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Book Discussion: Reading Price Charts Bar by Bar by Al Brooks
TRO - this thread is about the Brooks book. Please stay on-topic. If you're not reading this book then please keep your price theories and methods in your own thread. I say that with the upmost respect, I want to keep this thread on topic.
Can you help answer these questions from other members on NexusFi?
Jeff, thanks for posting the new Sharky indicator on my ES chart. I am impressed, which is saying something because I do not like indicators. This could be the single exception!
At the same time, this thread is for discussing the brooks book so please help me to keep it on topic.
Notice also that there is a trendline break followed by 2 legs up (the legs are small) and then a test of the high.
It's very cool how his patterns are related. And hats off to you, you seem to be finding them on your charts. I hope others will participate as well but even if it's just you & I, I think we're going to learn a lot together.
Now the question is can we do it real time? I'm going to be trying on Monday on ES 5 min chart.
The only part that I'm not sure about is "trying to take those trades". I prefer to have a setup and take every trade. Otherwise human judgement comes in and we will take the easy trades which are not always the best ones. Doing what he recommends requires great discipline and lots of practice & experience.
BTW I have one more thought on this pattern/setup. It's an entry pattern. But Brooks says in his book that we should swing part of our position until we get a signal in the opposite direction. This is key. My biggest challenge is not knowing when to get out of a trade. Even if one doesn't use the brooks patterns for entering, one could use them to take profits or at least tighten stops. For me I already have a couple reliable setups that I use (breakouts), I'm looking to the Brooks setups for two reasons:
1 - get an earlier entry (this isn't an immediate goal but more for later when I'm more comfortable)
2 - know when to take profits on my swing / runner.
One just have to be careful because his setup start as a scalp and then you decide to swing or not. If you have a runner you don't want to exit on a little scalp setup in the opposite direction, but I'm thinking if I already have a nice open profit I might want to take it at those points.
I'm studying my charts looking for these brooks patterns and I see this one everywhere. I originally posted this chart in my volume thread but I just noticed that it has the brooks reversal pattern. Twice.
After the first trendline break there are two legs up to retest the high. Then another trendline break and another two legs up to retest the high.
I am trading/learning PA in a chat room for Brooks only.
(the room is closed, wants to stay small, is not looking for new members)
Why do I mention it then? As I think it is a good way and on the Brooks page is a chat (a bit basic) too.
We discuss there things like TLB and now 2nd leg up, could be DT, wedge is there too, L2 could be good setup, all when it comes up. You have to decide by yourself, but it helps to listen how others see Brooks stuff in the PA. And trading is a lonely business.
There is also a dark side. The rooms are tending for some reasons to scalp, so I often have to fight with me to keep a part as a potential runner.
Another thing with comments on almost every bar is the risk of overtrading which is a big problem for me.
Therefore I am working on a "method", where I write in advance the entry reasons on my chart (like DT, W, EMA G2 in the last example). So I have written down reason 1, reason 2,... of my trading plan. This helps me to be more selective. As a bar needs 5 minutes, there is enough time to do. Another advantage is, that I can post the chart in advance of the possible trade without talking much about, as German speaking, English means always a kind of effort, and when trading I need no such distractions. And when work is done, I can leave these annotations on my charts to archive them like some kind of a journal.
It is easy to have a setup with a fixed PT. As it is easy and you have part of your profit at home – and you never know what the market will do next - I do so too. For example: part at 8t, part at 12t, then for the rest stop to BE+2 and let it run... Especially the 6E often reverses very quickly, so you are on the save side and the bills are paid.
With the runner, there are lots of possibilities... In this 6E example I did it with MM of the wedge. But this was only the start of a much bigger run down...
This whole exit problematic is where I try to work more in the future. I like your thinking about that.
But now it's time for Sunday jogging...
1) I posted pages from the book and made comments. It should be obvious to the reader that I read those pages.
2) Big Mike Trading Forum Mission statement: "We are a small community of traders with one goal: making money. If a book is misleading traders, or leading them down an unprofitable path, shouldn't someone point that out if the goal truly is "making money"?
3) I thought the topic was about reading price charts bar by bar, one thousand apologies for my misunderstanding.
4) When one reads a book, everything should be questioned rather than swallowed. Opposing views should be looked at. How else can one make profitable trading decisions?
Please do not take this post as a sign of disrespect. My only intention is to educate traders so they can make money.
This is the smallest font available. I hope no one has trouble reading it.
