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Hello, Al, Richard, anybody?
I have been following Brooks for about 5 years. Ive been through both regular course and forex multiple times. And everything he posts. And studied his charts for years. Yet... I continue to lose 10's of thousands of dollars.
The reason? After all this time and study and practice one thing that has always eluded me and makes no sense STILL is...
If THE STOP IS BELOW THE MOST RECENT MAJOR LOW lets say and I buy anywhere, lets say on a pullback, my target for a swing would have to be at least two times risk away. THATS ABSOLUTELY RIDICULOUS. It hits that maybe 1 out of ten times. No where near enough to be profitable. No where!
He's said it a MILLION times. I RELY ON MY STOP!
But he also says you have to go for two times risk no matter where you bought for a swing?
This MAKES ABSOLUTELY NO SENSE TO ME. In fact it seems contradictory! Your stop belongs way down here but you ALSO have to go for two times that because if you DO HIT YOUR STOP you need to have that risk/reward to make it work.
So which is it? Rely on stop? Or go for two times risk? Seems it CANT BE BOTH!
He has NEVER shown his trades so who knows what he actually does vs what he SAYS he does? He says it because of FTC. Its not. Its because people would be shocked. Many many people... including Hedge funds have to show their trades and they are NOT getting shut down.
Im I frustrated. Yes. Im i getting dupped? Starting to think so.
Brilliant yes. Good teacher? No terrible. Can anyone shed light on this for me?
Thank you very much in advance!
This is just my opinion and what I've taken from the videos, but I think Al talks about this in videos 33-36 of the PA fundamentals, notably actual risk vs initial risk.
From my understanding Al says to put a stop at the lowest pivot, but then if the price only drops half that and goes up you can "argue" to take just 2x the actual risk and not the initial risk. This idea didn't make much sense to me at first because if I took a position size based on my initial risk (say $1), but only actually needed half of that ($0.50) it doesn't mean I really gained 2x my initial risk ($2) if I exited at 2x my actual risk ($1). To me that trade was really a 1:1 if I did exit at 2x my actual risk vs my initial risk which wouldn't be a positive trading equation. However I've learned over time that it basically comes down to trade management. You aren't always supposed to take your full stop and you aren't always supposed to reach the full 2x target if you get a signal the stock may be failing, like 3 big bear bars closing on their lows, or get out at exactly 2x if the stock is trending, like big bull bars closing on their highs with more room above to resistance, as you'll miss out on additional profits. Trade management is something that can only be learned with experience but I think Al gives people the basics with his videos, so they can figure this out themselves as they progress. It's not a holy grail, but a process to learn how to trade themselves.
I think the thing you should be trying to figure out if you do want to take an all or nothing approach, 2R:1R with a set stop and set target that is not adjusted after you enter the trade, is how to see those 1 out of 10 times that you said they work and consistently find them. If you have been trading like this you're trade logs should give you an idea of what time periods and setups/patterns work best for those types of trades (ie trending days or breakouts) and what days they are not good for (ie trading range days). It takes time but as you start to see and recognize more and more of those patterns it gets easier to find these setups before they happen.
I wish you the best. I know trading is not easy and can be frustrating as hell at times.
I'm nowhere near as experienced as you are. But what I personally have noticed is that I'm simply terrible at swing-trading. Whenever I scalp I usually make money or at least stay flat. But when I try to swing-trade, I really struggle. Maybe your problem is in part related to this? Do you notice differences in your results whenever you scalp vs when you try to swing-trade?
What instrument are you trading and on what timeframe (usually)?
Hello and thank you for the response. I've tried both and am still still experimenting to find something that fits my personality.
I have nor have heard ANYONE EVER making money with Al. Its a bunch of analysis that is so much more confusing then it needs to be.
He wrote 4 books that basically repeat themselves to infinity. Then a course. Then another. Then chart patterns... then then then.
Trading is HARD but its not that complicated. Buy pullbacks in an uptrend sell in a down trend. Its about management of 1000 trades not one or two or ten.
My problem is trying to understand what he says when thats not even what he means.
STOP IS BELOW MAJOR LOW. RELY ON IT!?!! (but of course does Al follow his own advice?)
Seriously doubt it.
I DONT FOR A SECOND BELIEVE HE CANT TRADE. I JUST DONT THINK HE CAN TEACH.
I am in a group where EVERY TRADE IS RECORDED AND EVERYONE CAN SEE IT. AND TEST IT. AND IT IS INCREDIBLY PROFITABLE. But just not for me.
Im still working on being consistently profitable.
He would say JUST TAKE THE BEST SETUPS. Ya whatever Al.
Wow great reply thank you. I have poured over records. I have tried to isolate the best trades, swinging, scalping, 1R 2R, based on price, based on fixed size.
Al whole concept is buying on strength in a pullback. Buying on momentum. Or range trading.
This is all stuff all traders know. Three pushes... support, resistance, traps Breakouts, false breakouts... ect.
I have also teied to back and trade his daily updates. Go back and have a look. What the %@^#^*???? Bottoms out he starts buying. Then buys the pullbacks. Then he sells the tops... one thing though. In doing these EVERYDAY FOR YEARS ive NVER EVER seen him day where he exits and you can see clear as fay from the charts MAYBE one in twn goes for 2X which he recommends EVERYBODY DO???
See the problem? Great post though my friend!
Yet... I continue to lose 10's of thousands of dollars.
I think I can only give you some tips that have helped for me.
So if you loose that much money, why don't you drastically cut down the contract sizes that you're trading? I've been there once as well. Now I trade the Mini-Dax contract (see my trading journal in the forum). So in former times, a bad month used to be loosing thousands. Now a really bad month is loosing maybe 100 bucks. Of course, your winners will be smaller. But I try to trade a position size so that I can replenish my account every month, so that my equity at least stays flat. I'm hoping that eventually when I feel more confident I can slowly increase my trading size until I trade a full contract, then two etc...
Of course, this will not help you with becoming a better trader. But at least you preserve your capital for future you so that you don't take away the possibility to trade from yourself.
I will also offer to look through your trades. Certainly, I'm not the most experienced trader here. I still consider myself on the verge of the transition from beginner to intermediate. So if you have a track record, for example an excel sheet with your trades or a chart showing your trades etc. I would be willing to look through them and try to figure out, what's going wrong.
Hello and thank you for responding. To be fair to Al, MOST of that money was lost in the first few years. Trading many different styles and experimentations.
I am a freak about spreadsheets! I LOVE THEM! If you dont spreadsheet your lost.
Also now I do trade the mircos that they are available.
But trading is trading. How I lose now is by depositing a few thousand and bleeding it dry slowly only to try again. Over and over. Yes I paper trade as well but that only gets you so far as as soon as you switch to live its a) usually the worst time as you switch when system hot and b) it could be $5 risk per trade and still be super emotional as you want to succeed. Not to get rich or anything just to be able to trade with some kind of consistency.
Yes you have to be very vey good but it doesnt explain how its possible to do SO bad on the way down but only kinda OKish on the upside. (Well it does, psychology and edge)
WHATS AL'S EDGE?!?? THATS THE QUESTION. Can he take random entries and manage them well enough to make money? Can he take his best setups and show an equity curve? Any setups and show an equity curve?
(I think I just answered my own question... Spreadsheet his best setups only... BUT... wait... how the h€ll do I do that if he has contradictory rules, fuzzy logic, random targets and stops based at SUPPORT and RESISTANCE which again makes NO sense.
Again I believe Al might be a great trader but I dont think he practices what he preaches which is really misleading to everyone that BELIEVES he is.
Wish HE would answer but I'm guessing Im too aggressive. All good.
Cheers my friend!
Its funny i have the opposite problem, i Know when to enter and i know where to exit, and i´m usually right i just cant do it. I see an opposite setup as well and loose confidence in my trade. I exit too soon, or i miss the trade entirely just to see it behaved exactly as i thought it would.
I only trade reversals for a swing, so my stop is often at the high or the low of the day, then is use measured moves to define my target. I simply measure the height of the opening breakout and use that measure for the rest of the day as a rule of thump. If we are in a range the market will usually test the top and bottom twice during the day.. If there is a trend within the (broad) range i expect 2 legs up or down. I measure the height of the first leg and expect the same height of the second leg if there is room for it within the total range. on top of that i use yesterdays low, high and close as support and resistance. Then i finally look at my EMA 220 to see where we are in relation to the 1 hour chart. A simple strategy that works at least on paper.
If THE STOP IS BELOW THE MOST RECENT MAJOR LOW lets say and I buy anywhere, lets say on a pullback, my target for a swing would have to be at least two times risk away. THATS ABSOLUTELY RIDICULOUS. It hits that maybe 1 out of ten times. No where near enough to be profitable. No where!
Something is wrong here.
I think you misunderstand the concept of traders equation. You can not pick a trade anywhere on the chart and then expect the equation to work for you. It is the opposite way around, you only pick a trade if you believe that there is enough room for the equation to work out.
If you buy a pullback you are already halfway in a swing that's why your stop is so far away. If you buy a pullback anywhere you need to look at the actual risk not the initial risk. But your stop still needs to be below major low.
@thetuxxxgmail-com
Yeah I noticed that about his daily blog as well, but I think you might be misunderstanding what those buy and sell signals mean. He is only showing you what could be considered a reasonable buy or sell at that time. A sell after a buy signal could be considered a reasonable exit if it did not reach 2x risk for example as it gives an argument for the stock to reverse. In general I've found that on average about 4 of his signals on the daily emini charts reach 2x risk, that means 20+ or more don't but that does not mean they aren't good entries if managed correctly.
My suggestion would be to learn to recognize the patterns for those 4 buy/sell setups that do work consistently if you want to increase your chance of hitting 2x risk on the majority of your trades. This usually means you'll have to take more low risk low probability trades resulting in getting stopped out more often. For example look at Al's emini daily chart from Jan 21st at 8:30am where Al puts a green buy in the down trend surrounded by red sells. You could argue for taking that buy trade with a stop at the previous candles low for a reversal swing on the day, but it unfortunately fails. However if you had put your stop at the low of the day and not the previous candle it would have reached 2x risk before stopping you out. Each trade is just a bet you take based on probability and risk. You can increase your risk or increase your probability but there is a give and take for each. That is where trade management comes in and this isn't something someone can really teach you. It comes with experience. It's why some people can enter at the exact same time while one will make money on that trade and the other will lose it.
Its funny i have the opposite problem, i Know when to enter and i know where to exit, and i´m usually right i just cant do it. I see an opposite setup as well and loose confidence in my trade. I exit too soon, or i miss the trade entirely just to see it behaved exactly as i thought it would.
This is called analysis paralysis. You have to remember all trades have an argument for and against it, otherwise there would be no one willing to sell the stock to you. The way I overcame this problem as I started to recognize arguments for and against a long or short trade was to use a checklist. For example if I had 5 reasons checked off for going long but only 2 to go short I could confidently take the trade long knowing odds were on my side for the most part. Same goes for exiting a position early.
Hiya @printznielsenicloud-com. Had me there for a minute. I almost thought it made sense. But it doesn't. For a few reasons. I could totally be missing something, which I probably am.
Heres what I am missing.
If you buy a pullback you are already halfway in a swing that's why your stop is so far away. If you buy a pullback anywhere you need to look at the actual risk not the initial risk. But your stop still needs to be below major low.
Ok so heres what Im missing. If you already have a swing up lets say, and then a pullback either a H1 or H2 as Al describes, a bull bar, buy one tick above. Setup complete. This is all assuming context is right. Say after a major trend reversal.
Now depending on how far the stop is THATS YOUR RISK times your size. PERIOD! You don't know actual risk until your in a position to take profits at some distance past your entry. So wheres your target? If you take actual risk target your negating IF IT WOULD have hit your true stop.
Do you wait and "go to Walmart" with a target 2X risk? Yet he says the third part of the traders equation PROBABILITY. So by nature of the trade the probably HAS to be bad.
He also says on many occasions. Is two times optimal? No. Would you stop your kids at high school and say good enough? (Horrible paraphrase but you get the idea)
And to add confusion he also sells after two or three small bear bars or one convincing bar with stop one tick below?
I am completely missing something for sure. When I look at his end of days charts he shows you exactly where to enter???
I would love for him to answer what his tentative stops and targets even would be?
I get its not black and white but this to this day confuses me.
Al has taught me so much through his teachings really. There are just some glaring deficiencies for me. And I get frustrated but it's a journey.
Any help would be appreciated.
Thank you.
He is only showing you what could be considered a reasonable buy or sell at that time. A sell after a buy signal could be considered a reasonable exit if it did not reach 2x risk for example as it gives an argument for the stock to reverse.
Yes! I agree with this. But why is he buying all the way up? Because he doesn't know how far it will go and ITS GOING UP. So the further away the low the further away the target. You just have to reduce position size but that doesn't change the fact the probably of hitting two times risk is enormously low in the traders equation unless in a small pullback trend for example. Thats why he stresses going for AT LEAST two R... you NEED to cover loses and costs.
So its true if your buying anywhere here your stops down here he'll say. So if your jumping out at a couple of down bars of profit the equation won't hold up?
Thank you. Still confused.
@thetuxxxgmail-com Learning PA is many times frustrating, we all know because we all have been at some point/s in your shoes. Yet, when discussing in abstract terms (with no chart example) is difficult to reach any conclusion. Here you have yesterday's emini chart, why don't you point out any trades you have problems with and we discuss the management?
Ok so heres what Im missing. If you already have a swing up lets say, and then a pullback either a H1 or H2 as Al describes, a bull bar, buy one tick above. Setup complete. This is all assuming context is right. Say after a major trend reversal.
Now depending on how far the stop is THATS YOUR RISK times your size. PERIOD! You don't know actual risk until your in a position to take profits at some distance past your entry. So wheres your target? If you take actual risk target your negating IF IT WOULD have hit your true stop.
Take a look at the Emini if you buy the pullback after the reversal up at 08.30 (cup and handle), your initial risk is at the low of the day i agree with you on that. But i would not consider this a low probability trade. This means that you should aim for a 1:1 risk reward. One could also argue that it is safe to move your stop up to the green line as soon as price brakes above the pullback.
An other way to find your profit target is to measure the height of the first leg and assume that the second leg will travel the same distance. Finally you can measure the height of the actual pullback and use that for a measured move up.
Here is how i draw up my trading sessions. Look how powerful measured moves are. Use them to find your targets.
Its funny i have the opposite problem, i Know when to enter and i know where to exit, and i´m usually right i just cant do it. I see an opposite setup as well and loose confidence in my trade. I exit too soon, or i miss the trade entirely just to see it behaved exactly as i thought it would.
This is called analysis paralysis. You have to remember all trades have an argument for and against it, otherwise there would be no one willing to sell the stock to you. The way I overcame this problem as I started to recognize arguments for and against a long or short trade was to use a checklist. For example if I had 5 reasons checked off for going long but only 2 to go short I could confidently take the trade long knowing odds were on my side for the most part. Same goes for exiting a position early.
Thank you
Sometimes i miss the they days where i could only see only one side of a trade, things were so clear back then. Those were also the days where i thought i would be a millionaire in 6 months. 🤣
