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Track 'n Trade Bulls 'n Bears Trading System

Neutral Markets

Video Transcript

We know that markets move in waves- two steps forward one step back, then two steps forward, and one step back, again. Basically, a stair-stepping approach, as the market moves up or down a trend. We see this type of action on a short term basis, as well as a on a longer term basis. This is where we as traders make the majority of our profits. The problem comes when a market is not in either an up trend or a down trend- but a sideways trend. As mentioned earlier, a market can only do three things- it can go up, it can go down, or it can go sideways.

The problem that we as traders run into, and where systems fail, is when markets go into long sideways trends. They're not going either up or down.

Lets talk for moment about the Yellow Light. Notice on the Bulls 'n Bears Indicator, that we have Green price bars when the market's in a Bullish trend. We have Red price bars when the market is in a Bearish trend. We also have Yellow price bars, of course, Yellow price bars are our warning lights. Warning us that the market is neither Bullish or Bearish, but that it is sitting somewhere in between. This Yellow Light is very good at helping us determine when a market is becoming ripe to trade. When the market moves out of it's Yellow or neutral state, it's at that point that it enters into a new trend.

Our concern at this critical moment is, will it continue in that direction or will it whipsaw, and return back to the Yellow state, once again.

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