What are the four kinds of technical trade?
Markets alternate between trending and ranging. Every technical trade is one of four bets: a trend continues, a trend ends, a level holds, or a level fails. Naming which one you are taking is what makes a journal entry honest and a backtest meaningful.
What it is
Markets alternate between trending, where price keeps going one way, and ranging, where price bounces between levels. Every setup you will ever take is one of four: trend continuation, trend termination, a support or resistance level holding, or that level failing.
Why it matters
A pullback entry and a breakout entry are opposite bets on the same chart. Until you say which of the four you are taking, you cannot test the rule, and the journal cannot tell you whether the trade followed the plan. The Markets screen tags each pair trend or range so you start from the right question.
What the research says
The technical-analysis literature that holds up under testing argues that an edge exists only in moments where the market is slightly less random than usual, and that without such a statistical advantage no amount of discipline or money management helps. Sorting trades into these four categories forces you to state the advantage you think you have, so that it can be checked.
Open the Markets screen, look at the trend / range tag on your pair, and say which of the four your next setup is before you draw it.
The Art and Science of Technical Analysis, Adam Grimes (2012).
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