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Switching to using the red and green arrows to indicate reasonable stop entries has been a little confusing to me. I often see examples now where a reasonable short entry is below a bull bar or a bear bar with a long lower tail. Likewise, there are many examples where a reasonable long entry is above a bear bar or a bull bar with a long upper tail. This approach is different than the rule I have been applying of "buy above a bull bar closing on its high or sell below a bear bar closing on its low."
Is this a shift in the approach or have I misunderstood the basic idea? What is a clear statement of a good setup entry?
Thanks.
Switching to using the red and green arrows to indicate reasonable stop entries has been a little confusing to me. I often see examples now where a reasonable short entry is below a bull bar or a bear bar with a long lower tail. Likewise, there are many examples where a reasonable long entry is above a bear bar or a bull bar with a long upper tail. This approach is different than the rule I have been applying of "buy above a bull bar closing on its high or sell below a bear bar closing on its low."
Is this a shift in the approach or have I misunderstood the basic idea? What is a clear statement of a good setup entry?
Thanks.
I agree that many entries indicated on these EOD charts seem incongruent with evident context. What would help improve comprehension would be written rationale for the entry.
Applying this approach would be impractical given the number of reasonable entries shown during a typical session. However, going back to the approach used when I first joined this community, charts used to show swing entries differently than other entries by including an outline around the entry box. This was logical, given Al's constant reminders that most traders should swing trade (and a good explanation for their removal has yet to be provided).
Written rationale for key swing entries, or for entries like those mentioned by Dennis, would be very useful. IMO, Brad's EOD videos are a very strong, instructional tool due to his explanations for context. Similarly, Al's EOD charts would be far more effective with some additional information about his thinking.
I'm not sure if this is correct or not, but here goes. I think the arrows are pointing to entry bars. So the signal bar would be the bar before the one with the arrow pointing at it.
For example, for Wednesday's chart, Oct. 25, the second bar of the day has an arrow above it pointing down. That means that the first bar of the day was a signal bar, and traders would have put a stop entry below it and entered on bar 2, the entry bar with the arrow pointing at it.
Bars 23 and 24 also have arrows above them. They are below the "Wedge, Body Gap, Low 2" label. In this case, bar 22 sets up the Low 2 signal and bar 23 is the Low 2 entry bar.
Then, bar 23 itself signals an entry at bar 24. A trader might have put a sell stop order below bar 23 and been filled on bar 24. Bar 24 had a lower wick that filled the stop order, but turned into a bull bar after the entry.
I'm pretty sure that is how to read the arrows. I hope this was helpful, and if my reading isn't correct, I would sure like to know about it!
That's my understanding as well. I think it would be clear if those arrows point to signal bar instead of entry bar as it avoids looking at bar before entry bar (to identify signal bar) which arrows are currently pointing to. Thanks!
It took me a second to really understand what was going on because i was so used to the old way but yah the arrows are the bars you're actually getting filled on. So the bar right before them is the bar signal, then fill and entry on the next bar.
For example, for Wednesday's chart, Oct. 25, the second bar of the day has an arrow above it pointing down. That means that the first bar of the day was a signal bar, and traders would have put a stop entry below it and entered on bar 2, the entry bar with the arrow pointing at it.
I'm not sure that bit is correct. Al's rule for trading the open is two consecutive bars of the same colour (or at worst one doji) and at least one with a strong close. Al has never advocated taking a trade on the close of the first bar of the session, so the first bar cannot be a signal bar.
Thanks for the feedback everyone.
Ryan, I think you are correct that the arrow corresponds to the entry bar rather than the signal bar. This is where my thinking was off base. Now that I read Al's explanation a little more carefully, I see this is what he is saying. Here is the text from below the daily graph:
"Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow."
>>Daily blog chart caption: Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. <<
Doesn't anyone read the text below the charts on daily blogs? They show entry bars as they ALWAYS have. The red and green rectangles were centered on entry bars.
PS. Trade entry marker arrows on trading platform charts are also on entry bars. They do not cause any problems, right? 🙂
You're probably correct, PB. The only way I can make an argument for the first bar as a signal bar is to see the gap down on the open as a bear spike. I think Dr. Brooks says that we should trade gap opens that way. And, if so, the bearish gap open could be read as an implied bear trend bar, possibly making Bar 1 a signal bar and Bar 2 an entry bar.
Other chart patterns might support that trade as well, like the 60 minute chart being in a down trend over the past couple days. Or, that the down trend from the afternoon before, Tuesday, Oct. 24, might continue into the next day, Wednesday, Oct. 25.
Thank you for the opportunity to talk about this!
Reviewing Al's videos about Candles, Set ups, and Signal bars in the 08 section of the video course reminded me of this topic.
They explain different ways to identify signal bars and why traders might enter after a "bad" Signal bar. Pretty interesting information!