Thanks for all the replies folks, I am still waiting for the book to be delivered. But I am printing out the ES 5 min chart each day and looking at it looking at what happens before a move. Will be doing this then sim trading for the next few months at least.
Hi oilfx, Yup, kids stuff, you're right. If you follow the ACD method it should be like child's play, once you get the hang of it. All the best, G.
I think wrbtrader nailed it. I have yet to see any intelligent criticism on the content of Al Brook`s material beyond trolling remarks with little of substance. Sure, the first book was written poorly and that made a lot of people give up on it. Maybe it was a way of natural selection to weed out the weak hands and only make it accessible for those who want it badly enough? I actually re-wrote the book the second time I read it, annotated charts, etc. There is no doubt that I learned more than if I had simply read it from cover to cover. Now, I have moved on a little from the concepts of Al Brooks, but there is no doubt in my mind that the book contains a lot of very valuable concepts and is a great starting point for any trader to start thinking intelligently about price action and putting it into a meaningful framework. As always, the important thing is to study, test and verify for yourself. Al Brooks insists on using the 5-minute chart. Maybe you would do better with a tick chart? Do your own studies and do not trust the opinion of any guru. So yes, I recommend his work and if his new book is better than his old one, you should probably buy that one. Regards.
Do you guys believe there is any edge in Al Brooks type price action setups? I mean just a price chart with a 20 ma. I'm not questioning whether or not any Al Brooks followers can trade profitably. I'm questioning whether their profitability has anything to do with his setups, or if it's due to something else. In my opinion, the edge is in position sizing and trade management. The intangibles that can't be taught in a book or newsletter. Being able to cut some losses before they hit full stop, being able to get the most out of a couple of winners, taking fewer losses on full sized positions compared to small sized positions, changing these rules in response to market conditions changing... stuff like that repeated over and over every day will add up in the long term. I think that's the edge, not a 20 ma or chart pattern. Discuss.
Unquestionably good (or great) trade management is AN edge. It is hard, rarely done well by the novice and as much or more art than science. But just because good management is AN edge it does not suggest that there are not OTHER edges to be had. It would be a hard case to make that if a particular setup resulted in good (or great) entries enough of the time that employing that setup would not constitute an edge. Just because the apple pie is tasty does not mean the blueberry is any less tasty.
I guess I ask because I've never had any success trading off the chart of a single instrument. I have to look at other stuff to assess the weight of the evidence, so to speak, in order to ever come to a conclusion that I have a greater than 50% chance of success. And even then it's still tough, I'm profitable on longer term ETF trading but not yet profitable on the highly leveraged intraday futures trading. The reason I thought of it is after some skype sessions with a friend who is a successful daytrader. He has a couple of custom indicators he uses in combo with price action and I couldn't see much advantage to them. He says he keeps an eye on market internals ($tick, Advn-Decl, Uvol-dvol) and a few leading stocks but they never seemed to factor into any of his decisions as far as I could tell. To my admittedly untrained eye, it seemed his profitability was more a function of his trade/position management than any advantage given to him by his chart setups. He agreed to a point, but wasn't ready to write off his chart setups competely and says they are necessary for him. I'm not convinced of that, but at the same time am not going to argue with someone who's making money at this... Just curious what those who do have success trading off the chart of a single instrument have to say. Do they think there's an edge to the price action setups, or could the edge be something else?
Without knowing when to enter a trade having good trade/money management and a sound psychology will not help you become profitable. These other disciplines are required to let your edge play out, yes, but you need the setups in the first place. I do believe though identifying setups is 10% of the learning curve and the hard slog is getting you psychology sorted and fine tuning your trade management.
I trade a 5-min charts with a 20-bar EMA and I draw trend lines and parallel channels because the way price reacts to those levels determines whether I will take my minimum profit or hold for more (I won't put on a trade if the next S/R level in line to be tested isn't at least my minimum profit's amount away from the entry trigger). There is a HUGE edge to many PA setups. I spent quite a few months noting on spreadsheets every PA setup, with-trend and counter-trend, along with max favorable and adverse excursions. This helped me choose the highest probability setups, and define rules for managing each type of trade based on the hard data, not based on "it looks weak/strong", "the news is bad, don't buy', "it's already run up too high to buy", "it's overbought/oversold", and on and on.