The book has a pretty nice discussion of failure patterns: failed breakouts, failed highs/lows, failed final flags, failed failures, etc.
A few of the worthwhile ideas from Brooks include the following: "The single most reliable Countertrend trade is entering Countertrend to a pullback which is a small trend in the opposite direction of a major trend. If a trader is becoming agitated because he is not in the market during an extended trend and he feels like he needs to trade aned he begins to look at 1-minute charts, 1-minute reversals offer a very profitable way to make money. However, it is by doing the opposite of the obvious. Wait for a 1-minute reversal to trigger a Countertrend entry, which you do not take, and then determine where you would place a protective stop if you had taken the trade. Then, place a With Trend entry stop at that price. You will be stopped into a With Trend position just as the Countertrend traders are getting stopped out. No one will be looking to enter Countertrend at that point and likely not until the trend has moved further along and another Countertrend setup begins to form. This is a very high probability With Trend scalp. Although the best reversals have strong momentum and go a long way they are often very slow to start and can have several small bars before the sharp moves begin. Typically, entries in trend pullbacks look bad but are profitable, and entries in reversals look good but are losers. Trends end with a reversal and then a test of the final trend extreme. Any series of strong trend bars (big bodies, small tails, and very little overlap) that is followed by a pullback almost always has a test of its extreme. If a market forms a Double Bottom after a selloff, but before the bull takes off, and it then has a pullback that tests just above the Double Bottom low, this is a Double Bottom Pullback long setup Trends often end with a test of the extreme, and the test often has two legs, each reaching a greater extreme (a Higher High in a bull, or a Lower Low in a bear). The first extreme and then the two legs make Three Pushes, which is a well recognized reversal setup with many names. The majority of Three Push patterns reverse after overshooting a trend channel line, and that alone is reason to enter, even if the actual shape is not a Wedge. The salient point is that an expanding triangle is a series of progressively higher Higher highs and lower lower lows that continue to trap breakout traders, and at some point they capitulate, and then all of the traders are on the same side, creating a trend Failures are often excellent setups for trades in the opposite direction, since the traders who were just forced out will be hesitant to reenter in the same direction, making the market one-sided. A one-tick failure is a reliable sign that the market is going the other way Most days are trending range days and offer many entries on failed swing high and swing low breakouts. You can also fade new swing highs and swing lows on trend days after a minor trendline break and when there is a strong reversal bar When price goes above a prior swing high and the momentum is not too strong, place an order to short the Higher High at one tick below of the prior bar on a stop. If the order is not filled by the time the bar closes, move the order up to one tick below the low of the bar that just closed. Continue to do this until the current leg gets so high and has so much momentum that you need more price action before shorting. All patterns fail, no matter how good they look. When they do, there will be trapped traders who will have to exit with a loss, usually at one tick beyond the entry or scalp bars, and this is an excellent opportunity for smart traders to enter for a low risk scalp. Place your entry stop at exactly the same place that these trapped traders are placing their protective stops, and you will get in where they get out. They won't be eager to enter again in their original direction, and this makes the market one sided in your direction and should lead to at least a scalp and usually a two-legged move."
Ugh, so much time to read the 10 pages of this thread to get these gems. Thanks for including them. The writing style is tedious but I can certainly see the value of suffering through it.
Quote from Al on his website: "lol, I've seen many of everything on 23 years of watching tick by tick". Was there even tick by tick charts back in 1987? If so, what charting platform?
The PC technology, networking and software back in 1987 did not support "tick chart" back in 1987, I don't believe. But I interpreted that sentence as someone reading the "time and sales" report (or the tape) tick-by-tick. Or that is just a general expression (though a bit exaggerated). Like somebody watching the markets every second of everyday (right).
He's not necessarily talking about tick charts. On Page 1, he defines tick as "The smallest unit of change is the tick, which has a different value for each market. Incidentally, a tick has two meanings. It is the smallest unit of change in price that a market can make, and it is also every trade that takes place (so if you buy, your order will appear on the Time and Sales table, and your fill, no matter how large or small, is one tick)." I'm reading the book now and I think people's criticism of his writing style is overblown. Sure, it's dense and a little repetitive, but that is a side effect of being very thorough. I actually find it pretty readable. Having read 40 pages so far, I'm finding myself looking at charts in a much different way and certainly encourage people to give the book a chance. (There's a link to a pdf of the first 50 pages somewhere in this thread.)