/biz/ - Business & Finance

You should be thinking as both a bull and bear at all times. The guy I learned from said, "if someone has a gun and a 40% chance if hitting you, you would take the situation very seriously." The same concept applies here since we are dealing in a realm where probabilities usually hover around 40-60%. The good traders have an intimate history with their particular charts and can gauge their probabilities well, and manage their trades well.

Obviously the simple trading math goes: if it's a 40-50% probability trade you typically want around 2:1 reward to risk. 60%+ percent you can do 1:1 but it is very difficult for traders to consistently achieve 1:1.

Don't be too fooled by channel drawings and lines. It is s/r but they break. You have to consider the implications of s/r breaking. "Hmm the bulls weren't even good enough to hold this s/r, what does that say about them? If you were long here would you be disappointed and possibly be looking for a pullback opportunity to get out with a smaller loss?" etc.

>>3584009

That's where the double bottom bull flag is. If you're a longterm investor looking for a swing it is an okay buy.

Basic day trading math:

If your probabilities are around 40-50% you want to swing for at least 2x what you're risking. If probabilities are 60% or better you can scalp with 1:1 reward risk.

If you're a longterm investor you are buying in this area for a swing. It's okay to buy here but if price goes lower you will probably just want to scale in at strategic spots and obviously not panic sell.

We're in a trading range now. Buy anywhere from here down to 3k and hold long for a long time. If it goes under the measuring gap and 3k then this is not a healthy bull (it's already not that healthy with the sell-off being strong). If we move back up past 4100 there will probably be sellers above scaling in again. If we test up near the all time high the bears will be setting up for a lower high or higher high major trend reversal (google it +al brooks) and that will have to be examined.