Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Al Brooks Price Action Fundamentals SmithJones > Trading Ranges (TRs) > Flashcards

Trading Ranges (TRs) Flashcards

1
Q

What the Goal of the market?

A

To maximize trading; find an agreement between Bulls & Bears

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

In a Strong Bulll Trend must Bulls take profits?

A

Yes a strong trend has periods of two-sided trading. Bulls have to take profits also when their stop is far too reduce risk. Profit taken creates PBs, and eventual TR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define a TR?

A

Any area of two-sided trading is a TR. Even if it lasts for only a bar. TRs lasting only one bar is common. Small TRs are called PBs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The term TR is to be used when there is less certainty that the market trend may continue.

A

The term TR is to be used when there is less certainty that the market trend may continue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

When more bars are added to a TR what does that do for a Trend?

A

The more bars added to a TR the more distant the trend becomes. and the less influence it has on the direction of the BO. After 20,30,40+ the probability of a trend resumption or reversal is now 50/50

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Big up + Big down = (?) in the market & what does it usually result in?

A

Big up + Big down = Big confusion and it usually results in a TR and once the PB grows to 20-40+ bars it is in BO mode. If one side had a higher probability, the market would begin to go that way and not sideways as such on this chart for so many bars.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

If I am looking at the markets and I feel confused or disappointed what are the chances that it is in a TR?

A

Odds are very high that the market is in a TR even if is not visibly clear to me at the present moment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Why is a TR hard to trade?

A

Confusion at the start of legs= rarely certain reversal has begun. Signal bars and setups are weak; trends are weak. Spends a lot of time in middle and not moving (as TRs spend A LOT of time in the middle), Bad follow-through after strong trend bars & BOs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Bad follow-through and constant disappointment mean what?

A

If I constantly seeing bad follow-through after BOs and Buyers and Sellers are both getting disappointed, I now know the market is in a TR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

If Gaps and Negative Gaps are closing promptly on both sides and PBs are going through S/R odds are we are in a TR?

TRUE or FALSE?

A

TRUE = disappointment gaps on both sides are closing all the time means we are most likely in a TR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Disappointment: 80% of BO attempts in TR fail why?

A

TRs and Trends both resist change, the markets have inertia and tend to continue to keep doing what they have been doing opposed to change. (In the trend the reversal fails from it becoming a flag than the trend continues)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

When I see what appears to be a Bull Trend but the Bull Bars have bad follow-through what is more likely?

A

It is more likely that this is a Bull leg in a TR rather than a Bull Trend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Strong BOs up and down but the gaps soon close & PBs going back beyond BO points, what does this mean?

A

The gaps closing consistently & PBs going back beyond BO points= probably in a TR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

NOTE: TRs have Deep PBs beyond Support and Resistance

A

NOTE: TRs have Deep PBs beyond Support and Resistance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

If I am confident the trend will resume when the price pulls back the pattern is what?

A

The pattern is a PB, the odds are very high the trend will resume it is a BULL flag on this chart.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If I am not confident9uncertain) the trend will resume when the price pulls back the pattern is what?

A

The pattern is a TR (bar/PB), I am uncertain the trend will resume or reverse, this makes the pattern a TR, Most channels are the beginning of a TR even though it still apart of the trend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q
A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

In Small TRs what do traders believe?

A

In small TRs traders believe the trend will resume soon making the TR a PB (only trade in direction of the trend). However once unclear if the Trend will resume, and the PB has grown in a TR; traders stop using the term PB and now understand the market is in BO Mode

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Once a Bull Trend falls below a Major Higher Low Stop what is likely to occur next?

A

Once the price falls below a stop at a Major Higher Low the market will enter a Bear trend or a TR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

When a PB grows too long, what happens to the prior trend?

A

When a PB grows too long, the prior trend loses influence. BO is equally likely in either direction and the PB has evolved into a TR.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is the minimum for a TR?

A

Usually, 3 Legs and 20 Bars, Confusion; Bears need to create enough doubt in the minds of the Bulls in a Bull trend. Remember a TR has to have both equally good Buy & Sell setups which = confusion. BLSHS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q
A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q
A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What kind of moves are TRs filled with?

A

TRs are-filled with 2-legged moves (2nd leg trap) Be very careful as the 2nd legs are usually stronger than the first and this tricks beginner traders all the time into thinking it is a successful BO. Ignoring the fact that 80% of TR BOs fail

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
2nd Leg Trap in a TR, what must I the trader pay attention to, to avoid getting trapped in the 2nd leg trap?
Pay attention to the context! The 2nd leg trap is a strong 2nd leg BO, but really it is just a vacuum test of S/R. Here, HL test of the bottom of the TR
26
Big Up, Big down reversal does what to a Trader?
Big confusion so it is probable the market is in a TR
27
28
a Bull BO above a bull channel fail what % of the time and within how many bars on average?
A Bull BO above a bull channel fails 75% pf time within 5 bars; the same thing if it was a bear BO
29
30
Q: 80% of TR BOs fail, expect when in BOM (BreakOutMode) when it's in BOM what is the probability of a BO?
The probability of a BO when a TR is in BOM is 50% for the Bulls and the Bears
31
In a TR when scaling into a position what is best to use limit order buys or buy stop?
Use limit orders but stops are still good to use as well
32
Because 80% of the BO attempts fail in a TR what is the best strategy to trade a TR?
BLSHS, scalp do not swing trade as Most BOO attempts will fail. Moves will soon reverse back to the entry
33
Are the tops and bottom of a TR always clear?
No, most times the TR Top and Bottom are not clear. TR will eventually break out into a trend; 50% chance of a bull BO & 50% chance of a bear BO; with the eventual BO 80% of attempts will still fail with a 50% chance the 1st attempt will fail.
34
Is a TR a good reason to Buy or Sell?
Every TR has both a reasonable buy setup and a reason sell setup. Whenever good reason to buy and to sell, then the market is in a TR (80% of TR BO attempts will FAIL)
35
36
With this developing weak bear channel in comparison to the Strong Bear BO in the context, what can I expect to occur soon in the markets?
Expect a Bull BO soon (Bear Channels have a 70-75% chance of a Bull BO that eventually evolves into a TR or Bull Trend; however, in a Bull Trend pay attention to the previous Major LH as it could act as Resistance and keep the TR odds intact)
37
38
Strong Bear Trend (Micro Bear Channel) evolved into a Weaker Bear Trend, what is this likely to evolve into?
With the lack of consecutive Bear BO Bars with great follow-through in this channel in comparison to the micro bear channel in the context evolving into a TR is extremely likely.
39
a Strong Trend that is beginning to show signs of weakness that in which is likely to develop into a TR
a Strong Trend that is beginning to show signs of weakness that in which is likely to develop into a TR
40
Very good reversal and follow-through bar but still below the micro DT. What is likely to occur in the markets as a result of this Price Action?
This increases the chance that this reversal is just a test of the high and part of a developing Bear Channel or Bull Leg in a TR
41
Most of the time when the market is in a Broad Channel, what is it also often in at the same time?
It often also in a TR
42
Even though on this chart we are clearly going up in this Bull Channel, what signs of weakness are presenting themselves in this Bull Channel? (making it a probable Bull Leg in a TR)
No strong BO with follow-through above prior high, No consecutive big bull bars, small bodies, PBs every few bars, Many big reversals
43
44
Once the Bull Channel/Trend is of the Bears start selling with Stops orders above buy signal bars betting on a leg down (75% chance of a Bear BO in a Bull Channel) TRUE or FALSE?
TRUE, ## Footnote The bears see the 3 consecutive Bear Bars at the top of a Bull Channel and the aggressive Bears will start Betting on the Bear BO that will probably evolve into a TR
45
In a spike and Channel Bull Trend the Bulls can Scalp or Swing and once gaps start to close and we get 3 pushes up (wedge top) the Bears will start to enter the market using limit orders because they are betting on the Bear BO from the Bull Channel that will soon evolve into a TR
In a spike and Channel Bull Trend the Bulls can Scalp or Swing and once gaps start to close and we get 3 pushes up (wedge top) the Bears will start to enter the market using limit orders because they are betting on the Bear BO from the Bull Channel that will soon evolve into a TR
46
47
a Spike and Channel Bull Trend usually has what type of break out from the Bull Channel?
The Bull Channel usually has a Bear BO and then it evolves into a TR
48
Define this pattern
Spike and Channel Bull Trend
49
In a Strong Bull BO with consecutive big bull bars closing on their high (this is good follow-through) should I look to Buy or Sell and why?
I should only look to buy because higher prices are likely due to the strong follow-through and no PB 5 bar Bull MicroChannel. Probably will reach MM targets before evolving into a TR
50
If the Trend is Becoming a TR and traders believe the downside is limited what is the traders' best course of action?
Trade it like a TR, BLSHS; use wide stops and scale in
51
The biggest Bear Bar Late in the Bear Trend with Bad Follow-Through, what is the market likely to do following this?
Evolve into a TR, this bear leg could possibly be a Bear Leg in a TR
52
Whenever I see a Bear Channel what should I think of it as?
Think of a Bear Channel as a Bull Flag with a 75% chance of Bull BO with the target usually being the top of the channel
53
Triangle, it is a type of TR, this triangle is in BOM
Triangle, it is a type of TR, this triangle is in BOM
54
Bull BO followed by a deep PB that evolved into a Broad Wedge Bull Channel, what are the chances of this evolving into a TR?
There is a 75% chance of it evolving into a TR, as the Bulls and Bears are able to make money with stops and limit orders & it has gone on for 20+ bars.
55
Bull Channel is a Bear Flag, what are the odds of a Bear BO?
75% Chance of a Bear BO, the BO usually tests the start of the Channel
56
Triangle, it is a type of TR, this triangle is in BOM
Triangle, it is a type of TR, this triangle is in BOM
57
When I PB grows to 20 or more Bars, is it ok for me to refer to it as a TR?
Yes, it is ok as the market is now in a state of confusion and in BOM
58
Once a PB grows to 20 or more bars the chance of Trend Resumption is equal to the chance a Trend Reversal, what is this called?
The market has entered BOM (BreakOutMode)
59
Most TRs have at least 1 Buy setup and 1 Sell setup? TRUE or FALSE
TRUE every TR has both reversal and trend resumption patterns
60
If this TR has a Bear BO what kind of day would you classify this as?
Trend Resumption making this a Bear Trend day
61
If this TR has a Bear BO what kind of day would you classify this as?
Trend Reversal making this a Bear Trend Reversal day
62
63
What do the Bears want at the top of the TR
They want it to be as overbought as possible to trap Bulls into buying High. As BOs fail 80% of the time in this allows the Bears to Sell even Higher capitalizing on more profits in the TR
64
In a TR at the bottom of the TR why would the Bulls want a Big Climatic Bear Bar near the bottom of the TR?
Bulls want as oversold and climatic as possible to create as big a bear bar possible and then as big a reversal up as possible. This increases the chances for a very strong climatical reversal up
65
What do the strong Bulls do at the bottom of the TR?
At the bottom, the strong bulls will buy back shorts and reverse to go long. They will be being from bears who are expected a follow-through and MM down (Remember 80% of BO in TRs fail)
66
67
In a TR a beginner sees momentum, not S/ R
In a TR a beginner sees momentum, not S/ R
68
69
70
Once the market reaches the magnet, what usually happens?
Once at the magnet, the magnet usually disappears! The market usually reverses and the test of S / R is complete
71
Once the market gets close to the top/bottom of a TR is it within the gravitational field of the edge of the Range? If yes, why?
Yes it is, as it gets closer to the edge of the TR, stronger magnetic pull is activated and the market moves faster
72
73
74
75
What is a Vacuum Effect?
When the market is drawn to Support / Resistance
76
Is the market constantly probing to try and find the best price (fair price)? TRUE or FALSE
TRUE the market is constantly probing to find the best price where most trading takes place. Bars get smaller and overlap more, swings become smaller, this is as the market no decides it is at a fair price.
77
Can Strong Trends Reverse suddenly?
Yes they can
78
79
How do I know if a TR is too tight?
If a scalper cannot make money, buying near the bottom or selling near the top, using stop orders to entry, then the TR is to tight
80
When there is a Tight TR like this what is my best course of action to enter the market?
Wait for a BO up or down before trading
81
82
In a Broad TR how do Traders enter with stops?
If broad, enter with stop orders, when reversing at the top and bottom of the range. Buy above the signal bar at the bottom of the range & Sell below the signal bar at the top of the range.
83
In a Broad TR how do Traders enter with Limit Orders?
If broad, enter with limit orders betting that BOs of TR will fail. Buy below bars and weak bear flags at the bottom of the range & Sell above bars and weak bull flags at the top of the range.
84
In a Broad TR how do Traders enter with Market Orders?
If broad, enter with market orders when strong reversals. Sell at the market, when strong reversal down from the top of the range & Buy at the market, when strong reversal up from the bottom of the range
85
When should a trader not trade when the market is in a type of TR?
The trader should not trade when the TR is too Tight
86
What is a Ledge?
A Ledge is a Tight TR were either all the Highs are at the same Price or all the Lows are at the same Price.
87
Can a TTR still form a MTR?
Yes it can
88
ho has the advantage in a TTR?
Bulls nor Bears have an advantage in a TTR. However when the TTR is mostly below the MA, there is a slightly higher probability of a Bear BO & when the TTR is mostly above the MA, there is a slightly higher probability of a Bull BO
89
In this TR why is a BO not imminently likely?
The market is going sideways with lots of overlapping bars, prominent tails, bull bars followed by bear bars, bear bars followed by bull bars. A big move up or down is not likely.
90
91
Can I trade all Tight TRs with Limit Orders?
No, to scalp in TTRs, I need most bars to be more than the size of the scalp (by at least 4 ticks)
92
Who Scalps in a LOM? ## Footnote A:
Both bulls and bears will scalp while using wide swing stops and many will scale in
93
Define a Limit Order Market (LOM)
94
Can the BO above a Ledge come 1 Week later?
Yes
95
The Ledge Bottom (it is a magnet), it has an 80% chance of an eventual BO below it & 80% chance of a PB back above the bottom of the Ledge
The Ledge Bottom (it is a magnet), it has an 80% chance of an eventual BO below it & 80% chance of a PB back above the bottom of the Ledge
96
What is a Ledge Bottom?
a Ledge Bottom is 3 or more bars with an identical L (5 or more bars is a stronger magnet)
97
98
If the market is a TR Day where does the market usually end up closing?
It often closes near the middle of the TR or near the open of the day
99
Do all trends and channels eventually become TRs?
Yes they do
100
101
With the 1st failed BO traders should be ready to swing trade.
With the 1st failed BO traders should be ready to swing trade.
102
When the market is in a TR what are the odds the 1st BO attempt will fail?
50% Chance the 1st BP attempt will fail and reverse. This usually leads to a successful BO in the opposite direction so be ready for that
103
Does Buying or Selling Pressure usually increase before a BO?
104
Are TRs always eventually followed by a Trend?
Yes they're, all TRs eventually BO into trends. Imbalance in Buying & Selling Pressure usually gives traders a clue to the direction of the BO. Often allows Traders to enter swing trades before the BO.
105
Can a TR transition into a Channel and become a trend without a BO?
106
Does every TR eventually lead to a successful BO?
Yes, every TR eventually leads to a successful BO
107
Should Traders bet on BOs failing?
Yes they should bet on failed BOs, BLSHS
108
Should traders bet on BOs near the High or Low of a TR?
No traders should not bet on BO; do not buy high or sell low
109
Are Traders expecting BOs to succeed or fail more often in TRs?
Traders are expecting BOs to fail most often in TRs; 80% of the time. They therefore bet on reversals and fade BOs & take scalp profits near the middle of the TR
110
Do traders like to take profits in the middle of TRs?
Yes they do
111

Al Brooks Price Action Fundamentals SmithJones (28 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions