Thursday, 24 April 2014

Trading Psychology - Al Brooks

Al Brooks is the master of price action trading, one thing is not always shown that he is also one the main masters in trading psychology.

Here are Al Brooks books, make sure to go through them if you're serious of trading using price action, and if you are also serious about learning  trading psychology:

  • Trading Price Action Trends: Technical Analysis of Price Charts Bar by Bar for the Serious Trader (Wiley Trading)

  • Trading Price Action Trading Ranges: Technical Analysis of Price Charts Bar by Bar for the Serious Trader (Wiley Trading)

  • Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader (Wiley Trading)

  • Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader (Wiley Trading)

  • Price action is a reflection of human behaviour.

  • Brooks setup: no distraction, no news, very focused.

  • Most things work 40-60% of the time.

  • Perfect trades cannot exist.

  • There is difference between knowing how to trade and trading to make living.

  • If you don't know who is trapped, you will discover soon it is you.

  • Believe the exact opposite can happen 40-60%.

  • You cannot move the market.

  • Great traders are disciplined, objective, patient, comfortable with uncertainty.

  • Discipline: doing what's right when you don't want to do it.

  • Discipline, never just this time, never i will try this.

  • Objectivity, if you feel emotion don't trade, the market might do the opposite.

  • Patience, it can take hours for a good signal, a trade is never overdue.

  • Comfortable with uncertainty, never be afraid of loses, nothing is clear in realtime.

  • Comfort zone, you must be comfortable, it must be enjoyable and not stressful.

  • Swing trading: high profit, low probability.

  • Scalpers: high probability, small profit.

  • Managing trades well is more important than perfect setups.

  • Good trader can make money either by buying/selling or managing the trade.

  • Management is the key.

  • Buy support and sell resistance.

  • You must follow what institutions are doing.

  • If you are feeling, worried, fearful, greedy, tired, or anything at all, you will lose.

  • If you care you will not be objective, you will not follow institutions, you will lose.

  • How to not care? trade small enough that you honestly don't care.

  • When trading use binary decisions.

  • Buying pressure: More bull bars, consecutive bull bars, bull bodies are bigger, Bar closing near high, no pullbacks, tails below bars. Consecutive bars increases, bull bodies getting bigger. Consecutive bear bars decreases, bear bodies getting smaller.

  • Trading range, look for evidence that one is winning, buying or selling pressure.

  • Market either trend, or trading range, if you're not certain it is trading range.

  • When trending, trade in the direction of trend, 80% of attempts to reverse will fail.

  • When in a trading range, 80% of attempts to breakout into a trend will fail.

  • When not clear, look at the context.

  • Tails are failed breakouts.

  • Setup as two parts, context and signal bar.

  • Best signal bars are reversal bars.

  • Best bull signal bar: Open near/below close of prior bar, close well above prior bar's close. Lower tail is about 1/3 to 1/2 of high of the bar. Small or non-existent upper tail, not much overlap with prior bar/s. The bar after the signal bar is not doji instead a strong entry bar.

  • Signal bar needs a context.

  • Strong setup don't require strong signal bar.

  • All doubles, are trade setups but don't enter unless the context is good.

  • Channel lines don't have to be parallel.

  • Channel can be strong (buy with trend) or weak (BLSHS).

  • If you are worried about losing money, you will not trade properly, you will lose.

  • Double bottom/top the market is trying to reverse.

  • It doesn't matter if two tops are not identical.

  • This is a zero sum game.

  • Will I PROBABLY make money on this trade?

  • Use testing to determine probability.

  • Emotions create losers.

  • You cannot win until you're comfortable with constant uncertainty.

  • Always enter with stop order.

  • Don't force a trade, if not good, wait.

Al Brooks books are highly recommended, check them here:
Posted by at
Labels: ,

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)