Trading Techniques  |  BON 2007

Defining The Bull And The Bear by Chuck Dukas

Defining The Bull And The Bear by Chuck Dukas “Bullish” and “bearish” are terms frequently used to describe the price behavior of financial instruments. What exactly do they mean? All price action can be categorized into six phases of trends that describe the cycle of markets. You can apply this insight to any financial instrument on any time frame. Although the principles will be illustrated with daily bars, you can utilize the concepts on intraday data, daily, weekly, or any time frames on commodities, stocks, or indexes or in fact any financial instrument subject to market forces. To be able to precisely categorize all price activity into the six phases enhances your ability to assess the quality of the price structure of the instrument you are examining. You can take this one step further by categorizing price with specific moving averages enabling you to statistically analyze price structure. In addition, this allows you to compare the quality of different instruments using specific criteria, enhance objectivity, and reduce subjectivity. Finally, but perhaps most important, it is a guide on how money can be deployed in the markets; the core principles of trend analysis can be used in constructing trading systems or in adjusting capital exposure in an instrument according to its phase.

by Chuck Dukas