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Book Discussion: Reading Price Charts Bar by Bar by Al Brooks
For reference,check out the chart from page 14(post#138). Just taking any H1,H2,L1,L2 is a losing strategy.Learning the proper context to take a Hx or Lx is very important.The "key" to increasing your odds of success in any trade is learning to read context and apply it correctly.For example,the size of the bars,the close of the bars,the number of bull trend bars in a row,the size of the tails or lack of tails(shaved),the amount of overlap,the number of pushes(legs) completed in the trend,previous days swing highs(possible resistance areas),the strength of the pullbacks,etc.When considering whether to trade H1's or H2's in a bull trend a trader should consider the strength of the trend.H1's work only in very strong trends. In most bull trends a price action trader would be looking to possibly take H2's.Why? because most pullbacks in trends have at least two small legs.Using a bar numbering system with the first bar of the trading day as bar 1 and the last bar 81(rth) the day started with a large bear gap and then on bar 4 the market reversed with a bull trend bar.What followed were three bull pushes(legs) and two pb's(each having two small legs) that formed a bull trending trading range channel.Al teaches to watch for three pushes that may overshoot a trend channel line (tcl) or a wedge.Why? because it usually signals a trend reversal of at least a hour or more that will many times break the bull trendline setting up the test of the extreme(in this case high of day).If you print out the chart and draw a line from bar 2 high thru bar 9 high and extend it to the right,you will notice that bar 31's high overshoots this line(could be either a tcl or wedge).After the tcl os and reversal a trader could anticipate at least a pullback(pb) to the bull tl(drawn form bar 4 low to bar 13 low and extended to the right) and probably at least a hour or more pb.bar 37(9:35) did bounce off the bull tl technically triggering the H2 but because were anticipating a much longer pb were not looking to trade any Hx's yet.I would be looking for a bull trap(failed H2) to fuel the next leg of the pb especially during the middle of the day.The pb after the tcl os lasted about a hour and half breaking the bull tl and pulling back on bar 48's low to test(db) bar 24's low forming a double bottom bull flag.Then the bull trend resumed for the test of the hod.HTH
Trading: Equities, index options and futures/futures options
Posts: 190 since Apr 2010
Thanks Given: 66
Thanks Received: 198
One thing that gets overlooked when discussing Al's techniques is that he has been doing this for a LONG time. He has stated that it took him about 10 years to become consistently profitable and he has been trading for more than 20 years. I've had the chance to watch him during the day and his ability to read the market seems eerie until you realize the tens of thousands of hours he has logged watching price action unfold every day. Perhaps one reason why the book is so difficult (beyond the horrid editing) is that so much of what Al does has become instinctive and difficult to systematically explain. I notice his articles on a single subject are much clearer than the book which tries to encompass everything.
Thanks Great Webinar! There is one trade from watching the news. Fade the market with the news anchors say the market is at new high or lows for the day.
Platform: NinjaTrader (It's a love/hate relationship)
Trading: CL, TF, 6E
Posts: 169 since May 2010
Thanks Given: 60
Thanks Received: 314
I miss those frequently. You really have to think quick. You get so focused on managing the open trade that you don't have time to analyze for stop-and-reverse potential.
I missed two great scalps this morning also. Lots of times I try to enter on limit orders rather than stops as it can greatly improve the R:R. Especially today as the bars are so two-sided. Unfortunately, sometimes you don't get filled and you have two choices then: chase the market or sit out. I sat out a lot today. Frustrating, but it's a calculated risk on my part and I feel it's worth it for the better R:R.
I took this late and exited early. But it was a 1pip failed breakdown, with YM it can be as much as 5 if the market is fast. 1 are the best and least scary.
I should have entered @ 10072, which would have been a signal that a reverse was possible. Instead went for the high probability entry @ 75 and should have set 91 as the target, but I just woke up, needed coffee & and was helping someone with a bad entry. It was a Traders Intuition moment that I even made a trade.
R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
I should add that I only took this because BSV39 showed much weaker selling on the attempt to break down. I use this template on all non-ladder charts, time frame does not matter. Get excited about making a trade when I see this on an 8K Volume chart.
One more point, on the ladder the previous 2 1k volume bars had high volume rungs @ 10073. Another factor in my decision, but also caused me to wait until 75 for entry.
R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
