Tribute to Brooks

volpri · Jan 31, 2021

kaizer said:
Regarding your question about barrel of gun. This is question for fun. In this hypothetical situation I will say ‘go long’ but it is pure coin toss and prediction and (even more important) context less decision. You did not show the broader context on the chart. In reality I will avoid trading in this situation because I never take breakout trades, only pullbacks.

Back to the serious. You wrote

*** Say you got a bull trend going then a PB. You are looking to go long. There are 3 bear bars in the pb. Each PB bear bar is successively smaller. So, a trader is looking for the bull trend to resume. So price has three successive bear bars...each one decreasing in size. ***

And this makes sense, so you look how the pullback is forming, how the countertrend traders acting. This is your way to identify whether countertrend activity is good for attack (weak) or not (strong).

And also this makes sense

****As far as stops go I will use the extreme of bars but not necessarily the extreme of the adjacent previous bar. ****

Could you please be so kind and point me the chapter in Brooks books or courses where this discussed in deep? My view (mistaken as see now from your post) is Brooks always advocate stop behind signal bar or entry bar.

How I do it without bars extremes.

1/ Lets suppose we are in uptrend and the last swing is rise from price level A to B. We want to get some money from pockets of countertrend traders, sellers. Where countertrend traders enter the market on the way from A to B and where the stops located? In theory average price of sellers can be anywhere from A to B but statistically the level is concentrated around (A+B)/2. This means the collective (average) stop level of sellers is above (A+B)/2. When price retrace to (A+B)/2 – aka ‘50% test’ – and reverse back up than, as Al Brooks could say, we ride stops of countertrend traders and get some money from their pockets.

2/ Lets suppose we are in uptrend and the last swing is corrective down move from price level A to B. Sellers step in during fall hoping to take advantage on the trend reversal and their average price is about (a+b)/2 and stops are above. So when price stop to fall, reverse and breaks the (a+b)/2 we again can ride the wave and it is ‘50% hook’.

So, to me the reason to buy is:
1/ we are in uptrend and as trend follower bet on continuation, so expect counter activity to fail
2/ stops of countertrend traders are ahead, above my entry price and the execution of stops will help to propel my long position into profit zone

Swing points instead of bars extremes. You can ask

‘hey, dude, but where are these swing points, on bar chart or on the line tick chart?’

Swing points, which are result of collective trader’s decision (opposed to bars extremes, which are subject of individuals decision to view PA by 5 min, 3 min, 5000 contracts, 300 ticks, etc) are stable to the small variations. This means swing points on 3 min and on 5 min will be 90% the same, but on 30 min different. But the individual bars extremes on 3 min and 5 min can vary a lot.

Bottom line. I don’t say you are wrong using bars extremes as decision points, opposite, I want to understand logic behind it. This is why I ask you to point the chapter or video of Brooks where he discuss wide and tight stops, obviously this is point I missed.
More...

which of his books you asking about?

kaizer · Jan 31, 2021

volpri said:
which of his books you asking about?
More...

i have all 4 books in pdf so any of them will be good where discussed the question of wide and tight stops

volpri · Jan 31, 2021

Why would you go long in the hypothetical situation? If it is a coin toss why did you pick long vs short? Was there any particular reason?

kaizer · Jan 31, 2021

Primary reason is barrel of gun
Secondary reason is i know that most breakouts fail but dramatical breakouts have more chanses to succeed that non-dramatical. I see that bulls won the battle in the moment and if pick long vs short my choice is long. But only in front of gun

volpri · Jan 31, 2021

His book on Trading Ranges chap 29 the entire chapter deals with stops.

His video course go in to more detail. Do you have his video course?

He also has a free (if you bot his course otherwise only partially free) online manual at his course site. It is called Trading Price Action Manual. The excerpt below is an example of a wide SL when averaging down (oops that naughty word) so I will call it scaling in? This is in the section on scaling in. Like I said his video course deals more depth with SL placement. You might want to make haste and buy it as it seems the course keeps going up in price. It is still a good deal for the info IMHO but it don’t seem to be getting any cheaper. He might have some free videos on stops loss placement you can look at on youtube. I really recommend the video courses first then using the books as reference. A good video to start with (and a cheap introductory) is the Best Trades video course made as a colaboration between Brooks and a fellow named Richard Entwistle at daytradinginsight dot com. I think it cost 69.00 dollars.

volpri · Jan 31, 2021

kaizer said:
Primary reason is barrel of gun
Secondary reason is i know that most breakouts fail but dramatical breakouts have more chanses to succeed that non-dramatical. I see that bulls won the battle in the moment and if pick long vs short my choice is long. But only in front of gun
More...

LOL
I gotta go to bed. It is 3:28 a.m. here and my brain is getting tired. I will comment on the forced trading decision later.

kaizer · Jan 31, 2021

volpri, thanks for tips and good night
i have no video course but will look into Trading Ranges book, always like to research something new and promising

easymon1 · Jan 31, 2021

padutrader said:
if you see my trading friday you will see that....i lost trades whole day and made up everything-almost- with one huge winner
More...

That was a fine exit if it was the one you exited around the prior high area / round number. That exit was also at a pivot on my charts by the way, good clean work padman. If you would, it'd be bueno if you'd detail your thinking for the entry setup there.

easymon1 · Jan 31, 2021

easymon1 said:
the one you exited around the prior high area / round number
More...

https://elitetrader.com/et/threads/charts-for-no-reason.344272/page-9#post-5311636

padutrader · Jan 31, 2021

kaizer said:
My view (mistaken as see now from your post) is Brooks always advocate stop behind signal bar or entry bar.
More...

sometimes he does say beyond swing extreme.

and he does discuss stops continuously