Chapter 2
Trend Bars, Doji Bars, and Climaxes
The market either is trending on the chart in front of you or it is not. When it is not, it is in some kind of trading range, which is composed of trends on smaller time frames. When two or more bars largely overlap, they constitute a trading range. The trading range can have many shapes and many names, like flags, pennants, and triangles, but the names are irrelevant. All that matters is that the bulls and bears are in some equilibrium, often with one side slightly stronger. On the level of an individual bar, it is either a trend bar or a trading range bar. Either the bulls or bears are in control of the bar or they are largely in equilibrium (a one-bar trading range).
The two most important concepts in trading are that there is a mathematical basis for everything, and that at any moment when you are convinced of the market's direction, there is someone equally smart who believes the opposite. Never be convinced of anything, and always be open to the possibility that the market will do the exact opposite of what you believe. Although the market at times is imbalanced and moves strongly up or down for many bars, most of the time it is relatively balanced, even though it might not appear to be so to a beginner.
Every tick is a trade, which means that there was someone who thought that the price was a good value to sell, and someone else who thought it was a good value to buy. Since the market is controlled by institutions and they are ...
