Manoj's Trading Diary

manojborle

Well-Known Member
#21
Notes on Al Brooks' Price Action Trading

Al Brooks' style of trading is based on price action only. He does not look at any technical indicators, only candle sticks, trend lines, and moving averages. He trades mainly S&P futures, but I am trying to apply the techniques to stock equities (SPY).

Chart Setting
5 minute chart with 20 EMA. The point is to be simple and nimble. Too much information will simply paralyze you from making quick trading decisions.


Terminology
H1, H2 Signals: The first and second occurrences where the high of the current bar is greater than the preceding bar during a given pull back of an up trend.
L1, L2 Signals: The first and second occurrences where the low of the current bar is lower than the preceding bar during a given pull back of a down trend.
Signal Bar: The bar preceding the H1, H2, ... or L1, L2, ... triggers.
Entry Bar: The bar after the signal bar.
Range Bar: A doji or near doji.
Trend Bar: A large white body candle is a bull trend bar; a red/black one is a bear trend bar.


Entries

H1 long or L1 short with-trend entries. These work well on a strong trend.

H2 long or L2 long entries near the 20 EMA. These work well based on the observation that a prevailing trend normally uses a 2 legged pull back before resuming the trend.

Parallel channel over-shoot and failure. Stay-in-the-channel, don't chase.

Reversal counter-trend entries only after trend line break AND a retest of the low (long entry) or the high (short entry). Look especially for 3 pushes for better reliable trade.

Exits
For scalping SPY: Exit 1/3 after the first .10, another 1/3 after .20, and let the remaining 1/3 run.

Stop exits: Initially 1 tick "beyond" the signal bar; after the entry bar transpires, move the stop to 1 tick "beyond" the entry bar; after taking the first target profit, move the stop to break-even.


Miscellaneous Notes
Do not look for perfect patterns. Resembling one is good enough.
Don't over-trade. Be selective. 3-4 trades per day is enough. If you're consistently profitable, simply increase the shares.
Most of reversals fail, so make with-trend trades.
Beginners tend to make reversal trades, so areas where they'd be stopped out would be good entries.
Market usually makes 2 attempts to do something; if failure, it would do the opposite.
Bail out if the signal bar is weak. E.g. a doji range bar or a bull trend bar on a L1/L2.
Reversal long entries - if lower low then expect 2 legged up; if higher low, then perhaps only 1 legged up. (Reverse for reversal short entries.)
Non-trending days: if long tails and overlapping bars during the 1st hour, then try fading at extremes. There tends to be 2 trading ranges.
Trending days: may want to have a swing trade rather than just a scalp.
Spike and channel trend day: a gap can be a spike; the channel would be in the direction of a spike.
Scalping requires higher percentage of winning trades. Swing trades require less winning percentage.
Only use 1 minute or 3 minute charts for with-trend trades, never counter trend trades.
Chart Examples

http://3.bp.blogspot.com/-cRsK9ScVpD0/Ty4PbwXB-4I/AAAAAAAAMZ0/FEwr8AsOYyk/s1600/h2.gif

http://2.bp.blogspot.com/-fSnE2YYYJHA/Ty4PxhVll9I/AAAAAAAAMZ8/GEeu3gaoRkA/s1600/l12.GIF

http://1.bp.blogspot.com/-f3-iuasy3LI/Ty4QGRHjBGI/AAAAAAAAMaE/ClaWAcjKLyo/s1600/db.gif

http://4.bp.blogspot.com/-KJ_hKYg_K5w/Ty4QcJZ3_dI/AAAAAAAAMaM/bCI4TiUF6-Q/s1600/ch.gif
 
#22
hi....
nice work u do this.. wel i work on 5min charts axsis bank , LT, etc stock not get nice result wish u best luck for ur this work

zerodh is also @ gujrat? i m here so if zerodha here i wil also open a/c wit ..

wts condition for a/c? ..
20 rs net? mens wit all tex? 9r 20 rs + tex? i have 0.01 paisa brok. and for option 40+40 rs plus tex.. so wts zerodha give ?
 
Last edited:

manojborle

Well-Known Member
#23
hi....
nice work u do this.. wel i work on 5min charts axsis bank , LT, etc stock not get nice result wish u best luck for ur this work

zerodh is also @ gujrat? i m here so if zerodha here i wil also open a/c wit ..

wts condition for a/c? ..
20 rs net? mens wit all tex? 9r 20 rs + tex? i have 0.01 paisa brok. and for option 40+40 rs plus tex.. so wts zerodha give ?
no zerodha is 20 rs brokerage per order
so u can buy 100, 1000 at a time brokerage will be the same 20 rs.
actually it is rs.20 or .01% whichever is lower.
I started with zerodha just 2-3 backs and i have seen the difference in costs.
 

manojborle

Well-Known Member
#24
no zerodha is 20 rs brokerage per order
so u can buy 100, 1000 at a time brokerage will be the same 20 rs.
actually it is rs.20 or .01% whichever is lower.
I started with zerodha just 2-3 backs and i have seen the difference in costs.
you can check with their brokerage calculator on their site
 
#25
ok thx ...

wel now ... i dont understand ur trading method use 5 min chart rite .. ema ok..
but h1 h2 L1 L2 when enntry exit sl .. tht i not clear understand.. so plz wehn u have time plc simply clear it.
thx
 

manojborle

Well-Known Member
#26
ok thx ...

wel now ... i dont understand ur trading method use 5 min chart rite .. ema ok..
but h1 h2 L1 L2 when enntry exit sl .. tht i not clear understand.. so plz wehn u have time plc simply clear it.
thx
you can see some price action trading threads on this forum where is very nicely explained.
I am just starting with this method so I may not be correct in my analysis
 

manojborle

Well-Known Member
#27
Missed first entry @ 5586.5 (Short) as per price action, trading range theory
Now will wait for second entry
 

Similar threads