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I have been journaling on paper for quite a while, but this is my first online journal. Keeping a journal not only helps me with record keeping but also helps me to keep my focus by documenting the price action as it happens.
I've been trading for a few years and have studied many different forms of analysis like order flow (DOM, footprint, tape), market/volume profile, and various indicators, but I always ended up feeling like paying attention to all of those other things was less helpful than just focusing on the price action of the 5 minute ES chart like Al Brooks teaches. I look at longer term charts like the daily and 60 min for context, but most of the trading info and decisions is coming from the 5 min chart. I look at the 20 EMA of the 5 min and 60 min charts because they are helpful references and can act as support or resistance, but otherwise I use no other indicators.
I generally trade the first 2 hours of the ES RTH Monday through Thursday unless work or family obligations take me away (which they often do, unfortunately). Sometimes I have extra time on Mondays but cannot trade Fridays due to work. I trade live (not sim) and only 1 contract at this point.
My current strategies are basically momentum based and include trading breakouts that I think will succeed or breakout pullbacks in a strong move. I do not like to trade reversals unless the context is really good. In really whipping or slow trading range days, I currently don't trade much at all. Some trading range days do have nice swings that I do trade, but if the day is not presenting me something that I think is high enough probability, I just sit on my hands. I try to trade relatively high probability trades (~60% or greater) and set a 4 point profit target and 4 point stop. I never set out to scalp for a smaller profit. I will exit with a smaller profit or loss if I think the price action is indicating to exit (like if a decent trade is triggering in the other direction or if price pulls against me where I think there is likely to be follow through and a stop out).
In my journal, I intend to give my 5 min bar by bar analysis in real time and note any trades that I am taking. Disclaimer: This is in no way a recommendation to others to buy or sell anything.
This just my analysis. If anyone else trades Al Brooks style, please feel free to add some of your own commentary or critique mine. I welcome all input and suggestions.
Some Brooks terminology/abbreviations and some of mine:
BTC: Buy the close
STC: Sell the close
PA: Price action
TR: Trading range
TTR: Tight trading range=consecutive bars with lots of overlap
BO: Breakout
PB: Pullback
BB: Buyers below
SA: Sellers above
BA: Buyers above
SB: Sellers below or Signal bar
LO: Limit order
LOM: Limit order market = traders making money buying below and selling above prior bars = TR PA
BUBD=BC: Big up followed by big down = big confusion = TR PA
Trend bar: Candlestick bar with relatively large body and small or no tails
H1: High 1 = Attempt to continue an up move after the first pullback (L1 = Low 1 = opposite of H1)
H2: High 2 = Attempt to continue an up move after second pullback (L2 = Low 2 = opposite of H2)
Wedge: Any three-legged pullback
MC: Microchannel=consecutive bars without going below the prior bar in an upmove or above the prior bar in a down move
RB: Reversal bar
DT: Double top
DB: Double bottom
CC: Consecutive
CX: Climax
FT: Follow through
SW: Sideways
HL, HH, LL, LH: Higher low, Higher high, Lower low, Lower high
MTR: Major trend reversal
ON: Overnight
Y: Yesterday
Y's: Yesterday's
Rev: Reverse or reversed
Cont: Continue
Prob: Probably
PT: Profit target
BE: Breakeven
Context:
Daily: Price reversed up strongly past few days but petered out yesterday just below the 20 day EMA and around the breakdown point from 3/21. Price will likely at least try to test Tuesday's high. If price breaks out, may try to test 3/21 breakdown bar high. Or if no upside BO, likely more TR PA sideways to down with BB yesterday.
60 Min: Yesterday along with Tuesdays high has formed a small rising wedge that appears to be breaking down slightly overnight. I expect it to at least test yesterday's low and may go more sideways from there. Also forming larger double top with 3/23 and looking to be possibly setting up a bigger inverse head and shoulders pattern.
5 Min: Yesterday was a TR day. We are opening in the midst of it so I expect to start with more TR PA.
Over night volume was pretty light. Not a whole lot of participation going on at the moment.
Bar (of 5 min chart)
1 Open price had small gap down which was quickly filled and reversed down to form bear reversal bar, but in the middle of yesterdays range so may have BB and TR open.
2 Doji. LO bull scalpers made money below 1. Possible buy SB for wedge PB with bar 70 and 78 from yesterday but I will not buy given TR PA in middle of Y's range.
3 DT with bar 80 of yesterday but big bull bar and likely BB and continue LOM
4 Bull IB, 3 cc bull bars but lots of overlap. Prob BB but I am not trading it.
5 DT Bar 80 from Y, but tail and following 3 bull bars, prob BB.
6 DT with Y's high, wedge with bars 1 and 5. I would not sell below given tight channel.
7 Strong BO bar above high of past 2 days. OK BTC. I did buy.
8 Small bear doji for failed BO above high of 2 days ago. May have BB for another push up.
10 FT on H1 above bar 8, but DT with ON high and may get selling around here. Prob BB after 8 bar bull MC.
11 Outside down bear bar. Possible wedge top with 5 and 8.
12 DB with 9, H2, BO PB long entry above. Fair stop entry buy above but I don't like TTR between 8 and 12. I didn't like the looks of bar 11 and poss wedge top at res so I exited BE during 12. We will see if that turns out to be the best move.
14 Another BO. Looks like I was a little too cautious in my early exit. I don't like to BTC the second BO due to market being even more over-extended and more SW to down PA often comes in soon.
15 Touched what would have been my 4 point PT but did not go though to guarantee I would have been filled. My stop moves to BE when my target is touched.
16 Would have filled PT on this bar. Market is forming gaps (between 6 high and 9 low and between 10 high and 15 low). When market is doing that, it is too early to sell (I don't try to pick tops anyway), but I would rather wait for a good PB setup to buy again.
17 H1 buy above 17 but may have sellers soon above after consecutive BO moves.
18 4 point PT would have been hit here on a stop entry buy above bar 12. I did not take the trade, but it was a reasonable set-up.
I have to go for today. I will put up a chart with some notes later tonight.
Here is an annotated chart with a legend for future reference:
Hey TalB - I too am a price action trader, but i trade the 6E instead of ES. Glad to see another brooks style trader, there are not many here. I did something very similar to your journal but with the EURUSD and received a lot of positive feedback. I think this type of journaling is very helpful to traders, both PA and others.
Good luck on your journey! And thanks for contributing to the community!
Josh
Note: For anyone reading my journal, I post my bar by bar analysis as it happens. I do compare my notes to what Al Brooks posts at the end of the day on his site and am happy when they agree, but I would never copy his work and post it here. The same thing with the chart mark-up. I note what trades I took or would/should have taken before I look at his trading notes at his blog. Al takes many more trades than I do. I am limiting myself to what I currently feel comfortable with and may expand my repertoire as I gain more experience.
Context: (I will try to update context the night before the trading day)
Daily: Market reversed up strongly last week and is now hitting resistance at the area where 3/21 broke down. Monday tried to turn back down but ended up finding buyers at around the 50% PB forming a reversal bar. The market may try to test above Monday's high to see if there are buyers to BO and take us above the 3/21 high and resume the bull trend or are there sellers around Friday's high to form a micro DT and another leg down.
60 min: Looks like an up-slanting inverted H&S over past 2 weeks. I am not big into looking for those types of patterns but one can't help noticing. I see lots of big downswings followed by big upswings. This is generally the hallmark of TR PA.
5 min: Monday started with a big downside BO followed by an almost equally strong reversal up. BDBU=BC=TR, but the reversal up did not get above the high of the breakdown, so the bears still have the edge. Might be forming a bear channel unless price gets above prior lower highs.
ON: Pulled back within Y's range and will open in about the middle of prior day's range. Will be wary for early TR PA.
Bars:
1 Small bear doji in middle of Y's range = TR PA. May have SA and BB for LOM open. (Note: 1 point scalp buying the 1 low would have worked but I don't take these trades.)
2 Micro DT with 1 but BO is not strong and location is not great to STC.
3 Big reversal back up, but tail on top = selling. Close just below 20 EMA. May try to test Y's close and high. I am not buying yet.
4 L2 at EMA, with small bear SB. Poss swing short, but may have BB because of strong 3 and TR PA. I will not short.
5 L2 triggered with OK entry bar, but found buyers at open. May try to reverse up around here or 3 low.
6 H2 bouncing off the open. I will not take because of the TR PA. Market is coiled and will likely BO soon. But BO may fail and reverse again.
7 Failed H2 and rev for strong bear BO. OK STC (I did), but BO may fail and try to rev back up. Not great location.
8 OK FT bar, would have liked stronger close to bar.
9 Poss DB with Y's bar 59 for HL MTR with bull reversal bar. Exited above for BE on trade. Likely SA but did not want to risk strong rev up.
10 OK bear SB for L1, but I am not liking the strength of this BO and would not sell.
11 Attempt to rev back up here but found sellers at around 50% PB from bear BO. May have buyers not too far below so I am not selling below. Also not buying above. Just currently waiting
12 Bull ioi, poss OK swing buy, but just below EMA and still below bar 7 high, so I am only thinking shorts for now. But location is better for bulls.
13 Strong bull BO, but did not yet get above Bar 7 = DT and tail at EMA and poss wedge with 9 and 11, but prob BB after strong 11 and 13. Until gets above 7 and 3, could still be forming a broad bear channel and go back below bar 9.
14 DT with 7 or 3 at EMA with small bull inside bar as SB, but prob BB after strong 11 and 13. May get another push or small test up. I am not buying yet, though.
15 Broke below then above then back below prior bar. Micro DT with 13 and DT with 7. OK swing sort for test below 9, but may just be more sideways with this TR PA. I did not short. I don't like to trade this kind of whipping PA. Makes my neck hurt
16 Strong FT bear trend bar. Prob SA and more down to test 9 low.
17 Doji inside bar. Prob SA but may just be getting more sideways because of TR PA.
Got to go for the day. Will post a chart later tonight.
Context:
Daily: Tuesday formed a small bull inside bar in the middle of Monday's range. Poss buy SB for another leg up. But lots of TR PA so may get SA and/or BB for and outside day and more sideways TR. I am giving edge to bulls for now given last weeks buying and poor downside FT from Monday's selling.
60 min: I see 3 pushes up Tuesday, cris-crossing the 60 min EMA (20 period) up to last weeks close and then pulling back, forming a tail on the last 60 min bar. Tuesday looks like a second push up from Monday's low which should then break to the downside to test Mondays low. I will watch for a strong breakdown which I will expect to get to around Monday's low or a failed breakdown to trap shorts followed by a strong reversal up to break above Monday's high.
5 min: Tuesday was mostly sideways in a tight bull channel. Most likely to break down to test channel lows.
Today has an ISM report at 10:00 EST and 2:00 FOMC minutes. Watch out at those times.
Bars
1 Gap up for upside BO but doji bar. May go SW here before swing up or down.
2 Small bear inside bar, micro DB with 1, but likely SA with doji bars 1 and 2. We are close to resistance at last week's high.
3 Strong bull trend bar. Poss BTC but just under resistance of last week's high, so I am waiting to buy.
4 Very strong FT bar. Would have hit 4 point PT if BTC of 3. Looks like better to have bought 3. I don't like to BTC now because poss overextended. Better to wait for some kind of PB.
5 Small doji pause bar. Prob BB. We will see what kind of PB we get here.
6 Small bull bar making upside progress but slowing.
7 Found BB 6. BB 6 was OK trade but I was worried about deeper PB and did not buy. Looks like I am being too cautious today.
8 Hit 4 point PT from anyone who bought below bar 6. Bear reversal bar, CC buy CX's, poss parabolic wedge with 1 and 4. I do not sell these kind of reversals but may get PB here or soon.
9 H1 buy above 9, but may get selling above 8 starting to come in.
Context:
Daily: We did get upside BO attempt which got sold strongly after the FOMC minutes only to break below prior day's low. Buying did not get above 3/21 prior breakdown high which is not good for bulls. But buyers came in below prior day's low to close exactly at (not below) prior day's low which is not showing as much strength for bears as it would if they closed strongly below. If the market seems like kind of a mixed bag, that is hallmark of a TR. Bears appear to have the edge and will likely get some FT, but with the buying pressure into the close, we may get buyers coming in not too far below Wednesday to continue TR.
60 min: Very strong reversal down Wed after three pushes up (high of 3/23, 3/30, and 4/5). Strong enough BO to likely get another leg down. May have big PB 1st with most recent moves reversing sharply.
5 min: Climactic sell off Wednesday. Al often says in this situation, 50% chance of FT selling in first couple hours of next day but 75% chance of 1-2 hour PB starting by the 2nd hour. In other words, may get some FT, but watch out for PB.
ON: Market had some FT selling followed by big PB into area where buying came back in above Tue's low. Will open here. High ON vol. Likely a PB from downtrend here followed by another attempt down.
Bars:
1 Strong bear trend bar, DT with Y's bar 77, but in Y's SW consolidation zone and just above Y's close. May have BB. (Personal rules: I never trade off of the first bar. First trade I will take is off of the 2nd 5 min bar.)
2 Big Bull TB, 2 bar rev, but now high in y's consolidation and just below EMA. May have SA.
3 DT Y's bar 77, fair swing short, but big SB is forcing you to sell low in TTR which lowers prob.
4 Wedge with Y's 73 and 81. If took short, would move stop above bar 4.
5 Looks like there were buyers above 4 for wedge bottom with big bull reversal here. Just below EMA. Will watch FT here. Lots of big up and down bars here so need to be careful.
6 OK FT closing at new high. OK BTC (I bought) for BO from wedge bottom. May have been better to wait to try to BB on a PB. May get deep PB given how today has been going.
7 Better trade would have been to BB bar 6 rather than BTC. We will see how this plays out.
9 Big bear doji outside bar. High of 8 and 9 touched high of bar 6 giving BTC traders of 6 a chance to exit which it looks like many did. Not a good sign. I am still holding expecting another push up. We will see if my 4 point stop is wide enough.
10 Hit my stop. Looks like not quite wide enough if market reverses back up here.
11 Bull inside bar. May have sellers below to test closer to 5 low. May also have buyers above for another push up.
12 There were buyers above 11 for that 2nd push I was looking for. May be forming wedge high with 3 and 7 soon.
13 Poss wedge with 3 and 7, but 3 CC bull bars. Not sure if buyers or sellers below.
14 Would have tapped 4 point PT of better trade (Buying 6 low). Wedge with 3 and 7, small bear rev bar. Would have moved stop to below 14.
15 Bear BO but big tail at bottom forming DB with 10. Would have exited BB bar 6 with 2 points profit if did not get fill at 4 point PT.
16 Bull inside bar after DB with 10, but buying high in TTR. May have SA.
Got to go. Will post chart tonight.
Don't have time to trade on Friday's and have to take my son to a doctor's appointment Monday morning. So likely won't be trading again until Tuesday.
This seems to be a really ambitious journal and I wish you the best. I too am learning Brooks. I know there are some naysayers about it out there, but I tend to believe there is much to learn and profit from his method. Particularly, if one can figure out trade management.
I hope you enjoyed your break. I just have one question about today's price action in general. Do you enter based a previous bar that can be some distance from the bar in which you enter.
For example, I attached a chart of today's price action (hope you don't mind me posting this harmless chart into your journal!). Consider bar 26, would you enter short here at the bar 1 low? or Consider bar 25, would you enter short here at the 20 low? I am unsure if Al advocates this idea. I seem to think he does, but can't locate it in my pile of notes.
Also, while I am at it, another concept is triangles. Would you have entered on bar 33 at the 32 close (or low) based on the 29-31-32 triangle, i.e., do you seen the continuation pattern in a triangle?
Also, let me know if you have any concerns or questions and I'll try to answer them. Only warning, I am only about 40 trades into this.
Take care and good luck with your journal - I know I'll be back to check things out it!
Be back on Tuesday.