| Probability
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Items
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| 90%
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- 90% bars on the chart are within trading range[1].
- In a strong bull trend day (more than 50 bars above MA), 99.5% of the time there are at least 3 bars with L below EMA.
- No matter how strong the trend is, 99.5% of the day it gets to EMA sometime during the day.
- No matter how strong the trend is, 99.5% of the day there is at least one bar closes below the EMA. Example of the 0.5%: 20221122.
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| 80%
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- The 80/20 Rule: in a trend, 80% of reversal attempt fails; in a TR, 80% of BO attempt fails.[2]
- when big gap down, 85% chance of PB in 1st two hours.
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| 70%
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- if a bar is exceptionally bigger than other bars(i.e. surprise bar), 70% chance of MM, especially when it has ok FT (at least doji).[3][4]
- probability of success of 70 percent or better (reward has to be at least half as big as risk just to break even):
- Scalps, but since most traders cannot consistently pick trades with a 70 percent chance of success, they should trade a scalp only if the reward is at least as large as the risk. For example, if you believe that a two-point stop is needed in the Emini, take the trade only if at least a two-point reward is reasonable[5].
- if bull is trying to BO above of a triangle, 70% chance of PB to apex of Triangle[6].
- 70% outside down days closes at lower 1/3 of the range, only 20% closes above middle point[7].
- when big gap down, 70% chance of swing down after 10am.
- if yesterday was climactic, there is 75% chance of trading range for a few hours today[8].
- when big gap down, 75% chance trending trading range day.
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| 60%
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- Probability of success of 60 percent or better (reward has to be at least as big as risk to break even)[9]:
- Buying a high 2 pullback to the moving average in a bull trend.
- Selling a low 2 pullback to the moving average in a bear trend.
- Buying a wedge bull flag pullback in a bull trend.
- Selling a wedge bear flag pullback in a bear trend.
- Buying a breakout pullback from a breakout of a bull flag in a bull trend.
- Selling a breakout pullback from a breakout of a bear flag in a bear trend.
- Buying a high 1 pullback in a strong bull spike in a bull trend, but not after a buy climax.
- Selling a low 1 pullback in a strong bear spike in a bear trend, but not after a sell climax.
- Shorting at the top of a trading range, especially if it is a second entry.
- Buying at the bottom of a trading range, especially if it is a second entry.
- Trend reversals:
- After a strong break of the trend line, look for a reversal after a test of the trend's extreme where there is a good reversal signal bar. Traders are looking to buy a higher low or a lower low at a bottom, or to short a higher high or a lower high at a top.[10]
- Strong final flag reversal.
- Buying a third or fourth push down in a bear stairs pattern for a test of the low of the prior push down.
- Selling a third or fourth push up in a bull stairs pattern for a test of the high of the prior push up.
- Entering using limit orders; this requires more experience reading charts, because the trader is entering in a market that is going in the opposite direction to the trade. However, experienced traders can reliably use limit or market orders with these setups:
- Buying a bull spike in a strong bull breakout at the market or at the close of the bar, or on a limit order at or below the low of the prior bar[11] (entering in spikes requires a wider stop and the spike happens quickly, so this combination is difficult for many traders).
- Selling a bear spike in a strong bear breakout at the market or at the close of the bar, or on a limit order at or above the high of the prior bar (entering in spikes requires a wider stop and the spike happens quickly, so this combination is difficult for many traders).
- Buying a bear breakout at around a measured move, if the breakout is not too strong—for example, if the range is about four points tall in the Emini, buying on a limit order at four points below the range, risking four points, and expecting a test of the breakout point. Only very experienced traders should consider this.
- Selling a bull breakout at around a measured move, if the breakout is not too strong—for example, if the range is about four points tall in the Emini, selling on a limit order at four points above the range, risking four points, and expecting a test of the breakout point. Only very experienced traders should consider this.
- Buying at or below a low 1 or 2 weak signal bar on a limit order in a possible new bull trend after a strong reversal or at the bottom of a trading range.
- Shorting at or above a high 1 or 2 weak signal bar on a limit order in a possible new bear trend after a strong reversal or at the top of a trading range.
- Buying at or below the prior bar on a limit order in a quiet bull flag at the moving average.
- Shorting at or above the prior bar on a limit order in a quiet bear flag at the moving average.
- Buying below a bull bar that breaks above a bull flag, anticipating a breakout pullback.
- Selling above a bear bar that breaks below a bear flag, anticipating a breakout pullback.
- 60% chance a climactic sell off for 15-20 bars on the open evolves into TR[12].
- 60% of trending TRs reverse and test into early TR[13]. This means traders sell the high of prior TR and scale in higher can make money.
- when big gap down, 60% chance of swing down in 1st hour.
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| 50%
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- 50% of strong moves on the open reverse.[14]
- FOMC breakout has 50% chance of reversing, like a breakout on the open[15].
- when yesterday was a buy climax, there is a 50% chance of follow through buying in next day starting from 1st hour[16]. Vice versa.
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| 40%
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An average MTR setup has about a 40% chance of leading to a profitable swing[17].
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| 30%
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An average MTR setup has about a 30% chance of a small loss, and a 30% chance of a small profit[18].
Major bull surprise usually only have 30% chance of a bear trend[19].
when big gap down, only 35% chance gap will close today.
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| 20%
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- only 20% of time the first bar leads to H or L of the day[20]
- The 80/20 Rule: in a trend, 20% of reversal succeed; in a TR, 20% of BO succeed.
- 25% of the time after a buy climax day, you get an hour or two rally the next day[21].
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| 10%
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10% of time, market is in breakout, price moves fast to find new TR[22].
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