Question regarding Brooks' book

[Ego]

i have had the same problem and lost more than a decade and more than 100000 usd.

the solution is simple: the issue is that you may not like it [the solution].

you have to decide whether you want to make money, make a living or search for the secret of of the how market works.

and trying to perfect something is like chasing the pot at end of rainbow.

if you cannot change your personality change your profession....get a job as a scientist

Agreed, and as I said, I don’t believe one can truly avoid trading. Even in pursuing a career in science, I will be at the whim of market forces. If I choose to not participate, my fate will continue to be determined for me. Now, as to whether or not one needs to be concerned with the outcome of that determination... that is quite another matter indeed. I have yet to reach a lofty level of consciousness such that I do not care at all what happens to me and mine. Perhaps one day; but until then, you are absolutely spot on — troubleshooting must be limited to being profitable and not towards completely solving the market puzzle.

Perfection is impossible. Crudely secured profits are still profits.

 

[padutrader]

I have yet to reach a lofty level of consciousness such that I do not care at all what happens to me and mine

i am impressed at your clarity of thought.

i am 64 years so i live for the day at most.

you must apply this clarity of thought to your trading procedure.

Volpri has explained it well in poetic form but to understand poetry you must understand the alphabet and apple,.... cat....... dog

so it requires that you start a systematic learning ...which is what experienced people like Volpri ,brooks myself and others........ can help you in doing....if they so desire.

indeed if you can truly understand volpri's post.... you will become a truly great trader.

or put in another way if you are great trader you will understand volpri's post and probably brook's books .........small wonder then that many traders hate Brook's and his books.

it is a long journey from alphabets to understanding Wordsworth and Keats ..their poetry

 

[Ego]

Remember in a bull BO the bears are, most of the time, going to try and reverse it. That is one reason PB’s show up on a chart. That PB action is bears pushing back and early bull taking profits. In a bear BO bulls are going to try and make it fail. PB’s are formed when they exert their pressure and when early bears grab profits.

That is correct. Every bar has bulls and bears trading it. Thus every bar has a bullish and bearish case that can be made for it. The trick is finding which side has the slight upper hand and betting that way, with the stronger hand. That my friend is the nature of the market. It is an uncertainty we have to learn to live with and still make trading decisions. Volume represents $$$$ so if that means something to you it may be useful to you I generally don't use it because I just know for instance that a large bear bar closing on it’s low likely was made on larger volume than the previous bar so I don’t need to see the volume to determine that fact. Also any single big body bar, bull or bear, is actually a trend. To see this if you are looking a a big bear bar closing on it’s low on say a 5 minute chart dial down to a 1 min chart and it will be clear it is a bear trend. All big body bear bars can be considered to have been won by the bears and all big body bull bars are won by the bulls. There are ALWAYS, AT ALL TIMES, bull and bears trading, every bar. One side wins every time except in doji’s where they both are exerting about equal pressure on the market. That my friend is just the way it is, always has been, and will continue to be. The edge is determining correctly where the most pressure is and betting that way. And it must be done considering the larger context too as that too shows overall pressure and not just individual bar pressure.

Thanks for taking the time to write all of this. I’m 10% through and already things are making more sense, re-reading your posts I can see that you and Brooks are in agreement on much.

 

[kaizer]

Am I overthinking this? Should I just go with the long term trend?

Well, firstly I recommend you to re-read what aka @maxinger wrote – words of wisdom really

Regarding Brooks, here is my opinion. Since I’m trend follower, Brooks ideas sounds good in the whole for me, but there is the hell in details.

Pro Brooks:

1/ beginner (at least beginner, but probably any trader) trader should build the trend following strategy and never countertrend

Consider this: most obvious ‘good trades’ in hind side are trend reversals and breakout from consolidation. These situations are very obvious and bright – in hind side. But in realtime lots of situations looks exactly like preemptive of breakout or reversal and lots are failed. This is hint for you – always expect continuation of current price action phase. When in trend, expect trend to continue until reversal, also expect range to be hold until it does not. Current phase continue multiple times and changes one time. Better to bet money on the event, which happens more often than not – this is essence of successful betting, trading included. This is second hint also: when you see the activity counter to continuation and than the failure – this is your entry. Brooks named this ‘second entry’ or H2/L2. Pocket money of countertrend traders and breakout traders.

2/ beginner (at least beginner, but probably any trader) who follow the trend, must avoid chop aka ‘barb wire’

Brooks said that ‘barb wire’ chapter is the most important of the book and I agree 100%, but than he just very briefly described this topic. Here is very useful discussion about barb wire:

https://www.elitetrader.com/et/threads/help-ive-been-chopped.277421/


Contra Brooks:

1/ entries above or below previous bar seems to be non logical for me. The reason is bars are subjective way of bundling ticks into 1 interval, regardless what one uses – time, ticks amount, contracts amount, range or more exotic things like delta. Price moves from one price level to the level +-1 tick ‘continuously’, bars/candles are only in trader’s head, not on market.

Hint: enter when you detect that counter-phase activity is failed, develop rules to detecting this, don’t follow bars blindly.

2/ Brooks wrote that subjectivity is essential and unavoidable

Well, my opinion is: trader have to have objective trading plan, for every movement of price trader must 100% know what to do. All the ‘traders intuition’, ‘price action feeling’ etc are total crap, only 100% objective plan and no second offensive! If you imagine that you can train the ‘market feeling’ looking at price action 10000 hours etc – I have nothing to say except of ‘good luck’ with zero belief in success.

3/ as many educators Brooks uses the ES. IMO it is the most complicated contract and should be avoided by beginner

Resume:

Do not take everything that Brooks wrote as dogma, it is not. Develop your own trend following strategy, look for opportunities to pocket countertrend traders money. Most trends contain several opportunities for this, problem is they are not obvious and looking as very bad trades on the right edge.

 

[Ego]

Well, firstly I recommend you to re-read what aka @maxinger wrote – words of wisdom really

Regarding Brooks, here is my opinion. Since I’m trend follower, Brooks ideas sounds good in the whole for me, but there is the hell in details.

Pro Brooks:

1/ beginner (at least beginner, but probably any trader) trader should build the trend following strategy and never countertrend

Consider this: most obvious ‘good trades’ in hind side are trend reversals and breakout from consolidation. These situations are very obvious and bright – in hind side. But in realtime lots of situations looks exactly like preemptive of breakout or reversal and lots are failed. This is hint for you – always expect continuation of current price action phase. When in trend, expect trend to continue until reversal, also expect range to be hold until it does not. Current phase continue multiple times and changes one time. Better to bet money on the event, which happens more often than not – this is essence of successful betting, trading included. This is second hint also: when you see the activity counter to continuation and than the failure – this is your entry. Brooks named this ‘second entry’ or H2/L2. Pocket money of countertrend traders and breakout traders.

2/ beginner (at least beginner, but probably any trader) who follow the trend, must avoid chop aka ‘barb wire’

Brooks said that ‘barb wire’ chapter is the most important of the book and I agree 100%, but than he just very briefly described this topic. Here is very useful discussion about barb wire:

https://www.elitetrader.com/et/threads/help-ive-been-chopped.277421/


Contra Brooks:

1/ entries above or below previous bar seems to be non logical for me. The reason is bars are subjective way of bundling ticks into 1 interval, regardless what one uses – time, ticks amount, contracts amount, range or more exotic things like delta. Price moves from one price level to the level +-1 tick ‘continuously’, bars/candles are only in trader’s head, not on market.

Hint: enter when you detect that counter-phase activity is failed, develop rules to detecting this, don’t follow bars blindly.

2/ Brooks wrote that subjectivity is essential and unavoidable

Well, my opinion is: trader have to have objective trading plan, for every movement of price trader must 100% know what to do. All the ‘traders intuition’, ‘price action feeling’ etc are total crap, only 100% objective plan and no second offensive! If you imagine that you can train the ‘market feeling’ looking at price action 10000 hours etc – I have nothing to say except of ‘good luck’ with zero belief in success.

3/ as many educators Brooks uses the ES. IMO it is the most complicated contract and should be avoided by beginner

Resume:

Do not take everything that Brooks wrote as dogma, it is not. Develop your own trend following strategy, look for opportunities to pocket countertrend traders money. Most trends contain several opportunities for this, problem is they are not obvious and looking as very bad trades on the right edge.

Makes sense, the problem I have is every counter trend is really a trend of its own. So, like others have said, I need a way to determine strength of one trend relative to another, and THAT seems to be a very subjective thing to do. Too fast, too slow, all of these descriptions are relative and can be rationalized after the fact depending on the direction they go.

Would you agree with Brooks that candlestick patterns are garbage on their own?

 

[kaizer]

Makes sense, the problem I have is every counter trend is really a trend of its own. So, like others have said, I need a way to determine strength of one trend relative to another, and THAT seems to be a very subjective thing to do. Too fast, too slow, all of these descriptions are relative and can be rationalized after the fact depending on the direction they go.


Would you agree with Brooks that candlestick patterns are garbage on their own?

you have to have at least 2 timeframes: trading and context. Trend and range should be 100% objectively defined. In Brooks world context provided my 20EMA and hourly charts (hourly is not covered in the book if I remember correctly).


Example: 5 min price action is above 20EMA, 20EMA slope is up at least last N bars – where is subjectivity in this definition?


You must structure the price action.


Candlesticks patterns or any other patterns, Brooks’s or not Brooks’s are pointless without context.


Start with one context only, my advice is starting with definite trend. Define it strictly (like in my example, but it’s only example). No subjectivity allowed! Detect counter trend traders – where they step in and where they fail (and also where they succeed). Remember that


1/ you will never be able to track the trend from beginning to the end, regardless of way you define it. No perfect definition exist. Your territory is in between.

2/ the setup must be researched only in fixed context, defined by you (not me or Brooks), setup that works profitably in any context is holy grail existed only in pipedreams.

3/ your enemies (filters, that negate the setup) are: potential chop and existence of S/R level from higher timeframe near the entry price. The airspace to S/R must be more than your minimum profit target (depends on market and setup)

4/ entries must be timely. First attempt to go to the trend direction often fail. Third is too late. Second is optimum. This is second entry mentioned by Brooks, but dont forget not to concentrate on bar's high/low



So – one context – one setup – and don’t spread your time unless you master 1 setup in one context.


PM me if you wanna more details regarding structuring price action. I already discussed this toipic with one ET member and send you some ready discussions to view

 

[volpri]

Bar by Bar is .....well like a pub crawl. Can get messy. ROFL

 

[volpri]

Ok strength of a trend is an important element. Correcto? So......how do you measure the strength if a trend or even the strength of a counter trend? Obviously understanding that is is important too for PA SL placement. Then context is important. Correcto? So you got larger and immediate contexts. How much is relative to intraday day trading on 5 minute chart? Is price action a month ago relative or important to know while trading a 5 minute chart today Dec 9 2020? In other words, how much context, in terms of time, is useful for trading intraday on a 5 minute chart?

 

[Ego]

Possibilities that I can think of:

- length of duration at right edge
- slope of trend line compared to previous trends
- bar body sizes in direction of trend
- volume on upswings compared to volume of previous trends (messy due to natural fluctuations in trading day)
- in direction of trend on significantly higher timeframe vs not

 

[Ego]

Ok, I have identified a key problem with my viewing of the markets. I am a contrarian by nature (or rather, by nurture, I suppose). When I see the crowd going one way for an extended period of time, I think it’s wrong. This has to do with several key experiences in my early life which are not pertinent to this thread. However, this aggressive skepticism has crippled my ability to make money, because I don’t respect trends. I think fixing this will go a long way towards making me profitable.

Pretty big lightbulb for me, I think. Difficult habit to break, but will probably solve other issues than just trading difficulties, and so break it I must.