al brooks trading price action reversals pdf compressor

Al Brooks Trading Price Action Reversals Compressor Series Of Trending

If you get great probability, you pay for it with reduced reward relative to risk. 3)Breakouts Breakout of what Of any support or resistance.

Trading a major trend reversal pattern is an attempt to enter at the start of a new trend, hoping that a series of trending highs and lows will follow.

Since traders are entering before the new trend is clear, the probability of even the best looking setup is usually only 40.

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These traders are looking for low risk (a tight stop), but that almost always comes with low probability.

The math is good for both these early entry traders and for those who wait for the strong breakout into a clear trend.

The components of a major trend reversal include a Trend Pullback that breaks out of channel Resumption of the trend 2nd pullback that grows into opposite trend There were several major trend reversal (MTR) buy setups.

Buying above bar 1 would have resulted in a small loss, and buying above bar 2 would have created a small profit or a breakeven trade.

Buying above either bars 3, 4, or 5 would have resulted in a profit that was many times greater than the risk, and the wedge bottom increased the chances of a swing up.

Many traders prefer higher probability trades and would have begun to buy around the close of bar 6, after the strong breakout.

The trade-off was that the risk was greater (the stop was below the bottom of the bull leg, like below bar 3 or 4).

GOOG had a failed breakout above the top of a bull channel and then a micro double top that was followed by a strong measured move down, well below the bottom of the channel.

Bears were alerted to look to sell the next rally, betting that it would fail to go above the bull high and instead be followed by at least a 2nd leg down.

Wipe the tears from off their cheeks, heal their wounds and kindle their hearts with hope.

They shorted below the bar 3 lower high, which was a successful lower high major trend reversal (it was also a small wedge bear flag).

The market entered a broad bear channel and bears shorted each strong rally, expecting it to fail to get above the prior lower high.

Final flags The components of a final flag are Trend Pullback that is usually mostly horizontal.

It can be as brief as a single bar Usually almost to a magnet (resistance in a bull, support in a bear) Usually other signs of a possible reversal (in a bull, examples include building selling pressure near the top of a channel) A final flag is a trend reversal pattern that begins as a continuation pattern.

Traders expect the continuation to fail and are ready to take a trade in the opposite direction.

My general goal is 10 bars 2 legs (TBTL), which means a swing that has at least Ten Bars and Two Legs, and it also means a reward that is at least twice as large as the risk (my minimum criterion for a successful swing).

Sixty percent of the trades result in small wins and losses that usually balance each other out.

Traders who want a higher probability usually will wait for the reversal to have a strong breakout in the new direction.

There always has to be something in the trade for the institution taking the other side of your trade.

If you get great probability, you pay for it with reduced reward relative to risk.

Breakouts Breakout of what Of any support or resistance.

Al Brooks Trading Price Action Reversals Compressor Series Of Trending

Al Brooks Trading Price Action Reversals Pdf Compressor