Futures I Trade Show & Brooks Book

[Guest Maletor]

That's something I've thought about.

 

Usually they become obvious after the fact and obviously there is no way to tell if the best trade of the day is still to come.

 

I just quantify it by three criteria:

 

how many unique things it has going for it

how dependable each of those things are independently

and how close the setup is to "perfect"

[rangerdoc 13]

  DynamicFx said:

Sorry for asking this here, but it's partly connected to what Brooks says in the book.

 

I trade currencies live, but I'm also demo trading the ES at the moment. What I'm interested in, is swing trading the SPY on 15m+ timeframes, using some of Brooks methods.

 

Could someone please outline what is needed to trade the SPY. I am almost certain to go with IB as the broker, but am unsure if I'll actually be allowed to trade the SPY.

 

Also, is it possible to get a demo feed of the SPY on any charts.

 

Thanks.

 

The pattern day trading rule may be an issue with trading the SPY on a 15m chart if you have a balance less than $25,000. Not sure since I don't trade equities.

You can get a demo from any broker, but most if not all are for 30 days only. The best way around is to open a live account with a broker. Most brokers will give you an indefinite demo account if you have a funded account with them.

[forrestang 10]

  rangerdoc said:

The pattern day trading rule may be an issue with trading the SPY on a 15m chart if you have a balance less than $25,000. Not sure since I don't trade equities.

You can get a demo from any broker, but most if not all are for 30 days only. The best way around is to open a live account with a broker. Most brokers will give you an indefinite demo account if you have a funded account with them.

 

If I recall, a friend of mine had a live demo account with TOS for like 6 months before he ever funded the account.

[jolee 10]

  DynamicFx said:

........ What I'm interested in, is swing trading the SPY on 15m+ timeframes, using some of Brooks methods.

 

Could someone please outline what is needed to trade the SPY. I am almost certain to go with IB as the broker, but am unsure if I'll actually be allowed to trade the SPY.

 

Also, is it possible to get a demo feed of the SPY on any charts.

 

Thanks.

 

Yes , I think mutiple day swings are great way to start and you can even practice live trading using Brook's methods with 1 to 50 shares as Wycoff suggested. You can get into options (with 75 - 80 delta) later as you gain confidence for directional plays. Although I study ,observe and utilize the SPY chart, I don't trade it, too expensive. Here is a list of Ultra and Ultra Inverse (when market slides can buy Inverse shares) index related ETFs. You can check them out for free at FreeStockCharts.com - Web's Best Streaming Realtime Stock Charts - Free.

Leveraged_InverseETFs.pdfFetching info...

[ACS 10]

  forrestang said:

Has anyone figured out how to quantify what the 'best trades' are each day?

 

By that I don't mean setup 1 vs. setup 2 or something, just if you were trying to explain to someone to pick the very best trades throughout the day, how would you do it?

 

I mean wether it be something having to do with how we opened, or using a S/R level somewhere, or whatever criteria you wish?

 

To me the best trades happen, first of all, when the bars are moving vertically rather than horizontally. I avoid all barb wire and tight trading ranges since I know I'm not good enough, at least yet, to trade them. A clear two legged pullback in a strong trend is number one. The second leg of an expected two leg move after a pattern such as a wedge, flag, trendline break, trend channel overshoot, etc. would be number two.

[bakrob99 11]

  forrestang said:

Has anyone figured out how to quantify what the 'best trades' are each day?

 

By that I don't mean setup 1 vs. setup 2 or something, just if you were trying to explain to someone to pick the very best trades throughout the day, how would you do it?

 

I mean wether it be something having to do with how we opened, or using a S/R level somewhere, or whatever criteria you wish?

 

 

 

Brooks specifically discusses this. He says it's not possible to select and be a winner as you will pick more bad cherries than good ones. Also - that is why he trades the 5M chart ... it has fewer trades on it, so less chance of overtrading. Finally, implicit in his method is to trade LARGE size and after you're up your goal STOP trading.

 

His pint is - it's better/easier to get 1 point with 100 contracts and make $5000 than it is to tray to make $5000 getting 10 points with 10 contracts.

[Mr_black 10]

Today's trades : Bar#4 Mtl Fbo Long P/L +4, Bar# 12 Bull Trap Short P/L+4,Bar's#15,16 and 17 Bull/Bear Trap Long P/L+4....

[ACS 10]

  Mr_black said:

Today's trades : Bar#4 Mtl Fbo Long P/L +4, Bar# 12 Bull Trap Short P/L+4,Bar's#15,16 and 17 Bull/Bear Trap Long P/L+4....

 

Why didn't you take the second bull trap short at bar 15?

[Guest Maletor]

Here is today's chart.

 

Afternoon trading has been abysmal as of late.

 

1 - Huge gap open with a huge bar. Going long felt like buying a top and indeed it came back to 1 tick of my MM stop. In the end worked up to +4

 

2 - Took the outside bar short thinking there were trapped longs on the H2. and it was the technical L2 from HOD. I should have taken the L2 that was after the green bar which was the real second leg down after the trend line break.

 

Was this entry 80% probable?

 

3 - Took long on breakout pullback from the mornings triangle and a 2 bar double top, moved top up, got stopped out and

 

4 - reversed like a buffoon. Quit for the day.

[mosley 10]

  Maletor said:

Here is today's chart.

 

Going long felt like buying a top and indeed it came back to 1 tick of my MM stop.

Maletor, thanks for posting your charts and more importantly your explanations. Simple question on your 1st trade above - what does MM mean? Didn't see it in Al Brooks' book, have never seen that particular abbreviation.

[ACS 10]

  Maletor said:

Here is today's chart.

 

moved top up, got stopped out

 

Still working on that one myself. It seems like the ES loves to go back and hunt for stops. Many times you get 3-4 ticks and then it tests not only the entry price but the signal price and even one tick beyond before giving you the needed 5.

[mbfromla 10]

  Maletor said:

Here is today's chart.

 

Afternoon trading has been abysmal as of late.

 

1 - Huge gap open with a huge bar. Going long felt like buying a top and indeed it came back to 1 tick of my MM stop. In the end worked up to +4

 

2 - Took the outside bar short thinking there were trapped longs on the H2. and it was the technical L2 from HOD. I should have taken the L2 that was after the green bar which was the real second leg down after the trend line break.

 

Was this entry 80% probable?

 

3 - Took long on breakout pullback from the mornings triangle and a 2 bar double top, moved top up, got stopped out and

 

4 - reversed like a buffoon. Quit for the day.

 

 

Nice trades, I still think that the highest probability trades for the day were the inside doji bar 8 setup bar and bar #9 short entry.

Also, bar #12 short, bar #4 long, and counting backwards bar #14 short.

[dbandas 10]

It's interesting that your traps at bar 4 and 12 were also "implied" H1 and L1 pullbacks, where the single countertrend candles may have been more clearly identified as pullbacks on a faster chart.

 

Another thing I've noticed is that EMA gap plays will sometimes show up on a daily 8:30 to 3:15 chart, but they won't show up on a 24 hour chart in the first hour and forty minutes of trading.

 

For example, the gap pullback 2nd attempt at bar 16. This isn't on a chart that plots 24 hours since the EMA actually plots differently for the first 20 5-minute periods of the regular session. It's one of my favorites.

[Mr_black 10]

  ACS said:

Why didn't you take the second bull trap short at bar 15?

Volume was decreasing:helloooo:

[DynamicFx 10]

Had this closed out at 94.20 earlier this morning, which I set last night, for +43.

 

What I'm finding from the book, is that I'm more comfortable with setups that I already could in part, see myself before reading the book. Brooks has just clarified the situation and gave me confidence to trade what I see.

 

I'm still looking at his other observations, but for now I'm concentrating on these trendline breaks and pullbacks. The target was where I thought price might stall, at the beginning of the move down yesterday. It's actually gone higher now, but I'm still happy with the result. Other pairs had the same pattern, and I should have actually went with GBP/USD instead.

 

It also highlights something he mentions in the book. The last push down appears to be a fake head and shoulders break. The line across the bottom is where I see the pattern (you can't see the left shoulder on the attached chart).

[bakrob99 11]

  mosley said:

Maletor, thanks for posting your charts and more importantly your explanations. Simple question on your 1st trade above - what does MM mean? Didn't see it in Al Brooks' book, have never seen that particular abbreviation.

 

I am sure he means his Money Management stop. (ie trailing his stop up after netting 4 ticks)

[Mr_black 10]

Today's trades Bars# 5,6 Mtl Fbo(Long) no entry on this one:crap:,and 2 longs -8 ticks (stop hit) , + 15 ticks....done for today and for the week P/L+52 ticks

[davewolfs 10]

If you played every pullback and the opening bar today today's chart was over 20 points and that is just the morning session letting a final position swing into the afternoon.

[mosley 10]

Difficult morning for me. Of course in hindsight it's obvious, just jump in after the break of the opening bar high. Problems were many:

• the gap was small, only 1.50 pts, and to use Al Brooks' term the market was anything but "overdone"
  
• there was over 2 hrs of congestion in that general area from the previous afternoon, and as Al said on pg.305 regarding one of his examples where the market gapped down huge (which is theoretically better), formed an opening bear-trend bar, and yet he didn't short below it: "A short based on the bear trend bar would be risky, since it is in the area of the trading range of the final hour of the day before."
  
• a buy above the opening bar with a stop below it would've meant a 2.75pt stop if hit. While not excessive that's a bit steeper than I like to risk, especially with the other problems of the trade listed above
  
• on the 9:50 bar the market stalled, formed a bear-trend bar (or largish-bodied doji) and I considered a buy above it. But to that point there had been no big trend bars clearly pointing the way, and serious resistance was right overhead. Entry would've been 955.50 and yesterday's high was 956.75.
  
• nice pullback at 10:20/10:25 and in hindsight should've bought above the 10:25 bar. But in realtime I didn't because we had just completed 3 clear legs up and I didn't want to bet on a 4th leg.
  
• another nice pullback at 10:40-10:50 which, in hindsight, I should've bought above the 10:50 bar. But this time I would've been betting on a 5th leg. Obviously it worked. Also the 6th leg worked too. Go figure.
  

 

I did play the 1st pullback to the EMA, but unlike the overwhelming majority of trend days that close at/near their high this one sold off and I was lucky to make 5 ticks.

 

BTW, bakrob99, thanks for the tip re: MM being Money Management. Never heard that one before. Have, of course, heard of break-even (BE) stops, and trailing stops, but never money management stops! Good to know.

[davewolfs 10]

The gap really didn't matter. We had a failed wedge yesterday up to the high and made two legs down. The upswing at the EOD was just the beginning out of the second leg and this morning was a continuation. The first bar was a strong bar and any trade on either side of a strong trend bar is a good trade.

 

On the 9:50 bar, the market pulled back after all bull bars. This was an inside bar and a low risk long trade, we were only on our first leg up right now and I expected a minimum of two. From here the rally took off. Every pullback after this took off and not a single swing trade was stopped out. The highest risk trade was at the 10:05 pullback as this was 3.75 pts but it still worked. Either way, you could have swung from the previous entry and all would have been good.

 

Bottom line, strong swings like this are far and few and when they show up you should be buying every H1, H2 that you encounter.

 

Between scalps and swings on the morning session there were almost 25 pts to be made and if you refer to all the with trend examples in the book, I don't think that it gets much better then what we saw on the tape today.

[profit-trader 10]

Hi all

I have been trading AL Brook technique for a while. Are there any live chat room in here that talk only his stuffs?

 

Thank you

[ACS 10]

Lessons from Thursday for me. You can look at Wednesday from 10:40 (NY time) on as a big bull flag so buying the first bar bull breakout Thursday was a logical trade. You needed the full 2 point stop but the trade did work. That huge 9:55 bar was apparently a very short term climax and that is why there was such a big pullback before the trend resumed. Situations like that require a bigger stop or waiting for another setup. The rest of the day just required a suspension of disbelief in the trend.

[scourt 10]

I just got the Brooks book yesterday, reading it intently after having gone through this forum and the presentations he's already done.

 

Guys, I have to tell you, risking 4-6 ES ticks to scalp 4 ticks (most of the time) is not my thing because I'm a 2-contract ES player and that's why I feel that if f I'm going to risk 4-6 ticks, then I want 6+ ticks to risk 4 and 12+ ticks to risk 6 on an all-in / all-out basis.

 

Brooks spends an entire book talking about breakouts from 5 min bar ranges based on stop orders a tick outside the range. And this is fine. I think there's a lot of great value in what he's saying. To know what he knows I think can only enhance my trading and understanding of how price action works.

 

But...he's only detailing 1/2 of all good trades. That is, you've got many ranges, built up by horizontal support and resistance which, if not violated by 4-5 ES ticks, will reverse back into the current range for MORE than 4 ticks on average.

 

What you gain in ticks, you lose in winning pct. just as the inverse is true for how Brooks trades.

 

I'm posting this as something to think about as you read (like I) all of this heavy duty analysis of bar-by-bar price action stuff that appears quite complex in real-time to pull off.

 

Now, what's not hard to do in real-time is to buy double/triple bottom and sell double/triple top breakout attempts with a limit order with a 5-6 tick stop. Support and resistance is certainly a subjective matter as well, but *I think* one can come up with some reasonable rules to establish areas which should not be violated by 5-6 ticks in order to hold the S/R and shoot back into the current range (which could consist of multiple "5-min range bars"). I'm also willing to bet that you could get good enough at it, in time, on a 5-min ES chart to nail the turns with a 3-4 tick stop-loss.

 

Here's the kind of thing I'm talking about in a picture of this morning's pre-market on a 5 min 24-hour session chart.

 

I'm using Brooks book to understand how he thinks for breakouts so I can see that other side of the market which he only uses as confirmation stages and come up with 50-55% odds of the breakouts failing and getting 2x the reward for the risk. Emotionally, it's just too tough for me to have to maintain a 70% winning pct. to be successful at scalping. If I fell below 60% winning pct, I won't make it and that would hit me pretty hard emotionally.

 

I've been at this since 2003 and I'm coming to the conclusion that, for me, I'd rather start off knowing that I only have a coin flip's chance of a winning trade, but...that winning trade should pay off for 1.8x to 2x greater than what I'm willing to risk.

 

Anyway, I won't talk about this anymore in this group because it is not my intention to hijack this thread, only to tell you where I'm coming from in reading his book.

[mosley 10]

  davewolfs said:

The first bar was a strong bar and any trade on either side of a strong trend bar is a good trade.

 

On the 9:50 bar, the market pulled back after all bull bars. This was an inside bar and a low risk long trade, we were only on our first leg up right now and I expected a minimum of two.

A couple of problems here. This morning our opening bar was a strong trend bar. Got long on its break at 969.75, and had a choice of a humongous 3.75pt stop (just below the bottom of the bar) or Al Brooks' more commonly recommended 2pt stop. Market went down to exactly 967.75 and immediately stopped me out for a 2pt loss. Then it reversed up. Did I get back in after just losing 2pts? No. Why should I trust it now to the upside after it just made a big bear-trend bar? Realtime and after-the-fact are so different.

 

As to yesterday after the 9:50 pullback, the problem there was you would be entering on the 9:55 bar immediately before the market-moving 10:00am gov't report (Existing Home Sales). That's always risky as there is often wild fluctuations with those reports. Yesterday it would have worked just fine. Again, realtime and after-the-fact are so different.

[zdo 20]

Got the book and finally browsed through it. He has a very idiosyncratic lexicon, but it’s obvious he has put in his 10,000 hours…

 

His micro trendline work reminded me of some scalping system development work I did a while back that is functionally similar but isn’t based on ‘other side’ micro TL’s (see attached – shorts only showing on a 1 minute EJ from early this morning) …

 

Was just wondering if anyone has coded up any of his techniques ??