Al Brooks - Trading Price Action Trends
- Thread starter mark_mm
- Start date
For those interested that don't have his books, these links will help you get a better idea of Al Brooks Methods.
Futures Magazine "I Trade Show"
Al Brooks Video before first book was published
http://www.mytradingedge.net/p/videos.html
You Tube Video's from Al Brooks
http://www.youtube.com/user/BrooksPriceAction/featured
Big Mike's site
Al Brooks Webinar
http://www.bigmiketrading.com/webinars/june21_2010/al_brooks_price_action/
http://www.bigmiketrading.com/webinars/jun29_2011/al_brooks_price_action/
Price action refers to the prices and times of historical transactions, however this data is arranged or displayed. It neither works nor does not work - it is simply a record of economic activity.
What you refer to as price action is what purports to be a methodology for anticipating the future price of an instrument based on historical conditions.
So now to "price action" we add:
-support and resistance levels
-trend and channel lines
-majority of participants
-controlling participants
-time frames
This set of "tools", along with Dow Theory and the Primary Trend concept is very very old indeed and has been continually rehashed in various forms. The limitations are well known. Studying such techniques appears to be some rite of passage for aspiring traders (although no doubt many or even most progress no further)
Your concept of majority/controlling participants is particularly interesting as you don't really know who is doing the business at a given point in time. Your assertion that this factor, if it could be measured, would be subject to "change at any time" without any apparent indication makes me wonder why it would be a useful aspect for you to try and track.
Perhaps trend and channel lines have their place in the toolbox, in order to help a trader apply more order to what is displayed in front of them and come up with a ruleset which they believe will lead to successful results. It is quite another thing to suggest that these lines have any predictive value, or that big locals and institutional desks trade because the levels are reached? No, of course they don't.
Markets are about supply and demand, and the quantity supplied and demanded. Quantity is large interests - institutions etc. Sell side institutions will use order flow information and release recommendations to successive tiers of clients who are then crossed with those who were privileged enough to be given the tip earlier. There are various ways to get business done depending on the objective of the participants - it isn't all directional speculation.
I have not seen (nor have any of my trader friends who have institutional backgrounds) such things as trendlines, channels, moving averages, fib, etc used for anything other than consumption by retail clients. Mention mean reversion, technical analysis, "support zones" etc and half will laugh at you while the others will sneer.
So now knowing (if we didn't before) that neither the institutions nor the big locals trade in this way, what use is a trendline / channels / support & resistance strategy in telling us anything about the traders alleged to be either the "majority" or the "controllers"?
A sensible approach and kudos to you if you have achieved success trading in this manner. However, you say elsewhere that your strategy is "pure Al Brooks". I don't think his material gives the tools to trade in the way that you describe, so either I am mistaken about his methodology or you are using something else entirely in addition to or instead of what Brooks teaches, whether you are aware of it or not.
Price action is using price to determine how the instrument is moving while spotting key areas of support and resistance.
In it's purest form only using horizontal and-or diagonal lines.
Of course traders love to complicate/modify the above and provide their own variations looking for other "edges", usually failing on the improvement.
FoN
In it's purest form only using horizontal and-or diagonal lines.
Of course traders love to complicate/modify the above and provide their own variations looking for other "edges", usually failing on the improvement.
FoN
very zen like post,covers everything in general yet useless to trade with,it's an overview, retail traders are the barnacles on the ship,we are not trading accumulative 50,000, lot short or long positions,a barnacle is gathering one piece of bacteria at a time to survive,so you and your instiutional friends can build your 50,000 lot position,you are comparing apples and oranges,and showing total condescension for the orange,the condescension is not zen like at all
Know thyself and seek the truth.
If somebody claims that by arranging historical transaction data in graphical form and annotating with various lines explains how either the "majority" size or "controlling" size makes trading decisions then this is demonstrably false by reference to known forms of institutional activity. That isn't an apple condescending to an orange, a barnacle, or a ship. Just simple logic.
Trend and channel lines are useless to trade with. A whole book re-hashing concepts of trends and S/R is useless to trade with. Pointing out that this is not how large interests trade may not in itself assist a small trader to make money from the markets, but at least it will leave them better informed. Rather informed than believing in some delusion of how other participants (be they majority, controller, barnacles, ships, or fruit) are supposed to operate.
ships,(institutions)and barnacles,(retail),trade on different time frames,i assume you agree,institutions get in at staggered prices,a move from 1248-1296 in spx in 3 weeks might have 400 points in it,if you are trading the bars refered to in this thread,there are a lot of ways to attempt to capture more than the 48 pts caught by the institution on size diminished by hedging,this thread is just a discussion of one tool used,nothing more