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Book Discussion: Reading Price Charts Bar by Bar by Al Brooks
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Book Discussion: Reading Price Charts Bar by Bar by Al Brooks

  #101 (permalink)
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cunparis View Post
I was trying what you said, using a 10 range bar for a 10 tick scalp (this is on CL). First problem is slippage. When the bar closes and I clicked enter I'd be about 2 ticks above. So I'd need an additional 11 ticks to get my 10. And during all that testing I realized that the illusion of getting one more bar was just that. The market doesn't know I'm using a 10 range bar. It's not going to give me a bar just cause I want it to. And often it doesn't.

But the real problem was I was getting into bad trades because I wasn't reading the market correctly. The market was distorted. Compressed. Things looked like a good entry when in fact market was in consolidation etc.

I don't think 10 ticks is a good scalping target on CL. I think 5 or 6 is more like it. Mike and others would know better as they trade CL more than me, though I've looked at a lot of CL charts to believe that 10 ticks, while not uncommon, is probably too much to expect from a scalp. 20+ tick trend moves can be commonly had if you get in at the right time, but I wouldn't call those scalps. Anybody else want to chime in?

In general, having studied charts from many instruments, anything that gets you $50-60 per contract of profit is a reasonable scalping target. That's 4-5 on the ES, 5-6 on 6E/6A, 5-6 on CL, 2 on ZB, etc. The problem with scalping is that you're paying 8-10% of your profit to your broker in commissions, assuming you had a profit.

Perhaps this all depends on one's definition of a "scalp" is. Looks like I just gave mine.

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  #102 (permalink)
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shodson View Post
I don't think 10 ticks is a good scalping target on CL. I think 5 or 6 is more like it. Mike and others would know better as they trade CL more than me, though I've looked at a lot of CL charts to believe that 10 ticks, while not uncommon, is probably too much to expect from a scalp. 20+ tick trend moves can be commonly had if you get in at the right time, but I wouldn't call those scalps. Anybody else want to chime in?

In general, having studied charts from many instruments, anything that gets you $50-60 per contract of profit is a reasonable scalping target. That's 4-5 on the ES, 5-6 on 6E/6A, 5-6 on CL, 2 on ZB, etc. The problem with scalping is that you're paying 8-10% of your profit to your broker in commissions, assuming you had a profit.

Perhaps this all depends on one's definition of a "scalp" is. Looks like I just gave mine.

Hey shadson thank you for sharing that it's definitely food for thought. I picked 10 ticks because I thought of the setup while using a 10 range chart. so I was wanting it to go just 1 bar (technically 1 bar + 2 ticks for entry and exit).

The problem I have with scalping for 5 or 6 with CL is that CL is always going 2 ticks forward and 1 tick back.. then 10 forward and 10 back hehe.. I'm using a 300 tick chart & 5 min so I shouldn't call these scalps.

If one was to scalp 5 or 6 ticks on CL what chart size would one use?

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  #103 (permalink)
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cunparis View Post
If one was to scalp 5 or 6 ticks on CL what chart size would one use?

Well, if you're using range charts then it's just a 5 or 6 range chart. As for time or tick charts, it depends on what sort of time frame you want to trade. Look at the ATR for whatever time frame you are trading to get an idea as a typical scalp target.

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  #104 (permalink)
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shodson View Post
I don't think 10 ticks is a good scalping target on CL. I think 5 or 6 is more like it. Mike and others would know better as they trade CL more than me, though I've looked at a lot of CL charts to believe that 10 ticks, while not uncommon, is probably too much to expect from a scalp. 20+ tick trend moves can be commonly had if you get in at the right time, but I wouldn't call those scalps. Anybody else want to chime in?

In general, having studied charts from many instruments, anything that gets you $50-60 per contract of profit is a reasonable scalping target. That's 4-5 on the ES, 5-6 on 6E/6A, 5-6 on CL, 2 on ZB, etc. The problem with scalping is that you're paying 8-10% of your profit to your broker in commissions, assuming you had a profit.

Perhaps this all depends on one's definition of a "scalp" is. Looks like I just gave mine.

In my opinion you have to scalp 10 ticks off CL if you're going to scalp it. Clearly it depends upon one's definition of a scalp but the way I see it is a scalp can be defined based on the expectancy of how long you will be in the trade (e.g. only being in the trade for 1 min vs 5 min). That being said I feel you must shoot for 10 ticks scalping the CL is because of the relative stop loss that you have to use. CL moves too quick and erratically to use a stop loss of anything less then 8-10 ticks. Thinking long term I don't think using a strategy of targeting 5-6 ticks and having a stop loss of 8-10 ticks would be profitable. It relies too much on having many more winners then losers.

FYI, I rarely scalp CL but when I do I look for 10-14 ticks or so and I usually don't enter on a scalp but rather I enter for a runner and will make a subjective decision to close the trade if I feel the momentum waning (which is quite frequently so I guess I do scalp a fair amount )

Blz

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  #105 (permalink)
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Here are 2 failed breakouts on CL from this morning using Brooks approach. The second image I did something a little different and I looked at the 1 min chart to spot the entry as the range on the 5 min was so choppy and didn't provide as clear of an entry point as the 1 min did. So in essence the trade is entirely set up off the 5 min but I looked at the 1 min for entry.

FYI, I didn't take either of these. Got some other things to do today so wasn't 100% focused plus as I posted on yesterday I'm still working on my confidence with these setups but I am happy to report I'm noticing them quicker and quicker every day.

UPDATE: Just added a third picture of a 6B failed breakout that just happened. Nothing huge but could be easily free riding it right now.

Blz

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Book Discussion: Reading Price Charts Bar by Bar by Al Brooks-cl_failed_bo_1.png   Book Discussion: Reading Price Charts Bar by Bar by Al Brooks-cl_failed_bo_2.png   Book Discussion: Reading Price Charts Bar by Bar by Al Brooks-6b_breakout.png  

Last edited by Blz17; October 16th, 2009 at 01:23 PM.
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  #106 (permalink)
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haim View Post
see CREBA in today's chat......

I saw the CREBA stuff in the chat. As it is not related to the style of price action trading that this thread is intended for it would be appreciated if we could keep it out of this particular thread.

Thank you.

Blz

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  #107 (permalink)
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Two more great Brooks style price action setups on CL this afternoon. I did not take them as I have been busy taking care of other things today and was not 100% focused but I did spot them in real time. Hopefully next week I'll be able to focus 100% and make some coin.

Also, I have gone ahead and switched to the 5 min chart. Despite the larger stops that are needed I'm finding the price action much easier to interpret and the patterns are far more successful.

Blz

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  #108 (permalink)
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Blz17 View Post
In my opinion you have to scalp 10 ticks off CL if you're going to scalp it. Clearly it depends upon one's definition of a scalp but the way I see it is a scalp can be defined based on the expectancy of how long you will be in the trade (e.g. only being in the trade for 1 min vs 5 min). That being said I feel you must shoot for 10 ticks scalping the CL is because of the relative stop loss that you have to use. CL moves too quick and erratically to use a stop loss of anything less then 8-10 ticks. Thinking long term I don't think using a strategy of targeting 5-6 ticks and having a stop loss of 8-10 ticks would be profitable. It relies too much on having many more winners then losers.

Your experience matches mine. I'm currently testing a new setup for a 10 tick trade (scalp?). I had my ATM strategy set to trail a stop loss starting at -12 and I put my hard stop at -10. That effectively makes the trail stop kick once price hits +2. Anyway, I watched twice today as price went up 5-6 ticks then came back down and hit my trailing stop and then continued up above my target. I've only been trading CL for 2 months now but so far I see CL does more back and forth than any other market I've traded. So after that happend the 2nd time I turned off the trail stop and will see how that goes.

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  #109 (permalink)
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Blz17 View Post
Here are 2 failed breakouts on CL from this morning using Brooks approach.

This is too funny! I went long on that "BO".


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  #110 (permalink)
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Blz17 View Post
Two more great Brooks style price action setups on CL this afternoon.

Also, I have gone ahead and switched to the 5 min chart. Despite the larger stops that are needed I'm finding the price action much easier to interpret and the patterns are far more successful.

Blz - I want to thank you for picking up the ball on the Brooks book and sharing your setups. You're doing very well with them. In my ES trading I love trading reversals because I often have a 1-1.5 stop. I love low risk trades like that. I especially like the one you showed here (failed breakout of the low) because if one got really good at this and did a runner, what a runner it would have been!

I'm a bit bummed cause all morning I fought it out with CL only to finish +$10 and go to dinner. I come back and there was a huge run.

Anyway, please keep your examples coming. It's very helpful. I'll try to post some too.

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