Al Brooks Daily Analysis
Websitehttp://www.brookspriceaction.com
Brooks On ScalpingWhen ES Daily ATR is 10-20 pts, using a 2 pt
protective stop is a reliable approachIf scalping for a 1 pt
profit, you need to win more than twice as often as you lose
Therefore, you need to be right about 70% of the time just to break
even For this reason, Brooks mostly swing trades
Brooks on Intraday Swing TradingAn ES swing setup has a high
probability to achieve 10 pts during the intraday move when ATR
> 15-25There are 3-6 setups a day where you can make 4 points
while risking 2. If you trade these with a 4 pt. profit target and
a 2 pt. stop, you only have to win 40% of the time to be
profitable.In practice, you will exit some trades at 1-3 pts
because of an opposite signal. Your 2 pt stop should rarely be hit.
However, once the mkt has moved 2-3 pts in your direction, Brooks
suggests moving stop to break even.Never risk > 4-5 ticks once
profit =>2 pts.
Brooks Defining TrendsA Trend: a series of price changes that
are either mostly up (bull) or down (bear)A trend can be as short
as one bar or longer than all bars on a screen
Als Four Trend CategoriesThe Trend: When price action becomes
Always in Long or Always in Short in the eyes of the traderSwing:
Two or more smaller trends with a series of higher highs and lower
lows or vice versa Pullback: a temporary countertrend move which
can be part of a trend or swingLeg: a smaller trend which is part
of a larger trend, swing or pullback
Most Profitable Trend PatternIn an Always In Long Trend, Swings
should be trending upward with each Pullback above the prior
Pullback resulting in a new high; Vice versa in Always In Short
TrendStrong momentum moves have at least a test of the extreme
following each PullbackAll strong moves usually have at least two
Legs even if the 2nd falls short and reverses
