maybe it is time to copy or use set ups even more strictly. or maybe it is time to use sensible position size......like 2% of account size......my account is small so i use 10% or even 50% and THAT is not what Brooks does. i have not used outside bars or inside bars or break out points or correct position sizes. so it is totally on my head since i have followed him selectively
Too tight a SL and a trader WILL lose. If price action trading is a traders <<modus operandi>> then an initial PA stop loss should be used, not a monetary SL , IMO. If price action is going to determine your entry then it should also determine your exit in terms of a max SL. That max SL I consider to be the point at which my premise for taking the trade in the first place is wrong. For a scalper this requires a high win rate because even on high probability trades the rewards are often going to be relatively small when compared to the losses when a losses do occur. Apart from maintaining a high win rate to offset larger PA SL’s, a strategy that I use when I do suffer a bigger loss than my average reward, is to double up or sometimes triple up, in the correct direction to get my larger loss back on less movement in points than that movement that caused the loss in the first place. And if price, on the doubled up position goes in my favor after entry, the same or more distance in points that the previous loss did then in short order I not only have my loss back but a profit. But this does require practice to train oneself to work the process and not get carried away with the emotion of the moment. He just suffered a loss and now doubles up in the opposite direction. Not emotionally easy to do. It takes training an practice to execute it properly. Remember, a high probability trade needs to have the profit extracted quickly without doting around i.e. falling in love with the profit, as high probability scenarios are fleeting and will “puff” be gone before the trader can reel the fish in. The market is not going to allow high probability in plain view for all to see and exploit for very long. Mr B’s traders equation can help with these decisions on whether or not a trader should take a trade in the first place and the probability of that trade rendering a successful outcome.
this is the truth and newbies do not understand it:they think they see it ,so it is going to be huge profit. Broks is the only one who explains such things ad nauseum........
unless he gets the probability right. From what i understand it: very often brooks does suggest a tight stop...but 'too' tight and yes i agree with you
brooks, and the rest of these "pa gurus" (who, not surprisingly, make no money trading), is probably the worst resource. good traders are inherently skeptical of any claim and conduct the analysis themselves to determine if an opportunity is real. let's talk about price action. how many of you have actually studied price action patterns using a robust framework to analyze subsequent returns? I have. and what i found was that there is little to no profitability in trading price action. if you believe that there is then you are making the hot hand fallacy argument and you do not understand that the probabilistic outcome is equal at each interval (Brownian motion). you are making a mental error based upon your misunderstanding of probability. conversely, there is a degree of profitability in momentum. however, the analysis of that is highly systematic, which means it is traded within milliseconds -- b̶e̶f̶o̶r̶e̶ ̶t̶h̶e̶ ̶l̶i̶g̶h̶t̶ ̶f̶r̶o̶m̶ ̶y̶o̶u̶r̶ ̶c̶o̶m̶p̶u̶t̶e̶r̶ ̶s̶c̶r̶e̶e̶n̶ ̶r̶e̶a̶c̶h̶e̶s̶ ̶y̶o̶u̶r̶ ̶e̶y̶e̶s̶. the trade you make is adverse, and the market maker has earned his or her spread. unless you have a way to know what the next price will be before it hits the tape, you are not going to make money through price action trading.