by increasing your stop you are increasing probability of successful trade; higher probability means a lower RR but more number of winners.
I used to place great emphasis on reward to risk ratio. I also had an unhealthy infatuation with the concept of a "free trade," where I'd take half of a position off for a minimal profit and move my stop loss to breakeven on the remain position). The result was I was largely a breakeven to small net loss trader. It took some time, but I finally learned what Ed Seykota meant when he said we each get what we want from the markets.
yes a free trade does not exist since you are paid to take risks.... you are lucky if you have a good and consistent stop 'policy' that is one of my biggest drawbacks and is keeping me from being a consistent trader stops may make a good subject for a thread it is as controversial as Brooks Ed Seykota was interesting but he is a bit off the radar now, do you know what happened to him?
Thanks traderGOD for an interesting discussion. I did read AB's book and looked at the video course and like others, I found the videos easier to follow. Since Brooks' approach to price action is a discretionary one, I think it's to be expected that it's going to be hideously complicated to follow (not helped by using his own terminology for some things). Like a student's academic paper, I think he's tried to cover every contingency in his explanations. I didn't "get" it until I'd spent a few hundred hours watching a 5min FX chart evolve and realised that I was subconsciously learning the subtle movements that provide a hint of what the market was probably going to do next. The subtleties I was learning were very hard to articulate because there were so many variables I was picking up and trying to process. I think this is what AB tries to explain - albeit somewhat clumsily at times. I don't know if AB trades or not. I've come across a lot of gurus that talk it up but when you look at their work you can see trades that could not have been made in real time using their rules. At least Brook's trades could be made (even if they lost). Anyway, to me it doesn't matter, AB's book and the videos provided useful ideas that I've since rolled into my own approach. eg. Watching one of his videos on stops, it became clear that my stops had to be a lot further away (or pass on the trade). Thanks again for the thread.
your welcome....i am quite amazed for your kindness and generosity yes discretionary is very dangerous to a beginner trader. as a very experienced but not profitable trader i have found sometimes it is better to forget all the rules and technicals and just go with your feel:it looks like going up go with that.
Short of a massive IT/AI team to let you compete against other robots, trading the daily chart is the best. Al Brooks' stuff has merit, it can open your mind about price action. However I think most people try this stuff on the intraday will be disappointed. The interpretations can really mess up your mind as there is always ambiguity. Daily chart is easier - that's the rhythm the market breaths in... the open and close of the daily bar actually means something..(the open and close of 5min bars means nothing). There is usually a news story of the day. There is a sentiment of the day. https://www.elitetrader.com/et/threads/trading-is-easy.321831/ Here I gave some examples of price action, but notice in this time frame the news stories are factored in, to make the clarity a bit better.... every advantage counts.
they do mean something but put that in context:you cannot expect 1000 point move from looking at 5 min; at the most the meaning may last for ten 5 min bars.
Thanks for the insight. I was wondering if @padutrader s success was more due to his experience than it was Al Brooks teachng.
knowledge is available cheap; but not understanding. take what everyone is told 'buy low sell high' this is not wrong but as usual the whole story is not told. the correct way for a trader is buy low IN THE TREND and sell high IN THE TREND so what is the trend? a bar -whatever time frame- visually shows a trend. so take any bar and buy at low and sell at high......stops below the low and above the high this gives a good RR. i am not sure why Brooks had to write 3 books to explain this. Unless his idea was to confuse the hell out of the competition [who is us ] he certainly confused me out of 20 years and 300,000 usd.