[Maletor]

Brooks rarely trades breakouts, they are unreliable; over the long run you will lose trading breakouts.

What he does trade is *failed failures* / breakout pullbacks / cup and handle patterns. (All the same thing if you think about it).

He even fades breakouts of trading ranges (with price action setups) because they are that much more likely to fail.

That is the far more probable trade.

[BlowFish]

Originally Posted by jolee »

...... Al Brooks doesn't seem to incorporate breakouts- maybe he can elaborate why if he happens to drop by this thread again. (not sure if this webinar and material is allowed here but available from Money Show )
MoneyShowBreakOutSetup
Attachment 12037

In some respects every brooks trade is a breakout....... well it is with respect to the previous 5 minutes range.

Most trades boil down to either a breakout or a 'fade'. (Some argue that pull backs warrant there own heading though I am not sure I agree).

[BlowFish]

Originally Posted by Maletor »

Brooks rarely trades breakouts, they are unreliable; over the long run you will lose trading breakouts.

What he does trade is *failed failures* / breakout pullbacks / cup and handle patterns. (All the same thing if you think about it).

He even fades breakouts of trading ranges (with price action setups) because they are that much more likely to fail.

That is the far more probable trade.

I am sure there are a few that would disagree about BO's being unreliable....or less reliable Having said that, if you buy into the idea that markets congest ( or are range bound, or are in balance) 70% of the time, then the obvious course of action is to fade break outs (or extremes at least). However if you can identify when or where a BO might succeed then you are likely to hit the long runs. 'Trend traders' often are BO traders and surprise surprise if they don't filter there entries they might expect 3 out of 10 winners. With proper money management they do OK. Just a couple of random thoughts.

[bakrob99]

Originally Posted by Maletor »

Here are my trades today.

That first L1 trade was not one that Brooks would have taken according to his book. My reading suggests that he would have waited and not traded that doji bar. It was also too close to the EMA. He would have entered after the next down bar on a stop; your "nailbiter" trade. Remember - you were above the EMA but not by much. He wants to see signs of selling coming in.

Thanks for posting.

[bakrob99]

Maletor - which "ROOM" are you talking about?

[thalestrader]

Originally Posted by Maletor »

Brooks rarely trades breakouts, they are unreliable; over the long run you will lose trading breakouts.

Some breakout traders might suggest that the reason so many feel that breakouts are unreliable is because, as DbPhoenix might say, they tend to see breakouts everywhere, even out "in the middle of nowhere."

The "middle of nowhere" is a dangerous place, and price spends most of its time there. But it is not the whole of price action. Price action is the entire universe composed of both support and resistance levels as well as the gaseous and vacuous middle of nowhere.

A candlestick, a volume spike, or a pullback to a moving average is not Price Action any more than a comet, a moon, or a nebula is the Universe. This does not mean that important information may not be derived from such phenomena, but it would be a mistake to extrapolate a general conclusion about the whole from an observation based on an isolated part.

It would, therefore, be in the would-be speculator's interest to learn the difference between bona fide S/R levels and the the amorphous middle of nowhere. Even if the trader decides that trading breakouts is not for him, an understanding of what constitutes a breakout would presumably help that trader to distinguish between a genuine breakout and a mere hiccup in the middle of nowhere that might be safely faded.

Best Wishes,

Thales

[davewolfs]

Would it be correct to say that a H1 is the first bar that is higher then the previous bar after a swing high has occurred and a H2 is the second bar that is higher then the previous bar but lower then the H1. Also, a leg is reset once a swing high occurs that is higher then the H1.

[rangerdoc]

Originally Posted by davewolfs »

Would it be correct to say that a H1 is the first bar that is higher then the previous bar after a swing high has occurred and a H2 is the second bar that is higher then the previous bar but lower then the H1. Also, a leg is reset once a swing high occurs that is higher then the H1.

Not necessarily. Brooks warns to be cautious when a second entry lets you in at a better price. They often fail. Often, an H2,3 & 4 are successively higher.

The main thing to remember is that Brooks method is entirely about scalping setups. As such they are highly reliable. Most traders are looking for small swings though & if you use Brooks methods without scalping out a small chunk quickly, you will lose more than you win. You swing a small portion of a position in the hopes that you will catch those larger moves, but the trade is really all about grabbing a very small profit quickly.