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Track 'n Trade Bulls 'n Bears Trading System

Market Filters

Video Transcript

In this Track 'n Trade Bulls 'n Bears educational video, I want to quickly cover the use of filters. Now, filters are little tricks that we use to help us know if market Buy signals are Bullish or if market Sell signals are Bearish.

We have three basic filters that we use to help us identify the best Buy signals and the best Sell signals. The use of market filters can help move the odds of success more directly in our favor. And is the key to helping us eliminate whipsaw.

Here's an example of a Bullish buy signal. Notice that a Bullish buy signal is a Green price bar where the close of that price bar, closed higher than the previous Yellows price bars close; and higher than the Green price bars open. Optimally, we would also like to see this Green price bar close higher than yesterday's high, but that's not necessary to still be considered a Bullish buy signal.

Now, here's an example of a Bearish buy signal- we have a Yellow price bar followed by a Green price bar. But notice that the close of the Green price bars lower than the Yellow price bars close; and is lower than the open. This means that this price bar, although Green, is considered to be Bearish. In this case we might want to consider waiting for a second green confirmation price bar, before entering the market. Optimally we only want to enter the market long on a Bullish buy signal.

Now, lets talk about Bullish and Bearish sell signals. A bearish sell signal is a Yellow price bar followed by a Red price bar. Where the Red price bar close is lower than the Yellow price bar close; optimally, lower than the Yellow price bars low. For best results, this is the signal we want to see before entering the market with a short position.

Of course, a Bullish sell signal would be a Yellow price bar, followed by a Red price bar. Where the close of the Red price bar is higher than the close of the Yellow price bar.

If we receive this signal, we might want to consider waiting for a second Red confirmation price bar, before entering the market with a short position.

We rarely want to enter a market long, if we receive a Bearish buy signal, and we rarely want to enter the market short, if we receive a Bullish Sell signal.

The software has the ability to weed out these negative signals, through the use of filters, if we so choose.

One last filter I want to consider is the Neutral Buy/Sell signal. A Neutral signal is either a Green or a Red price bar where the high and the low are within price boundaries of the previous Yellow price bar.

This is what we call an inside day- where the trading price range never broke out of the previous days price range.

These are considered non-event days, where nothing happened. We wouldn't want to enter the market based on the signal derived from a non-event or neutral day. Again, the computer can filter these out for us, if we so choose.


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