LiggerPig

From my understanding of Brook's thoughts in his book, he's saying you should enter with a trend for a higher probability of scalping a profit. His view being by waiting for the bar to complete you are simply asking the market to confirm the trend you are looking to enter. He stresses the importance of confirmation for many of his setups. He sees bars as either trending or non-trending, and much of his emphasis is on putting them in the right context with prior bars and setups. He identifies uses for other timeframe charts inc. 1 min but he says 5 min offers a good number of opportunites per day for high probability setups and is the minimum timeframe he's physically able to trade effectively. I think the question as to whether it's better to use 'pure' price action or that depicted by 5 min bars is interesting. For the 5 min bars to work in Brooks' favor, instead of drumming their fingers, the big players need to be entering trades seconds ahead of the 5 min bar completion to stamp their authority on direction and paint the bar to their advantage. When one side wins the battle for the bar Al gets his 'trend' and he enters on their coat tails whether the setup is with trend, counter trend, breakout, prior setup failure, etc. Seems pretty implausible and is an obvious way for big players to do the exact opposite if enough traders used Al Brooks' setups. It clearly makes sense to use other methods to read price action, or at least integrate better methods when using Al's setups. That said, I've found the 5 min bars to be a good 'rough guide' and can often use them as per his book. Other players' methods look for best possible entry with the tightest stops whereas Brooks likes a high win rate for scalps with the possibility of catching onto some big trends. I think his stressing the need for confirmations reflects the reliance on interpreting bars rather than 'pure' price action.

Al Brooks may be returning to his trading cave but expect good news about his website With the right support and enough interest perhaps Al will continue to post his charts....

Hi Jay, "Trade what you see not what you think" is typically used to tell oneself the market disagrees with our bias. Traders have to change their view according to changes in the market, the expression reminds us not to stubbornly stick to pre-determined thoughts of where the market is going. Rather, let the market tell you. Good to hear you are learning to understand your feelings managing the trade. This is one of the prime reasons for keeping a journal. The more you understand about your emotions whilst in a position the more control you will have over the feelings about whether or not a trade is working as per plan. It's human nature to want to exit early whether it be fear the market will reverse or simply the need to be 'right'. In a similar vein, I wouldn't worry about keeping your method 'hush hush'. There are loads of profitable trading methods widely available. However, it's one thing knowing about them but how many traders are actually able to use them with success? One size does not fit all, every trader has to find their own way and find a method that suits their personality. Keep up the great work :thumbs up:

hi Jay, great to see you're still working to improve your trading. Sorry, I haven't had much time in recent months to keep up with your blog. I like the transition away from short-term turns in sentiment to using ma's. :thumbs up: Recently, I've been trading online with a newbie to ES and we've been building her trading plan around the use of 9ema and 20ema, 50ma and 200ma on the 15 min ES chart. It has helped me to avoid some of my more high risk positions or at least I highlight them as higher risk before explaining them to her. Your target of 4 ES points per day is pretty ambitious over the longer term. Right now the high volatility makes it embarrassingly easy but when the market eventually settles down it will become harder work. I had to work my way from 3 points and it was a big step to consistently average 4. Excellent to see you use the VIX to determine stop size. I don't know of any simple alternative to allowing VIX to tell me to trade small with a wider stop. Scaling out and trailing stops have been problematic in the recent environment. I've given up using them many times. Often, it has been more rewarding to wait for the market to offer re-entries. I'm caught between using them or not and analysis of my trades shows I need to adjust how I exit rather than give up on them. I now try to judge it trade by trade according to market sentiment. Thank you for posting your findings re money management. I find it food for thought since my idea of money management was always to assess reward to risk of every trade prior to entry and to never get into any margin difficulties. Keep up the good work :applaud:

Hi Snowtruck and welcome to TL. You make a very good observation in your first post here. I have noticed in chatrooms that traders will comment on how boring a market is, how they're going to find something else to do, etc. Soon afterwards the market will move, they miss the setup which was unfolding only to return later to curse the market(s). I can't comment on meditation or breathing techniques as I prefer to take breaks when I feel I need them. I don't worry too much about missing trades as there's always going to be another come along. My focus tends to be on market action rather than myself. I focus on price by considering the market to be a game played between bulls and bears. In my journal I note price levels each side needs to get the upperhand. My preparation includes compiling support and resistance levels which become a playing field for the game. By continually trying to assess what each side needs to achieve pricewise my focus is to anticipate rather than chase the action. The nearest price targets for each side change often, adjusting to the game, unless the market becomes choppy or rangebound when I can then simply choose areas where one side will regain the upperhand. Risk is managed by choosing to side with bulls or bears in only those parts of the playing field where they have space to run with the ball. Of course I'm also using sentiment, volume and moving averages to assess which side is likely to dominate but for keeping focus I'm running gameplans for each side. Going back to traders being distracted, I find I have the opposite problem - of becoming immersed. I've come to recognise when I'm being drawn in to a small area of the playing field, usually by the reward to risk setups. These are the times when I'm just as vulnerable to those checking other websites, etc. This is often the best time to zoom out and look at the playing field from afar, daily, hourly charts instead of 15min and so on. An example of my method of focus from my journal today; The notes are often contradictory as I add views from different perspectives and some thoughts turn out to be completely wrong but as you can see from the prices, I try to keep myself busy with the game even when the market isn't making any real progress.

Same thing happened to me today, with Windows XP pro update. Fortunately I'm used to this as I regularly update my ATi display driver / Catalyst C C software to the latest versions. How I get around it is to save my monitor setup as a 'profile' in the ATi Catalyst control center then, whenever I need to, I need only activate the saved profile. I'm thinking your graphics setup will have the same or similar feature? If so, you ought to be able to save the display settings, let Windows do it's worst then just load/activate the saved settings.

To win a competition you need specialisation in the sectors which are going to do well in the 3 month period. I wouldn't worry about specific stock selection unless it's for fine-tuning between a few leaders in their sector. Your task will be to identify the industry sectors most likely to benefit from the economic conditions in future months. Not easy I know, but get the right sectors and concentrate on the leaders in those industries. Don't over diversify, 8-10 stocks in 3 sectors is my thought. If it were now I'd take a chance on the beaten down banking sector for starters, regardless of how you see interest rates moving, they're due a bounce. Once your stocks are performing (or not) you should look to reduce the number of stocks by selling the weaker performers on dips and increasing your holdings of the winners. Don't put too many eggs in one basket though, 5 stocks should see you through to the competition end. Don't be tempted to take profits too quickly, you need to run your winners to come out on top. That means increasing your holding on pullbacks. Finally, don't overtrade. When the whole market is underperforming, your stocks will too. You will require patience at times. Good luck in the competition.

It's one thing to have a successful strategy, the important part is being able to trade it. Learn to trade it well and only then will you have to worry about others stealing your idea. One of the easiest ways to protect your method would be to disguise what you are doing. Using extra indicators, external data, etc. which you don't use all adds to the mystique for someone trying to follow your success. If they ask, just give 'em pages full of charts and tell them to figure it out for themselves, just like you had to :rofl: Good luck with your strategy.

If you believe the market can be predicted you have an incentive to learn how to predict where and when the market will move to. That incentive can be an excellent motivation for traders, or alternatively, could be a destructive journey into randomness. Personally, I've found the effort to learn to predict market moves very rewarding. It gives you a sense of being at one with your market, of being in control and understanding it's needs. To be of use to you as a trader your method of prediction needs to be reliable, consistently profitable and enhance your performance. Your risk management must work with your method to tell you when you are wrong. This is extremely important. It's all too easy to become over-confident having the market perform twists and turns at your every command but a momentary lapse, a short period of defiance, a bad mood swing, etc. can see you part ways very quickly. When we predict the future we are essentially looking for history to repeat. We need to be aware that history is repeating on many different levels. These are viewed most easily as different timeframes. If we consider the complex nature of interrelated markets and the different timeframes, it becomes clear that history won't repeat exactly. The best we can expect is a close approximation to our prediction. To be effective, I believe it worthwhile to predict the path taken to the next target. Think of the waypoints along the path that will confirm your prediction is valid. You may have one, two or maybe more different predicted paths to the next waypoint. We should always allow for the market to vary it's path to the next waypoint. This is best realised by remembering that we are in the game to make a profit. By dropping our arrogance, our need to be right, we use stops to indicate our preferred paths are straight, or slightly curved. Our paths have to be paved with riches, we can't take huge detours. Our waypoints are entries and exits which confirm our predictions. By predicting the path(s) we have a regular assessment of our performance en route to the next target. It's not essential for us to travel each path, in fact it's preferable to avoid many. Experience tells us where predictions are easier and which paths carry the biggest riches. As traders we needn't be too hung up about whether the markets move to a pre-determined plan; our goal is to profit financially regardless.

Hi Jay, For such a small sample size you've done well to find some important ideas you can trade successfully. It's very true that opening gaps of 7 points or less tend to be filled and 8 points or over tend to lead to runaway, "stuck up" or "stuck down" trend days where pullbacks are shallow and the moves are difficult to join in. For someone, like yourself, who is actively watching the opening, it's very useful to know how the pit operates to maximise their profits. They take advantage of those who have a bias at the open, those who must have a position in the market, whether it be due to news, data releases, etc. It's an emotional time when, very often, one side wants to trade regardless of slippage. The pros on the floor want to suck in both sides and they want each side to pay over the odds. It's one of those times these guys make their big money, moving the market one way and then the other. Importantly, you may be able to find a way to successfully trade the gap-fill with a decent win and profit ratio. You will probably need to set a time to enter e.g. I've used 9.45 am for longs which meet certain conditions such as 20ema on 15 min chart is pointed up along with a second, confirming signal on a smaller timeframe. I'm sure you'll find some conditions / rules in your methods which give you an edge. You'll need to paper-trade the ideas since, unfortunately, your current stops are probably far too tight to trade gap-fills. But trading the gap-fill remains a very very popular method of making money at the open. It's not my style but it works for others. I'm more nervous at the open than at any other time, and it's not by accident that I will very often note the ES price at 9.30 ET. A tight opening range in the first couple of minutes becomes a 'pivot' which shows up later. You notice it more at s/r levels. I think Fiewalker touched upon something similar in your original thread? Best to note how price moves away from your s/r levels, rather than trying to second guess a turn, i.e. if price falls to your support level, don't just enter long at support. Rather, recognise the opening ranges as a time when one or other side feel they "must" get in a position at any cost, whereas you can wait for a pullback. You'll achieve a safer, low-risk entry and easier, less volatile exit by picking them off on your terms. You have to distance yourself from the opening emotional swings, One of the toughest things to accept about trading the open is you will get stopped out only to see the market go your way immediately afterwards. This will happen sometimes day after day and is why you must be selective and only enter at prices which offer a good risk/reward ratio. Scale out at on a partial gap-fill and don't hold out for the full gap-fill if it co-incides with your s/r levels. Finally, many trading systems were developed and became very popular over the years based on breakouts from the opening range. You should already be very aware that your favoured market deliberately creates false breakouts in the form of marginal new highs and lows. Bear this in mind when trading gap-fills!