Keep the trend type in context while trading

Trends come in three broad varieties. The usual most common is the elastic trend, which snaps back and forth based on buying and selling pressure. Most traders expect every day to act like this and will lose big on the other two type of days.

The second type of trend is a soft trend which essentially maintains a slow grind (usually up) pulling back only a tick or two below previous bars. Shorting such days based on any standard setups is a recipe for bleeding your account every six bars or so.

The third type of trend is a hard trend day which moves (usually down) relentlessly. There are up moves, but none of them are worth trading since they take your focus off what you should really be doing: wait for a with trend move and hold till end of day or climax.

By the first two or three bars you should have already known that this was a hard trend day. And on hard trend days, there is only one rule: There are no counter-trend trades. Yes, the move from b15 to b19 was good but that was the exception. Most counter-trend trades lost today and almost any with-trend trade succeeded. The other interesting feature of hard trends is that overshoots need to be very deep to give pullbacks. And only an obnoxious overshoot with a large climax bar can terminate the trend. Hard trend days need to break and go into trading ranges before they can continue or reverse. On many days such as today, they will push relentlessly till the end of day.

There are very few entries from the perspective of a normal or elastic trend. Today we had the 1st reversal on bar 1. If you watched the bar forming, You would see it popped up 4 ticks in the first few seconds and then stayed down. A reversal bar off a sharp overshoot above a gap is a signal any trader should take. b5 was a 1st pullback and if it wasn't for the impending news which often runs stops is the best swing entry of the day.

If you missed that, there was an A2 on b23, which was also a good swing entry. The entire lunch move saw only failed H1s in a hard trend and you could short below any pullback that did not have a large tail. This takes some practice to do and I often let them pass. A final A2 at b75 gave 6 points. Its never too late to enter with trend on a hard trend day.

Market types and setups

The price action that defines markets can be divided into several types and each type has setups that typically work for it. Trending markets for example, facilitate with trend trades and usually cause reversal setups to fail with high probability. Trading ranges on the other hand, facilitate fading breakouts with high probability.

I divide the market price action into the following categories:

Trend (or elastic trend): There is an obvious trending in the market. Bars in the direction of the trend are small, close strong and there are multiple bars in any given trend-side push. Bars against the trend are fewer, usually larger and if there is more than a single bar, closes are usually weaker.

Hard Trend: This is a kind of trend where there are very few bars in the counter-trend direction. With-trend bars can be large or small, pullbacks are usually just a bar or two. This is a very strong trend.

Soft-trend: Bars are very small both trend-side and counter-trend-side. Very shallow pullbacks and pushes.

Channels: Channels look like Soft-trends but with one big difference. Unlike the trends above, a pullback in a channel often overlaps into the previous signal bar.

Trading Range: There is no discernible trend. Erratic movements usually lasting two or three pushes in one direction followed by pushes in the opposing direction. A move in one direction may or may not reach the other side before reversing, therefore hard to gauge profit target.

Barb Wire: A special kind of Trading range where the price action is confined to a narrow range made of small bars, many of which are dojis

The Open: Markets that have "Regular Trading Hours" have opens and closes for the day and the open of a given day has often behavior that may look entirely unlike the previous day. When the market opens and the first bar begins to form, the market is not in any of the above states yet and is considered to be in the open state. This lasts for about 10 bars or so.

The Setups
Each price action type has its own list of setups. A setup that works very well for hard-trend will fail for a channel and vice-versa. These 30 setups cover every possible large move from any type of price action. If you master these, you can trade any market.

There is a small number of setups per price action type and you can focus on a much smaller set of patterns. Setups marked beta are sustained observations but I'm unsure if they can be traded profitably in all kinds of markets. I may drop them in the future.

Setup List

Setup	Name	Trade type	Price Action Type
GRb1	Gap reversal b1	X -- Beta	Open
ib2	Inside bar b2	X -- Beta	Open
1Fb1	1st failure of b1	X	Open
2Fb1	2nd failure of b1	X	Open
1P	1st pullback	X	Open
1FBO	1st fbo of OR	X	Open
2FBO	2nd fbo of OR	X	Open		G	Gap
1W	1st Wedge of day	X	Open		R	Reversal
1TL	1st close at TL	X	Channel		T	trend
1CBO	1st channel BO	X	Channel		b	bar
1ib	1st inside bar	X	Channel		b1	bar 1
CBP	channel BP	X	Channel		P	pullback
CXT	channel XT	X	Channel		1P	1st Pullback
SD	shallow+deep	X	Channel		S	small/shallow
fL2	failed L2	X -- Beta	Channel		OR	Opening Range
fL2	failed L2	X	Soft Trend		TL	Trend Line
STb	small Trend bar	X	Hard Trend		BO	breakout
Tb1	Trend from b1	X	Hard Trend		BP	breakout+P
2_1tF	2nd 1TF	X	Hard Trend		P	pullback
2SP	2nd shallow P	X	Hard Trend		XT	expanding TRI
1TAIL	1st Tail	X -- Beta	Hard Trend		TRI	Triangle
WP	Wedge pullback	X	Trend		BW	Barb Wire
TLP	P at TL	X	Trend		1TF	one tick failure
W	Wedge Reversal	X Rev	Trend
Rfx2	Reversal+fx2	X Rev	Trend
W1P	W + 1st pullback	X Rev	Trend
FBOFx2	FBO + FX2	X fBO	Trading Range
WFBO, DP	Wedge FBO	X fBO	Trading Range
TRI BP	Triangle BP	X BO	Trading Range
XT	Expanding Triangle	X BO	Trading Range
BWBO	Breakout from BW	X BO	BW

Setups not listed above such 1Rev, A2, BO, etc are obsolete due to various reasons such as being incorporated into the list above, me not using EMA anymore and inconsistent profits.