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Here in the highlighted sentence Al says 'An experienced trader would have needed follow-through in the form of second or third bull trend bar believing that the always in trade had reversed to up'.
Al says experienced trader here would sell above the bar. Is he referring to above bar 3 here?
If yes then why would an experience trade sell above bar 3 while it is forming? In another words bar 3 could have been resulted in a bull trend bar while it was forming in a real time and an e experience would have no way knowing that prior the close of bar 3.
Selling the close of bar3 and below bar 3 make sense but when we are talking about selling above the bar which bar are we talking about here?
Hi Sudeep,
I believe that "sell above the bar" here refers to the bull bar before bar 3. Once it closed, experienced traders would see it as a first breakout of a tight bear channel 1-2 which is expected to be minor and a bear trend resumption attempt should soon follow. So they would sell that bull bar close and also place limit sell orders 1 tick above that bull bar.
Hope that helped,
CH
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It does make sense when you we are talking about a first breakout of a tight bear channel (in the given time frame) but since I am reading the first book (based on order that is recommended), up to this point we have not learned about channels and we have no knowledge that a breakout of a tight channel may result in a continuation of the prior trend. I am sure its mentioned in upcoming chapters or next books. This can get confusing for beginners if you are a beginner reading the book the first time. 🙂
Thank you so much for your reply! @Mr. Carpet @ludopuig
