Al Brooks has been day trading for over five decades, starting from the 1980s. He is a renowned instructor at the Chicago Mercantile Exchange (CME), where he teaches master trading classes. His daily blog reaches millions of people worldwide every month.
His strategy involves pattern recognition to anticipate market movements and structure trades accordingly, in real-time. Brooks starts by drawing lines on the chart to identify patterns such as channels, wedges, and double tops. After highlighting the lines, he moves on to identify special and unusual bars. He then draws red and green boxes to indicate the ideal entry points and adds text boxes.
The better you understand the market, the easier it is to anticipate its next move and make profits. By recognizing patterns quickly, you can structure trades faster. For example, if you observe a bear channel where prices are trending downwards and breaking below the channel, followed by a reversal in an uptrend, featuring three legs and a channel; it is essential to recognize it. Additionally, if you spot a wedge bottom and a micro double bottom, it's good to take note of that.
Every day, I create charts for my blog. I call them my "daily setups", and anyone can look at them for free. To create these charts, I use a small line that I can move around and change the orientation of, as well as a text box for adding labels. I also use the format painter to add formatting to the text.
Traders can find typical daily setup charts on my website. The more perfect a pattern is, the more likely computers will find it and trade on it. However, no pattern is perfect, and most patterns will not be exact. For example, a wedge is made up of at least three lines, and there are many different varieties of patterns that can unfold.
When looking at a bare channel with three or more points, I draw the line using point one and point three. If we start to see a reversal near this line, I will look to sell for a reversal down, especially if there is a bear bar below the line.
Double tops and double bottoms are common trading patterns in the financial market. However, it's rare to find a perfect pattern. If you're always searching for a flawless one, you might miss out on great trading opportunities. Therefore, flexibility is key when analyzing trading patterns.
When looking for potential trade opportunities, it's essential to consider the context of the market. For instance, in a rallying market, a possible double top could result in a reversal down. In this particular case, the trader would look for an "O" formation and then sell below the low of that bar. Additionally, a bear bar closing near its low would be an indication to sell below that.
It's necessary to keep an eye on special bars such as big bars, small bars, inside bars, and outside bars. For instance, in a bullish market, three consecutive bull bars with little overlap indicate sustained strong buying.
If you are day trading, it might be challenging to watch every tick throughout the day. However, if you're trading on a daily chart, it's easier to analyze the chart at the end of the day and place your orders for the following day's opening.
Regardless of the market or time frame, it's essential to use a similar approach when marking up a chart. Start by drawing lines to identify channels, wedges, and other patterns such as double tops, double bottoms, and triangles.
This is Al Brooks and I want to express my gratitude for taking the time to watch this video. In my experience, having a daily routine at the end of trading is crucial.
It's important to explain why I think a particular asset is a good buy or sell
No comments:
Post a Comment