djohnsonhot

Well, many have posted replies in a different category than the one I use: Market Profile or otherwise known as Volume Profile or VOLUME at PRICE. In any case, those indicators come in different flavors depending on the platform. Ninja has a free one (look in forums under indicators) and I use the ones I see at Freestockcharts.com and the ThinkorSwim platform - - -which I actually do use to trade from as ONE of the indicators I use beyond pure price action (Based on principles I learned from Al Brook's book on a 5 minute chart with a 22 EMA on pullbacks). However, most of my trades are worked from the following: 1. I trade RANGES. In other words, depending on my over-night studies and a daily trade sheet that displays: GANN LEVELS, FIB LEVELS ON 5 different timeframes, I use the previous 3 to 5 days of range to determine exhaustion in any direction, low or high based on the first 30 minutes to one hour of trading (or the previous days' range should I take a pre-market trade that I deem a no-brainer entry). Now, I will NEVER go long at the top of my calculated range and vice-versa (short at the bottom) unless the momentum is just ridiculous and many support or resistance levels are taken out by "range bars." 2. I will respect VOL PROFILE levels. I write them on a 30-minute, 2-day chart in TOS. I will also look at Shadowtraders' VP levels. I will also look at several other blogs I subscribe to in order to find commonality is what their projected ranges are OR what they think they are...and play according to those commonalities. You can pretty much find that your SUPPORT and RES levels match theirs or come very close. 3. I follow a guy names Michael Jardine on his Enthios.com website. He does a good job in actual trades, posts them in advance and takes those trades. He uses Volume Profiles calculated on the Ensign Software platform which I do not need. Jardine also uses Keltners to exit his trades without exception. His trades at times produce good results or rather small losses....he cuts his losses quickly. That is really the key in my mind: stick to your plan, do not get emotional esp on very fast action by the commercial trades because they scoop up retail shares in order to build their trading contract sizes by eating us alive by taking out our stops that are way too close to the action. Many of you will be surprised by this: I use a 16 tick stop. I do NOT close a trade if and until a stop point is hit...I try to enter trades that offer ENOUGH TICKS OF STOP AND TARGET RANGE that are OUTSIDE of major support/resistance/key levels. For example: I will short at $990 (for example). If my 16 tick stop and target are CLOSER than the KEY levels (let's say we go short at $990 and $1000 is a key level (it should be, it is a century level), then I will not go short there because it is within 16 ticks of a major level. Comprende? I will wait, instead, for my short entry to pullback to OUTSIDE of the 16 tick stop level. In this case, we will need some downward range expansion to trade it....make sense? If a VOLUME PROFILE level is within that range, then again, it is not wise to trade it unless you know it will HOLD. $1000 ES could indeed hold, right, as now SUPPORT BECOMES RESISTANCE at $1000 because it was trading above that level for my short to be of consequence...and thus, IF I see it BOUNCE BACK UP TO $1000 and it holds and then proceeds with momentum below that level, I might have a better chance but $1000 less 16 ticks would be a better short area..... It is Turkey day, or otherwise I would share more. One more thing: if I shorted at $990, then my natural target (profit level) is $990 less 16 ticks or 4 points. Or, $986. Now, if I have on 10 contracts, I will trade out of 1/2 of my position at $986 and IF that level is still above a key level, I will then make that my next target...let's say it is a 61.8 level or 138.2% expansion on a great range expanding down-draft short...well, now we will place a trade to close the other 1/2 (5 contracts) at that level. I am quick to move my stops IN CLOSER should I sense a rapid shift against me and I DO NOT move my stops on a good trade closer than Break-even plus 1 tick, unless and until my first trade target stop (5 contracts, or 1/2) is hit.

Fantastic reference...thanks for that link.

The last couple of days have been choppy...but, I on my Five minute chart, I did see a beauty of a set-up before lunch on a break-down with stacking candles (on a short, open is at or below the close of the previous candle).....several in a row. When I see that sort of Price Action, esp if the next candle gaps lower on a short, then I enter at will ....the participants are entering trades so quickly that the exchanges cannot keep up with the number of orders and the price gaps down candle to candle on such action. I use a simple Zero Lag Vergvoort Crossover set of EMA's (Zero lag TEMA and Zero Lag Heikan-Ashi TEMA with the same value: 20/22 or 34) and look for cross-overs when ranges exhaust (volume confirming that longs are out or shorts are out) and look for Brooks' pull-back legs and DOJI's. If I stick to those set-ups, I am at 75% plus. I use my other indicators to confirm as well. Volume though is a must and pure/simple price action and working ranges. Rules not mentioned: I have to see more than a few attempts to push past a double top to go long at the top of the day's session range and vice-versa for shorts. The rule simply says that I am not willingly enter long at tops or short at bottoms (absolute ranges, mind you). Happy Trading.

"Brooks does not emphasize volume much." I stand by my statement. Watch his video's....he rarely mentions volume. Not taking volume into consideration is a mistake. But, I understand your point. Watch volume spikes, though, at major reversals.....in combination with DOJI's, volume is powerful and I always have volume as a bottom panel indicator.

On top of runners, averaging INTO a trade, even by a couple of ticks after confirmation of a good entry, can add profits. Esp if you let that/(those) second contract(s) (by a double down from 2 to 4, from 4 to 8, etc) can REALLY pay off. I have been watching a guy name Carl Futia trade for a while and wondered why he would average DOWN into a trade by adding a second, or two more, contract(s) and the math works, so long as you don't let your first run up by 5 points to something. Another rule I TOTALLY agree with: if you have two reasons to enter (double top, doji, for example) and one reason to NOT enter (still not at top of day range, or running into a fib on reversal), then DO NOT enter.....think about this: if you have entered a trade but a gut feeling was hitting you when you clicked your mouse, you know it IMMEDIATELY and can USUALLY find your error for that entry. THE VERY NEXT STEP: be ready to exit with a stop. Pull your stop into your trade, and wait for another BETTER set-up with no bad gut feelings and more reasons to enter. Use all of your tools: 1. Volume: Brooks does not emphasize volume much. A BIG MISS in my book. 2. RANGE: where are you in the range. 3. Trend: meaning the bigger picture for that session as CONFIRMED by the overall market direction. My rule: you forget the trend, or ignore it, and you will not therefore actually know if you are in a counter move or a trend move. If you cannot bet that $1000 on a trade (if you say to yourself, YES, I would lay down $1000 because I KNOW THE TREND, and I am countering, fading, or trading with it, then do not take the entry). 4. Money Management: pre-determine you hard stops (6 to 8 ticks) and do NOT vary from them. The old adage goes: there will always be another trade. 5. Understand waves and patterns, and know your candlesticks and play the S/R levels to your advantage. FINALLY: 6. If you have a chart tool loaded, and ignore it most of the time, take it off your chart. How many times have you entered a trade only to notice that one of your oscillators, or Moving averages, or a consolidation/chop zone indicator has signaled and THEN you notice your bad entry was actually made quite obvious and you missed it! USE YOUR TOOLS, remove tools you do not use and take Brooks at his word: simple, clean, and then use those techniques. OK, everyone, happy trading. I am excited about this coming week as we are in a turning point. Either we continue long or roll over. Some great days are in the mix. Regards, DJ

Szu: One thing I read in your post caught my attention: ........."around 1:35 i thought market is trying to put bottom so got stubborn..." For one thing, I agree that we need to post real trades.....I also think that you are showing that you are studying your trades post-session and are man/woman enough to admit when you see yourself as stubborn. I did the EXACT same thing on Monday, if I recall: I thought we were going short all day and entered a VERY stupid trade SHORT AT THE BOTTOM! I have many trading rules, and one of them is a combination: " Never enter short at the bottom of a range (esp. if several waves have occurred short) and NEVER go long at the top of ranges." Allow me to add another rule: let the VOLUME, the PRICE ACTION, and S/R and ATTEMPTS to go further or roll-over, or reverse course to guide you. Do what Brooks says and let TWO attempts guide you. Also, one of my main trading rules: NEVER trade against the prevaling trend, even if the entry is into a lucrative counter-move (pull-back in my book)....always go for the meat of a nice trend trade and keep looking for those pull-backs into the 20EMA (I use 22 periods, Exponential and TRIPLE EXP)....and look for that SIGNAL bar (doji, esp those STARS or those LONG-WICKED candles with that long wick on the top or the bottom - - which tells you that there was an ATTEMPT to go long against a short trend and vice-versa in a long trend. In essence, stubborn is the word for it if you THINK that there is something happening, and in fact the PA is telling you, shouting to you, that you are against a trend. FINALLY! There is always another trade in the session to be had. Wait out those trades that you say to yourself: "Would I bet a thousand dollars on this entry I am ABOUT to take." Bet that thousand on MORE THAN ONE indicator, more than ONE attempt, and more than one reason.....never WILLINGLY trade short or long against the prevailing trend. I have shared with you pretty much all of my rules. DJ

Very Nice Charts, you all! I appreciate these. DJ

Wonderful entries, trader!!!!!!!!! I wish I had that knack!!! I lost on a couple of bad entries and then on the last leg down within the last hour to go (12:30 PST or so), I caught that short and took her down! Were you the guy who wanted to create a live forum of some sort??? DJ

I found this post on "Re: Futures I Trade Show & Brooks Book" interesting and have nominated it accordingly for "Topic Of The Month July, 2009"

Yes, I did not say that I use 3 tick stops. I use 8 to open, and then use PURE PA for my action. I take heat pretty much on most trades as my entries are so-so...this is true lately. I really liked the chart above, all marked with excellent entries. I prefer the pullback entries, on the first DOJI's then enter a tick below the low of the signal (Doji poke-up bar on shorts we see)...rather than the H1 or H2 trades which I actually need help understanding. I also like the trade the Double bottoms and tops, but esp the double bottoms where the second leg is that fake-out leg that fails on the SECOND ATTEMPT to go lower...esp if this is the low of the day so far. Al Brooks is right on: take two legs up on pullbacks...again, the pull-back trades in the DIRECTION OF THE TREND...I do not work counter's very well at all. THANKS, MB for your trades!!!

The best traders that I know enter their trades with 3 ticks of stop and a minimum of 10 contracts..and scalp out pretty quickly. They are pure price action traders, use Elliotts, breakouts and Support and resistance levels. All on clean charts with very little in the way of indicators, MA lines, oscilllators or that sort of thing. They trade on signals from 3000 volume charts and enter their trades on 233 tick charts. I've watched them trade and they are profitable on the majority and close out quickly on bad entries.

The best traders I know of enter with 3 tick stops. Period. They get out fast. I am not that good. The subject, and debate about how many ticks of heat should we (lesser experienced) take SHOULD be based upon how you assess your entry at the time of your trade entry. Sounds easy, huh? Let me tell you that when you do find that magic entry, and your profit is immediate and obvious, I would say that you can see it with your own eyes, and your entry is clearly a winner. Most of the time, when I have nailed a topping point (let's say for a roll-over to a short trend from a day high, and volume confirms it, and momentum is clearly on your side) then I loosen my stops and let a runner run. I use the PULLBACK strategy that Brooks KIND OF describes: an attempt to go higher on short that fails. I'll actually SCALE IN on those entries. I'll start with 2 to 5 contracts and then re-enter on the next break level until I hit my max contract size for any entry. How many times a day doe this happen? Twice, maybe. ALWAYS on the second leg..always...after a major reversal. Those are those magic runs that you say, "wow, I missed that one." And thus: I tend to lose on the entries where I was late to the game (did not recognize the trend in fact did change or rolled) and did not clearly see that wave three was well on its way ....in Elliott terms (or, as Brooks says it, the second "leg" from a bottom that he mentions at about 45 minutes into his Static Slide show)..... If we have a choppy day, as we have seen lately after a single run-up or whatever, then I move my stops to 3 ticks...remember chop is essentially just that: limited in range. For example, If your average daily range for the last 5 trading days has already declined to low point for the past 30 days, and then you enter a chop zone of 2 points, then your entries at the bottom and tops of these zones are already limited in potential, so your entries SHOULD be limited anyway (there is very little profit potential in chop). You can chew up profits or put yourself in a losing net for the session and walk away disappointed for the day. When you see chop forming, walk away! Put a shade box around it. Don't trade those zones. In my opinion, you are better off writing checks to the homeless. One is far better to enter during pull-backs in a nice swinging trend upward or downward and as I mentioned earlier, if you find that turning point, then your initial stop SHOULD be loose, and you should move your trailing stop more slowly to take advantage of waves within waves. What I do is wait for each positive price action bar in your favor to complete, and then move my stop to one tick ABOVE that bar for a short trend and below that bar in a long trend. Then wait for the next bar to close and take that stop to a tick above or below the open again. On 5 minute charts, there is a way to determine that you are in a good swing and thus SHOULD be looser in your trailing ATM: stacking candles or candles that open at the same price as the closing price, pull back no more than a tick or two and CONTINUE in your favor....just keep SLOWLY moving your trailing stop candle to candle. I am not a teacher, and thus I am struggling with the language here. I hope this made sense. The best traders I know of enter with 3 tick stops. They manage their entries better than newbies or the lesser experienced.

I waited all day on Monday, the 30th, to pick up the quickie profit when we broke the range...made $725 in less than a couple of minutes...I also caught the pre-market action. Today, news may drive some break-outs...beware that action. Sometimes I will trade 30 seconds into the news. I also am looking for bullish or bearish action 45 seconds to a minute prior to news releases because the insiders will sneak in with buying or selling...I will take the other side of those trades for 3 ticks, and 10 contracts. Fast money, heart-stopping, pure Las Vegas trades...not for the faint of heart. But, then again, this entire Emini trade takes stamina. If you are not clearing 4 points a day, then another job may be in order.....

I made a mistake: I look for Elliott pullback into the POINT 2 and trade in the direction of the trend into WAVE 3. Also, my Signal candles are Brooks' signals (on a short, a pullback to a failure to go long or a HH failure in that pullback). In essence: look for failed reversals (which are range-limited pullbacks) against the true trend (long or short)...these failed reversals are in Elliott parlance 1 to 2's and 3 to 4's....the meat waves in Elliott terms are 2 to 3 and 4 to 5 waves. I ignore the shorter runs, the A-B-C patterns and the 1 to 2's and 3 to 4's because these are all pullbacks or LIMITED RANGE entries. The predominant rule is that I do not trade anything but meaty trend trades and all you need is one a day to make money or easily off-set the small loser trades.....the better the trader, the more limited your losses are because you are hopefully taking losses on failed entries which are limited...if I take a loss and then the trade WAS OK (good entry after all), then I just simply say that another trade will occur. Finally: never trade Triple witching, and beware expiration days and Bernanke hours or Obama hours, and be careful on Mondays and Fridays...all you need are two to three profitable days in a week and six figures is easily achievable.

This is my first take on Al Brooks, in this forum, since I read all of his articles and saw the slide show (.mov file I downloaded from the Sanuk forum, which is all about price action). First, let me say that I am trading only two set-ups, based on the same ingredients (long a short): 1. I look for the predominant trend that I can determine at the time of the trade and based upon the previous 30 minutes to 1.5 hours of trading, depending on the time of day. I do trade pre-hours, but have lost money more times than I made money doing so. 2. So, for example we have a topping situation, where a double top (DT) has occurred and I am convinced we are rolling over......since I use volume and other indicators ON TOP of price action (PA), then I have to be very convinced that we have now gone into a short trend for the time being. Also, bear in mind that I TRY to trade Elliott patterns. I say try, because there are so many ways to identify an Elliott wave. For those of you who understand that WAVE 3 is the "meat wave", then you will understand as well that I am looking for a short downturn wave from the top (zero point) and I am convinced that the first wave (point 1) has been achieved.....I will know that because I will see a pull-back to point 1. Then, I see the PA takes us into Wave 3. With that, here is my set-up. 3. I look for Doji to form and place my short trade one tick below the low of that signal bar. These Doji bars (hesitation bars, better if they are Doji Stars) give me pause to wait and see a new lower OR EQUAL open in relation to the Signal bar. That opening PA, with momentum, and I will wait at times for the typical counter move a tick or two, is that I enter with that one tick of continuation into the next bar. I immediately place my stop at one tick above the signal bar. 4. My order is placed with an ATM strategy in Ninja. The strategy is I enter with 10 contracts, or 6 contracts in two entries (I often scale IN, not out) and take 1/2 off once my initial six ticks are achieved at +3 ticks past my entry. I often CANCEL my ATM's if I see a swing trade occur on a single DOWNWARD candle bar, that confirms my entry was a good one. =====I hope I am not confusing you all...but, let me say that I often scale in on GREAT entries and double down at twice the contracts (simply by pushing the MARKET entry button in Ninja)....this is contrary to a lot of thinking out there.....I also am very reluctant on a GREAT entry to let the BE+3/ 6 ticks of profit ATM go if I see that I have good swing. I am fast to cancel ATM's in that way=== Now, I begin to move my stop order down (to exit) once I see plus 8 ticks fo profit...this is my average exit, should I have scaled in OR canceled my automatic trade stop and target. 5. Now, I wait until the next pull-back LONG in this short trend and re-enter for WAVE 4 to 5 in Elliott terms. I only take one of these a day. I will wait all the way thru lunch and if I do not see a perfect topping, as we did on Friday, then I will not trade. I also have a PLT trading auto-signal NinjaScript loaded, with very tight restrictions (Meaning, I want more bars to print to give me long or short signals). My hard and fast rules: NO counter trades, only in the direction of the trend - - which again is a trend I know with great authority is actualized. I will never ever counter trade into pullbacks. I look for DT's and DB's. Finally, I trade H pattern entries. These develop all day long. I also trade inverted H patterns. These are based DB's and DT's and are easy for me to find as I have been trading those for over 2 years. Brook's video touches upon H patterns but he does not call it such. Instead, look for long runs upward or downward, and then look for the second LL (or HH) to be a few ticks beyond the first low or high....then enter a trade long or short and stay in the trade until they exhaust themselves into a Doji, or a top, and then do the same with your pullback entries.... I hope this all makes sense.

Well, I think that this failed hinge was a single candle move and reading that particular candle, one MUST observe the follwing: 1. The real body of the red candle immediately following the up-move break-out candle would be called a REACH or a TEST of the high (an attempt to push higher) with a failure to do so. I would like to see VOLUME accompany this chart in that real time-frame...I would suspect a pop. 2. The body of this red candle has a lower open and higher close. LH and an inside closing point...hardly a move anywhere and in and of itself, we are talking a lack of momentum within its shorter timeframe. Go over to the Al Brooks forum and look for what they call a signal candle. DJ

Good call, ACS...I was about the post the same reply. Based on Al's other articles, and from another forum called Sanuk (Google groups) one must be constantly diligent to recognize when a prior trendline has become irrelevant to the current Price Action. Oh, and I am surprised that there was not another T-Line drawn from the bottom at Candle three to Candle 5. The two candles prior to 5, at approx 11:28 to 11:30 bounce off this T-LINE. DJ

Hi, I am new to this forum. There is a ZEROLAG TEMA and HATEma (Heikan-Ashi)...that I used on Ninja that seems to respond quite well to quick direction changes and roll-overs. I also use a 22 Period TEMA on my charts. I look for a ZERO lag Cross over using 34 periods for the two TEMA's mentioned above (Zero Lag)...and use the 22 period TEMA as a marker as well. The steeper the cross over (TEMA is Blue, HATema is Red) with the Blue tema crossing up or down SHARPLY, the better the trend change on a 5 minute chart. I have been employing Al's rather simple but effective MICRO-trendlines with good success...but, my impatience level has cost me quite a bit of money and some losing days. As Al mentions, there SHOULD be less than 10 perfect set-ups in a Day session of the EMini (ES)...... This Brook's stuff is good. Apparently I need to read Wycoff..