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Because picking the direction is not the factor that decides profitability. More than anything else, the three M's are --- money management, trade management, risk management.
You can give a new trader an indicator that is right 90% of the time and they will still loose their ass because they can't follow the rules and have terrible money management skills.
This is also why indicators are pointless. If you aren't making money, it isn't because of having the wrong indicator.
BTW, you mention commissions and fees --- that is also why this is not a zero sum game...
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Topics will include:
Wake Up! How to Prep and Trade the Market Open Price Action, presented by Al Brooks
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[Gets Old, presented by George Kleinman
I decided to order this book like the rest of you, I thought Al Brooks could teach me a lot of new stuff.
Man, I am still in chapter one and it's painful. Something about his writing style is not agreeing with me. I keep feeling like these super-long paragraphs of why a bar is, could, could not, might, might not be, sometimes is, sometimes isn't, a bear or a bull bar .... ugh, I just lost my train of thought again just typing that...
I wish he had used bullet points for describing some of it instead of writing it in paragraph format.
I've learned more about doji's though in the first chapter than I ever knew before. I'm also paying more attention to up/down bars like the two in the attachment.
He's also reminded me that if it looks like "xyz", it probably will behave very similar to "xyz". Trading is not an exact science, and too many times I (we?) get caught up in looking for the perfect symmetry or perfect bar.
As Douglas Adams said:
Last, I'm also learning more about ii and iii bars. So as you can see, I am in fact learning from the book, but man, it's a tough lesson.
I just wanted to say that Brooks might be the worst author ever. His book is so mind numbingly painful to try and decipher. That being said I find the material brilliant. I'm still grinding through the book and I find that it just takes time to let the material sink in. Then as I watch the charts each day I'm noticing more and more setups from the book. It's a painful way to learn but ultimately I think very rewarding.
I'm hoping to start posting some charts of setups that I spot through out the day in this thread.
Blz
P.S. I don't think he has written any other books but don't quote me on that. He has done some writing for Futures magazine.
Platform: NinjaTrader, Tradestation, Think Or Swim
Broker: Mirus Zen-Fire
Trading: ES
Posts: 15 since Sep 2009
Thanks Given: 5
Thanks Received: 1
Glad to hear I am not the only with these thoughts... what a quagmire of insightful ideas. Mike thanks for your post... I am encouraged to reopen the book and trudge through.
I've read several chapters many times. I had to take a break so I started reading some other non-trading books. But I'll be back to Brooks. No one reads the Bible cover to cover, same with Brooks.
I'm not using any particular setup but I am incorporating his ideas into my trading:
I wish I had more time to lead this discussion more but I'm sorry that I don't. When I started it I didn't want me to be teaching the Brooks ideas, something I'm not qualified to do. I wanted it to be collaborative. So I hope others will contribute when they can and the thread won't die.
Attached is a picture of a Brooks pattern that he claims has very high reliability. In essence it is a second entry into a failed breakout of a tight trading range. So, in the attached example the 6B got into a tight range (Barb Wire as per Brooks) and gave a nice fakeout pop. When you get that first breakout you want to enter a sell stop 1 tick below the breakout bar. If it doesn't reverse you don't get executed but if it does you'll get triggered and there will be longs trapped that are looking to get out.
BTW Mike, I tried range bars for a while (part of dealing with the overlapping bars on the CL 5 min chart that I mentioned in the CL thread plus Jeff got me interested in them). But I decided yesterday that I was going back to tick & minute charts. I think the relationship of the close & open are very important and with range bars the close is always on the high or low. It makes detecting dojis and other trading ranges very difficult.
Yesterday I saw on my tick chart that price was in long trading ranges that didn't even show up on the range chart.
On a tick chart it can compress low volume periods but it doesn't compress price. A range chart compresses price (and can compress low volume activity too). I don't like compressing price. I want to see it all.
Obviously the brooks patterns won't work with range bars very well.