What I noticed with brooks H2/L2 is that they often occur at the setups I take. So I consider it another way of looking at it. I typically won't trade without a volume setup so I don't know if I'll ever take H2/L2 by themselves but if I get several signals lining up then I'm all over it.
I now have 7 criteria that I look for and if I get say 3 or so I pull the trigger. H2/L2 is one of those.
I took this trade with my usual criteria. This is what I was talking about with Brook's H2, often the H2/L2 coincides with my own setup. And this is what happened with Vic's 2B. It's all just different ways of seeing price action. The more ways you learn to see the more clear they become and the more confluence you have with signals then the higher the probability of a winning trade. I already had 4 of my criteria.
Up +13 ticks, target is 32 but I may cut this short cause it's lunch and I can see volume has already dropped off (see the LV bars)..
Update: Took profit at 9 ticks. Volume is dead and it could find support at 20 EMA. Time to pick up my little one from daycare and take her to the playground.
Good trading everyone, I'm taking the evening off to spend time with the wife.
So last week was a little rough for me, nothing too bad but was on a roll of hitting the bad trades and missing the good ones. Part of this is emotional and I know this. We all have those moments where we get stopped out, it messes with our head and we miss the next picture perfect setup. That being said I felt like there was something I was missing. I could see the grand picture but it always felt like my entry was on the wrong bar or as I alluded to the setup was right but the better entry was a few bars later (right about the time I was fuming over getting stopped out). Now enter signal bars.
Mike started a thread on inside and outside bars and that got me thinking. Perhaps I wasn't seeing the forest through the trees or in this case I'm probably not seeing the trees through the forest. What I mean is I was so focused on the grand picture that I forgot some of Brook's initial points about fine tuning the entry. So, over the past few days I've made it a point to focus on individual bar setups within the context of the overall pattern. For example, excluding very specific setups, I will only enter a long after a green bar or a short after a red bar. This point was so blatantly obvious that I overlooked it. If I'm looking long of course I want the bulls to be in control. If they're not in control then I'm bottom picking.
I'd encourage anyone serious about learning Brooks patterns to go back to page 13, read it and the next 10 pages or so. After observing and trading based on some of the principles of the signal bars I have avoided many fake outs and been hitting (or observing) more winners
P.S. I'm working on an outline of Brooks concepts, setups, signal bars, rules, etc and will post it when complete. I'm designing it with my own thought process in mind so it's designed for me but if it helps someone else then hooray!
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Strangely I find the reverse best ie if I want to go long I love it when a white entry bar follows a black signal bar.
Still waiting for Brooks' book so these are just my own observations over a few days.
Not exclusive but to my mind the pattern has trapped some people short which of course means some stops will be around my signal bar and that feeds the initial impulse - again just thoughts no scientific testing. :-)
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