I have bought Al Brooks' Trading Course

[wrbtrader]

...institutions trading against other institutions can often create a hostile environment that will negatively affect retail traders' returns, specifically at lower time frames...

Yes, it does negatively impact some retail traders. Just the same, it does not impact some retail traders that recognize when institutions are in a slugfest (Hint: high volatility).

My point is that most retail traders are not profitable regardless to their time frame. Its foolish and an illusion if you think if you increase your time frame...you'll have a better chance at being profitable as a trader. Traders using higher time frames lose as much a traders using low time frames.

Note: I'm talking about trader (high time frame) versus trader (low time frame). I'm not talking about trader versus investor.

Traders lose and it has nothing to do with their time frame. It has everything to do with poor risk management, margin abuse, lack of discipline, trading the wrong trading instruments, lack of diversification to weather any storm, not having the ability to adapt when market conditions change, inability to manage stress, inability to manage the costs of trading...

Time frames as a reason would be low on the totem pole...below other reasons (like the above) that have more impact on one's profitability level.

Simply, the reasons for lack of profitability is that the typical retail trader does not have the tools to trade one's own money and/or does not know how to approach trading as if its a business...not the time frame. The latter (treat trading like a business) gives you a fighting chance and gets the trader to be more realistic about goals and limitations.

It ain't time frames.

In comparisons, institutions have access to information we as retail traders do not have access too or push aside to focus on trade signals...ignoring the context of the markets (I'm not talking about price action).

 

[wjk]

Correction

I bought this two leg set up on the 15 Wed. I faded my first entry, tried to fade the second leg down, but had my order too far away, and moved the limit to above the bar prior to the signal (after the 2nd pullback leg down, and after the signal closed), where it filled.

Would possibly have been more accurate to say "and moved the limit to above the signal bar prior to the entry bar (after the 2nd pullback leg down, and after the entry closed".

I believe that last bear bar in the second leg down qualifies as a signal by Brook's definition. Regardless, I moved my limit to just above that last bear bar in the second leg down after the close of the following bull trend bar.

 

[NoDoji]

If that is what you believe, then it is no wonder TA "doesn't work" for you. I use TA in much of trading. I never feel like I am "making a guess" when I put on a position.

Right on! If you're guessing, you're gambling. I know within a coupe of percentage points what the odds on each trade are of attaining my profit target. There is no guessing involved. I have no idea if that particular trade will be the profitable one or the unprofitable one in a series of similar trades, but I definitely know the odds of price achieving, say, a $200 profit before hitting a $100 loss (per contract/lot) are in my favor when I put on that trade.

 

[NoDoji]

The market makers obviously know this and price moves to liquidity where they get their inventory flat.

This concept is at the core of my trading and this "pattern" repeats constantly throughout the day. There are dozens of opportunities to extract small ($100-$200/contract) profits by playing off these "zones of liquidity". Because I limit my risk, not all these opportunities result in a profit before hitting my max risk stop loss; however, more often than not they do and that's all one needs for a profitable trading strategy.

 

[Alpha Trader]

This concept is at the core of my trading and this "pattern" repeats constantly throughout the day. There are dozens of opportunities to extract small ($100-$200/contract) profits by playing off these "zones of liquidity". Because I limit my risk, not all these opportunities result in a profit before hitting my max risk stop loss; however, more often than not they do and that's all one needs for a profitable trading strategy.

Hey @NoDoji I'm not quite with you on this. Would you be kind enough to elaborate (with illustration, if possible) on how these types of trades work.

Ty

 

[wjk]

... (treat trading like a business)...

At the end of each trading day, I calculate my average gains, average losses, largest gains and losses. I do it again at the end of the week, month, and year. This is how I gauge my progress or lack of, and of course keep track of my P & L in dollars.

EG: Last week I did 35 round trips. I had 21 winners, 14 losers. The week before, also 21 winners, 16 losers (coincidental or consistency? Don't know for sure), and the average gains and losses were similar both weeks. I can look at those numbers and know what needs to be improved on (especially regarding my win averages). Even though they are larger than my loss averages, the difference is not large enough. I want my average winners to be twice my average losers in actual pips, regardless of the number of winners or losers. I'm not going to post those averages, nor the actual money I make or lose. Right now, I'm only concerned with the pips I make or lose, and am using low enough risk to not care about the money. I was a horrible loser some years ago...probably one of the best definitions of a revenge trader you would ever meet. Lost a lot of money doing that. My goal is to become comfortable with losses, and I've done quite well this year, as the next numbers show.

These are my monthly percentage win/loss ratios for the last 4 months (based on the daily win/loss percentage averaged at the end of the week, then the weekly averaged at the end of the month). In backward order present to July...so far this month 54%, Aug 49%, July 62%, June 56%. What I find interesting about these numbers is they are fairly consistent with the probabilities of most trade setups according to Brooks. June was when I really cranked up my trading after reading the books. I've done 797 trades in that time. The last 3 months all had small monetary losses, almost insignificant (even though the percentages were positive for two of those months), but directly a result of 1, and only 1 reason. I violated size rules on one or two trades, and that was enough. I still have to overcome my occasional anger when trading, or I will eventually quit.

This month I am profitable, haven't gotten angry, and tightly controlling my size and risk. Still do stupid stuff (see my chart and comments about entering before a bar closes), but the absolute biggest gain I'm getting from Brooks, and I can't entirely explain this, but slowly his approach to trading is helping my get past allowing emotion into the game, for a variety of reasons, but most importantly, constantly reminding me that I'm competing with computers, which have no emotion (yet?), and don't care if they make money or not. That is the single most important understanding to have in my 12 years of learning and losing. I would not have been comfortable with the amount of losers, and would in fact have been angry about every single loss (over 40% of those 797 trades) prior to reading Brooks. That's what I mean when I say I've done well, and why I am defending him so vigorously.

 

[NoDoji]

I'm no expert here, but I'm not sure why you think this is High Frequency Trading.

Correct me if I'm wrong, but isn't HFT based on equities and the algos are programmed to transact hundreds or thousands of trades a day for tiny profits (fractions of cents) by working against funds (mutual funds, hedge funds, and other big money managers) trying to accumulate or distribute large positions without the advantage of superfast systems positioned as close as possible to the exchanges?

How the heck would that even be a factor for the small retail day trader?

I haven't seen any of the classic technical patterns change in the past 7 years I've been observing intraday price action. There are things that happen more often than not.

For example, in a strong well defined trend (where price barely dips much below a sharply rising 1-min 20EMA or above a sharply falling one), you can position yourself almost anywhere in a pullback and if your stop loss is below/above the previous swing, you'll likely be able to steal a profit of at least $100 per contract/lot, and often a lot more if you keep adding during the pullbacks. When positioning in a pullback you're providing liquidity for counter-trend traders, so HFT doesn't even come into the picture. If you're trying to get into the trend during one of the with-trend pushes, that's a different story.

In a strong trend don't fear the pullback or think it's the end of the trend. Use the liquidity of the pullback to get positioned in the direction of the trend and let the counter-trend traders' stops above/below the last new high/low fuel your profits on the next leg in the trend.

I learned that from Brooks' book and didn't understand/believe it. Once I played with it in real time and studied it thoroughly, this concept led to my #1 intraday setups.

 

[Alpha Trader]

Correct me if I'm wrong, but isn't HFT based on equities and the algos are programmed to transact hundreds or thousands of trades a day for tiny profits (fractions of cents) by working against funds (mutual funds, hedge funds, and other big money managers) trying to accumulate or distribute large positions without the advantage of superfast systems positioned as close as possible to the exchanges?

How the heck would that even be a factor for the small retail day trader?

That is the same understanding I have of HFTs. I usually enter trades for a protracted move rather than a scalp and they have been working the same year after year, telling me that HFT has no impact on my trading.

"programmed to transact hundreds or thousands of trades a day for tiny profits (fractions of cents)"

The above is the exact opposite of how I trade, so logic gives that I and HFT are both competing in different arenas.

 

[NoDoji]

Hey @NoDoji I'm not quite with you on this. Would you be kind enough to elaborate (with illustration, if possible) on how these types of trades work.

Ty

Sure, enjoy!

 

[wjk]

Sure, enjoy!

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I believe Brooks term for that play/setup is a lower high major trend reversal. I would guess your initial risk was based on an area just above the high of the reversal bar, or did you use some other area below or above that?