Bonus 5: Trading Tight Ranges on the Open Flashcards
Only __% of days trend up or down all day from the open
20%
About once per week.
__% of opens have 2 or more reversals
Two examples are:
80%
Double Bottom/Top (near EMA)
Wedge Bottom/Top (near EMA)
80% of days test support or resistance in 1st 90 minutes.
Reversal often becomes high or low of day
Al calls it an opening reversal.
If you have 2-4 reversals on the open, you will probably get one of these patterns
Here are examples where the open is below the moving average
Bears look for Double-Top or Wedge Top
Bulls look for Double-Bottom or Wedge Bottom.
Define Trading Range Open:
When there are 5 or more reversals on the open and range is tight. 25% of opens.
The first breakout has only a 50% chance of success.
Examples: 5 or more reversals below the moving average
Photo of Trading Range at the open.
Overlapping bars with prominent tails
If you’re short, and you see consecutive big bear bars closing on their highs, you have to get out.
Limit order scalping: Fade Breakout bars near the moving average
Sell the close of bull bars closing near EMA and not near top of range.
Buy close of bear bar closing near its low and near bottom of range.
Limit order scalping: Fade Prior Highs and Lows
Sell the close of bull bar closing near EMA and near top of range
Fade prior highs and lows
Bet that the breakout will fail.
Bulls do the opposite
Limit order scalping: Fade flags near Top and Bottom
Beat that breakout will fail
Buy below Sell signal bars of
“ii” is often a Final Flag
Also look at bear bars after big bull bars, and traders will take low of bear bar expecting it to fail.
Here are all of the buy and sell opportunities from the previous slides on fading.
Traders often get frustrated by not finding set-ups. There are far more that you think if you look carefully.
In real-time, nothing looks as good as you want.
But always assume that every trade will win 40-60% of the time.
These are scalps and are around 60% likely.
