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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

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  #1 (permalink)
 cunparis 
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In the Holy Grail thread Garry recommended this book:

"Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader (Wiley Trading)"

Amazon.com: Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader (Wiley Trading) (9780470443958): Al Brooks: Books

After reading the description and the reviews, I decided it was exactly what I was looking for. Well I got it this week and I must say it's way more than I was looking for. The author trades ES on 5min chart with 20 EMA as his only indicator. And he does exactly what he says, he introduces some concepts and then goes by by bar through the chart looking at the bars. I have not seen a better book on trading without indicators.

He starts out with a story that's familiar to many of us, I know BigMike & I have taken the same path: He learned all the indicators and then spent years writing indicators and strategies to use them. He finally concluded that it doesn't work and that one has to learn to trade the price action! If only I had found his book 2 years ago! But seriously I think everyone needs to start down that path (indicators & strategies) so that they can fully understand what's going on and the limitations of the indicator approach.

Two weeks ago I started trading currencies "naked" (without any indicators). Last week I added CL. So far it has been two profitable weeks for me. I'm never going back to indicators!

I read the first chapter and to be honest, it's quite a lot to take in. I followed his examples but I found myself just reading trying to finish the chapter. After I finished I realized that one needs to spend a lot of time really understanding the material and then try to apply it to your own charts. I think it could easily take over 100 hours to learn the information in this book and if you want to master it then I think thousands.

That's a big commitment so I plan to go little by little. And that gave me the idea of starting a thread about it so that people reading the book can ask questions of each other and post examples. I always find the best exercise is to learn a new concept and then find examples from my real charts. This way I know if it really works or if the examples in the book were cherry-picked. Often it's the latter, but once in a while you find something that really works.

A slight warning, the way the book is written could be a bit better organized. The guy really jumps in head first, talking about patterns he hasn't explained (he explains them later on) so you have to be on your toes. He isn't spoonfeeding anything, this is clearly a book for advanced traders who do not use indicators.

So if you're interested, get the book and then we can get this discussion going. One more note, I do not plan on attempting to teach the material in the book (I'm totally incapable of that, it's mostly new to me). So reading the book will be mandatory. My idea for this thread is we discuss it, answer each others' questions, and most importantly try to find examples of the setups and patterns on our own charts so that we can incorporate his ideas into our trading. Learning the material in the book will be a lot of hard work. This is not a book for bedtime reading. So if you want to participate, you must commit yourself to doing the work. No one can do the work for you.

Thanks Garry for the recommendation, I think you found a gem.

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  #2 (permalink)
 RodS 
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Yes I picked up his book a couple of weeks ago. I agree and believe that price action is the only way to go.

His book is extremely hard to follow. I have finished it for the first time now I am starting to go through for the second. I believe I will get much more out of it this time.

I look forward to this thread.

Rod

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  #3 (permalink)
 cory 
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somebody wrote Al bar label for faster reading.
LegHL indicator - NinjaTrader Support Forum

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 Poocher 
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Impressive looking just from the feedback here and the little I read at Amazon.

Did the author qualify his technique as being best for the ES, other indexes or just price action in general?

I'm trying to stick to the eurusd spot and know I should have an underlying bias based on pa alone.

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 wh 
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for good old germans

read the book "das große buch der markttechnik" ... a very good price action explain book
all my knowledge came from this ...

i read this in 2 weeks and after one year too and learned too.

wh

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 websouth 
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Poocher View Post
Impressive looking just from the feedback here and the little I read at Amazon.

Did the author qualify his technique as being best for the ES, other indexes or just price action in general?

I'm trying to stick to the eurusd spot and know I should have an underlying bias based on pa alone.

There are some discussions on this over here


Along the lines of having a permanent long or short bias but pick one and stick to it. The rest is money management. That way you don't try to guess the market. I also trade the spot forex...

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 bermarti 
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I too purchased the book and am in the process of reading it. There is a tremendous amount of great information, I only wish I could remember and apply more of it. It will take at least two readings but well worth the time and effort IMO.

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  #8 (permalink)
 GarryM 
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Cunparis,

You are right, when you say it's not light reading. For me, it has been the most difficult trading book I have ever read.

For those who learn better by listening to Al Brooks, try this:

Futures I-Trade Show Now On-Demand!
The I-Trade Show uses the latest technology to bring the insights and lessons from real traders directly to you! Visit with the hottest companies and exchanges in the exhibition hall where you can browse the newest products, presentations, and tools available
to you today.



EVENT DETAILS
ON-DEMAND: May 21- August 19
HOW DO I REGISTER? Click Here to register or visit FuturesMag.com
COST: FREE
AGENDA: Click Here to view complete show agenda


What You Will Learn:
  • A Month of great trades, presented by Al Brooks
  • The Natural Number Method: A breakthrough strategy for capturing market profits,
    presented by George Kleinman
  • Using the "smart money" to your advantage, presented by Larry Williams
  • Futures 101: Understanding the building blocks of trading, presented by Dan Gramza
  • Using options to curb risk and protect profits, presented by Tom Sosnoff
  • Trader Profile: Jamie Charles, Trading forex with force


These events happen a few times a year and Al gives some great ideas in his presentations. He is one of the most popular of the presenters.

Al also suggests that beginners start with the most important chapter, number 15.

In reference to Poocher, Al scalps the emini and then catches an occasional swing day trade on some of the more popular day trading stocks.

Bermarti, I read it once, and really didn't have a clue, it's that overwhelming. I went back and just picked up some tips, that meshed with me, at the time. I am getting ready to start working on it again.

Garry

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  #9 (permalink)
 TheWizard 
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Thanks for the recommendation. I, too, found a copy on Half.com today for $44.00 (plus $3 or $4 shipping). Look forward to expanding my knowledge.

After all, it's what you learn AFTER you know it all, that counts!
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 Poocher 
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Thanks Websouth





websouth View Post
There are some discussions on this over here


Along the lines of having a permanent long or short bias but pick one and stick to it. The rest is money management. That way you don't try to guess the market. I also trade the spot forex...


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  #11 (permalink)
 Poocher 
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Okay GaryM...the ES and individual stocks so I'd guess his stuff would apply to PA in general.








GarryM View Post
Cunparis,

You are right, when you say it's not light reading. For me, it has been the most difficult trading book I have ever read.

For those who learn better by listening to Al Brooks, try this:

Futures I-Trade Show Now On-Demand!
The I-Trade Show uses the latest technology to bring the insights and lessons from real traders directly to you! Visit with the hottest companies and exchanges in the exhibition hall where you can browse the newest products, presentations, and tools available
to you today.


EVENT DETAILS
ON-DEMAND: May 21- August 19
HOW DO I REGISTER? Click Here to register or visit FuturesMag.com
COST: FREE
AGENDA: Click Here to view complete show agenda


What You Will Learn:
  • A Month of great trades, presented by Al Brooks
  • The Natural Number Method: A breakthrough strategy for capturing market profits,
    presented by George Kleinman
  • Using the "smart money" to your advantage, presented by Larry Williams
  • Futures 101: Understanding the building blocks of trading, presented by Dan Gramza
  • Using options to curb risk and protect profits, presented by Tom Sosnoff
  • Trader Profile: Jamie Charles, Trading forex with force






These events happen a few times a year and Al gives some great ideas in his presentations. He is one of the most popular of the presenters.

Al also suggests that beginners start with the most important chapter, number 15.

In reference to Poocher, Al scalps the emini and then catches an occasional swing day trade on some of the more popular day trading stocks.

Bermarti, I read it once, and really didn't have a clue, it's that overwhelming. I went back and just picked up some tips, that meshed with me, at the time. I am getting ready to start working on it again.

Garry


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  #12 (permalink)
 cunparis 
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GarryM View Post
Cunparis,

EVENT DETAILS
ON-DEMAND: May 21- August 19
HOW DO I REGISTER? Click Here to register or visit FuturesMag.com
COST: FREE
AGENDA: Click Here to view complete show agenda

I tried to register but it's too late (after Aug 19).

Gary, I didn't skip to ch 15 but maybe I should. Should we start with that chapter here? I plan to study it and then try to find examples on the markets I trade. I'm glad to post them here to share, and if others do the same we could all benefit.

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 Saroj 
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While you are waiting for your book to arrive:
Reading price charts bar by bar (Open Library)

It is also avaliable as a DNL book... I don't know what the cost is to download, but the online applet is neat.. you can highlight, add Notes and do other good stuff while working through the material... including taking snapshots and annotating them as you wish:
Reading Price Charts Bar by Bar - al brooks, john wiley & sons

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 GarryM 
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Cunparis,

Al Brooks is the one who says beginners should begin at chapter 15.

I found myself jumping all over the place trying to learn his methods,
possibly a little ADD.

Garry

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 terratec 
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The book is very hard to read. Even harder if English is not your language. I would like someone did a Brooks for Dummies.

I find his EOD comments on his website very useful:
Brooks Price Action - IntegraMOD Default

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 cunparis 
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Ok guys, let's get the ball moving.

First, I suggest everyone read the chapter he recommends, I think it's 15. it's about the best trades. To summarize he's looking for:

- in a trend, a reversal bar after a pullback, entering in the direction of the trend
- after a trendline break, look for a reversal bar after a failed test of the high/low

These are similar to the trading that I do, although I didn't require a TL break to go countertrend, I think it's an excellent idea to reduce risk.

What do you say? Can we post some charts showing these patterns and then discuss them?

Can we agree to keep to the 5 min timeframe? I used to trade ES on tick charts and recently I started trading everything on 5min (except CL which is too wild for 5 min IMHO) and I really like 5 minutes. Gives you time to think and analyze the price action.

As for the market, I think we should leave that open. Stocks, ES, whatever you want. This way everyone can see some other markets they may not usually trade.

Another comment of his that I like is one that I really believe in. If a move comes back to your entry then it's probably not a good move. Cause a good move wouldn't come back to let everyone on. The good ones take off.

There are so many gems in this book..



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 cunparis 
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Here's a trade I learned while reading brooks' book on the way home from work.

Trading is really easy when you let price be your only indicator!


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 Blz17 
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I just got the book today!


Blz

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 cunparis 
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Blz17 View Post
I just got the book today!
Blz

It's not an easy ready but I hope you will put in the time so that we can discuss it together. I've learned a lot so far. I think there is a lot of ideas that one can incorporate into just about any trading style. I took another reversal like the one I posted above, on CL and made 30 ticks. My best CL trade of the day and it didn't even come from my normal system!

The book is really a gold mine. It'd take a year or more to learn everything in it.

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 terratec 
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EMA Gap
In this case, sideways or up trend with gap below EMA

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 Blz17 
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cunparis View Post
It's not an easy ready but I hope you will put in the time so that we can discuss it together. I've learned a lot so far. I think there is a lot of ideas that one can incorporate into just about any trading style. I took another reversal like the one I posted above, on CL and made 30 ticks. My best CL trade of the day and it didn't even come from my normal system!

The book is really a gold mine. It'd take a year or more to learn everything in it.

I plan on going nuts reading through this thing. Especially after hearing the feedback from you and others as to what its all about. Gonna be a fun weekend. I'll post my thoughts as I pick through it.

Blz

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 Saroj 
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terratec View Post
The book is very hard to read. Even harder if English is not your language. I would like someone did a Brooks for Dummies.

I find his EOD comments on his website very useful:
Brooks Price Action - IntegraMOD Default

Thanks for that link. I poked around a little bit, but its late so limited... However I didn't see any end-of-day comments (or by "EOD" did you mean something else?)

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 terratec 
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Go to "Forum" and then "Trading Updates from Al Brooks". There you will find the EOD comments from Al and discussions about the comments. Highly recommended!
As the book, the portal is not easy to navigate.
There is also a chat room.
Many articles... "Extreme Scalping" helped me a lot...
Worth to walk around... and come back

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 cunparis 
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terratec View Post
EMA Gap
In this case, sideways or up trend with gap below EMA

Awesome job terratec! Thank you for sharing. I hope others will choose just 1 or 2 patterns and then learn to trade them and share their charts. I'm going to choose mine today, then go back over the past week looking for them. Will share my results.

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 cunparis 
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Hey guys I'm working on my perfect trading charts and I came across this example of a trade from the Brooks book.


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 yroyal 
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Price tested the premarket high, then there is a reversal bar showing failure of the test. BUT the next bar after that didnt break the LOW of the reversal bar...

This simple filter will keep you out of a lot of losing trades from my experience...

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 cunparis 
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yroyal View Post
Price tested the premarket high, then there is a reversal bar showing failure of the test. BUT the next bar after that didnt break the LOW of the reversal bar...

This simple filter will keep you out of a lot of losing trades from my experience...

I totally agree. I was too premature. Thanks for pointing that out!

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 yroyal 
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Cunparis, nothing premature about it.. theres an urge always to take trades at the best price which leads to overlooking such things. I have fallen through such pitfalls myself many times and paid the price for it... good luck !

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 cunparis 
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cunparis View Post

P357 (Best Trades):


Quoting 
One of the best reversal patterns is a trendline break with strong momentum followed by a two-legged test that results in a new extreme...

Around 10:25 there was a trendline break (trendline not shown). And then a two leg move up to test the high. Exactly as he said. I tell you guys, this book is amazing. I'm going to keep quiet about it. Going to keep this between Al & I. Shhhh....

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 sp139214 
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I have the book.. got it early this week... slow read.... Let's talk this book up amongst ourselves and share our findings...

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 Jeff Castille 
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Hey Cunparis,

I thought you might like to see what your previous chart looked like with the dots on it. Scalper paradise.


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 cunparis 
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sp139214 View Post
I have the book.. got it early this week... slow read.... Let's talk this book up amongst ourselves and share our findings...

Here's what I'm doing. I started with Best Trades. Then I went to my favorite setup about pullback in trend. Then I read the part about day trading. Then I read the chapter on the opening. Just in those chapters alone I have weeks of work to do to try and learn it. I totally agree that one should start with just one setup and master it before adding others.

In my case I already have a couple setups that I'm trading so I'm looking to learn about his setups because they could give me an earlier entry and they could help me with my exits which is my weakest part.

I hope that helps.

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 TheRumpledOne 
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READING PRICE CHARTS BAR BY BAR

1) Price will either breakout of the high, low or both of the previous bar

or

2) Price will not breakout of the previous bar.

That is all there is to know. You can not reduce it any further. Anything else complicates the issue.

You either decide to:

1) Wait and do not enter a trade

2) Trade a breakout

3) Trade a reversal.

Those are your ONLY 3 options.

TRADING IS SIMPLE. DO NOT COMPLICATE IT. DO NOT BE FOOLED.

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 terratec 
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And again EMA Gap, with DT, W, iii

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 jonesr9 
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Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader - By Al Brooks

http://books.google.com/books?id=GrDQYq-ChpUC&pg=PP1&dq=al+brooks+price+action&ei=LVP_Sb67EpPMNZn8xNkD#v=onepage&q=&f=false

It's not the complete book but people can read the pages that have been posted.

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 crez 
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Jeff, are the dots painting at the close of the bar?

Cheers

Adam

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 TheRumpledOne 
Tucson, AZ
 
 
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jonesr9 View Post
Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader - By Al Brooks

http://books.google.com/books?id=GrDQYq-ChpUC&pg=PP1&dq=al+brooks+price+action&ei=LVP_Sb67EpPMNZn8xNkD#v=onepage&q=&f=false

It's not the complete book but people can read the pages that have been posted.



Read the above and see if you can spot the flaw. It sounds good at first glance. But this is one of the reasons 95% of traders lose.

If you don't want to end up like the herd, then do not follow the herd.

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 TheRumpledOne 
Tucson, AZ
 
 
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SO YOU DO NOT THINK I AM ALWAYS NEGATIVE



The author says a few things that are TRUE:

EVERYTHING IS RELATIVE, ...

EACH TICK CHANGES THE PRICE ACTION OF EVERY TIME FRAME CHART...

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 TheRumpledOne 
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THIS MAY HELP YOU SEPARATE THE WHEAT FROM THE CHAFF WHEN READING ABOUT TRADING:


Critical Thinking Skills





Paul, Binker, Jensen, and Kreklau (1990) have developed a list of 35 dimensions of critical thought:

  • "A. Affective Strategies

    • S-1 thinking independently

      S-2 developing insight into egocentricity or sociocentricity

      S-3 exercising fairmindedness

      S-4 exploring thoughts underlying feelings and feelings underlying thoughts

      S-5 developing intellectual humility and suspending judgment

      S-6 developing intellectual courage

      S-7 developing intellectual good faith or integrity

      S-8 developing intellectual perseverance

      S-9 developing confidence in reason

    B. Cognitive Strategies--Macro-Abilities

    • S-10 refining generalizations and avoiding oversimplifications

      S-11 comparing analogous situations: transferring insights to new contexts

      S-12 developing one's perspective: creating or exploring beliefs, arguments, or theories

      S-13 clarifying issues, conclusions, or beliefs

      S-14 clarifying and analyzing the meanings of words or phrases

      S-15 developing criteria for evaluation: clarifying values and standards

      S-16 evaluating the credibility of sources of information

      S-17 questioning deeply: raising and pursuing root or significant questions

      S-18 analyzing or evaluating arguments, interpretations, beliefs, or theories

      S-19 generating or assessing solutions

      S-20 analyzing or evaluating actions or policies

      S-21 reading critically: clarifying or critiquing texts

      S-22 listening critically: the art of silent dialogue

      S-23 making interdisciplinary connections

      S-24 practicing Socratic discussion: clarifying and questioning beliefs, theories, or perspectives

      S-25 reasoning dialogically: comparing perspectives, interpretations, or theories

      S-26 reasoning dialectically: evaluating perspectives, interpretations, or theories
    C. Cognitive Strategies--Micro-Skills

    • S-27 comparing and contrasting ideals with actual practice

      S-28 thinking precisely about thinking: using critical vocabulary

      S-29 noting significant similarities and differences

      S-30 examining or evaluating assumptions

      S-31 distinguishing relevant from irrelevant facts

      S-32 making plausible inferences, predictions, or interpretations

      S-33 evaluating evidence and alleged facts

      S-34 recognizing contradictions

      S-35 exploring implications and consequences" (p. 56)



"Critical thinking is important, because it enables one to analyze, evaluate, explain, and restructure our thinking, decreasing thereby the risk of adopting, acting on, or thinking with, a false belief. However, even with knowledge of the methods of logical inquiry and reasoning, mistakes can happen due to a thinker's inability to apply the methods or because of character traits such as egocentrism. Critical thinking includes identification of prejudice, bias, propaganda, self-deception, distortion, misinformation, etc. "

Critical thinking - Wikipedia, the free encyclopedia

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 Jeff Castille 
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crez View Post
Jeff, are the dots painting at the close of the bar?

Cheers

Adam

This question should be addressed to zeller.......I did not do the programming.

The setting on the indicator is set to false.

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 cunparis 
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TheRumpledOne View Post

READING PRICE CHARTS BAR BY BAR

1) Price will either breakout of the high, low or both of the previous bar

or

2) Price will not breakout of the previous bar.

That is all there is to know. You can not reduce it any further. Anything else complicates the issue.

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.

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 cunparis 
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Jeff Castille View Post
Hey Cunparis,
I thought you might like to see what your previous chart looked like with the dots on it. Scalper paradise.

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.

Thanks

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 cunparis 
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terratec View Post
And again EMA Gap, with DT, W, iii

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.

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 cunparis 
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Read the above and see if you can spot the flaw. It sounds good at first glance. But this is one of the reasons 95% of traders lose.

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.

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 cunparis 
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cunparis View Post
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.

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.

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 cunparis 
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cunparis View Post
Notice also that there is a trendline break followed by 2 legs up (the legs are small) and then a test of the high.

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.

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 terratec 
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cunparis View Post
Now the question is can we do it real time? I'm going to be trying on Monday on ES 5 min chart.

About real time...

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.

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 terratec 
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cunparis View Post
My biggest challenge is not knowing when to get out of a trade.

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...

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 TheRumpledOne 
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cunparis View Post
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.

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.



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 TheRumpledOne 
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cunparis View Post
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.

That's part of the flaw.

This is the smallest font available. I hope no one has difficulty reading it.



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 record100 
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"Ctrl +" is the command to increase font in Web Browser if someone is having problems

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 cunparis 
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TheRumpledOne View Post
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.

TRO - My comment was made in response to a post of yours which did not mention the book or any material from the book. It was one of your posts that you post over and over ("price goes up or down, ...") , and it was off-topic for this thread.

Your later posts where you read parts of the book are very interesting and I welcome them. My only comment there is to be careful because without reading all of the book, if you just take a few paragraphs they could be out of context. The book is not organized very well and I find the same information repeated and scattered throughout the book.

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 Blz17 
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I got the book on Friday and once I got going I haven't been able to put it down.

I noticed 2 Brook's style setups on CL this morning and have attached a pic. I don't know if I'm getting these exactly right but the book certainly has me looking for some new types of setups.

Blz

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 terratec 
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TLB, FBO, LL
I like it. It's one from chapter 15 (best trades)
In this case it is not perfect, but close is close enough.


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 cunparis 
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terratec View Post
TLB, FBO, LL
I like it. It's one from chapter 15 (best trades)
In this case it is not perfect, but close is close enough.

Excellent trade terratec!

After reading several times "best trades", "daytrading stocks", glossary, "first hour", and the pullback chapter, I'm now starting at the beginning again and I'm currently on signal bars and reversal bars.

This book is amazing. But very challenging. I plan to sim some brooks trades on ES today.

I think this trade from yesterday qualifies as a brooks trade. I saw the TL break and a FBO (did make a HH but due to news). I put a stop one tick under the low around 3pm and as the bar reversed it triggered.


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 terratec 
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cunparis View Post
After reading several times "best trades", "daytrading stocks", glossary, "first hour", and the pullback chapter, I'm now starting at the beginning again and I'm currently on signal bars and reversal bars.

This book is always with me, and it looks very old...


cunparis View Post
I think this trade from yesterday qualifies as a brooks trade. I saw the TL break and a FBO (did make a HH but due to news). I put a stop one tick under the low around 3pm and as the bar reversed it triggered.

I would say it is the same setup as I did in the last 6E trade. Just in the other direction. Great trade. Brook's comment of the FOMC day and short setup is interesting too.
I do not trade FOMC days. Wait or donate...

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 cunparis 
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I took a brooks trade on the open. There was a failed double bottom pattern.



I was mistaken, I got 1 pt on runner and 1 pt on the scalp so 2 points total. For some reason Ninja is showing $46, not sure why.

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 cunparis 
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cunparis View Post
I took a brooks trade on the open. There was a failed double bottom pattern.

I'm going to have to read the book again to find out how he manages his stops. Had I moved my runner stop to BE I would have been taken out just before the big move. Had I kept it above the entry bar high I'd still be in. A bummer cause this looks like it may end up being the HoD.

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  #59 (permalink)
 cunparis 
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I read the day trading chapter for the 3rd or 4th time. is it just me or is this book really difficult to read? After 30 min I have to put it down or my head will explode.

My other comment is that I would like to see how the author would have traded each bar. As it is, it is a review bar by bar in hindsight. Often "one would wait for a second entry which occurred 2 bars later" kind of makes me suspicious. But we gotta take what we got and learn it. It's a treasure trove of information.

Here is what I reinforced today:

- you must have two reasons to take a trade (he lists them in the daytrading chapter)
- always think about what is luring in traders on the opposite site and trapping them
- think about how you could be getting trapped by the opposite side
- don't go countetrend if there is a lot of momentum. wait for the 2nd reason (TL break, failure, etc.)

I tried it yesterday but was just practicing entries and moving my stops etc. I'm not comfortable risking 2 pts to get 1 pt scalp. The runner makes up for it but right now ES has a very low range (14 pts) so runners are rare. So I'm going to set my target equal to my stop and do 1 contract and see how that goes.

Heck I will post my trades from yesterday but don't laugh. I was just fooling around.

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  #60 (permalink)
 TheWizard 
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Quoting Cunparis: So I'm going to set my target equal to my stop and do 1 contract and see how that goes.

My 2 cents: (passing this on, which was passed on to me, from another member: helpful link).

"Here is a quick way to determine if your performance numbers will make you money and how quickly.
Random Equity Curve Simulator of a trading system. Learn it before you trade Play with it you will see 1:1 loses over time."

After all, it's what you learn AFTER you know it all, that counts!
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 cunparis 
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TheWizard View Post
Quoting Cunparis: So I'm going to set my target equal to my stop and do 1 contract and see how that goes.

My 2 cents: (passing this on, which was passed on to me, from another member: helpful link).

"Here is a quick way to determine if your performance numbers will make you money and how quickly.
Random Equity Curve Simulator of a trading system. Learn it before you trade Play with it you will see 1:1 loses over time."

You have to enter both a win/loss percentage and an avg win/loss ratio.

Your expectancy equation is % wins * avg win - % loss * avg loss. 1:1 ratio is only part of the equation. If you believe 1:1 cannot be profitable then you have a misunderstanding about expectancy. With 1:1 you only need to win more than you loose. If you win more than 50% of your trades then you're profitable.

Every must understand this completely before trading, it's very important. This book covers the subject in way more detail than one needs but I recommend it:

Amazon.com: Trade Your Way to Financial Freedom (9780071478717): Van Tharp: Books

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 cunparis 
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Also I add that Brook's ratio is often less than 1:1. He risks up to 2 pts and his scalp profit target is 1pt. He even says you have to win 67% of your trades or something like that but then goes on to show how trailing your stop and catching runners increases your reward/risk ratio and lowers the percentage required.

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 Silvester17 
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The runner makes up for it but right now ES has a very low range (14 pts) so runners are rare

I think 14 pts is a pretty big range, almost 1.50 %. I remember a few years back 5 pts was considered a big range. The increased volatility has to do with the growing number of derivative instruments. Certainly good for the brokers (commissions), but maybe not so for a healthy market.

Forgot: Allez les Bleus

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 TheWizard 
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cunparis View Post
You have to enter both a win/loss percentage and an avg win/loss ratio.

Your expectancy equation is % wins * avg win - % loss * avg loss. 1:1 ratio is only part of the equation. If you believe 1:1 cannot be profitable then you have a misunderstanding about expectancy. With 1:1 you only need to win more than you loose. If you win more than 50% of your trades then you're profitable.

Every must understand this completely before trading, it's very important. This book covers the subject in way more detail than one needs but I recommend it:

Amazon.com: Trade Your Way to Financial Freedom (9780071478717): Van Tharp: Books

Thank you. I guess I was looking at it too simplisticly.

After all, it's what you learn AFTER you know it all, that counts!
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 cunparis 
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Silvester17 View Post
The runner makes up for it but right now ES has a very low range (14 pts) so runners are rare

I think 14 pts is a pretty big range, almost 1.50 %. I remember a few years back 5 pts was considered a big range. The increased volatility has to do with the growing number of derivative instruments. Certainly good for the brokers (commissions), but maybe not so for a healthy market.

Forgot: Allez les Bleus

I guess it's relative. It was up to 50 in the past year. It hasn't been as low as it is now for a few years. since I've only been trading 2 years, I've never seen it this low.

Here's my thinking: Unless you catch the absolute top or bottom, your chance of a big win is pretty slim.

14 pts = - 2-3 pts off the top - 2-3 pts off the bottom = around 9 pts in the middle.

The chance of getting a good runner is low. Back before the summer I was often getting 4-6 pts on my ES trades. Then July & August came and the range trimmed down and I was no longer profitable because I was still using setups for a 4-6 pt trade. Since then I've changed to trade primarily Euro & CL where I don't have this problem. I don't see much reason to trade ES & YM when currencies & oil move so much more.

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 Silvester17 
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cunparis View Post
I guess it's relative. It was up to 50 in the past year. It hasn't been as low as it is now for a few years. since I've only been trading 2 years, I've never seen it this low.

Here's my thinking: Unless you catch the absolute top or bottom, your chance of a big win is pretty slim.

14 pts = - 2-3 pts off the top - 2-3 pts off the bottom = around 9 pts in the middle.

The chance of getting a good runner is low. Back before the summer I was often getting 4-6 pts on my ES trades. Then July & August came and the range trimmed down and I was no longer profitable because I was still using setups for a 4-6 pt trade. Since then I've changed to trade primarily Euro & CL where I don't have this problem. I don't see much reason to trade ES & YM when currencies & oil move so much more.

Yes but you got spoiled last year. That was a record year in terms of volatility. It even beat the great depression. Now it's more like back to reality.

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 cunparis 
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Silvester17 View Post
Yes but you got spoiled last year. That was a record year in terms of volatility. It even beat the great depression. Now it's more like back to reality.

I don't think so. I think the markets have changed and will be more volatile for a while. When the next leg of the bear market starts up I think we'll see a return to high volatility. Right now the day range is around 14 and volume is very low (except the past couple days). People aren't interested at the current prices. Once it starts down people will trade more and we'll have a lot of volatility again. Who knows maybe even some of my automated strategies will start working again (they were optimized during the bear market).

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 Blz17 
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This book makes my head want to explode. Okay not really but wow this book is very intense. I haven't had as much time to read it as I would have liked but I'm slowly grinding through it. That being said I think this book is an absolute wealth of information. My goal from this book is to continue to trade my style as described in my journal but to refine my entries and exits using Brook's price analysis.

As I begin to understand more of Brook's setups I plan on posting the charts in this thread as I see them. Hopefully after reading the book a few times and watching the charts spotting the setups will become second nature.

Blz

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 cunparis 
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Silvester17 View Post
Yes but you got spoiled last year. That was a record year in terms of volatility. It even beat the great depression. Now it's more like back to reality.

I was reading a journal this weekend of a guy's volatility breakout system and back in 2002 he was concerned that his system would stop working if the ES range went below 7 pts. Amazing. I wasn't around at that time so 14 seems low to me. Now it could happen with us, if it goes back to 7 our current strategies counting on 14+ may no longer work.

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 cunparis 
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Blz17 View Post
My goal from this book is to continue to trade my style as described in my journal but to refine my entries and exits using Brook's price analysis.

This is exactly my goal too. I quit trading a system because I became unprofitable for a while. Well that's when I removed indicators and tried something different. So last night I was looking at my charts using my old setup (indicators) and I saw things differently. I saw that where I'd usually enter would be too early, but waiting for a TL break and a retest it would have been profitable. I started doing some perfect trading charts and I found myself applying Brooks concepts. I think the Brooks ideas could be what I was missing. That and going for 1 month without indicators taught me to read price better. So this week I'm going to trade my old system on simulator and see how I do. For example I was using 4 pt stop. Using a brooks entry criteria (an event such as TL break + reversal bar) I can now get in at a better time and use a 2 pt stop. This alone should make a huge improvement. Before I was trying to time entries on a smaller timeframe. That didn't work and I realize that by going to a smaller timeframe I was just entering on noise.

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 Silvester17 
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cunparis View Post
I was reading a journal this weekend of a guy's volatility breakout system and back in 2002 he was concerned that his system would stop working if the ES range went below 7 pts. Amazing. I wasn't around at that time so 14 seems low to me. Now it could happen with us, if it goes back to 7 our current strategies counting on 14+ may no longer work.

I like to check the VIX index. Some traders won't take a trade below a reading of 30.

VIX Index Quote - Cboe Volatility Index Index Quote - VIX Quote - VIX Index Price

There's a NT Vix indicator as well, but I didn't find it very useful.

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 terratec 
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I think Brooks does not tell us new things. Just in a different way. The pattern with TLB and RB is also known under different other names by other "gurus". So other patterns are.
He is not fixed to patterns, but focused to little parts that could end in patterns, also your own patterns.

This morning again: TLB, EMA G2, PB, S/R... more would be overflow.

@cunparis: You are not the only one who has to stop reading the book after 30 minutes...




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 Blz17 
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I attached a chart of what looks like a classic Brooks style setup. I'm still learning his material but I believe this is a pattern he looks for. The pattern on there is a break of a long term trendline, followed by two waves down, then a run back to the highs forming a double top and finally a reversal bar.

Let me know what you think.

Blz

P.S. I didn't take this trade as I'm still learning the material (though I clearly wish I had).

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 AynRandFan 
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This is gonna sound hella stupid, but one of the points he made in the book that has permanently stuck itself in my head (I think it's in the preface, not sure on that) is that even without a chart, you have a 50% chance of being right.

Think about that for a moment.

You have a 50% chance of being right in any trade without any chart at all.

Now, how many traders do you think there are out there... sitting next to some very expensive computers that are running incredibly complex formulii -- and yet performing at a rate beneath that of a coin-flip?

You have a 50% chance of being right in any trade without any chart at all.

That's a fact, right there.

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 cunparis 
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AynRandFan View Post
This is gonna sound hella stupid, but one of the points he made in the book that has permanently stuck itself in my head (I think it's in the preface, not sure on that) is that even without a chart, you have a 50% chance of being right.

Please define "being right".

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 blenderking 
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AynRandFan View Post
This is gonna sound hella stupid, but one of the points he made in the book that has permanently stuck itself in my head (I think it's in the preface, not sure on that) is that even without a chart, you have a 50% chance of being right.

Think about that for a moment.

You have a 50% chance of being right in any trade without any chart at all.

Now, how many traders do you think there are out there... sitting next to some very expensive computers that are running incredibly complex formulii -- and yet performing at a rate beneath that of a coin-flip?

You have a 50% chance of being right in any trade without any chart at all.

That's a fact, right there.

I get the concept behind this statement. But I'd argue that two traders can take that coin flip trade (one long and the other short) and both lose money. Your money management principles are still at play (position size, price target, stop placement, etc.). Technically speaking, both traders can take the opposite side of the trade and still both win, or both lose.

The entry is only the 1st shot in the battle, not the battle itself.

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 caprica 
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i am enjoying this thread immensely. just ordered this book so look forward to some discussions on not trading with indicators..... maybe we can balance things out a bit on this forum......

"Let us be thankful for the fools. But for them the rest of us could not succeed." - Mark Twain

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 cunparis 
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blenderking View Post
I get the concept behind this statement. But I'd argue that two traders can take that coin flip trade (one long and the other short) and both lose money. Your money management principles are still at play (position size, price target, stop placement, etc.). Technically speaking, both traders can take the opposite side of the trade and still both win, or both lose.

The entry is only the 1st shot in the battle, not the battle itself.

This is where I was going with my "define being right" question. Cause I totally agree with the 50% chance theory.

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 AynRandFan 
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cunparis View Post
Please define "being right".

Well, the author's apparent meaning behind making this statement concerns direction only, i.e., you have a 50% chance of being "correct" in terms of direction in any trade you make, no chart required. To be fair, here, the author doesn't belabor this point -- it's just something that struck me as profound -- and still does, by the way.

Getting from that 50% to the area of 51% is where our true battles lay.

***** ***** *****

On another note, going through a chart literally bar-by-bar is a worthy exercise -- taking an hour or so to do this at least once in your life can be pretty revealing... in the sense that it can change your "feel" for the markets. I don't have the language skills to really explain what I mean, here -- but believe me when I tell you that a close examination of opens, highs, lows, and closes (and grasping how they tend to work together in trends and contrast one-another in chop) is very much worthy of your time -- it's a frame of reference that sort-of congeals in your head... not trying to thread-jack here, by the way.

Back to the topic of the book.

(A truly great thread-concept, by the way!)

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 terratec 
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Friday the 6E was much better tradable than the day before...

Brooks does not take care about FloorPivots or Fibonacci. In ES I do only care about when there are big moves like last winter with 10% intraday. But in 6E I care about pivots and sometimes fibos.

After the news the market went down with strong momentum and turned at S1 after an overshot of 4 ticks, realizing that is was the wrong direction. That happens often after news.
The strong move up ended with a TCLO and an overshot of R1. Followed by a PB, which broke the TL in a "weak" way. The retest of the high formed a HH. So we could expect two legs down after the RB. The pattern is very strong and the same as the Vic 2B reversal pattern

After the trend reversal, the first leg ended with a MTLB and a PB. The overshot of the resistance and the RB started the 2nd leg down, which ended one tick above the PP. A sign for lack of weakness. So a long was not a bad idea. When looking at the setup with MTLB, PB, retest of low with LL, RB, EMA G, we see that it is the same as before, just long.



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 RJay 
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AynRandFan View Post
This is gonna sound hella stupid, but one of the points he made in the book that has permanently stuck itself in my head (I think it's in the preface, not sure on that) is that even without a chart, you have a 50% chance of being right.

Think about that for a moment.

You have a 50% chance of being right in any trade without any chart at all.

Now, how many traders do you think there are out there... sitting next to some very expensive computers that are running incredibly complex formulii -- and yet performing at a rate beneath that of a coin-flip?

You have a 50% chance of being right in any trade without any chart at all.

That's a fact, right there.


Hi All,

A few thoughts...

If its just a coin toss, why do 85 percent of traders get their clocks cleaned?


I'll agree to this 50% notion only under specific criteria.


Both trades must be made at the same time with no slippage.

There cannot be any stops used with the trades.

Both trades must be sold at the same time with no slippage.


You only pay for fees and commissions!!!


Maybe I should write a book.

Maybe I'm just not smart enough to understand it.

I think I'll pass.

RJay

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 Big Mike 
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RJay View Post
If its just a coin toss, why do 85 percent of traders get their clocks cleaned?

Because picking the direction is not the factor that decides profitability. More than anything else, the three M's are --- money management, trade management, risk management.

You can give a new trader an indicator that is right 90% of the time and they will still loose their ass because they can't follow the rules and have terrible money management skills.

This is also why indicators are pointless. If you aren't making money, it isn't because of having the wrong indicator.

BTW, you mention commissions and fees --- that is also why this is not a zero sum game...

Mike

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 GarryM 
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Bar by Bar readers,

Learn from real traders like Al Brooks, George Kleinman and more. Free On-line webcasts will provide detailed power point presentations with trading strategies and examples, along with live question and answer sessions with presenters. The I-Trade Show is for all traders of futures, options, forex and stocks; people who trade anything that moves.
Topics will include:

Wake Up! How to Prep and Trade the Market Open
Price Action, presented by Al Brooks

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[Gets Old, presented by George Kleinman


Live Show: December 8 & 9

On-Demand: Dec 10 - March 12

visit FuturesMag.com

Cost: FREE

Have a great one!

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 Big Mike 
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I decided to order this book like the rest of you, I thought Al Brooks could teach me a lot of new stuff.

Man, I am still in chapter one and it's painful. Something about his writing style is not agreeing with me. I keep feeling like these super-long paragraphs of why a bar is, could, could not, might, might not be, sometimes is, sometimes isn't, a bear or a bull bar .... ugh, I just lost my train of thought again just typing that...

I wish he had used bullet points for describing some of it instead of writing it in paragraph format.

I've learned more about doji's though in the first chapter than I ever knew before. I'm also paying more attention to up/down bars like the two in the attachment.

He's also reminded me that if it looks like "xyz", it probably will behave very similar to "xyz". Trading is not an exact science, and too many times I (we?) get caught up in looking for the perfect symmetry or perfect bar.

As Douglas Adams said:

Douglas Adams
If it looks like a duck, and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family anatidae on our hands.

Last, I'm also learning more about ii and iii bars. So as you can see, I am in fact learning from the book, but man, it's a tough lesson.

Are all of Al Brooks' books written like this?

Mike

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 Blz17 
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Big Mike View Post
I decided to order this book like the rest of you, I thought Al Brooks could teach me a lot of new stuff.

Man, I am still in chapter one and it's painful. Something about his writing style is not agreeing with me. I keep feeling like these super-long paragraphs of why a bar is, could, could not, might, might not be, sometimes is, sometimes isn't, a bear or a bull bar .... ugh, I just lost my train of thought again just typing that...

I wish he had used bullet points for describing some of it instead of writing it in paragraph format.

I've learned more about doji's though in the first chapter than I ever knew before. I'm also paying more attention to up/down bars like the two in the attachment.

He's also reminded me that if it looks like "xyz", it probably will behave very similar to "xyz". Trading is not an exact science, and too many times I (we?) get caught up in looking for the perfect symmetry or perfect bar.

As Douglas Adams said:


Last, I'm also learning more about ii and iii bars. So as you can see, I am in fact learning from the book, but man, it's a tough lesson.

Are all of Al Brooks' books written like this?

Mike

Mike,

I just wanted to say that Brooks might be the worst author ever. His book is so mind numbingly painful to try and decipher. That being said I find the material brilliant. I'm still grinding through the book and I find that it just takes time to let the material sink in. Then as I watch the charts each day I'm noticing more and more setups from the book. It's a painful way to learn but ultimately I think very rewarding.

I'm hoping to start posting some charts of setups that I spot through out the day in this thread.

Blz

P.S. I don't think he has written any other books but don't quote me on that. He has done some writing for Futures magazine.

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 sp139214 
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Glad to hear I am not the only with these thoughts... what a quagmire of insightful ideas. Mike thanks for your post... I am encouraged to reopen the book and trudge through.

Thanks.

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 cunparis 
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I've read several chapters many times. I had to take a break so I started reading some other non-trading books. But I'll be back to Brooks. No one reads the Bible cover to cover, same with Brooks.

I'm not using any particular setup but I am incorporating his ideas into my trading:

- reversal bars
- trading ranges and the idea that a doji is a 1 bar trading range
- avoiding barb wire

I wish I had more time to lead this discussion more but I'm sorry that I don't. When I started it I didn't want me to be teaching the Brooks ideas, something I'm not qualified to do. I wanted it to be collaborative. So I hope others will contribute when they can and the thread won't die.

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 Blz17 
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Attached is a picture of a Brooks pattern that he claims has very high reliability. In essence it is a second entry into a failed breakout of a tight trading range. So, in the attached example the 6B got into a tight range (Barb Wire as per Brooks) and gave a nice fakeout pop. When you get that first breakout you want to enter a sell stop 1 tick below the breakout bar. If it doesn't reverse you don't get executed but if it does you'll get triggered and there will be longs trapped that are looking to get out.

Blz

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 cunparis 
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Big Mike View Post
I've learned more about doji's though in the first chapter than I ever knew before. I'm also paying more attention to up/down bars like the two in the attachment.

BTW Mike, I tried range bars for a while (part of dealing with the overlapping bars on the CL 5 min chart that I mentioned in the CL thread plus Jeff got me interested in them). But I decided yesterday that I was going back to tick & minute charts. I think the relationship of the close & open are very important and with range bars the close is always on the high or low. It makes detecting dojis and other trading ranges very difficult.

Yesterday I saw on my tick chart that price was in long trading ranges that didn't even show up on the range chart.

On a tick chart it can compress low volume periods but it doesn't compress price. A range chart compresses price (and can compress low volume activity too). I don't like compressing price. I want to see it all.

Obviously the brooks patterns won't work with range bars very well.

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 cunparis 
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Blz17 View Post
Attached is a picture of a Brooks pattern that he claims has very high reliability. In essence it is a second entry into a failed breakout of a tight trading range. So, in the attached example the 6B got into a tight range (Barb Wire as per Brooks) and gave a nice fakeout pop. When you get that first breakout you want to enter a sell stop 1 tick below the breakout bar. If it doesn't reverse you don't get executed but if it does you'll get triggered and there will be longs trapped that are looking to get out.

Blz

Very nice Blz! You explain that much better than the man himself. I'm going to see if I can find that on my charts. Doing my homework!

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 shodson 
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cunparis View Post
BTW Mike, I tried range bars for a while (part of dealing with the overlapping bars on the CL 5 min chart that I mentioned in the CL thread plus Jeff got me interested in them). But I decided yesterday that I was going back to tick & minute charts. I think the relationship of the close & open are very important and with range bars the close is always on the high or low. It makes detecting dojis and other trading ranges very difficult.

Yesterday I saw on my tick chart that price was in long trading ranges that didn't even show up on the range chart.

I don't like range bars either for those same reasons. It masks price action over time. Plus range bars can gap and run away from you quickly. The advantage of them is that they can be good for scalping: just set your range to your scalping target and you just need 1 full bar to hit your target. Also, they can help identify chop more easily and more easily help define hi/low ranges. So I guess they have some advantages, just depends on what you're using them for.

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 Blz17 
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Well I got good news and bad news. The good news is I'm getting the hang of these Brooks style setups and I am noticing them in real time. The bad news is because I still feel like I'm learning them so I'm lacking the confidence to take the trades as they develop. This is clearly an emotional issue that I need to work on (or I'll just get hammered before I start trading so I don't give a $#@% , just kiddin).

I also have switched to a 3 min chart. I was trading 1 min on CL which I felt worked as CL constantly has short term setups but there are still alot of fakeouts on the 1 min so I switched to the 3 min and I am liking it much more. I would go to 5 min but I feel that it will create quite large stop loss levels that are beyond my comfort level.

Anyhow, I've attached a chart of 3 Brook's style setups that would've made for a great day, hope they help.

Blz

P.S. To be fair I would never take that first setup knowing that the oil inventory reports are coming but just nice to see that it would've worked well.

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 cunparis 
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shodson View Post
I don't like range bars either for those same reasons. It masks price action over time. Plus range bars can gap and run away from you quickly. The advantage of them is that they can be good for scalping: just set your range to your scalping target and you just need 1 full bar to hit your target. Also, they can help identify chop more easily and more easily help define hi/low ranges. So I guess they have some advantages, just depends on what you're using them for.

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.

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 cunparis 
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Blz17 View Post
Well I got good news and bad news. The good news is I'm getting the hang of these Brooks style setups and I am noticing them in real time. The bad news is because I still feel like I'm learning them so I'm lacking the confidence to take the trades as they develop. This is clearly an emotional issue that I need to work on (or I'll just get hammered before I start trading so I don't give a $#@% , just kiddin).

When I started practicing brooks trades I did it on sim and it was a disaster. Everything looked like a brooks trade.


Quoting 
I also have switched to a 3 min chart. I was trading 1 min on CL which I felt worked as CL constantly has short term setups but there are still alot of fakeouts on the 1 min so I switched to the 3 min and I am liking it much more. I would go to 5 min but I feel that it will create quite large stop loss levels that are beyond my comfort level.

I was going to ask you about that as I've been experimenting between 5 min & 10 range & now 300 tick & 3 min.. Here's my take:

I trade breakouts of S/R and some reversals. On the breakouts, the major breakouts are the same on 1min & 5min it's just the 1min has more noise. I like to put my stops way out of the way, often 30 ticks. When I look at a smaller timeframe I see a closer spot to put my stop. But it's often taken out. I think what happens is the "closer spot" is just noise and I put my stop just under the noise and of course it's taken out. So I'm coming to the conclusion that one really does need a 30 tick stop to trade CL. One can cut the loser short but also you risk getting out of winning trades doing that.

This was really hard to do with real money. I had a few days where I had several losers and after a couple of -$1000 days that's when I started looking at shorter timeframes. But that didn't work for me. So now I'm back to 30 pt stop but for those trades with a big stop I do it on sim until I'm convinced and it's profitable and I'm comfortable with risking that much. On the lower risk trades (shallow pullback, say 20 tick stop or a reversal) I can do that with real money without deviating from my plan.

So I guess what I'm saying is you can try the higher risk trades on sim until you decide if it works for you. So far it has worked for me but it's not easy. I need another week I think and then I'll be back to trading those higher risk trades with real money OR abandon them altogether.

I was long just before the inventory release and I exited like a good boy before news. Market shot up. this is the second time in 2 days that oil reversed and started up heading into news and then continued higher after the news release. I think some oil traders know the news ahead of time. I'm still watching this..

Good job on the brooks trades. That high 2 was always confusing for me. I guess you're just getting a reversal after the 2nd leg down right?

One final thing: I can see the 20 EMA on an ES 5 min chart because that's a very popular timeframe and a very popular moving average. But I am skeptical of applying the 20 EMA setups to all markets and all timeframes. Price may touch the 20 EMA on a 3 min but on a 5min maybe it wouldn't touch it at all and on a 1 min maybe price would break below it. I think it's ok to use the ema as a frame of reference and for gauging the trend of the market (that's precisely why I added Jeffsdots to my chart) but I do not use the EMA in any way for my entry & exit decisions. I posted a CL trade today and the EMA just happened to turn blue on the bar I entered long. I didn't even notice the EMA when I took the trade and would have taken it even if it had been red.

Thanks for sharing your brooks trades, please keep them coming.

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 GarryM 
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CUNPARIS & BLZ,

I could not agree more, maybe you could approach John Wiley & Sons with that
idea.

GarryM

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cunparis View Post
Obviously the brooks patterns won't work with range bars very well.

For Brooks setups, I think a 5 minute chart is a must, he makes that clear in the book. I wouldn't try to use it on a non-minute chart. Still, my entries are on a 6 range chart, because that is what works best for me.

I treat the "Brooks 5m chart" the same way I treat my 60m chart. I look for breakouts, I look for reversals, I look for trending patterns, etc. Then I make my moves accordingly on a 6 range.

Mike

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 Big Mike 
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Blz17 View Post
Attached is a picture of a Brooks pattern that he claims has very high reliability.

Thanks Blz, I wish I could hit the "Thanks" button twice

Now I just need you to translate the rest for me

Mike

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 Big Mike 
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Blz17 View Post
Well I got good news and bad news. The good news is I'm getting the hang of these Brooks style setups and I am noticing them in real time. The bad news is because I still feel like I'm learning them so I'm lacking the confidence to take the trades as they develop. This is clearly an emotional issue that I need to work on

First, thanks again for the chart. I think I now more clearly understand the Low2 and High2 he is describing (remember, I am still on chapter one).

Confidence is what you need, and you've already identified it. The best way to build it is by doing. So, first you need to fully understand the setups. You can't "think" you have it right, you have to "know" OK THIS IS THE SETUP! Then you keep nailing it over and over, and if the setups are profitable and within your risk tolerance, the confidence will come.

I think for me it will take a lot of screen time to feel that way with his setups. But that is true of everything, so it is no different really.

As for 1m, 3m, 5m etc -- I'm using a 5m for Brooks setups. You need to think like a winner to be a winner. And winners have no problem using 5m candles. But I'm also not going to trade Brooks style and that's the ballgame. Hell no. I always trade my style, and so should you. So I will take a Brooks setup and use that information to help me get a better entry on a 6 range chart. At least for now.

Mike

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 Blz17 
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Big Mike View Post
First, thanks again for the chart. I think I now more clearly understand the Low2 and High2 he is describing (remember, I am still on chapter one).

I think for me it will take a lot of screen time to feel that way with his setups. But that is true of everything, so it is no different really.

As for 1m, 3m, 5m etc -- I'm using a 5m for Brooks setups. You need to think like a winner to be a winner. And winners have no problem using 5m candles. But I'm also not going to trade Brooks style and that's the ballgame. Hell no. I always trade my style, and so should you. So I will take a Brooks setup and use that information to help me get a better entry on a 6 range chart. At least for now.

Mike

No problem Mike. I recall at one point Brooks describes the Low2/High2 setup in a very clear way. He in essence says that the market will almost always try something twice before failing. So in an uptrend the market will push down once and bounce (your High1) then it will try and push down again and then bounce again (your High2). Therefore sometimes it won't even appear in the candles, you just have to see the price action make those two attempts to push up or down and fail.

I couldn't agree more on the chart time. Despite my last paragraph the Low2's and High2's are something I still struggle to identify clearly but it's getting better. I think with more time I'll recognize more setups and be able to distinguish the higher probability ones.

I did start looking at the 5 min on CL (keep in mind I watch the 5 min for all other instruments) today and I may make a shift to it. However, I do still think that because of the huge range in each bar that there are very tradeable setups on the 3 min chart. Screen time will ultimately determine which direction I go.

Thanks for the words of encouragement and feedback.

Blz

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 cunparis 
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Mike - I do not recommend reading the book from to back. Read chapter 1 lightly. Then read the chapter on "best trades" and then "daytrading". Then you can go back to chapter 1 again, and then read the other two again. I've read best trades & day trading at least 3 times. I may be slower than the average reader though. It would easily take over a year to do this book. I've had it over 1 month and have only done those 3 chapters. Well I did read the sections on breakouts since that's what I trade.


Blz17 View Post
I did start looking at the 5 min on CL (keep in mind I watch the 5 min for all other instruments) today and I may make a shift to it. However, I do still think that because of the huge range in each bar that there are very tradeable setups on the 3 min chart. Screen time will ultimately determine which direction I go.

I think 3min is ok because CL moves so much more than ES. 5min is ok too when CL isn't range bound which it essentially is at the current time. I was trying to find the optimal chart setting but what's optimal this week isn't what's optimal over the past year. I'm going to use 300 tick for reversals and early entries and 5min for breakouts. My goal is to be in the trade on the 300 tick before the 5min breakout. I'm still experimenting..

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