Hi everyone! Recently finished reading Brooks' Reading Price Charts. It was not easy but I made it. Next question is how to apply it to trading? What have you found helpful in Brooks' approach? How do you apply it to your trading? If you did not find it helpful, what do use instead? Brooks recommends to start with this, "Here are some possible reasons for entering a trade (remember, you need two or more): Reversal bar Good signal bar pattern EMA pullback in a trend, especially if two legged Breakout Pullback Breakout Test High/ Low 2 or 4 (there must have been a prior trendline break if fading a strong trend) Failure of anything: Prior High or Low, flag breakout, reversal from an overshoot of a trendline or a trend channel line, 5 tick failure" Succesful trades to everyone!
no i do not agree but Brooks does not spoon feed and you have to use a considerable amount of judgement in the application of his techniques. you do not need to read the whole book but only the sections on signal bars.
i have heard of one tick failure which is quite powerful when used in the right context...but not 5 tick failure
you could add 'gap bar' which is also a good set up. Brooks mainly scalps which is not surprising since a set up on a 5 min does not usually go very far,unless some alignment with a bigger time frame took place : however, it is usually quite enough to make a living.
i think you have to know direction first and then wait for set up which will then allow you to control risk.
i first read that book a long time ago and am now re reading it this time around it is a lot easier to understand what he is saying...but i have a few years experience in trading now. his book is not meant for inexperienced traders or traders who are looking for a rule based system to trade.
i just entered this trade...a break out, pull back trade, what Brooks calls a ' failed failure ' a risk reward of 1:2