Track 'n Trade Bulls 'n Bears Trading System

Calculating BnB Bullish/Buy vs. Bearish/Sell signals.

Video Transcript

In this video, I want to introduce you to how we identify and highlight when a market changes from neutral to bullish and from neutral to bearish.

Markets can only do three things, they can go up, known as bullish, they can go down, known as bearish, and they can go sideways, known as neutral.

To go long, of course, means that we are anticipating a rise in price, to go short means we anticipate that prices will fall, and a neutral market means that prices move sideways, with no definable up or down-trend.

The question we try to answer with mathematics, computers, and probabilities, is how far must a market move, before we determine that it has left the neutral zone, and started a new bullish, or bearish trend?

Most popular oscillating indicators never provide any kind of neutral zone calculation, they simply switch directly from bullish to bearish, without ever calculating anything in-between, yet it's been calculated that the average market only trends, either bullish or bearish, 33% of the time, while spending 67% of its price movement in a stagnated or neutral state.

It's these types of oscillating indicators that cause us, as traders, to experience a lot of whipsaw, jumping in and out of the market unnecessarily, and it's for this reason that we've added into the Bulls ‘n Bears the ability to identify this sideways channeling of markets.

We use this information to help keep us out of the market during times of stagnation, or to implement strategies that take advantage of stagnated markets.

Within the Bulls ‘n Bears, as mentioned before, we have three primary calculations used to make this determination, and in this example, I'm going to show you the primary differences between these three formulas, and the timeframes where each formula seems to excel.

The Traditional formula has the widest span and coverers the broadest and most conservative range of neutral bars; this is done by performing a rolling Fibonacci calculation on the current trend, and using the Golden Ratio zone between 38.2% and 61.8% as our primary neutral zone.

The Bulls ‘n Bears has been programmed to generate a bullish or bearish arrow, which signals when the market leaves the Fibonacci neutral zone, and has either accelerated bullish, into higher prices, or decelerated bearish, into lower prices.

This is also where we get the color change. As long as the price bars remain within the neutral zone, the Bulls ‘n Bears leaves the price bars colored yellow, but as soon as prices leave the Fibonacci neutral zone to the upside, the Bulls ‘n Bears generates a bullish arrow, and changes the price bars to green, and conversely, when prices leave the neutral zone to the downside, it generates a bearish arrow, and turns the price bars red.

The Progressive formula provides the exact same information, but with a much tighter calculation of the neutral zone, which tends to provide us with earlier signals; which of course, means there is a trade-off, anytime we opt to receive earlier signals, we also take the risk that some of those early signals are more prone to false starts.

The Aggressive formula, completely removes the natural zone altogether and provides the quickest possible switch from Bullish to Bearish possible. Again, this formula is highly prone to false starts, and is generally best used on short intraday trading time frames.