Thank you.
It makes complete sense. Despite being aware and trading these setups, I've never consciously termed them as "zones of liquidity". Nice to see something new with old eyes
I have bought Al Brooks' Trading Course
- Thread starter Visaria
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Thank you.
It makes complete sense. Despite being aware and trading these setups, I've never consciously termed them as "zones of liquidity". Nice to see something new with old eyes
I'll second that. +1.Thank you.
It makes complete sense. Despite being aware and trading these setups, I've never consciously termed them as "zones of liquidity". Nice to see something new with old eyes
As I view the world, it is thinking like that that separates those who can from those who can't. To view a trade as a "guess" is to view it as something that can be judged as being "right" or being "wrong." A trade cannot, as I look at it, be right or wrong. It can only be a win or a loss. Over the next 20 trades, I do not know which ones will be wins and which ones will be losses. I know that a certain % will win. I know That the value of those wins will outstrip the value of the losses. That is all I need to know. When the market sets up displaying my set up variables, I place the order. That is the only "right" thing about it. It would be "wrong" of me to skip any instance of my set up as doing so will dilute my edge. If the trade is a win or a loss is no fault of mine, so how can I be wrong? After all, I will have done all that is required of me.
However one cannot assume that the series of apparently profitable trades will repeat itself ad infinitum. I have trouble believing Brooks' assertion that major trend reversals such as a higher low on the 5-minute timeframe early in the day following a failed test of a previous day's RTH swing high can be reified and fit into a probabilistic set of trades spanning decades into the past and future, such a scenario would have to be true to eliminate the guesswork from trading.
A trading algorithm is a set of rules defined by a set of market variables - rules with precise definitions for initiating a position, taking your max loss, exiting for max profit either using defined limits or defined trailing stop exits. Following said rules is not "guessing." Vacillating over whether or not to take "this particular signal" or not is guessing. Trading without rules, without defining how and when you will engage with the market is also guessing. But trading a defined algorithm, whether manually or coded and automated, is not guesswork.
Very common market behavior, and Brooks, I assure you, did not discover it. If you are an S&P retail hack, you can make a tidy living trading just this pattern. You won't trade everyday, but you can trade size when it sets up. It happens with amazing regularity during bull swings. I would add that one really should include any "double bottom" following a retest of the prior day's high to be viable - whether a higher low, a matched low, or a lower low that is quickly reversed.
Yes, my initial risk would be just above the high of that bar that looks like a reversal bar. (It's only a reversal bar in hindsight; at the hard right edge it's just a price bar formation that candle worshippers refer to as a reversal bar.) My "pullback to liquidity" entry saves me from getting "trapped", which would be Brooks' description of what happened to the counter-trend traders who thought the trend was reversing on the 3rd, 8th, and 16th/17th bars on the chart I posted.
Instead, I wait for more confirmation that the trend might be reversing. In the illustration, the strong break of the trend line is the signal. I'm aware from long experience that the initial break of a trend line in a well-defined trend usually fails and simply shakes out the "weak hands". However, when a trend line breaks strongly and also breaks the previous swing low (Bar 17) as in my illustration, that tells me the longs that held through the break are nervous and there's a much better chance of a true reversal than there is during normal pullbacks in a defined trend.
The other thing I learned from long experience is that price tends to pull back to those earlier levels just inside price turns and by using limit orders to enter there I get two major advantages:
1) No slippage on the entries
2) Rarely have to hold through a retrace following entry because I'm entering on the retrace (low heat trades)
Understood.
After you were filled, did you then bring your stop down to just above your entry bar after the following bear signal and entry bars? And did you add in at the bear entry bar two bars after your initial entry (if so, I hope you didn't move your stop to above the entry bar on it's close:eek
?Those that entered on the bear entry following the bear signal just after your limit entry bull bar were screwed if they moved their stop immediately to the bear entry high. If so, they were stopped out on the next bar, and probably trapped out, making that bar itself a pretty great signal as it closed near it's low, below which you could have added in again on the next bar, wouldn't you agree?
Also, I wanted to ask you if you ever did some of the Pristine courses. I thought it was you mentioning Lang in a post. I did an online course with Ron Wagner years ago. I bought several of Capra's dvd's, and read their initial book. That's where I leaned the term "revenge trading"
, and learned what the term good loser is as opposed to good winner.