Futures I Trade Show & Brooks Book

[balllightning 10]

Hi,

 

I am new to this forum and would like to say that this forum has been very informative and engaging. Am struggling with Al's book but I hope that I can hunker down and get through it. Reading the posts here really do help.

 

Thanks

[balllightning 10]

Hi,

 

Have a question that I was hoping some of you experts here can help me with. =)

 

In Al's book, he states that a H1 is a bar with a higer high than the previous bar, in a pull back in a bull trend.

 

However, many a time i see that he also counts L1's and L2's even when the candles are moving steadily upwards.

 

What am I missing here ?

 

Also, Upon identifying a H1, if lets say the market continues to drop lower, when do you void this H1 count and determine that the trend has changed? When do you go from counting a H2, and then deciding that the next instance is a H1?

 

Thanks for any help =)

[Mr_black 10]

First trading day after nice vacation....

[Guest Maletor]

You can count H1,2,3,4 from swing highs *or* swing lows.

Same goes for L1,2,3,4.

 

Depends on if you are looking for a reversal or pullback.

 

To answer your other question, it is when there is a new swing high / swing low in place.

These are subjective places but if you wanted to make it objective you could call it a bar preceded by and followed by 2 higher highs / lower lows. (Search fractal for the pattern I'm trying to describe here.)

[DynamicFx 10]

Could someone please offer some advice, or comment on the attached chart please. I'm on my second read through the book now, but today realised I still don't really have the faintest idea what I'm doing.

 

I think I should just stick with one pattern that I can see easily, and that's the DB/DT, which I didn't take today as my mind was too messed up with regards to direction.

 

Anyway, I can't clarify in my mind how to trade a trendline break. When the line breaks at (a), we then look for a continuation of the trend. I assume we're meant to go long on bar (b). It didn't trigger but bar © had a MTB which triggered and then stopped you out.

 

That continuation broke on the next bar. Am I right in thinking that the bar after © is the bar we should short.

 

The problem I'm having is, is that when a trendline breaks and you then go into drawing smaller degree trendlines, which you want to break to clarify a change in trend, the move often happens before any confirmation can happen.

 

If I'm drawing too many trendlines after the break at (a), I don't understand at what point the continuation of the trend is indicated as having failed.

 

It could even be argued that the pattern after the break at (a) forms a DB bull flag that fails. There's just too much information for me to process in real time, and by the time I had, the move was over. I was looking for a short, as the move up looked like a wedge, but it just kept on growing.

 

Did anyone else find today difficult, or was it just me.

 

Thanks.

[markw 10]

The volume has been on the light side. You had a good up move and punched thru 1000 so a pullback was possible.

 

 

 

mark

[ACS 10]

Could someone please offer some advice, or comment on the attached chart please. I'm on my second read through the book now, but today realised I still don't really have the faintest idea what I'm doing.

 

I think I should just stick with one pattern that I can see easily, and that's the DB/DT, which I didn't take today as my mind was too messed up with regards to direction.

 

Anyway, I can't clarify in my mind how to trade a trendline break. When the line breaks at (a), we then look for a continuation of the trend. I assume we're meant to go long on bar (b). It didn't trigger but bar © had a MTB which triggered and then stopped you out.

 

That continuation broke on the next bar. Am I right in thinking that the bar after © is the bar we should short.

 

The problem I'm having is, is that when a trendline breaks and you then go into drawing smaller degree trendlines, which you want to break to clarify a change in trend, the move often happens before any confirmation can happen.

 

If I'm drawing too many trendlines after the break at (a), I don't understand at what point the continuation of the trend is indicated as having failed.

 

It could even be argued that the pattern after the break at (a) forms a DB bull flag that fails. There's just too much information for me to process in real time, and by the time I had, the move was over. I was looking for a short, as the move up looked like a wedge, but it just kept on growing.

 

Did anyone else find today difficult, or was it just me.

 

Thanks.

 

Look for patterns yourself and then go to AB's web site and compare your chart to his. With time things should start to become clearer. Don't cheat and look at his chart first. If you really want to learn you have to do the work yourself first then use his chart to correct yours. Yes today was tough for me as well. Too many overlapping bars. I only took one trade, the H2 at 1002.50 at 12:45 NYT.

[Guest Maletor]

ACS, you weren't worried about the developing wedge?

 

Or were you trading a failed wedge / H2?

 

I like how Al wrote on his chart near EOD H2... three times in one spot.

 

I missed the first, second and third one. Got to work on some mental endurance.

 

That was the best trade of the day I think.

[climberguy 10]

Edit:Answered my own question

[Mr_black 10]

6E trade from this morning

[DynamicFx 10]

EMA Gap Bar: In a flat or up market, it is a bar with a high below the EMA.

 

On the attached chart, is my understanding of the EMA gap correct, in that every bar under the EMA is a signal bar, and once the signal bar triggers it becomes the entry bar.

 

Therefore, would I be correct in thinking that a buy stop is to be placed above every bar under/over the EMA in a flat market, in the hope it triggers and becomes the gap bar.

 

Or am I misinterpreting what he means by 'bar with a high below the EMA'.

 

Thanks.

[ACS 10]

ACS, you weren't worried about the developing wedge?

 

Or were you trading a failed wedge / H2?

 

I like how Al wrote on his chart near EOD H2... three times in one spot.

 

I missed the first, second and third one. Got to work on some mental endurance.

 

That was the best trade of the day I think.

 

I was trading a trend that had not yet broken the trendline or had a strong reversal pattern.

[ACS 10]

EMA Gap Bar: In a flat or up market, it is a bar with a high below the EMA.

 

On the attached chart, is my understanding of the EMA gap correct, in that every bar under the EMA is a signal bar, and once the signal bar triggers it becomes the entry bar.

 

Therefore, would I be correct in thinking that a buy stop is to be placed above every bar under/over the EMA in a flat market, in the hope it triggers and becomes the gap bar.

 

Or am I misinterpreting what he means by 'bar with a high below the EMA'.

 

Thanks.

 

EMA Gap is a type of trend trade and requires the same preconditions as all trend trades. When he says "flat" I assume it means a very short term flat correction in an otherwise strong uptrend and not an overall flat market.

[DynamicFx 10]

I thought the first trade was going to be a strong down-up reversal, but in hindsight I can see it was probably a failed BO pullback.

 

Second trade was an H2 by my counting (still unsure on the counting, but working on it) and second attempt to reverse yesterday's low.

 

Last trade was a wedge and DT.

 

I was not at the PC for the DBBF just above my text, but might have taken it.

[Mr_black 10]

6e trade from last night ....It was L1/L2 pullback to 20 Ema after a trend change signal

[Mr_black 10]

Nice morning session on 6e.....I had a lot of fun scalping these Reversal Bars

[Mr_black 10]

Bar # 1 takes HOY (High of yesterday) making a HH....Bar # 2 Mtl Fbo short sale opportunity and H1 after HH....Bar#3 H2

[DynamicFx 10]

I was busy setting up my new account today, but took a demo trade anyway. In all honesty I wouldn't have took it live. If I had a larger account, and could tolerate a wider stop then I would.

 

However, was the NFP move being setup in pre-market with the DB and then the DBPB, and even a MTFB.

 

I also think my counting could be at fault, as especially with including forex charts, I seem to be seeing more H3's as being the setups that trigger a move. Granted, the H2 including pre-market data never triggered, but it was close.

[mikea59 10]

My first post on this forum...

 

This book is about to drive me crazy, there are so many inconsistencies or down right errors - I'm about to give up. For example, H1, 2, 3, 4 and L1, 2, 3, 4 definitions and examples are just not consistent throughout the book. Check out page 120, Figure 4-16. This chart shows 11 Lx's in a strong bull trend right after he explains Lx

 

"Likewise, a Low 1 (Ll) occurs in an down or sideways market, and a Low 2, 3, and 4 are comparable to their High 2, 3, and 4 counterparts."

 

Clearly the first part of that chart is in a strong bull trend, why would he even consider identifying Lx's in a strong bull trend. He does go on to say:

 

"Although many are labeled, when the market is clearly trending up, you should not be looking to sell most Low 1 and Low 2 setups."

 

By his own definition, a Lx doesn't even exist in a bull trend.

 

I really have the sense that price action is the way to trade. So many indicator based mechanical systems I have tried have failed. I was really hoping (based on favorable reviews) that this Brooks book would be the definitive PA book - please, someone tell me that there is a payoff for reading this entire thing, I'm not sure I can get through it without some hope.

[szubaark 10]

This book will be easy or hard to read depending on how much Hard Screen Time you already put in to this.

Wish it was easier also, but its now.

[will1709 10]

My first post on this forum...

 

This book is about to drive me crazy, there are so many inconsistencies or down right errors - I'm about to give up. For example, H1, 2, 3, 4 and L1, 2, 3, 4 definitions and examples are just not consistent throughout the book. Check out page 120, Figure 4-16. This chart shows 11 Lx's in a strong bull trend right after he explains Lx

 

"Likewise, a Low 1 (Ll) occurs in an down or sideways market, and a Low 2, 3, and 4 are comparable to their High 2, 3, and 4 counterparts."

 

Clearly the first part of that chart is in a strong bull trend, why would he even consider identifying Lx's in a strong bull trend. He does go on to say:

 

"Although many are labeled, when the market is clearly trending up, you should not be looking to sell most Low 1 and Low 2 setups."

 

By his own definition, a Lx doesn't even exist in a bull trend.

 

I really have the sense that price action is the way to trade. So many indicator based mechanical systems I have tried have failed. I was really hoping (based on favorable reviews) that this Brooks book would be the definitive PA book - please, someone tell me that there is a payoff for reading this entire thing, I'm not sure I can get through it without some hope.

 

I'm of the opinion he was merely demonstrating, as is obvious with legs, that both highs and lows exist in an uptrend but these were not necessarily to used as entries. With regard to your final comment, I believe that one cannot overstate the importance of this book. It's fair to say it's not written in the best way and perhaps this labeling of H1 L1 etc is a little ambiguous at time but for me the crux of the matter is that price action is a highly subjective subject and one must be able to express themselves as they see it to properly convey the situation (to be true to themselves). Secondly, I'm yet to complete the book but, I feel that the effort is more than worth the reward. There are such small nuances,and subtleties to price action trading that if you can look past the books short comings you will find some genuinely invaluable information. The book definitely gets better the more you read. I already notice a small polarization of perspective in the way I trade Forex in all time frames so something must be working. So, keep at it

[ACS 10]

My first post on this forum...

 

This book is about to drive me crazy, there are so many inconsistencies or down right errors - I'm about to give up. For example, H1, 2, 3, 4 and L1, 2, 3, 4 definitions and examples are just not consistent throughout the book. Check out page 120, Figure 4-16. This chart shows 11 Lx's in a strong bull trend right after he explains Lx

 

"Likewise, a Low 1 (Ll) occurs in an down or sideways market, and a Low 2, 3, and 4 are comparable to their High 2, 3, and 4 counterparts."

 

Clearly the first part of that chart is in a strong bull trend, why would he even consider identifying Lx's in a strong bull trend. He does go on to say:

 

"Although many are labeled, when the market is clearly trending up, you should not be looking to sell most Low 1 and Low 2 setups."

 

By his own definition, a Lx doesn't even exist in a bull trend.

 

I really have the sense that price action is the way to trade. So many indicator based mechanical systems I have tried have failed. I was really hoping (based on favorable reviews) that this Brooks book would be the definitive PA book - please, someone tell me that there is a payoff for reading this entire thing, I'm not sure I can get through it without some hope.

 

It will take several readings of the book and viewings of his lectures before details such as that start to make sense. And even without the details there are many big picture concepts that are alone worth the effort. The most obvious one is the discussion of how trends behave and terminate and when to switch from with trend to counter trend setups.

[BlowFish 10]

It is a worthwhile book though there are probably easier sources to get a grounding in 'price action'. Dunnigan, Joe Ross law of charts, Gann (not all his stuff was esoteric), Trader Vic (trend line breaks and 2B's) etc etc.

 

If you already 'know price action' it might give you an easier time of things. Also take a setup at a time and make sure you have that down. Finally a lot of the material is just observations, 'if this happens then often that happens'. Leave those until later when you have the basic framework down.

 

btw I agree there most certainly is inconstancies in descriptions of L1 L2 H1 H2's, I noticed that pretty much straight a way ("hang on, by definition that should only occur in a side ways or up market"). The important thing is identifying the legs and the context of those legs, the H1 L1,s are simply 'delimiters' to legs.

[dbandas 10]

First of all, I am very grateful to have found this book. I've been studying for several months and am doing very well with it. Some things that helped were watching the videos several times to get warmed up to the concepts and the lingo. Then, the articles. Finally, I found it essential to go to brooks price action - Home and print out charts so I could see them!

 

My ongoing confusion, though, is the concept of "breakout pullback." Is this simply a little pullback after a breakout? It seems, from what I read and parse something more.

 

Like: price is in a bullish uptrend, say at 900. It "breaks out" downward to 890. This is the breakout. This fails, and price returns to the 898-900 area. This is a failure of the breakout. It then attempt to break out again, and falls back to the 890-892 area. Is this the "breakout pullback?" Is it a pullback to the area of the orignal breakout, and a potential setup for a long if it fails? Am I making this hard and it is it just the 2nd of two attempts to breakout and thus a with trend setup?

 

Help! Please!

[ACS 10]

My ongoing confusion, though, is the concept of "breakout pullback." Is this simply a little pullback after a breakout? It seems, from what I read and parse something more.

 

Like: price is in a bullish uptrend, say at 900. It "breaks out" downward to 890. This is the breakout. This fails, and price returns to the 898-900 area. This is a failure of the breakout. It then attempt to break out again, and falls back to the 890-892 area. Is this the "breakout pullback?" Is it a pullback to the area of the orignal breakout, and a potential setup for a long if it fails? Am I making this hard and it is it just the 2nd of two attempts to breakout and thus a with trend setup?

 

Help! Please!

When the market is trending it will try to break the trend but most attempts fail and the trend resumes; that is a pullback. Sometimes the failure stops before it makes new highs/lows in the trend and it then reverses back in the direction of the breakout. In other words the failed breakout fails and becomes a breakout pullback in the new trend. Often there will be a period of uncertainty whether it is just a pullback in the old trend or a breakout pullback in a new trend until the market tips its hand by further price action.