Option Spread Strategies

In doing so, markets will be able to lower equity turnover rates Bull Bear Trader , thereby reducing volatility and allowing them to attract the type of long-term investment and capital necessary to grow their markets. Track back to where they are being first declared, if they have not already been declared in one statement, declare them all on one line using the "or" Boolean operator you want to know when ANY of them are true at any time, not when ALL of them are true at once , then use that statement as a "series" in an alertcondition statement. This is the most classic pattern where you have two swing points where the second swing penetrates the prior high and then immediately gets rejected. Because as long as you can survive, you can continue putting yourself in positions to place strong trades. How often did you experience a situation where a trade looked so obvious but then immediately reversed on you and you had to realize that you were, once again, entering at a very wrrong spot?

SEFC Bull and Bear trading system is a forex strategy trend following. SEFC Bull and Bear indicator is a repaint indicator but the othe indicatrs used not repaint.

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Channels that slope down in the direction of the trend have a higher percentage of failure. In addition, the longer the channel, the less likely of a continuation breakout. In sum, the forex bear flag pattern is easy to recognize with simple rules to observe to enter. Price targets and stops make the bear flag the ideal pattern for traders of all experience levels to benefit from.

So when bulls wave the flag of surrender, look for the bears and the downtrend to resume! To contact Gregory McLeod, email gmcleod dailyfx. Follow me on Twitter gregmcleodtradr. I hope you found this article helpful and informative in seeing how to short the market effectively. To further your education on other methods to enter into a trade short using Fibonacci, sign my guest book and take a free 20 minute lesson that will show you.

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Or, read more articles on DailyFX. You are subscribed to Gregory McLeod. An error occurred submitting your form. Please try again later. F orex bear flag patterns provide excellent setups to join a strong downtrend. Several strategies use these levels as a means to plot out where to secure profit or place a Stop Loss. These levels are purely the result of human behavior as they interpret said levels to be important. One key observation of price action traders is that the market often revisits price levels where it reversed or consolidated.

If the market reverses at a certain level, then on returning to that level, the trader expects the market to either carry on past the reversal point or to reverse again. The trader takes no action until the market has done one or the other. It is considered to bring higher probability trade entries, once this point has passed and the market is either continuing or reversing again. The traders do not take the first opportunity but rather wait for a second entry to make their trade.

For instance the second attempt by bears to force the market down to new lows represents, if it fails, a double bottom and the point at which many bears will abandon their bearish opinions and start buying, joining the bulls and generating a strong move upwards. Also as an example, after a break-out of a trading range or a trend line, the market may return to the level of the break-out and then instead of rejoining the trading range or the trend, will reverse and continue the break-out.

This is also known as 'confirmation'. Any price action pattern that the traders used for a signal to enter the market is considered 'failed' and that failure becomes a signal in itself to price action traders, e. It is assumed that the trapped traders will be forced to exit the market and if in sufficient numbers, this will cause the market to accelerate away from them, thus providing an opportunity for the more patient traders to benefit from their duress.

It can also scare traders out of a good trade. Since many traders place protective stop orders to exit from positions that go wrong, all the stop orders placed by trapped traders will provide the orders that boost the market in the direction that the more patient traders bet on. The phrase "the stops were run" refers to the execution of these stop orders. All trapped trader strategies are essentially variations of Brooks pioneering work. This concept of a trend is one of the primary concepts in technical analysis.

A trend is either up or down and for the complete neophyte observing a market, an upwards trend can be described simply as a period of time over which the price has moved up. An upwards trend is also known as a bull trend, or a rally. A bear trend or downwards trend or sell-off or crash is where the market moves downwards. The definition is as simple as the analysis is varied and complex. The assumption is of serial correlation, i. On any particular time frame, whether it's a yearly chart or a 1-minute chart, the price action trader will almost without exception first check to see whether the market is trending up or down or whether it's confined to a trading range.

A range is not so easily defined, but is in most cases what exists when there is no discernible trend. It is defined by its floor and its ceiling, which are always subject to debate. A range can also be referred to as a horizontal channel. A range bar is a bar with no body, i. This is also known in Japanese Candlestick terminology as a Doji.

Japanese Candlesticks show demand with more precision and only a Doji is a Doji, whereas a price action trader might consider a bar with a small body to be a range bar. It is termed 'range bar' because the price during the period of the bar moved between a floor the low and a ceiling the high and ended more or less where it began. If one expanded the time frame and looked at the price movement during that bar, it would appear as a range.

There are bull trend bars and bear trend bars - bars with bodies - where the market has actually ended the bar with a net change from the beginning of the bar. In a bull trend bar, the price has trended from the open up to the close. To be pedantic, it is possible that the price moved up and down several times between the high and the low during the course of the bar, before finishing 'up' for the bar, in which case the assumption would be wrong, but this is a very seldom occurrence.

A trend bar with movement in the same direction as the chart's trend is known as 'with trend', i. In a downwards market, a bear trend bar is a "with trend bear" bar. A trend bar in the opposite direction to the prevailing trend is a "countertrend" bull or bear bar.

There are also what are known as BAB - Breakaway Bars- which are bars that are more than two standard deviations larger than the average. This is a with-trend BAB whose unusually large body signals that in a bull trend the last buyers have entered the market and therefore if there are now only sellers, the market will reverse.

The opposite holds for a bear trend. A shaved bar is a trend bar that is all body and has no tails. A partially shaved bar has a shaved top no upper tail or a shaved bottom no lower tail. An "inside bar" is a bar which is smaller and within the high to low range of the prior bar, i. Its relative position can be at the top, the middle or the bottom of the prior bar. There is no universal definition imposing a rule that the highs of the inside bar and the prior bar cannot be the same, equally for the lows.

If both the highs and the lows are the same, it is harder to define it as an inside bar, yet reasons exist why it might be interpreted so. An outside bar is larger than the prior bar and totally overlaps it. Its high is higher than the previous high, and its low is lower than the previous low.

The same imprecision in its definition as for inside bars above is often seen in interpretations of this type of bar. An outside bar's interpretation is based on the concept that market participants were undecided or inactive on the prior bar but subsequently during the course of the outside bar demonstrated new commitment, driving the price up or down as seen.

Again the explanation may seem simple but in combination with other price action, it builds up into a story that gives experienced traders an 'edge' a better than even chance of correctly predicting market direction. The context in which they appear is all-important in their interpretation. If the outside bar's close is close to the centre, this makes it similar to a trading range bar, because neither the bulls nor the bears despite their aggression were able to dominate.

Primarily price action traders will avoid or ignore outside bars, especially in the middle of trading ranges in which position they are considered meaningless.

When an outside bar appears in a retrace of a strong trend, rather than acting as a range bar, it does show strong trending tendencies. For instance, a bear outside bar in the retrace of a bull trend is a good signal that the retrace will continue further. This is explained by the way the outside bar forms, since it begins building in real time as a potential bull bar that is extending above the previous bar, which would encourage many traders to enter a bullish trade to profit from a continuation of the old bull trend.

When the market reverses and the potential for a bull bar disappears, it leaves the bullish traders trapped in a bad trade. If the price action traders have other reasons to be bearish in addition to this action, they will be waiting for this situation and will take the opportunity to make money going short where the trapped bulls have their protective stops positioned.

If the reversal in the outside bar was quick, then many bearish traders will be as surprised as the bulls and the result will provide extra impetus to the market as they all seek to sell after the outside bar has closed. The same sort of situation also holds true in reverse for retracements of bear trends. The inside - and outside - inside pattern when occurring at asto higher high or lower low is a setup for countertrend breakouts.

As with all price action formations, small bars must be viewed in context. A quiet trading period, e. In general, small bars are a display of the lack of enthusiasm from either side of the market.

A small bar can also just represent a pause in buying or selling activity as either side waits to see if the opposing market forces come back into play. Alternatively small bars may represent a lack of conviction on the part of those driving the market in one direction, therefore signalling a reversal.

As such, small bars can be interpreted to mean opposite things to opposing traders, but small bars are taken less as signals on their own, rather as a part of a larger setup involving any number of other price action observations. For instance in some situations a small bar can be interpreted as a pause, an opportunity to enter with the market direction, and in other situations a pause can be seen as a sign of weakness and so a clue that a reversal is likely.

One instance where small bars are taken as signals is in a trend where they appear in a pull-back. They signal the end of the pull-back and hence an opportunity to enter a trade with the trend. An 'ii' is an inside pattern - 2 consecutive inside bars. An 'iii' is 3 in a row. Most often these are small bars.

Price action traders who are unsure of market direction but sure of further movement - an opinion gleaned from other price action - would place an entry to buy above an ii or an iii and simultaneously an entry to sell below it, and would look for the market to break out of the price range of the pattern. Whichever order is executed, the other order then becomes the protective stop order that would get the trader out of the trade with a small loss if the market doesn't act as predicted.

A typical setup using the ii pattern is outlined by Brooks. The small inside bars are attributed to the buying and the selling pressure equalling out.

The entry stop order would be placed one tick on the countertrend side of the first bar of the ii and the protective stop would be placed one tick beyond the first bar on the opposite side.

Classically a trend is defined visually by plotting a trend line on the opposite side of the market from the trend's direction, or by a pair of trend channel lines - a trend line plus a parallel return line on the other side - on the chart. In its idealised form, a trend will consist of trending higher highs or lower lows and in a rally, the higher highs alternate with higher lows as the market moves up, and in a sell-off the sequence of lower highs forming the trendline alternating with lower lows forms as the market falls.

A swing in a rally is a period of gain ending at a higher high aka swing high , followed by a pull-back ending at a higher low higher than the start of the swing. The opposite applies in sell-offs, each swing having a swing low at the lowest point. When the market breaks the trend line, the trend from the end of the last swing until the break is known as an 'intermediate trend line' [16] or a 'leg'.

Frequently price action traders will look for two or three swings in a standard trend. With-trend legs contain 'pushes', a large with-trend bar or series of large with-trend bars. A trend need not have any pushes but it is usual. A trend is established once the market has formed three or four consecutive legs, e. The higher highs, higher lows, lower highs and lower lows can only be identified after the next bar has closed. A more risk-seeking trader would view the trend as established even after only one swing high or swing low.

At the start of what a trader is hoping is a bull trend, after the first higher low, a trend line can be drawn from the low at the start of the trend to the higher low and then extended. When the market moves across this trend line, it has generated a trend line break for the trader, who is given several considerations from this point on.

If the market moved with a particular rhythm to-and-fro from the trend line with regularity, the trader will give the trend line added weight. Any significant trend line that sees a significant trend line break represents a shift in the balance of the market and is interpreted as the first sign that the countertrend traders are able to assert some control.

The alternative scenario on resumption of the trend is that it picks up strength and requires a new trend line, in this instance with a steeper gradient, which is worth mentioning for sake of completeness and to note that it is not a situation that presents new opportunities, just higher rewards on existing ones for the with-trend trader. In the case that the trend line break actually appears to be the end of this trend, it's expected that the market will revisit this break-out level and the strength of the break will give the trader a good guess at the likelihood of the market turning around again when it returns to this level.

If the trend line was broken by a strong move, it is considered likely that it killed the trend and the retrace to this level is a second opportunity to enter a countertrend position. However, in trending markets, trend line breaks fail more often than not and set up with-trend entries.

The psychology of the average trader tends to inhibit with-trend entries because the trader must "buy high", which is counter to the clichee for profitable trading "buy high, sell low". In-between trend line break-outs or swing highs and swing lows, price action traders watch for signs of strength in potential trends that are developing, which in the stock market index futures are with-trend gaps, discernible swings, large counter-trend bars counter-intuitively , an absence of significant trend channel line overshoots, a lack of climax bars, few profitable counter-trend trades, small pull-backs, sideways corrections after trend line breaks, no consecutive sequence of closes on the wrong side of the moving average, shaved with-trend bars.

In the stock market indices, large trend days tend to display few signs of emotional trading with an absence of large bars and overshoots and this is put down to the effect of large institutions putting considerable quantities of their orders onto algorithm programs.

Many of the strongest trends start in the middle of the day after a reversal or a break-out from a trading range. Price action traders or in fact any traders can enter the market in what appears to be a run-away rally or sell-off, but price action trading involves waiting for an entry point with reduced risk - pull-backs, or better, pull-backs that turn into failed trend line break-outs.

The risk is that the 'run-away' trend doesn't continue, but becomes a blow-off climactic reversal where the last traders to enter in desperation end up in losing positions on the market's reversal.

As stated the market often only offers seemingly weak-looking entries during strong phases but price action traders will take these rather than make indiscriminate entries. Without practice and experience enough to recognise the weaker signals, traders will wait, even if it turns out that they miss a large move. A trend or price channel can be created by plotting a pair of trend channel lines on either side of the market - the first trend channel line is the trend line, plus a parallel return line on the other side.

Trend channels are traded by waiting for break-out failures, i. Trading with the break-out only has a good probability of profit when the break-out bar is above average size, and an entry is taken only on confirmation of the break-out. The confirmation would be given when a pull-back from the break-out is over without the pull-back having retraced to the return line, so invalidating the plotted channel lines.

When a shaved bar appears in a strong trend, it demonstrates that the buying or the selling pressure was constant throughout with no let-up and it can be taken as a strong signal that the trend will continue. A Brooks-style entry using a stop order one tick above or below the bar will require swift action from the trader [19] and any delay will result in slippage especially on short time-frames. If a trend line is plotted on the lower lows or the higher highs of a trend over a longer trend, a microtrend line is plotted when all or almost all of the highs or lows line up in a short multi-bar period.

Just as break-outs from a normal trend are prone to fail as noted above , microtrend lines drawn on a chart are frequently broken by subsequent price action and these break-outs frequently fail too. Microtrend lines are often used on retraces in the main trend or pull-backs and provide an obvious signal point where the market can break through to signal the end of the microtrend.

The bar that breaks out of a bearish microtrend line in a main bull trend for example is the signal bar and the entry buy stop order should be placed 1 tick above the bar. If the market works its way above that break-out bar, it is a good sign that the break-out of the microtrend line has not failed and that the main bull trend has resumed. Continuing this example, a more aggressive bullish trader would place a buy stop entry above the high of the current bar in the microtrend line and move it down to the high of each consecutive new bar, in the assumption that any microtrend line break-out will not fail.

This is a type of trend characterised as difficult to identify and more difficult to trade by Brooks. After the trend channel is broken, it is common to see the market return to the level of the start of the channel and then to remain in a trading range between that level and the end of the channel. A "gap spike and channel" is the term for a spike and channel trend that begins with a gap in the chart a vertical gap with between one bar's close and the next bar's open.

The spike and channel is seen in stock charts and stock indices, [19] and is rarely reported in forex markets. A pull-back is a move where the market interrupts the prevailing trend, [20] or retraces from a breakout, but does not retrace beyond the start of the trend or the beginning of the breakout. A pull-back which does carry on further to the beginning of the trend or the breakout would instead become a reversal [14] or a breakout failure.

In a long trend, a pull-back often last for long enough to form legs like a normal trend and to behave in other ways like a trend too. Like a normal trend, a long pull-back often has two legs. One price action technique for following a pull-back with the aim of entering with-trend at the end of the pull-back is to count the new higher highs in the pull-back of a bull trend, or the new lower lows in the pull-back of a bear, i.

L1s Low 1 are the mirror image in bear trend pull-backs. If the H1 doesn't result in the end of the pull-back and a resumption of the bull trend, then the market creates a further sequence of bars going lower, with lower highs each time until another bar occurs with a high that's higher than the previous high.

This is the H2.

Forex Training — Bull Flags and Bear Flags

Bear Bull Power Indicator can be used to gauge the strength of the bulls and bears and can provide indication to breakout potential. Enjoy. Forex Bulls Bears Stochastic Oscillator Trading System is a ‘trend following’ forex strategy. SEFC Bull and Bear indicator is a repaint indicator but the other indicatrs used not repaint. SEFC Bull and Bear indicator is a repaint indicator but the other indicatrs used not repaint. Forex Factory is for professional foreign-exchange traders. Its mission is to keep traders connected to the markets, and to each other, in ways .