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Hi there - quick question..
Slide 8 - Big bull (/bear)momentum bar - Al stresses the importance of developing a reflex to get in the trade at any point - market entry with stop at the start of the bull BO - Al comments on the fact that this is high risk for high probability of reward. 60% probability of the price going higher..
The BO has 60% odds of going higher and this is why the entry is indicated.
- Are the favourable 60% odds due to the strength of the momentum bar -
- Strong large bar
- Closes above 20/30 of prior closes.
- Does not close on or near it's high but with long top wick.
My confusion is that he also stresses that 80% of Breakouts fail. That gives me a 20% chance of the Breakout trend succeeding - but Al indicates 60%...
2. Does the nature of the BO bar adjust the odds of it succeeding and raise the odds by a further 40%?
Thanks
First thing is to be clear on the breakout bar of the small trading range, which is the fourth bar after the bear bar low. At that point there would be a 80% chance of the breakout failing. The big climax bar is the follow through bar for the breakout, so its likely (60% chance) the prices will be going higher and he will buy the close of the bull bar.