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slide 5:
1) How is b2 on middle chart a buy, but b2 on first chart not a buy? All he said about the left chart on b2 was reversal bar but it failed... seems like we should talk a little more about it if buying above b2 on left chart is a reasonable buy instead of just moving on to talking about shorting below LOD.
2) In general, with gap and reversal bar on b1 (gap down + bull bar closing on high, or gap up + bear bar closing on low), it is ok to take with stop beyond the signal bar? He says buy above b1 on that right chart instead of waiting for consecutive bars and doesn't mention wide-stop or scaling-in or anything. Risky no?
slide 6:
Al points to b1-5 saying look there are many bull bars, so it is good to buy early and points to b3 pullback saying you can buy above it. However, I don't yet have my time machine. Maybe he was trying to make independent statements but it sounded funny! Did I miss something?
slide 14:
Is b2 not a strong enough reversal bar to buy above? It isn't as good as the one on middle chart of slide 6, but similar context (gap down, strong bear bar on b1, and strong bull reversal bar on b2).
Hey Daniel,
here are my thoughts:
Slide 5:
1) Bar 2 in the middle chart is a buy because after a large gap down far below the MA, there is a greater chance of getting a couple legs sideways to up to the MA before getting trend resumption. Once the gap is rejected by a strong reversal up on bar 2, it is a reasonable swing buy with lots of room to the MA. The probability increases after the FT on Bar 3.
Bar 2 on the left chart is not a good buy because it does not have the same overextended context as the middle chart. While the middle chart is far below the average price after a very large gap down, the left chart is forcing stop order traders above bar 2 to buy right below the MA in a non over extended market.
2) When a large gap down is immediately rejected on bar 1 with a strong bull bar, Al often marks it as a buy above bar 1 and has mentioned in the room that a trader can take it when a stop below. He will sometimes advise against it depending on context and if there is a clear magnet slightly below like the GX L, for example. 5/19/21 is one example where he advised against it in the room because the GX L was just below. I have attached a picture of that day.
Using a wide stop in the right contexts certainly increases probability, as does waiting for 2 bull bars (my preference), but it is not necessary to create an edge for swing traders when the gap is large and the context and signal bar are good. Even with a strong signal bar on bar 1, the odds of it being the low of day are 30% at best but the odds of a couple legs up to the MA are higher and therefore make it a reasonable swing.
Slide 6:
Lol. This one does sound funny. It is the order that is presented that makes it a bit confusing but I think the point was that buying above Bar 2 is a typical buy and then when you see multiple bull bars, you must continue to buy expecting a bull trend from the open.
Slide 14:
My thought is that because the slide is based on flags at the MA, he didn't mark the buys but would agree that it is reasonable but not as good as bar 2 of the middle chart on slide 5.
Hope this is helpful,
Faizal
