You are probably correct about suitability but I use average down to provoke and shock. To make people consider the concept. To help effect a paradigm shift. Making something more palatable is often counter to the effect you want it to have. I want to shock...then let folks see how I do it. So it may be better suited to people’s palate to use scale in as opposed to average down but will it accomplish better what I hope to accomplish in my journal.
Techniques for Day Trading the ES, NQ, YM, MES, MNQ, and MYM
- Thread starter volpri
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Thanks very much volpri; I have spent the last two or three weeks at odd times working through this entire thread, all 96 pages of it, as it is easily the most interesting thread I have seen here. I have lived through your caulking and painting, your work in the garden, and the occasional gem about day trading 
On the back of it I have bought Al Brooks first book, and his most arcane one it would seem, about price action. I have been looking for an in depth discussion of the subject for some time, and this is definitely it. It is rather convoluted and very dense in content, but I’m a mathematician so I am used to that. I have it on my coffee table with a notebook and pen, and will work my way through it over time. Like you I am an older guy, which is odd as day trading is supposed to be for the young and agile, but there it is.
I agree with pretty much all you have said here. I arrived at the averaging down thing independently by just trying stuff on SIM, and now use it to trade real (though tiny) sums of money. You make it very clear that you need an exit strategy if it goes wrong, which it will of course, but as another tool in the box it seems very useful. However, for anyone reading who is not familiar with the phrase ‘risk of ruin’, don’t try it at home folks. I am also a bit nervous of your ‘double up and trade the opposite direction’ if averaging down gets stopped out, which sounds a bit like a Martingale system with all those negative connotations, but I expect you know all about that, and have plans in place if that fails too. It is also quite clear from your posts that you don’t have to do this; you can just trade one entry at a time and go from there; that should work too.
I’m not sure of your definition of risk which seems to be ‘if a trade goes straight up, then it is a risk free trade’, though I note your distinction between risk and actual risk. I can see that might be a useful definition in its place, but it’s not what most people seem to mean by risk. But then I think most people don’t really know what they mean by risk. The risk/reward ratio thing (5:1 if your Profit Target is 5 times your Stop Loss for example) is not really meaningful either; it’s just the mechanics of your trade and tells you nothing about your likelihood of winning or not. As you say along the way, probability is the thing and I think you have a good handle on that, much better than I have, presumably based on long experience and much reading.
I note you like the AL Brooks videos, and might try those in due course, though I pick up stuff better from books on the whole. Still, it sounds like it might be the next place to go.
One thing I would be interested in are your thoughts on the philosophy of this stuff. I am a natural sceptic, and reading some of the more obscure stuff in Brooks book, I find myself wondering whether some of it is just smoke and mirrors, and if there is some self-delusion involved. Maybe he has just developed a good feel for the market by trading a lot (like Jesse Livermore) rather than through any teachable patterns. I don’t doubt his sincerity, but maybe some of these bar patterns he sees are rationalisations of his own thought processes which can not be taught? I suppose it’s an impossible question to answer. There seem enough people on here who say that it works for them that there must be something in it. But then, there seem no limits to the capacity for self-delusion in this world.
Anyway, many thanks for a thoroughly engaging thread, and for the acres of time you must have put in to it. It is really very generous of you.
On the back of it I have bought Al Brooks first book, and his most arcane one it would seem, about price action. I have been looking for an in depth discussion of the subject for some time, and this is definitely it. It is rather convoluted and very dense in content, but I’m a mathematician so I am used to that. I have it on my coffee table with a notebook and pen, and will work my way through it over time. Like you I am an older guy, which is odd as day trading is supposed to be for the young and agile, but there it is.
I agree with pretty much all you have said here. I arrived at the averaging down thing independently by just trying stuff on SIM, and now use it to trade real (though tiny) sums of money. You make it very clear that you need an exit strategy if it goes wrong, which it will of course, but as another tool in the box it seems very useful. However, for anyone reading who is not familiar with the phrase ‘risk of ruin’, don’t try it at home folks. I am also a bit nervous of your ‘double up and trade the opposite direction’ if averaging down gets stopped out, which sounds a bit like a Martingale system with all those negative connotations, but I expect you know all about that, and have plans in place if that fails too. It is also quite clear from your posts that you don’t have to do this; you can just trade one entry at a time and go from there; that should work too.
I’m not sure of your definition of risk which seems to be ‘if a trade goes straight up, then it is a risk free trade’, though I note your distinction between risk and actual risk. I can see that might be a useful definition in its place, but it’s not what most people seem to mean by risk. But then I think most people don’t really know what they mean by risk. The risk/reward ratio thing (5:1 if your Profit Target is 5 times your Stop Loss for example) is not really meaningful either; it’s just the mechanics of your trade and tells you nothing about your likelihood of winning or not. As you say along the way, probability is the thing and I think you have a good handle on that, much better than I have, presumably based on long experience and much reading.
I note you like the AL Brooks videos, and might try those in due course, though I pick up stuff better from books on the whole. Still, it sounds like it might be the next place to go.
One thing I would be interested in are your thoughts on the philosophy of this stuff. I am a natural sceptic, and reading some of the more obscure stuff in Brooks book, I find myself wondering whether some of it is just smoke and mirrors, and if there is some self-delusion involved. Maybe he has just developed a good feel for the market by trading a lot (like Jesse Livermore) rather than through any teachable patterns. I don’t doubt his sincerity, but maybe some of these bar patterns he sees are rationalisations of his own thought processes which can not be taught? I suppose it’s an impossible question to answer. There seem enough people on here who say that it works for them that there must be something in it. But then, there seem no limits to the capacity for self-delusion in this world.
Anyway, many thanks for a thoroughly engaging thread, and for the acres of time you must have put in to it. It is really very generous of you.
Your welcome.Thanks very much volpri; I have spent the last two or three weeks at odd times working through this entire thread, all 96 pages of it, as it is easily the most interesting thread I have seen here. I have lived through your caulking and painting, your work in the garden, and the occasional gem about day trading
On the back of it I have bought Al Brooks first book, and his most arcane one it would seem, about price action. I have been looking for an in depth discussion of the subject for some time, and this is definitely it. It is rather convoluted and very dense in content, but I’m a mathematician so I am used to that. I have it on my coffee table with a notebook and pen, and will work my way through it over time. Like you I am an older guy, which is odd as day trading is supposed to be for the young and agile, but there it is.
I agree with pretty much all you have said here. I arrived at the averaging down thing independently by just trying stuff on SIM, and now use it to trade real (though tiny) sums of money. You make it very clear that you need an exit strategy if it goes wrong, which it will of course, but as another tool in the box it seems very useful. However, for anyone reading who is not familiar with the phrase ‘risk of ruin’, don’t try it at home folks. I am also a bit nervous of your ‘double up and trade the opposite direction’ if averaging down gets stopped out, which sounds a bit like a Martingale system with all those negative connotations, but I expect you know all about that, and have plans in place if that fails too. It is also quite clear from your posts that you don’t have to do this; you can just trade one entry at a time and go from there; that should work too.
I’m not sure of your definition of risk which seems to be ‘if a trade goes straight up, then it is a risk free trade’, though I note your distinction between risk and actual risk. I can see that might be a useful definition in its place, but it’s not what most people seem to mean by risk. But then I think most people don’t really know what they mean by risk. The risk/reward ratio thing (5:1 if your Profit Target is 5 times your Stop Loss for example) is not really meaningful either; it’s just the mechanics of your trade and tells you nothing about your likelihood of winning or not. As you say along the way, probability is the thing and I think you have a good handle on that, much better than I have, presumably based on long experience and much reading.
I note you like the AL Brooks videos, and might try those in due course, though I pick up stuff better from books on the whole. Still, it sounds like it might be the next place to go.
One thing I would be interested in are your thoughts on the philosophy of this stuff. I am a natural sceptic, and reading some of the more obscure stuff in Brooks book, I find myself wondering whether some of it is just smoke and mirrors, and if there is some self-delusion involved. Maybe he has just developed a good feel for the market by trading a lot (like Jesse Livermore) rather than through any teachable patterns. I don’t doubt his sincerity, but maybe some of these bar patterns he sees are rationalisations of his own thought processes which can not be taught? I suppose it’s an impossible question to answer. There seem enough people on here who say that it works for them that there must be something in it. But then, there seem no limits to the capacity for self-delusion in this world.
Anyway, many thanks for a thoroughly engaging thread, and for the acres of time you must have put in to it. It is really very generous of you.
My personal opinion, latching onto a guru is the road to ruin.
Grab the bits you like while a noob and use it, but also treat everything with a small degree of scepticism.
Then comes a time you need to cut yourself off completely from books and gurus and training.
After boot camp you're on your own - 100% using your own imagination.
Thinking for yourself gets you there.
If you are possibly considering videos I would suggest very strongly starting with Richards Entwistle’s video. He and Al work together. Richard put out a condensed version of the very best trades. His video set is mostly Al teaching. It is a great introductory to the larger comprehensive Brooks video course. I am by nature more of an ear gate learner. I grew up listening to lectures and copiously making notes, hardly looking at the speaker. And I am a book learner too as the written material engages my mind and causes me to reflect upon, and apply the concepts in my own experience and imagination. And I often find NEW and multiple scenarios it can be applied to as I meditate upon the written words. I discover entirely new scenarios the concepts can be related to. Scenarios outside the authors original intentions. I am not much of a visual learner. But in PA trading one has to be, to some extent, a visual learner. WHY? Because the concepts have to be shown on a chart, which in itself is visual. Nevertheless, I find the videos to be very engaging if I follow the process below.
First of all....Heads up....if you can’t sleep on a particular night put on an Al’s video. You likely soon be snoring while he keeps talking! He is a great guy and knows his stuff “par excellence” better than anyone I know of but sometimes his voice...well it is what it is....the repetition doesn’t bother me as that is a proven teaching technique. I actually like it. It is the monotone sound that gets to me and I just want to go to sleep. But I have discovered techniques to keep me awake and engaged with the video.
May I make some suggestions? Listen to a video. As you are listening the first time take rapid notes in the online note section of the video. Notes of the things that first grab your attention as you are working through the video. Also during this first video learning session take a screen shot of the video slide that covers the most salient points under discussion by Al, at that moment, in the video. Usually, as Al opens a slide to begin a topic he will show several slides of the same price action and he will be adding written comments as he moves along. Finally, the last slide of the immediate topic (not the last slide of the particular video) will have ALL of his comments written and graphics drawn on them. That is the slide you want to capture.
Then he will go to another completely different slide in the same video. And he will do the same thing again building up to that last slide. So, again, take first impression notes. Also take a snap shot of that last slide. Go through that entire particular video lesson doing the above until you finish the video. Print the snapshots you made of that video lesson. Print the online notes out. Put the printed out snapshots and notes in a binder. Rest your brain LOL! Maybe even a day or two if need be.
When refreshed, start the same video again but this time with pen in hand and take extensive notes on each slide snapshot THAT is in YOUR BINDER. Do this as he is talking and working thru the concepts; the concepts that the snapshot slide embodies. Remember, on the video he may have 3 or 4 slides dealing with some concepts but your snapshot slide is usually the last one, and captures them all before he heads to another topic in the same video lesson. This is an excellent “process step” because you are relating your understanding of what he is saying, to the slide he is discussing. And you are physically writing it down on the slide and that process drives it even deeper into your consciousness. This exercise serves to help cement the concepts into your brain. Go through the whole video doing this. Rest a few days..ROFL.
Next take time to review each slide with your ALL your notes. Think deeply about each slide. That review will drive it even much deeper into your consciousness.
As a very last step take a look again at each slide in your binder, one by one. As you look at a slide, close your eyes, see it in your mind, take a picture...clik clik..a mental snapshot. It is now yours!
With Brooks you have to “engage” the videos. You have to “do” something EACH time you go through a video. You cannot just sit there and listen. You will miss the nuances and even many of the main points.
The books will make much more sense if you work through the videos first. The books will then become a reference source for deeper application. I too started out with Brooks first book and some articles he had written. Then his trilogy came out. I bought a hard copy of the trilogy. I also bought a digital copy of the trilogy to study while flying around and traveling. I bought the Best Trades course by Richard. I bought the entire Brooks video course including the secondary Forex course.
The taxonomy of the use of his materials is as the following:
I recommend Entwistle first. Then the Brooks main course with forex, if you like forex. Then the trilogy. I would work thru his materials in that order. I would use the above process I have discovered, and explained above, as I listen to the videos, both Entwistle’s course and the Brooks main course. Why? The material is voluminous and it will, without a doubt, take a very long time to go through it. Most will just give up. The goal is to start making money as soon as possible, without understanding ALL that Brooks expounds upon. I believe the process and order that I have laid out above will facilitate reaching that goal.
BTW Entwistle’s course is real cheap. Like 69 bucks I believe.
I am not a shill for either of them. Nor do I get any monetary compensation. I am just relating my thinking on how to work through Brooks materials. I suspect and fear many traders start off and then give up in despair as it can be overwhelming. They quit. Too bad as “they are throwing the baby out with the bathwater.” Younger people will need to google that idiomatic expression to understand it. ROFLMAO!
IT IS WORK! You have to roll up your sleeves and wade in. Good luck!
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The HFT’s and computers have knocked the young and agile out of the equation. Only the old dinosaurs can be successful as discretionary day traders as the young love the new, new technology, and new style, too much to take a serious look at the ole ways used “back in the day” but adapted for today’s markets. Too old fashioned for their palate.
The only risk that has any real meaning to it in pragmatic terms is, actual risk. From the entry to the exit the only risk a trader actually endured is how far the market, in REALITY, went against his position, plus 1 tick. It is the only pragmatic mechanism for figuring reward to risk as the final curtain slides down over the trade. As the sun sets on a trade and it is in it’s final throes of agony or pinnacle of glory and jubilation the “true” risk/reward can be known only when the exit is complete and the trade has been placed in the dustbin of history to never be resurrected again. It is over and final.
The initial risk is a provisional step and a synthetic (not real) in case the market gets there. It should IMO never be utilized as a measuring mechanism in the R:R equation. It was a hypothetical situation in the life of a trade .....just in case....internet down...mini crash....major crash....happens while the trade is on.
The only real risk is the risk suffered during the life span of the trade from it’s birth to it’s death. Its entry to it’s exit.
If after entry the market moves immediately in ones favor with no adverse movement, then in my thinking, it IS a risk free trade. No sweat....no heart palpitations...no sweaty palms...no broken key boards....no RISKS... just a peaceful crushing of the market fit for a good ribeye and a couple of Coors or Stella Artois. The market never reduced me down to a chicken and pork hotdog.
A trader always need to look at risk/reward/probability. He has his initial and actual risk, his initial and actual reward, his initial and actual probability. The latter is his best guess that price will likely reach his reward before it reaches his initial SL. It becomes actual and true when he exits the trade at whatever reward or loss he gets. I am not a mathematician so my discussion of probability is without doubt lacking standing or merit but it works for me in the world of trading.
Finally, if I get a quick move with no actual risk in my favor I immediately know I must exit quickly and grab what the market has handed to me on a silver platter. Why? Because the market, most if time, IS NOT going to give me small risk, big reward, high probability. So if I get small risk or zero risk after I take a position then my probability is higher I will make profit, as opposed to a loss, but I cannot count on it also giving me a big reward. There are exceptions of course, such as in a very strong BO. Where most traders go wrong is ...market moves immediately in their favor....jubilation takes over...visions of Angus ribeyes...they are thinking...”this baby is going to the moon“.....greed takes over...I’m holding for BIG reward...this is huge....no risk...good probability...big reward...I’ve hit the motherlode...SO they hold. Market whipsaws...their actual PT (what they could have exited with) dissipates faster than a monkey running after peanuts ...price plunges and the synthetic SL is hit converting into a Real loss...out comes el cheapo hotdogs and el cheapo wine to drown the pain, or at least numb it. Then the conversation turns to ...could of...should of...wife is giving the trader those glaring looks again and it becomes crystal clear “he screwed up” AGAIN.
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Risk of ruin generally only becomes greater if “averaging down” is done in the wrong context. If averaging down is done in the right context it actually increases the probability that the trade will end up being a successful trade. Why? It lowers the BE point and lowers the synthetic initial PT to a smaller movement to make the same, or better profit, than the initial PT. It capitalizes on the markets natural rhythm to oscillate back and forth on any single bar as it forms the bar.
Double up and reverse is an easy way to get a loss back and be in the money on aprox 1/2 the move once one’s previous loss was suffered because of the undeniable fact that one's original premise has been proven wrong. In addition, it serves as a mechanism to change those glaring looks into looks of admiration and praise, especially, when you send her on her way to Dillards.
this is your thread n journal but why not show this working on an actual live account many try it n succeed to just blow out by adding!
why do you never show anything real or time n sales of real trades.
i have all kind of ideas on how to get people to the moon but im not doing them does that mean i should be so confident in my abilities?
whats the minimum account size you need to run this strategy?
why do you never show anything real or time n sales of real trades.
i have all kind of ideas on how to get people to the moon but im not doing them does that mean i should be so confident in my abilities?
whats the minimum account size you need to run this strategy?
That old dinosaur is taking advantage, isn't he a bit old for screwing the youngsters?
But I suppose that's the name of the game in trading.
The old screwing the young while the young wanna screw the old.