Quote from atlTrader666:
It's interesting how people will admit that it's poorly written and then say it's a great book because if you search hard enough you will ultimately discover a few gems. This irony extends into how Al Brooks tries to keep his trading "very simple" and yet can't even clearly outline his strategies.
As I posted yst, if you follow his setups then you'll be trading a sh1tload of noise. Brooks talks about institutions in the beginning of his book and how it relates to price action - do you guys seriously believe that institutions give a sh!t about High or Low 1 or 2, super short-term trendlines, 5 minute candlesticks and where the bar closes, etc? Again, he comes up with strategies from completely "Random Order Flow".
He should title his next book "How to Churn Your Account by Using Super Tight Stop Losses by Interpreting a 5 Minute Candlestick". Some of his entries are ridiculous too, like he will place a limit order to buy only if it gets to a higher price (as opposed to anticipating the move)... this again on a 5 minute chart of a stock. The guy is totally oblivious to institutional random order flow. He is the epitome of a human seeing patterns in randomness.
You obviously did not understand much of the book, but I will try to enlighten you and others who may think like you.
- Yes, he talks about institutional traders, but he never claims that they use his setups or his method of analyzing the market. One of the premises in TA and price action analysis is that the big players leave predictable footprints in the market place and that small traders like us can piggyback them when we learn to spot them.
- Do you even understand what a "High 2" is? Not that it is a big part of the book. I just assume that you don`t, since it was one of the things that was really poorly explained.
- He explicitly states that new traders should NEVER trade during "barb-wire" which he labels as noise. He also states that a trader should learn to sit on his hands for hours and only take the select few trades during a day instead of CHURNING his account like you call it. And on the subject, he HIGHLY advices against the 1-minute chart because there are too many fake moves and too many signals.
- As for using a stop (not a limit) to enter a trade, the difference is that instead of anticipating, he is willing to give up a few ticks in order to achieve a HIGHER win percentage due to the fact that if price trades beyond his stop, the probability that it will reach his target is higher. So yeah, he might be giving up ticks, but overall his win rate is increased and there is less CHURNING of the account. A lot of traders trade like this, so it`s not an invention of Al. I use it myself, but it has more merit on momentum instruments like crude oil which often takes off without looking back after breaking out as opposed to the ES which typically retraces even on a breakout.
- As for the close of the bar, that is obviously very important. Time validates price, yes? Some will argue that 5 is a random number, but 5,10,15 minute charts are watched by many participants. If price penetrates a level and trades beyond/above for most of the duration of the bar and closes there, surely it means something else than if price simply spiked for a few seconds and retreated?
-A 2 point stop is not very tight in the ES market under normal market conditions if your entries are crisp and you know how to read price action. Obviously, in periods of increased volatility you will need to lower your size and widen your stop, but wider profit targets usually make up for the decreased size. The only thing I don`t agree with him on is using a 2-point stop to scalp a 1-point profit, but I can`t say that it really bothers me.
Seriously. I hate trying to convince non-believers, but aggressive stupidity usually gets on my nerves, so I can`t help it
