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so when we are always in long in this situation and enter the trade after that first big surprise bull bar. Shouldn't our stop be below the large bull bear? I see we can exit the trade but shouldn't we hold for our stop loss? This is something I have been struggling with trading lately. When i start to see bear bars in an uptrend I exit for a smaller profit.
Good question. I struggle with it too now. It seems like if something changes (your premise of strong trend not valid anymore) and its not a pullback, but more like refeversal, then better to exit on sell signal and buy again later (h2 at bottom). Rewatch videos "Protective Stops" and "Swing Trading and Scalping" in "How to Trade Prerequisites" category.
Also you may allow to test your entry once, but with that strong move its better to exit and enter again later.
Here's my 2 pesos / correct if wrong -
Big down/ big up/ big confusion
Always in TR, so BLSHS trumps AI Direction
- Climactic move to top of TR = possible buy vacuum
- Bull BO above wedge bull channel = common 2nd leg trap
- Bad buy signal bar = expect retest
- Major surprise = often deep PB
- TR = often deep PB
best choice = flat
wait for TR BO + FT or Bull flag PB
@Aaron exiting is only ok if you are capable of getting back in later. In your example, if you exit, you have to be able to enter after the first or the second bull bar (marked with green above them after the strong bear leg). Otherwise just hold and rely on your stop and then maybe get out below the big bear bar after the tight bull leg, or get out below the second big bear bar.
@w this is a perfect example for your Always In question. Here the market is AIL because of the broad bull channel and the bull spike within, but the bear move is strong enough to consider the market temporarily AIS. You can hold like I said, or get out below one of the marked bear bars and look to enter again, or you can join bears for a scalp.
Just some thoughts ... (attached)
@Aaron
You should be aware before entering the trade if you want to be in for a scalp or a swing trade? You should be aware of the context to the left. As the first bar is a TR bar it already signals a potential TRD. The big bull bar started after a W bottom PB and is a surprise bar from my pov. BO points often get tested. The spike should get an equal distanced CH as FT. Buying in the sell zone of a TR where most BOs fail within 5 bars should be mentioned and the big bull bar is creating a possible DT with the previous HOD. A good rule to exit can be when you see a good trade setup for the other direction (bears in that case) would you have taken that?
@Philipp
The SLs are showing were they have to be while entering at any green box. This doesn't mean they have to stay there forever. A good rule can be to trail your initial SL 2 HL or 2 LH away to make sure you are at the right side of the market. After that breaks the AI direction can change. In your shown example Al might have mentioned to trail the SL as a solution in this vid, didn't he?
