CHAPTER 8Bar Patterns: Estimating Risk and Setting Bar Size
Section 8 starts off by identifying three bar patterns, key, closing point, and island, that can be used to identify potential reversals. This section then goes on to discuss the very important topic of risk and various ways that risk can be measured. The Risk of Ruin formula is also discussed in detail. Position sizing, determining bar length, and setting up multiple bar lengths for trading are all skills taught in Section 8.
QUESTION 8.1 EGN with Bar Pattern
What is the bearish bar reversal pattern?
How would you describe this pattern?
What candlestick pattern is it similar to?
What's the difference between the similar candlestick pattern and the bar reversal pattern in this example?
QUESTION 8.2 F with Bar Pattern
What is the bearish bar reversal pattern?
How would you describe this pattern?
What candlestick pattern is it similar to?
What's the difference between the similar candlestick pattern and the bar reversal pattern in this example?
Draw an arrow to, and name the type of, gap on this chart.
Why doesn't the bullish bar prior to the gap qualify as the same bar pattern as “1”?
QUESTION 8.3 GILD Risk (NASDAQ)
A trader is going to trade a daily chart of Macy's (M) and will use a $7.66 trailing ...
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