia.

💡Profit Taking

'Profit taking' es cuando los traders se toman ganancias de posiciones abiertas que están ganando dinero. Es una estrategia común utilizada al final de una tendencia o en momentos en los que los traders sienten que el mercado está sobrevalorado o subvalorado. En el video, se discute cómo el profit taking puede ser una señal de que un breakout no será exitoso y puede resultar en un trap.

💡Moving Average

La 'moving average' es un indicador técnico que se utiliza para suavizar los precios de un activo y mostrar la tendencia a largo plazo. Es calculada tomando el promedio de los precios de ciertas ventanas de tiempo. En el video, se hace referencia a la moving average como un nivel de resistencia o soporte que puede influir en la decisión de los traders de comprar o vender.

💡Support and Resistance

Los niveles de 'support' y 'resistance' son puntos clave en un gráfico de precios que indican áreas donde los precios tienen tendencia a rechazar o aceptar los movimientos de precios. Los niveles de soporte son precios en los que se espera que el precio del activo comience a subir nuevamente, mientras que los niveles de resistencia son precios en los que se espera que el precio comience a bajar. En el video, se discute cómo estos niveles pueden influir en la identificación de traps y breakouts.

💡Double Top and Double Bottom

Un 'double top' y un 'double bottom' son patrones de gráficos que se forman cuando el precio de un activo toca dos veces el mismo nivel de resistencia o soporte, respectivamente. Estos patrones son importantes para prever posibles cambios en la tendencia. En el video, se discute cómo estos patrones pueden ser indicadores de un posible trap o de una continuación de la tendencia existente.

Highlights

定义了交易陷阱（trap）的概念，即看似趋势开始的突破却失败而反转。

专注于讨论在交易日尾声时出现的牛市陷阱（bull traps）和熊市陷阱（bear traps）。

牛市陷阱是交易区间内尾盘的上涨，通常预期会回落，但若继续上涨则为失败的牛市陷阱。

熊市陷阱是尾盘的下跌，预期会继续下跌，但如果反转向上则为失败的熊市陷阱。

根据80%规则，交易区间内的突破尝试通常会失败，而趋势中的反转尝试也会失败。

强调了了解突破前市场情况的重要性，而不仅仅是观察图表上的突破。

讨论了在牛市趋势中，强劲的反转可能导致交易者预期会有进一步的上涨，从而形成陷阱。

解释了熊市趋势中，尾盘的强劲上涨可能是陷阱，预示着熊市趋势的继续。

强调了在交易决策中，观察市场行为和趋势线的重要性。

提到了在市场出现大卖盘时，交易者应预期会有短盖（short covering）的上涨。

讨论了在市场出现牛市陷阱时，交易者如何识别并做出相应的买卖决策。

分析了市场在特定情况下可能出现的“双顶”（double top）或“牛市通道”（bull channel）等形态。

解释了在市场出现熊市陷阱时，交易者如何识别并做出相应的买卖决策。

强调了在市场出现强劲上涨或下跌后，交易者应寻找确认趋势持续性的信号。

讨论了市场在特定情况下可能出现的“牛市旗形”（bull flag）或“熊市旗形”（bear flag）等形态。

总结了如何识别和应对交易中的陷阱，以及如何在市场动态中保持理性和纪律。

Transcripts

I'm al Brooks thank you for well thank

you all for being here and this is the

money show Orlando Florida February 8th

today today I want to talk about end of

the day traps I'll begin by talking

about what I mean by a trap a trap is

simply a breakout that fails I'm going

to be focusing on traps that occur late

in the day I'll begin by talking about

end of the day bull traps a bull trap is

a rally at late in the day that reverses

down sometimes you get a rally late in

the day that it looks like it's going to

reverse down but instead it continues up

and that's a failed end of the day bull

crap next I'll talk about bear traps so

a late sell-off that reverses up

sometimes you get a late sell-off at the

end of the day that actually leads to a

bear trench so it's a failed end of the

day bear trap now what is a trap anytime

you see a trend bar in this case bull

trend bars one bar several bars it's a

breakout and then here are examples of

two breakouts and just looking at the

chart and it seeing the breakouts is not

enough you need to know what took place

leading up to the breakout no and I have

a rule if the markets in a trading range

it resists breaking out 80% of the time

breakout attempts will fail and if it's

in a trend and it's trying to reverse

80% of trend reversal attempts will fail

even if the reversal attempt looks very

strong now look at the two charts on the

Left leading up to the breakout the

markets in our trading range and my 80%

rule says that 80% of the time that's

not going to lead to a trend what it

will do is lead to continuation of the

trading range and no one's really

trapped here so you know this could if

you want you can call it a bull trap if

it reverses down but everybody expects

that this is not going to lead very far

but it's a bull leg and a trading range

and that's what we had it was a rally we

got a little bit more up wedge top

but then back down on the other hand

take a look at this similar to this four

consecutive bull trend bars however

what's different is what led up to this

was a strong bear trend and my 80% rule

is that 80% of the time if you get a

reversal no matter how strong it is if

you have a strong bull trend the

reversal is going to fail this reversal

is strong enough up so that when you

look at it you think there's gonna be at

least a second leg higher right and if

you don't get that second leg higher all

the Bulls who bought up here expecting a

second leg are going going to be trapped

this is an example of an end of the day

trap a very strong reversal strong

enough to make traders think there's

going to be at least a second leg up

maybe a bull trend and instead it

immediately reverses down and the key is

right here as soon as you see a bear bar

closing near it's low especially if you

get a beer bar like this closing very

near its low then this rally is probably

a trap and the bear trend is probably

going to continue down Bulls who bought

got trapped right so the Bulls have

bought this big outside up bar thinking

it was the start of a bull trend

thinking that at least it'll get to the

top of the sell climax here they're

trapped they're trapped into a losing

long and they get out below either of

these spare bars and the Bears who took

profits and get out if they do not sell

again they were trapped out by this

rally they were looking for two legs up

and then planning to sell again and

instead they got trapped they got

trapped out and they had to sell as I

went down so a bull trap traps Bulls

into a bad trade and it traps Bears out

of a good trade and this is a bear

example we have three bear bars two of

them pretty big and here we have four

consecutive bear bars but again context

is important what took place leading up

to the bear breakout in this case it was

a trading range and therefore you know

80% chance this is not going to lead to

a bear trend that it's a bear leg

interest rating range and that you'll

soon get a reversal back up which is

what we did

on the other hand what took place to the

left of this reversal again this is very

similar to this but the context is

important and here you're getting a very

strong sell-off in a bold friend and

it's strong enough to make traders think

there's going to be a second leg down so

their traders selling here expecting at

least a small second leg down however if

you see bull a bull bar at closing

though of its midpoint especially a bull

bar closing near its high you're

probably it's probably a bear trap so

the bear selling here hoping that we'll

get a lower high in a second leg down

got trapped into a losing trade and they

gave up up here and there are also other

Bulls who after seeing four bear bars

they get out and they're trapped out of

a winning trade and they have to buy

again so a bear trap traps bears into a

losing trade and it traps Bulls out of a

winning trade and the key is if you have

a big sell-off and you're thinking it

might get a second leg down but then you

start to see bull bars especially a bull

bar closing there it's high it's

probably a bear trap and the bull trend

will probably resume when you get a bull

trap late in the day

I call it an end of the day bull trap

you know I got three examples here we

have a bear trend and then a series of

bull bars here we have a trading range

in a series of bull bars and here we

have a bull friend in the series of bull

bars all fairly late in the day and

every one of these instances the rally

looks strong enough to have a second leg

up and therefore it's a potential trap

and the key is you get bear bars closing

near their lows and if you do the Bulls

will get out and the Bears will sell

here

in a bear trend day usually in a bear

trend day you're going to get some

profit taking at the end of the day the

Bulls will look at this and say you know

my stop is way up here I don't want to

risk that much we might go under

sideways I might go up into the day I'm

gonna take some profits and they do

and typically they like to wait about

ten bars two legs to see how strong the

Bulls are and if the Bulls are not all

that strong the Bears will sell again

infinitely and the Bulls are very strong

and you get a bull trend the beers are

not going to sell again and one key is

if you start to see bear bars especially

if you have hours closing any of their

lows chances are it's a bull trap and

the market is going to go back down

traders will look to sell below Bear

bars closing their lows so this is a

bull trap and a bear trend this is a

similar bull trap but in this case it's

a trading range so you can get a bull

trap in our trading range so you can get

a bull trap and a bear trend and you got

a very strong reversal it looks like

we're gonna get a second leg up but look

to the left if it has not going far

above a lower high it's probably a

double top and your might pretty cool to

the neckline and fall for a measure move

down same here

look to the left is if there's a

potential double top or even up here it

could be a trap and finally you can get

a bull trap in a bull trend as well a

bull trend and a acceleration upward and

the bull trend but it's an exhaustion

gap an exhaustive move and same

principle you start to get bear bars

especially a pair of bare bars of micro

double top goals will get out bears will

sell I am NOT going to be talking about

bull exhaustion gaps today so I'll be

talking about bull traps and bear trends

and bull traps and trading Rangers not

in Bulls friends they're trying

and late in the day very tight beer

channel the Bulls are going to want to

start to take some profits so you expect

that there's going to be a strong rally

at some point late in the day and in

that short covering

if pears are short and they're covering

their shorts it's short covering and so

it's very you have to expect any kind of

this bear trend there's going to be a

short covering rally and a lot of times

it's strong enough to make traders

believe that there will be at least a

second leg up and this is probably

strong enough to make traders believe

there'll be at least a second leg up

this was the second leg up it was

sideways if you get a bear bar closing

they're slow especially a second sell

signal this is probably going to be a

trap the Bulls will get out below that

bar Bears will sell below that bar or

below this bar or below this bar or this

bar or this bar any Bear bar closing

near slow is a reasonable short when you

get a strong rally and a bear trend

always look to the left at most recent

lower high

if this rally does not go far above that

lower high you got to be thinking it

could be a trap and the market could

resume down traps I'm talking today

about traps that are occurring late in

the day but they can come anytime

anytime during the day sometimes on the

open you'll see an extremely strong

rally and it immediately reverses down

and it's an opening reversal down and

it's the type of bull trout and earlier

this week I think it was Tuesday we had

a sell climax on the open right and it

was a bear trap it immediately reversed

up but today I'm talking about things

that take place late in the day mm-hmm

again this is short covering rally

anytime by the way anytime you see a

bear trend that becomes a bull trend

that always begins with short covering

so every bold trend begins with short

covering profit taking by the Bears and

if the profit taking is aggressive

enough if the Bears are deciding that

and this is it this is the end of the

song they'll buy back their shorts

aggressively Bulls will see that and

they'll buy as well and you can get a

reversal but most of the time are short

covering rally is going to be a trap and

the trend is going to continue down

again if I'm a bowl and I bought this

I'm expecting it to be a minor reversal

stalling around the trading around the

moving average or around a prior high

and I'm going to get out around the

resistance and if I if not around the

resistance I'm definitely going to get a

little beer bar closing near its low so

I'll get out on this bar when it's

raised below that wall and bears some

bears will sell below that bar

especially since it's a micro global top

and a test of the moving average it

failed with the moving average here here

here so it might be failing at the

moving average so beers will sell here

they'll definitely sell here on micro

double top a little too short and they

don't take all of these shorts but all

of them are reasonable entries for bears

we've got a bear trend we got War

Boulevard and this one is even bigger so

it's starting to accelerate up but it's

also right at the moving average and we

could not get above it here here here

here so this could be a trap so short

I'm sorry what that's a 20 bar

exponential moving average okay

I've always used that you can use

anything I had friends I've used all

kinds of nutty things like you know 34

bar weighted moving averages and it

doesn't matter you just pick one moving

average to get accustomed to how the

market behaves around it and you know

just just keep using one thing so we got

some strong buying and anytime you get

buying in a bear trend it's

short-covering

the Bears see maybe a wedge bottom one

was to pause three fours four pause

right and they're concerned maybe it'd

be the low of the day maybe better

lighten up on some shorts and they wait

to see how strong the Bulls can get can

the Bulls get strongly above that moving

average and they did not know the Bulls

took profits the bull scalpers took

profits they were not willing to buy up

here they were selling out of their

lungs here and the bear sensed it so we

got bulls and bears selling you got a

bear bar closing there Oslo this is

probably a bull trap traders will sell

below bear bars closing

their lows and this is what took place

over the rest of the day this is an

unusual day this is a stock market crash

on the five-minute chart and the range

here is actually huge this rally is a

15-point rally even though it does not

look like much but it's a huge rally and

this is an even much bigger sell-off and

then look at this a huge bull bar

closing on its high and a cell climax

and we raced up strongly to the moving

average however we did not break above a

prior lower high and now we have a bear

bar it's closing near its midpoint but

look at this bear bar closing near near

its low bulls will get out below any

bear bar and Bears will start to sell

below bear bars closing near their lows

and this was just a huge bull trap it

was a 62 point rally and the e-mini

alright alright that's a you totally

huge rally it's small compared to the

size of the sell-off

but it's a huge rally and would you

trade it the same bulls are going to buy

above this huge bull reversal and they

hope it breaks strongly above the moving

average but then you get this bear bar

Bulls will get out below the bear bar

and Bears will sell below this bear bar

hoping for a continuation of the bear

trend which they got there are many bear

bars closing on there was any of them is

a reasonable short now I'm ed these bars

are huge it's really important to

realize if you have a huge bar it's a

problem for a lot of traders you know

for example let's say this this might be

a 40-point tall bar right it's a great

buy set up but a 40-point tall bar and

if it's the e-mini that's risking $2,000

of contract right and if you're trading

you should never be risk any more than 2

percent of your account 3 percent of

your account so if you're taking this by

your account has to be you know

basically a hundred thousand dollar

account and if you don't have a hundred

thousand dollar account you cannot take

that buy and what are you do instead

your watch you just you just wait you

know if her trade requires you to risk

more than two percent of your account

three percent of your account you just

wait you just don't take the trade here

we have a gap off pretty good-sized gap

up in a rally in the market went

sideways you can call it a triangle

basically horizontal trading range and

we have a breakout below at the bottom

of the triangle a triangle is a trading

range and we have a reversal up and a

bigger bull bar so it's starting to

accelerate up but always look to the

left okay

is it breaking strongly above prior and

lower highs if it's not breaking

strongly above prior lower highs it

might not be the start of a bull trend

it might be a bull leg in a trading

range or it could be a double top of one

of these lower highs and a bear trap so

what are you looking for next looking

for a bear bar okay is it going to be a

bull leg in a trading range or is it a

bear trap a bull trap and could we break

below and get a reversal and then if you

get a beer bar closing there its low

especially a pretty good sized bar like

that and your long it doesn't matter if

you have five consecutive bull bars you

got to get out because this could be a

double top with that we could break

below the neckline and fall for a

measured move down Bulls get out for a

beer bar closing they're slow and Bears

will start to sell some beers will take

the first sell some will take a second

or third sell and this is what happened

we ended up reversing so gap up bull

trend trading range the Bulls won a

trend resumption up so they wanted leg

one sideways leg two instead we've got

leg one sideways and then reversal down

and the key is bear bars closing any of

their lows Peters will start to sell

Bulls will give up and you can get a

swing down here we have a beer channel a

beer channel is a bold flag 75% of the

time if you have a bear channel

eventually you're going to get a bull

Branco in this particular case is the

double bottom major trend reversal and

we have a pretty good reversal up Bulls

will buy above this bar betting that

it'll be a double bottom will get above

the buy signal bar break

the neckline and rally for measure move

up but always look to the left yes the

market went above the neckline of the

double bottom Laura hi which is good but

whenever you have a cell climax and you

get a reversal

there's also resistance at the top of

the cell climax so this could be simply

a test of the cell climax high it could

be vacuumed up to that resistance level

this means that there might be a lot of

bears selling up here and if the Bears

think it's going to go up to this price

are they going to sell here no if you

think it might go here you don't sell

until it gets there so there's an

absence of sellers and the market can

accelerate up to the area where the

Bears are going to suddenly appear as

strong as this is if you see a bear bar

you got to be thinking that it could be

a buy vacuum test and resistance it

could be a bull trap we're near that

lower high and then you have a bear

inside bar closing on its low if I'm a

bull and I bought this I'm going to get

out below that bull bar aggressive bears

will sell that of the Bears we'll wait

for a second a third sell and then take

a chance that we go down for swing and

we got back down to the low of the day

this is such a common problem when

you're starting out you got a bear trend

a bold breakout a higher low major trend

reversal double bottom pullback or

whatever you want to call it a cup and

handle small cup handle and we're going

up and then we accelerate up we have a

big bull bar and an even bigger bull bar

and we closed above everything to the

left right but what does the

follow-through look like if the

follow-through is also a bull bar and we

get two closes above resistance the

eyelids are much higher that we're going

up but if you have one close above

resistance and then a bear bar it could

be a trap it could be a higher high

double top and this could be simply a

second leg trap like one pullback like

to wear leg two is a breakout and it's a

very strong breakout

odds are you're going higher but if you

get a beer bar closing on it slow the

odds no longer favor the

you're going higher so it's really easy

to look at that and say oh it's got to

go up look how big that bull bar is it's

a bunch of bull bars it's a strong

breakout but whenever I see a by the

closed type rally where you get five six

seven bull bars and then I see a very

big bull bar and it's near a top from

the left I'm not gonna buy that close I

want to see one more bar because if that

one more bar is a vert bar closing near

its low I know this could be a bull

trout there could be a second leg trap

in our trading range day like one pull

back leg too and if I'm wrong if I'm

willing for any reason I'm getting out

below that bear bar and Bears will sell

they'll take a chance that it's the

second leg trap like one pullback leg -

and that leg - the breakout is going to

fail and that we're going to reverse

down and the trading range will continue

right so bear bar closing near is slow

on near a prior high it could be a trap

so beers Bulls will get out beers will

start to sell the little bear bars

closing the end of the lows it did not

become a huge beer trend it might be a

bull flag for tomorrow but the Bulls did

not get out lost money and the Bears is

sold made money so the key is if you

have something that might be a trap and

you get a beer bar closing they're slow

Bulls will get out and beer so start to

sell now sometimes you'll get what looks

like a bull trap and instead of trapping

bulls you get an actual bull trend very

big bear trend and then a very big bull

bar you can call it a wedge one two

three in any case you know late in a

bearish trend day a strong bear trend

Bears are going to take some profits you

know if you're short and you know your

stop is up here or up here

that's a lots of risk especially late in

the day so you're going to take profits

and here the Bears took profits some

Bulls will buy far below the moving

average looking for a scalp up to the

moving average at this point all you

know is you get short covering going on

and it's a possible bear trap we're not

above a prior Laura high and we have a

bear bar closing near its low so if

you're a bull what do you

you're going to get out blow that bull

bar closing they're slow and if your

bear you'll either sell that or your

wait for a second sell but instead of

triggering the cell pools bought the

clothes of that bear bar and they had

limit orders to buy the low of that bear

bar there are so many Bulls buying

preventing the cell we went up a little

bit you could argue this is a cell but I

would not sell below a doji bar I want

to sell below a beer bar closing they're

slow this went below that low but it's

four bars earlier I want the cell to

take place on the very next bar I want

some sense of urgency so for me I'm not

going to sell here I'd wait for a second

entry cell instead we have to bull bars

closing me in their highs this is a

breakout it could be a measuring gap in

fact we did go for about a measure move

up from here to that gap to up to here

once I see these two consecutive bull

bars I'm thinking this is not a bear

trap this is not a bear trap this is

probably a breakout and we're probably

going up for a measured move so I think

this is a failed bear trap the bear trap

never triggered we have consecutive bull

bars a breakout a gap we're probably

going higher so at this point instead of

buying about bull bars closing near

their highs expecting the market is now

in a bull trend again every bull trend

if your trend reversal if you have a

bear trend that becomes a bull trend it

always begins with short-covering

profit taking by the Bears and if it's

relentless and they keep taking profits

and if Bulls start to pile on and they

can prevent a sell signal from

triggering the Bulls are in control bear

traps the opposite of everything that I

just said here we have a bull trend and

a strong sell-off here we have a trading

range and a strong sell-off and here we

have a bear trend and a strong sell-off

any time you're in a bull trend and in

your bowl you're going to be looking for

reasons to take profits and that's

called long liquidation it's the

opposite of short covering when bears

take profits that's short covering

and bulls take profits it's long

liquidation and you have to expect it

there's going to be some profit taking

in every bull trend and it creates a

sell-off and sometimes the sell-off is

strong enough to make you think you're

going to get a second leg down if

instead the bull trend resumes and you

don't get the second leg down any bears

are short are trapped so you can get a

bear trap and a bull trend and if you

see a bull bar closing on or near its

high you buy above the bull bar and the

Bears who did short they'll get off of

that bull bar as well the same thing can

take place in a trading range here we

have five consecutive beer bars and a

very big beer bar but whenever you see a

big beer bar and you look to the left

and it's possibly testing a prior low it

might be a sell vacuum test of support

you need follow-through and if you get a

bull bar closing there its high that's

exactly the opposite of what the beers

want any beer who sold anywhere down

here hoping for a break below the low

and a measure move down is going to get

out below that bull bar and bulls will

start to buy either above that bar or

the wait for a second entry by over here

so this is a bear trap in our training

range and then finally if you have a

strong bear breakout late and a bear

trend it can also be a trap it could be

an exhaustive end of the bear trend but

I don't have time to talk about that

today so I'm only going to be talking

about traps and bull trends and in

trading ranges strong bull friend small

pullback bull trend small pull backs and

honestly higher you have to expect some

profit taken we have a wedge one two

three a bear broad closing near it slow

we've been unplugged the average price

for a long time a lot of the bulls will

take profits and then they'll wait to

see how far down we go before they buy

again we sold off we have a tail and

then we have a bull bar closing there

its high this could be simply a long

liquidation profit taking sell off a

bull flag attest the average I always

look to the left if there's some

possibility of a double bottom either

with that low or with this low it could

be a double bottom bold flag so a

reasonable place to take profits you get

some long

liquidation but if you see a bull bar

closing near its high the Bears will get

out the Bulls will buy and the Bulls had

many other opportunities to buy above

any of these bull bars closing near

their highs weak bears see the wedge and

sell hoping for a bear trend and they

see the lack of follow-through that tail

they see the bull bar they get trapped

into a losing short and they buy back

their shorts and the Bulls they look for

bull bars closing the end their highs

and they'll buy for a resumption of the

bull trend so lots of opportunities to

buy you don't take every one of them but

you try to take at least one for a

resumption of the bull trend we're a

bold friend

lots of pull backs and then here we have

consecutive beer bars very good size

beer bars both closing below the moving

average but look to the left maybe a

double bottom with that maybe a double

bottom with this maybe a double bottom

with this it came down here reversed up

down here and reverse so up down here

reversed off all right so here we're

getting an even stronger sell-off but do

we get follow-through do we get closes

below all the higher lows or do we get a

bull bar closing there it's high if you

get a bull bar closing that's high this

is probably a bear trap and bulls will

buy a little above that bar to get long

again we have another version of it here

possible higher hype major trend

reversal we broke above that high we

reversed down decent Bear bar reasonable

for Bulls to get out reasonable for

bears to sell but big tail on the bottom

and then a bull bar and then an even

bigger bull bar this is probably another

bear trap so bear trap Bulls by above

that bear trap Bulls by above any of

these bull bars closing near their highs

this tail is a problem for the Bears

they need bars closing near their

lonesome they did not get hit get it

here they have to bear bars but tail and

not below all the prior lows both turned

out to be traps and Bulls will buy both

a bull bar closing their high a bull

scalper is going to buy take profits by

take profits by take profits

swing traders they'll take anyone of

these bison just hold Bulls rent and

going sideways getting some bear bars

closing on it slow closing near Oslo

closing on it slow and then a bear

breakout tail on the bottom so not as

strong for the Bears and whenever I see

a bear breakout

I'm always looking to the left I'm

looking for a possible double bottom or

a chest of support and Big Bear bar

closing below the low of the past 20

bars good for the Bears but then we have

a bull bar and if I look to the left I'm

wondering is this just a test of that

support level when the market went above

this level the Bulls bought relentlessly

we're back down to that area where the

Bulls bought earlier will they buy again

so if you're a bear who's sold and you

see this bull inside bar closing near

its high you get a exit and therefore

your bull you're very happy because

you're assuming the sell-off was just a

breakout test a test of the breakout

point and that the bull trend is going

to resume that it's a failed bear break

up whenever you see a breakout test it

never looks like it could go all the way

up for a measured move it never looks

like it's going to get there but

whenever you see a breakout test and the

bull trend is starting to resume look at

the beginning of the move and then look

at the gap you got to be thinking the

market may go up for a measured move so

if you're buying it's reasonable to be

holding for a swing trade you can see as

they got near the measured move target

the market started to accelerate why

because the Bears knew it was going to

reach the target so there were no Bears

willing to sell here the Bulls knew it

was going to reach the target especially

high-frequency trading firm type

momentum traders they knew it was going

to go up there so they just started to

buy aggressively we have a bull trend

reversal and a wedge one two three or an

expanding triangle one two three a very

strong reversal down at this point the

market is short the odds are it's going

lower alright however you also know

it's retracing about half of the rally

so it's possibly a 50% pullback it's

testing this breakout point we have a a

cell climax and we broke above it so

it's always possible to be a bear trap

you need to know what the next bar or to

look like and in this case we have a big

bull bar closing on its high and if

you're shortened anywhere in here and

you see this bull bar you have to get

out you look to the left and say oh

might be a breakout test might be a 50%

pullback it might be an end of the day

bear trap so bears will get out above

that bull bar closing their high and

Bulls will start to by either taking the

first entry or any of the other entries

anytime there's a bull bar closing there

it's high but both of them will be blind

expecting your resumption of the bull

trend this is a point that I sometimes

make we have a very strong breakout a

pullback and then we're channeling up

from this point on it was a small

pullback bull trend the bars are small

they don't look all that strong here we

have a 2 bar pullback not all that big 2

bar pullback not all that big a small

pullback bull trend whenever you have a

small pullback bull trend you have to

assume there's gonna be profit taking

late in a day and not only that you

assume that the profit taking will be at

least fifty to a hundred percent bigger

than the biggest pullback earlier in the

day so when I see the market channeling

up in a tight channel I'm always paying

attention to what the biggest pullback

was in the channel we have a pullback

here we have a pullback here this is

still the biggest pull light and I'm

expecting that there's going to be a

pullback later in the day that would be

at least 50% bigger than this maybe a

hundred percent bigger than this this

blue rectangle is the size of this and

we have two bloomer rectangles so at

this point it's a hundred percent bigger

than that so goal accomplished it's

possible

in fact it's likely at the close of this

bar that we're going to get a second leg

down

and it turns out this is probably the

second leg down when we went down we

went up went down we went up and went

down this is probably a wedge on a

smaller time frame chart and we have a

bull bar closing near its high it's not

a particularly great bull bar but if I'm

short hoping for a bear trend and I see

a micro wedge and a bull bar closing

there its high and about a 50% pullback

and I see this pullback is about twice

the size of this earlier pullback I'm

gonna have to get on with my shorts

above that bull bar because this could

be an end of the day bear trap

profit-taking that is about twice as big

as the biggest earlier so ah bear traps

they can occur in training ranges

trading range we broke to a new high of

the day here we have a micro double top

moving up we went down we movin up we

went down some traders will sell blow

that bar because it's the neckline of

this micro double top and we're at the

top of a trading range tried to break

above the trading range failed try to

break above the trading range again

failing so some bear sold is this bar is

forming other Bears will wait here we

have an inside bar Bear bar closing

below its midpoint if you're wrong you

have to get out you have to know that

this is just a bull leg and a shredding

range and not the sort of a bull trend

so the Bulls have to get out and with a

surprise bar down like this we're

probably going a little bit lower maybe

testing this low so the Bears will sell

and you got a very strong rally you get

five consecutive beer bars and you have

an even bigger bar here closing blow the

prior lows but not closing below we

gapped up here not closing below the low

of the day and therefore this could be

an end of the day bear trap in a

training Wednesday and the key you look

for a bull bar here we have a very big

bull bar closing there its high and it's

an expanding triangle at this point we

have a low lower low lower low we have a

high we have a higher high and it's a

higher low double bottom with this law

we did not fall below this low and we're

reversing up it's a failed breakout

below this trading range bears have to

get out above this bar and Bulls will

either buy above this bar or above this

bar or above this

or expecting that this is trapping bears

and the bidders will have to you know

and we could get a reversal back up to

the top of the range so bears get out

above the first full bar

bears either Bible the first or above

any other bull bar expecting a test back

up

we have excuse me to sell off we have a

rally

we're selling off again pretty good bear

bar we have looks like a wedge bull flag

we went down and up down and up down

with a decent bull bar and we try twice

trying to go up but we failed so we have

a wedge bull flag which is the first leg

down and now we have a very strong break

out below and we're probably going down

for at least a couple legs no this this

is this is a credible start of a bear

trend but you need follow-through and if

you don't get follow-through

it could be a second leg bear trap so

the first look like down was a wedge

bull flag and now we're getting a bear

break out below the wedge bull flag but

we're not breaking below all the bars to

the left and therefore it could simply

be a sell climax test of the bottom of

the day and if you get a bull bar

closing on its high right here Bulls

will buy if you have any bull bar

especially with an inside bar like this

Bears will buy back their shorts either

above the two small bars they definitely

have to buy back this shorts about this

and Bulls will start to buy either about

the first bull bar closing there its

high or above the second one expecting

that this is a second leg trap first leg

down a bull flag we have a break below

the bull flag and it looks like we

should get additional selling and

instead we're reversing up I'm sorry

what five minutes five minutes charts

but the same thing applies on any

timeframe the reason why I don't have a

price scale or the time scale on the

bottom is because you'll see this on any

timeframe weekly chart daily charts 60

minutes short one-minute chart

15 second sharp 5 second sharp this

doesn't matter what time frame now I've

been talking about

traps but sometimes you get bear

breakouts that actually lead to beer

trends

I've got a small pullback bull trend and

pullbacks are small and brief you expect

some profit taking late in the day we

have a wedge top so bears will sell

either below that or that looking for a

couple legs down we have one pullback to

pull back three so possibly a wedge bull

flag but it's a tight bear channel and

we do not have a bulldog closing on its

high so that you know we might go more

sideways here to Big Bear bars

we probably got at least a small second

leg down and profit-taking in a bull

friend but the bulls I said earlier they

like to buy about bull bars closing in

their highs this bar does not close near

its high and it's also a type air

channel most bulls eye I would not buy

above that bar I would wait for bull

bars closing near their highs or maybe

we'll go sideways and we'll get a double

bottom so for me I would not buy here

but some Bulls would taking a chance

that it's a double bottom with this low

and that we're going higher but why are

we're not getting decent-sized bull bars

closing in their highs and Plus why are

we getting four or five bear bars that

are bigger than the bull bars the

momentum down is better than the

momentum up so this is suspicious for

the Bulls

and yes it's reasonable to get out of

shorts above a bull bar if you're

possibly having a bear trap proper

taking in a bull trend I reasonable to

get out of shorts but that is not a good

enough reason to buy and then you get

this one beer bar closing near is slow

I'm starting to go back you have one

beer bar closing nearest low plus it's

the biggest beer bar of all of this

that's warning us that we might go lower

and once you get consecutive Big Bear

bars closing there there lows this is a

sign that the Bulls have given up the

Bulls have decided it's not a bullshit's

bear trend and by the second bar

everybody's going to be selling below

beer bars closing the other lows some

Bears will sell here

but everybody's selling here bulls and

bears were selling here the Bulls gave

up here so here we had what could have

been a bear trap here and then here and

here yeah we never get a bull bar

closing the air time we never got a bull

bar with a body as big as the bear bars

so there were there was never a goodbye

and then we got a very strong breakout

consecutive Big Bear bars closing the

end there are a lot of probably on the

Bulls giving up and the Bears beginning

a bear trend I began by talking about

what a trap is the trap is simply a

breakout that looks like it's the start

of a trend but instead it reverses so

it's a failed breakout and then I'm

talking today about traps at the end of

the day and then dirted a bull trap is a

strong rally and a trading range or in a

bear trend and it's on short-covering

and if it does not have good

follow-through bears will sell below a

bear bar closing they were slow looking

for a resumption of the bear trend but

sometimes you'll get what appears to be

a bull trap and instead of the bear

trend resuming it becomes the start of a

bull trend so if you get a short

covering round at the end of the day but

there's no good cell signal and then you

start to get a bull breakout it's

probably the start of a bull trend and

not fail and not a bull trap bear traps

same thing if you have a bull friend or

trading range you have a late sell-off

but there's no flow through and you get

a bull bar especially a bull bar closing

near its high that sell-off is probably

long liquidation profit taking and the

Bulls will be very eager to buy again

once they see a bull bar closing their

side sometimes you'll get what begins as

a likely bear trap

but the market just keeps going down

sometimes the bear trap can fail instead

of becoming a bear trap it can become

the start of a bear trend so if you get

a cell signal bar for example but the

knock market never triggers the sell and

then you get a bull breakout it's

probably now a bull trend

I'm al Brooks thank you for watching

[Applause]

does anybody have any questions

75% of the training maybe more this

program training most of the coast of

the training in every market especially

a big market like the e minis or the

stock market most of it is its program

training but it has to be based upon

rational human behavior so it doesn't

look to me as a traitor I don't care if

it's program trading it's all going to

be rational you know profit taking right

I look at the biggest pullback I look at

the biggest pullback once I see the

small pullback bull trend begins

I look at the biggest pullback and

that's the ones that I'm looking for a

bigger version of it later in the day

right I just pay attention to which

pullback is the biggest if I get a

bigger one later and it keeps going up I

just pay attention to the new biggest

one I'm always looking for that biggest

pull but you know it's bonds futures

it's easy I do it all the time I try

trade bond futures right

right so yeah if so if there's something

wrong with the bull case you know the

market probably has to go higher to find

bull price if it's it if you're if

you're looking to buy right and you're

not getting a good buy set up the market

probably has to go lower to find buyers

yeah and traps can occur on the open

they can occur any time during the day

but I'm talking today about

profit-taking type traps usually in the

final third of the day you know but the

traps can occur at any point in the day

but today I'm talking about

profit-taking traps so be till late in

the day final third of the day final our

final two hours

you know traders are looking to take

some profits they don't want to risk all

the way to a stop that's far away you

know yeah only exclusively you know I

have friends who trade the 3-minute for

trends for the 15 second short right I

don't think it matters you know there

there's a trade-off

the smaller the timeframe the smaller

the risk the smaller the price risk but

there's another kind of risk I'll talk

about in a second it's smaller the price

risk but also the lesser low the lower

the probability

whenever you reduce your risk you're

reducing your probability I wouldn't do

it I pick one shark you know either just

only look at the three minute chart or

only look at the five minute chart or

the 15 minute chart with a 1-minute

chart

just pick one chart because if you're

going back and forth like that you're

gonna get all kinds of inconsistencies

you know you'll think you know it'll

look look I get to sell in the 5 minute

then you look at the 3 minute and looks

like it's a buy we I don't use that at

all I years ago I've had a lot of

attention to it but I don't use it at

all

high on a five-minute chart typically I

see at least their 81 bars to the day

right I see at least 50 trades a day on

the five-minute charm

how many trades a day am I going to get

from the put/call ratio okay so I'd

rather stick with my 50 no so I see so

many things in the 5-minute chart that I

don't want to be looking at other things

well thank you all very much

yeah sometimes on the first bar right

most of the time 80% of days have a

reversal in the first hour right 80% of

the days you get some kind of a double

bottom some kind of a double top a wedge

bottom or a wedge talk so usually 80% of

the days there's not going to be a swing

on the open or if there is you're going

to get a pullback in it so you can trade

the first bar but the probability is low

in general 20% chance the first bar will

be either the high or low of the day so

you know you can trade the first bar if

the context is really good let's say you

have a big gap up and a huge bear bar

right I'm gonna sell below that bear bar

but most of the time if you have a huge

gap up in a bear bar

there'll be big tail blow that bear bar

telling you the traders bought into the

close of that bar and that it's

dangerous to sell below it so depends on

context in general I do not trade on the

first or second bar I sometimes do in

special situations most of the time I'll

wait for at least two consecutive bars

and one direction before trading so

consecutive bull bars consecutive bear

bars yeah yeah so I paid no no I just

you know because they can occur at any

time there are certain times like 18 bar

essence of the day 90 minutes and today

that's a common reversal breakout time

two hours three hours four hours or

their common times right

on but you know I don't pay much

attention to that I'm more interested in

what the what the bars are doing

normally I try to enter with stops but

sometimes the market is moving very fast

and you can't get in with the stop and I

ended up you know just entering at the

market you know because if the markets

moving fast

that means everybody wants okay okay

times up if the markets going up quickly

everyone wants to get into that trade

right so you know I sorta why

[Applause]